Sample disclosure committee charter
Corporate boards are responsible for making financial disclosures and reports according to laws and regulations. It's important that the disclosures be accurate, complete and timely. For many companies, regular board meetings don't provide sufficient time for boards to review and monitor internal controls, complete and submit the required forms, and communicate the company's disclosure policies in a fair and transparent way.
Disclosure committees will find that a board portal system by Diligent Corporation provides them with a secure platform for developing a customized disclosure committee charter and performing all the duties required under the charter. The board portal integrates seamlessly with Diligent Messenger, a highly secure digital communications tool.
Sample Disclosure Committee Charter
The following is a sample disclosure committee charter that incorporates the most commonly used components for committee charters. Every company should customize their charters according to the company's needs and requirements.
KAPLAN SUPPLY COMPANY DISCLOSURE COMMITTEE CHARTER
Disclosure Policy
All financial disclosures that the corporation makes to its security holders or the investment community should comply with regulations and other compliance obligations. The disclosure policy embraces a philosophy of transparency and fairness. It's with the same spirit that the corporation is committed to making disclosures that are accurate, complete and timely. In all material respects, disclosures should fairly represent the corporation's financial condition and the results of operations and cash flows, and meet all legal, regulatory or stock exchange requirements.
The company commits to communicating internally to make sure that all senior managers understand and consistently apply the principles of the disclosure policy and regularly communicate the disclosure policy to its employees.
Kaplan Supply Company is committed to effective employee orientation and communication. The company will demonstrate its commitment by providing formal employee orientations, holding an annual employee meeting and annually acknowledging the company's disclosure policy in conjunction with the company's code of conduct.
The disclosure committee is responsible for overseeing Kaplan Supply Company's disclosure practices. The disclosure committee will design, implement and regularly evaluate the company's internal controls and procedures.
Purpose of the Disclosure Committee
The company's disclosure committee shall assist the corporation's officers and board directors in fulfilling their responsibilities and the corporation's responsibilities to identify and disclose material information about the corporation. The disclosure committee will also ensure the accuracy, completeness and timeliness of the company's financial reports.
Responsibilities
The senior officers of the board shall supervise and oversee the disclosure committee. The disclosure committee is accountable for the following responsibilities:
1. Review the company's internal controls and other procedures to make sure that the company can provide the Securities and Exchange Commission (SEC) with the information required by disclosures. This responsibility includes reviewing controls over written information that the company will disclose to the public and ensuring that all disclosures are reported accurately and in a timely manner. The disclosure committee will also gather information and communicate it to management, including the senior officers, to allow them ample time to make timely decisions about the disclosures.
2. The disclosure committee shall review, monitor and document the effectiveness and integrity of the disclosure procedures and controls.
3. The disclosure committee will review all required material and relevant reports related to disclosure statements, including:
- Annual reports on Form 10-K
- Quarterly reports on Form 10-Q
- Current reports on Form 8-K
- Proxy statements
- Registration statements
- Other reports filed with the SEC
- Press releases containing financial information
- Earnings guidance
- Financial projection statements
- Material transactions
- Correspondence communicated to shareholders
- Other relevant disclosure statements or communications
4. The disclosure committee is responsible for having discussions about the committee's duties and responsibilities about preparing the disclosure statements and evaluating the effectiveness of the disclosure controls and procedures.
Additional Responsibilities
The senior officer may assign other responsibilities to the disclosure committee that are consistent with the committee's purpose.
Considerations About Disclosure Control
The disclosure committee shall base their review and revision of the disclosure controls and procedures based on the control environment, risk assessment, control activities, information and communication, and monitoring.
The disclosure committee shall consider any directives given to them by the board and the audit committee, the ethics and values of the corporation's officers and employees, the corporation's code of conduct, management's philosophy and operating style, and how the company delegates authority.
The disclosure committee shall review procedures to make sure that the company is taking the necessary actions to handle risks in light of achieving their objectives.
The committee shall review and assess the committee's charter on an annual basis and recommend any proposed changes to the senior officers for approval.
The disclosure committee shall consider the identification and analysis of relevant risks that may prevent accurate and timely disclosures and form a basis for how to better manage risks.
The committee shall also consider the flow of communication about financial disclosures as it moves up, down and across the organization.
The disclosure shall assess the quality of the financial reporting systems through evaluations, regular management supervision and reporting deficiencies.
Organization
The committee will consist of the corporation's officers and directors. The committee may assign two or more committee members to review disclosure statements if the full committee can't convene. At least one of them must be knowledgeable about financial reporting and the law. Alternatively, the senior officers may assume the responsibilities of the disclosure committee if the full disclosure committee cannot fulfill their duties as a group.
Chair
The chair of the disclosure committee shall be either the chief financial officer or another member of the committee as appointed by a senior officer.
Meetings and Procedures
The board committee may meet formally or informally. They shall meet as frequently as necessary to ensure that the disclosure statements are accurate and timely. The committees shall also use meeting time to evaluate the disclosure controls and procedures to determine whether changes are appropriate in light of preparing disclosures, developments since the last evaluation or material changes in the company's organization. The committee shall also consider changes in economic and industry conditions.
The disclosure committee shall have full access to the company's books, records, assets, facilities and employees, including internal auditors in connection with committee responsibilities.
