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POST OFFICE LIMITED
GROUP EXECUTIVE REPORT
Annual Board Governance
itle: Meeting Date:
Title: Report 9 11 March 2020
Rebecca Whibley, Assistant ;
Company Secretary & David Veronica Branton, Company
Authors: ‘ 7 Sponsors: Secretary, Ben Foat, General
Parry, Senior Assistant
Counsel
Company Secretary
Input Sought: Approval for Board and Noting
1. The GE is asked to note the approvals sought in the Annual Board Governance
Report, including:
a. The Matters Reserved to the Board incorporating the spend approval limits,
authorised signatory and Company Seal authentication list, treatment of unlimited
liabilities and table of delegated authorities;
b. The Terms of Reference for the Audit, Risk & Compliance Committee;
C. The Terms of Reference for the Nominations Committee; and
d. The Terms of Reference for the Remuneration Committee
as attached in appendices 1 - 4 to be effective from 1% April 2020 and to supersede all
previous versions.
2. The GE is asked to note the obligations table, derived from the Framework Document, as
attached in appendix 5 and particularly, the obligations that fall within their area of
accountability.
3. The GE is asked to note the other elements of the annual Governance Report to the
Board.
4. The GE is asked to provide any comments or suggestions they wish reflected before
the report is finalised for Board!.
5. The GE is asked to note that Terms of Reference for GE and revised Terms of Reference
for the Risk and Compliance Committee are being drafted for their review.
Executive Summary
As previously noted by the GE (most recently on 15" January 2020), new Articles of Association
(AoA) for all Group Companies and a Framework Document (FD) between Post Office Limited
(POL), the Department of Business, Energy & Industrial Strategy (BEIS) (Shareholder) and UK
Government Investments (UKGI) (Shareholder Representative) are to come into effect from 1%
April 20202. In order to implement these documents and map the new requirements therein,
the Group’s Governance Framework has been revised.
+ We will be undertaking a further check to make sure that the Matters Reserved to Board, Table of Delegated Authorities and
Terms of Reference align with one another and the Articles of Association and Framework Document.
? Subject to ministerial approval.
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Further, following the recent announcements from the Purpose, Strategy & Growth (PSG)
review, the obligations contained within the FD have been mapped to show where accountability
and compliance sits within the Group. The key obligations are the production of a Group
Strategic Plan, Group Business Plan and subsidiary Company Business Plans, increased
reporting of financial performance against KPIs, greater observance of various corporate
governance guidelines alongside the Financial Reporting Council’s UK Corporate Governance
Code (“the Code”) and observance of Public Sector Pay and Terms’.
These changes have been included in the Annual Governance Report to the Board which
routinely covers annual reviews against the Board Committee Terms of Reference, confirmation
of the Register of Interests for POL Board Directors, and approval of delegated authority for
spend, and authentication of the Seal as well as noting the list of authorised signatories. This
approach complies with best practice under the Code.
Report
Governance Framework
1. POL’s core constitutional documents consist of:
a. AoA;
b. FD;
c. Entrustment Letter from UKGI to POL; and
d. Funding Agreement between POL and BEIS.
2. These constitutional documents together with the Matters Reserved to the Board (MRB)
and Board Committee Terms of Reference form the Governance Framework at Board level.
We have also produced a Table of Delegated Authorities, which map out the AoA and FD,
where relevant, so that you can see the decision journey through the executive
governance structure, to Board or a Board Committee and, where required, to the
Shareholder. Tables of Delegated Authorities have also been produced for the
subsidiaries* which, in some instances, have the additional governance steps of
Shareholder Board and Parent Shareholder consent.
In order to ensure the new AoA is fully implemented, the following documents have been
revised:
a. The Matters Reserved to the Board, incorporating the spend approval limits,>
authorised signatory and Company Seal authentication list, treatment of unlimited
liabilities and a Table of Delegated Authorities produced;
b. The Terms of Reference for the Audit, Risk & Compliance, Nominations and
Remuneration Committees (Committees of the Board).
We make explicit in the MRB that the Board delegates to the Group Chief Executive (CEO)
the broad authority for the day-to-day running of the business’ as well as spend up to
specified limits. Subject to any matters reserved to the Board or which require Shareholder
3 Insofar as UKGI has deemed them to have a practical application to POL.
4 Post Office Management Services Limited (Post Office Insurance - POI) and Payzone Bill Payments Limited (PZBPL)
° There has not been any changes to spend approval limit levels.
© The approvals required for unlimited liabilities and indemnities have not changed from the approach approved by the Board on
27 March 2018, but the approach has been incorporated into the Matters Reserved to the Board.
7 This is made explicit in the Matters Reserved and Delegated Authorities.
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consent, the CEO may structure his team and executive governance arrangements as he
sees fit.
3. In addition, a table summarising the obligations POL should comply with as set out in the
FD, and linking to core constitutional documents referenced at paragraph 1, is included at
appendix 5. This table also details where accountability and then responsibility for
discharging these obligations sits in POL. Meetings to ensure those identified as being
responsible are aware and accept responsibility have been held® and will continue as we
approach 1* April 20209.
4. The new draft documents are appended with a cover sheet describing what changes are
proposed and why. The main changes are:
a. restructuring to align with a standard template and to use consistent terminology,
taking into account best practice and the Code (as appropriate);'°
b. addition of requirements under the new AoA and FD including matters that require
Shareholder consent;
c. formal governance around existing practices as required following conversations with
colleagues.
5. For POL’s subsidiaries POI and PZBPL, new Matters Reserved to the Board and Terms of
Reference have also been produced which align with Group documents and reflect the new
Articles of Association and Framework Document.*
6. The revisions have been discussed with colleagues in Change, Procurement, Finance,
Legal, HR, Communications and the subsidiaries to start socialising the changes and help
align the materials with other policies and processes’. Just prior to the launch on 1* April
2020, the Decision-Making Page on the intranet will be revised to reflect the revised
Governance Framework and provide access to all documents, along with tailored
summaries appropriate for different audiences within the Group'?. Following the GE
meeting, workshops will be offered to the GE and GE-1 to provide an initial introduction,
with workshops for the wider business being offered after the launch.
7. Terms of Reference for GE and revised Terms of Reference for the Risk and Compliance
Committee are being drafted and will be sent to the Chairs for review prior to seeking GE’s
approval.
Standard elements within the Annual Governance Report to Board
Review against Terms of Reference
® At the time of writing this report meetings had been held with the CoSec team, Chief Strategy & Transformation Officer, Head
of Financial Performance & Analysis, Head of Treasury, Tax & Insurance, Government Affairs & Policy Director, Head of Reward,
Head of Risk and Money Laundering Reporting Officer.
® The Remuneration Committee has agreed the employees joining Post Office can be offered private medical insurance until 1
July 2020 so that recruitment processes in train are not disrupted.
2 The model Matters Reserved to the Board and Terms of References for Committees released by the Governance Institute have
been considered in drafting. The Group is required to “seek to comply” with the UK Corporate Governance Code (section 9.4 of the
Framework Document).
11 Although the subsidiaries are not party to this document, it contains certain requirements for POL for which subsidiary support
or compliance is required to enable POL to meet its obligations
2 We reference procurement requirements, spend authorities etc. in the tables of delegated authorities where people may need
to be aware of these.
We would like to include this high level overview with induction materials.
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8. The Code (Provision 21) recommends that an evaluation of the activities of each
Committee against their Terms of Reference should be completed annually. These reviews
have been completed for the Nominations and Remuneration Committees (“the
Committees”) and discussed at their meetings on 11 February 2020 where it was
concluded that the Committees had fulfilled their requirements to the Board. Specifically
that:
a The purpose of each Committee was clear;
b. The composition and terms of office had been adhered to throughout the year;
to} All meetings had been convened in accordance with the Terms of Reference; and
d All duties and responsibilities had been discharged in accordance with the Terms of
Reference’*,
The ARC will be considering the review against its Terms of Reference at its meeting on
24 March 2020.
Register of Interests
9. In line with the Group Conflicts of Interest Policy and the requirement under s.175 of the
Companies Act 2006 for directors to avoid conflicts of interest, the Board Directors have
confirmed that their entries on the Register of Interests are up-to-date. This review takes
place annually. Outside of this review, directors are asked at the beginning of each Board
or Committee meeting to advise of any conflict of interest which could be triggered
because of an item to be discussed or to notify any new external appointment. The revised
register will be included with the Board paper.
Next Steps & Timelines
10. The Board will be asked to approve and adopt the Matters Reserved to the Board and Board
Committee Terms of Reference at its meeting on 24‘ March 2020, and to note the
obligations table, the review against Terms of Reference for the Nominations and
Remuneration Committees and the Register of Interests for Board Directors.
11. POI and PZBPL will be asked to approve and adopt their Matters Reserved to the Board and
Terms of Reference (as appropriate) and on the 18‘ and 26" March respectively, as well
note any executive committee Terms of Reference and the obligations table.
12. All documents will come into effect from 1% April 2020. However, this is contingent upon
BEIS providing the required ordinary resolution adopting the Articles of Association for POL
and the execution the Framework Document (following ministerial approval), which is
outstanding at present. Should this not be returned prior to the 1* April 2020, this date will
be treated as a soft launch allowing communications and workshops to continue in advance
of a delayed effective date. The GE will be advised should this occur.
Appendices
1, Matters Reserved to the Board, incorporating spend approval limits, authorised
signatory and Company Seal authentication list, treatment of unlimited liabilities and
delegated authorities
The one exception identified was referral of GE exit arrangements to the Remuneration Committee for approval which has
now been addressed.
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Terms of Reference for the Audit, Risk & Compliance Committee
Terms of Reference for the Nominations Committee
Terms of Reference for the Remuneration Committee
Obligations Table
Register of Interests for POL Board Directors (to be added to Board paper).
Ans oN
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including the new Articles of As:
Changes to Matters Reserved to the Board & Terms of
Reference
Matters Reserved to Board
The Matters Reserved to Board were approved in 2015. These note that certain
matters require shareholder consent and set out the main categories of
approvals reserved to Board such as setting strategy. The following additions
have been made:
* a general section on the purpose of the Board, requirement to operate in
accordance with the Articles of Association and in compliance with the
Companies Act 2006
« the matters that requires Shareholder consent which now include group
matters reserved as well as company matters reserved
* an explicit delegation of authority to the Group Chief Executive Officer for the
day-to-day running of the company
* appendices with the spend approval limits, the authorised signatories and
company seal authority, treatment of liabilities and indemnities
¢ Table of Delegated Authorities, mapping out the approval stages for decisions.
Terms of Reference (ToR)
We've made changes to produce a consistent format and terminology so it is clear
whether the Committee is:
e receiving information to ensure that appropriate processes, policies and
controls are in place and/or monitoring implementation of agreed processes,
policies and controls in its assurance and oversight role;
e taking a decision under its delegated authority from the Board; or
* approving for recommendation to the Board or Shareholder where the ultimate
authority rests with them.
Principally we've used the terms Review, Approve, Approve for
recommendation.
Reporting responsibilities, authority and annual review and approval have been
included as sections in each ToR.
Matters Reserved to the Board
Document Note the Matters Reserved to the Board were last updated in 2015.
Paragraph(s)
Changes because of AoA revisions and addition of the Framework
Document
6&7 Reflects that there are now Company & Group Matters Reserved
(previously no Group Matters as not a Group).
Company Reserved Matters are all as before.
Group Reserved Matters within the AoA and Framework
Document (where applicable): Matters concerning all Group
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t to Board (including the new Articles of As:
Companies now requiring Shareholder (BEIS) consent that was
not required before:
- The entry into administration of the Company.
- The formation of any subsidiary undertaking or the
purchase, cancellation of transfer of Shares, or granting of
any Share Rights, in the company.
- The sale, issue, allotment, purchase, cancellation or
transfer of any shares by the company in any subsidiary
or associated undertaking.
- The amalgamation or merger of the company with any
other company or business undertaking.
- The creation or granting of any encumbrance over the
whole or any part of the company’s business, undertaking,
assets or over any Shares unless arising in the ordinary
course of business).
- Making of a loan, granting of credit or giving of a
guarantee or indemnity apart from _ intra-group
arrangements entered into in the ordinary course of
business.
- The restructure or reorganisation of the Group Structure
such that the Company's shareholding in its subsidiary
undertakings is altered or amended
- The appointment, remuneration of any person who is not
a member of the Group as a director of any member of the
Group (other than the company and a member of the
Group that is regulated by the FCA
- The additional remuneration of any employee (but not
salary arrangements) of a member of the Group in their
capacity as a director of a member of the Group
- The establishment of (or approval of any agreement to
establish) a new pension scheme by the company
- Adoption, and variation of, Group/Company Business Plan
(previously only Strategic Plan required approval).
8 (i)
Amendment to reflect requirement to develop a Group Strategic
Plan (under the Framework Document)
8 (xi)
Addition of purpose of ensuring that any statutory or
administrative requirements for the use of public funds are
complied with, having regard to the requirements under the
Articles of Association, the Framework Document and associated
guidance (to reflect requirements under the Framework
Document).
9 (i)
Matters requiring Shareholder Consent require Board approval
(in some instances are approved by a Board Committee - see
Table of Delegated Authorities)
9 (x)
The provision regarding dividends has been updated to reflect
where the dividend is within the Group Strategic Plan and
references where POL must approve subsidiary dividend
declarations.
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t to Board (incl
luding the new Articles of As
Changes made to reflect best practice and the Code
1-3 Purpose amended to reflect duty to comply with AoA, regulatory
requirements and the Code (where appropriate). Wording
otherwise revised for stylistic reasons.
8 (ii) Approval of the Group’s purpose and values (Code Principle B)
9 (ii) Approval of the Group’s purpose and values (Code Principle B -
which includes strategy but this requires Shareholder approval)
9 (xxx) Addition of approval of Board Committee Terms of Reference
(this also happens in practice)
8 (viii), 9, Addition of a delegation to the Chief Executive (rather than
12&13 Group Executive) which is how the delegation exists in practice
and this addition makes it clear and explicit. There is also the
addition of the requirement for the Board to approve the
division of responsibilities between the chair, chief executive
and senior independent director (Code Principle K)
Changes to reflect current operational practice which is not reflected
in the MRB c
urrently
9 (vi)
The approvals relating to succession planning, talent
management and diversity have been updated to reflect what the
Nominations and Remuneration Committees actually do.
9 (xv - xvii)
The financial commitments section has been updated to reflect
the approvals that Board undertakes in practice as has developed
since the last update to the Matters Reserved to the Board and
the addition of subsidiary companies.
9 (xviii)
Removal of reference to pension investment strategy and
monitoring performance of investment managers which is
undertaken by the trustees.
9 (xx)
Insertion of definition of a senior employee (from the
Remuneration Committee Terms of Reference)
9 (xxi)
Addition of requirement to approve subsidiary director
remuneration (appointment already provided for).
9 (xxii)
Approval of Group Remuneration Policy (work in progress) and
introduction of an STIP scheme plus criteria and amount of
awards (previously only referred to LTIP).
9 (xxiii)
Approval of Group policies amended to refer to key policy
framework which sets out where policies may be approved
10 -11
Updated to reflect current committee structure
14-17
Membership and Secretary sections updated to remove names
and to amend number of Non-Executive directors (being six,
including the Chair, Senior Independent Director and
Shareholder Representative)
20
Removal of a requirement to hold eight Board meetings per
year and two strategy sessions to avoid this being too
prescriptive.
23
Amended to reflect that Group employees may attend Board
meetings at the request of the Chair (previously Post Office), so
this now includes all Group Companies.
24
Addition of ability to pass resolutions in writing which is
permitted under the AoA and happens in practice.
25
Correction of typo within the original Matters Reserved.
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Appendices I Addition of Spend Approval Limits, Authorised Signatory &
Company Seal Authority list & Liabilities and Indemnities
Approvals. Each were previously found in separate documents
and are now collated into this single document for ease of use.
Appendices Addition of a Table of Delegated Authorities which sets out the
approvals path for matters requiring a decision from Executive
Committee to Shareholder (BEIS) and flags where other
sources may require consulting (e.g. relevant policies and
processes).
Audit, Risk and Compliance Committee
ToR
Paragraph
Changes because of changes made in the AOA
8-9 Approval of changes to accounting reference date, practice or
policy required by law or generally accepted accounting policies
or not (in the latter case for Shareholder consent)
Changes made to reflect best practice and the Code
B Revision of headings and categorisation of duties relating to the
Committee’s duties to reflect the model ToR from the
Governance Institute.
