eGuide to CG Code

Provision 3.2

The Board establishes and sets out in writing the division of responsibilities between the Chairman and the CEO.
 
A. Explanation

There should not just be a separation of the positions of the Chairman and the CEO, but also a clear definition of their roles and responsibilities.

In general, the Chairman is responsible for creating the conditions for overall Board and individual director effectiveness, both inside and outside the boardroom. He is the face of the Board, and should ensure effective communication with shareholders and other stakeholders. Within the company, he should ensure appropriate relations within the Board, and between the Board and management, in particular, between the Board and the CEO.

The CEO is responsible for leading the Executive Directors (EDs) and the executive team in the day-to-day running of the company in accordance with the directions of the Board. He ensures the communication of key management decisions and recommendations to the Board.

To institutionalise this framework, the division of responsibilities should be clearly established, put down explicitly in writing, and agreed to by the Board.

 

B. Practice Guidance

 

C. Related Rules and Regulations
  • Nil.

 

D. CG Guides
  • Board Guide 2.5: Board Leadership [Board Composition].
  • Board Guide 2.9: Independence [Board Composition].
  • Board Guide Appendix 1J: “Comply or Explain” – Examples of Non-Compliance: 2. Separation of the Chairman and CEO [Corporate Governance].
  • Board Guide Appendix 2F: Board and Board Committees’ Composition Requirements [Board Composition].
  • Board Guide Appendix 6B-6: Balancing the Chairman-CEO Relationship [Board Relationships].
  • NC Guide 4.2: Number of Independent Directors [Director Independence].
  • NC Guide 4.6: The Lead Independent Director [Director Independence].

 

E. Related Articles

 

 

 

eGuide to CG Code
Overview
Preamble
Definition of Corporate Governance
History and Structure of the Code
Role of the Board
Role of the Chair
Focus on Long Term and Sustainability
Revised Code Structure and Approach
Mandatory Principles
Provisions and Variations
Thoughtful and Meaningful Application
Board Matters
Principle 1
Provision 1.1
Provision 1.2
Provision 1.3
Provision 1.4
Provision 1.5
Provision 1.6
Provision 1.7
Principle 2
Provision 2.1
Provision 2.2
Provision 2.3
Provision 2.4
Provision 2.5
Principle 3
Provision 3.1
Provision 3.2
Provision 3.3
Principle 4
Provision 4.1
Provision 4.2
Provision 4.3
Provision 4.4
Provision 4.5
Principle 5
Provision 5.1
Provision 5.2
Provision 5.3
Remuneration Matters
Principle 6
Provision 6.1
Provision 6.2
Provision 6.3
Provision 6.4
Principle 7
Provision 7.1
Provision 7.2
Provision 7.3
Principle 8
Provision 8.1
Provision 8.2
Provision 8.3
Accountability and Audit
Principle 9
Provision 9.1
Provision 9.2
Principle 10
Provision 10.1
Provision 10.2
Provision 10.3
Provision 10.4
Provision 10.5
Shareholder Rights and Responsibilities
Principle 11
Provision 11.1
Provision 11.2
Provision 11.3
Provision 11.4
Provision 11.5
Provision 11.6
Principle 12
Provision 12.1
Provision 12.2
Provision 12.3
Managing Stakeholder Relationships
Principle 13
Provision 13.1
Provision 13.2
Provision 13.3
Practice Guidance
Board Roles and Director Duties
Board Composition and Guidance
Chairman and CEO
Board Membership
Board Performance
Procedures for Developing Remuneration Policies
Level and Mix of Remuneration
Disclosure on Remuneration
Risk Management and Internal Controls
Audit Committee
Shareholder Rights and Engagement
Engagement with Shareholders
Managing Stakeholder Relationships
eGuide Glossary

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