FRC Nominations Committee Charter

This Charter

This Charter sets out the functions and responsibilities of the FRC Nominations Committee (Committee).

Functions

The functions of the Committee are:

1. to review annually the composition of, and criteria for appointment to, the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB)
2. to conduct the merit-based assessment of relevant candidates and to make recommendations to the Financial Reporting Council (FRC) on the appointment of individuals to the AASB and AUASB, as necessary
3. to review, periodically, the succession needs of the AASB and AUASB in discussion with the Chair of the AASB and AUASB respectively
4. to consider and report to the FRC on the performance of AASB and AUASB Members.

Responsibilities

The Committee will:

1. make a recommendation to the FRC on the desired size and composition of the Boards including skills mix and the eligibility criteria for appointment.
2. establish and periodically review criteria for appointments to the AASB and AUASB, to be approved by the FRC
3. advertise periodically to seek applications from persons interested in being considered for appointment to the AASB and/or AUASB as a member, other than the Chair;
4. maintain a schedule of eligible nominees who meet the eligibility criteria established by the FRC on the recommendation of the Committee for AASB and AUASB members;
5. for appointments to the AASB and AUASB, other than the Chair, interview and evaluate candidates on the basis of merit and make recommendations to the FRC for its consideration. In making recommendations the Committee may also take into account factors such as the desirability of particular skills, experience and other factors having regard to the overall membership of the board.
6. recommend appointments to the AASB and/or AUASB for a term of 3 years with the possibility of extension for a further 2 terms. Once a member has served 3 terms, to be reappointed they must reapply through an open interview process except where they are extended on a short-term basis, as outlined under clause 3.7. Appointment for a second and third term may occur without a further interview, provided the peer and Chair feedback are satisfactory.
7. while legislation to give effect to the proposed merger of the FRC, the AASB and the AUASB is before Parliament, the Nominations Committee may recommend to the FRC that current appointments (including those where the member has served the maximum number of terms) can be extended as needed, on a short-term basis (i.e., for a 4-month term) without interview. This will minimise the risk that the AASB and AUASB will have insufficient Board members and mitigate practical difficulties associated with finding suitable candidates for short-term appointments.
8. consider and recommend whether an acting appointment should be made where there is a vacancy in the office of an AASB or AUASB member, or where an AASB or AUASB member is absent from duty, overseas or for any reasons unable to perform the duties of the office. In making a recommendation, the Committee should have regard to the impact of an acting appointment on the operations of the relevant Board, with a view that acting appointments should be considered as a short-term measure. An acting appointment should not be renewed without a merit-based process unless there are exceptional circumstances.
9. make appropriate inquiries into any circumstances or conduct of which the FRC becomes aware that indicates there may be reasons to terminate a member of the AASB or AUASB (other than a Chair) on the grounds of misbehaviour, physical or mental incapacity or a breach of the terms and conditions of the member’s appointment, and after taking due legal advice and providing all interested parties an opportunity to have their views heard, make a report to the FRC on that matter which may include a recommendation as to whether it should terminate the member’s appointment (ASIC Act ss236C(6), 236G(6));
10. oversee a process by which Members of the AASB and AUASB are periodically appraised on their performance to inform future considerations by the Committee, including reappointment decisions.
11. as part of the recruitment of AASB and AUASB members, consider upcoming appointments to key relevant international bodies requiring financial reporting, assurance, external reporting or educational responsibilities in these areas, where it is important that Australia has influence, and where appropriate identify suitable candidates to promote for appointment.

Membership of the Committee and Quorum

1. Members of the Nominations Committee are appointed by the FRC, including a Chair.
2. Half the total number of members appointed to the Nominations Committee constitutes a quorum for a meeting.
3. However, if one or more members is prevented from being present during deliberations, or taking part in any decision, due to FRC Rule of Procedure 9.5, with respect to a particular matter and as a result there is no longer a quorum present when any member or members leave the meeting, that question should ordinarily be resolved by circular resolution. However, where conducting a circular resolution is not reasonably practicable, the remaining members at the meeting constitute a quorum for the purpose of any deliberation or decision at that meeting with respect to that matter.
4. Despite Rules 4.2 and 4.3 a quorum shall not be constituted by less than 2 members.
5. As appropriate, the Committee may invite other relevant persons to make submissions to meetings and/or provide input as necessary.

Meetings

1. The Committee will meet as often as needed to perform its duties.
2. Minutes of the meetings of the Committee will be drafted and confirmed at the following meeting or approved earlier as needed and should ordinarily be included in the papers for the next full FRC meeting.

Voting

1. A recommendation made by the Committee is to be determined by a majority of the votes of the members present and voting. Every appointed member has one vote.
2. A resolution will not be taken to be carried unless there is an affirmative vote of more than 50 per cent of those present and entitled to vote. In the event of a tied result, the member presiding at the meeting will have a casting vote, in addition to his or her vote.

Disclosure and handling of conflicts of interest

1. The Committee is bound by the obligations to disclose material personal interests and abstain on relevant matters as detailed in Rule 9 of the FRC Rules of Procedure. Specifically, a member with a material personal interest must declare that fact and not participate in deliberations or decision-making in relation to that matter. For the avoidance of doubt, matters that concern a member of the same firm as a Committee member are presumed to give rise to a material personal interest.
2. The member presiding will call on members to declare conflicts at the start of a Committee meeting.

Reporting

The key matters discussed at each Committee meeting are to be reported by the Committee Chair to the FRC at the next scheduled FRC meeting. The report will include all matters that are relevant to the function and responsibilities of the Committee.

Other matters

The Committee shall also perform any other activities consistent with this Charter that the Committee or the FRC deem appropriate.

Review

The Committee will review its Charter on a regular basis, at least every 2 years.