Corporate Governance

Principal activities
BT is one of the world’s leading communications services companies operating in over 170 countries. A review of our business is given in the ‘BT in review’ section.

Corporate governance
We are committed to operating in accordance with best practice in business integrity, maintaining the highest standards of financial reporting, corporate governance and ethics. The directors consider that BT has, throughout the year, complied with the provisions set out in Section 1 of the 2006 Combined Code on Corporate Governance.

Board and board committees
It is BT’s policy that the Board will comprise a majority of independent non-executive directors. The roles of the Chairman and the Chief Executive are separate. The non-executive directors provide a strong, independent element on the Board. Non-executive directors are appointed initially for three years at the end of which the appointment may be continued by mutual agreement. The Chairman and the non-executive directors hold regular meetings without the executive directors being present. The Chairman ensures that the views of the shareholders are known to the Board and considered appropriately.
     The Board’s main focus is overall strategic direction, development and control. A formal statement of its role is available on BT’s website. The Board normally meets nine times each year.
     The Board carries out annual evaluations of Board and Board Committee performance and effectiveness.
      To meet best corporate governance practice, the Audit Committee, the Remuneration Committee and the Nominating Committee have long been an established part of BT’s system of governance. The Audit Committee is made up entirely of independent non-executive directors. The Board considers that members of the Committee have recent and relevant financial experience. The Audit Committee reviews BT’s published financial results, the Annual Report & Form 20-F and other published information for statutory and regulatory compliance and reports its views to the Board. It recommends the appointment,
reappointment and remuneration of the external auditors and ensures that key partners are rotated at appropriate intervals. The Board has policies determining what non-audit services the external auditors can provide, in order to safeguard their independence and objectivity.
     The Nominating Committee has agreed and reviews the combination of experience, skills and other attributes which the non-executive directors should bring to the Board, using this evaluation to recommend any proposed changes to the Board.
     The Equality of Access Board monitors BT’s compliance with the Undertakings made to Ofcom following Ofcom’s strategic review of telecommunications.
     The Chief Executive chairs the Operating Committee, which meets weekly.
     The Board also has a Committee for Responsible and Sustainable Business and a Pension Scheme Performance Review Group.
     The Audit Committee, the Remuneration Committee and the Nominating Committee, and the Equality of Access Board, have written terms of reference, which are available on our website at

Internal control and risk management
The Board is responsible for the group’s systems of internal control and risk management and reviews each year the effectiveness of those systems. These systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives; any system can provide only reasonable and not absolute assurance against material misstatement or loss.
     BT has processes for identifying, evaluating and managing the significant risks faced by the group. These processes have been in place for the whole of the 2008 financial year and have continued up to the date on which this document was approved.
     BT’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the group. Management has concluded that at 31 March 2008, BT’s internal control over financial reporting was effective.


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