Corporate report

Board Governance document

Published 23 April 2024

1. Introduction

Corporate governance is the application of a system of effective oversight, guidance and direction over executive management activities to ensure that the organisation is pursuing the right strategy, and in doing so is identifying and addressing risks and opportunities and engaging with stakeholders effectively and appropriately, so that value is created and preserved for the longer term.

Corporate governance is not the function or output of executive management activity or the day to day running of the business (or any component part of it).

This document is a description of how Great British Nuclear (“GBN”) (company number: 05027024) is organised to enable the effective discharge of its corporate governance responsibilities.

The Financial Reporting Council has published the UK Corporate Governance Code (the “Code”). This is primarily designed for UK public listed companies. GBN, as an unlisted private company, does not fall within the automatic application of the Code. However, the interim Framework Document for GBN (the “Framework Document”) issued by the Department for Energy Security and Net Zero (“DESNZ” or “Shareholder”) specifies that GBN must comply with the principles and provisions of the Code to the extent appropriate to GBN or specify and explain any non-compliance in its annual report. The Board of Directors of GBN will therefore conduct an annual review exercise to agree and ensure it understands the reasons for any gaps between GBN’s governance and the Code.

2. Purpose of GBN

GBN has been established to deliver the new Nuclear Programme for the UK. It is expected to be classified by the Office for National Statistics as a Non-Departmental Public Body of DESNZ.

GBN’s purpose, responsibilities and strategic objectives are set out in the Framework Document.

3. Board responsibilities

As a UK-incorporated limited company, GBN has a Board of Directors (the “Board”). The Board’s role is to promote the long-term sustainable success of GBN, generating and preserving value for the Shareholder and UK taxpayers and in doing so contributing to wider society. The Board, as the highest-level decision-making forum within GBN, has responsibility for overseeing the entirety of GBN’s activities and operations, supported as appropriate by its Committees. This includes monitoring GBN’s risk performance and mitigations applied, with the support of the Board Audit & Risk Committee and the DESNZ sponsorship team.

As set out in the Framework Document, the Board is specifically responsible for:

• establishing and taking forward the strategic aims and objectives of GBN consistent with its overall strategic direction and within the policy and resources framework determined by DESNZ Ministers;
• providing effective leadership of GBN within a framework of prudent and effective controls which enables risk to be assessed and managed;
• ensuring the financial and human resources are in place for GBN to meet its objectives;
• reviewing management performance;
• ensuring that the Board receives and reviews regular financial and management information concerning the management of GBN;
• ensuring that it is kept informed of any changes which are likely to impact on the strategic direction of GBN’s Board or on the attainability of its targets, and determining the steps needed to deal with such changes and where appropriate bringing such matters to the attention of the responsible Minister and PAO via the executive team, shareholder team or directly;

• ensuring that any statutory or administrative requirements for the use of public funds are complied with; that the Board operates within the limits of its statutory authority and any delegated authority agreed with DESNZ, and in accordance with any other conditions relating to the use of public funds; and that, in reaching decisions, the Board takes into account guidance issued by DESNZ;

• ensuring that as part of the above compliance they are familiar with:
• Articles of Association
• GBN Framework Document;
• any delegation letter issued to GBN;
• any elements of any settlement letter issued to DESNZ that is relevant to the operation of GBN; and ensure that they have appropriate internal mechanisms for the monitoring, governance and external reporting regarding any conditions arising from the above documents and ensure that the Chief Executive and Great British Nuclear as a whole act in accordance with their obligations under the above documents;
• demonstrating high standards of corporate governance at all times, including by using its independent Audit & Risk Committee to help the Board to address key financial and other risks;
• appointing (with the responsible Minister’s approval) a Chief Executive and, in consultation with DESNZ, setting performance objectives and remuneration terms linked to these objectives for the Chief Executive which give due weight to the proper management and use and utilization of public resources; putting in place mechanisms for independent appraisal and annual evaluation of the performance of the Board Chair by the independent non-executives, taking into account the views of relevant stakeholders. The outcome of that evaluation should be made available to the Responsible Minister; and
• determining all such other things which the Board considers ancillary or conducive to the attainment or fulfilment by GBN of its objectives.

