It’s an ill wind that blows no good for the EU

October 18, 2018


There’s an old Chinese saying that “when the wind of change blows, some build walls whilst others build windmills” – well there’s little evidence of either in the corridors of power in the EU according to Udo Baader, founder and head of German bank, Baader Bank, speaking at the Zagreb Stock Exchange Conference in Rovinj, Croatia, today.

He reckons that 2019 might blow up a storm as the bailout chickens come home to roost.

Just when the Eurocrats in Brussels thought that the financial crisis in the EU was over it looks like that is far from being the case.

Over the last 10 years, since the financial meltdown in 2008, the EU has poured €600 billion into the money pit that is Portugal, Ireland, Greece and Spain (PIGS) plus Cyprus – €400 billion going to Greece alone in 3 bailouts – effectively taking EU taxpayer’s hard-earned cash and giving it directly to the Banks by way of the Asset Purchase Program (APP), otherwise known as Quantitative Easing (QE).

Whilst there has been a general reduction in unemployment and an increase in growth in these countries and some Banks, particularly in the US, have done very well out of this scheme, other Banks, especially those in Greece have fared less well – with some of them having over 50% of bad loans on their books, guaranteed by government bonds which are either already high risk or are about to be re-classified so in the coming weeks.

And it’s not just the PIGS + Cyprus that are affected, Italian Banks are also sitting on high-risk collateral and the once mighty Deutsche Bank has lost 80% of its share value over the last decade.

With the possibility of further political instability in Germany following the next round of elections coupled with the perilous situation in Greece, 2019 is likely to prove a very bumpy ride for EU finances.


UK Corporate Governance Code 2018

October 18, 2018

A new version of the UK Corporate Governance Code was published in July 2018 and takes effect from 1 January 2019.

Of the 2,600 companies listed on the London Stock Exchange, only 1,200 are listed on the Main Market and of those around 850 have a Premium Listing and are therefore required to report on how they have applied the Code – though it is recognised as a best-practice guide to Corporate Governance which sets the standards of board leadership and effectiveness, remuneration, accountability and relations with shareholders and stakeholders.

The Code, which has developed over the last 25 years since the publication of the Cadbury Report, contains broad principles and more specific provisions that Premium Listed companies are required to report on as part of their annual report and accounts. They must state how they have applied the main principles of the Code and either confirm that they have complied with the Code’s provisions or provide an explanation where they have not.

Roughly half the countries in the world which have some form of Corporate Governance regulation have adopted a code approach, similar to the UK, whilst the other half have opted for legislation. The important difference between the two approaches is that with a code, it is the shareholders who are expected to exert pressure on the directors to comply rather than the courts.

Placing the onus on shareholders to ensure that their directors follow the code is a much more flexible solution than legislation and means that the code can be regularly updated to reflect changing needs in Corporate Governance. Unfortunately, the dramatic shift in share ownership from predominately private individuals to financial institutions over the last 40 years has resulted in less pressure on directors to comply with the code rather than more.

To combat this perceived lack of interest of institutional investors in the way the businesses they are investing in are run, the UK Stewardship Code was introduced in 2010 – though this has turned out to be relatively toothless and politicians will be looking for other ways to further influence the standards of Corporate Governance in the boardrooms of the major UK companies.

Both codes are ‘owned’ by the Financial Reporting Council (FRC) which consults widely before making revisions to the codes – in the case of the latest revision to the code, consultation started in February 2017 and concluded a year later in 2018. The transparency of this process has been questioned with some commentators saying that the resultant revisions bear little resemblance to the responses submitted during the consultation.

The new shorter and sharper Code seeks to re-emphasise the relationships between companies and their shareholders and stakeholders, which are enshrined in the 2006 Companies Act, and their importance for the long-term sustainable growth of the UK economy.

The main changes to the code include:

  • a new provision to enable greater board engagement with the workforce to understand their views. The Code asks boards to describe how they have considered the interests of stakeholders (that is anyone with a legitimate interest in the company including employees, customers, suppliers and the local community) when performing their duty under Section 172 of the 2006 Companies Act;
  • a requirement for Boards to create a culture which aligns company values with strategy and to assess how they preserve value over the long-term;
  • an assurance that boards:
    • have the right mix of skills and experience;
    • encourage constructive challenge and;
    • promote diversity;
  • an emphasis on the need to refresh boards and undertake proper succession planning;
  • consideration of the appropriateness of Chairs remaining in post beyond nine years;
  • strengthening the role of the nomination committee in succession planning and establishing and maintaining a diverse board;
  • conducting regular external board evaluations – Nomination committee reports should include details of the amount of contact the external board evaluator has had with the board and individual directors;
  • an emphasis on the need for remuneration committees to take into account workforce remuneration and related policies when setting director remuneration including performance-related pay to address public concerns over excessive executive remuneration.

