A board of a company typically consists of two or more executives with a number of non-executive positions. Various sub-committees, such as remuneration and audit, would often be formed from these people. This structure is not entirely appropriate to LINX due to its standing as a not-for-profit mutually owned organisation. However, some valid comparisons can be made with other similar and dissimilar organisations. Various codes have been produced and a wide range of research has been conducted into this subject and there are links in the further reading section.
The structure and operation of the LINX board has remained largely unchanged since September 2000 when circumstances resulted in the separation of the CEO and Chairman roles. This structure, which is explained below, was most recently reviewed and ratified at a Board strategy meeting in June 2015, and followed in November 2015 by the appointment of an independent non-executive Chairman. In 2017 further consideration led to the proposal to appoint up to 3 executive directors, which was passed by the LINX membership in November 2017.
The LINX board consists of the independent non-executive Chairman, a full time CEO, six people elected by the members as non-executives and three appointed executive directors. Elections for the non-executive directors are run annually in accordance with the MoU and Articles of the Company (see Further Reading). The officers of the Company, as deemed appropriate by the board members, are decided and elected by the board following each election. This normally consists of a Vice Chairman.
The above process has been deemed appropriate where a Board has been elected by the members and may not have a complement of people with balanced skill sets and experience.
Aside from fiduciary duties associated with an office of the Company, the Chairman takes first responsibility for the HR and other requirements of the CEO and leads his/her annual appraisal.
Terms of Reference for Board members, their Biographies and their Declarations can be found in the Further Reading section of this document.
Responsibilities and Risks
LINX board members are directors of the Company and therefore take on responsibilities and risks as individuals just as they would any other directorship. However, there is no statutory definition of a non-executive. The responsibilities include statutory items such as the filing of accounts and annual returns as well as all activities of the business. Ultimately, each director is responsible for any and all of actions the Company makes and has to comply with the duties of an executive director as established under common law and case law, such as the duty to exercise care, skill and diligence.
Alongside this, there is also a certain level of risk associated with a company of LINX’s size (50+ staff, turnover of £14-15m and cash reserves often in excess of £1m) and the business area it operates in. The failure of the Company to act within the Companies Act 1985 can result in prosecution for directors. They also face the risk of personal litigation by any party, including the Company itself, that believes they have reason to bring such an action. LINX takes out certain insurances to protect its officers but these do not protect the directors in a personal capacity in all circumstances.
Having said that, there have been no incidents of attempted prosecution of any of the directors of LINX or fines for late filing of information at Companies House.