5
Board composition
5.1
The principles of good governance should apply to all boards, including parent and subsidiary companies. A cornerstone of best practice is for the non-executives to be able to hold management to account effectively and to ensure that the executives are discharging their responsibilities properly. The board should include a sufficient number and quality of non-executives who are independent and who between them have sufficient breadth of understanding of the firm’s business to provide effective challenge to the executives.
- 10/12/2018
5.2
In the case of listed firms, established best practice is that at least half of the board, excluding the chair, is comprised of independent non-executives, but even smaller firms should ensure that they have at least two independent non-executives.
- 10/12/2018
5.3
The PRA also expects firms to have a non-executive chair who is independent on appointment, in line with the Corporate Governance Code.[6] Where this is not the case, the firm should be able to explain how its governance arrangements will otherwise satisfy the need for independent oversight of the executives.
Footnotes
- 6. See Financial Reporting Council’s ‘UK Corporate Governance Code’; https://www.frc.org.uk/Our-Work/CodesStandards/Corporate-governance/UK-Corporate-Governance-Code.aspx.
- 10/12/2018