2 Monitoring the integrity of the financial statements — wording
reflects the model ToR from the Governance Institute.
5 Review and report to the Board on significant financial reporting
issues
7 Addition of reporting to the Board when not satisfied with
proposed financial reporting
9 Review and approve the statements in the ARA concerning
internal controls and risk management
10 Wording amended to reflect the model ToR which simply
amalgamates duties listed in other areas of the existing ToR
24 Adequacy and security of Whistleblowing arrangements. This
also happens in practice.
25, 27 & 28 I These provisions have been reworded and expanded upon in line
with model ToR. This also happens in practice.
30 - 35, 37 I This section has been taken from the model ToR adapted to the
specific requirements of POL.
Key changes:
- Direct access of Internal Audit to Board and Committee Chair
- Requirement to meet with the internal auditor once a year
without management present
- Determine whether third party independent review is required
39 Review and approve selection procedure for appointment of the
audit firm.
40 If an Auditor resigns, review the issues leading to this and
determine whether any action is required.
42 Review the findings of the external audit (reworded as originally
more limited)
43 Addition of review of representation letters
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45 Monitoring of the independence of the external audit
47 Addition of requirement to meet regularly and at least once a
year without management.
48 Assessment of qualifications, expertise and resources and
effectiveness of audit process
49 Coordination with internal audit to be ensured.
50-52 Reporting responsibilities to the Board, in the ARA
54-57 Authority outlined in more detail (paragraph 58 was part of
original ToR)
61 Inclusion of requirement to be independent.
Chair cannot be a member of the Committee (Code Provision 24)
62 Appointment of Chair and election of cover if chair is not
present.
72 Convening of meetings — added possibility of any members,
external audit or internal audit requesting meetings (as per
Model ToR).
Changes to reflect current operational practice which is not reflected
in the ToR currently
1 Change of Company to Group reflecting the Committee oversight
role of its subsidiaries. Addition of risk appetite monitoring which
happens in practice.
3&4 Approval of the ARA & half yearly results for recommendation to
the Board (also in model ToR for ARC to review results requiring
Board approval). This has been incorporated with the existing
references to what should be reviewed. Other sections are
incorporated into paragraph 5.
7 Approval of Treasury Policy
16 List of risks reviewed with Head of Risk and clarified in simpler
definition, with expansion in footnote.
18 Change of Company to Group reflecting the Committee oversight
role of its subsidiaries.
21 Breach analysis happens in practice.
22 The ARC approves the Group Insurance in practice.
29 This happens in practice and is part of the ARC’s role in monitoring
compliance.
31, Addition of every 2 years on the requirement to approve the
Internal Audit Charter.
53 Amendment of minutes for noting from POMS to receive reports
from subsidiary companies regularly and as requested by the
Committee (reflecting Post Office Insurance and Payzone and fact
that the minutes are not provided, but reports).
70 Notice amended to three working days in line with the Board and
other Committees
Nominations Committee:
Changes because of changes made in the AoA
LN/A
Alignment between the Matters Reserved to Board and the Terms of
Reference
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[N/A
Changes made to reflect best practice because of changes to the
Governance Institute’s model terms which we propose adopting
ToR
Paragraph
18. Review the Group’s Governance Framework.
Changes to reflect current operational practice which is not reflected
in the ToR currently
1.(iii) Approve the appointment of individuals to the Company
subsidiary boards (Payzone now included).
1.(iv) Approve the nomination for appointment and reappointment of
individuals employed by the Company to the First Rate Exchange
Services Holdings Limited (“FRESH”) Board, and approve the
proposal for removal of individuals employed by the Company
from the FRESH Board.
21, Review and approve the processes for Board and Committee
evaluations.
22. Approve the appointment of external facilitators for Board and
Committee evaluations.
23. Review developments in corporate governance
and determine whether changes should be made to the Group’s
governance arrangements.
Remuneration Committee:
Changes because of changes made in the AoA
LN/A
Alignment between the Matters Reserved to Board and the Terms of
Reference
13. Approve for recommendation to the Board’, the establishment of
(or approval of any agreement to establish) a new pension
scheme by any member of the group.
14. Have oversight and approve for recommendation to the Board any
material changes to the pension arrangements for company
employees, in particular affecting the rate of contributions
required to be made?.
15. Approve for recommendation to the Shareholder of any exit
package that would be in excess of the contractual obligations for
the Group Chief Executive and Chief Financial Officer (previously
silent on CEO).
Changes made to reflect best practice because of changes to the
Governance Institute’s model terms which we propose adopting
ToR
Paragraph
41. The Secretary shall provide current and new Committee members
with any training, briefings or induction required under the
supervision of the Chair (change in wording).
1 Which in turn requires the approval of the Shareholder.
2 Executive Directors’ remuneration packages and changes to these, including pensions,
must be approved by the Shareholder.
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sort to Board (including the new Articles of Association)
Changes to reflect current operational practice which is not reflected
in the ToR currently (with relevant ToR paragraph)
LN/A
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t to Board (including the new Articles of As:
Post Office Limited
(“the Company”)
Matters Reserved to the Board
Purpose
The Board is collectively responsible for setting the Company's strategic
direction and primary business objectives. It establishes a robust
governance framework and ensures that the Company has financial and
human resources required to achieve its agreed objectives.
The Company is required to operate in accordance with the Companies Act
2006, the Company’s Articles of Association (the Articles) and any other
applicable and appropriate regulatory requirements. The Company seeks to
comply with the Financial Reporting Council’s UK Corporate Governance
Code 2018, where appropriate.*
The Directors’ statutory duties are set in the Companies Act 2006. One of
the primary duties of the Directors is to promote the success of the
Company for the benefit of its Shareholder? and taking into account the
interests of key stakeholders.
Matters Reserved to the Shareholder
In accordance with the Company’s Articles, the Shareholder may, by
special resolution, direct the directors to take, or refrain from taking, any
specified action (Article 45).
Article 8.1 (A) — (F) sets out certain powers reserved to the Shareholder
regarding Company Matters, which may occur and be effective only with
prior written consent from the Shareholder:
i. Appointment, reappointment or removal from office of any director,
chief executive (or equivalent) or Chair of the Company (Articles 8.1
(A) (i)-(iii), 40, 42, 44)
ii. Any change in the prescribed minimum number of directors of the
company (Article 8.1 (B) (via the Nominations Committee)
iii. The appointment of any person other than a director of the company
as an alternate director of any director of the company (Article 8.1 (C))
iv. Any action taken by any company or the Board (including any
appointment, removal or re-designation) which would have the effect
that the Board ceased to include directors appointed to the post of
Chair, chief executive and finance director (or directors carrying out
the general functions denoted by such posts) (Article 8.1 (D))
v. Approval or variation of director and officer remuneration and/or terms
and conditions of employment or engagement (Articles 8.1(E), 50-52
(via the Remuneration Committee)
1 As required under section 9.4 of the Framework Document between Post Office Limited, the Department of
Business, Energy & Industrial Strategy (BEIS) & UK Government Investments (UKGI) (the Framework
Document).
? BEIS
PUBLIC 1
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Tab 8 Governe t to Board (including the new Articles of Association)
Post Office Limited
Matters Reserved to the Board
vi. Declaration or payment of a dividend or other distribution outside of
the Group Strategic Plan (Article 8.1 (F))
vii. Any distribution, payment or return to Shareholders of the Company
out of capital of the Company (Articles 8.1 (G), 76)
6. Article 8.1 (H) - (Z) sets out the powers reserved to the Shareholder
relating to Group Matters, which may occur and be effective only with prior
written consent from the Shareholder:
i. The alteration or deletion of, or the ratification of any breach of, all
or any part of the Articles (Articles 8.1 (H))
ii. Voluntary winding up or entry into administration of the company
(Article 8.1 (I))
ji. Redemption or purchase of the Company’s own shares or reduction
in share capital (Article 8.1 (J))
iv. Set up of a new subsidiary company or any action relating to shares
in the Company (Article 8.1 (K))
v. Any action relating to shares held by the Company in a subsidiary
or associated undertaking? or in First Rate Exchange Services
Holdings Limited (while an associated undertaking of a member of
the Group) or in any other associated undertaking of a member of
the Group (Article 8.1(L))
vi. The amalgamation or merger of the Company with any other
company or business undertaking (Article 8.1 (M))
vii. The creation or granting of any encumbrance relating to the
Company’s business, undertaking, assets or Shares unless arising in
the ordinary course of business* (Article 8.1 (N))
viii. Making of a loan, granting of credit or giving of a guarantee or
indemnity apart from intra-group arrangements entered into in the
ordinary course of business® (Article 8.1 (O))
ix. The restructure or reorganisation of the Group structure such that
the Company’s shareholding in its subsidiary undertakings is altered
or amended (Article 8.1 (P))
x. The actual or proposed presentation of a petition to appoint an
administrator of the Company (Article 8.1 (Q))
xi. I Change to accounting reference date, practice or policy if different
from the Group and unless required by law or generally accepted
accounting principles (Article 8.1 (R))
xii. The appointment, remuneration of any person who is not a member
of the Group as a director of any member of the Group (other than
3 An associated undertaking is defined an entity over which a company has significant influence but cannot
exercise control (pursuant to International Accounting Standard 28) and normally demonstrated by 20-50%
shares held. A subsidiary undertaking is defined as (a) holds a majority of the voting rights in it, (b) or is a
member of it and has the right to appoint or remove a majority of its board of directors, or (c) is a member of
it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it
(1159 CA 2006).
* This is a factual analysis that must be conducted on a case-by-case basis.
5 As previously defined.
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Tab 8 Governa
t to Board (including the new Articles of Association)
Post Office Limited
Matters Reserved to the Board
xiii.
xiv.
xv.
xvi.
xvii.
xviii.
xix.
XX.
xxi.
the company and a member of the Group that is regulated by the
FCA (Article 8.1 (S)); or
The additional remuneration of any employee (but not salary
arrangements) of a member of the Group in their capacity as a
director of a member of the Group (Article 8.1 (S))
The establishment of (or approval of any agreement to establish) a
new pension scheme by the company (Article 8.1 (T))
The adoption of or any material variation or amendment of a Group
Strategic Plan previously adopted (Article 8.1 (U) and Group
Business Plan (Section 4.2 Framework Document)®
The adoption, material variation or amendment to a Group Strategic
Plan previously adopted (Article 8.1 (V))
Entry into a Relevant Transaction’? the Company’s interest in an
asset is lost meaning it can no longer perform the business of the
Company as per the Group Strategic Plan (Article 8.1 (W))
The entry into or implementation of a Relevant Transaction® by the
Company involving actual or likely spend or liability in excess of
£50,000,000 (Article 8.1 (X))
The entry by the Company into any Relevant Transaction? which is
not on commercial terms and is not considered by the Board to be
in the interests of the company (Article 8.1 (Y))
Any action in relation to the Post Office Trade Mark which prevents
the Group using the Trade Mark, including sale, assignment,
charging, mortgaging, granting of licence or disposal (Article 8.1
(2))
The borrowing of funds from any source other than another member
of the Post Office Group, Article 8.1 (Z) (AA))
Cc. Duties & Responsibilities
7. In addition to its legal duties, the Board has the following specific
responsibilities:
Setting the strategic direction of the Group by developing a Group
Strategic Plan and Group Business Plan;
Establishing the Company’s purpose and values;
Setting the Company’s risk appetite and ensuring a proper
framework exists for the management of risk;
Maintenance of proper accounting and tax records, as required by
the Companies Act 2006;
Maintenance of a sound system of internal control so that the
Company can meet its statutory and regulatory obligations;
6 Subsidiary Company Business Plans require the approval of the Company and Shareholder.
7 Relevant Transaction is any transaction which is not (i) in the ordinary course of business, (ii) intra-group; or
(iii) approved in the Group Strategic Plan (Article 2).
® As previously defined
° As previously defined
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Tab 8 Governance report to Board (including the new Articles of Association)
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Matters Reserved to the Board
vi.
vii.
viii.
xi.
Maintenance of the reputation of the Company as a public institution,
including consideration of new products and activities which may
attract public interest or have an impact on the value of the
Company’s brand;
Ensuring regular and active communications with the Shareholder,
particularly on the Company’s performance against the Strategic
Plan and other key indicators;
Delegation of authority to Board Committees according to their
respective Terms of Reference;
Delegation of authority to the Group Chief Executive;
Formal evaluation of the performance of the Board and Board
Committees; and
Ensuring that any statutory or administrative requirements for the
use of public funds are complied with, having regard to the
requirements under the Articles of Association, the Framework
Document and associated guidance.
8. Pursuant to Article 49, the Board may delegate any of the powers conferred
to them under the Articles to any executive director or committee as they
see fit. Whilst the Board may choose to so delegate, the following matters
are reserved to the Board, unless a specific delegation is in place (the Board
may revoke any delegated authority granted):
Approve for recommendation to the Shareholder on those matters requiring
Shareholder consent, as specified in the Articles (see paragraph B above)!9;
9. Strategy & Management
Approve the Group’s purpose, and values ;
Approve the Funding Agreement with the Shareholder and monitoring
of the achievement of milestones contained within the plan;
Approve the adoption of and review annually the criteria for
measurement of performance (Key Performance Indicators) and
management!!;
Review and monitor necessary corrective action required in light of
reviews of performance against the Group Business Plan;
Approve succession plans for directors of Group Companies and
monitor diversity, talent management and succession plans for senior
leaders of the Group (delegated to the Remuneration and Nominations
Committees).
2° Certain matters may be approved by a Board Committee. Please refer to the Delegated Authorities Table.
11 The Company is required to provide quarterly reports to the Shareholder on the targets and budgets set out
in the GSP and the performance of the branch network (FD Section 13).
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Matters Reserved to the Board
10. Ownership, Capital Structure & Constitution’?
Approve the change of the Company Name, trading name or Registered
Office for any member of the Group
11. Financial Reporting & Controls
i. Approve the Annual Report and Accounts (on recommendation from
the Audit, Risk and Compliance Committee);
ii. Approve the half-yearly results13 (on recommendation from the Audit,
Risk and Compliance Committee);
iii. Approve the recommendation for declaration of dividend and payment
of interim dividend (within the Group Strategic Plan) (Articles 68 —
69)14;
iv. Approve the risk appetite statement (on recommendation from the
Audit, Risk & Compliance Committee);
v. Review the Company’s risk management systems, internal controls
and key systems (delegated to the Audit, Risk & Compliance
Committee);
vi. Approve changes to accounting reference date, practice or policy by
the Company as required by law or generally accepted accounting
principles (delegated to the Audit, Risk & Compliance Committee);
vii. Approve of Group treasury and banking policies, including methods of
mitigating against foreign currency exposure and any use of financial
derivatives (delegated to the Audit, Risk & Compliance Committee);
viii. Monitor the independence of the external auditor (delegated to the
Audit, Risk & Compliance Committee).
12. Financial Commitments
i. Approve the entry into or implementation of a transaction (OPEX spend)
by the Company involving actual or likely spend or liability15 up to
£50,000,000;16
ii. Approve the entry into or implementation of a transaction by
the Group involving actual or likely spend or liability in excess of
£5,000,000 for Post Office Management Services Limited, and
£2,000,000 for Payzone Bill Payments Limited;
iii. Approve changespend over £5,000,000 for the Group (£2,000,00 for
Payzone Bill Payments Limited);
2 All other matters require Shareholder consent (see paragraph B above)
*3 Where produced
4 Declaration or payment of any dividend outside of the Group Strategic Plan requires Shareholder consent
(see paragraph B above). The Company is required to consent declarations of dividends within the Group
Strategic Plan for Subsidiary Companies.
15 See above
*© See appendix for approvals required for unlimited liabilities and indemnities. There are certain matters where
there is a risk of loss or liability or a wider risk which should be escalated to the Board (and, in some instances,
the Shareholder). These instances may also come under the matters requiring Shareholder consent.
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87 of 173
Post Office Limited
Matters Reserved to the Board
iv.
13.
vi.
14.
iii.
iv.
Approve the Group pension strategy and any material changes to
pension arrangements for the Group, in particular reflecting the rate of
contribution made (on recommendation from the Remuneration
Committee).
Appointment and Senior Remuneration
Approve the appointment or removal of the Secretary (Article 66);
Approve the appointment, remuneration or dismissal of senior
employee17 (delegated to the Nominations and Remuneration
Committees);
Approve the appointment, reappointment, removal and remuneration of
directors for Subsidiary Companies18 (delegated to the Nominations and
Remuneration Committees);
Approve the Group Remuneration Policy19 (on recommendation from the
Remuneration Committee);
Approve the introduction of any long or short term incentive scheme,
performance criteria and any awards made under such schemes.
