Matters Reserved for the Board
2. Financial Matters
3. Property
4. Litigation/Arbitration/Mediation
5. Benefits
6. Personnel
7. General Corporate
8. Reports to the Board
9. Access to the Company Secretary
10. Board Review
11. Reporting Procedures
Matters to be Decided by or Referred to the Board
The Board has delegated to the Chief Executive wide powers for the day-to-day management of the Company. It has also delegated to Committees of the Board the duty to make recommendations to the full Board in specialised areas; these are the Audit Committee, the Remuneration Committee, the Nomination Committee, the Risk Committee, the Corporate Governance Committee and the General Business Committee.
The Board does however reserve to itself the power of decision, approval or agreement, as the case may be, over certain matters which are summarised below and in the Table of Board Delegated Authorities, as amended from time to time by the Board:
Note: References to financial limits set out in the Matters Reserved for the Board may be superseded by such other limits that the Board may from time to time approve.
1. Statutory Obligations
The Board is required by law, by the Company's Articles, by the United Kingdom Listing Authority (“UKLA”) Listing, Prospectus, Disclosure and Transparency Rules, by the Combined Code or the requirements of institutional investors to decide certain matters which include:
- alteration of share capital, Articles or name of De La Rue plc
- change in situation of registered office
- approval of interim dividends and recommendation of final dividends
- approval of the Annual Report and Accounts and the information given therein including the Remuneration Report
- any circulars to shareholders
- recommendation to shareholders on the appointment of auditors and approval of the audit fee and any proportionate limitation of the auditors’ liability in respect of the audit
- approval of any statements containing inside information including preliminary announcements of interim and final results and interim management statements for release to a recognised regulatory information service and Group wide provided that if a meeting of the full Board cannot be convened to enable a prompt announcement to be made as required by the Disclosure Rules and Transparency Rules the General Business Committee shall be authorised to approve such statements and their release.
The Board must have referred to it any issue which would have a material effect on the Company's financial position, liabilities, future strategy or reputation ("Material Effect").
2. Financial Matters
Group Investment Procedures
Annual Budget
Half-year Report
Year-end Report
Business Plan
Treasury Authorities and Policies including annual approval of delegated authorities and approval of specific transactions in excess of £25 million, as set out in the annual Table of Board Delegated Authorities
Intra Group loans in excess of £25 million
Accounting policies and any significant change in policies or practices
Proposals for any mergers, acquisitions or disposals either of shares or of business comprising assets and liabilities or joint ventures in excess of such amount as may be determined by the Board
Directors' and Officers' liability insurance
Any contract with unlimited liability (except where liability cannot be limited by law) and/or where terms and conditions exceed limits approved by the Board as matters reserved to be approved by the Board provided that the Board may delegate to the General Business Committee (“GBC”) authority to approve the submission of tenders where the conditions of the invitations to Tender do not limit liability on such conditions as the GBC may approve
All Group investment proposals requiring Board approval in accordance with the limits of authority from time to time adopted by the Board and set out in the Group Finance Manual together with any other items having a Material Effect including:
Capital expenditure including IT in excess of £1.5 million (or such other amount as determined by the Board)
Revenue expenditure (excluding items within cost of sales) in excess of £2 million related to any one payment (or such other amount as determined by the Board)
Acquisition or disposal of intellectual property rights including licences having Material Effect on the Group
Investment in new products or services which are not derivatives of existing products or services
Creation or liquidation of a subsidiary or a branch
Alteration of share capital of a subsidiary
Pledging any asset/charging property or company in excess of £2 million
Overall insurance strategy and levels of retention and risk exposure under any Group Insurance Policy in excess of such amount as the Board may from time to time approve.
3. Property
Purchase or sale of any land or buildings valued at more than the amount determined by the Board from time to time as set out in the Group Finance Manual.
Lease of any land or buildings for which the total rent and capital expenditure exceeds the amount determined by the Board from time to time as set out in the Group Finance Manual over the period of the lease.
Renewal of leases where the total rent and capital expenditure exceeds the amount determined by the Board from time to time as set out in the Group Finance Manual over the period of the lease.
4. Litigation/Arbitration/Mediation
Appointment of Lawyers for main Board or major activity, where costs are likely exceed £2 million.
The settlement, compromise or initiation of any legal proceedings, including giving any undertaking in damages, the outcome and/or costs of which may have a Material Effect provided that in cases of emergency where speed is essential the General Business Committee may authorise such action without prior reference to the Board.
5. Benefits
Setting up of or change in pension or post employment benefits.
Decisions on pension funding rates, contribution holidays, increases in pensions paid or augmentations with Material Effect, in conjunction with the trustees of the relevant scheme, where appropriate.
Setting up of, and any material increase in, the Company's liability for medical expenses, permanent health and similar schemes which would have a Material Effect.
Appointment and removal of pension fund trustees where the Company has the power/responsibility.
Appointment and removal of pension fund managers where the Company has the power/responsibility.
Introduction of and material rule changes to all share option and employee share ownership plans (including phantom plans).
The grant of options or shares under employee share option and ownership plans (including phantom plans).
Appointment of savings carrier/administrator for sharesave schemes.
6. Personnel
Election and removal of the Chairman of the Board.
Appointment and removal of Directors.
Designation of senior independent non-executive Director.
Division of responsibilities between the Chairman, Chief Executive and other executive directors, which should be in writing.
Determination of the independence of Directors.
Appointment and removal of senior managers reporting to the Chief Executive and their remuneration, conditions of contract and termination arrangements.
Remuneration of and contracts/consultancy arrangements with the Chairman and non executive Directors of the Board. No Director may vote with respect to his own remuneration.
Appointment and removal of the Company Secretary and any Deputy or Assistant Company Secretary.
