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Corporate governance statement

The Company is committed to high standards of corporate governance. The Board is accountable to the Company’s shareholders for good corporate governance. The code of best practice, set out in Section 1 of the Combined Code as amended from time to time and appended to the Listing Rules of the Financial Services Authority (the ‘Combined Code’), has been adopted as the Company’s corporate governance statement.

In accordance with the Listing Rules, the Company is required to report firstly on how it applies the main principles of the Combined Code and secondly to confirm that it has applied the Code’s provisions or, where it has not, to provide an explanation. The following section outlines the way in which the Company has applied the main and supporting principles in the Code.

The Board

The Board directs the Company’s risk assessment, resource management, strategic planning and financial and operational management to ensure that obligations to shareholders and other stakeholders are understood and met. Certain functions are delegated to committees consisting of non-executive directors as detailed within this section. The Board generally meets eight times a year, and additionally when necessary, to consider all matters relating to the overall control, business performance and strategy of the Company and in succession planning. For these purposes a schedule of matters reserved for Board decisions has been established. The Board has also drawn up a schedule of matters which must be reported to it. These schedules are reviewed at least annually. A statement of the directors’ responsibilities in respect of the financial statements is set out in the responsibilities statements and a statement on going concern is given in the Chief Financial Officer’s report.

The Chairman leads the Board and the Chief Executive leads the executive management of the Company. Their respective roles are more fully described in the corporate governance section of the Company’s investor relations website bashares.com. The Chairman’s responsibilities include setting the Board agenda. With the Company Secretary, he ensures that Board members receive accurate, timely and clear information. As mentioned in the Board of directors, the Chairman was independent at the time of his appointment in July 2004.

Of the 11 Board members serving at the year end, excluding the Chairman, two were executive directors and eight were non-executive directors.

The Board

Pie chart of the Board

The non-executive directors are drawn from a range of business and other backgrounds. This diversity is identified by the members as one of the strengths of the Board. Maarten van den Bergh is the Board’s senior independent director. In this role he is available to the shareholders should they have any concerns that they have been unable to resolve through normal channels. He is also responsible for leading the Board’s discussions on the Chairman’s performance and would lead the process for the appointment of a new Chairman, when appropriate.

The non-executive directors scrutinise the performance of the management in order to be satisfied as to the integrity and strength of financial information, controls and risk management. They have a prime role in appointing, removing and succession planning of senior management and, through the Remuneration Committee, they are responsible for determining appropriate levels of remuneration for the executive directors.

Although the non-executive directors are eligible for non-contractual travel concessions in addition to their fees, this is not considered to affect their independence.

All directors receive regular and timely information about the Company prior to Board meetings. They also have access to the Company Secretary for any further information they may require. If any of the non-executive directors has any concerns about the running of the Company they would first discuss these concerns with one of the executive directors, the Company Secretary or the Chairman. If these concerns cannot be resolved, then their concerns are recorded in the Board minutes. No such concerns arose during the year.

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