(delegated to the Remuneration Committee)20;
Approve the appointment, reappointment or removal of the Group’s
principal professional advisors, 21 including the external auditor (on
recommendation from the Audit, Risk & Compliance Committee).
Governance
Ensure delivery of obligations on the Company under the Postal Services
Act 2011, including the publication of the annual Network Report and
Postal Heritage Report;
Approve the adoption of the Company policies related to business
operation and/or strategic matters and identified within the approved
policy framework as requiring Board level oversight (some policies may be
approved by Board Committees in accordance with the key policy
framework);
Authorise a Conflict of Interest (Article 54 (A));
Approve overall levels of insurance for the Company, including directors’
and officers’ liability insurance and any arrangement for indemnity of
directors (delegated to the Audit, Risk & Compliance Committee) ;22
!” Defined as any executive who reports directly to the Group Chief Executive Officer, other than executive
directors.
18 The Nomination Committee may also approve the nominations for appointment, reappointment or removal of
any statutory director who is an employee of the Group to an associated undertaking of the Group and the
appointment, reappointment or removal of the Shareholder Representative to an associated undertaking (First
Rate Exchange Services Holdings Limited).
This incorporates the establishment of any profit-sharing, share option, bonus or any other incentive
schemes for employees of any Group Company.
2° Remuneration of Executive Directors requires Shareholder approval.
2 This consists of advisors specifically mentioned in the Group Annual Report & Accounts including but not limited
to, the Group's solicitors, actuary and financial advisors.
The Company must consider if the Group policy is sufficient or whether additional cover is required.
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t to Board (including the new Articles of Association)
Post Office Limited
Matters Reserved to the Board
vi.
vii.
viii.
15.
16.
Approve the adoption of and changes to Matters Reserved to the Board
(including appendices23) and Board Committee Terms of Reference (on
recommendation from the relevant committee for the relevant
committee);
Approve the process for the annual review of Board and Board Sub-
Committee Effectiveness (delegated to the Nominations Committee);
Approve the authority delegated to the Group Chief Executive (or
equivalent) and the division of responsibilities between the chair, chief
executive and senior independent director (on recommendation of the
Nominations Committee);
Approve the Group’s overall corporate governance arrangements
(delegated to the Nominations Committee).
Delegation to Committees
The Board may delegate authority for specified responsibilities to
Committees of the Board. The Terms of Reference for these Committees
will be approved by the Board. The duties of each Committee are contained
in the Terms of Reference. The Committees of the Board are:
a) Audit, Risk & Compliance Committee
b) Nominations Committee
c) Remuneration Committee
The Board has authority to establish additional Committees of the Board
from time to time.
Delegation to the Group Chief Executive Officer
The Group Chief Executive Officer (Group CEO) is granted full authority for
the day-to-day running of the business of the Company, including
authority to make changes to the management, approve agreements
(including novation, extension and/or variation of such agreements), and
to accept risks, rights and obligations on behalf of the Company (including
NDAs, Letters or Intent or exclusivity obligations), other than those
matters reserved to the Board and Shareholder for its decision and
subject to the limit of authority of up to £5,000,000 and any applicable
internal policies and processes.
The Group CEO is also authorised to sub-delegate such authority as he or
she sees fit, including the power to further sub-delegate, provided than
any such sub-delegation shall be within the limits of authority set out
above and evidenced in writing (see Spend Approval Limits Appendix).
2 Including: Spend Approval Limits, Authorised Signatories, Records of Spend Approvals and Authorised
Signatories, Approval of unlimited liabilities and indemnities and Delegated Authorities
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t to Board (including the new Articles of As:
Post Office Limited
Matters Reserved to the Board
17.
iii.
18.
19.
20.
21.
Composition and Governance
Membership
The minimum number of directors is two (Article 37), but there is no
maximum. Appointment and any change to the minimum number of
directors is subject to the appropriate Shareholder approval.
Normally, terms of office will be three years for a maximum of two terms.
However, this is at the discretion of the Shareholder.
The composition of the Board is at the discretion of the Shareholder. The
current composition of the Board is:
a) Non-Executive Chair;
b) One Senior Independent Non-Executive Director;
c) Three Non-Executive Directors;
d) One Shareholder representative; and
e) Two Executive Directors, being the Group CEO and Group Chief
Financial Officer.
Secretary
The Group Company Secretary, or his or her nominee, shall not be a
member of the Board but shall act as Secretary to the Board and shall keep
minutes and records of each meeting, as required by the Companies Act
2006.
Minutes of each meeting will be circulated to the Chair for approval and
then to all members of the Board. Minutes will be formally approved and
signed at the next meeting.
Quorum
The quorum for the transaction of business at a Board meeting shall be
two directors (Article 59).
Meetings
The Board shall meet as often as required, and not less than once every
quarter. A separate Strategy session will be held at least one a year. The
Board may meet in person, by telephone or by other electronic means, so
long as each member can contribute to the business of the meeting
simultaneously (Article 64).
2 This includes any persons holding these positions in the interim.
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t to Board (including the new Articles of Association)
Post Office Limited
Matters Reserved to the Board
22.
23.
24.
25.
26.
Meetings may be convened by the Secretary to the Board, at the request
of the Chair, or any other director, at any time.
Notice of each meeting shall be given to all members of the Board and any
other person required to attend, at least 3 working days before each
meeting.
Other Group employees and/or external consultants may attend for part or
the whole of any Board meeting at the invitation of the Chair.
Resolutions may be made in writing?® if signed by all directors entitled to
receive notice of the meeting (Article 63).
The Non-Executive Directors shall meet at least twice per year without the
executive directors being present.
ANNUAL REVIEW AND APPROVAL
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27. The Board will undertake an annual review of its performance and the
content of the Matters Reserved (subject to the Articles of Association).
The Board will approval any changes to these Matters Reserved pursuant
to the annual review or whenever so required.
Approved by: Date: Version: Effective from:
Post Office Limited Board February 2015 I 1.0 February 2015
[Post Office Limited Board 24/03/2020 2.0 01/04/2020}
28. Appendices
Spend Approval Limits
The Board has delegated to the Group CEO spend approval of up to £5,000,000
and the Group CEO recommends to the Board the following standard spend
approval limits subject to applicable internal policies and processes:?°
Job Title Spend Approval Limit
Group Chief Financial Officer (CFO) I £4,000,000
Group Executive Member £2,000,000
Direct Reports to Group Executive I £250,000
The Group CEO may sub-delegate up to his spend limit of £5,000,000 and
determine the conditions of that delegation. Such delegation must be provided
to the Group Company Secretary in writing.
25 This includes electronic circulation and signature.
26 OPEX spend may be approved in accordance with these levels. CAPEX spend requires prior approval from the
Project Review Board and/or Investment Committee. The spend is measured over the life of the contract or
project.
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t to Board (including the new Articles of Association)
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Matters Reserved to the Board
The Group CFO and Group Executive member may delegate up to their
£4,000,000 and £2,000,000 spend approval limit respectively, on a permanent
or ad hoc basis, to their direct reports or below, provided such delegation is
provided to the Group Company Secretary in writing. For the avoid of doubt,
direct reports to Group Executive members automatically have a £250,000
delegation, unless the Group Executive member advises the Company
Secretariat otherwise.””
Authorised Signatories & Company Seal Authority
The following positions are approved to sign documents that will bind the
Company such as, but not limited to, contracts, statements of work, change
notes, order forms and terms & conditions.”® Signature is subject to
applicable internal policies, processes and documented exceptions:
- Any Statutory Director;
- The Group Company Secretary;
- Any member of the Group Executive; and
- Any Senior Assistant Company Secretary.
The following positions are permitted to sign employment contracts or
similar HR related agreements (for the purpose as specified only) as set out
below:
Job Title Purpose
Employment Recruitment, Leavers & New Joiners’ Contracts
MI Manager
Payroll Manager Contract Changes
Agents On-boarding Team Agents’ contracts
The following positions are permitted to sign franchise agreements as part
of the DMB programme:
Job Title
Head of DMB Programme
Director of Network Development
Any one of the following positions is approved to authenticate the affixing
of the Company Seal pursuant to Article 78 (C):
- A Statutory Director;
- Group General Counsel;
- Group Company Secretary; or
- Senior Assistant Company Secretary.
2? This does not apply to Personal, Executive Assistants or Team Supports who report directly to a Group
Executive member.
28 The Board authorised the Company Secretariat to keep a list of authorised signatories in its meeting on 22
January 2016 (see minute reference 69 of 2016)
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Tab 8 Governa
t to Board (including the new Articles of Association)
Post Office Limited
Matters Reserved to the Board
Records of Spend Approvals and Signatories
The Group Company Secretary is authorised to keep a list of individuals who
hold authority to approve spend, are authorised signatories and may
authenticate the Company Seal from time to time. Any changes in persons
appointed the relevant positions must be notified to the Group Company
Secretary in writing.
Liabilities and Indemnities?9
Certain contracts may include unlimited liabilities and/or indemnities. If this
is the case, the following rules shall apply:
i. If the unlimited liability/indemnity is for one of the following “standard
liabilities”, no additional approval is required and approval is required
under the spend approval limits;
a. Categories of loss that cannot be limited by law:
« death
* personal injury
° fraud
« fraudulent misrepresentation
b. Categories of loss which reflect industry practice:
« breach of third party intellectual property rights (IPR);
« breach of Confidentiality;
« breach of Data Protection; and
« breach of applicable law.
If the liability/indemnity is not a “standard liability” (as listed above), and
is unlimited or is above the Group Chief Executive’s spend approval limit,
additional approval will be required from the Group Chief Financial Officer
and Group General Counsel.
There are certain matters where there is a risk of loss or liability or a
wider risk which should be escalated to the Board (and, in some
instances, Shareholder):°°
* a granting of a security in excess of £5m;>*
* anew area of business which might bring the Group within the
scope of oversight of a regulator to which it has not previously
been subject;??
* a matter which gives rise to risk in excess of £5m in maintaining
service commitment to customers in line with the Group’s social
purpose (for which the Group has an averse risk statement);?>
29 This approach was approved by the Board on 27 March 2018.
2° Please consult the matters reserved to the Shareholder consent in paragraph B above.
3! See also Article 8.1 (AA) & (X)
22 See also Article 8.1(Z)
3 Subject to Article 8.1(X)
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Tab 8 Governance report to Board (including the new Articles of Association)
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Matters Reserved to the Board
* a matter which could risk disruption to the credit facility (averse
risk appetite - the Company is to ensure loan remains below
eadroom);** or
possibility of Competition and
Markets Authority intervention.*°
3 Refer also to the Treasury Policy and Article 8.1(AA)
5 See also Article 8.1(Z)
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ELL 30 6
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ey nal outhoretion of a sec sad under he Artes of Asseation an EIS: Department of Business, Energy & Industrial Strategy
Aaarave: Final authorisation ofa decision as worded under the Articles of Assocation ai ‘The Group/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office
Post Office Limited (POL) Attic smenaaton; Astriston to permit the equet tobe concuered ete nest governance stage, jusuullGra Comal: ost oes mtd (F4), os ‘
(“the Company”) ‘Consent: Permission is granted to proceed with a decision authorised by the Company as worded under the ‘Subsidiary: A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited
Delegated Authorities Articles of Association and FD. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL
The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Association of the Company as effective from 1/4/2020. These should be consulted for
Shareholder as required under the Artes otAssaciation and FD. further information prior to proceeding
Action Required
POL Executive Committees: Board Committee
Decision Group
Ho I «Hy ) ce.
I ae
Project Review
Board
POL Board must develop
8 Group Strategic Plan
(GSP) covering a period
amendment of a Group Strategic Plan previously adopted} The GSP must be
reviewed annually by the
POL Board (FD section
45).
6).
POL Board and
— a Shareholder must
1.2 Adoption of, or variation to, the Group Business Plan (every 12 . . . Pe 4 . . . ermendstion I Approve I 2PProve Individual
months) (FD section 4) ies foyer Subsidiary Business
Plans which feed into the
Group Business Plan.
13, Substantial alteration to the nature of the business of the Company
Unless as specified in the Group Strategic Plan (Article 8.1 (V)); FD
(uonetoossy Jo sejonzy meu ey) Bulpnjoul) pre0g 0} yodes eoueWenoD g qeL
Approve for ‘Aoprove subject
section 3.3 (vi)) 5 P , cegiilinaption 7 a " 2 shereholder
seston'3 OO) ssa Kieasoraved tou stab crenao Tesrarenaser I congene
Plan, any substantia alteration in the nature ofthe business carried
on by any Group company]
1.4 Approval of the Funding Agreement with Government and Approve for
monitoring ofthe achievement of milestones contained within the - : : recommendation : : 2 poprove
plan [Existing Matter Reserved) TOPOL Board
FOL Boards requreaTS
provide quarterly reports
1.5 Approval of the criteria for measurement of performance (Key ‘Approve for to the Shareholder on
Performance Indicators) and management, including annual review 7 7 a recommendation : : a Approve the targa and badpets
of such erteria [Existing Matters Reserved} to POL Board iawn te OFF sod
branch network (PD
Seaton 13)
1.6 Approval of succession plans for directors of Group Companies - : 7 - 7 i . . 7
[Existing Matters Reserved]
Where an Arie had
2.1 The alteration or deletion of, or the ratification of any breach of, all . . ; reahtrovetor I ‘oprove subject I consent I been I breached that
or any part of the Articles; (Article 8.1 A (H)) POL Board consent RCC/ GE and escalated to
Ae.
2.2 Voluntary winding up or entry into administration of any Group
Company (Article 8.1 (1))
The voluntary winding-up or entry into administration of am . . . Anprove for . . . Approve subject
C id ied mvinteael the fail h recommendation to Shareholder Consent
member of the Group, the passing of a special resolution to the oe] share
effect that any member of the Group should be wound -up by the
court or put into administration, the presentation (whether solely or
£41 4096
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OZ/EO/LL-0Z0Z YEW 11 - Buneay AjWUOW 39
“4
Fs
nar iartaihior d's deci heel usr Wes Ai tctaa 2 accel ras BEIS: Department of Business, Energy & Industrial Strat o
eh erinarenien i 8 Guatien ai waver mate Ge See eine om ‘The Group/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office o
Post Office Limited (POL) — 225°0%¢ errecommandation; Autheriaton to permit the equest to be consiaered ot the next governance stage, yrsjer2uatGroup Companies: oat vice mie (P01) oon e
(“the Company”) ‘Consent: Permission ts granted to proceed wih'e decision authorised by the Company as worded under the Subddinys A veoty curted compery'cf Foe: fice Lnvted: Post effice Insurance and Payzone Ql Payments Umked
Delegated Authorities Articles of Association and FD. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL 3
‘The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Association of the Company as effective from 1/4/2020. These should be consulted for
Shareholder as required under the Artes otAssaciation and FD. Ree cuted iota aonneling 2
3
Action Required FA
POL Executive Committees Board Commit $
7 5 5 a
% 8 as Ege > S
Decision 3 2 i as i o ote 3 i; 2 i i Shareholder i
FH Hi ate Executive ii He Ha (BEIS) Notes
& 2 8 iie 8
5s =
ary with ay athe person) oF & peiNon Tor the winding “up oF Bay A
member of the Group, or any proposal for any of the foregoing] =
a
Z3_ Redemption or purchase of the Companys own shares oF reduction $
in share capital (Article 8.1 (J)) @
[The redemption or purchase by any member of the Group of any 2
share in itself or the reduction of the share capital of any member of Approve for Approve subject z
the Group, or any uncalied or unpaid liability in respect thereof, ~ ~ = Tecommendation to ™ . = to Shareholder Consent
ce alanaonteic aad las POL Board consent z
capital redemption reserve or share premium account of any Fi
member of the Group or the passing of any resolution authorising a
any of the foregoing] (Article 8.1 (3)) 8
ZA Set up ofa new subsidiary company oF any action relating to shares >
in an existing Group Company or associated undertaking ' (Article 4
8.1 (K) & (L) [the formation of any subsidiary undertaking or the 8
issue, allotment, purchase, cancellation or transfer of shares, or a
granting of any share rights, in any member of the Group / The sale, : Z . Approve for . . . Baphehereiy Fi
issue, allotment, purchase, cancellation or transfer of any shares by eorrretiaation ‘consent ee =
3 J ; to POL Board
any member of the Group in any subsidiary undertaking or in FRES
Limited (while an associated undertaking of a member of the Group)
or in any other associated undertaking of a member of the Group]
ZS The emalgamation or merger of any member of the Group with any
‘Approve for ‘Aoprove subject
other company or business undertaking (Article 8.1 (M)); - + - ‘recommendation - - - to Shareholder Consent
to POL Board “consent
Zs The creation oF granting of any encumbrance relating to the
Company's business, undertaking, assets or Shares unless arising in
the ordinary course of business? (Article 8.1 (N))
[The creation or granting of any encumbrance over the whole or any
part of the company's business, undertaking or assets or over any
Shares in the company or the entry into any agreement to do so, or . : . code . . . inpprpranitiet I
the same in respect of any member of the Group (other th an, in to POL Board consent
each case, the creation or grant of any lien arising in the ordinary
course of business and/or any charge arising by the operation (or
purported operation) of tite retention clauses and in the ordinary
course of business)
* An associated undertaking is defined an entity over which a company has significant influence but cannot exercise control (psuant to Intemational Accounting Standard 28) and normally demonstrated by 2050% shares held. A subsidiary undertaking is defied as (a)
holds a majority of the voting rights init, (b) oF is a member of it and has the right to appoint or remove a majority of board of directors, or (c) is a member of it and controls alone, pursuant to an agreement with other members, a majorjtof the voting rights in it
(5.1159 Companies Act 2006).
