Corporate

Terms of Reference for Board Committees

Leek United's board is accountable to members for the careful direction of society affairs, safe stewardship of funds held on members' behalf and the provision of high quality products and services which meet the needs of individual members whilst offering a fair deal to all.

Supervision and direction is facilitated by the operation of a number of board committees, which meet regularly to consider issues specific to key business areas.

The board committees are:

AUDIT & RISK COMMITTEE

Constitution

The Board has established a committee of the Board known as the Audit & Risk Committee, the purpose of which is to assist Board oversight of:

(i)   the assurance over the adequacy of internal controls;
(ii)  the integrity of the Group's financial statements;
(iii) the Group's compliance with legal and regulatory requirements;
(iv) the management of risk across the Group;
(v)  the external auditors' qualifications, independence and remuneration; and
(vi) the performance of the external auditors, and the Group's internal audit function.

Responsibilities

  1. To review the effectiveness of the financial reporting, internal control and risk management procedures within the Group with particular regard to the Group's compliance with provisions contained in Senior Management Arrangements, Systems & Controls (SYSC) in the FSA Handbook.  To receive and consider reports from the external and internal auditors with respect to these matters.
  2. To oversee the appointment of external auditors, to approve their terms of engagement and the nature and scope of their audit work.  To review their performance, their objectivity and independence and to approve their provision of non audit services (if any).
  3. To approve the appointment of the Head of Internal Audit and the terms of reference for the post.
  4. To review the reports of the Internal Audit department and the remit, authority, scope and resources available to that function.

    In particular to ensure that:
    1. the Audit Department is independent of the functions it inspects and maintains objectivity at all times.
    2. the Internal Auditor's status and reporting relationship is such as to maintain the independence and objectivity of the Department.
    3. the qualifications, experience and training of staff in the Department are adequate in relation to the Department's objectives.
    4. an Audit Programme is prepared annually, setting out (in summary) audit work and the frequency with which it is to be performed, based on a risk analysis model prepared by the Internal Auditor. 
  5. To review reports concerning the Group's compliance with all regulatory and statutory requirements.
  6. To review the procedures to assess and manage the Group's risk exposures and receive reports from the Risk Management Committee.
  7. To review financial reports for publication pursuant to any applicable law or regulation.  To ensure the Group's compliance with all accounting policies and standards and to review the auditor's reports in connection therewith.
  8. The Audit & Risk Committee must ensure and review the arrangements for whistle blowing and independent investigation into concerns raised by staff about possible improprieties in financial reporting or other matters.
  9. To make a statement in the Annual Report to members that describes the work of the Committee.
  10. To review reports of any instances of fraud.

Membership

  • The Committee shall comprise at least three members appointed by the Board, all of whom shall be non-executive directors.  The Chairman of the Society may be a member, but not Chair the Committee, in addition to the non-executive directors, provided he or she was considered independent on appointment as Chairman.  The Board shall have determined that each member is "financially literate" and that at least one member has recent "accounting or related financial management expertise" as such qualifications are interpreted by the Board in its business judgement.  Members shall serve for such term or terms as the Board may determine.
  • A quorum is two directors.
  • The Chairman of the Committee shall be appointed by the Board.
  • Members of the Committee shall receive initial induction training on the role and duties of membership of the Committee, and there shall be a regular technical update of the Committee on new accounting and legislative requirements.
  • It is normal practice for the Chief Executive, Finance Director, Head of Risk & Compliance & the Internal Auditor to attend meetings of the Committee.  The Committee can invite others to meetings and can hold meetings or parts of meetings on a members only basis.  The Committee is allowed access to any individual who can supply relevant information or explanations, including outsiders with appropriate professional experience.
  • External Auditors - the external auditors have direct access to the Committee in order to aid their independence and attend meetings at their discretion.  Each year the external auditors present their Audit Plan to the Committee.  It is current practice for them to attend meetings of the Audit & Risk Committee to discuss the year-end accounts and year-end systems matters.  The external auditors also report annually to the Committee regarding the efficiency and effectiveness of the Internal Audit Department.