FRC Chairman Sir Win Bischoff said about the new code:

“Corporate governance in the UK is globally respected and is a framework trusted by investors when deciding where to allocate capital. To make sure the UK moves with the times, the new Code considers economic and social issues and will help to guide the long-term success of UK businesses.

This new Code, in its new shorter and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.”

Business Secretary Greg Clark said:

“Britain has a good reputation internationally for being a dependable place to do business, based on required high standards. It is right that we keep under review and update our corporate governance code to ensure the highest standards.

“That is why I supported the FRC in deciding to update their Corporate Governance Code, and I am pleased to see the revised Code.

“These changes will drive improvements in how boardrooms engage with employees, customers and suppliers as well as shareholders, delivering better business performance and public confidence in the way businesses are run. They will help the UK remain the best place in the world to work, invest and do business.”

Concern about the new Code was expressed by James Jarvis, Corporate Governance Analyst at the Institute of Directors, the Professional body that aims to improve standards of directorship:

“While the shorter and sharper nature of the code is welcome, along with the increased emphasis on the importance of a wide range of stakeholders, the IoD does have concerns over the relegation of professional development to the Guidance for Board Effectiveness. As we highlighted during the consultation period, the role of the modern director is increasingly complex and specialised, and there is an ongoing need for these individuals to take stock of their competencies. By removing reference to the professional development of directors from the Code and only mentioning it peripherally in the Guidance, the FRC risks indicating to directors that it is not important.”

At the same time as the FRC were producing the new code, they themselves were the subject of a review into their own effectiveness. This review, led by Sir John Kingman, the chairman of Legal & General Plc, which is the largest institutional investor in the UK, was set up in April 2018 by the UK government to assess the FRC’s governance, impact and powers to help ensure it is fit for the future.

The outcome of the review, which is due to be completed by the end of 2018, is aimed to make the FRC the “best in class for corporate governance and transparency, while helping it to fulfil its role of safeguarding the UK’s leading business environment.”

The FRC has two big jobs to do – in addition to being the guardians of Corporate Governance, the FRC is also the UK’s accounting and audit watchdog. Some argue that these tasks are too big to be undertaken by one body, whilst others ask if there is a conflict of interest between the roles? – the IoD has called for the creation of a new body to be responsible for promoting higher standards of Corporate Governance to leave the FRC free to concentrate on its core task of improving company audits.

Given the question marks hanging over auditors in the light of recent high-profile corporate failures such as Carillion there is an argument that Corporate Governance is the thing that the FRC does well and it is their perceived failure to improve auditing and accounting standards that needs to be addressed.

The IoD’s rationale for setting up an independent body to oversee the UK Corporate Governance and Stewardship codes is that the shaping of voluntary best practice for boards of directors and the setting and enforcement of accounting standards are very different activities

Dr Roger Barker, Head of Corporate Governance at the IOD said:

“Corporate governance has been swallowed up within a regulator that now urgently needs to focus its energies on improving the legitimacy of statutory audit. The FRC has for many years done a good job acting as the keeper of the UK’s corporate governance code, but we feel its centralised decision-making structure is not conducive to the differing regulatory approaches needed for governance and stewardship on the one hand, and statutory audit on the other. There must be a clear distinction between being robust on audit quality, while continuing to nurture the UK’s much-admired principles-based corporate governance regime”

The IoD is not the only Professional body with an interest in governance. The Institute of Chartered Secretaries and Administrators (ICSA), otherwise known as the Governance Institute – the professional body for governance has also made its views about the FRC known in its response to the Kingman Review call for evidence.

Unlike the IoD, the ICSA is firmly opposed to the suggestion that responsibility for Corporate Governance should pass from the FRC to another regulator given the expertise that has been developed by the FRC.