In addition, the Board are subject to certain legal duties including as follows:

Under the Companies Act 2006, each Director owes the same objective legal duties to the company as any other Director. However, those with specialist expertise in any particular area will also be treated subjectively at law as having that additional knowledge when the Board is reviewing and making decisions on matters relevant to that area of expertise.

Each Director owes a general fiduciary duty to the company to act in what they consider to be the best interests of the company at all times.

The Board is responsible for ensuring that GBN meets its responsibilities to DESNZ as the Shareholder and must also consider the interests of wider stakeholders (pursuant to s172 Companies Act 2006). The Board should keep engagement mechanisms under review to ensure there is effective engagement with, and participation from, these parties. To assist with this, GBN may establish a Stakeholder Advisory Panel comprised of a diverse selection of stakeholder representatives that the Board may directly consult and obtain advice and perspectives from on strategic matters.

The Board should concern itself that workforce policies and practices are consistent with GBN’s values and enable the workforce to raise any matters of concern, and that such policies and practices support GBN’s long-term success.

• Directors must avoid any conflict or potential conflict of interest with GBN and comply at all times with and the Code of Conduct for Board Members of Public Bodies (the “Board Code of Conduct”) which covers conduct in the role and includes the Nolan Principles of Public Life as well as rules relating to the use of public funds and to conflicts of interest. The Board, with the support of Company Secretariat, is responsible for taking action to identify and manage any such conflicts of interest. The Board is responsible for ensuring that the influence of third parties does not compromise or override the independent judgement of any Director. Where conflicts arise, the Board is also responsible for ensuring that in dealing with them all applicable laws, regulations, the Articles, the Board Code of Conduct and, wherever possible, the UK Corporate Governance Code are complied with.

• Company Secretariat maintains a register of Directors’ interests, which is reviewed at least annually by the Board. Directors are required to declare any interests in the subject matter of any meeting topic at, or before, the start of each Board and Committee meeting, or immediately during any meeting if a potential conflict becomes apparent.

• Each of the Directors will have the benefit of Directors & Officers insurance cover.

4. Matters reserved to the Board

The following matters specified in the GBN scheme of delegations will be determined by and require the approval of the GBN Board:

• GBN’s corporate governance structure and the terms of reference and membership for all Board Committees;

• GBN Board Code of Conduct;

• GBN Risk framework; the setting of GBN’s Risk Appetite and approval of the Principal Risks; and

• Annual Report and Accounts.

Any GBN matters which require Shareholder and/or HM Government approval will also require GBN Board endorsement before submission to the Shareholder (unless the GBN Board either waives such requirement or delegates its authority to endorse the recommendation). This includes:

• Approval of significant business cases or procurement decisions including those with a whole life value or approval cost as specified in GBN’s scheme of delegations as requiring Shareholder and/or HM Government approval.

• GBN’s Corporate and annual Business Plan, including setting measurable and challenging KPIs for agreement with Ministers.

• Recommendations on major changes to the structure of GBN, including proposals for the set up or closure of any subsidiary, joint venture or other commercial partnership.

• Recommendations to initiate or defend legal proceedings which are material to delivery objectives or present significant reputational or financial risk to GBN and/or to the Shareholder, subject to GBN’s scheme of delegations.

In addition to the matters reserved to the Board, the Board’s general powers are set out in GBN’s Articles of Association.

Of those matters which are under the Board’s powers of approval, the Board has delegated responsibility for certain matters to its Board Committees (but not to the exclusion of the Board’s own powers, authorities and discretions), as described in the Committees’ respective Terms of Reference.

Each Committee acts on behalf of the Board in undertaking such delegated responsibilities, and this allows for dedicated time, focus and expertise to be applied on key matters. The Board is responsible for supporting its Committees to ensure that sufficient resources are in place to undertake the required duties.

