Vodafone 2011 Annual Report Download - page 62

60 Vodafone Group Plc Annual Report 2011
Disclosure controls and procedures
We maintain “disclosure controls and procedures”, as such term is defined in
Rule 13a-15(e) of the Exchange Act, that are designed to ensure that
information required to be disclosed in reports that we file or submit under the
Exchange Act is recorded, processed, summarised and reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to management, including our Chief
Executive and Chief Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.
The directors, the Chief Executive and the Chief Financial Officer have
evaluated the effectiveness of the disclosure controls and procedures and,
based on that evaluation, have concluded that the disclosure controls and
procedures are effective at the end of the period covered by this document.
Going concern
The going concern statement required by the Listing Rules and the
Combined Code is set out in the “Directors’ statement of responsibility” on
page 75.
Auditor
Following a recommendation by the Audit Committee, and in accordance
with Section 489 of the Companies Act 2006, a resolution proposing the
reappointment of Deloitte LLP as our auditor will be put to the shareholders
at the 2011 AGM. We do not indemnify our external auditor.
In its assessment of the independence of the auditor and in accordance with
the US Public Company Accounting Oversight Board’s standard on
independence, the Audit Committee receives in writing details of
relationships between the Company and Deloitte LLP that may have a
bearing on their independence and receives confirmation that they are
independent of the Company within the meaning of the securities laws
administered by the SEC.
In addition, the Audit Committee pre-approves the audit fee after a review
of both the level of the audit fee against other comparable companies,
including those in the telecommunications industry, and the level and
nature of non-audit fees, as part of its review of the adequacy and objectivity
of the audit process.
In a further measure to ensure auditor independence is not compromised we
have a policy that provides for the pre-approval by the Audit Committee of
permitted non-audit services by Deloitte LLP. The policy lists categories of
non-audit services from which the auditor is excluded from providing. For
certain specific permitted services the Audit Committee has pre-approved
that Deloitte LLP can be engaged by management subject to specified fee
limits for individual engagements and fee limits for each type of specific
service permitted. For all other services, or those permitted services that
exceed the specified fee limits, the Chairman of the Audit Committee, or in his
absence another member, can pre-approve permitted services which have
not been pre-approved by the Audit Committee.
In addition to their statutory duties, Deloitte LLP is also engaged where, as a
result of their position as auditor, they either must, or are best placed to,
perform the audit-related services in question. This is primarily work in
relation to matters such as shareholder circulars, Group borrowings,
regulatory filings, and certain business acquisitions and disposals. Other
work is awarded on the basis of competitive tender.
During the year Deloitte LLP and its affiliates charged the Group £9 million
(2010: £9 million, 2009: £8 million) for audit and audit-related services and
a further £1 million (2010: £1 million, 2009: £1 million) for non-audit
assignments which primarily comprised fees in relation to a number of
taxation assignments totalling £1 million (2010: £1 million, 2009: £1 million).
The auditor was considered the most suitable supplier for the services given
its extensive knowledge of the Group. After reviewing external requirements
and guidelines in place, the types of services rendered were considered by
the Audit Committee not to impact the objectivity and independence of
Deloitte LLP. An analysis of these fees can be found in note 4 to the
consolidated financial statements.
US listing requirements
Vodafone’s american depositary shares are listed on the NASDAQ Stock
Market LLC (‘NASDAQ’) and we are therefore subject to the rules of
NASDAQ as well as US securities laws and the rules of the SEC. NASDAQ
requires US companies listed on the exchange to comply with NASDAQ’s
corporate governance rules but foreign private issuers, such as the
Company, are exempt from many of those rules. However, pursuant to
NASDAQ Listing Rule 5615 we are required to disclose a summary of any
material ways in which the corporate governance practices we follow differ
from those required by NASDAQ for US companies. The material differences
are as follows:
Independence
■ The NASDAQ rules require that a majority of the Board be comprised of
independent directors and the rules include detailed definitions that US
companies must use for determining independence.
■ The Combined Code requires a company’s board of directors to assess
and make a determination as to the independence of its directors.
While the Board does not explicitly take into consideration NASDAQ’s detailed
definitions, it has carried out an assessment based on the requirements of the
Combined Code and has determined in its judgement that all of the non-
executive directors are independent within those requirements. At 17 May
2011 the Board comprised the Chairman, four executive directors and ten
non-executive directors.
Committees
■ NASDAQ rules require US companies to have a nominations committee, an
audit committee and a compensation committee, each composed entirely
of independent directors, with the nominations committee and audit
committee required to have a written charter that addresses the
committees’ purpose and responsibilities.
■ Both our Nominations and Governance Committee and our
Remuneration Committee have terms of reference and compositions that
comply with the Combined Code’s requirements.
■ Our Nominations and Governance Committee is chaired by the Chairman
of the Board and its other members are non-executive directors of the
Company.
■ Our Remuneration Committee is composed entirely of non-executive
directors whom the Board has determined to be independent.
■ The Audit Committee is composed entirely of non-executive directors
whom the Board has determined to be independent and who meet the
requirements of Rule 10A-3 under the Exchange Act.
We consider that the terms of reference of these committees, which are
available on our website (www.vodafone.com/governance), are generally
responsive to the relevant NASDAQ rules but may not address all aspects of
these rules.
Code of conduct
Under NASDAQ rules US companies must adopt a code of conduct
applicable to all directors, officers and employees. We have adopted a Code
of Conduct which applies to all employees. It sets out what conduct is
expected of employees as they adhere to our Business Principles and draws
their attention to the Group’s policies. In addition, a Code of Ethics has been
adopted in compliance with Section 406 of the Sarbanes-Oxley Act which
is applicable to the senior financial and principal executive officers. We have
made our Code of Ethics available on our website (www.vodafone.com/
governance).
Quorum
Under NASDAQ rules companies are required to have a minimum quorum of
33.33% of the shareholders of ordinary shares for shareholder meetings.
However, our articles of association provide for a quorum for general meetings
of shareholders of two shareholders regardless of the level of their aggregate
share ownership.
Corporate governance continued