The ICSA’s concern with the implementation of both the UK Corporate Governance Code and the Stewardship Code is the lack of sanctioning powers open to the FRC to enforce them. This is a view shared by Labour MP Frank Field, co-author of the 60-page report into the BHS collapse by the parliamentary business, innovation and skills select committee with particular reference to Sir Philip Green who fails all but one of the section 172 tests but has not been prosecuted for failing to obey the 2006 Companies Act.

The UK Shareholders Association (UKSA) and ShareSoc have jointly asked for firmer and faster action to be taken against those who violate the integrity of reporting standards. They say that the general perception is that “in practically every financial scandal or financial crisis, the FRC seems to have taken far too long to decide and too often has concluded that nothing has gone seriously wrong”.

Partly this lack of bite for the FRC lies with its position within the regulatory hierarchy as a “Council” it has much blunter teeth than the Financial Conduct Authority (FCA), which might have more success in enforcement if it was given the powers to do so. The Companies Act has been law since 2006 but we have yet to see any meaningful prosecutions for failure to comply with section 172 and only now in 2018 is the new Code asking boards to specifically say how they comply.

With so many high-profile corporate failures being due to an inability to respond to reputational or environmental risks rather than financial ones, does it make sense for the Corporate Governance regulatory body to still have the word “Finance” in its title?

It will be interesting to see what the outcomes of the Kingman review are when the findings are reported at the end of the year.

One thing is for certain, regardless of who ‘owns’ the Corporate Governance and Stewardship Codes in the future and which political party is in power, the pressures on business leaders to improve the way they run their companies whilst avoiding scandals of corporate failures and excessive executive pay will continue to rise.

The 2018 UK Corporate Governance Code can be downloaded here


Is it time for Charity Chief Executives to get on Board?

December 20, 2017


The Insolvency Service is understood to have given all eight former Kids Company charity directors and founder and former chief executive Camila Batmanghelidjh a deadline of December 20 to agree to a voluntary ban on holding company directorships or face being disqualified for periods of between two-and-a-half and six years..

Despite not being a registered company director or charity trustee, Camila Batmanghelidjh is considered to have been a ‘de facto’ director of the company by the Insolvency Service.

The vast majority of charity boards are composed entirely of non-executive trustees registered with the Charity Commission, who may also be company directors registered at Companies House, with the Chief Executive attending and taking part in the board decision making process and yet not being formally registered as a director or trustee.

A number of charity Chief Executives I have spoken with say that they are happy with this arrangement in the belief that they cannot be held personally liable for any decisions made by the board which may lead to prosecution – however, as we have seen with Kids Company, this is an unfounded belief.

The test for whether or not someone is acting as a director, either ‘de facto’, someone who holds themselves out to be a director, by, for example, having the title Chief Executive or CEO, or ‘shadow’, in the case of someone who is for all intents and purposes a member of the board, is not that they are registered as a director but is to do with their attendance at and contribution to board meetings.

I believe that it is time for more Charity Chief Executives to consider their positions and if they are acting as directors or trustees then they should seek formal recognition by obtaining permission from the Charity Commission to be registered Company Directors and or Charity Trustees, to gain the protection of the Companies and Charity Acts, and to become fully fledged members of a unitary board.

Charity trustees also need to heed the lessons of Kids Company – Alan Yentob faces being disqualified from running or controlling companies for five years including his ‘I Am Curious Productions’, the company he set up last year after having been forced to quit the BBC creative director in December 2015 by his colleagues who accused him of attempting to interfere in the broadcaster’s coverage of the Kids Company scandal.

There seems to be a widely held misconception amongst Charity trustees that their duties, liabilities and responsibilities are a somewhat watered down version of those for an equivalent private sector director and clearly this is not the case.

Trustees need to ensure that they are fully aware of what they are letting themselves in for before they accept appointments to a Charity Board.

Emerging markets: can you mitigate Know Your Customer (KYC) risk?

October 26, 2017

Emerging market challenges and opportunities

Emerging market opportunities bring with them a new level of KYC risk – it is important that financial institutions identify and understand the associated due diligence challenges.

Businesses are expanding their reach and exploring opportunities in new territories as never before. That is not surprising, when you consider that 70% of world growth is expected to come from emerging markets by 2025.

Populations are rising and the ratio of those working to retirement means a growing customer base, especially for high-tech products and services.

In China, the bond market is predicted to double in size from the current US$9 trillion over the next five years. That will make it bigger than Japan’s and second only to the United States.

On-boarding challenge

But all these opportunities come with a new level of risk and fresh set of challenges.

