It is common in the MCH family for a board to have a number of committees. The most common are Finance and Audit Committees and Remuneration Committees. Depending on the organisation both may have different names. Other entities have a variety of committees that are specific to their needs. The Arts Board, for example, has a Pacific Arts committee while the NZ Film Commission has a Sales Agency Advisory Committee.
Committees should exist for a reason
Most of our entities are not overloaded with committees and the sector reflects a strong prevailing ‘best practice’ view that board committees should only exist where they are necessary and can ‘‘help the board do board work’’. Board committees should also be subject to a regular review as to whether they should continue to exist (see ‘Work Plan’ topic).
Crown Entity Act requirements for committees
Members of Crown entities should be aware that clause 14 of Schedule 5 provides for the board, by resolution, to appoint committees:
- To advise it on any matters relating to the entity’s functions and powers that are referred to the committee by the board; or
- To perform or exercise any of the entity’s functions and powers that are delegated to the committee, if the committee includes at least one member of the board and any other person or persons that the board thinks fit. So Crown Entity boards must ensure that if they want a committee to perform or exercise a board function and/or a power, as distinct from simply advising, that at least one board member is on the committee.
Committee members of Crown entities must also disclose, in a manner similar to that required of board members, any interests they may have.
Some key principles for board committees
The guidelines below apply to any board committee of a Crown entity or otherwise.
- The terms of reference and the membership criteria for the board committee should be clear;
- The board chair is often an ex-officio member of any board committee;
- There should be explicit reporting requirements and expected outcomes (and out puts);
- The existence and time span for all committees should be subject to review annually.
Discussions on the role and terms of reference for board committees are outlined in the web links in the Appendix to this topic.
Board Committees - Appendix
A good discussion of and some terms of reference for suitable board committees are contained in a Corporate Governance report of the Port of Tauranga:
- The Australian Institute of Company Directors outlines the role of board committees.
- A Scottish perspective of the role on board committees in public bodies has much relevance for NZ Crown-connected boards and is at: http://tinyurl.com/ypbh8r.