REMUNERATION COMMITTEE

Constitution

The Board has established a Committee of the Board known as the Remuneration Committee ("the Committee"), the purpose of which is to set appropriate levels of pay and conditions for Board and Senior Management posts.

Responsibilities

  1. To determine and agree with the Board the broad policy for, and to set the level of, the remuneration (including pension rights and any compensation payments) of the Society's Chairman and other members of the Board and other members of senior management (if applicable) as it is designated to consider. 
  2. In determining such policy and levels of remuneration to ensure that the interests of the executives are aligned with those of the Society's members and that the Society is able to attract, retain and motivate high calibre individuals.
  3. In determining such policy and levels of remuneration to have regard to the provisions of the Combined Code on Corporate Governance and the FSA Remuneration Code effective from 1 July 2011 for all building societies.
  4. To ensure that the Remuneration Policy and decision making process is adequately documented for disclosure under the requirements of the Remuneration Code.
  5. To determine and agree with the Board the broad policy for remuneration of management and staff; including the receiving of recommendations from management concerning periodic review of management and staff pay scales and other benefits and the approval of same.
  6. To determine appropriate targets which are relevant, stretching and designed to enhance the performance of the Society for any performance-related pay plans operated by the Society for executive directors.
  7. To be made aware of any major changes in employee benefit structures throughout the Group by the Human Resources Manager and to approve same.
  8. To prepare an annual report on remuneration that complies with relevant regulations and forms part of the Society's Annual Report & Accounts for approval by the Board and for submission to an advisory vote by members at the Society's Annual General Meeting.
  9. To consider any other relevant matters specified by the Board.

Membership

  • The Committee shall be appointed by the Board and shall comprise of at least three non-executive directors, one of whom will be the Chairman of the Committee to be appointed by the Board.  The Chairman of the board may sit on the Remuneration Committee, but not in the capacity of Chair.
  • A quorum shall be two directors.
  • All members of the Committee shall be non-executive directors.

NOMINATIONS COMMITTEE

Constitution

The Board has established a Committee of the Board known as the Nominations Committee ("the Committee").

Responsibilities

  1. To review regularly the structure, size and composition, and the balance of skills, knowledge and experience of the Board and make recommendations to the Board with regard to any necessary changes and in particular to ensure that membership is refreshed.
  2. To be responsible for identifying and nominating for the approval of the Board, candidates to fill vacancies on the Board, as and when they arise.
  3. To prepare a description of the role and capabilities required for a particular appointment following an evaluation of the balance of skills, knowledge and experience on the Board.
  4. To ensure that on appointment to the Board, non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside Board meetings.  A formal induction programme is also required.
  5. To ensure that appropriate processes are in place with regard to succession planning both for appointments to the Board and to senior management.
  6. The Committee shall also make recommendations to the Board:
    1. as regards the re-appointment of any non-executive director either at the conclusion of his or her specified term of office or the time of re-election if earlier;
    2. concerning the re-election by members of any director under the retirement by rotation provisions in the Society's rules;
    3. concerning any matters relating to the continuation in office of any director at any time.
  7. To make a statement in the Annual Report & Accounts that describes the work of the Committee, including the process it has used in relation to Board appointments.
  8. To consider any other relevant matter specified by the Board.

Membership

  • The Committee shall be appointed by the Board and shall comprise of at least three members.  Members shall serve for such term or terms as the Board may determine.
  • A quorum is two directors.
  • A majority of the members of the Committee shall be independent non-executive directors.
  • The Chairman or an independent non-executive director should Chair the Committee, but the Chairman should not Chair the Nomination Committee when it is dealing with the appointment of a successor to the Chairmanship.