Language barriers, depth and breadth of information and operational efficiency can make it harder to on-board counter-parties (customers).

And without conducting enhanced due diligence (EDD), reputations and revenues could be at risk should companies, unknowingly (or knowingly) conduct business with individuals or entities engaged in criminal activities.

What parts of the KYC compliance program should be a priority?

I would prioritize reliable data, i.e. ‘golden sources’ of accurate verified data.

Screening utilities can also reduce the KYC compliance burden without negatively impacting the client on-boarding experience.

I think the automation of due diligence processes to reduce the burden of manual processing and duplication without compromising on compliance or risk is also key.

How does EDD reporting provide depth for better understanding customers?

The greatest risks in KYC and AML compliance come from high-risk or high-net worth customers and large transactions.

That is why it is appropriate to use EDD for those customers and transactions to provide greater detail and depth than would be the case with customer due diligence (CDD).

Regulators also require a higher degree of evidence that EDD has been undertaken and the collection of more detailed information, all of which has to be documented in detail.

In order to provide the required assurance, both internally and externally, EDD is likely to prove much more of a burden on the organization in terms of cost, time and effort.

This is particularly true in emerging markets where the costs of undertaking due diligence to the necessary level of detail is likely to be significantly greater than in advanced markets.

It is therefore vital to ensure that the segmentation of new and existing clients into CDD and EDD compliance regimes is robust and reliable.

The segmentation also needs to be regularly monitored to ensure that changes in customer profiles adequately reflect the level of risk assigned to the customer.

When identifying an EDD vendor, what criteria are most important?

Reputation is probably the most important criteria because you are outsourcing an important element of your compliance risk management to a third party.

How reliable are their processes and procedures in ensuring the accuracy of the identity information that they obtain on your behalf?

Are you seeking a global solution or are you adopting a country by country model? The answer determines the importance of a global footprint in making your decision.

A lot will also depend on the likely number of customers requiring EDD and future growth in those numbers when assessing the capability and capacity of the third party vendor.

Emerging markets webinar: can you mitigate KYC risk?

For further insight into KYC risk mitigation within emerging markets, watch the recording of the Thomson Reuters webinar recorded on 19 September where I was joined by:

James Swenson, Global Head of Proposition for Risk Managed Services

Pete Sweeney, Asia Editor Reuters Breakingviews

Emerging Markets Webinar

The new Charity Governance Code – does it go far enough?

August 4, 2017

In a move to bring charity governance in-line with the recommendations of the UK Corporate Governance Code, the best practice guide for the UK’s listed companies, the new Charity Governance Code is advocating external reviews for larger charities every three years, more openness and limits on how long trustees may serve.


The new Charity Governance Code, which replaces the previous Code of Good Governance, outlines the high standards of governance that all charities and their trustees in England and Wales should aspire to.

“The code for the first time sets out clear aspirations for a charity board to meet. This code is a great stepping off point to help charities navigate the changes” Rosie Chapman, chair of the Charity Governance Code steering group

The Charity Commission is encouraging registered charities to use the code to tackle the governance challenges that the sector has faced over the last two years, most notably in the case of the failure of Kids Company.

“There is a clear consensus within the sector that we must focus more on governance. With this in mind, I envisage that we will soon see a commitment to following the Charity Governance Code become a requirement from many funders. Taking action now is a way of getting ahead of the game” Sir Stuart Etherington, chief executive of NCVO

The new code comes in two versions which share common principles and outcomes: one set of recommended practice applies to smaller charities and another to larger organisations – there is no single definition of what constitutes a small charity, the Small Charities Coalition defines small charities as those with an income under £1m, NCVO, on the other hand, define small as being income under £100,000, and that represents 80% of all registered charities.

The Charity Commission are keen to emphasise that good governance is not about ticking boxes, it is about attitudes and culture and putting the charity’s values into practice. How trustees make decisions and how well they understand what is going on are key to avoiding the pitfalls that have been highlighted in the negative press the sector has received over the last two years.

“The bottom line is, good governance is no longer an optional extra. It’s essential to charities’ effectiveness and probably their survival too. Charities need to be able to demonstrate that they take it seriously, allowing it to change the way they operate”

Charity trustees need to be less conservative, better informed and more supportive of their executives in order that their charities can realise their potential and maximise the difference they make by using good governance to develop and maintain their vision, mission, values and strategy to deliver their charitable objects.

