By Terrence N. Chimanya

For a Board of Directors of any organisation to do its work effectively, it is necessary that all members understand their individual fiduciary roles and responsibilities and that the Board organises itself to perform the necessary tasks effectively. To achieve that feat, Board Committees or working groups are the answer. Through Board committees, work can be divided so that far more can be accomplished than if the entire Board acted on all matters. Board Committees, therefore, provide organisational structure and, at the same time, allow enough flexibility so the Board can adapt quickly to the changing demands of the environment and business.

In my view, there are 4 crucial functions that Board Committees serve and such committees will be able to:

• Divide up the work of the organisation into management and targeted areas;
• Expedite work by removing routine tasks from monthly board consideration;
• Permit broader participation by all board members in the various committees they will serve; and
• Utilise and aggregate the specific talents and knowledge of board members for the good of the business.

While a Board Committee’s overall function is primarily advisory, it still has to make board recommendations and, in some cases, decisions that will be binding to the Board and its members plus the business as expert knowledge and application of it would have been put to test. With the publication of the King IV report, the emphasis now moves from a theoretical approach to real implementation and Boards/Company Secretaries, therefore, have to be smart about how they put the recommendations of the report into effect and be able to measure whether they are working? King IV™ is more forceful on delegation to Board Committees as compared King III. Principle 8 of King IV™ clarifies the objectives for these delegated arrangements, which are to promote independent judgement, assist with the balance of power, and to help the governing body to discharge its duties effectively. This blog post, therefore, contains recommendations on the duties and scope of Board Committees and it remains the responsibility of the organisation’s governing body to align its corporate governance with the Companies Act, associated rules and regulations of the respective industry segment it operates within and King IV™. The goal is effective partnership and collaborative working among Board Committees with minimal overlap of duties and a balanced distribution of power. I am fully aware of the need for Zimbabwe to update its Companies Act in line with the advanced corporate governance developments that have now superseded its existence.

That said, there is certain to be a fair amount of overlap of duties- say between the Remuneration and the Social and Ethics Committees. The best way for the governing body to manage overlap of duties may be to restructure Board Committees and lines of reporting. The different Board Committees will have to cooperate more and organisations must ensure there’s a process to cater for managing scope overlap. This blog post, in line with the King IV report, will attempt to make recommendations around which directors should serve on which committees. For instance, it recommends the Social and Ethics Committee should include executive and non-executive members, with most members being non-executive members of the Governing Body. It also recommends that the governing body should comprise mostly non-executive members and that most of them should be independent.

With the ever changing and advancement of corporate governance codes and laws across all jurisdictions, Social and Ethics Committees enjoy quite some prominence in King IV™, with the enhanced focus on ethical governance. The new South African Companies Act obliges certain companies to set up a Social and Ethics Committee but Judge Mervyn King himself goes further and states that the Social and Ethics Committee should be responsible for oversight and reporting on organisational ethics, responsible corporate citizenship, sustainable development and stakeholder relationships. The idea is to grow these committees from mere compliance structures to actually creating value for the organisation.

It must, therefore, be noted that for a Board Committee to operate effectively, it needs:

• A specific terms of references so that it is aware of its responsibility, timeline, and the limits of its authority;
• Capable board members who can offer supplementary assistance when needed;
• An effective Chair; and
• Responsible committee members. 

Most boards organise themselves into:

• The Executive Committee;
• Standing Committees;
• Audit and Finance Committee;
• Governance and Risk Committee;
• Sustainable Development Committee; and
• Ad Hoc Committees/Working Groups/Task Forces.