RBS 2005 Annual Report Download - page 119

section
02
Governance
117
Corporate governance
Annual Report and Accounts 2005
Meetings
The number of meetings of the Board and the Audit,
Remuneration and Nominations Committees and individual
attendance by members is shown below.
Board Audit Remuneration Nominations
Total number of meetings
in 2005 99 5 5
Number of meetings
attended in 2005
Sir George Mathewson 9 – – 5
Sir Tom McKillop* 2 – – 2
Lord Vallance** 4 – – –
Sir Angus Grossart** 4 – – –
Sir Fred Goodwin 9 – – –
Mr Buchan 9 8 5 –
Dr Currie 9 – 5 –
Mr Fish 6 – – –
Mr Hunter 9 9 – –
Mr Koch 9 – – –
Mr MacHale 9 9 – –
Miss Mackay 9 9 5 –
Mr Pell 9 – – –
Mr Robertson** 3 – – –
Sir Steve Robson 9 9 – –
Mr Scott 9 – 5 4
Mr Sutherland 8 – – 4
Mr Watt 9 – – –
* Sir Tom McKillop was appointed to the Board on
1 September 2005.
** Lord Vallance, Sir Angus Grossart and Iain Robertson retired
from the Board on 20 April 2005.
Relations with shareholders
The company communicates with shareholders through the
annual report and by providing information in advance of the
Annual General Meeting. Individual shareholders can raise
matters relating to their shareholdings and the business of the
Group at any time throughout the year. Shareholders are given
the opportunity to ask questions at the Annual General Meeting
or submit written questions in advance. The chairmen of the
Audit, Remuneration and Nominations Committees are
available to answer questions at the Annual General Meeting.
Communication with the company’s largest institutional
shareholders is undertaken as part of the company’s investor
relations programme. During the year, the directors received
copies of analysts’ reports and a monthly report from the
Group’s investor relations department which includes an
analysis of share price movements, the Group’s performance
against the sector, and key broker comments. In addition,
information on major investor relations activities and changes
to external ratings are provided. In 2005, the senior
independent director attended results presentations to
enhance his understanding of the views of major shareholders
and would be available to shareholders if concerns could not
be addressed through the normal channels. The arrangements
used to ensure that directors develop an understanding of the
views of major shareholders are considered as part of the
annual Board performance evaluation.
The Chairman, Group Chief Executive, Group Finance Director
and, if appropriate, the senior independent director
communicate shareholder views to the Board as a whole.
In 2005, a survey of investor perceptions was undertaken on
behalf of the Board by independent advisers, and the findings
were considered by the Board.
Internal control
The Board of directors is responsible for the Group’s system
of internal control that is designed to facilitate effective and
efficient operations and to ensure the quality of internal and
external reporting and compliance with applicable laws and
regulations. In devising internal controls, the Group has regard
to the nature and extent of the risk, the likelihood of it
crystallising and the cost of controls. A system of internal
control is designed to manage, but not eliminate, the risk of
failure to achieve business objectives and can only provide
reasonable, and not absolute, assurance against the risk of
material misstatement, fraud or losses.
The Board has established a process for the identification,
evaluation and management of the significant risks faced
by the Group, which operated throughout the year ended
31 December 2005 and to 27 February 2006, the date the
directors approved the Report and Accounts. This process is
regularly reviewed by the Board and meets the requirements
of the guidance ‘Internal Control: Guidance for Directors on
the Combined Code’ issued by the Institute of Chartered
Accountants in England and Wales in 1999.
The effectiveness of the Group’s internal control system is
reviewed regularly by the Board and the Audit Committee.
Executive management committees or boards of directors in
each of the Group’s businesses receive quarterly reports on
significant risks facing their business and how they are being
controlled. These reports are combined and submitted to the
Board as quarterly risk and control assessments. Additional
details of the Group’s approach to risk management are given
in the ‘Risk management’ section of the ‘Operating and
financial review’ on pages 86 to 106. The Audit Committee also
receives regular reports from Group Risk Management and
Group Internal Audit. In addition, the Group’s independent
auditors present to the Audit Committee reports that include
details of any significant internal control matters which they
have identified. The system of internal controls of the
authorised institutions and other regulated entities in the Group
is also subject to regulatory oversight in the UK and overseas.
Additional details of the Group’s regulatory oversight are given
in the Supervision and Regulation section on pages 253 to 256.