"This is a factual analysis that must be conducted on a caseby-case basis.
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2
ey sc: Fal euthonaton ofa dec ded under the Ailes f Assocation ana FO EIS: Department of Business, Energy & Industral Strategy &
‘Angtave: Final authorisation of a decision as worded under the Articles of Association an ‘The Group/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office ©
Post Office Limited (POL) joortve for recommendation: Authorisation to permit the request to be considered atthe next governance stage, j-scroubiGcaun-Gamanies, font Dies Umer opt) °
(“the Company”) Consent: Permission is granted to proceed wih a decison authorised by the Company as worded under the Subsidiary: A wholly owned company of Post Office Limited: Post ofice Insurance and Payzone Bill Payments Limited
Delegated Authorities frets of Sosociaton on. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL. 3
‘The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Associaton of the Company as effective from 1/4/2020. These should be consulted for
Shareholder as required under the Articles ofAssociation and FD. further information prior to proceeding 3B
3
Action Required FA
OL Executive Committees Board Committee 3
A 5 5 a
q § « oe] Eis 3 s
Decision i “hic Poctad 2829 3 g Shareholder i
H € Prat ecutive I @2E8 He fee (BEIS) Notes 2
i Be] REY ge I $2 I gbe a
« =
TF The restruchure or reorganisation ofthe Group Stnichare such Mat any 7 , 2
Group company’s shareholding in its subsidiary undertakings. Is 7 7 . redberovesfor I I . . ‘Aprcove subject I =
altered or amended (Article 8.1 (P)) to POL Board ‘consent Fj
a
ZB The actual or proposed presentation of a petition to appaint an 5
administrator for any company in the Group (including POL) (Article 3
8.1 (Q)) Approve for ‘Approve subject 3
[The presentation, or proposal for presentation, (whether solely or : e . recommendation to * . * to Shareholder Consent =
POL Board ‘consent >
jointly with any other person) of a petition applying for the z
appointment of an administrator of any member of the Group] 5
s
ZB Any action in relation to the Post Office Trade Mark which prevents 5
the Group using the Trade Mark, including sale, assignment, ES
charging, mortgaging, granting of licence or disposal (Article 8.1 2
@ g
[()) the sale, assignment, charging, mortgaging or outright disposal BH
by any member of the Group of any Trade Mark in any of the Es
Primary Territories, (jt) the granting of an exclusive licence by any Ey
member of the Group which prevents the Group from using any Approve for ‘Approve subject ~
Trade Mark in any of the Primary Territories, (i) the taking of any : 2 : Tetommendetion to I = ; 6 soperchetcer I Consaie
action by any member of the Group with the intention of POL Poard coment
jeopardising any Trade Mark in any of the Primary Territories, (iv)
the taking of any action by any member of the Group whi ch has the
effect of causing any Trade Mark in any of the Primary Territories to
cease to subsist, or (v) the taking of any decision or action by any
member of the Group which has the effect of allowing rights in
respect of any Trade Mark in any of the Primary Territories to lapse]
2.10 Change of the Company Name, trading name or Registered Office ‘Approve for
for any member of the Group. - " recommendation to I : : Approve :
3.1, Declaration or payment of any dividend or other distribution outside a
a se Group Sreegi an by amy member ofthe Group (Arice B.A sero rove on Bans at ive he
[he dectaration or payment of any dividend or the making of any . . . ror soerd I . . gro ser I od payment of an
distribution by the company other than in accordance with the interim dividend (Articles
Group Strategic Pian] 68-69)
3.2. Any dstribution, payment o retum to shareholders ofthe Company . . . I lee I - ; . Mme I ccnae
out of capital of the company (Article 8.1 (G)) POL Board consent
3:3 Any distribution, payment or retum to shareholders ofthe Company Neprove for Subsidiary Company wil
out of capital of the company by a Subsidiary (Subsidiary Company - e - recommendation to I - 2 = Consent = Spprave eaters
Articles) POL Board Board.
L150 96
£1150 16
POL00448719
POL00448719
OZ/EO/LL-0Z0z YOIEW 11 - Bunsey AiUEW 39
“4
Fs
ey sc: Fal euthonaton ofa dec shed under the Arles of Associaton anf EIS: Department of Business, Energy & Industrial Strategy &
nel ouinruien Wy 0 Saaien at winter abn Ge Sie eine om ‘The Group/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office oo
Post Office Limited (POL) —frpveierrconmanton sutorsaton to permite reas tbe cnsered ote nest governance Stage. insane BO) a ayn ayers unted (EOP) e
(“the Company”) Gagamat; Perreleston (s granted to procesd wih decision eutherteed by the Compeny as worded under the ‘Subsidiary: A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited =O.
Delegated Authorities Articles of Association and FD. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL 3
‘The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Association of the Company as effective from 1/4/2020. These should be consulted for
Shareholder as required under the Artes otAssaciation and FD. Ree cuted iota aonneling 2
3
Action Required FA
POL Executive Committees Board Committee $
7 5 5 a
§ g $8 3 3 s
Decision i i 25 i, Poctad 23 ! ig af iy Shareholder id
H t rat mecutive I 2¢2 I Fe Ha (oers) Notes F
: HO] FRE aE] oe I be Hl
i =
3.3 Change to accounting reference date, practice or policy By any a
member of the Group, if different from those previously adopted by A
the Group, unless required by law or generally accepted accounting E
principles (Article 8.1 (R)) a
[The adoption of any accounting reference date or any material Where changes are Fa
variation ye accounting practices and policies to be applied in the rove for Approve rove St eueices by lew cr, 2
arition of th ting practices and policies to be applied in th Anprove fo subject to ‘Approve subject Generally accepted 2
preparation of the accounts of any member of the Group, if different . ; Tecorenereae e Shareholde 5 . incre Consent I accounting principles, 2
from the practices or policies then adopted or applied by other one! Treonsent seneent the POL ARC approve >
members of the Group (other than any accounting practice or policy these changes, ES
required to be adopted by law or required by generally accepted =
accounting principles applying in the place of incorporation of the 8
company or the relevant member of the Group] g
>
Approve The POL Board may FA
3.4 Approval of the Annual Report and Accounts, including any corporate for delegate authorty on an I &
governance statement and any specific reports required by law : : : % recommen : : Approve : 26 hoc basis to 8
[Existing matter reserved] ‘ation to inividuas to finalise or I 3
POL Board a'committee to approve. I 5
‘Approve The POL Board may g
3.5 Approval of any half year financial report or trading statement for for delegate authority on an
lication [Existing matter reserved] . m * > recommen ; ~ ‘Approve : {2d hoc basis to
= TERS Rae Tear dation to Individuals or &
POL Board committee to approve.
3.6 Approval of Group treasury and banking policies, including methods ‘Approve for
of mitigating against foreign currency exposure and any use of : ° recommendatl : Aoprove : : : -
financial derivatives (Existing matter reserved] ‘nto POL ARC
3.7 Approval of the appointment, reappointment or removal of the bs - 3 . . . . . -
external auditor [Existing matter reserved] Aapred
The POL ARC wil review
a a ‘and monitor the Group's
ppeioeatcr Lod risk management
3.8 Approval of Company's risk appetite statement : . recommendatl : recommen : : ‘vprove : dnl nt
‘onto POL ARC ‘ation to systems operat
Lisiabeds systems.
4.1 Making ofa loan, granting of crestor giving of a guarentee or Refer to the Treasury
indemnity by the ‘Group, apart from intra-group arrangements Policy for authorities in
entered into in the ordinary course of business? (Article 8.1 (O)) acai Hoe roe
[save for any intra-group arrangements entered into between wholly fe (one,
owned members of the Group in the ordinary course of business by . . : recommendatonto I = - . ‘Approve subject
any Group Company, the making of any loan (otherwise than by Board toshareholder I Consent
way of deposit with a bank or other institution the normal business “consent
Of which includes the acceptance of deposits or in the ordinary
course of business), the granting of any credit (other than in the
hormal course of business) or the giving of any guarantee oF
> This will be a factually based decisionand taken on a case by case basi.
OZ/EO/LL-0Z0Z YEW 11 - Buneay AjWUOW 39
L130 86
key
Post Office Limited (POL)
(“the Company”)
Delegated Authorities
Articles of Association and FD.
‘Agorave: Final authorisation of a decision as worded under the Articles of Association and FD.
‘Approve for recommendation: Authorisation to permit the request to be considered at the next governance stage.
‘Consent: Permission is granted to proceed with a decision authorised by the Company as worded under the
‘The authorisation Is only valid once consenthas been received from the
‘Shareholder as required under the Articles ofAssociation and FD.
BELS: Department of Busines, Energy & Industrial Stra
ost Ofice Limited (POL), Post Office Management Services Limited (Post office
Insurance (PO!) and Payzone Bil Payments Limited (PZBPL).
‘A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited
ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL
Bficl’ Refers to artles of Associaton ofthe Company flectve fom 1/4/2020, These shoul be consulted for
further information prior to proceeding
POL00448719
POL00448719
Action Required
POL Executive Committees Board Commit
7 ’ 5
Hy g $8 3 ~
Decision i z i 25 F ¢ bedetd 33 ! ig H H iy Shareholder
é Peat Executive I g2ee I Fe Ha (BEIS) Notes
i EB I FESS Her] se I be
? 5 2
indemnity (in each case other than in the normal course of business)
by any Group company]
4.2 The establishment of (or approval of any agreement to establish) a ae Approve for I Approve subject
new pension scheme by any member of the Group (Article 8.1 (T)) : - - POL Remuneration - . recommendation I ‘to Shareholder Corio:
to POL Board aaa
Any proposal should
be reviewed to check
whether Shareholder
consent is required
because of instances
each elements of an
individuat's
4.3 Approval of the Group pension strategy and any material changes to Approve for — farreardein hk 6
Pension arrangements for the Group, In particular the rate of . . : recommendation to} . teeuneanion I Abpoie be approved by the
Contribution made [Existing matters reserved) POL Remuneration To POL Bosra Shareholder and to
check that the
approach taken would
rot run contrary to
public sector pay
uidance which fs
eemed to apply to
Pou.
Ta Entry into @ Relevant Transaction® whereby any Group Companys
interest in an asset is lost meaning it can no longer perform the FH the Company test
business of the Company as per the Group Strategic Pian (Article 8.1 able to exclusively use
aw) the asset for the
[The entry into any Relevant Transaction under which any member remainder of ts useful
of the Group, directly or indirectly, ceases to own or retain any such economic ite,
interest as it may have in any asset in the absence of which the ‘ ” Approve for ie ‘ ae ‘Approve subject ‘Shareholder (POL)
Group might reasonably be considered to be unable to continue to ey had to Shareholder enees Sppravel and cecent
Strategic Plan, except in circumstances under which the relevant fevmerthaneiaane
asset remains available for exclusive use by any one or more Transaction must be
members of the Group for the remainder ofits useful economic hfe approved by the Board
Or until i is fully depreciated;
‘4.5 The entry into or implementation of a Relevant Transaction * by any
member of the Group involving actual or likely spend or ability in
excess of £50,000,000° (Article 8.1 (X)) Approve for ‘Approve subject
[The entry into or implementation of a Relevant Transaction by any 7 recommendation to - 7 to Shareholder Consent
‘consent
member of the Group which involves or Is likely to involve (either
Individually or when taken together with all other related Relevant
“ Relevant Transaction is any transaction which is not (i) in the ordinary course of business,
As previously defined
* See appendix to the Matters Reserved to the Board for approvals required for unlimited liabiltiesind indemnties. There will be instances where there is a risk of ass or
) intragroup; oF (il) approved in the Group Strategic Plan (Article 2)
instances, the Shareholder, for example where a proposal could be deemed tobe “novel or contentious"). These instances may also come under the matters requiring Shareholder consent.
blty or a wider risk, such as reputational risk, which should be escalated to the Board(and, in some
(uonetoossy Jo sejonzy meu ey) Bulpnjoul) pre0g 0} yodes eoueWenoD g qeL
£1140 66
POL00448719
POL00448719
OZ/EO/LL-0Z0Z YEW 11 - Buneay AjWUOW 39
“
F
May: Final authorisation of «dace shed under the Arles of Associaton anf EIS: Department of Business, Energy & Industrial Strateoy &
Aaura¥e: Final authorisation of a decision as worded under the Articles of Assocation an ‘The Group/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office ®
Post Office Limited (POL) joortve for recommendation: Authorisation to permit the request to be considered atthe next governance stage, j-scroubiGcaun-Gamanies, font Dies Umer opt) a
(“the Company”) ‘Consent: Permission is granted to proceed with a decision authorised by the Company as worded under the ‘Subsidiary: A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited
Delegated Authorities ee Nooetnn oro sericcivork Detarnant betwen BEIS (sharencdarh URGE (Shorehakder Represents) 8 POL 8
Aoorave sublect to Sharahalder consent The authorisation i onl valid once consenthas been received from the fl’ Refers to Atle of Association ofthe Company as effective trom 1/4/2020, These shouldbe consuited for 3
Shareholder as required under the Articles ofassocaton and FO. ecrmeirtenbeeaehepemener Fi
8
r 7 8
Action Required FA
POL Executive Committees Board Commit g
: . 5 8
Decision h il «li, Group aii, £83 ty Shareholder 5
} i ¢ I $429 I comme I 2272) 379 i ‘oes) totes 2
i fo FEE GS) G82] gne A
& =
Transactions (other than any related Relevant Transad 3
previously approved under this article Error! Reference source a
not found.s.5 entered into or Implemented in the previous 12 3
inet) the: hcirreri!6f acon iwlowenk or RABI, oF Hb a
payment ofa sum, by any member of the Group which isan amount Fi
in excess of £50,000,000) 5
3
4B The entry by any member of the Group into any Relevant =
Pee apes Hi 4 ‘Anprove for Approve subject >
‘Transaction which is not on commercial terms and is nat considered recover hoprove subject z
by the directors ofthe relevant member of the Group to be in the : - - Pot bears : : : poy Consent Fa
interests of that member of the Group (Article 8.1 (¥)) g
“4:7 The borrowing of funds by any member of the Group from any ‘See Article 8.1 (AA) (a) gQ
source other than another member of the Group (Article 8.1 (AA)) Siblforteonect sone I >
[The incurring of (or entry into of any commitment to incur) any es 8
oeeing Frey maccicolibe Seamte preseonceneare ‘ , : : F : roprove ute I consent 8
borrowing is to be provided from any source other than another ‘consent Es
member of the Group] s
The Group CEO has
delegated authority to
approve OPEX spend
up to 5m and may
4.8 The entry into or implementation ofa transaction (OPEX spend) by __ delegate below this
the Group involving actual or likely spend or lablity? in excess of : i . “Naika . . on . leit.
