Board matters
1. Membership
1.1 Members of the Board shall be appointed by the Board, on the recommendation of the Nomination Committee, and shall be subject to election by the Society's members. The Society's members also have the right to nominate candidates for election to the Board. The majority of Board members shall be independent non-executive directors.
1.2 Only members of the Board have the right to attend Board meetings. However, other individuals such as the Secretary, Divisional Directors and external advisers may be invited to attend all or part of any meeting as and when appropriate.
1.3 Executive appointments to the Board shall be for a period of up to three years, which may be extended for further three year periods subject to election or re-election by the members of the Society.
1.4 Non-Executive appointments to the Board shall be for a period of up to three years, which may be extended for further three year periods, subject to election or re-election by the members of the Society at the end of the first and second three year terms and annually thereafter.
1.5 The Board shall appoint the Chairman. At the time of appointment as Chairman, the director concerned shall be an independent non-executive director. In the absence of the Chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.
2. Secretary
2.1 The Secretary of the Society shall act as the Secretary of the Board.
3. Quorum
3.1 The quorum necessary for the transaction of business shall be 5 members, of whom the majority should be non-executive directors. A duly convened meeting of the Board at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Board.
4. Frequency of Meetings
4.1 The Board shall meet at least ten times a year and otherwise as required.
5. Notice of Meetings
5.1 Meetings of the Board shall be summoned by the Secretary at the request of any of its members or at the request of external or internal auditors if they consider it necessary.
5.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Board and any other person required to attend no later than 5 working days before the date of the meeting. Supporting papers shall be sent to Board members and to other attendees as appropriate, at the same time.
6. Minutes of Meetings
6.1 The Secretary shall minute the proceedings and resolutions of all meetings of the Board, including recording the names of those present and in attendance.
6.2 The Secretary shall record any conflicts of interest divulged at the meeting.
6.3 Minutes of Board meetings shall be circulated to all members of the Board before the next meeting of the Board.
7. Annual General Meeting
7.1 Members of the Board shall attend the Annual General Meeting, prepared to respond to any questions on the Board's activities.
8. Principal Functions
8.1 The principal functions of the Board are to:
8.1.1 Determine the strategy and policies of the Group;
8.1.2 Set out the guidelines within which the business is managed; and
8.1.3 Review business performance.
8.2 The Board also has a general duty to ensure that the Group operates within:
8.2.1 The Society's Rules;
8.2.2 Rules and guidance issued by relevant regulatory authorities; and
8.2.3 All relevant laws.
9. Matters reserved to the Board
9.1 Strategy and management
9.1.1 Responsibility for the overall management of the Group.
9.1.2 Approval of the Group's long term objectives and commercial strategy, including the Group's Corporate Plan.
9.1.3 Approval of the annual operating and expenditure budgets and any material changes to them.
9.1.4 Oversight of the Group's operations ensuring:
- competent and prudent management
- sound planning and risk management
- an adequate system of internal control
- adequate accounting and other records
- compliance with statutory and regulatory obligations
- adequate financial resources
9.1.5 Review of performance in the light of the Group's strategy, objectives, business plans and budgets and ensuring that any necessary corrective action is taken, including review of the Board Performance Pack.
9.1.6 Any material extension of the Group's activities into new business or geographic areas.
9.1.7 Any decision to cease to operate all or any material part of the Group's business.
9.1.8 Approval of any material change to the Group's principal policies, such as health and safety and corporate social responsibility.
9.2 Strategic Initiatives, Group Structure, Capital and Funding
9.2.1 Changes relating to the Group's capital structure including capital raising activity.
9.2.2 Major changes to the Group’s corporate structure including any merger or creation, acquisition or disposal of any subsidiary or associated company, or of any significant business operation, or any other initiative which has significant strategic implications for the Group.
9.2.3 Changes to the Group's management and control structure.
9.2.4 Any change to the Society's mutual status.
9.2.5 The principles of any new forms of wholesale funding instruments with characteristics different from those previously approved by the Board.
9.2.6 Approval of any material change to the Treasury Policy Statement.
9.3 Financial reporting and controls
9.3.1 Approval of preliminary announcements of interim and final results.
9.3.2 Approval of the annual report and accounts including the corporate governance statement and remuneration report.
9.3.3 Approval of any significant changes in accounting policies or practices.
9.3.4 Any approval of corporate expenditure over £10m which either does not fall within the budget approved by the Board or falls within the application for financial investment appraisal process.