From time to time the Board may delegate to the Chair alone, or to other individual Board members or to a Board Committee or sub-committee to take responsibility for specific matters.

5. Membership

The composition of the Board must allow it to discharge its responsibilities and provide effective leadership to GBN to help address current and future challenges in GBN’s long-term interests. Each Director must bring skills and experience to the Board that are relevant to support the Board in fulfilling its role effectively, as appropriate to GBN’s purpose, sector, primary activities, strategic objectives, development plans, risks, opportunities and stakeholder interests. The Chair, with the support of the Nominations & Remuneration Committee and DESNZ as its Shareholder, will keep under review the specific reasons why each Director’s contribution is, and continues to be, important to GBN’s long-term sustainable success.

Directors are not subject to annual shareholder re-election (given DESNZ, as GBN’s sole Shareholder, has approved their initial appointment) but Board membership will be periodically refreshed as GBN’s risks, challenges, opportunities, strategy and governance requirements evolve. The Shareholder has the power to appoint and remove any Director.

The Board is comprised of Non-Executive Directors and Executive Directors.

The Board will consist of a Non-Executive Chair, independent Non-Executive Directors, up to two Non-Executive Directors nominated by DESNZ (the “Shareholder Director”), the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”) and such other Executive Directors whose appointment may be recommended by the Nominations & Remuneration Committee and approved by the Board from time to time. All will be company directors within the meaning of the Companies Act 2006.

5.1 Non-Executive Directors (“NEDs”)

The NEDs provide constructive challenge, help develop proposals on strategy and policy, offer strategic guidance and specialist advice, help to assess risks and opportunities, and hold management to account by assessing management performance against agreed goals and objectives and monitoring how those goals are reported.

The NEDs are:

• The Chair: DESNZ appoints the Chair, who should be independent upon appointment when assessed against the circumstances set out in the Code. The Chair is responsible for the leadership of the Board and providing support and challenge to the CEO and management team in accordance with the Chair’s responsibilities set out in the Framework Document, the Chair’s appointment letter and any letter of priorities issued to the Chair by the Secretary of State;

• Independent NEDs: Individuals appointed by DESNZ who are external to GBN, but who support the Chair in bringing outside experience, perspective and ideas to the Board and who are chosen for their ability to contribute to GBN’s governance and strategic development. These individuals are determined by the Board to be independent by reference to the tests set out in the Code; and

• Shareholder Director(s): The Shareholder may nominate up to two senior employees of DESNZ for the Board to appoint as NEDs, each to represent the Shareholder on the Board in acting as a Shareholder Director in accordance with the Framework Document. The role of a Shareholder Director is broadly the same as for the Independent NEDs, with the addition of supporting the Chair in ensuring the Board and the Shareholder are aware of each other’s views, or likely views, including attending meetings with members of the Shareholder’s sponsorship team to obtain or relay such views where necessary.

5.2 Senior Independent Director

The Board has decided not to appoint a Senior Independent Director (“SID”) from its Independent NEDs. The role of the SID is described in the Code as providing a sounding board for the Chair and an intermediary for the other directors and shareholder(s). However, the Board considers this role is not necessary because:

• Each of the NEDs provides a sounding board for the Chair;

• In cases where the Chair has a potential conflict of interest one of the Independent NEDs can be asked to chair the relevant meeting (or part of it);

• The presence of the Shareholder Director already presents an intermediary route between the Shareholder and the Chair; and

• There are no other shareholders to engage with (as compared to a listed company).

5.3 Executive Directors

The Executive Directors are senior Executive employees who are responsible for running the day-to-day business of GBN. This includes:

• The CEO who is responsible for the leadership of the Executive team in managing the day-to-day operation of GBN and implementing the strategy and policy set by DESNZ and the Board. The Board has delegated to the CEO authority for running the day-to-day business of GBN. The role of the CEO is set out below; and

• Other Executive Directors who support the CEO. These other Executive Directors have specialist skills and experience to lead their business/functional areas. However, as Board members they are each equally and jointly responsible with the other Directors for overseeing all GBN activity.