As with the UK Corporate Governance Code and its principle of ‘comply or explain’, which is ultimately the responsibility of the shareholders, or owners, to enforce, the Charity Governance Code works on the principle of ‘apply or explain’ – the question is who is responsible for its enforcement? In most charities the closest thing to an owner is the member of the charity who is most likely to also be a trustee and therefore not the best people to be holding themselves to account. In practice the expectation is that funders will be expected to ensure that the charities they fund are well governed.

The code is built on the ‘foundation principle’ that all trustees should understand their legal duties, liabilities and responsibilities and should be committed to good governance. In practice it is not always the case that trustees take the time to fully understand their roles – something that the Charity Commission will continue to focus their efforts to try to improve.

The code then develops seven principles:

1.   leadership;

2.   integrity;

3.   decision-making;

4.   risk and control;

5.   board effectiveness;

6.   diversity;

7.   openness and accountability;

The key recommendations of the code include:

  • More oversight when dealing with subsidiary companies; registers of interests and third parties such as fundraising agencies or commercial ventures.
  • Where a charity uses third party suppliers or services – for example for fundraising, or data management, boards must ensure the work is in the charity’s interests and must regularly review agreements.
  • An expectation that the board will review its own performance and that of individual trustees, including the chair, every year, with an external evaluation for larger organisations every three years.
  • Boards should regularly review the sustainability of income sources and business models and their impact on achieving charitable purposes
  • Boards should regularly check charities’ key policies and procedures to ensure make sure that they still support, and are adequate for, the delivery of their aims, including key areas such as fundraising and data protection
  • No trustee should serve more than nine years without good reason.
  • Boards thinking carefully about diversity, how they recruit a range of skills and experience, and how they make trusteeship a more attractive proposition.
  • Boards should operate with the presumption of openness.
  • Stronger emphasis on the role of the chair and vice chair in supporting and achieving good governance.

The publication of the new code comes at a very critical time for the charity sector where high profile catastrophic collapses, data misuse and donor fatigue have all contributed to the need to focus on governance improvement.

Whilst the implementation of the code will undoubtedly lead to better levels of trustee understanding and engagement in the basics of good governance, will it address fundamental issues such as an evaluation of the public benefit achieved by a charity, known as the impact statement?

Charity trustees should also be encouraged to consider the risks involved in being too conservative and not taking strategic opportunities, particularly mergers or acquisitions with charities with similar objects.

The main test of the code will come from the cultural change required to move trustees from being dedicated volunteers but amateur board members to becoming much more professional in discharging their duties.

Is it time for a new model of charity governance?

May 24, 2017


The recent news that the Government’s Insolvency Service has reportedly written to lawyers acting for Alan Yentob and other former Kids Company board members to warn them that it is minded to pursue disqualification proceedings against them, highlights the risks that charity trustees face and quashes the myth that their duties and liabilities are somehow lesser than those of their peers on boards in the private sector.

It also begs the question – are charity governance structures still fit for purpose?

In a damning report by MPs last year into the Kids Company’s collapse in 2015 they stated that there had been an “extraordinary catalogue of failures of governance and control at every level” and criticised the charity’s founder, Camila Batmanghelidjh, the other executives, the charity’s trustees and the charity regulators, the Charity Commission.

Under the newly harmonised ‘fit and proper persons test’ regimes charity trustees found to have fallen short in regard to their legal duties and responsibilities can also find themselves ineligible for future director roles in the private sector – if successful, disqualification proceedings could force former Kids Company chairman Yentob, for example, to relinquish his directorship of the television production business called I Am Curious, which he established last year.

And it is not just the collapse of Kids Company – mass resignations at the RSPCA, the investigation into fundraising methods following the suicide of 92 year-old Olive Cooke and criticism of commercial activities have shone a critical spotlight onto the activities of other high profile charities, with blame being put to a large extent on poor governance.

Two of the voluntary sector’s most prominent figures Sir Stephen Bubb, former Chief Executive of charity leaders’ network ACEVO and Sir Stuart Etherington, Chief Executive of charity umbrella group NCVO have said that the conventional trustee board model is not right for all charities and the sector should start thinking about a different form of governance for larger charities.

Addressing the question: Is Charity Governance in Crisis?, Bubb suggested that the traditional trustee board may not be effective for “those large organisations that have grown in size and structure so much that they almost resemble a new category”.