9.4 Internal controls and risk management
9.4.1 Ensuring maintenance of a sound system of internal control and risk management including:
- receiving reports on, and reviewing the effectiveness of, the group's risk and control processes to support its strategy and objectives
- undertaking an annual assessment of these processes
- approving an appropriate statement for inclusion in the annual report
9.4.2 Approval of the Group's risk appetite and policy statement.
9.5 Projects and Contracts
9.5.1 Individual projects or projects that are related which in aggregate would result in a disbursement (including allocation of internal resource) in excess of £50m over the life of the project.
9.5.2 Any asset acquisition, including freehold and leasehold buildings, with a value in excess of £50m, or disposal of an asset with a book value or proceeds exceeding £50m or where there is an accounting loss on disposal in excess of £25m.
This excludes any merger and acquisition activity which has strategic implications for the Group which is covered by 9.2.2.
9.5.3 Entering into individual or inter-related leases or tenancies where the annual rent exceeds £3m, or disposal of surplus leasehold premises with an annual rental value in excess of £3m.
9.5.4 Outsourcing contracts which involve annual spend in excess of £25m or total life of contract spend in excess of £150m.
9.6 Lending
9.6.1 Approval of recommendations from the Group Risk Committee for
- i lending proposals in excess of the Group Risk Committee’s lending mandate or
ii borrowing propositions which, in the opinion of then Group Risk Committee fall outside the Society’s normal business
iii acquisition of external loan portfolios in excess of the Group Risk Committee’s mandate
9.6.2 Approval of Treasury counterparty exposures in excess of the Group Risk Committee’s mandate.
9.6.3 Approval of Treasury counterparty exposures in excess of £1bn, on the basis of recommendations from the Credit Committee.
9.7 Communication
9.7.1 Approval of resolutions and corresponding documentation to be put forward to members at a general meeting, including proposals for recommendation to the Society's Memorandum and Rules.
9.7.2 Approval of all circulars and listing particulars which require approval by the Board.
9.8 Board membership and other senior management issues
9.8.1 Changes to the structure, size and composition of the Board, following recommendations from the Nomination Committee.
9.8.2 Ensuring adequate succession planning for the Board and senior management following recommendations from the Nomination Committee, including any changes to the Board Composition and Succession Plan.
9.8.3 Appointments to the Board, following recommendations by the Nomination Committee, including the appointment of the Chairman, the Chief Executive, the Senior Independent Director and the Secretary, and the selection of members and chairmen of Board committees.
9.8.4 Continuation in office of directors, including:
- at the end of their term of office when they are due to be re-elected by members at the annual general meeting
- the suspension or termination of service of an executive director as an employee of the Society, subject to the law and their service contract
9.8.5 Appointment, reappointment or removal of the external auditor to be put to members for approval, following the recommendation of the Audit Committee.
9.8.6 Appointments to boards of subsidiaries and associated companies.
9.8.7 Approval of any loan to a director or connected person of a director.
9.9 Remuneration
9.9.1 Determining the remuneration policy for the directors.
9.9.2 Determining the remuneration of the non-executive directors.
9.9.3 The introduction of new incentive plans for executive or divisional directors or major changes to existing plans.
9.9.4 Determining whether the circumstances are such that the Society's members should be invited at the annual general meeting to approve the remuneration policy.
9.10 Delegation of Authority
9.10.1 The division of responsibilities between the chairman and the chief executive, which should be in writing.
9.10.2 Approval of terms of reference of Board committees and the CEO's Additional Job Information statement.
9.10.3 Receiving minutes and/or reports from the Board committees and the CEO on their activities.
9.10.4 Approval of the High Level Business Control Manual and any material changes to it.
9.11 Corporate governance matters
9.11.1 Undertaking a formal and rigorous review annually of its own performance, that of its committees and individual directors.
9.11.2 Determining the independence of directors.
9.11.3 Considering the balance of interests between members, other customers, employees and the community.
9.11.4 Review of the Group's overall corporate governance arrangements.
9.11.5 Receiving reports on the views of the Society members.
9.12 Miscellaneous
9.12.1 The making of political donations.
9.12.2 Prosecution, defence or settlement of litigation involving above £5m or being otherwise material to the interests of the Group.
9.12.3 Approval of the overall levels of insurance for the Group including Director's & Officers' liability insurance.
9.12.4 Major changes to the rules of the Group's pension scheme.
9.12.5 This schedule of matters reserved for Board decisions.
10. Other Matters
10.1 Matters which the Board considers suitable for delegation are contained in the terms of its Committees.
10.2 In addition, the Board will receive reports and recommendations from time to time on any matters which it considers significant to the Group.