The Code provides that a majority of Directors (excluding the Chair) should be Independent NEDs. However, the Board is content (absent any other reasons) for each Shareholder Director to be counted as an Independent NED for this purpose (despite not meeting the Code’s independence test due to representing a significant shareholder).

This is because DESNZ is GBN’s sole voting Shareholder, and the interests of GBN will therefore almost always be aligned with the interests of the Shareholder. Where any misalignment may arise, this would be carefully managed by the Chair with the support of Company Secretariat to ensure all Directors continue to discharge their legal duties.

Save with regard to any interim positions, the Shareholder will appoint the Chair and the independent Non-Executive Directors for a term of three years, subject to satisfactory annual appraisal. The Chair and independent Non-Executive Directors may be reappointed for up to two further terms of three years each, subject to mutual agreement and meeting required performance standards.

The Chair is accountable to the Shareholder and the Chair’s responsibilities are set out in the Framework Document, the Chair’s appointment letter and any letter of priorities issued to the Chair by the Secretary of State.

6. Role and powers of the CEO

The CEO’s responsibilities are set out in this document, the CEO’s appointment letter, CEO’s delegations letter and, in the CEO’s capacity as GBN’s Accounting Officer (“AO”), in the AO’s appointment letter.

The CEO is responsible for the day-to-day leadership and management of GBN, reporting to the Board Chair. The CEO may delegate responsibilities to GBN executives and employees as determined within GBN’s scheme of delegations and Board-approved governance structure.

The CEO as Accounting Officer is personally responsible for safeguarding the public funds for which they have charge; for ensuring propriety, regularity, value for money and feasibility in the handling of those public funds; and for the day-to-day operations and management of GBN.

As set out in Cabinet Office guidance for Non-Departmental Public Bodies, the CEO will generally follow the direction of the Board. The CEO shall escalate to the Board and DESNZ in writing any matters which give rise to a conflict with their responsibilities as AO. If the Board is still minded to proceed, the CEO should then ask the Shareholder Director General to intervene to resolve the difference of view in writing, and if the Board’s decision stands seek written direction to continue. The Shareholder will immediately inform HM Treasury.

The Board has delegated to the CEO (but not to the exclusion of its own powers, authorities and discretions) all its powers, authorities and discretions except for:

• matters that the Board specifically reserves to itself from time to time, including those matters specified for Board approval in GBN’s scheme of delegations; and

• the matters delegated to the Board’s Committees or sub-committees.

The CEO has in turn delegated certain powers, authorities and discretions to other members of the Executive Committee and senior management (but not to the exclusion of the CEO’s own powers, authorities and discretions), as specified in GBN’s scheme of delegations.

7. Relationship between the Chair and the CEO

The roles of Chair and CEO are exercised by different individuals. The Chair is responsible for the leadership of the Board and providing support and challenge to the CEO and management team. The CEO is responsible for the day-to-day leadership and management of GBN.

The two roles are complementary. The Chair and the CEO ensure that each is appropriately informed of the other’s current areas of activity, and they seek to work closely together as a team. The success of their relationship is based on mutual respect and trust, frankness and openness, with problem areas addressed early. The Chair and CEO will agree on their respective roles in setting major tasks, taking new initiatives and addressing major challenges.

The Chair has a right of direct access to any member of the GBN workforce as deemed necessary.

8. Meetings

Scheduled Board meetings are expected to take place at least six times per year but the Board may also meet on an ad hoc basis as required to discuss ‘out of cycle’ important and urgent matters. Board meetings will typically be scheduled at least 12 months in advance to ensure availability of Directors. Board meetings may be supplemented by Directors’ training, meetings with members of management, site visits and/or Board dinners to allow for conversations in a less formal setting.