Although charities with over £100m turnover represent only 0.02% of the total number registered, they account for more than 18% of all charitable income.

Over the past 30 years in the commercial sector we have seen a sea-change in corporate governance, from the Cadbury report to the widespread adoption of the UK Corporate Governance Code, which has resulted in significant changes to board composition and boardroom behaviours.

This change in governance has not been mirrored by the voluntary sector. Oxfam treasurer Robert Humphreys has said: “The charity model at the moment I see as essentially being developed in the 19th century, in Victorian times, when a new wealthy middle class decided to set up trusts and foundations to address the problems they saw around them. That model, with trustees who are quite distant and not necessarily engaged, doesn’t stand well against the current focus on regulation, scrutiny and challenge.”

Earlier this year, the House of Lords select committee on charities’ published their report: Stronger Charities for a Stronger Society, The Lords committee was set up to look at charity governance and they concluded that good governance is fundamental and that charities need strong governance, with robust structures, processes and good behaviours to best serve their beneficiaries and their cause – this will be enshrined in the Charity Governance Code which is currently being updated.

Typically, most of the 200,000 plus registered charities in the UK are governed by a board of trustees, who may also be directors of the charity, who are volunteers, with no day to day responsibility for running the charity – they are therefore acting in a non-executive capacity.

The trustee/directors are also usually the members of the charity and if the charity is a company limited by guarantee they will act as guarantors for a sum as little as £1 each, as stated in the charity’s Articles of Association, which is only payable should the charity be wound up due to having become insolvent.

The most senior employer of the charity, who may have the title ‘Chief Executive’, is not usually a member of the board of trustees but attends board meetings as an observer.

This type of board arrangement contrasts with the unitary board structure adopted by listed commercial companies operating under the auspices of the UK Corporate Governance Code where there are equal numbers of executive and non-executive directors who all have the same legal duties and responsibilities.

The changes proposed by Sir Stephen Bubb and Sir Stuart Etherington would see the creation of unitary boards as standard for large charities, whereby their senior executives would become directors, with the introduction of payment for the non-executive directors/trustees.

Large charities Oxfam, Marie Curie and RNIB have backed this call for charities to be able to adopt a unitary board structure – Dr Jane Collins, Chief Executive of Marie Curie has said: “I’m sure it was fine years ago when the world was kinder perhaps, but now things are moving very fast. We have six meetings a year plus a two-day away day, so eight meetings a year. I can contact any of my trustees right away, but it’s not quite the same… I think a unitary board would be the way forward.”

Currently there is no reason why charity Chief Executives should not be director/trustees. As long as it is permitted by the charity’s Articles of Association and there is expressed permission from the Charity Commission then it can be done – and it does avoid the possibility of a charity CEO who regularly attends and participates in board meetings being considered to be a ‘shadow director’, having all the legal duties and responsibilities of a company director as set out in the UK Companies Act 2006.

Rachel Stancliffe, Chief Executive of the Centre for Sustainable Healthcare has been a member of the board of trustees since the charity was incorporated in 2011 – her status as a full-time paid employee of the charity and a director/trustee was approved by the Charity Commission when the charity was founded.

RNIB’s group director of resources Rohan Hewavisenti confirms that there is flexibility within the current charity structure; “We are now able to pay our trustees, even though it did take six months or a year to get that through the Charity Commission. And I think the unitary board structure is a really important one that trustees shouldn’t be excluded from having as an option.”

The rights charity, The Advocacy Project, has taken the decision to allow its Chief Executive, Judith Davey to join the trustee board. The 9 trustees took the decision on the basis of an independent report by consultancy Campbell Tickell, and a short presentation to the board by Rosie Chapman, governance consultant and former director of policy and effectiveness at the Charity Commission.

Campbell Tickell said that “on balance, we favour the inclusion of the chief executive on the board because it emphasises that responsibility for the success or failure of the organisation is shared by executives and non-executives. We have not found that it creates difficulties or conflicts of interest that cannot be managed with the right advice and careful preparation.”

The inclusion of the Chief Executive on the board of trustees addresses the apparently iniquitous situation whereby the person responsible for the day-to-day running of the charity has less responsibility in law than the unpaid trustees who may only meet as a board a few times a year – Camila Batmanghelidjh, the high profile head of Kids Company, was not a member of the charity’s board.

