Board Terms of Reference

February 2026

The Board of Directors is the overall governing body of Principality Building Society. The Board is responsible for the overall stewardship of the Society and its wholly owned subsidiaries.

The principal functions of the Board are :

• Reviewing and determining the Society’s overall Purpose;
• Setting the strategy for the organisation;
• Monitoring performance against the approved short, medium and long term plans;
• Approving Society’s overall risk appetite;
• Approving the short, medium and long term financial plans;
• Approving the appointment of the CEO, CFO and CRO;
• Approving the cultural and performance frameworks which underpin the Society’s approach to colleagues, members, commercial partners and the wider community;
• Ensuring that the organisation is managed with a view to balancing the short, medium and long term interests of the membership
• Ensuring that the Society meets its regulatory and statutory duties including those related to good outcomes for customers;
• Approving the overall governance structure of the Society; and
• The Board has a general duty to ensure that the Society operates within the Society’s Rules and Memorandum, rules and guidance issues competent authorities and all applicable laws. 

The Board shall comprise no fewer than seven members, and shall not exceed 14 members. The composition of the Board will include Executive and Non-Executive Directors with Non-Executive Directors always being in the majority. Members of the Board are appointed and re-appointed by the Board, upon the recommendation of the Governance and Nominations Committee and subject to the approval of the membership, where appropriate.

The Chair of the Board shall be the Chair of the Society as appointed by the Board and elected/re-elected by the membership at each Annual General Meeting. In the absence of the Chair at a Board meeting, the Senior Independent Non-Executive Director will chair the meeting. If the Chair and the Senior Independent Non-Executive Director are both absent from a meeting of the Board or both decline to act as Chair, the Non-Executive Directors present at that meeting shall appoint a Director to be Chair for the purposes of that meeting.

The Secretary of the meeting will be agreed between the Chair of the Meeting and the Society Secretary.

Only the Statutory Directors of the Society have the right to attend Board meetings. However, other individuals may be invited to attend for all or part of the meeting with the approval of the Chair of the meeting.

The Board shall meet not less than four times per financial year.

Four members, at least two of which should be independent Non-Executive Directors. Subject to the approval of the Chair, all or any member of the Board may participate in the Board meeting, and be considered part of the quorum, by means of a conference call or any other communication method.

Matters arising at a meeting shall be decided by a straight majority vote In the case of a tie , the Chairman of the meeting shall have the casting vote.

Written resolutions may be used in accordance with the Society’s Rules. 

Meeting papers and minutes

The Secretary shall circulate the Agenda and papers for each meeting no less than five working days in advance of the relevant meeting.

Minutes will record the proceedings, resolutions and decisions including recording the names of those present and in attendance and record any declarations of interest/conflicts of interest disclosed at meetings. The minutes of the meeting shall be approved at the next meeting.

The Board may exercise all powers of the Society that are not, by the Statutes or by the Rules, required to be exercised by the Society in a General Meeting.

The activities of the Board are set out in this document. This document should be read in conjunction with the Society’s Rules and Board Composition Policy.

• Audit Committee
• Governance and Nominations Committee
• Non-Executive Director Remuneration Committee
• Remuneration Committee
• Risk Committee

1.1 Responsibility

Set and monitor diversity and inclusion objectives and strategies for the Board and Executive Committee.

Annually

No delegation

1.2 Approve

Short, Medium and Long Term Corporate Plans.

Minimum annually

No delegation

1.3 Approve

All circulars, prospectuses and listing particulars which require approval by the Board.

As necessary

No delegation

1.4 Approve

Approval of:

Interim and final results.

As necessary

No delegation

Annual Report and Accounts.

No delegation

Any significant changes to accounting policies or practices save for those which arise by way of statute or regulatory obligations.

Audit Committee

The Appointment, reappointment or removal of the external auditor to the members.

No delegation

1.5 Approve

Prior approval of any capital expenditure in excess of that authorised in the budget.

As necessary

No delegation

1.6 Approve

Changes to the Group’s corporate structure involving a merger, acquisition, creation or disposal of a legal entity, entering into any Joint venture arrangements or partnerships disposal or any other initiative which could reasonably be considered to have significant strategic implications for the Society.

As necessary

No delegation

2.1 Approve

The Society’s Values Framework, Culture and Standards of Conduct including responsibility for assessing and monitoring the alignment with Purpose and Values.

As necessary

No delegation

2.2 Oversight

Receive an annual report on the Colleague Engagement Survey and ensuring appropriate follow up action is taken.

Annually

No delegation

2.3 Oversight

Ensuring appropriate and effective arrangements for engagement with the Society’s stakeholder groups (members, customers, employees, suppliers, investors, community and the environment) and approval of the Board Stakeholder Map. 

