What Is a Board Committee Charter?

A board committee charter is a key document detailing the specific goals, duties and processes of a certain committee. The charter serves as a reference book for the committee’s mode of operation and ensures that each member is aware of the committee’s purpose.

Purpose of a board committee charter

A well-organised, detailed committee charter allows for the proper management of committee functions. It ensures that all members work towards a shared goal, helps maintain clear lines of communication and prevents misunderstandings regarding the committee’s key responsibilities.

While a committee charter differs from a board charter — a policy document that outlines the roles and responsibilities of the board of directors — they both play a key role in corporate governance by promoting the effective functioning of the board and committee members.

Key elements of a committee charter

Here are the key contents of a board committee charter:

Name, type and purpose

The first section mentions the name of the committee, its type — standing or ad hoc committee — and the mission statement. This statement highlights the committee’s overall purpose to the board and the company. It should clearly explain the reason for the committee’s creation and how it will help drive the company’s goals.

Authority and scope of responsibilities

This section outlines the committee’s authority, the parameters that limit the committee’s operations and the processes of decision making and dispute resolution. It also mentions the specific roles and duties of each committee member.

Composition and qualifications

The personnel requirements of the committee and the criteria for choosing members. This includes the specific nomination processes and rotation requirements.

Meetings

All details related to conducting meetings to ensure productivity. This covers the frequency of committee meetings, member attendance obligations, what constitutes a quorum and the process of recording the meeting minutes.

Specific procedures and systems

The standard procedures to help each committee member understand their specific duties. The section covers the committee’s reporting systems — the frequency of submitting reports, presentation requirements and to whom they should be submitted.

Evaluation procedures

This section outlines the specific systems for conducting committee self-assessments, including the process to follow and the frequency of the evaluations.