£5,000,000 (2,000,000 for PZBPL) {Existing Hatter Reserved) POL Board Each Subsidiary has
its own spend
approval limits, See
applicable Matters
Reserved to the
Board
4.9 Approval of Change spend under £2,000,000 for the Group®
{Existing delegated authorty from the Board to the Group CEO} Approve : : : : : : :
“IO Approval of Change spend over £2,000,000 but up to £5,000,000 i" Change spend over
forte Groun®(Bestng delegated suthorty fromthe Board tothe I <Abmovefon, I . ; ; ; ; I amor pzepe wit
pal require POL Board
roup CEO) on toe
approval
” Non-standard unlimited liabilities and indemnities or those capped at £2m and above may be approved byGroup General Counsel and the Company's Chief Financial Officeras part of the Contract Approval Process. Standard liabilities and indemnities do not require
‘additional approvals or Board oversight. There are certain matters where there isa risk of loss or liability or a wider risk which should b escalated to the Shareholder. These instances may also come under the matters requiring Shareholderconsent. Please refer to the
Matters Reserved to the Board,
"This is defined Change spend refers to the CAPEX & Exceptional budget, which is managed by be Group Change team. It does not include OPEX spend or contract approvals, for which the appropriate spend approvals must be considard, If a project's forecast spend
‘exceeds £5m (total CAPEX, Exceptional and OPEX), POL Board approval is required.
as previously defined,
OZ/EO/LL-0Z0Z YEW 11 - Buneay AjWUOW 39
€21 4° OOL
POL00448719
POL00448719
ey nal outhoretion of a sec shed under the Arles of Associaton anf BEIS: Department of Business, Energy & Industrial Strat
‘Angtave: Final authorisation of a decision as worded under the Articles of Association an ‘The Groun/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office
Post Office Limited (POL) {Gorove for recommendation: Authorisation to perma the request to be considered at the nest governance stage, jus. Sil (POI) and Payzone Bill Payments Limited (PZBPL).
(“the Company”) ‘Consent: Permission is granted to proceed with a decision authorised by the Company as worded under the ‘Subsidiary: A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited
Delegated Authorities Articles of Association and FD. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL
‘The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Association of the Company as effective from 1/4/2020, These should be consulted for
‘Shareholder as required under the Artcies ofAssociation and FO. further information prior to proceeding
Action Required
POL Executive Committees Board Commit
: . A
Decle i F ti, I cow I #2. I 885 3 areholder
ecision HI li iis executive ils HP Wi Sharenole notes
Pol I USI He I ue
4.11 Approval of Change spend over £5,000,000 for the Group!” (RRS I Corie ete reconenensossnes'I : 2 Approve .
appointment at the end
5.1 Approval of the recruitment and appointment process for a director Approve for of the recruitment
‘of the Company including engagement terms of external search . . . - . recommendat 5 . Approve I Process to the
agents for appointments and formation of interview panel (FD ‘on to the pase Shareholder.
section 7.3 (ii)) Shareholder ‘Appointment then
requires approvals from
POL Nominations and
Remuneration
Informed not less than
ten Business Days before
the proposed date of
appointment of a
(uonetoossy Jo sejonzy meu ey) Bulpnjoul) pre0g 0} yodes eoueWenoD g qeL
5.2 Appointment, resppointment or removal from offce of any director Seca cls re
oon a ‘ciel executive, interim directors and ‘alternate ‘Approve for ‘Approve for ‘Approval subject appointment: ‘artice 38).
Cirectrs who are nt already directors ofthe Company (Article 8.1 ‘ € ‘ * ~ I ggcommendat, I recommendation I te Sharshader I consent
SBT OS waa ee Te Sa
Sent anal
pecan
decor othe POL Board
(FD section 7.3 (ii)).
“he Sharahaa hal
porn tne Cra ef the
OL Board (secon
730
5.3. Appointment, reappointment or removal of any person as Chair of . i . . I cporowater,, I __Aperove for I approve for I ove I Titesppcntments 2
the Company (Article 8.1 (A) (i), 42 (A), FD section 7) Recerommsmaele I ecommerce II ecomrmenoaat publ ppaniment and
Sah be aecnane
eon ut
seosininens
“here could be
5:4 Any ection tan by any the company or the Board (Intading any inatances where for 8
appointment, removal dr re-designaton) which would have the temporary period the
effect that the Board ceased to include directors appointed to the . . . . - I reRBerOWe for I Approve for I APProve subject Ie I Board did not have
post of Chal, chef executive and finance director (or drecors recammendatio I sacormcnanion I "© Stareho <7 oe
carrying out the general functions denoted by such posts) (Article to POL Board postholders in post
8.1 (D)) where an interim role
of arrangement
° As previously defined.
£2140 LOL
POL00448719
POL00448719
OZ/EO/LL-0Z0Z YEW 11 - Buneay AjWUOW 39
“4
2
i ee a eee BEIS: Department of Business, Energy & Industrial Strat &
‘Auatata; Fine! authorisetion of» decison as worded under the Articles of Assacation an ‘he Grovp/Group Companies: Post Office Limited (POL), Post Otfice Menagement Services Limited (Post Office ©
Post Office Limited (POL) joortve for recommendation: Authorisation to permit the request to be considered atthe next governance stage, j-scroubiGcaun-Gamanies, font Dies Umer opt) a
(“the Company”) ‘Consent: Permission is granted to proceed with a decision authorised by the Company as worded under the ‘Subsidiary: A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited
Delegated Authorities ticles of Association and FD. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL 3
‘The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Associaton of the Company as effective from 1/4/2020. These should be consulted for
Shareholder as required under the Articles ofAssociation and FD. father Laserasic lors proreetiog FA
3
Action Required FA
OL Executive Committees Board Committ 3
Decision i i § Group ; § Eig ; 3 3
off, Group gf!,I 2 Shareholder
FH z ate Executive) 2278 ae Ha (BEIS) Notes
Bou I AP UE) I ge i
« =
requredbowdend—] 3
Shareholder approval. I ©
55 Approval or variation of director remuneration T and/or terms and &
conditions of employment or engagement (Article 8.1 (E)) The Board delegatesto IB
[the approval of or agreement to or any material variation or Commitee the approval I
amendment to: () the remuneration including, without liaton, Approve subject ceomesme I &
salary, share options, bonuses, benefits in kind and pension rights) : . : - : : 10 Shareholder consent I the Shareholder of 3
pald or granted to any director of the company; or (i!) the terms and oe Gaccueme, I 2
conditions of employment or engagement of any of the directors of approved remuneration I 2
the company] policies. &
s
S15 Appamntment, appartment removal and remuneration of 8
executives reporting directly to the Group Chief Executive Officer Rd
wil observe the
(Group Executive), other than executive directors (Existing duty 7 a 4 : 5 a anecore F 5 Raecor end z
within Remuneration and Nominations Committees Terms of Terms (FD Appendix). I
Reference] g
incorporates the Fi
‘establishment of any 2
profit-sharing, share
‘ption, bonus or other
incentive schemes for
‘employees of any Group
‘company.
‘The Group is required to
5.7. Approval of the Group Remuneration Policy (Existing duty with Approve for seek consent for actions
Remuneration Committee Terms of Reference] - : - - : : recommendation I Approve : Felating to shares in
to POL Board Subsidiaries (Artie 8.1
8)
POL will observe the
Public Sector Pay and
‘Terms (FD Appendix 5).
POL director
remuneration is dealt
with in 5.5 and 5.9
5.11 for subsidiaries
SB Approval of the introduction oF any Tong and/or shart term incentive
scheme, the associated performance criteria and any awards made . . . . . . a . .
under such schemes [Existing Matters Reserved}
5.9 Approval of the recruitment and appointment process for a director
(who is not an employee of a member of the Group) to Subsidiary
including formation of interview panel. [Existing duty within - : : - : Approve - : :
Nominations Committee Terms of Reference]
' Encompassing: salary, share options, bonuses(including long-term and short-term incentive plans), benefits in kind and pension rights. Exit packages outside the Group policies and procedures will alsaequire approval
© As defined above.
POL00448719
POL00448719
Key a syericctc Sta deck Siac cds? ha: diticlas'cl/AaactSelh a, BEIS: Department of Business, Energy & Industrial Strategy
‘Angtave: Final authorisation of a decision as worded under the Articles of Association an The Grovp/Group Companies: Post Office Limited (POL), Post Office Management Services Limited (Post Office
eo Office Limited (POL) {Gorove for recommendation: Authorisation to perma the request to be considered at the nest governance stage, jus. Sil (POI) and Payzone Bill Payments Limited (PZBPL).
(“the Company”) ‘Consent: Permission is granted to proceed with a decision authorised by the Company as worded under the ‘Subsidiary: A wholly owned company of Post Office Limited: Post office Insurance and Payzone Bill Payments Limited
Delegated Authorities Articles of Association and FD. ED: Framework Document between BEIS (Shareholder), UKGI (Shareholder Representative) & POL
The authorisation is only valid once consenthas been received from the Article: Refers to Articles of Association of the Company as effective from 1/4/2020. These should be consulted for
Shareholder as required under the Articles ofAssociation and FD. further information prior to proceeding
Action Required
‘expenses that are
reasonably and properly
Incurred.
5.13 Nomination for appointment, reappointment or removal of any
statutory director who is an employee of the Group to an associated
Undertaking of the Group and the appointment, reappointment or
removal of the Shareholder Representative to an associated
undertaking [Nominations Committee Terms of Reference]
“4
Fs
&
©
oO
g
g
8
3
B
8
3
8
POL Executive Committees Board Commit 3
7 5 5 a
% 8 as Ege > S
Decision 3 i « i, ote 3 i; 2 i i Shareholder i
He Hi Fig I secue I 32:9) 348 i (oers) Notes F
i fo FEE GS) G82] gne A
i =
S-10 Appointment and remuneration ™ of any parson wha i not am aasjouas FA
employee of a member of the Group as a director of any Group ‘Approve tor I Approve for I Approve subject appointments to Post II &
oripony’ Unless tat congsanyis ranuieted Gyitie'RcAy (avaice BA. é - 7 : - I recommendatio I recommendation I ‘to'Shareholder I Consent I Office Insurance donot I 5
sia ‘nto POL Board I “to POL Board consent require Shareholder a
(S) ( consent. Fa
5.11 The additional remuneration of any employee (not Including any Under the subsidiary o
salary arrangements for such employee) of a member of the Group Approve for Approve for Approve subject articles, directors are Fi
in their capacity as a director of a Group Company (Article 8.1 : : - - = I recommendatio I recommendation I ‘to'Shareholder I Consent I not ented to 3
(50) nto POL Board I “to POL Boara consent femuneratin fr ther I =
Services tothe company I =
fs directors or for any I
‘ther service which tney I
5.12 Appointment, reappointment, removel and remuneration of underateinther I
statutory directors of Subsidiary (where Shareholder Consent is not cotpeccete I a.
required, cf. 5.10 & 5.11 above) [Existing duty within Remuneration is * * * . Approve: ‘Approve 2 § ‘executive director. 2
and Nominations Committees Terms of Reference] Brreaors we entero I
&
8
‘This applies to First Rate
Services
- 5 - - : Approve : : : xc
Holdings Limite.
The appomnted Secretary
r ¥ - - ; : : Approve : shall be the Group
‘Company Secretary.
5.13 Appointment and removal of a Secretary (Article 66)
OZ/EO/LL-0Z0Z YEW 11 - Buneay AjWUOW 39
5.14 Appointment, reappointment oF removal of the Group's principal “aprove Tor
professional advisors'® [Existing Matter Reserved] - : - recommendation to} Aoprove A
POL Board,
6.1 Any change to the prescribed minimum number directors of the . . . . . RTT eerove aes
company (Article 8.1 A (B)) ice] poy Consent
The Group Conflicts of
Interest Policy is,
reviewed and
approved by the ARC
annually and directors
6.2 Authorisation of Conflicts of Interest for Board Directors (Article 54) - : é 2 : " : a appointment letters
set out the
requirements for
advising/ receiving
approval for
‘additional external
appointments.
€L1 4° ZOL
© As defined above.
As defined above,
'S This consists of advisors specifically mentioned in the Group Annual Report & Accounts including but not limited to, the Grogs solicitors, actuary and financial advisors.
£21 40 COL
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6.5 Adoption of and changes to Matters Reserved to the Board (including feccAPmrove for I recommend I ,,APProve for, I Approve for ‘Any changes are subject I =
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Delegated Authorities [Existing Matter Reserved) tevant committee I -POLOBEE I "“Womco Tol yas Nana oeclanar 8
relevant committee I POLS I “womco ToR) I (Remco ToR) Framework Document, I
6.6 Approval of the delegation to the Group Chief Executive and the ‘Approve for bed
division of responsibiities between the chair, chief executive and the : : : . - I recommendatio. . Approve 5 2
senior independent director [Addition due to Code, best practice] 1h to POL Board z
G7 Process for the annual review of Board and Board Committee 7 5 . ara - - - 2
Effectiveness [Nominations Committee Terms of Reference] 8
The Board delegates to I ©
the Nominations a
Committee approval of @I
number of elements of I 3.
‘ovemance and
Feviewing and
Approve for monitoring corporate
6.8 Approval of the Group's overall corporate governance arrangements - 7 . - . I caess. . — . ‘governance
Texsting Matter Reserved} mrto POL Board omplance but decisons
‘onthe consttutionel
Socuments, including
the Articles of
‘Assocation and Matters
Reserved to the Board
fequire Board approval
Tab 8 Go}
t to Board (including the new Articles of As:
Post Office Limited
(“the Company”)
Terms of Reference of the Audit, Risk and Compliance Committee
The Audit, Risk and Compliance Committee (the “Committee”) is a Committee of
the Post Office Limited Board (“the Board”) from which it derives its authority and
to which it reports after each meeting. Its authority is always subject to the powers
and duties of the Board, as set out in the Articles of Association.
A.
de
Where publ
PURPOSE
The purpose of the Committee is to assist the Board of Directors in fulfilling
its fiduciary responsibilities by:
i. Contributing an independent view on the accounting, financial control
and financial reporting practices of the Group’;
ii. Taking all reasonable steps to ensure accurate and informative
corporate financial reporting and disclosures which meet appropriate
accounting and corporate governance standards; and
iii. Providing oversight of the Group’s risk management systems,
operational controls and key systems, including monitoring
exposures to the Group Risk Appetite.
DUTIES AND RESPONSIBILITIES
Financial Reporting
The Committee shall:
Monitor the integrity of the financial statements of the Company, including
its annual report and half yearly reports and any other formal statements
relating to its financial performance, and review and report to the board on
significant financial reporting issues and judgements which those statements
contain having regard to matters communicated to it by the auditor.
Review and approve for recommendation to the Board the Annual
Report and Accounts, including but not limited to:
i. Reports of the External Auditor;
ii. any proposed changes in presentation of the financial statements or
accompanying notes which the auditors may recommend; and
iii. the Management letter.
Review and approve for recommendation to the Board the half year
financial report or trading statement for publication.
e Limited and it
Payzone Bill Pa’
ndertakings: Post Office Management Services
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t to Board (including the new Articles of As:
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Terms of Reference of the Audit, Risk and Compliance Committee
5.
10.
11.
Review and report to the Board on significant financial reporting issues,
including, but not limited to:
i. the consistency of, and any changes to, significant accounting policies
both on a year on year basis and across the Company/Group;
ii. the methods used to account for significant or unusual transactions
where different approaches are possible;
iii. whether the Company has followed appropriate accounting standards
and made appropriate estimates and judgements, taking into account
the views of the External Auditor;
iv. the clarity and completeness of disclosure in the Company's financial
reports and the context in which statements are made;
v. all material information presented with the financial statements, such as
the business review and the corporate governance statements relating
to the audit and to risk management; and
vi. an overview of the extent to which the Annual Report and Accounts are
fair balanced and provide the information necessary to the Shareholder?
to assess the Company’s performance, business model and strategy.
Report to the Board where the Committee is not satisfied with any aspects
of the proposed financial reporting by the Company;
Approve the Group Treasury and banking policies, including methods of
mitigating against foreign currency exposure and any use of financial
derivatives.
Approve for recommendation to the Shareholder any changes to the
accounting reference date, practice or policy by any Group Company, if
different from those previously adopted by the Group, unless required by law
or generally accepted accounting principles.
Approve any changes to accounting policies required by law or generally
accepted accounting policies.
Internal Controls and Risk Management Systems
The Committee shall:
Along with the external and internal auditors, monitor the adequacy and
effectiveness of the Company's internal financial controls and other internal
control and risk management systems.
Review recommendations for the improvement of the Company’s internal
controls, processes and systems.
The Department for Business, Energy and Industrial Strategy
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Tab 8 Governance report to Board (including the new Articles of Association)
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Terms of Reference of the Audit, Risk and Compliance Committee
12.
13.
14,
15;
16.
17.
18.
19.
20.
21.
