Terms of Reference of the Management Board (“MB”) of the UK firm

1. Governance Structure

The governance structure of the UK firm primarily comprises of the following:

• a MB responsible for the policies, strategy, direction and management of the UK firm;
• an Executive Board (“EB”) (a Committee of the MB) responsible for execution of the policies, strategy and management of the UK firm;
• a Clients and Markets Executive (“CME”) (a Committee of the MB) responsible for overseeing the UK firm’s​ client facing and market activities​ ;
• an International Committee (“IC”) (a Committee of the MB) responsible for decision making in relation to and oversight of the UK firm’s strategic alliances (currently Africa, CEE and Middle East), matters relating to regionalisation and/or EMEA and approval of any matters on behalf of the MB relating to network issues;
• a Partner Matters Committee (“PMC”) (a Committee of the MB) responsible for certain Partner HR matters on behalf of the MB;
• a Supervisory Board (“SB”) which considers, reviews and gives guidance to the MB on matters which the SB considers to be of concern to the partners and having regard to the interests and wellbeing of the wider partnership as a whole and the UK firm; and
• a Public Interest Body (“PIB”) responsible for considering the public interest aspects of the UK firm, which consists of five external independent members, two members of the MB and two members of the SB.
• These Terms of Reference should be read in conjunction with the Members’ Agreement. In the event of any inconsistency or contradiction, the Members’ Agreement prevails.

2. Membership

The MB comprises of:

• the Senior Partner;
• the Senior Partner Elect (during such periods as there is one); and
• such partners and/or other persons as are appointed by the Senior Partner, such appointments being for such periods of time and on such other terms and conditions, and such appointees having such powers, functions and responsibilities, as the Senior Partner considers appropriate.

Additionally:

• the MB comprises at least two partners (including any Senior Partner Elect) in addition to the Senior Partner; and
• the MB is required to comply with the requirements of professional regulations.

The Senior Partner may at any time:

• remove any person as a member of the MB;
• appoint additional members, such appointments being for such periods of time and on such other terms and conditions, and such appointees having such powers, functions and responsibilities, as considered appropriate.

The MB may delegate (with limited exceptions) its powers or discretions to committees.

3. General Powers

• The MB is responsible in particular for:
• the policies, strategy, direction and management of the UK firm;
• leadership of the UK firm including setting and oversight of the execution of the purpose, culture, values, strategy, policies, direction and management of the UK firm;
• the strategy for the UK firm including audit and non-audit services;
• the UK firm’s policies including professional standards, conduct and independence;
• compliance with the Audit Firm Governance Code;
• involuntary partner retirements (being in accordance with processes approved and confirmed by the SB);
• the MB has oversight of the activities of it’s Committees; and
• the MB also has the power to exercise the rights and powers, and to perform, or procure the performance of, the duties and obligations of the UK firm.

4. Meetings

The MB normally meets formally every three to four months and conducts business at additional meetings as necessary.

The MB keeps minutes of its formal proceedings and makes these available to the SB and the PIB.

The Senior Partner is Chairman of the MB. If he is unable to attend, another member may Chair the meeting from the other attending members.

The MB will be quorate with three MB members attending in person or by telephone, video or other means that allows them to hear the discussion except in relation to Notices to Retire.

In relation to the enforced retirement of a member for cause, in accordance with the Members’ Agreement the quorum is three-quarters of the members of the MB.

The Chairman of the MB has the casting vote.

Decisions of the MB may be taken at a meeting, in writing or electronically except in relation to Notices to Retire.

5. Reporting and Controls

The MB shall, at least once a year, review its own performance, constitution and Terms of Reference to ensure it is operating at maximum effectiveness.

6. Risk and Quality

The MB has overall responsibility for establishing systems of internal control and for reviewing and evaluating their effectiveness.*

The MB has overall responsibility for the quality of the UK firm’s work and for the maintenance of a culture upholding the UK firm’s values.

7. Financial and Operational Matters

The MB, assisted by the EB (a committee of the MB) has overall responsibility and accountability for the financial and operational affairs of the UK firm including budgeting, periodic forecasting and the monthly driving of performance. It has the authority to enter into loans and security arrangements (including subordinating partners’ interests) for the purpose of financing the UK firm.

8. Policies, strategy and management of the UK firm

The MB, assisted by the EB (a Committee of the MB) has responsibility for execution of the policies, strategy and management of the UK firm.

9. Partner-related Matters

The MB, assisted by the PMC and EB (committees of the MB), has overall responsibility for the management of partner-related matters including:

• the nomination of candidates for partner (with the approval of the SB);
• withholding from a partner who misconducts himself or herself the repayment of capital and the payment of income; and
• setting rules, including for establishing and maintaining the UK firm’s independence.

10. International Matters

The MB, assisted by the IC and EB (committees of the MB) has overall responsibility for making decisions in relation to and oversight of the UK firm’s strategic alliances (currently Africa, CEE and Middle East), matters relating to regionalisation and/or EMEA and approval of any matters relating to network issues.

11. Client facing and market activities

The MB, assisted by the CME and EB (committees of the MB) has overall responsibility for overseeing the UK firm’s ​ client facing and market activities.

12. Network Obligations

The MB is required to consult the SB before putting any matter to the partners for approval or determination by a resolution or ballot.

The MB shall exercise its powers so as to secure the UK firm’s compliance with PwC Network obligations.

The MB has the power to conduct legal proceedings on behalf of the UK firm.

The MB may determine the form of resolutions for constitutional changes (with the approval of the SB).

Any two members of the MB have the power to execute, on behalf of the UK firm:

• transactions, commitments and arrangements outside the ordinary course;
• deeds; and
• financing documents.

However, the MB can delegate this power.

The MB can request the SB to test the reactions of a wider body of partners to particular matters, issues or proposals.

Two members of the MB, appointed by the Senior Partner, sit on the PIB.

13.Supervisory Board

Members of the MB are ineligible to stand for election to the SB.

July 2017

_{*Further details of the UK firm internal quality control system, quality control standards and independence procedures and practices are given in the UK firm’s Transparency Report (pwc.co.uk/annual-report).}