Topics covered in this section include:
- Insurance for board members
- Board induction
- Listed Companies
- Private company governance
- Public Sector governance
- Charity governance
- Education Sector governance
Directors Liability Insurance
WOB recommends that you should not join a board without checking that the directors/trustees/governors are covered by some form of "director's liability" insurance. Whilst it is possible to take out a personal policy, most boards will have a policy which covers all board members.
Insurance is a complex area so we recommend you read these two articles, originally sourced from the Institute of Directors website:
A good induction is an important part of joining a board. Some boards are better than others at getting this right so it's worth knowing what you need to know to be effective. Please see below for a good checklist.
In July 2018 the Financial Reporting Council (FRC) released a new 2018 UK Corporate Governance Code which puts the relationships between companies, shareholders and stakeholders at the heart of long-term sustainable growth in the UK economy. The new shorter, sharper Code is the product of extensive consultation.
"This Code places emphasis on businesses building trust by forging strong relationships with key stakeholders. It calls for companies to establish a corporate culture that is aligned with the company purpose, business strategy, promotes integrity and values diversity. There is a renewed focus on the application of the Principles – the FRC wishes to see clear, meaningful reporting. Investors and proxy advisors must assess explanations carefully and not take a tick-box approach". FRC Quote.
For small and mid-sized companies
The Quoted Company Alliance (QCA) have produed a Corporate Governance Code tailored to small and mid-sized quoted companies which takes a practical, outcomes-orientated approach to governance. Click here to download it.
They also have number of codes on specific elements of governance for small and mid-size listed companies; see link
See also FRC Guidance for Boards and Committees
Prudential Regulation Authority
Issued in April 2016, see their guidance Corporate governance: Board responsibilities – SS5/16
The Wates Corporate Governance Principles for Large Private Companies
Published in December 2018, this code takes effect for financial years starting from 1st January 2019. The code is a set of pragmatic, modern, commonsense principles created by a broad coalition of contributors including the CBI, IOD, TUC, ICSA, FRC, BVCA and several large private companies like Warburton's and Wates. Its use is only mandatory for large private companies (>2000 employees or £200 million income or balance sheet of £2 billion), however any company could usefully review the seven principles. To view, click here.
Public Sector Bodies
The principles of public life apply to anyone who works as a public office-holder. This includes all those who are elected or appointed to public office, nationally and locally, and all people appointed to work in the civil service, local government, the police, courts and probation services, NDPBs, and in the health, education, social and care services.
For information on Good Governance in the Public Sector view this guidance report. It's called Good Governance in the Public Sector, a report written by IFAC (International Federation of Accountants) and CIPFA (Chartered Institute of Public Finance and Accountancy).
Public Appointments Newsletter
If you are interersted in public appointments in England and Wales, we recommend that you sign up to the Public Appointments Newsletter. For a recent newsletter, click here.
To sign up for information on Scottish Public Appointments, click here and go to Register of Interest.
The Scottish Government also has a webpage called On Board for all those appointed under statute to be members of the Boards of public bodies in Scotland. Link
Making sense of the NHS
If you are considering a board role in the health sector, this video from The Kings Fund provides a useful overview of how the sector works, how it is changing and the roles of the various organisations that make it up. These include NHS England, NHSI (Improvement), NHS Digital, the CCGs (Clinical Commissioning Groups), the Care Quality Commission, the Department of Health and the NHS Trusts and Foundation Trusts. Link
The Charity Governance Code
This Code is a practical tool to help charities and their trustees develop high standards of governance. It has been put together with support from the Charity Commission and various other organisations in the sector. Click here for more information.
Guidance from the Charity Commission for all who serve as trustees or directors on the governing body of a charity, or who are about to take up trustee responsibilities.
The following quote from The Essential Trustee is an important one to note regarding trustee liability: "Trustees can be held liable to their charity for any financial loss they cause or help to cause. This applies to any type of charity whatever its legal form. The law generally protects trustees who have acted honestly and reasonably from personal liability to their charity."
Other Charity Commission Advice sheets:
For the full range of Charity Commission guidance, see link: https://www.gov.uk/topic/running-charity.
Search for a charity: you can search for a charity by name or number, or search for all charities in a particular region, using the Advanced Search functionality on the CC website - click here for the search page.
A guidance document for charities in Scotland.
A simple guide to trusteeship published in October 2015 by the law firm Bates Wells Braithwaite, which covers the topic of trustee liability under each of the different types of charity structure - (S)CIO, Company limited by Guarantee, Trust and Unincorporated Association (report link
Setting Your Risk Appetite - Institute of Risk Management Guidance
Risk Management for Charities - Link
The Finance Act 2010 introduced a definition for tax purposes of charities and other organisations entitled to UK charity tax reliefs. The definition includes a requirement that to be a charity an organisation must satisfy the ‘management condition’. For a charity to satisfy the management condition its managers must be ‘fit and proper persons’. There is no definition in the legislation of a ‘fit and proper person’. This guidance explains how HMRC applies this test to people who have the general control and management of the administration of the charity.
Has your Board considered whether social investment could help deliver your mission? Social investment is the use of repayable finance to achieve a social as well as a financial return.
GET INFORMED is a campaign to help support charity trustees and non-executive directors of social enterprises to better understand the opportunities and risks of using social investment.
For more information click here for a pdf or visit the Big Society Capital website at https://www.bigsocietycapital.com/get-informed
BBC Radio 4 podcast on Charities by Matthew Taylor, Series 1(link), on fundraising.
Higher Education Sector
There are a number of bodies involved in the governance of higher education in the UK. Below we list a few, with some insight into their roles and useful publications.
Higher Education Funding Council
The regulator for Universities in England is the Higher Education Funding Council for England. HEFCE acts on behalf of the Charity Commission as almost all Universities are exempt charities. Because it has distributed funding and is the main monitor of financial probity for Universities, the Government decided HEFCE should take on that role after the upgrades on governance within the Charities Acts. It has been particularly involved in giving guidance on public benefit etc. and has a key role as gatekeeper for new entrants in the HE market. See http://www.hefce.ac.uk/reg/
Leadership Foundation for Higher Education
The HEFCE and its equivalent for Wales and Scotland along with the Universities fund a leadership development organization for UK HE sector called the Leadership Foundation. See their governance page at http://www.lfhe.ac.uk/en/governance-new/
Committee of University Chairs
There is also an organisation that supports the Chairs of University Boards called Committee of University Chairs in England and Committee of Scottish Chairs in Scotland
NED Opportunities in the Housing Sector
Andrew Foster, Executive Director of Governance and Contracts at Midland Heart, shares his insights into the Housing sector and why it should be a destination of choice for aspiring NEDs. Read his article here