Code of Governance

A. Constitution and Composition of the Board

Main Principle

The Board must be effective in leading and controlling the organisation and acting wholly in its best interest.  Board members must ensure that the interests of the organisation are placed before any personal interests.

Provisions

  1. The purpose of the Board is to determine strategy, direct, control, scrutinise and evaluate an organisation’s affairs.  Operational management of the organisation must be delegated to the organisation’s staff.
  2. All members of the Board share the same legal status and have equal responsibility for decisions taken that affect the success of the organisation. 

Good Practice and Excellence

The Board as a whole should have, or acquire, a diverse range of skills, competencies, experience and knowledge.

The areas outlined below provide a broad range of some of the skills that organisations may wish to adopt :-

  1. Leadership and working as an effective team;
  2. Direct knowledge of the needs and aspirations of the communities and people served;
  3. General business, financial and management skills;
  4. Other relevant or specialist skills, such as commercial, financial, HR, investment, risk management, legal, health, social services, property management and housing development
  5. Effective communication skills and an ability to focus on key issues facing the organisation; and
  6. The ability to foster a culture that enhances commitment, enthusiasm and excellent performance from the staff.

B. Essential Functions of the Board

Main Principle

Each Board must be clear about its duties and responsibilities.  These must be set out and made available for all existing and potential Board members.

Provisions

  1. The essential functions of the Board must reflect the organisation’s constitutional documents, terms of reference and financial regulations.
  2. All Boards should have a set of core responsibilities. These will include as a minimum :-
  1. Setting and ensuring compliance with the values and strategic objectives of the organisation, ensuring its long-term success;
  2. The appointment and if necessary the dismissal of the chief executive and approval of his/her salary, benefits and terms of employment.
  3. Satisfying itself as to the integrity of financial information, approving each year’s budget and annual accounts.
  4. Establishing, overseeing and reviewing annually a framework of delegation and systems of internal control.

Good Practice and Excellence

  1. Board members of small organisations with few or no staff will also have wider responsibilities for operational management.
  2. The essential functions of the Board should, as a minimum, include duties to :
  3. Agree or ratify policies and decisions on all matters that might create significant financial or other risk to the organisation, or that raise material issues of principle;
  4. Establish and monitor a mechanism for communicating and receiving feedback from the organisation’s stakeholders;
  5. Establish a strong working relationship between the board, the chief executive and other staff;
  6. Satisfy itself that the organisation’s affairs are conducted lawfully and in accordance with generally accepted standards of performance, probity, good practice and regulatory requirements;
  7. Follow the organisation’s constitution in appointing (and, if necessary, removing) the Chair of the Board.

C. Board Induction and Information

All Board members must receive a properly resourced induction and relevant information.

D. Responsibilities of the Chair

Each Board must be headed by a properly appointed and skilled chair who is aware of his or her duties as head of the Board and the clear division of responsibilities between the Board and executive.

E. Conduct of the Board’s Business

The Board must act effectively, making clear decisions based on timely and accurate information. 

Provision

Board decisions should be, wherever possible, based on full agendas and documents circulated to members in advance of meetings.  Decisions and the main reasons for them should be recorded in the minutes.

Excellence

Effective conduct of Board business is vital to good governance.  Without suitably clear documents, no Board can hope to make wise and effective decisions.  All Board members should contribute to making decisions which may involve the organisation in significant strategic, financial or other risk, or which raise material issues of principle.  Very occasionally, such decisions will be required urgently between meetings.  Governance systems must be robust enough to deal with these properly.

F. The Chief Executive

There must be clear working arrangements between the Board and the Chief Executive and clear delegation of authority.

Good Practice and Excellence

  1. The essential duties of the chief executive should be to :-
  1. Act in the best interest of the organisation;
  2. Assist and advise the Board in determining the organisation’s strategies, policies and business planning;
  3. Manage the affairs of the organisation in accordance with the vision, values and objectives of the organisation, and the general policies and specific decisions of the Board;
  4. Draw the Board’s attention to matters that it should consider and decide;
  5. Ensure that the Board is given the information necessary to perform its duties and, in particular, that the Board receives advice on matters concerning compliance with its governing instrument, the law and the need to remain solvent;
  6. Ensure that proper systems of financial control, risk assessment and risk management, and legal and regulatory compliance are established and maintained, and that reports on these are provided to the Board as necessary.
  7. Support the Chair to ensure that the business of the Board is properly conducted;
  8. Represent the organisation as appropriate
  9. The written and signed contract, besides complying with current legislation, should clearly define :-
  10. His or her duties;
  11. The remuneration level;
  12. How complaints and disciplinary matters will be dealt with; and
  13. The length of contract, whether or not it can be renewed (if it is for a fixed term) and any notice period.

G. Diversity and Inclusion

Boards must demonstrate leadership and commitment to equality, diversity and inclusion as outlined in the Equality Act 2010, across the organisation’s activities.

H. Audit and Risk

The Board must establish a formal and transparent arrangement for considering how the organisation ensures financial viability, maintains a sound system of internal controls, manages risk and maintains an appropriate relationship with external auditors.

I. Conduct and Probity

Organisations must maintain the highest standards of probity and conduct.

This Code was based upon the National Housing Federation’s document ‘Excellence in Governance’ – revised edition July 2010.