BOARD INTERACTION AND RELIANCE ON MANAGEMENT AND EXPERT ADVISERS

It is the duty of the board to monitor, question and probe the management so it is satisfied that the overall strategy of the company and its implementation is sound. Directors’ access to accurate and relevant information from management and external advisors is crucial to performing this duty.

Clarification of the roles and responsibilities of the board, management and external advisers

The Board Charter should stipulate the roles and responsibilities of the board, management and detail the policy regarding the appointment and the role of external advisers.

Boards should be provided with information from management that is accurate, sufficient, relevant and timely in order to properly perform their role as monitors, governors and counsellors to management and to fulfil their duty of care to shareholders.

Similarly, the AICD recognises that directors have the right to obtain independent advice, resources and information when necessary at the expense of the company, in order to perform their role properly.

Boards must clearly stipulate their information requirements from management, and continually evaluate and review this process to ensure that it is comprehensive and understood by all parties.

Reliance on information provided by management and external advisors

Directors have a duty of care that requires them to act with all the care and diligence a reasonable person might be expected to show in this capacity. Directors also have a duty to act in the best interests of the corporation, and more specifically to ensure that proper accounts are kept for authorities and the shareholders.

Directors are responsible for ensuring their particular duties and responsibilities at law are not compromised, even when relying on an external adviser or on information provided by management.

Role of Committees and Advisers

It is important that the chairmen and members of key committees, such as audit, nomination and remuneration, have a direct relationship and line of report to the external advisers that is not dependent on management.

The audit committee must also have the key role in the procurement process of the auditor and determining the budget for advisers overall.