• HC-1.2 HC-1.2 Role and Responsibilities

    • HC-1.2.1

      All directors must understand the board's role and responsibilities under the Commercial Companies Law and any other laws or regulations that may govern their responsibilities from time to time. In particular:

      (a) The board's role as distinct from the role of the shareholders (who elect the board and whose interests the board serves) and the role of senior managers (whom the board appoints and oversees); and
      (b) The board's fiduciary duties of care and loyalty to the licensee and the shareholders (see Section HC-2.1).
      January 2014

    • HC-1.2.2

      The board's role and responsibilities include but are not limited to:

      (a) The overall business performance and strategy for the licensee;
      (b) Causing financial statements to be prepared which accurately disclose the licensee's financial position;
      (c) Monitoring management performance;
      (d) Convening and preparing the agenda for shareholder meetings;
      (e) Monitoring conflicts of interest and preventing abusive related party transactions;
      (f) Assuring equitable treatment of shareholders including minority shareholders; and
      (g) Establishing the objectives of the licensee.
      January 2014

    • HC-1.2.3

      The precise functions reserved for the board, and those delegated to management and committees will vary, dependent upon the business of the licensee, its size and ownership structure. However, as a minimum, the board must establish and maintain a statement of its responsibilities for:

      (a) The adoption and annual review of strategy;
      (b) The adoption and review of management structure and responsibilities;
      (c) The adoption and review of the systems and controls framework; and
      (d) Monitoring the implementation of strategy by management.
      January 2014

    • HC-1.2.4

      The directors are responsible both individually and collectively for performing the responsibilities outlined in Paragraph HC-1.2.1 to HC-1.2.3. Although the board may delegate certain functions to committees or management, it may not delegate its ultimate responsibility to ensure that an adequate, effective, comprehensive and transparent corporate governance framework is in place.

      January 2014

    • HC-1.2.5

      In its strategy review process under Paragraphs HC-1.2.3 a) and d), the board must:

      (a) Review the licensee's business plans and the inherent level of risk in these plans;
      (b) Assess the adequacy of capital to support the business risks of the licensee;
      (c) Set performance objectives; and
      (d) Oversee major capital expenditures and divestitures.
      January 2014

    • HC-1.2.6

      Licensees must notify the CBB in writing of all major proposed changes to the strategy of the licensee prior to implementation.

      January 2014

    • HC-1.2.7

      The board is expected to have effective policies and processes in place for:

      (a) Approving budgets and reviewing performance against those budgets and key performance indicators; and
      (b) The management of the licensee's compliance risk.
      January 2014

    • HC-1.2.8

      When a new director is inducted, the chairman of the board, assisted by the licensee's legal counsel or compliance officer, should review the board's role and duties with that person, particularly covering legal and regulatory requirements and Module HC (see also HC-4.5.1).

      January 2014

    • HC-1.2.9

      The licensee must have a written appointment agreement with each director which recites the directors' powers, duties, responsibilities and accountabilities and other matters relating to his appointment including his term, the time commitment envisaged, the committee assignment if any, his remuneration and expense reimbursement entitlement, and his access to independent professional advice when that is needed.

      January 2014

    • Risk Recognition and Assessment

      • HC-1.2.10

        The board is responsible for ensuring that the systems and controls framework, including the board structure and organisational structure of the licensee, is appropriate for the business and associated risks (see Paragraph HC-1.2.3 (c)). The board must ensure that collectively it has sufficient expertise to identify, understand and measure the significant risks to which the licensee is exposed in its business activities.

        The board must regularly assess the systems and controls framework of the licensee. In its assessments, the board must demonstrate to the CBB that:

        (a) The licensee's operations, individually and collectively are measured, monitored and controlled by appropriate, effective and prudent risk management systems commensurate with the scope of its activities;
        (b) The licensee's operations are supported by an appropriate control environment. The compliance, internal audit, risk management and financial reporting functions must be adequately resourced, independent of business lines and must be run by individuals not involved with the day-to-day running of the various business areas. The board must additionally ensure that management develops, implements and oversees the effectiveness of comprehensive know your customer standards, as well as on-going monitoring of accounts and transactions, in keeping with the requirements of relevant law, regulations and best practice (with particular regard to anti-money laundering measures). The control environment must maintain necessary client confidentiality and ensure that the privacy of the licensee is not violated, and ensure that clients' rights and assets are properly safeguarded; and
        (c) Where the board has identified any significant issues related to the licensee's adopted governance framework, appropriate and timely action is taken to address any identified adverse deviations from the requirements of this Module.
        January 2014

      • HC-1.2.11

        The board must adopt a formal board charter or other statement specifying matters which are reserved to it, which should include but need not be limited to the specific requirements and responsibilities of directors. This charter must cover the points in Paragraphs HC-1.2.1 to HC-1.2.10.

        January 2014