Board committees don’t receive sufficient attention, in my view. Yes, there’s considerable focus on terms of reference and reporting to the board. And chairs of committees at banks and a number of other financial institutions are SMF senior managers; some of them are interviewed before being approved by regulators. But there are various points I’ve seen in practice that remain as consistent wrinkles. Here are some thoughts.
1 Identifying the committees established by the board – this is a point I come across frequently. The board is at the top of the governance tree. It has the right to establish committees and should receive reports from those committees. The committees, in turn, usually have the right to establish other committees – sub-committees – and receive reports from them, the results of which should then be part of the committee’s report to the board. All committees are derived from the board but I often come across situations where executive committees are seen as entirely separate from the board – a form of corporate immaculate conception. An executive committee’s terms of reference should set out the powers and responsibilities given to it by the board. Exco sub-committees’ powers and responsibilities will need to be derived from the exco’s powers and responsibilities in its terms of reference. Exco’s sub-committees – and they are sub-committees of exco with a reporting line to it, not executive committees of equal standing with the exco – need their own terms of reference, derived from and consistent with exco’s own terms of reference. This isn’t being pedantic or picky, wordsmithing or playing with semantics. It’s a matter of governance.
2 Allocation of business to board committees – the issue here is whether the board, or a board committee, should review, approve and otherwise have responsibility for dealing with a particular matter. With board audit committees, the allocation of business between the committee and the board tends to be quite straightforward. The same is generally true of remuneration, nominations and people committees (which are sometimes merged into a single committee), although I’ve also seen a wider pool of directors – or the board as a whole – wanting to be involved in the work of those committees and/or wanting to know (or even have a say in) what happens there.
The committees where I see most blurring of the lines are board risk committees and any culture and conduct committee that the board has established. In each of these cases, the issue is whether the committee has responsibility for things that the board should consider and decide. The common issues centre around whether:
- The board risk committee is making decisions about risk matters that should properly be decided by the board; and
- A culture and conduct committee (however named) is determining culture and reviewing and overseeing that culture and conduct when that’s the responsibility of the board or the board should have greater levels of input.
When challenged on this, a board’s response tends to be that these committees can devote more time get into more detail than the board is able to allocate but great care is needed to ensure that the board retains full and effective responsibility in respect of relevant topics.
3 Robust reporting to the board becomes particularly important when board committees are given a wider scope of work – if board committees have an extended remit and/or are carrying out deep dives in place of the board, it’s extremely important that there’s detailed and thorough reporting to the board. This will allow the board to make decisions about matters that are properly the responsibility of the board. Without that detailed and thorough reporting, the board can’t make those decisions which are properly the responsibility of the board. This brings us back to the point about what the board should consider and approve and what can be delegated to a board committee – and the extent to which that needs to be kept under review.
4 It’s very possible that papers provided to board committees that have an extended remit also need to be provided to the board – the intention isn’t that boards should receive exactly the same materials as the relevant board committee but the board shouldn’t be short-changed on relevant information, bearing in mind what it’s responsible for. Care needs to be taken in deciding what to provide to the board and what can, properly, be provided only to the board committee. This applies to all boards but is particularly relevant to larger boards where only a few of the directors sit on the relevant committee.
January 2026
This note is intended to provide general information about current and expected topics and perspectives that might be of interest. It does not provide or constitute, or purport to provide or constitute, advice relevant to any particular circumstances. Legal or other professional advice relevant to any particular circumstances should always be sought.