22.
This
Review and approve the statements to be included in the Annual Report
concerning internal controls and risk management.
Review the overall risk management framework and strategy in place for
the Group including its risk appetites and tolerance.
Review the Company’s overall risk position and periodically invite
management to outline risk management strategy and status within their
specific business units.
Review management's assessment of the degree of risk the Company
prudently incurs in achieving a reasonable balance between the cost of
managing risk and control systems and the benefits derived.
Review areas of specific risk as highlighted by management, including
enterprise and business risk.*
Monitor the Risk and Compliance Committee activities and receive summary
reports as appropriate.
Review legal, regulatory and any other matters that may have a material
impact on the financial statements, related Group compliance policies, and
programmes and reports prepared to manage and monitor Group compliance
policies.
Review whether any remuneration policy adopted by either the Company or
its subsidiaries, or the implementation of any such policy is consistent with
the risk appetite particularly in relation to conduct risk.
Monitor the impact of any new legislative, regulatory, market or other
developments which could materially or adversely affect the Group.
Receive reports on specific breaches and incidents and review management
plans for resolution. The Committee will also review management plans for
root cause analysis resulting from breaches and issues.
Approve the overall levels of insurance for the Group, including directors’
and officers’ liability insurance and any arrangements for indemnity of
directors.
Compliance, Whistleblowing and Fraud
The Committee shall:
cludes, but is not limited to:
ices
Limite
existing and
reputational risk,
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Post Office Limited
Terms of Reference of the Audit, Risk and Compliance Committee
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
° The
the Modern Sia’
Review with the internal auditors and the external auditors the results of
any review of the compliance with the Company’s codes of ethical conduct
and similar policies including whistleblowing®.
Review at least annually the adequacy and security of the Company's
arrangements for its employees and contractors to raise concerns, in
confidence, about possible wrongdoing in financial reporting, regulatory
breaches or other matters. The Committee shall determine that these
arrangements allow proportionate and independent investigation of such
matters and appropriate follow up action
Review the Group’s procedures for detecting fraud and the systems and
controls for prevention of bribery and any non-compliance.
Review any summary of frauds, thefts and other irregularities of any size.
Review the regular reports from the Money Laundering Officer and monitor
he adequacy and effectiveness of the Group’s anti-money laundering systems
and controls.
Review regular reports from the Director of Compliance and monitor
adequacy and effectiveness of the Group’s compliance function.
Review late statutory filings and the circumstances around such lateness.
Internal Audit
The Committee shall:
Approve the appointment or termination of appointment of the Head of
Internal Audit.
Approve the Internal Audit Charter every two years®.
Review and approve the annual Internal Audit Plans, including any
changes to these plans, to ensure they are aligned to the key risks of the
business and review reports on work carried out. The review should include
methods employed by the internal auditors to assess risk and to prioritise
the various audit proposals identified in the annual plan.
Ensure internal audit has unrestricted scope, the necessary resources and
access to information to fulfil its mandate.
ures fi pliance with
y Act 2015.
e of the cha
e e of d
to staff, data and sy:
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Terms of Reference of the Audit, Risk and Compliance Committee
34,
35.
36.
37.
38.
39.
40.
41.
42.
Aud
Ensure the Internal Auditor’ has direct access to the Board Chair and to
the Committee Chair, and is accountable to the Committee.
Monitor and review annually the effectiveness of the internal audit
function in the context of the Group’s overall risk management system and
the work of compliance, finance and the external auditor and as part of this
assessment:
i. Meet with the Head of Internal Audit without the presence of
management
ii. Review the annual internal audit plan work and results
iii. Determine whether it is satisfied that the quality, experience and
expertise of internal audit is appropriate for the business
iv. Review actions taken by management to implement the
recommendations of internal audit and to support the effective working
of the function.
Ensure the independence of the internal auditor including an annual review
of any non-audit services provided by internal audit.
Determine whether an independent, third party review of processes is
appropriate.
External Audit
The Committee shall:
Approve for recommendation to the Board the appointment,
reappointment or removal of the independent external auditors, the
proposed fees (in consultation with management) and the acceptance of
the scope and general extent of the engagement.
Review and approve the selection procedure for the appointment of the
audit firm in accordance with applicable regulatory requirements, ensuring
that all tendering firms have access to all necessary information and
individuals during the tendering process.
If an Auditor resigns, review the issues leading to this and determine
whether any action is required.
Review and approve the agreed annual external audit plans and approach
to risk assessment and the scope and plan of their audits.
Review the findings of the audit with the external auditor. This shall include
discussing any major issues which arose during the audit including (but not
limited to) key accounting and audit judgement and the levels of error
identified.
internal Auditor include the Head of Internal Audit (or their representative) and the Internal
ide
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43. Review any representation letter(s) requested by the External Auditor
before they are signed by management.
44. Review the management letter and management’s response to the
auditor's findings and recommendations.
45. Monitor and review annually the independence of the external auditors
including level of fees paid, an annual review of any non-audit services
provided by the external auditors and auditor’s processes for maintaining
independence.
46. Approve the Group’s policy on non-audit services by the auditor.
47. Meet regularly with the external auditor (including once at the planning
stage before the audit and once after the audit at the reporting stage) and,
at least once a year, meet the external auditor without management being
present, to discuss the auditor’s remit and any issues arising from the audit.
48. Review annually the qualifications, expertise and resources of the external
auditor and the effectiveness of the audit process, which shall include a
report from the external auditor on their own internal quality procedures,
an assessment of the quality of the audit, handling of key judgement by the
auditor and the auditor’s response to questions from the Committee.
49. Ensure co-ordination of the external audit with the activities of the internal
audit function.
c. REPORTING RESPONSIBILITIES
50. The Chair shall report formally to the Board on its proceedings after each
meeting on all matters within its duties and responsibilities and shall also
formally report to the Board on how it has discharged its responsibilities.
This report shall include:
i. the significant issues that it considered in relation to the financial
statements (required under paragraph 5) and how these were
addressed;
ii. its assessment of the effectiveness of the external audit process
(required under paragraph 48), the approach taken to the
appointment or reappointment of the external auditor, length of
tenure of audit firm, when a tender was last conducted and advance
notice of any retendering plans; and
iii. any other issues on which the board has requested the Committee’s
opinion.
51. Advise the Board on any area it deems appropriate within its remit where
action or improvement is needed.
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Tab 8 Governance report to Board (including the new Articles of Association)
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Terms of Reference of the Audit, Risk and Compliance Committee
52.
53.
54.
55.
56.
57.
58.
The Commi
financial statem
assessment of v
Report on its activities in the Group’s annual report. The report should
describe the work of the Committee, including®:
i. the significant issues that the Committee considered in relation to
the financial statements and how these issues were addressed;
ii. an explanation of how the Committee has assessed the
independence and effectiveness of the external audit process and
the approach taken to the appointment or reappointment of the
external auditor, information on the length of tenure of the current
audit firm, when a tender was last conducted and advance notice
of any retendering plans; and
iii. an explanation of how auditor independence and objectivity are
safeguarded if the external auditor provides non-audit services,
having regard to matters communicated to it by the auditor.
The Company's Subsidiary Companies shall provide reports to the
Committee on a regular basis and as requested by the Committee.
AUTHORITY
The Committee is authorised to:
Seek any information it requires from any employee of the company in
order to perform its duties.
Obtain, at the company’s expense, independent legal, accounting or other
professional advice on any matter if it believes it necessary to do so.
Call any employee to be questioned at a meeting of the committee as and
when required.
Have the right to publish in the company’s annual report, details of any
issues that cannot be resolved between the committee and the board. If
the board has not accepted the committee’s recommendation on the
External Auditor appointment, reappointment or removal, the annual
report should include a statement explaining the committee’s
recommendation and the reasons why the board has taken a different
position.
Conduct or authorise investigations into any Group matters within the
Committee’s cope of responsibilities.
nt in deciding which
include at least
g concern and the
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Terms of Reference of the Audit, Risk and Compliance Committee
59.
60.
61.
62.
63.
64.
65.
66.
67.
In the absence of express authority from the Board, the Committee will
not, without the concurrence of both management or discharge of the
independent auditors, have either the responsibility or authority for the
altering of the financial statements or the accounting procedures of the
Group.
COMPOSITION AND GOVERNANCE
Membership
The Chair and members of the Committee will be appointed by the Board,
acting on the recommendation of the Nominations Committee.
The Committee shall consist of at least two independent non-executive
directors and only independent non-executive directors shall be eligible to
be members of the Committee. The Chair shall not be a member of the
Committee.
The Committee Chair shall be appointed by the Board. In the absence of
the Committee Chair and/or an appointed deputy at a Committee meeting,
the remaining members present shall elect one of themselves to chair the
meeting.
The Chair of the Company and Executive Directors may be invited to
attend any meeting, or any part of any meeting, by the Committee Chair.
The Group Chief Financial Officer, the Group General Counsel, the Head of
Risk, the Director of Compliance and the Head of Internal Audit (or those
holding positions with responsibility for such roles, howsoever named) will
be permanent invitees.
The External Auditors may attend all or part of any Committee meeting at
the invitation of the Chair. As a minimum the External Auditors will attend
to present their external audit plan for approval and to present their
reports.
Quorum
Quorum shall be two members, of whom one will have recent and relevant
financial experience.
Committee Secretary
The Company Secretary, or his or her nominee, shall act as Secretary to
the Committee and shall attend all meetings to keep minutes and record
actions.
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Terms of Reference of the Audit, Risk and Compliance Committee
68.
69.
70.
ids
72.
73.
74.
Frequency
The Committee shall meet as often as required but at least three times per
year.
Governance
Meetings may be held in person or by telephone or other electronic means,
so long as all participants can contribute to the meeting simultaneously.
Notice of each meeting shall be given to all those entitled to participate at
least three working days before the meeting. Meetings shall be planned in
accordance with key reporting and financial planning dates.
Meetings for the Committee will be convened by the Secretary, at the
request of Chair or any of the members and the External Auditor or Head
of Internal Audit, if they consider it necessary. The Secretary will be
responsible for setting the venue date and time of meetings in consultation
with the Chair. All papers supporting the meeting will be issued in good
time, one week in advance of the meeting date.
The Chair will report regularly to the Board. Minutes of each Committee
meeting will be circulated to all members of the Committee and, once
agreed, to all members of the Board.
The Company will provide current and new Committee members with any
training, briefings or induction required. The Company Secretary, The
Group Chief Financial Officer, the Group General Counsel, the Head of Risk,
the Director of Compliance, the Head of Internal Audit (or those holding
positions with responsibility for such roles, howsoever named) and the
External Audit Partner will keep members informed of relevant published
guidance as necessary.
ANNUAL REVIEW AND APPROVAL
The Committee will undertake an annual review of its performance and the
Terms of Reference. The outcome of these review will be recommended to
the Board for approval (notwithstanding amendments approved by the
Committee whenever so required).
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Approved by: Date: Version: Effective from:
Post Office Limited Board
23 January 2013
ey
23 January 2013
Post Office Limited Board
26 March 2014
26 March 2014
Post Office Limited Board
22 September 2015
22 September 2015
Post Office Limited Board
24 March 2020
1.2
1.3
2.0
01 April 2020
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Terms of Reference of the Audit, Risk and Compliance Committee
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t to Board (including the n
w Articles of As:
POST OFFICE LIMITED
(“the Company”)
Terms of Reference of the Nominations Committee
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The Nominations Committee (the “Committee”) is a Committee of the Company Board
(“the Board”) from which it derives its authority and to which it reports after each
meeting. Its authority is always subject to the powers and duties of the Board, as set
out in the Articles of Association.
A. PURPOSE
1. The purpose of the Committee is to:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Recommend to the Board the appointment, re-appointment or
removal of individuals to/ from the Board of Post Office Limited
Recommend to the Board the appointment of individuals to the
Board committees
Approve the appointment of individuals to the Company subsidiary
boards
Approve the nomination for appointment and reappointment of
individuals employed by the Company to the First Rate Exchange
Services Holdings Limited (“FRESH”) Board, and approve the
proposal for removal of individuals employed by the Company from
the FRESH Board
Approve the appointment or removal of executives who report
directly to the Group Chief Executive Officer
Recommend to the Board the appointment or removal of the Group
Company Secretary
Succession planning for Board and oversight of succession planning
at Group Executive and senior leadership level
Review and monitor the Group’s overall corporate governance
arrangements.
2. The consent of the Shareholder is required for Post Office Limited Board
appointments and will be obtained prior to recommendations to the Board?.
B. DUTIES AND RESPONSIBILITIES WITH REGARDS TO THE COMPANY
Board and Senior Executive appointments
3. Review the structure, size and composition of the Board (taking account of
the skills, experience, knowledge and diversity of its members), to ensure
that the roles of Board Chairman, Group Chief Executive, Group Chief
Financial Officer, Senior Independent Director and Non-Executive Directors
are filled and to recommend changes to the Board’s composition as
necessary.
4. Monitor the independence, and process for evaluation, of Board committees
and the skills and experience available within the Board, in order to
1 Post Office Management Services Limited (Post Office Insurance) and Payzone Bill Payments Limited.
Shareholder approval would be required for the appointment of Non-Executive Directors to non FCA regulated
subsidiaries.
2 The Department for Business, Energy and Industrial Strategy.
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t to Board (including the new Articles of As:
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Terms of Reference of the Nominations Committee
10.
11.
12.
recommend new appointments to committees, or the replacement of
individuals on those committees, as required from time to time.
Review the results of any Board and Committee evaluation process which
may relate to the time required from non-executive directors and whether
non-executive directors are spending enough time to fulfil their duties, the
composition of the Board, any of its Committees or the Group Executive.
Review and approve for recommendation to the Shareholder the re-
appointment of any non-executive director at the conclusion of their
specified term of office having given due regard to their performance and
ability to continue to contribute to the Board in the light of knowledge, skills
and experience required.
Approve for recommendation to the Shareholder the process for
identifying and nominating candidates for appointment to the Board,
including the formulation and approval of appropriate role descriptions and
specifications and considering candidates from a wide range of backgrounds,
on merit and against a range of objective criteria and with due regard for
the benefits of diversity on the Board, including gender, and which seek to
attract a wide range of talent and promote diversity within the organisation.
Such deliberations should also assess whether appointees have enough time
available to devote to the position.
Approve for recommendation to the Board, the appointment, re-
appointment or removal from office of any statutory director including the
Group Chief Executive of the Company, Chief Financial Officer, interim
directors and alternate directors who are not already directors of the
Company.
Approve for recommendation to the Board, the appointment,
reappointment or removal of any person as Chair of the Company.
Review for each proposed appointment the respective merits of open
advertising and the use of specialist advisers to facilitate the search for
appropriately qualified candidates and recommend for approval the
Shareholder.
Approve the engagement terms of external search agents for appointments
to the POL Board once Shareholder approval has been obtained.
Approve recommendations made by the Group Chief Executive on
appointments to or removal of executives who report directly to him.
Succession planning
13. Ensure that the business puts in place development and succession plans
for the Board the Group Executive and senior leadership, taking into account
the challenges and opportunities facing the Company and the skills and
expertise needed for leadership of the Post Office in the future.
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including the new Articles of As:
Post Office Limited
Terms of Reference of the Nominations Committee
14. Review, on behalf of the Board, succession planning for Board and senior
leadership at executive level.
15. Ensure that any proposed appointee to the Board discloses other business
interests and any potential conflict of interest, in line with the
recommendations of the UK Corporate Governance Code (the Code) and the
precepts of the Nolan Committee on Standards in Public Life.
16. Engage with the Remuneration Committee in respect of new hires, to
ensure that the proposed package for new senior appointments reflects the
responsibilities of the role and is designed to attract talent but is not
excessive.
17. Review on behalf of the Board any matters relating to the continuation in
office of any director or Group Executive Member and the Group Company
Secretary, including the suspension or termination of any contract of
employment or contract for services, subject to the provisions of the law.
Corporate Governance
18. Review the Group’s Governance Framework.
19. Review and approve the processes for Board and Committee evaluations.
20. Approve the appointment of external facilitators for Board and Committee
evaluations.
21. Review developments in corporate governance and determine whether
changes should be made to the Group’s governance arrangements.
22. Ensure that on appointment to the Board, non-executive directors receive
a formal letter of appointment setting out clearly what is expected of them
in terms of time commitment, committee service and involvement outside
Board meetings.
23. Note the appointment of any director to executive or other office in
accordance with the Conflicts of Interest Policy and letter of appointment for
Non-Executive Directors.