Consideration of and if thought appropriate authorisation of any perceived conflict of interest notified by a director.
Annual review of the Register of Directors’ Conflicts of Interest.
7. General Corporate
Annual general meetings, extraordinary general meetings - date, location and agenda ensuring that Notice of the AGM and related papers are sent to shareholders at least 20 working days before the meeting.
Dates and frequency of Board meetings.
Adoption of and amendments to the De La Rue Share Dealing Code and Business Code of Conduct.
Approval of policies including Health and Safety, Environmental and Corporate Social Responsibility.
Setting up Committees of the Board and agreeing their composition and terms of reference.
Review of the structure, membership and terms of reference of each Committee at least every three years.
Appointment of key corporate advisers, e.g. investment bankers, brokers, public relations advisers etc.
Appointment of Management Consultants or Advisors with fees in excess of £1 million in any one year (or such other amount as determined by the Board).
Payment of fees for Management Consultants or Advisors with fees, once appointment approved, in excess of £2 million in any one year (or such other amount as determined by the Board).
Approval of Political Donations (currently prohibited), Charitable Donations in excess of £250,000 and promoting the brand of De La Rue through sponsorship in excess of £100,000.
Review of the Corporate Governance Framework at least every three years.
Ensuring that the Annual Report includes a statement of compliance with the Combined Code and complies with the requirements of the UKLA or any other regulatory body as regards the remuneration or any other policy for which a report is required.
Receive reports on the views of the Company’s shareholders.
8. Reports to the Board
To enable the Board both to take properly informed decisions and to exercise its supervisory role, it expects to receive management reports on the following matters at the intervals stated:
- Financial
(a) For each meeting:
Reports from the Chief Executive and Finance Director so that the Board is aware of:
- key business issues
- cash proposals for major items of capital expenditure
- specific reports on new/major/troubled projects
- summaries of key financial data and ratios
- details of sales, costs, profits, margins, budgeted and actual statements
(b) Annually:
- half year financial statements
- annual financial statements
- updated budgets and projections including projections of liquidity
- Treasury Authorities and Policies
- Taxation - e.g. key issues, major exposures, planning, etc.
(c) Ad hoc:
- Information Technology
- Research & Development
- Material business development projects
- Property
- In respect of major projects costing £10 million or more, post-acquisition and capital expenditure reviews within two years of completion establishing whether financial projections have been realised
- Items within the authority of the executive Directors but which would have a Material Effect (e.g. initiation or receipt of legal proceedings, significant environmental or health and safety incidents)
- Any subject required by the Board
- Group Risk Committee
- Minutes and papers relating to quarterly meetings of the Risk Committee
- Significant matters having a Material Effect and not covered by quarterly meetings
- Any subject required by the Board
- Company Secretarial
(a) For each meeting:
- Directors' Dealings in the Company's shares
- Dealing in the Company's shares by employees to whom the De La Rue Share Dealing Code applies
- Legal Update
- Security Update
- Environmental, Health and Safety Update
- Report on the shareholder register
(b) Ad hoc:
- Change of name of subsidiaries
- Significant changes to subsidiaries/ divisions
- Changes or proposed changes in the law or regulations affecting the Group including the Listing Prospectus and Disclosure Rules of the FSA/NAPF/ABI requirements or good practice having a Material Effect
- Summary of Shares purchased in the market
- Summary of notifications received relating to the percentage change of voting rights of major shareholders
- Personnel
Annually:
- Management Succession and Development Review
- Human Resources Strategy
- General levels of salary increases
- Charities
Annually:
- A review of policy and a report from the Chairman of the Trustees of any charitable trust set up by the Company
(a) Quarterly:
(b) Ad hoc:
9. Access to the Company Secretary
All directors have access to the advice and services of the Company Secretary who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.
10. Board Review
- The Board shall conduct a formal and rigorous annual review of:
(a) the outcome of the Board's activities and that of its Committees comprising a report on the achievement of objectives and compliance with procedures;
(b) the effectiveness of the Board's procedures;
(c) performance of individual directors and whether each director continues to contribute effectively and to demonstrate commitment to the role;
by means of the following processes:
- The Chairman shall be responsible for conducting the annual review in conjunction with the Senior Independent Director, non-executive directors and such external advisers as the Board may from time to time consider appropriate.
- The Chairman shall lead the evaluation of the performance of individual directors, other than himself.
- The non-executive directors, led by the Senior Independent Director, shall evaluate the performance of the Chairman, taking into account the views of executive directors.
- The Nomination Committee shall review annually the time required of a non-executive director and the performance evaluation of each director shall be used to assess whether each non-executive director is spending enough time to fulfil his duties.
- The Chairman shall produce a report to the Board on the results of the review and shall consult with the Chairmen of Committees of the Board and individual directors, including the Chief Executive, and any other executive he considers relevant.
- The Board shall conclude its review by no later than the meeting at which the Annual Report is approved and shall state in the Annual Report whether such performance evaluation is taking place and how it is conducted.
- The Chairman shall act on the results of the evaluation and, where appropriate, shall ensure that the Nomination Committee makes recommendations to the Board for the appointment of suitable new board members or seek the resignation of directors.
11. Reporting Procedures
- The Annual Report shall include a statement of how the Board operates, including a statement of which types of decisions are to be taken by the Board and which are to be delegated to management. The Committees shall also report on their responsibilities and activities.
- The Annual Report shall identify the Chairman, the Chief Executive, and the chairmen and members of the Nomination, Audit and Remuneration Committees. It shall also set out the number of meetings of the Board and those Committees and individual attendance by directors.
- The terms of reference of the Board and its Nomination, Audit, Remuneration, Risk and Corporate Governance Committees shall be made available.
25 September 2008
