BT 2004 Annual Report Download - page 58

party. This policy continues and appropriate
arrangements are in place to implement it throughout
the group. However, the Companies Act 1985 requires
companies to obtain shareholder authority before they
can make donations to EU political organisations
(which includes UK political parties). The definition of
political donations used in the Act is very much
broader than the sense in which these words are
ordinarily used. As a result, it covers activities which
form part of normal relationships between BT,
individual politicians and the principal political parties.
These activities are not designed to provide support to
or to influence public support for any political party.
They would not be thought of as political donations in
the everyday sense of these words. They are entirely
non-political in nature and are designed so that BT can
make MPs and others aware of key industry issues and
matters affecting the company.
The authority we are requesting from shareholders
at the AGM is not designed to change the company’s
stated policy of not making cash contributions. It will,
however, ensure that BT acts within the provisions of
the current UK law when carrying out the above
activities. They are carried out on an even-handed
basis related broadly to the major UK political parties’
electoral strength and the company believes that they
make an important contribution to the success of BT.
The level of political donations split as between the
major UK political parties is shown in the Report of
the directors.
Pension funds
BT’s two main pension funds – the BT Pension Scheme
and the BT Retirement Plan – are not controlled by the
Board but by separate trustees who are company and
union nominees, under independent chairmen. The
trustees look after the assets of the funds, which are
held separately from those of the company. The
pension funds’ assets can only be used in accordance
with their respective rules and for no other purpose.
Financial
A statement by the directors of their responsibilities for
preparing the financial statements is included in the
Statement of directors’ responsibility. The directors
report on page 72 that the company is a going
concern.
US Sarbanes-Oxley Act of 2002
BT has securities registered with the US Securities and
Exchange Commission (SEC). As a result, BT is obliged
to comply with those provisions of the Sarbanes-Oxley
Act (the Act) applicable to foreign issuers. BT will
comply with the legal and regulatory requirements
introduced pursuant to this legislation, in so far as they
are applicable to the group.
Given the narrow and prescriptive definition under
the relevant SEC rules, it is the opinion of the Board
that the Audit Committee does not include a member
who is an ‘audit committee financial expert’. However,
the Board considers that the Committee’s members
have broad commercial experience and extensive
business leadership, having held various roles in
accountancy, financial management and supervision,
treasury and corporate finance and that there is a
broad and suitable mix of business, financial and IT
experience on the Committee. The Board and its
committees will keep under active review the financial
expert matter during the 2005 financial year as part of
their nomination and succession planning activities.
The Chief Executive and Group Finance Director,
after evaluating the effectiveness of BT’s disclosure
controls and procedures as of the end of the period
covered by this Annual Report and Form 20-F, have
concluded that, as of such date, BT’s disclosure
controls and procedures were effective to ensure that
material information relating to BT was made known to
them by others within the group. The Chief Executive
and Group Finance Director have also provided the
certifications required by the Act.
There were no changes in BT’s internal control
over financial reporting that occurred during the year
ended 31 March 2004 that have materially affected, or
are reasonably likely to materially affect, BT’s internal
control over financial reporting.
The code of ethics for the Chief Executive, Group
Finance Director and Director Group Financial Control
and Treasury, adopted for the purposes of the Act, is
posted on the company’s website at
http://www.btplc.com/Thegroup/Companyprofile/
Ourcodesofethics/CodeofethicsCEO.htm
The New York Stock Exchange
In November 2003, the SEC approved the new
corporate governance listing standards of the New
York Stock Exchange (NYSE). The company, as a
foreign issuer with American Depositary Shares listed
on the NYSE, is obliged to disclose any significant ways
in which its corporate governance practices differ from
these standards.
The company has reviewed the NYSE’s new listing
standards and believes that its corporate governance
practices are consistent with them, with one exception
where the company does not meet the strict
requirements set out in the standards. The standards
state that companies must have a nominating/
corporate governance committee composed entirely of
independent directors and with written terms of
reference which, in addition to identifying individuals
qualified to become board members, develops and
recommends to the Board a set of corporate
governance principles applicable to the company. BT
has a Nominating Committee. Information about it is set
out on pages 54 and 55. It does not develop corporate
governance principles for the Board’s approval. The
Board approves the group’s overall system of
governance internal controls, governance and
compliance authorities. The Board and the Nominating
Committee are made up of a majority of independent,
non-executive directors.
BT Annual Report and Form 20-F 200457 Corporate governance