C. DUTIES AND RESPONSIBILITIES WITH REGARDS TO THE COMPANY
SUBSIDIARY BOARDS
Board and senior executive appointments
24. Review the structure, size and composition of the boards (taking account
of the skills, experience, knowledge and diversity of its members), to ensure
that the key roles are filled and to recommend changes to the board
composition as thought necessary.
25. Approve the process for identifying and nominating candidates for
appointment to the boards, including the formulation and approval of
appropriate role descriptions and specifications and considering candidates
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26.
27.
31,
34.
35.
36.
37.
from a wide range of backgrounds, on merit and against a range of objective
criteria and with due regard for the benefits of diversity on the boards,
including gender, and which seek to attract a wide range of talent and
promote diversity within the organisation. Such deliberations should also
assess whether appointees have enough time available to devote to the
position.
Approve the appointment, reappointment, removal of statutory directors
from any subsidiary company (where Shareholder Consent is not required).
Review and approve the re-appointment of any non-executive director at
the conclusion of their specified term of office having given due regard to
their performance and ability to continue to contribute to the boards in the
light of knowledge, skills and experience required.
Review on behalf of the Board any matters relating to the continuation in
office of any board director, including the suspension or termination of any
contract of employment or contract for services, subject to the provisions of
the law.
REPORTING RESPONSIBILITIES
The Committee Chair (the Chair) shall report to the board after each
meeting on the nature and content of its discussion, recommendations and
action to be taken.
Report to the Board whatever recommendations it deems appropriate on
any area within its remit where action or improvement is needed.
Report on its activities in the Company’s annual report describing the
work of the Committee, including:
i. The process used in relation to appointments, its approach to
succession planning and how both support the development of a
diverse pipeline.
ii. How board evaluation has been conducted, the nature and extent
of an external facilitator’s contact with the board and individual
directors, the outcomes and actions taken, and how it has
influenced or will influence board composition.
If an external search consultancy has been engaged, it should be identified
in the annual report alongside a statement about any other connection it
has with the company or individual directors.
AUTHORITY
The Committee is authorised by the Board to obtain, at the company’s
expense, outside legal or other professional advice on any matters within
its terms of reference.
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t to Board (including the new Articles of As:
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Terms of Reference of the Nominations Committee
F. COMPOSITION AND GOVERNANCE
Membership
38. The Committee Chair (the Chair) and members of the Committee will be
appointed by the Board, acting on the recommendation of the Nominations
Committee and in consultation with the Chair of the Remuneration
Committee.
39. In the absence of the Chair of the Committee at any meeting, the
Committee members present shall determine who shall chair the meeting.
40. It shall consist of three members, including at least two independent non-
executive directors.
41. The Chairman of the Company shall chair the Committee.
Quorum
42. The quorum necessary for the transaction of business shall be two
members. In the absence of the Chair at any meeting, the Committee
members present shall determine who shall chair the meeting.
Committee Secretary
43. The Company Secretary, or his or her nominee, shall act as Secretary to
the Committee and shall attend all meetings to keep minutes and record
actions.
Frequency
44. The Committee shall meet as often as required but at least two times per
year.
Governance
45. Meetings may be held in person or by telephone or other electronic means,
so long as all participants can contribute to the meeting simultaneously.
46. Notice of each meeting shall be given to all those entitled to participate at
least three working days before the meeting.
47. Meetings for the Committee may be convened by the Secretary in
consultation with the Chair, or by any member of the Committee, at any
time. The Secretary will be responsible for setting the venue date and time
of meetings in conjunction with the Chair. All papers supporting the
meeting will be issued in good time, one week in advance of the meeting
date.
48. Minutes of each meeting will be circulated to all members of the Committee
and, once agreed, to those members of the Board who have no personal
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t to Board (including the new Articles of Association)
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Terms of Reference of the Nominations Committee
49,
50.
Si.
52.
53.
54.
interest in the matters discussed. Where a conflict of interest exists, the
Company Secretary will provide sufficient information to the full Board to
provide an understanding of the matter(s) considered.
The Committee Secretary shall provide current and new Committee
members with any training, briefings or induction required under the
supervision of the Chair.
Only members of the Committee have the right to attend Committee
meetings. The Group Chief Executive and the Group Chief People Officer
(or the holder of any equivalent position) and external advisors shall be
informed of the date of each meeting and may be invited by the Chair to
attend all or part of any meeting, as and when appropriate.
The Committee shall have access to sufficient executive time and resources
in order to carry on its duties, including access to the Group Company
Secretary and members of the Human Resources team.
The Committee shall have authority to appoint executive search
consultants and to obtain, at the Company’s expense, legal or other
professional advice on matters within its terms of reference as required,
up to a financial limit determined by the Board.
If there should be disagreement between the Committee and the full
Board, the Chairman of the Board shall make time available for discussion
of the issue so that the matter may be resolved.
ANNUAL REVIEW AND APPROVAL
The Committee will undertake an annual review of its performance and the
Terms of Reference. The outcome of these review will be recommended to
the Board for approval (notwithstanding amendments approved by the
Board whenever so required).
Approved by: Date: Version: Effective from:
Post Office Limited Board 25/11/2015 1a 25/11/2015
[Post Office Limited Board 01/04/2020 2 01/04/2020}
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Tab 8 Governance report to Board (including the new Articles of Association)
POST OFFICE LIMITED
(“the Company”)
Terms of Reference of the Remuneration Committee
The Remuneration Committee (the “Committee”) is a Committee of the Company
Board (“the Board”) from which it derives its authority and to which it reports
after each meeting. Its authority is always subject to the powers and duties of
the Board, as set out in the Articles of Association.
A. PURPOSE
a Fa The purpose of the Committee is to:
i. Ensure that appropriate group remuneration strategies are in place
for (the Company) and its subsidiaries designed to attract, retain and
motivate the executive management and workforce required to run
the Company successfully’ without paying more than is necessary and
linking incentives to the Company’s vision, mission and values.
ii. Approve for recommendation to the Shareholder:
e the remuneration and terms and conditions of employment and
variation of these for Executive Directors
e the fees for Non-Executive Directors for the Company, including
the Chair.
iii. Approve the remuneration packages of individuals who report
directly to the Group Chief Executive Officer.
iv. Approve the remuneration packages of Executive Directors/
Managing Directors and fees for Non-Executive Directors of its
subsidiaries.
v. Approve for recommendation to the Shareholder’, the criteria for,
and outturn of performance related pay arrangements for Executive
Directors and the criteria for executives who report directly to the
Group Chief Executive Officer (STIP).
vi. Approve for recommendation to the Board’, the establishment of
(or approval of any agreement to establish) a new pension scheme
by any member of the Group.
vii. Have oversight of and approve for recommendation to the Board
any material changes to pension arrangements for Company
employees, in particular affecting the rate of contributions required to
be made.
viii. Have oversight of the Group remuneration and related policies for
the wider organisation.
‘In doing so, regard will be paid to the views of the Shareholder and other stakeholders; all relevant legal,
regulatory and corporate governance requirements; the risk appetite of the Company and alignment to its long-
term strategic goals, structuring of a significant proportion of remuneration to link rewards to corporate and
individual performance and designed to promote the long-term success of the Company.
2 The Department for Business, Energy and Industrial Strategy.
> The Board must then seek the approval of the Shareholder.
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w Articles of As
including thi
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Terms of Reference of the Remuneration Committee
ix. Have oversight of Group workforce engagement strategies and
outputs.
B. DUTIES AND RESPONSIBILITIES
Remuneration Policy for Post Office Limited: Executive
2. i. Approve for recommendation to the Board the remuneration policy
for the Group Chief Executive Officer, executive directors and those
executives who report directly to the Group Chief Executive Officer,
taking into account the remuneration policy set for other employees and
linking incentives to the Company’s vision, mission and values.
I. Review the group remuneration policy annually and recommend any
changes to the Board for approval.
Remuneration Package: Executive Directors
Bs Approve for recommendation to the Shareholder the remuneration
package for Executive Director appointments proposed by the
Nominations Committee. This may include, but shall not be restricted
to:
i. Base salary
ii. Short term incentive (annual bonus)
Long Term Incentive Plan
Pension Provision
v. Benefits such as car or car allowance, private health, holidays
vi. Contractual terms such as notice periods.
The recommendations shall align with the group remuneration
policy approved by the Board.
Remuneration Package: Direct reports to the Group Chief Executive
Officer
4. Approve the remuneration package for direct reports to the Group Chief
Executive. This may include, but shall not be restricted to:
i. Base salary
ii. Short term incentive (annual bonus)
iii. Long Term Incentive Plan
iv. Pension Provision
v. Benefits such as car or car allowance, private health, holidays
vi. Contractual terms such as notice periods.
The recommendations shall align with the group remuneration policy
approved by the Board.
5. Review the contractual terms applicable to executive directors such that
payments adhere to the group remuneration policy approved by the Board.
6. Review each element of the remuneration package and total remuneration
for new hires and any internal promotions and appointments which are
proposed to carry a salary in excess of the lowest salary of any executive
who reports directly to the Group Chief Executive Officer.
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Post Office Limited
Terms of Reference of the Remuneration Committee
de Review annually the overall total remuneration of the Senior Group
(defined as the Group Chief Executive Officer, executive directors and
those executives who report directly to the Group Chief Executive Officer)
compared both with external market comparators and with the
remuneration of other employees in the Group.
Long Term Incentive Plan (LTIP)
8. i. Approve the implementation of, or changes to performance related
incentive schemes for the Executive Directors*, executives who report
directly to the Group Chief Executive Officer and senior managers eligible
to be invited to participate in the Post Office (LTIP).
ii. Review annually the performance related incentive schemes for the
executive directors, executives who report directly to the Group Chief
Executive Officer and senior managers eligible to be invited to
participate in the Post Office Long Term Incentive Plan (LTIP).
Short Term Incentive Plan (STIP)
9. i. Approve the criteria for, and the outturn of, performance related pay
arrangements (STIP) for Executive Directors® and the executives who
report directly to the Group Chief Executive Officer
ii. Review annually the criteria for, and outturn of, performance related
pay arrangements (STIP) for Executive Directors® and executives who
report directly to the Group Chief Executive.
10. Receive information on the total outturn of performance related pay
arrangements across the business.
11. Approve for recommendation to the Board, the establishment of (or
approval of any agreement to establish) a new pension scheme by any
member of the Group.
12. Have oversight of and approve for recommendation to the Board any
material changes to pension arrangements for Company employees, in
particular affecting the rate of contributions required to be made.
13. Approve for recommendation to the Shareholder of any exit package
that would be in excess of the contractual obligations for the Group Chief
Executive and Chief Financial Officer.
14. Approve the exit package for any individual with a salary above the lowest
salary of those executives who report directly to the Group Chief
Executive’, where the exit package would be in excess of contractual
obligations.
4 Executive Director LTIP arrangements must be approved by the Shareholder.
5 Executive Director STIP arrangements must be approved by the Shareholder.
© Executive Director STIP arrangement must be approved by the Shareholder.
7 For approval by the Shareholder in the case of the Chief Financial Officer.
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Terms of Reference of the Remuneration Committee
15.
16.
17.
18.
19,
20.
21.
Remuneration Policy for Post Office Limited: Non-Executive
Directors
Approve for recommendation to the Shareholder the fees for Non-
Executive Directors of the Company to the Board, including the Chair.
Remuneration for Post Office Subsidiary Boards®: Executive
Approve the remuneration package for statutory executive director
appointments to the Company subsidiary boards °. These elements will form
the remuneration package and exit package for an individual in the above group, which may
include, but shall not be restricted to:
i. Base salary
ii. Short term incentive (annual bonus)
iii. Long Term Incentive Plan
iv. Pension Provision
v. Benefits such as car or car allowance, private health, holidays
vi. Contractual terms such as notice periods.
The recommendations shall align with the Group Remuneration Policy.
Review the contractual terms applicable to executive directors of the Post
Office subsidiaries such that they adhere to the group remuneration policy.
Review annually the overall total remuneration of the Senior Group
(defined as any members of the subsidiary board) compared both with
external market comparators and with the remuneration of other
employees in the Group.
Remuneration Policy for Subsidiary Boards: Non-Executive
Directors’?
i. Approve the remuneration framework within which the fees for each
Non-Executive Director of a Subsidiary Board may be paid where an
appointment is recommended by the Nominations Committee.
ii. Review annually the remuneration framework for Non-Executive fees
for the subsidiary boards.
ENGAGEMENT
To have oversight of workforce engagement measures, such as
engagement surveys, and outputs from these.
To receive feedback from the Senior Independent Director on employee
views.
® Post Office Management Services Limited (Post Office Insurance) and Payzone Bills Payments Limited.
° Excluding subsidiary board appointments which are in addition to an executive's primary role and where no
additional remuneration applies.
10 Section 7.3 of the Framework document. Non-Executive Directors may be appointed for Post Office
Management Services Limited, trading as Post Office Insurance.
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Terms of Reference of the Remuneration Committee
D.
22.
23.
24.
25.
26.
275
28.
29.
30.
REPORTING RESPONSIBILITIES
Report to the Board after each meeting on the nature and content of its
discussion, recommendations and action to be taken.
Report on its activities in the Company’s annual report and should
describe the work of the Committee.
Identify in the annual report any consultants appointed as remuneration
consultants, alongside a statement about any other connection it has with
the Company or individual directors.
AUTHORITY
The Committee is authorised by the Board to obtain, at the Company’s
expense, outside legal or other professional advice on any matters within
its terms of reference.
The Committee shall be authorised to seek any information it requires from
any employee of the Company in order to perform its duties.
COMPOSITION AND GOVERNANCE
Membership
The Committee Chair (the Chair)!! and members of the Committee will be
appointed by the Board, acting on the recommendation of the Nominations
Committee and in consultation with the Chair of the Remuneration
Committee.
In the absence of the Chair of the Committee at any meeting, the
Committee members present shall determine who shall chair the
Committee.
It shall consist of at least two independent non-executive directors. If
considered independent at the time of appointment, the Chairman of the
Company may be a member of the Committee, but shall not chair it.
Only Non-Executive directors shall be eligible to be members of the
Committee, such that no individual shall be involved in determining their
own remuneration.
11 The UK Corporate Governance Code (16/07/2018), stipulates that Remuneration Committee Chairs should
have at least 12 months’ experience on a remuneration committee prior to appointment.
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t to Board (including the new Articles of As:
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Terms of Reference of the Remuneration Committee
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
PUBLIC
Quorum
Quorum shall be two members. In the absence of the Chair at any
meeting, the Committee members present shall determine who shall chair
the meeting.
Committee Secretary
The Group Company Secretary, or his or her nominee, shall act as
Secretary to the Committee and shall attend all meetings to keep minutes
and record actions.
Frequency
The Committee shall meet as often as required but at least three times per
year.
Governance
Meetings may be held in person or by telephone or other electronic means,
so long as all participants can contribute to the meeting simultaneously.
Notice of each meeting shall be given to all those entitled to participate at
least three working days before the meeting.
Meetings for the Committee may be convened by the Secretary in
consultation with the Chair, or by any member of the Committee, at any
time. The Secretary will be responsible for setting the venue date and time
of meetings in conjunction with the Chair. All papers supporting the
meeting will be issued in good time, one week in advance of the meeting
date.
The Chair will report regularly to the Board. Minutes of each Committee
meeting will be circulated to all members of the Committee and, once
agreed, to those members of the Board who have no personal interest in
the matters discussed. Where a conflict of interest exists, the Company
Secretary will provide sufficient information to the full Board to provide an
understanding of the matter(s) considered.
The Secretary shall provide current and new Committee members with any
training, briefings or induction required under the supervision of the Chair.
Only members of the Committee have the right to attend Committee
meetings. The Group Chief Executive and the Group Chief People Officer
(or the holder of any equivalent position) shall be informed of the date of
each meeting and may be invited by the Chair to attend all or part of any
meeting, as and when appropriate.
The Committee shall have access to sufficient executive time and resources
in order to carry on its duties, including access to the Company Secretary
and members of the Human Resources team.
The Committee shall be exclusively responsible for establishing the
selection criteria, selecting, appointing and setting terms of reference of
remuneration consultants and have authority to appoint remuneration
consultants and to obtain, at the Company’s expense, legal or other
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Tab 8 Governance report to Board (including the new Articles of Association)
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Terms of Reference of the Remuneration Committee
professional advice on matters within its terms of reference as required,
up to a financial limit determined by the Board.