As necessary

No delegation

2.4 Approve

Consumer Duty:

• Appoint a Board Consumer Duty Champion.
• Review and approve at least annually an assessment of whether the firm is delivering good outcomes for its customers which are consistent with the Duty.
• Holding senior managers accountable for the Duty through the Senior Managers & Certification Regime.
• Consider the Duty in all strategic discussions. 

Throughout its activities the Board shall consider the general obligation to ensure customers are getting fair value and good outcomes in everything it does (Consumer Duty – Principle 12).

As necessary

No delegation

3.1 Approve

Approval of the Society’s L1 Risk Appetite Statements.

As necessary

No delegation

3.2 Approve

Approval of any major changes affecting the Society’s risk management / governance frameworks responsible for the identification, mitigation and management of risk.

As necessary

No delegation

3.3 Monitor

Ensuring maintenance of a robust system of internal control and risk management including receiving:

• Regular reports from the Audit and Board Risk Committees on the effectiveness of the Society’s systems and controls and risk management processes.
• An annual report from the Board Whistleblowing Champion on the appropriateness and effectiveness of the Society’s Whistleblowing systems and controls. 

Following each meeting via Committee reports

Annually

No delegation

3.4 Delegation

The overall levels of insurance cover purchase for the Society. The Board to receive a copy of the Directors and Officers Liability Insurance certificate. 

Annually

No delegation

3.5 Approve

Lending proposals in excess of the Board approved delegated lending mandates or risk appetite.

As necessary

No delegation

3.6 Approve

Acquisition and disposal of loan portfolios or other material assets.

As necessary

No delegation

3.7 Delegation

Approval of any material changes to the allocation of responsibilities as set out in the Society’s Responsibility Map.

As necessary

Board Risk Committee

3.8 Approve

Approval of:

• TPS
• ICAAP
• ILAAP
• RRP (including LCFP)

Annually

No delegation

3.9 Approve

Approval of new products as required by the Commercial Lending Product Approval Matrix or the Retail Product Governance Standards.

As necessary

No delegation

3.10 Approval

Of the commencement of legal proceedings or settlements with a potential or actual financial impact in excess of £250,000 including costs.

As necessary

No delegation

3.11 Oversight

Of the arrangements in place to discharge the Society’s regulatory obligations. 

As necessary

No delegation

4.1 Approve

Third party commitments and framework agreements. Approval for contract expenditure where the consideration (or aggregate consideration over the contract term) and/or contingent liability in line with delegated authority.

As necessary

No delegation

5.1 Oversight

Strategy in respect of Environmental, Social and Corporate Governance.

As necessary

No delegation

5.2 Delegated

Strategy in respect of climate change, and approve, where necessary, any actions required to achieve this.

As necessary

BRC

6.1 Oversight

The overall remuneration policy for the Society and its subsidiaries.

The remuneration of non-executive directors shall be a matter for the Non-Executive Remuneration Committee.

As necessary

Remuneration Committee

Non-Executive Remuneration Committee

7.1 Review and recommend change of Rules to members

The Society’s overall corporate governance arrangements including whether its Rules are fit for purpose.

As necessary

No delegation

7.2 Agree and recommend to members

Any proposed change to the name of the Society.

As necessary

No delegation

7.3 Approve

The place of the Head Office.

As necessary

No delegation

7.4 Approve

Resolutions and corresponding documentation to be put forward to members at a general meeting, including proposals for changes to the Society’s Memorandum and Rules and of any document stated to be made on behalf of the Board. 

As necessary

No delegation

7.5

The division of responsibilities between the Chair and the Chief Executive Officer including approval of:

    Delegation

Chair and Chief Executive Officer role profiles; and

As necessary

Governance and Nominations Committee

    Approval

The level of authority delegated to the Chief Executive Officer.

No delegation

7.6 Approve

Any loan to a director or person connected with a director.  

As necessary

No delegation

7.7 Delegation

The making of political donations.

As necessary

No delegation

7.8 Approve

Statements made under S54 of the Modern Slavery Act and Modern Slavery & Human Trafficking Policy.

Annually

No delegation

7.9 Approve

Whistleblowing Policy. 

Annually

No delegation

7.10 Delegation

The approval of the Common Seal Policy. 

Triennially

Executive Committee

7.11 Approve

Appointments to the board of subsidiary businesses.

As necessary

No delegation

7.12 Evaluate

Independence of Non-Executive Directors.

As necessary

No delegation

7.13 Approve

Outside interests and any potential conflicts of interest of any director.

As necessary

No delegation

7.14 Approve

Board Committees:

• The establishment of new committees. 
• Terms of reference (including the level of delegation of authority to those committees).
• Approval of membership and Chairs of Board Committees.

As necessary

No delegation

7.15 Approve

Approval of changes to the structure, size and composition of the Board.

As necessary

No delegation

7.16 Approve

Amendments to this Terms of Reference. 

Annually

No delegation

7.17 Review

Undertaking a rigorous and formal review annually of its own performance, that of its Committees and individual Directors. 

Annually

No delegation