However, although it is possible and there are several examples of where it has happened, it is currently the exception rather than the norm to have charity Chief Executives on the board and charity trustees remain almost without exception, unpaid.

As with SMEs in the private sector, there is a recognition of the need for a pragmatic approach to the most effective governance structures for smaller charities but that does not rule out the unitary board which does not necessarily incur any additional cost and is probably no more than a recognition of what actually happens in the boardroom in practice.

Charity trustees do not necessarily need to be paid but they do need to be trained and made aware of their legal duties and responsibilities – and, despite the fact that they are volunteers, they should also be expected to attend and contribute to board meetings.

Along with a charity’s employees, trustees should also be set objectives and annually assessed on their attainment – they should be appointed for an agreed period, typically 3 years and members should take careful consideration when voting on trustees’ appointment and re-appointment.

There is also no reason why membership of the charity should not be expanded beyond the board of trustees – charity members attend the annual general meeting (AGM) and can vote on the appointment of trustees and the appointment of the charity’s auditors and they can and should hold the trustees to account.

There is no doubt that it is time to re-think charity governance not just for the large charities but for charities of all shapes and sizes The Victorian board of trustees may well still be appropriate for some charities but it is important that charities consciously choose a governance model that takes account of the significant improvement in corporate governance that has taken place in the private sector over the last 30 years and provides the right balance of challenge and support to make each charity a success and to avoid repetition of the public failings of charities such as Kids Company.

David Doughty is Chief Executive of Excellencia Limited, Chair of the registered charity The Centre for Sustainable Healthcare and Governance Consultant to the British Small Animal Veterinary Association.

How to become a Non-Executive Director – London 23 May 2017

May 12, 2017

Find out how you can obtain a Non-Executive Director position by booking a place on this interactive 1-day course.

non-executive director“A well structured and presented introduction to the responsibilities, challenges and attributes required of being a NED. It was thought-provoking. I have referred back to my copious comments in the comprehensive slide hand outs many times already”

Simon C Jones, Interim Transformation Leader and Hidden Value Discoverer

The How to become a Non-Executive Director course helps you to plan and prepare for your first NED position. It instils a real sense of what is expected of NEDs, and how you can meet the challenge.

This one-day interactive course is aimed at aspiring NEDs and covers essential knowledge about roles, responsibilities, strategy and corporate governance that are key foundations for a Non-Executive board role. It also considers up to date thinking on corporate governance and the responsibilities of owners, the board and employees.

This is followed by practical sessions on identifying NED opportunities, the process of obtaining a first appointment and performing due diligence before any position is accepted. There is emphasis on the importance of presenting your experiences with clarity and relevance.

This course identifies the various ways and circumstances in which non-executive directors can make an effective contribution to a board’s work. It also examines methods for their selection and reviews their motivation, induction and reward.

Who should attend?
Individuals who are currently a non-executive director; those seeking appointment as a non-executive director and those looking to appoint a non-executive director.

What to expect?

  • Clarifies how and why non-executive directors can strengthen a board
  • Provides practical guidance on how best to secure an appointment as a non-executive director

Course objectives
Participation on this course will provide you with the knowledge to:

  • Clarify the board’s role, purpose and key tasks
  • Appreciate the contributions that non-executive directors can make to the board in different types of company and situations
  • Recognise the qualities and experience needed to fulfil a non-executive director appointment
  • Appreciate appropriate methods for finding, selecting, appointing and rewarding non-executive directors
  • Understand the preparation required to interview for or be interviewed for the post of non-executive director

Course Leader: David Doughty CDir FIoD

David Doughty - Chartered DirectorThe course is delivered by David Doughty, a Chartered Director and highly experienced Non-Executive, Chief Executive, Chair, Entrepreneur and Business Mentor. David has extensive executive and non-executive experience in small and medium enterprises in private and public sectors. He is also a board level consultant to multi-national organisations and a Chartered Director Ambassador for the Institute of Directors. See his LinkedIn profile here: (

Key Details
Duration: 1 day

Institute of Directors
116 Pall Mall

£330.00 (ex VAT)

Payment with Booking Price

£300.00 (ex VAT)

Partner Price*
£280.00 (ex VAT)

Book Now
To see course dates and to book your place now follow this link:

Course Registration
The fee includes lunch, refreshments and a copy of the course handbook

Attendance counts as 6 CPD hours of structured learning

*Discounts on Excellencia course fees are available for:

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