Corporate Governance Code

The Board has adopted terms of reference for, and has formed an audit committee with formally delegated duties and responsibilities. The Company is a relatively small fund with no direct employees and so the Board has decided it is not appropriate at present to appoint nominations or remuneration committees.

As an AIM-quoted company, the Company has adopted the principles of the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), which is published by the Quoted Companies Alliance and available at  Where the Company has not adopted the principles, it states this and explains why not. The QCA Code identifies ten principles to be followed in order for companies to deliver growth in long-term shareholder value, encompassing an efficient, effective and dynamic management framework accompanied by good communication to promote confidence and trust.

The sections below set out the ways in which the Company applies the principles of the QCA Code in support of the Company’s medium to long-term success, including where applicable, any deviation from those principles.

1. Establish a strategy and business model which promote long-term value for

The Company is a Guernsey authorised fixed-life investment company regulated by the Guernsey Financial Services Commission and governed by the Companies (Guernsey) Law, 2008. Since the 2017 AGM, shareholders have been given the option annually to vote to end the Company’s life.

The Company’s investment strategy is to invest in unquoted companies which are close to a liquidity event, such as an IPO or trade-sale. The funds invested by the Company into these unquoted companies are intended to provide the working capital to facilitate such an event. By building a diversified portfolio of such investments, the Company hopes to generate returns for its shareholders.

The Company does not seek long-term growth. Rather it seeks to invest in companies which have identified a route to a liquidity event and seeks to sell its position once the liquidity event has been achieved.

The Board seeks to deliver shareholder value by engaging with the management, shareholders and market participants in relation to each investee company, with a view to identifying or creating opportunities to realise its positions in such companies to maximise shareholder value.

2. Seek to understand and meet shareholder needs and expectations

Shareholders have the opportunity to meet representatives of the Board at the Company’s AGM. The Board is also happy to respond to any written queries made by shareholders during the course of the year, or to speak to shareholders if so requested. In addition to the formal business of the AGM, representatives of the Board are available to respond to questions shareholders may have.

All enquiries should be addressed in the first instance to the Company’s administrators, Maitland Administration (Guernsey) Limited: If a matter is not procedural, the administrators will refer it to the Company’s chairman.  

If, and when, voting decisions are not in line with the Company’s expectations, the Board will seek to engage with shareholders to understand and address any issues informing those decisions.

3. Take into account wider stakeholder and social responsibilities and their    
implications for long term success

The Company is an investment company and has no employees.  The Company has a very limited number of professional, third party service providers. The Company is traded on AIM and regulated by the London Stock Exchange and the Guernsey Financial Services Commission. In accordance with the rules and regulations of these (and other) regulatory bodies, it is required to behave ethically. The Company welcomes feedback from all stakeholders but has no formal mechanism in place.

The Company has investments in a diverse range of activities and expects its investee companies to operate in accordance with accepted standards relevant to their activities.  All of the operations of the investee companies within the Company’s portfolio are impacted by social, community and environmental matters that could have the potential to affect their financial performance and as a consequence, valuation.  The Company’s portfolio is diversified and actively monitored to mitigate the impact on shareholder value of these and other factors.

The business model is to invest in companies that are close to a liquidity event. Where no liquidity event is on the horizon as a result of macro or company-specific circumstances, the Company seeks to engage with the investee company and other stakeholders with a view to either helping achieve that liquidity event, where appropriate, or monitoring and attempting to maintain value pending such a liquidity event.

4. Embed effective risk management, considering both opportunities and threats,    
throughout the organisation

The Board has overall responsibility for the Company’s systems of internal controls and for reviewing their effectiveness and ensuring the day to day operations. These controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained and the financial information used within the business and for publication are reliable.

All of the Company’s day to day management functions are delegated to the Administrator and whose controls are monitored by the Board.

Maitland Administration (Guernsey), the Administrator, is engaged to carry out the accounting function and manages the retention of physical custody of the documents of title relating to unquoted investments. Quoted investments are held in CREST where possible and in other electronic depositories where appropriate. Maitland Administration (Guernsey) regularly reconciles the client asset register with the physical documents.

In addition, Maitland Administration (Guernsey) identifies regulatory, accounting and compliance risks and reports on these regularly to the board.

The Company identifies investment opportunities and monitors the portfolio of investments and makes recommendations to the Board regarding suggested valuations, disposals and further acquisitions.
In all cases, a bottom-up exercise in relation to risk is carried out by delegated professionals. Results of these risk assessments are communicated transparently to all members of the Board and the Board exercises its judgment on the basis of these assessments with a view to achieving the Company’s strategy.

Investments are restricted to no more than 10% of the Company’s Net Asset Value in any one investment without the Board’s consent.

5.   Maintain the board as a well-functioning, balanced team led by the chair

The Board currently comprises three non-executive Directors.   The Board considers one of the non-executive Directors, Russel Michel, to be entirely independent. Both Lynn Bruce and Graham Shore are interested in Shore Capital Group, which is a significant shareholder in the Company. The Board as a whole considers their indirect interests in the Company to be an advantage for the shareholders as in addition to their fiduciary duties, it serves to make their interests closer to shareholders generally.

A single independent NED is not compliant with the QCA recommendations. Nevertheless, the Board consider this appropriate in the context of the Company’s size and its stage in its life cycle.

