Compliance Committee

Membership
The members of the Committee shall be at least one non-executive director selected by the Board to chair the Committee (and approved by the Ministry of Defence) and at least one other non-executive director selected by the Chairman of the Committee.

The Ministry of Defence shall be entitled to remove the Chairman if necessary either to ensure the effective application of the Compliance Principles or to protect UK defence or security interests.

The MOD shall be entitled to appoint any one person to be an observer, who shall be entitled to attend and speak at all Committee meetings, (but not vote, unless he/she is also a member of the Committee).

The quorum of the Committee shall be two non-executive members.

Secretary
The secretary of the Company shall be the secretary of the Committee.

Attendance
The Group Chairman and CEO would ordinarily be members of the Committee. The Committee shall also require the attendance of the Compliance Implementation Director and the Compliance Audit Director, or of any other executives of the Group to report on the workings of the compliance regime within the group.

The Compliance Implementation Director is responsible for implementing the Compliance Regime and the Compliance Audit Director is responsible for undertaking periodic audits of QinetiQ’s compliance procedures and their implementation by QinetiQ.

Frequency of Meetings
Meetings shall be held at least four times a year. Either Committee members or the Ministry of Defence may request additional meetings if they consider one is necessary.

Operation
The function of the Compliance Committee is to monitor QinetiQ’s compliance with the Compliance Regime agreed with the MOD, the purpose of which is to ensure that QinetiQ is able to maintain its position as a supplier of independent and impartial advice to the MOD.

The Committee is authorised by the Board to require the investigation of any activity falling within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.

Duties
The primary duties of the Committee shall be to oversee and ensure the effective application of the Compliance systems within the Group, as defined in the Memorandum and Articles of the Group and in the Principal Agreement, and as set out in more detail in the QinetiQ Business Management System and to review the operation of the Compliance Regime. In addition, the Committee shall monitor the activities of the QinetiQ Ethics Committee and any other internal functions which the Committee may, from time to time, determine falls within the scope of its responsibilities.

The Committee will do this by:

• receiving a quarterly report from the Implementation Director on the application of the Compliance Regime
• receiving a quarterly report from the Compliance Audit Director summarising the outcome of audits and any process review
• where necessary requiring the production of a more detailed report on any actual or potential breaches of the compliance system
• where necessary, requiring specific actions to be taken by the Compliance Implementation Director to remedy breaches or resolve issues identified by either the MOD, the Compliance Audit Director or by the Committee
• on an ongoing basis, keeping under review the systems that support the compliance regime and recommending any necessary changes
• receiving an annual report from the internal audit team on the effective application of the compliance principles
• making recommendations to the Board on any changes necessary to improve the effectiveness of the systems of internal control for the compliance system.
• reporting annually to the shareholders on the working of the compliance system
• reviewing at the end of the first year of the Company's operation and every three years thereafter on the effectiveness of the compliance regime and its impact on QinetiQ's business
• reviewing the operations of the QinetiQ Ethics Committee and any other internal fuction which the Committee may, from time to time, determine falls within the scope of its responsibilities, on a quarterly basis