The Company’s Ordinary Shares are admitted to trading on AIM, therefore the Company is not required to comply with the UK Corporate Governance Code. Nonetheless, the Directors recognise that it is in the best interests of the Company and its Shareholders to follow the UK Corporate Governance Code’s principles of corporate governance and to have in place risk controls appropriate for a company of its size along with the NAPF Corporate Governance Policy and Voting Guidelines for AIM Companies.
The UK Corporate Governance Code provides that the board of directors of a UK public company should include an appropriate combination of executive and non-executive directors. Except in the case of smaller companies, at least half the board, excluding the Chairman should comprise independent non-executive directors. The board should determine whether a director is independent in character and judgment and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director’s judgment taking into account the criteria of independence defined in the UK Corporate Governance Code and the guidance in the NAPF AIM Policy.
The Directors support high standards of corporate governance. The Company’s Board currently comprises three executive directors and two non-executive directors. The Chairman and the other non-executive director are considered by the Board to be independent of management and free of any relationship which could materially interfere with the exercise of their independent judgment.
The Directors have adopted terms of reference for and will form an audit committee, a nominations committee and a remuneration committee. In accordance with the NAPF AIM Policy a majority of the members of the audit committee, remuneration committee and nominations committee will be independent non-executive directors. The UK Corporate Governance Code requires that a majority of the members of the nominations committee should be independent non-executive directors. It also requires that the audit committee and the remuneration committee comprise at least three (or in the case of small companies, two) independent non-executive directors. The Company fully complies with these requirements.
The UK Corporate Governance Code recommends that the Board should appoint one of its independent non-executive directors to be the Senior Independent Director (“SID”) to provide a sounding board for the Chairman and to serve as an intermediary for the other directors when necessary. The SID should be available to Shareholders if they have concerns that contact through the normal channels of chairman, chief executive or other executive directors has failed to resolve or for which such contact is inappropriate. The Company’s SID is Mike Dee.
The audit committee comprises Alan Howarth and Mike Dee, both independent non-executive directors and will be chaired by Mike Dee. In compliance with the UK Corporate Governance Code, Mike Dee has relevant financial experience. The audit committee will normally meet not less than twice a year and has responsibility for, amongst other things, the planning and review of the Group’s annual report and accounts and half yearly reports and the involvement of the Group’s auditors in that process. The committee will focus in particular on compliance with legal requirements, accounting standards and on ensuring that an effective system of internal financial control is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half yearly reports remains with the Board.
The terms of reference of the audit committee cover such issues as membership and the frequency of meetings, as mentioned above, together with the role of the secretary and the requirements of notice of and quorum for the right to attend meetings. The duties of the audit committee covered in the terms of reference are: financial reporting, internal controls and risk management systems, whistleblowing internal audit, external audit and reporting responsibilities. The terms of reference also set out the authority of the committee to exercise its duties.
The nominations committee comprises Alan Howarth and Mike Dee, both of whom are independent non-executive directors, and will be chaired by Alan Howarth. The nominations committee will meet when appropriate and will consider the composition of the Board, retirements and appointments of additional and replacement directors and make appropriate recommendations to the Board.
The remuneration committee comprises Alan Howarth and Mike Dee, both of whom are independent non-executive directors, and will be chaired by Alan Howarth. The remuneration committee will normally meet not less than twice a year and has responsibility for making recommendations to the Board on the Group’s policy on the remuneration of certain senior executives (including senior management), including annual bonuses, the eligibility requirements for benefits under long term incentive schemes and for the determination, within agreed terms of reference, of specific remuneration packages for each of the executive Directors, including pension rights, contracts of employment and any compensation payments.
The terms of reference of the remuneration committee cover such issues as membership and frequency of meetings, as mentioned above, together with the role of secretary and the requirements of notice of and quorum for and the right to attend meetings. The duties of the remuneration committee covered in the terms of reference relate to the following: determining and monitoring policy on and setting levels of remuneration, contracts of employment, early termination, performance related pay, pension arrangements, authorising claims for expenses from the executive directors, reporting and disclosure, and remuneration consultants. The terms of reference also set out the reporting responsibilities and the authority of the committee to exercise its duties.