42. If there should be disagreement between the Remuneration Committee
and the full Board, the Chairman of the Board shall make time available
for discussion of the issue so that the matter may be resolved. Where any
such disagreement cannot be resolved, the Remuneration Committee shall
report the issue as part of any annual report on its activities required by
the Shareholder.
G. ANNUAL REVIEW AND APPROVAL
43. The Committee will undertake an annual review of its performance and the
Terms of Reference. The outcome of these review will be recommended to
the Board for approval (notwithstanding amendments approved by the
Committee whenever so required).
Approved by: Date: Version: _I Effective from:
Post Office Limited Board 25/03/2015 11 25/03/2015
Post Office Limited Board 25/11/2015 1.2 25/11/2015
Post Office Limited Board 30/10/2018 1.3 30/10/2018
Post Office Limited Board 20/07/2019 14 30/07/2019
[ Post Office Limited Board 24/03/2020 1.5 25/03/2020)
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item Obligation ‘Accountability (A)/ Responsibility
R)
Overall Aims I 1. Maintain a minimum of 11,500 Post Offices during Funding Agreement. (Section 2.2 (i)) ‘A: CEO and CFO
Section 2 2. Meet minimum access requirements of Entrustment Letter. (Section 2.2 (ii)) R: 1-3: Group Retail and Franchise
3. Provide that Post Offices make available services of general economic interest (SGE!). (section 2.2 (iii)) Network Director; and Head of
4. Operate under sound commercial/financial principles in accordance with applicable laws. Seek to deploy capital, brand and products as I Network. 4: all of GE
a responsible commercial operator, and manage risk to deliver positive financial returns, notwithstanding network requirements. (Section
2.4)
The Special __I Prior written consent of Shareholder required for following decisions including but not limited to: CEO and CFO
Share 1. Varying POL's Articles. R: CoSec will ensure the appropriate
Section 3.3. I 2. Voluntary winding up of the company or member of the group. delegated authorities are in place and
3. _ Issuing or allotment of shares or granting of share rights in the company. governance requirements are
4. Appointment or removal from office of any director or the CEO. adhered to.
5. The adoption or amendment of a Strategic Plan
6. Any unplanned substantial alteration in nature of the business.
7. Sale of material assets in the absence of which POL would not be able to perform its business as provided for in the Strategic Plan
8. The entry into or implementation of a transaction involving the commitment or liability or the payment of a sum in excess of £50,000,000.
9. The entry into any transaction which is not on commercial terms and is not considered by the directors to be in the interests of the Company
10. Alterations to trademark rights.
11. Any material variation to the remuneration or terms and conditions of employment of any of the directors appointed or approved by the
Shareholder.
12. Incurring of any borrowing exceeding pre-set limits and subject to other restrictions as agreed with HM Treasury; and
13. The appointment or removal from office of the Chair.
Group 1. Develop a GSP covering a period of at least 3 years. (Sections 4.1, 4.4) ‘A Group Chief Strategy and
Strategic Plan I 2. Ensure a GSPis in place at any time covering a period of 3 years. (Sections 4.1, 4.4) Transformation Officer
(GsP) 3. Agree a timetable with Shareholder to provide a draft and final version of next GSP at least 12 months ahead of expiration of current R: This will require input from all
(forms part of GSP. (Section 4.4) areas of the business, (including PO!
Group Plans) I 4. Seek final approval of GSP from the Shareholder subsequent to POL Board approval. and PZBPL),
Section 4 5. Review GSP annually and update if required. Proposed changes/variations are subject to discussion and approval of the Shareholder.
(Section 4.6)
6. _ Inform and consult Shareholder of any contemplated changes of Group Plans. All changes subject to Shareholder approval. (Section
47)
Group 7. Develop a GBP for next the financial year on an annual basis covering a period of twelve months, (Section 4.2) A: CEO and CFO
Business 8. By 31 December, the Shareholder will agree with POL a timetable for a draft and final version of the GBP for the next financial year. R: Head of Financial Performance
Plan (GBP) (Section 4.2) and Analysis (who currently produces
(forms partof I 9. Agree with the Shareholder any issues and priorities that should be addressed in GBP (Section 4.2). the 5 yr plan)
Group Plans)
Section 4
Accounting I 1. CEO as AO to observe principles of HM Treasury in Managing Public Money (MPM) (see Appendix 1 obligations below) ACEO
Officer 2. Personally responsible for safeguarding all funds, ensure propriety, regularity, value for money and feasibility in handling funds, and day _I R: GE and wider POL Business
responsibiliti to day management of POL.
es (POL AO is I 3. Attend Committee of Public Accounts meetings when invited
currently CEO)
Appendix 1:
Section 6.2; _ I governance
‘A40967787/0,0/30 Jan 2020
mau 64j Bulpnjoul) preog 0} odes eoueUIEADD g GEL
g
a
a
8
Fi
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“have a governance structure which transmits, delegates, implements and enforces decisions
Appendix 1 + have trustworthy internal controls to safeguard, channel and record resources as intended
+ work cooperatively with partners in the public interest
* operate with propriety and regularity in all its transactions
+ treat its customers and business counterparties fairly, honestly and with integrity
+ offer appropriate redress for failure to meet agreed customer standards
+ give timely, transparent and realistic accounts of its business and decisions, underpinning public confidence;
decision-making
+ support its ministers with clear, well-reasoned, timely and impartial advice
+ make all its decisions in line with the strategy, aims and objectives of the organisation set by ministers and/or in legislation
+ take a balanced view of the organisation's approach to managing opportunity and risk
+ impose no more than proportionate and defensible burdens on business;
financial management
+ use its resources efficiently, economically and effectively, avoiding waste and extravagance
+ plan to use its resources on an affordable and sustainable path, within agreed limits
+ carry out procurement and project appraisal objectively and fairly, using cost benefit analysis and generally seeking good value for the
Exchequer as a whole
+ use management information systems to gain assurance about value for money and the quality of delivery and so make timely adjustments
+ avoid over defining detail and imposing undue compliance costs, either internally or on its customers and stakeholders
+ have practical documented arrangements for controlling or working in partnership with other organisations, as appropriate
mau 64j Bulpnjoul) preog 0} odes eoueUIEADD g GEL
+ use internal and external audit to improve its internal controls and performance. 3
3
Shareholder _ I Provide information to Shareholder Policy Sponsor where required to fulfil their oversight function from policy perspective A; Group Corporate Affairs and >
Policy ‘Communications Director g
Sponsor (the R: Government Affairs and Policy 8
‘I Policy Director =
= I Sponsor 3
Section 6.4
I Shareholder’s I Provide information to UKGI where required to fulfl their function as Shareholder representative. A; Group Corporate Affairs and
> I Representativ ‘Communications Director
S Ie R: Government Affairs and Policy
4 Director
= I Section 6.5
S [Shareholder I CEO and CFO to attend shareholder meetings ‘A Shareholder, CEO and CFO(in
‘SI Meetings terms of attendance)
R: Government Affairs and Policy
Section 6.6 Director (in terms of briefings)
POL Board I 1, To exercise control over day to day operations of POL. ‘A: The POL Board
2. Accountable to Shareholder. R: GE and wider POL Business
Section 6.7 I 3. Inform Shareholder of any significant changes that impact strategic direction or the attainability of targets. Determine rectification steps.
4. Ensure statutory/administrative requirements for use of public funds are complied with
Individual 1. Abide by statutory and common law duties. ‘A; Each member of the POL Board
Board 2. Not to misuse information gained in the course of public service for personal gain/political profit, nor seek to use the opportunity of public
members’ service to promote private interests or those of connected persons or organisations.
responsibiliti I 3. Shareholder Representative NED to recuse hinvherself from relevant Board decision where there is potential for or perceived conflict of
es interest
— ‘A40967787/0.0/30 Jan 2020
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Section 6.8
Chair's T. Ensure that policies and actions support POL's overall aims and Shareholder’s wider strategic policy. ‘A. The Chairman
specific 2. Ensure POL Board acts with probity and that corporate governance structures and controls are in place in line with governance codes _I R: GE and wider POL Business
responsibiliti and guidance.
es
Section 6.9
Chair's T. Formulate POL Board strategy. ‘A The Chairman
specific 2. Promote efficient and effective use of staff and other resources. R: GE and wider POL Business
responsibiliti I 3. Ensure work of POL Board and its members are reviewed and working effectively.
es 4. Ensure POL Board has appropriate balance of skills to direct business.
(additional) I 5. Ensure directors are fully briefed on terms of appointment, duties, rights and responsibilities.
Section 6.10 _I 6. Assess performance of individual members when considering re-appointment.
Board 1. POL Board to consist of: Non-Executive Chair, Group CEO; CFO; a number of NEDs with one dedicated as Senior Independent Director I A: The POL Board and Shareholder
Composition, (SID); and a Shareholder NED. (Section 7.1) R: Remco, NomCo and CoSec will
appointments I 2. The three sub-committees, Audit, Risk and Compliance (ARC), Nominations Committee (NomCo) and Remuneration Committee ensure the appropriate delegated
; (RemCo), are to be chaired by a NED. (Section 7.1) authorities are in place and
remuneration I 3. On the advice of NomCo, all POL Board appointments (apart from the Chair and Shareholder NED) are subject to Shareholder approval. I governance requirements are
and review A request for approval must contain justification for the appointment. Written consent of the Shareholder is required. (Section 7.3) adhered to.
4. Before the recruitment process begins, Shareholder to be consulted on overall recruitment process, including proposed terms, and
Section 7 conditions of appointment. This also applies to re-appointment of directors and appointment of interim directors. (Section 7.3)
5. The employment contract for each POL Board member must contain a Power of Attorney enabling POL to execute a deed of resignation
upon termination of employment. (Section 7.4)
6. RemCo to recommend to POL Board the remuneration policy and changes to individual elements of remuneration packages of POL
Board members. Remuneration will require Shareholder approval. (Section 7.6)
7. Remuneration of POL Board member that exceeds thresholds of HM Treasury's Guidance for Approval of Senior Pay requires additional
approval by Chief Secretary to the Treasury. (Section 7.6)
8. Chair to ensure performance of POL Board, Committees and POL Board members is evaluated annually. (Section 7.7)
9. SID to conduct annual appraisal of Chair and Effectiveness Review; report findings to Shareholder typically via UKGI. (Section 7.7)
10. No Group Company other than POL is to have non-executive directors appointed to its Board. This shall not apply to any Group
Company subject to FCA regulation. (Section 7.8ii)
Essential T. Publish ARA and lay before Parliament annually. (Section 6.7) 7
Publications I 2. Provide Network Report to Shareholder annually and lay before Parliament. (Section 8.2) A: CEO and CFO
R: The Financial Controller currently
Section 8 co-ordinates this exercise and holds
the pen, with input from the wider
business. The Government Affairs
and Policy Director team lay before
parliament.
2
A: CEO and CFO
R: The Director or Network
Development currently co-ordinates
this exercise and holds the pen, with
input from the wider business. The
Government Affairs and Policy
Director team lay before parliament.
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Observance I 1. Observe Public Sector Pay and Terms (Section 9.3) T. Group Chief People Office
corporate 2. Seek to comply with FRC UK Corporate Governance Code (the Code). If POL does not intend to observe the Code, to notify UKGI in 2. CoSec Team
governance advance. (Section 9.4) 3. CoSec Team
guidelines 4. CoSec Team
Appendix 2 5. CoSec Team
Section 9 & POL shall have regard to the principles set out in relevant sections of the following guidance documents: 6. Head of Risk
Appendix 2 I Corporate Governance 7. Head of Treasury, Tax and
3. Corporate Governance Code for Central Government Departments (April 2017) Insurance
https://www.gov.uk/government/publications/corporate-governance-code-for-central-government-departments-2017 8. MLRO
9. Head of Financial Performance
4. Guidance note that supports the Corporate Governance Code (April 2017) and Analysis
https:/assets. publishing. service.gov.uk/government/uploads/system/uploads/attachment _data/file/609668/PU2076 corporate governance _g I10. As per 7.3 of the FD, only the
uidance.pdf appointment of the Chairman is a
public appointment and thus
5. Code of Conduct for Board Members of Public Bodies (June 2019) caught by this guidance
https://www.gov.uk/government/publications/Board-members-of-public-bodies-code-of-conduct However, it is our understanding
6. Management of Risk: Principles and Concepts (July 2019) the expectation is that this
httos://www.gov.uk/aovernment/publications/orange-book guidance will also be followed for
the CEO. Accountability sits with
Financial Management the SoS with the Group Chief
7. Managing Public Money (MPM) (March 2018) People Officer being the point of
https://assets publishing service.gov.uk/government/uploads/system/uploads/attachment_data/file/742189/Managing Public Money MPM contact within POL.
with annexes 2018 pdf 11. As per 7.3 of the FD, only the
appointment of the Chairman is a
8. HM Treasury and NAO Guidance on Tackling Fraud (2013) public appointment and thus
https ://www.nao.org.uk/wp-content/uploads/2013/02/Tackling Extemal_Fraud.pdf caught by this guidance
9. HM Treasury Consolidated Budget Guidance (particularly Chapter 11) (March 2019) However, it is our understanding
https://www.gov.uk/government/publications/consolidated-budgeting-quidance-2019-to-2020 the expectation is that this
guidance will also be followed for
Senior Appointments and Remuneration the CEO. Accountability sits with
10. Governance Code on Public Appointments (December 2016) RemCo and responsibility which
https://assets publishing .service.gov.uk/government/uploads/system/uploads/attachment_data/file/578498/governance code on public app sits with the Group Chief People
ointments 16 12 2016 pdf Officer.
11. HM Treasury Guidance for approval of Senior Pay (January 2018) 12. MLRO
https://www.gov.uk/government/publications/senior-civil-service-pay-and-reward
Other
12. Whistleblowing Guidance and Code of Practice (March 2015)
https://www_gov.uk/government/publications/whistleblowing-guidance-and-code-of-practice-for-employers
Financial 1. Not to borrow externally unless agreed by Shareholder. (Section 10.1) A: CEO and CFO
responsibiliti I 2. Borrowing from the Shareholder will be subject to appropriate documentation to be agreed between POL/Shareholder. (Section 10.1) _I R: CoSec will ensure the appropriate
es and 3. As part of the Funding Agreement between Shareholder/POL, POL Board is required to meet specific requirements in terms of preparing I delegated authorities are in place and
funding and reporting against the strategic plan covering the relevant funding term. (Section 10.2) governance requirements are
arrangements I 4. To adopt a dividend policy once commercially sustainable. (Section 10.4) adhered to. Head of Treasury, Tax
Section 10 and Insurance
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POL’s T. Any undertaking that incurs expenditure in excess of £50,000,000 requires prior written consent of Shareholder. (Section 17.1) A: CEO and CFO
delegated 2. To putin place appropriate policies of financial delegation to Group Companies. Group Companies to seek to comply with these R: CoSec will ensure the appropriate
authority policies. (Section 11.2) delegated authorities are in place and
governance requirements are
Section 11 adhered to
Reporting T. Share information on key strategic or policy issues with Shareholder. (Section 12.1) 1
performance, I 2. Any final decision on “Relevant Issues” will require written notification to Shareholder not less than 10 business days before any final A: Group Corporate Affairs and
information decision is made. Communications Director
exchange and
confidentialit
y
Relevant issues include:
* Issues not set out in an approved GBP.
+ Anissue that may have material adverse effect upon the business or financial prospects of the Group or Group Company.
+ Regulatory matters, such as any Group Company being referred for regulatory investigation by relevant regulatory authority
R: Government Affairs and Policy
Director
2.
A: The POL Board
Section 12 (Sections 12.2, 12.3) R: CoSec will ensure the appropriate
delegated authorities are in place and
governance requirements are
adhered to.
Reporting T. Provide quarterly report via UKGI on: ‘A: CFO
performance (a) Summary of performance of previous quarter R: Head of Financial Performance
to the (b) Information on expected draw-down for remaining duration of strategic plan and Analysis (1, 4) , Director of
Shareholder (c) Update on delivery against planned investments. Investment plans should include look ahead over the next three financial years. Network Development (2), Head of
(Section 13.1) Legal, Disputes Resolution & Brand
Section 13 2. Provide quarterly update to UKGI on performance of branch network against overall aims set out in Entrustment Letter. (Section 13.2) I (4)
3. Inform UKGI before the quarterly update is provided of whether POL has failed to meet its objectives set out in section 2.2 of framework
document. (Section 13.2)
4. Provide quarterly update on any active litigation, threatened litigation or reasonably anticipated litigation. (Section 13.4)
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