Entire Section

  • D. DELEGATION BY THE BOARD

    • D.1 Management functions

      • Principle

        An issuer should have a formal schedule of matters specifically reserved for board approval. The board should give clear directions to management on the matters that must be approved by it before decisions are made on the issuer's behalf.

      • Code Provisions

        • D.1.1

          When the board delegates aspects of its management and administration functions to management, it must, at the same time, give clear directions as to the management's powers, in particular, where management should report back and obtain prior board approval before making decisions or entering into any commitments on the issuer's behalf.

          Note: The board should not delegate matters to a board committee, executive directors or management to an extent that would significantly hinder or reduce the ability of the board as a whole to perform its functions.

        • D.1.2

          An issuer should formalise the functions reserved to the board and those delegated to management. It should review those arrangements periodically to ensure that they remain appropriate to the issuer's needs.

        • D.1.3

          An issuer should disclose the respective responsibilities, accountabilities and contributions of the board and management.

        • D.1.4

          Directors should clearly understand delegation arrangements in place. Issuers should have formal letters of appointment for directors setting out the key terms and conditions of their appointment.

    • D.2 Board Committees

      • Principle

        Board committees should be formed with specific written terms of reference which deal clearly with their authority and duties.

      • Code Provisions

        • D.2.1

          Where board committees are established to deal with matters, the board should give them sufficiently clear terms of reference to enable them to perform their functions properly.

        • D.2.2

          The terms of reference of board committees should require them to report back to the board on their decisions or recommendations, unless there are legal or regulatory restrictions on their ability to do so (such as a restriction on disclosure due to regulatory requirements).

    • D.3 Corporate Governance Functions

      • Code Provisions

        • D.3.1

          The terms of reference of the board (or a committee or committees performing this function) should include at least:

          (a) to develop and review an issuer's policies and practices on corporate governance and make recommendations to the board;
          (b) to review and monitor the training and continuous professional development of directors and senior management;
          (c) to review and monitor the issuer's policies and practices on compliance with legal and regulatory requirements;
          (d) to develop, review and monitor the code of conduct and compliance manual (if any) applicable to employees and directors; and
          (e) to review the issuer's compliance with the code and disclosure in the Corporate Governance Report.

        • D.3.2

          The board should be responsible for performing the corporate governance duties set out in the terms of reference in D.3.1 or it may delegate the responsibility to a committee or committees.