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Non-Executive Ofcom Board Members’ Interests In Companies In The Communications Sector

1. It is essential that Ofcom should establish and maintain a reputation for impartiality, integrity and high professional standards. Amongst other things, this means that there must never be any legitimate reasons for people outside Ofcom to suspect that our decisions may be influenced by the private interests of Non-Executive Board members; or that Non-Executive Board members may be able to profit from information available to them through their work. Working within these necessary standards of probity it is also important that Ofcom is able to attract Non-Executive Board members with knowledge of the sector it regulates; it is therefore important for Ofcom that it is able to manage sensibly and appropriately potential conflicts of interest the Non-Executive Board members may have or that may arise from time to time.
2. Non-Executive Board members may, on occasion, find themselves in a situation where they may be subject to what would be deemed to be a conflict of interest. In such circumstances such conflicts should be referred to the Secretary to the Corporation who will advise the Non-Executive Board member on the appropriate course of action (which could, inter alia, involve ceasing an activity or role, disposing of an interest or being excused from part of a Board meeting).
3. There are numerous individual companies in the Communications sector. Many are subsidiaries of other companies, often with diverse interests. In some cases, participation in the UK Communications sector is a major activity for these groups; in others, it is less significant. Accordingly, it is not appropriate to impose an absolute prohibition on Non-Executive Board members having an interest in all companies that are actively involved in some way in the wide Communications industry – that would be too prohibitive and would prevent Ofcom from benefiting from the experience of members. Nevertheless, it is appropriate to impose certain restrictions to ensure that Non-Executive Board members do not put themselves in a position where their interests could be perceived to be in conflict with their official duties or could damage Ofcom’s reputation.
4. Detailed guidance is attached. However, it is important to note that:
5. Non-Executive Board members should have no interests in companies a significant part of whose activities are those of an Ofcom-regulated company (excluding companies who require solely a Wireless Telegraphy Act Licence). Where the Ofcom-regulated activity forms only a small part of the overall group’s activity, an interest may be held, provided the Non-Executive Member gains approval and the interest is made transparent to external stakeholders.
6. Non-Executive Board members may have significant interests in other non-regulated companies in the Communications sector PROVIDED they gain approval and there is full transparency about any such interests.
7. Finally, it is important to note that all colleagues at Ofcom (including specifically executive Board members) and other part-time members of Ofcom (for example members of the Content Board) are also subject to policies on conflicts of interest and further iterations of this policy will be provided to them.

David Currie
Chairman of Ofcom

Interests In Communications Companies: Procedures

1. Non-Executive Board members are advised to exercise caution when dealing in shares of Communications sector companies, and generally to be alert to possible conflicts of interest between their personal financial affairs and their official duties.
2. The following rules must be observed in all circumstances:

