Appendix

Governance provisions: summary

The relevant provisions of the foundation trust Code of governance and the UK corporate governance code are set out below.

Code of governance

The Code of governance does not have the force of law and is based on the principle of 'comply or explain', whereby organisations that do not comply with the code must explain to relevant stakeholders their reasons for not doing so.

The foundation trust Code of governance stipulates that there should be a clear division of responsibilities at the head the organisation between the chair and the executive which is responsible for the management of the trust. The code makes it clear that no one individual should have unfettered powers of decision making.

It confirms the chair as being responsible for leadership of the board of directors and the council of governors and ensuring their effectiveness on all aspects of their role. It also confirms the chair’s role leading on agenda setting, ensuring the provision of accurate timely information and ensuring that adequate debate. The code acknowledges the central role of the chair in promoting a culture of openness and facilitating constructive but challenging relations between executive and non-executive directors.

However, the code warns against appointments made for reasons of convenience emphasising that search for candidates should be conducted, and appointments made, on merit, against objective criteria with due regard for the benefits of diversity on the board and the requirements of the trust.

The code asserts that on appointment the chair should meet the criteria for independence. The factors that may be taken into account in determining independence include whether the candidate:

• has been an employee of the NHS foundation trust within the last five years
• has, or has had within the last three years, a material business relationship with the NHS foundation trust either directly, or as a partner, shareholder, director or senior employee of a body that has such a relationship with the NHS foundation trust
• has received or receives additional remuneration from the NHS foundation trust apart from a director’s fee, participates in the NHS foundation trust’s performance-related pay scheme, or is a member of the NHS foundation trust's pension scheme
• has close family ties with any of the NHS foundation trust’s advisers, directors or senior employees
• holds cross-directorships or has significant links with other directors through involvement in other companies or bodies
• has served on the board of the NHS foundation trust for more than six years from the date of their first appointment
• is an appointed representative of the NHS foundation trust’s university medical or dental school.

Foundation trust chairs are appointed by governors and the code is clear that a prospective chair’s other significant commitments should be disclosed to the council of governors before appointment and included in the annual report. Changes to such commitments should be reported to the council of governors as they arise, and included in the next annual report.

Finally, and perhaps most importantly, although it is not legally binding, the code states that no individual, simultaneously whilst being a chair of an NHS foundation trust, should be the substantive chair of another NHS foundation trust.

The UK corporate governance code

While there have been significant revisions to the UK code in producing the 2018 iteration the provisions regarding the role of the chair remain clear consistent with the foundation trust code:

• the chair leads the board and is responsible for its overall effectiveness in directing the company
• they should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate – in addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information
• the responsibilities of the chair, chief executive, senior independent director, board and committees should be clear, set out in writing, agreed by the board and made publicly available
• the chair should act on the results of the evaluation by recognising the strengths and addressing any weaknesses of the board;
• the chair should hold meetings with the non-executive directors without the executive directors present
• when making new appointments, the board should take into account other demands on directors' time
• prior to appointment, significant commitments should be disclosed with an indication of the time involved
• additional external appointments should not be undertaken without prior approval of the board, with the reasons for permitting significant appointments explained in the annual report.