The Directors provide the Company with the knowledge, mix of skills, experience and networks of contacts required. The Board seeks to provide effective leadership and maintain a high standard of integrity in the Company. The Board is collectively responsible for corporate governance.

Full Board meetings take place quarterly and additional meetings are held as required to address specific issues. The Board has a formal schedule of matters specifically reserved for its decision.  These include:

  • considering recommendations regarding the acquisition, disposal and valuation of investments;
  • payment of dividends; and
  • reviewing, annually, the terms of engagement of all third party advisers
  • All Directors have access to the advice and services of the Company Secretaryand the Administrato.r The Administrator provides the Board with information on the Company’s assets and liabilities and other relevant information requested by the Chairman, in advance of each Board meeting and all directors, as well as on an ad hoc basis if so requested.

The Board has not appointed a nominations committee or remuneration committee as the Company is a fund and does not have direct employees. Appointments of new Directors and Directors’ remuneration are dealt with by the full Board.

Each of the Directors’ biographies is provided on the Company’s website.
The Board typically meets at least quarterly. For the financial year ended 31 March 2018, all Directors were present at all board meetings. In addition, the audit committee met two times and all members of that committee were present.

Each Director has agreed to commit a minimum of the equivalent of one day a month to the business of the Company (or such additional time) as may be required to participate in person at all the Company’s board meetings, its AGM, preparation, ongoing professional development and such other matters as may require their consideration and input during each year (including, for example, reviewing and approving the semi-annual and annual accounts of the Company).

6.     Ensure that between them the directors have the necessary up-to-date experience,
skills and capabilities

The Board is made up of one woman (chairperson) and two men and has changed from time to time as the Company has evolved. The Board has a high degree of specialist skill sets incorporating deep experience and understanding of investment, public markets, corporate governance and accounting/financial reporting. The Board is able to access specialist advice as required. The Board undertakes training from time to time to stay abreast of changing regulations.

Graham Shore is an experienced private company investor as well as public markets expert. Lynn Bruce is a chartered accountant and has been the chief financial officer of several companies during her career, including of a well-known Guernsey-based wealth management group for some eleven years, where she also sat on their risk and audit committees. Russel Michel is also a chartered accountant and currently chairs various operating subsidiaries of a Guernsey wealth management company.

Each of the Directors is required to undertake ongoing professional development, including in relation to their duties as directors of an AIM-traded company. They are also able to rely on the regulatory and compliance expertise of the Administrator.

Other than the role of chairman and membership of the audit committee, there are no formal role responsibilities on the Board. There is no senior independent director and the Administrator performs the role of company secretary.

7. Evaluate board performance based on clear and relevant objectives, seeking
continuous improvement

The Board has adopted a formal review process to be carried out by itself in conjunction with Maitland Administrators, with a view to reviewing the effectiveness of its performance as a unit, as well as that of its audit committee and the individual directors. The latest board evaluation was completed and tabled at the Q3 2019 board meeting (28 October) where the results were reviewed.

The Board do not believe that there is a current requirement for succession planning.  The Company has no formal processes by which it determines board and other senior management appointments.

In attempting to evaluate the effectiveness of each of the Directors, the review process will take into consideration the attendance record of each Director at board meetings, his or her contribution to meetings and his/her continued professional development.

8.   Promote a corporate culture that is based on ethical values and behaviours

The Board regards highly the importance of promoting ethical responsibility and good conduct within the Company. The Board always seeks to act with the highest professionalism and to treat all stakeholders equally and fairly.

The Company is regulated or subject to the rules of numerous external agencies, including the London Stock Exchange, the Takeover Panel and the Guernsey Financial Services Commission. It seeks to comply with all rules and regulations governing its business and to meet best industry standards where applicable.
In addition to providing investment to its portfolio companies, it actively engages with the management teams of these companies and (where practicable) offers advice and help in accessing further capital and/or on other matters.

9.  Maintain governance structures and processes that are fit for purpose and support
good decision-making by the board

The Board has established governance structures and processes in line with its corporate culture and appropriate to its size and complexity as well as capacity, appetite and tolerance for risk.

This is established by the provision to it by its administrator of regular bottom-up reviews which are considered and discussed by the Board no less than quarterly at board meetings where all the directors are physically in attendance.

The Chairman is responsible for the effectiveness of the Board together with the responsibility to oversee the company’s corporate governance practices.

The Company is a relatively small fund with no direct employees and so the Board has decided it is not appropriate at present to appoint nominations or remuneration committees.

The Audit Committee comprises Graham Shore as its chairman and Lynn Bruce. The committee is responsible for ensuring that the financial performance of the Company is properly monitored and reported on and that any such reports are understood by the Board. The Board has overall responsibility for any findings of the committee and for implementing its recommendations.

The Directors review and approve the strategy and management, policies and procedures, financial reporting and controls, capital structure, contracts, shareholder documents/press announcements, and adherence to Corporate Governance and best practice.

10.   Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders

The Company reports to its shareholders through its interim and yearly accounts, as well as ad hoc stock exchange announcements and/or circulars where required or appropriate.

Any stakeholder may contact the Company at any time initially through its administrator, who will answer procedural questions or direct the stakeholder to the chairman of the company in relation to all other matters. This policy is stated herein and posted on the Company’s website.

This Corporate Governance statement was last updated on 14 February 2020.