BP 2013 Annual Report Download - page 116

BP Annual Report and Form 20-F 2013112
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 arrangements (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 37 and Audit committee report on
page 76 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 279.
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. There have been no further amendments to the Articles of
Association.
The Articles of Association may be amended by a special resolution.
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.
A director may be removed by BP as provided for by applicable law and
shall vacate office in certain circumstances as set out in the Articles of
Association. 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.
The Act requires a director of a company who is in any way interested in a
contract or proposed contract with the company to declare the nature of
the director’s interest at a meeting of the directors of the company. The
definition of ‘interest’ includes the interests of spouses, children,
companies and trusts. The Act also requires that a director must avoid a
situation where a director has, or could have, a direct or indirect interest
that conflicts, or possibly may conflict, with the company’s interests. The
Act allows directors of public companies to authorize such conflicts where
appropriate, if a company’s Articles of Association so permit. BP’s Articles
of Association permit the authorization of such conflicts. The directors may
exercise all the powers of the company to borrow money, except that the
amount remaining undischarged of all moneys borrowed by the company
shall not, without approval of the shareholders, exceed the amount paid up
on the share capital plus the aggregate of the amount of the capital and
revenue reserves of the company. Variation of the borrowing power of the
board may only be affected by amending the Articles of Association.