ASSETS AND LIABILITIES COMMITTEE

Constitution

The Board has established a Committee of the Board known as the Assets and Liabilities Committee, the purpose of which is to supervise the Group's treasury and financial risk management activities.

Responsibilities

  1. To consider and report to the Board the level of financial risk to which the Group should be exposed.
  2. To ensure adequate systems are in place to monitor such risk.
  3. To form an interest rate view.
  4. To review and manage the balance sheet structure and its sensitivity to interest rate changes.
  5. To monitor market trends and the Society's competitiveness.
  6. To monitor and report to the Board trends in macro-economic activity that may affect the Society.
  7. To monitor treasury performance.
  8. To report the level of required funding to the Board.
  9. To review all exposures and limits.
  10. To review the Market Risk and Liquidity Risk Policy Statements.
  11. To report Committee business and decisions to the board, through the Committee Chairman or other appointed member, following each committee meeting.

Membership

  • The Committee shall be appointed by the Board and shall comprise of at least 3 non-executive directors, the Chief Executive, the Finance Director.
  • The Chief Executive shall be the Chairman of the Committee.
  • A quorum shall be three (at least one of whom should be a non-executive director).
  • Committee members shall be "financial literate" as interpreted by the Board in its business judgement.
  • It is normal practice for the Head of Risk & Compliance to attend meetings of the Committee.

STANDING COMMITTEE

Constitution

The Board has established a Committee of the Board known as the Standing Committee, the purpose of which is to deal promptly with matters which arise requiring attention and decision before the next scheduled meting of the full Board.

Responsibilities

  1. The Chairman/Chief Executive will notify the other directors of the nature of the busines to be discussed prior to any meeting.
  2. To meet at short notice or discuss by conference call to deal with ad hoc, often unforeseen business/policy issues.
  3. To report all matters discussed and decided to the next meeting of the Board.
  4. To consider any merger/acquisition/demutualisation proposals received by the Society and to:
    1. Prepare a suitable response and recommendation to the Board.
    2. Where the Board takes the view that the proposal is not in the best interests of members, to formulate and issue a suitably robust reponse.
    3. To ensure that suitable arrangements are put in place to deal with the implications of any hostile approach which may go public.
    4. To form a Defence Committee for the purpose of overseeing the above arrangements and protect the Society's independence in the event of a hostile approach (merger, acquisition or members' call to demutualise).

Membership

  • The Committee shall comprise all members of the Board.  Meetings will often be called at short notice.  The Chairman must ensure that notice of meetings is given to all directors.
  • A quorum is three directors.
  • The Chairman of the Society shall be the Chairman of the Committee or, in his absence, the Vice-Chairman.  In the event of the absence of both the Chairman and Vice-Chairman, the members at the meeting shall apoint a chairperson from amongst the non-executive directors present.

IT COMMITTEE

Constitution

The Board has established a Committee of the Board known as the IT Committee for the purpose of overseeing the operation and development of information technology across the business.

Responsibilities

  1. To make recommendations to the Board on matters relating to the Group's present and future IT strategy.
  2. To receive management reports on any aspect of the Society's IT/systems environment and to deal appropriately with matters arising there from.
  3. To receive updates in respect of IT projects and monitor progress against plan.
  4. Annually, to consider a budget submission from the Head of IT concerning overall IT and systems expenditure for the forthcoming financial year.
  5. To receive and review periodic reports from the Head of IT detailing progress of expenditure against budget.
  6. To ensure that the integrity of the Group's systems and data is protected by adequate contingency/recovery plans.
  7. To report to the Board, through the Committee Chairman, or other appointed member, following each Committee meeting.

Membership

  • The Committee shall comprise of three non-executive directors, the Chief Executive and Finance Director.
  • The Chairman shall be appointed by the board.
  • A quorum is two directors (at least one of whom must be a non-executive director).
  • Committee members shall be "IT literate" as interpreted by the Board in its business judgement.
  • Attendance at meetings by the Head of IT and the Internal Auditor will normally be required.