• Non-Executive Board members should have no share interests in companies, a significant part of whose activities consist in broadcasting or providing an electronic communications network or service (an “Ofcom-regulated company”).
• Any Non-Executive Board member who holds shares in any of these companies or their subsidiaries should let the Secretary to the Corporation know immediately, and agree, if appropriate, a timetable for disposal. Ofcom will meet the reasonable transaction costs for the disposal of the shares in circumstances where a company has moved since the shares were purchased from an approved company to an Ofcom-regulated company although it will not compensate Non-Executive Board members for any losses arising on such disposals.
• Exceptionally, shares may be held in companies for whom Ofcom-regulated activity forms only a small part of the company’s overall activities (for example a major supermarket group which also offers telecommunications services as an ancillary part of the business). Such holdings should be referred to the Secretary of the Corporation who will discuss whether the holding is acceptable.
• Any Non-Executive Board member proposing to deal in or exercise rights attached to shares in any other company involved in the Communications sector or in companies that are affiliated to any such company (such as parent companies and their other subsidiaries) must first consult the Secretary to the Corporation to obtain clearance (which should be confirmed in writing or by e-mail and a copy sent to the Chairman). In general, unless the Communications activities comprise a significant part of the group’s activities, or there are special circumstances prevailing at the relevant time that would make it inappropriate for a Non-Executive Board member to deal in the way proposed, clearance should be given. In other circumstances, however, it may be necessary to withhold approval. For these purposes, “significant” refers to the degree of influence on the market value of the relevant shares, which variations in the financial and trading position and prospects of the Communications activities can be expected to have.
• Membership of Boards of companies in the Communications sector, main employment by a company in the Communications sector and consultancy work for a company in the Communications sector is not prohibited for Non-Executive Board members; however, all such engagement should be referred to the Secretary to the Corporation who will discuss with the Non-Executive Board member whether such engagement is acceptable. The general principle is that engagement or involvement with an Ofcom-regulated company will not be permitted and for other communications sector companies how much the company concerned is concerned in or affected by a significant number and/or range of Ofcom Board decisions coupled with its salience (eg if a supplier, whether it is closely tied to an individual Ofcom-regulated company) will be indicative in whether a Non-Executive Member’s involvement in the company is acceptable or unacceptable.
• Appearances on television or radio, the production of television or radio programmes and the writing of newspaper columns by Non-Executive Board members is not prohibited; however, the underlying criteria are the combined materiality of the appearances/productions/columns and the subject matter of such appearances/programmes/columns; for example occasional production credits, and occasional appearances on TV or radio are fine but, being a regular main presenter or producer is not. Writing a regular newspaper column about communications matters will not be acceptable but writing a regular column about non-communications matters would be acceptable.
• It is not appropriate for a Non-Executive Board member to:

• Be a member of, or seek adoption or selection as, a candidate or prospective candidate for the House of Commons, the Scottish Executive, the Welsh Assembly, the Northern Ireland Assembly or the European Parliament;
• Be a member of, or a candidate for election to, a local authority other than parish councils; and
• Act as a party spokesman in the House of Lords.

There are other situations which merit special consideration. For instance, in the case of a former elected representative who had lost office, the main consideration in assessing acceptability would be whether such a person intended to seek re-election or adoption as a candidate at the next opportunity. Or in the case of a person holding office in a party political organisation, the main consideration in assessing acceptability would be whether this was regarded as a step towards selection as a candidate.

• If a Non-Executive Board member becomes aware of a possible conflict of interest between his/her private interests and his/her official responsibilities, the Non-Executive Board member should immediately bring the matter to the attention of the Secretary to the Corporation and agree with him what steps should be taken to deal with the conflict of interest.

3. Non-Executive Board members should note the following additional points:

• These rules extend to spouses, unmarried partners and dependent children. If these have interests in Ofcom-regulated companies then they should be declared to the Corporation Secretary immediately who will discuss what action needs to be taken with the Non-Executive Board member concerned.
• References to “shares” and “shareholdings” should be read to include all types of security, debt instruments and derivative products including preference shares, loan stocks, bonds, commercial paper, bills of exchange, convertibles, warrants, futures, options, contracts for difference and spread-betting contracts. It does not include collective investment schemes such as PEPs/unit trusts/ OEICs and investment trusts where the individual concerned has no influence on investment decisions.
• Shares may not be held in a trustee or comparable representative capacity whether or not the Non-Executive Board member has primary responsibility for investment decisions (i.e. ‘blind’ trusts are not acceptable).
• Ofcom maintains a register, kept by the Secretary to the Corporation of Non-Executive Board members’ interests to ensure Ofcom has a current record of members’ interests. Upon joining Ofcom all Non-Executive Board members must make a declaration of any interests they or their spouse/partner or dependent children have relating to:

• Office or Board appointments;
• Consultancy work and/or employment;
• Appearances on TV and radio or newspaper columns;
• Relevant financial interests; and
• Any public and/or charitable appointments.

Such register will be updated regularly.

• Prior to appointment to the Board a prospective Non-Executive member will be taken through this policy by the Corporation Secretary to identify, and agree a process for dealing with, any potential conflict as identified in this policy document.

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