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prompt-pack-board-committee-charter

Category: Coding Risk: Unknown ★ 3.9 · Rating 3.9/5 (8) sboghossian/mini-claude-for-legal MIT

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name: prompt-pack-board-committee-charter
description: Use when drafting the charter (terms of reference) for a board committee — Audit, Remuneration/Compensation, Nomination/Governance, or Risk — covering purpose, composition, independence standards, duties, meeting requirements, reporting obligations, and authority to retain advisors. Corporate governance practice area; covers MENA-listed company governance codes (UAE SCA, KSA CMA, DIFC Companies Law) and international standards.
license: MIT
metadata:
id: prompt-pack.board-committee-charter
category: prompt-pack
practice_area: corporate-governance
priority: P2
intent: [drafting, board-committee-charter]
related: [prompt-pack-board-resolution, prompt-pack-board-resolution-template, prompt-pack-annual-report-governance-section, heuristic-always-state-jurisdiction-first, kb-corporate-governance-mena]
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Board Committee Charter

When to use this

Use this skill when drafting the formal charter (also called terms of reference) for a board-level committee. A charter defines the committee's mandate, membership, and operating procedures. It is adopted by the full board and is a foundational governance document.

Most governance codes and regulators in MENA and internationally require certain standing committees. The main committees addressed by this skill:

  1. Audit Committee — financial reporting, internal audit, external auditor oversight
  2. Remuneration/Compensation Committee — director and executive pay
  3. Nomination/Governance Committee — board composition, succession, governance
  4. Risk Committee — enterprise risk oversight (especially for financial institutions)

Prompt template

Draft a charter for [Company's] [Audit/Compensation/Nomination/Risk] Committee. Include purpose, composition requirements, independence standards, duties and responsibilities, meeting frequency, reporting obligations, and authority to retain advisors.

Use [[conversation-clarifying-questions]] to elicit [bracketed] inputs before drafting.

Required inputs

Input Why it matters
Company name and jurisdiction Determines which governance code applies; composition requirements vary
Committee type Audit, Remuneration, Nomination, Risk — each has different mandatory requirements
Board size and composition Charter must reflect realistic composition possibilities
Applicable governance code SCA (UAE), CMA (KSA), DIFC Companies Law, UK Code, etc.
Whether company is listed, regulated, or private Listed company charters must comply with exchange rules; regulated entities (banks, insurers) have additional requirements

Document structure (all committee types)

1. Purpose and authority

  • Committee name and the committee's core mandate (2–3 sentences)
  • Delegation by the full board: the committee acts on behalf of and reports to the board; it does not have management authority
  • Authority to retain independent advisors (counsel, consultants, experts) at the company's expense — this is a standard governance protection

2. Composition

2.1 Size

  • Minimum and maximum number of members
  • All members must be non-executive directors; majority or all must be independent (as defined)

2.2 Independence standards

Define "independent" by reference to the applicable governance code:

Jurisdiction Independence definition
UAE (SCA Code) Director who is not an executive; has no material relationship with the company or related parties; has not been an employee in the last 3 years
KSA (CMA Code) Director who is not a controlling shareholder, relative of the CEO, or employee; no material financial relationship with the company
DIFC Companies Law Independent: not an employee; no material business relationship; no family relationship with other directors or officers; meets the definition in the Companies Regulations
UK Corporate Governance Code Annex B independence criteria; majority of board (excluding Chair) should be independent NEDs

Flag that independence assessments must be disclosed in the annual governance report — see [[prompt-pack-annual-report-governance-section]].

2.3 Chairperson

  • Appointed by the full board or elected by committee members
  • Must be independent
  • Audit Committee: the Chair should have financial literacy or expertise (required under most codes; UAE SCA requires at least one member with financial/accounting experience)
  • Remuneration Committee: the Chair must be independent; the CEO may not chair

2.4 Membership changes

  • Committee members are appointed annually by the full board
  • Removal: by the full board only
  • Vacancies: filled by the full board within [60/90] days

3. Duties and responsibilities

Audit Committee duties

Core responsibilities (universal across governance codes):

  • Financial reporting: review the integrity of the company's financial statements; review significant accounting judgements and estimates; review the annual and interim reports before board approval
  • Internal audit: oversee the internal audit function; approve the internal audit plan; ensure the internal audit function has adequate resources and independence
  • External auditor: recommend appointment, re-appointment, or removal of the external auditor to the board/shareholders; review external auditor independence (ensure no prohibited non-audit services); approve the external audit scope and fees; review audit findings
  • Internal controls: review the effectiveness of the company's internal controls over financial reporting; review management's reports on internal control
  • Whistleblowing: oversee the company's whistleblowing mechanism; ensure employees can report concerns without fear of retaliation
  • Related party transactions: review and approve related party transactions above defined thresholds

MENA-specific: in UAE (SCA Code) and KSA (CMA Code), the Audit Committee must include at least one member with financial expertise. The committee must report to shareholders at the AGM.