The Chair, and each Committee Chair, will also ensure communication is maintained with the other members of the Board/Committee, members of management, and DESNZ representatives as appropriate outside of the scheduled meetings.

Company Secretariat will maintain forward business planners of Board and Board Committee business. This enables discussions on particular topics to be scheduled at appropriate times during the year and ensures that the Board and its Committees can prioritise their time on the matters of most importance to GBN within their respective remits.

Company Secretariat will work with the Chair in setting the agenda for each Board meeting, in collaboration with Executive Committee members. Each agenda item will have an Executive Sponsor and nominated presenter who is responsible for preparing a pre-read report for the Board (if appropriate) and, if required, for attending the meeting to present the topic and answer questions from the Board.

It is the Executive Sponsors’ responsibility to brief any members of their team appropriately and in good time to enable reports to be prepared, reviewed and submitted to Company Secretariat in line with published deadlines.

Company Secretariat collates all reports for each meeting in accordance with published deadlines, and uploads all papers to a secure electronic folder accessible to the Board for Directors’ review.

Unless otherwise agreed, notice of each meeting confirming the venue, time and date of the meeting, together with an agenda of items to be discussed and supporting papers, shall be made available to each member of the Board and any other person required to attend no later than five working days before the date of the meeting.

The Shareholder may request to the Chair that an observer from DESNZ (in addition to the presence of the Shareholder Director or their alternate) attends all or part of specific Board meetings.

• A meeting may exceptionally be called by the Chair, or by any other Director in agreement with the Chair, on less than five days’ notice, and on less than 48 hours’ notice if agreed by all of the Directors having a right to attend and vote at the relevant meeting.

• Company Secretariat manages the logistical arrangements of Board meetings. A Board meeting may be held in person, via virtual meeting platforms, telephone or a combination of methods where necessary, at the Chair’s discretion.

• The quorum for Board meetings shall be two Directors, one of whom shall be a Shareholder Director (or alternate Shareholder Director). DESNZ will seek to ensure that a Shareholder Director (or alternate Shareholder Director) attends all meetings of the Board of which notice to the Directors is given. If a Shareholder Director is not available to attend a Board meeting, an alternate Shareholder Director must be available to attend.

• Company Secretariat takes formal minutes (a written record) of each meeting. The minutes are reviewed and approved by the Board at the subsequent meeting, signed by the Chair and stored securely by Company Secretariat in line with GBN’s legal obligations.

• Where the Chair considers it appropriate, decisions may be taken by written resolution by way of confirmatory emails received from a majority of Directors who would have been able to count in the quorum and vote on such resolution at a duly convened Board meeting. The decision should be formally noted at the following meeting.

• The Chair may hold regular meetings with the NEDs without Executive Directors present, typically after formal Board meetings to allow for candid discussion and feedback.

9. Board Effectiveness

The Chair will periodically instruct an effectiveness review to evaluate the performance of the Board, Board Committees and individual Board Members, with the support of the Company Secretariat. This will be annually unless agreed otherwise with the Shareholder. At least once every three years an external independent review will be commissioned.

The summary results from the review will be presented to the Board, together with a high-level action plan proposed by the Chair and Company Secretariat, for approval. Each Director is expected to engage with each evaluation process and take appropriate action when development needs are identified.

10. Other relevant matters

The GBN Board will approve, adopt and comply with a Board Code of Conduct and publish a register of Board Members’ interests, which will be updated at least annually. GBN will manage proactively and appropriately any potential or perceived conflicts of interest that Board Members have, or which may arise on specific issues. A Director seeking authorisation in respect of a conflict must seek advice from Company Secretariat and notify the Board as soon as possible.

The Chair shall ascertain, at the beginning of each meeting, the existence and handling of any conflicts of interest and Company Secretariat shall minute them accordingly.

The Board may commission such further independent or external advice or reviews as necessary, including legal advice, in order to discharge its responsibilities and provide assurance to the Shareholder.

This Board Governance Document shall be reviewed by the Board at least every two years.