BP 2011 Annual Report Download - page 138

136 BP Annual Report and Form 20-F 2011
Corporate governance
Principal accountants’ fees
and services
The audit committee has established policies and procedures for the
engagement of the independent registered public accounting firm, Ernst
& Young LLP, to render audit and certain assurance and tax services. The
policies provide for pre-approval by the audit committee of specifically
defined audit, audit-related, tax and other services that are not prohibited
by regulatory or other professional requirements. Ernst & Young are
engaged for these services when its expertise and experience of BP are
important. Most of this work is of an audit nature. Tax services were
awarded either through a full competitive tender process or following an
assessment of the expertise of Ernst & Young relative to that of other
potential service providers. These services are for a fixed term.
Under the policy, pre-approval is given for specific services within
the following categories: advice on accounting, auditing and financial
reporting matters; internal accounting and risk management control
reviews (excluding any services relating to information systems design
and implementation); non-statutory audit; project assurance and advice on
business and accounting process improvement (excluding any services
relating to information systems design and implementation relating to BP’s
financial statements or accounting records); due diligence in connection
with acquisitions, disposals and joint ventures (excluding valuation or
involvement in prospective financial information); income tax and indirect
tax compliance and advisory services; employee tax services (excluding
tax services that could impair independence); provision of, or access
to, Ernst & Young publications, workshops, seminars and other training
materials; provision of reports from data gathered on non-financial policies
and information; and assistance with understanding non-financial regulatory
requirements. BP operates a two-tier system for audit and non-audit
services. For audit related services, the audit committee has a pre-
approved aggregate level, within which specific work may be approved by
management. Non-audit services, including tax services, are pre-approved
for management to authorize per individual engagement, but above a
defined level must be approved by the chairman of the audit committee
or the full committee. The audit committee has delegated to the chairman
of the audit committee authority to approve permitted services provided
that the chairman reports any decisions to the committee at its next
scheduled meeting. Any proposed service not included in the approved
service list must be approved in advance by the audit committee chairman
and reported to the committee, or approved by the full audit committee in
advance of commencement of the engagement.
The audit committee evaluates the performance of the auditors
each year. The audit fees payable to Ernst & Young are reviewed by the
committee in the context of other global companies for cost effectiveness.
The committee keeps under review the scope and results of audit work
and the independence and objectivity of the auditors. External regulation
and BP policy requires the auditors to rotate their lead audit partner every
five years. (See Financial statements – Note 16 on page 209 and Audit
committee report on page 127 for details of audit fees.)
Memorandum and Articles
of Association
The following summarizes certain provisions of the company’s
Memorandum and Articles of Association and applicable English law. This
summary is qualified in its entirety by reference to the UK Companies Act
2006 (Act) and the company’s Memorandum and Articles of Association.
For information on where investors can obtain copies of the Memorandum
and Articles of Association see Documents on display on page 170.
At the AGM held on 17 April 2008 shareholders voted to adopt new
Articles of Association, largely to take account of changes in UK company
law brought about by the Act. Further amendments to the Articles of
Association were approved by shareholders at the AGM held on 15 April
2010. These amendments reflect the full implementation of the Act,
among other matters.
Objects and purposes
BP is incorporated under the name BP p.l.c. and is registered in England
and Wales with the registered number 102498. The provisions regulating
the operations of the company, known as its ‘objects’, were historically
stated in a company’s memorandum. The Act abolished the need to have
object provisions and so at the AGM held on 15 April 2010 shareholders
approved the removal of its objects clause together with all other
provisions of its Memorandum that, by virtue of the Act, are treated as
forming part of the company’s Articles of Association.
Directors
The business and affairs of BP shall be managed by the directors. The
company’s Articles of Association provide that directors may be appointed
by the existing directors or by the shareholders in a general meeting. Any
person appointed by the directors will hold office only until the next general
meeting and will then be eligible for re-election by the shareholders. There
is no requirement for a director to retire on reaching any age.
The Articles of Association place a general prohibition on a director
voting in respect of any contract or arrangement in which the director has
a material interest other than by virtue of such director’s interest in shares
in the company. However, in the absence of some other material interest
not indicated below, a director is entitled to vote and to be counted in a
quorum for the purpose of any vote relating to a resolution concerning the
following matters:
• The giving of security or indemnity with respect to any money lent or
obligation taken by the director at the request or benefit of the company
or any of its subsidiaries.
• Any proposal in which the director is interested, concerning the
underwriting of company securities or debentures or the giving of any
security to a third party for a debt or obligation of the company or any of
its subsidiaries.
• Any proposal concerning any other company in which the director is
interested, directly or indirectly (whether as an officer or shareholder
or otherwise) provided that the director and persons connected with
such director are not the holder or holders of 1% or more of the voting
interest in the shares of such company.
• Any proposal concerning the purchase or maintenance of any insurance
policy under which the director may benefit.