Remuneration/Compensation Committee duties

  • Remuneration policy: design and recommend to the board the company's remuneration policy for directors and senior management
  • Individual remuneration: approve or recommend the remuneration of each executive director and the CEO
  • Incentive plans: design, oversee, and administer short-term (annual bonus) and long-term (equity incentive) plans
  • Contractual terms: review contractual terms for new executive director appointments (notice periods, change of control provisions)
  • Disclosure: oversee the remuneration report in the annual report

MENA-specific: success/conditional fees and performance-linked remuneration for board members are subject to shareholder approval in UAE (SCA Code); KSA prohibits variable board remuneration in some contexts — verify current rules.

Nomination/Governance Committee duties

  • Board succession: identify and evaluate candidates for board membership; establish selection criteria; oversee the nomination process
  • Skills and diversity: review the board skills matrix; identify gaps; recommend board diversity goals
  • Independence assessment: make annual assessments of each director's independence; recommend to the full board
  • Corporate governance: review the company's governance practices; recommend improvements; oversee compliance with the applicable governance code
  • Board evaluation: oversee the annual board performance evaluation process

Risk Committee duties (for financial institutions and large corporates)

  • Risk appetite framework: review and recommend to the board the company's risk appetite statement
  • Risk oversight: oversee the enterprise risk management framework; review key risk reports; escalate emerging risks to the full board
  • Risk function: oversee the Chief Risk Officer; ensure adequate resources and independence for the risk function
  • Regulatory capital (for financial institutions): oversee regulatory capital adequacy and liquidity risk management

4. Meetings

  • Frequency: Audit Committee: at least 4 times per year; others: at least 3 times per year (or as required)
  • Quorum: majority of members; or as specified in the charter
  • Agenda: Chair (with committee secretary) prepares agenda; members may add items
  • Attendees: relevant management, external auditor (Audit Committee), and advisors may attend as invitees; committee may meet without management
  • Minutes: comprehensive minutes maintained; reviewed and approved at the next meeting; filed in corporate records
  • Written resolutions: permitted between meetings if urgency requires; same quorum/majority applies

5. Reporting

  • To the board: present summary of each committee meeting's deliberations and recommendations to the next board meeting
  • Formal recommendations: formal recommendations to the board (e.g., approval of financial statements, external auditor appointment) must be recorded in board minutes
  • Annual report: each committee Chair provides a report of the committee's activities for the annual governance section — see [[prompt-pack-annual-report-governance-section]]
  • Shareholders (Audit Committee): report to AGM on committee activities and auditor independence

6. Authority and resources

  • Independent advisors: the committee has authority to retain, at the company's expense, independent counsel, financial advisors, auditors, or other specialists it deems necessary
  • Access: committee members have unrestricted access to management and company records
  • Budget: annual budget approved by the full board

7. Review of the charter

  • Review annually for compliance with applicable governance code updates
  • Recommend amendments to the full board for approval

Jurisdictional notes

UAE (SCA Code for listed companies)

  • Audit Committee: mandatory; minimum 3 members; all non-executive; majority independent; at least one with financial expertise
  • Remuneration Committee: mandatory; minimum 3 members; majority independent; CEO must not be a member
  • Nomination Committee: mandatory; minimum 3 members; majority independent
  • Risk Committee: recommended for financial institutions; regulated banks must comply with CBUAE corporate governance standards

KSA (CMA Corporate Governance Regulations)

  • Audit Committee: mandatory for listed companies; minimum 3 members; majority independent; at least 2 with financial/accounting experience
  • Remuneration and Nominations Committees: mandatory; composition requirements per CMA regulations
  • Board member remuneration: shareholder approval required; limits on variable components

DIFC

  • DIFC Companies Law requires an audit committee for public companies (listed or large private); specific independence and financial expertise requirements
  • Financial institutions: DFSA Corporate Governance Module imposes additional committee requirements

Lebanon

  • No mandatory committee regime for private companies; voluntary committees for good governance; banks regulated by Banque du Liban circulars have specific committee requirements

Common mistakes

  • Charter silent on CEO attendance at committee meetings (for Audit and Remuneration, the CEO should not attend the compensation setting for themselves; state this explicitly)
  • No reference to the applicable governance code — charter will quickly become outdated when the code is revised
  • Independence criteria not defined — creates annual assessment disputes
  • No authority to retain independent advisors — committees without this authority are hamstrung
  • Charter not reviewed or updated after governance code amendment
  • [[prompt-pack-board-resolution]] — board resolution adopting or amending the committee charter
  • [[prompt-pack-annual-report-governance-section]] — annual disclosure of committee activities
  • [[kb-corporate-governance-mena]] — MENA governance code reference
  • [[heuristic-always-state-jurisdiction-first]] — jurisdiction determines mandatory composition requirements