HOW THE COMPANY SEEKS TO ACHIEVE GOOD CORPORATE GOVERNANCEWhat is good corporate governance?
"In essence, good corporate governance is about having the right people in the right roles, working together, and doing the right things to deliver value for shareholders as a whole over the medium to long-term".
Good corporate governance is achieved through a series of decisions made by the board, which needs to be kept dynamic and diverse and engender a consistent corporate culture throughout the organisation. Good corporate governance is about ensuring that the board is set up to make robust decisions and manage risk. It is also increasingly about ensuring that a healthy culture is in place which combines a strong focus on performance and a sense shared throughout the workforce of what is acceptable and what is unacceptable in terms of behaviour." (Extract from the introduction to the QCA Corporate Governance Code).
The Code provides a framework designed to ensure that companies who adopt and comply with its provisions have boards that fulfil not only their statutory obligations but also those to their shareholders and other stakeholders.
The London Stock Exchange has determined that each AIM company must confirm that it intends to comply with the provisions of a recognised corporate governance code and cite any areas in which it intends to deviate from the provisions of that code.
The Board of the Company has confirmed its intention to comply with the provisions of the QCA Corporate Governance Code ("the Code") in so far as it is appropriate to an organisation of the size and structure of the Company.
As Chairman of the Company it is my responsibility to ensure that in its methods of management, the manner in which the Board is structured and operates and in its relationship with its shareholders it is compliant with the Code. The following explain the way in which the Company complies with the ten key principles of in the Code; the disclosures were last updated on 17 March 2021 .Principle 1: Establish a strategy and business model which promote long-term value for shareholders.
The Company has since the sale of its construction-related businesses on 3 March 2021 followed a strategy of seeking a reverse acquisition target that is likely to bring satisfactory returns to its shareholders.
When setting out the strategy of the Company the Board decided that in order to maximise shareholder value it would structure the Company in such a way that as great an amount as is possible of monies held by the Company would be utilised for investment and that its spend on its structure and overheads would be kept to the minimum required to ensure that it operated in a professional manner. For this reason, the structure of the Company is extremely simple in that it does not own or occupy any property nor does it have any employees other than the members of its Board.
When setting out the strategy of the Company the Board decided that in order to maximise shareholder value it would structure the Company in such a way that as great an amount as is possible of monies held by the Company would be utilised for an acquisition and that its spend on its structure and overheads would be kept to the minimum required to ensure that it operated in a professional manner. For this reason, the structure of the Company is extremely simple in that it does not own or occupy any property nor does it have any employees other than the members of its Board.
An important consideration for the Board when considering whether to make an iacquisition is whether there will be a secondary market for the shares or stock following the acquisition of the target company.
The Directors will review the Company's acqisition policy annually and will advise shareholders of any variations or alterations to it. Were the Company to make an investment that fell outside of a stated acquisition policy the Directors would do so in compliance with the AIM Rules and having obtained shareholder consent.Principle 2: Seek to understand and meet shareholder needs and expectations
The Board intends to its shareholders updated about developments in the Company through RNS announcements and its website from which it is possible to check the progress being made by each of the companies into which it has invested.
Subject to COVID regulations not creating a bar the Company will offer shareholders the opportunity to listen to and interrogate the Board at its Annual General Meeting that is held at a central London location and in premises able to hold large numbers of shareholders. In addition, shareholders may ask questions of the Board or to make comment by emailing it at [ ].Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long term success
The Board's primary statutory responsibility is to promote the success of the Company for the benefit of its shareholders. The Company has no employees other than the Directors and the it recognises and accepts its responsibility to shareholders and other parties including those who supply services to pursue a socially responsible approach in all its dealings.
Due to the present size and nature of the Company the social, environmental and economic impacts from carrying out its business are limited but are of not disregarded.
The Board takes a socially responsible approach to all its investments and satisfies itself that each is socially useful and is operated an ethically and environmentally satisfactory manner.Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The Company is not subject to particular pressures from competitors or from suppliers of services or finance.
The major risk that the Board has to face is the need to ensure firstly that a potential acquisition meets the Company's acquisition parameters, that the nature of its business and market fits within any acquisition policies selected by the Board and that the potential return for shareholders is sufficient to justify any commercial risks.
The Board contains the legal accounting and business skills required to assess acquisition opportunities and the Company has available to it a range of persons who, together, are experts in all the areas in which the Company would consider making an acquisition and who are thereby able to ensure that the Board is adequately informed when it considers whether it should make a particular acquisition.Principle 5: Maintain the Board as a well-functioning, balanced team led by the chair
The size and composition of the Board have reflected both the Company's strategy of having an operating structure that is simple and low cost and the need for it to be able to call on various areas of expertise when making an acquisition decision. In this manner the board contains expertise in investment and in undertaking due diligence exercises and in financial and legal matters
As Chairman my responsibility includes chairing Board Meetings and use the professional experience of the Board to source and organise due diligence on possible acquisitions
I am satisfied that the composition of the Board and its collective skills enable it to analyse and complete potential acquisitions and that save for particular trade or scientific expertise that may be required for the analysis of certain situations it is able to assess and complete acquisitions by the Company.Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Directors have the experience and skills required to enable to successfully undertake its business and execute its strategy.
There is no upper or lower limit to the amount of time that each director is obliged to spend on the Company's business; he is required to spend such an amount of time as is necessary for the proper performance of his duties.Principle 7: Evaluate Board performance based upon clear and relevant objectives, seeking continuous improvement
The Board has not yet implemented a formal evaluation process primarily because it was not considered to be of use in measuring the respective contributions of the individual directors, whose principal role is to contribute towards analysing potential acquisitions, deciding on the merit of making required the same and monitoring the performance of the companies that are possible acquisition targets.
For the present however it has been agreed that a formal evaluation would not be a useful tool in of the Board and that it will be primarily the performance of the Company's acquisition or acquisitions that will act as an indication of its performance.Principle 8: Promoting a corporate culture that is based upon ethical values and behaviours
The Company has no employees and the only parties directly involved in it are the three persons who comprise the Board. The result is that the culture is a collegiate one with decisions being made following open discussion between them.
Emphasis is placed upon the need for integrity and accuracy in all dealings and attention to the interests of the shareholders.Principle 9: Maintaining governance structures and processes that are fit for purpose and support good decision-making by the Board
The Company has adopted the Code and abides by its principles except that in certain aspects it has proceeded differently because the Board believes that the size and structure of the Company make other solutions more appropriate. In particular:
1. The Board does not believe that it is necessary for it to create a nominations committee.
2. Apart from convening AGMs and EGMs the Board has not organised meetings with its shareholders. The Board does intend to commence a shareholder engagement programme and convene the first of such meetings in the near future and to invite all the Company's shareholders to it.
3. The Board will keep the Code and the manner in which it complies with it under regular review and will amend its policies and the manner in which it adheres to the Code from time to time in line with developments in the scope and size of the Company.
4. The Board is the primary decision-making forum of the Company and it is responsible for matters relating to the Company's performance (and the review of it), strategy, financing, capital expenditure and administration.
The Board is comprised of:
1. An Executive Chairman
2. Two independent Non-Executive Directors
The Board will set up an Audit Committee. Delegated to it is the oversight of the Company's annual audit, selection of the auditors and a meeting with the audit partner and his team following conclusion of their work. At that meeting the audit partner will advise the Committee of his conclusions as to the state of the Company's financial systems and will highlights any matters that require improvement or correction The Remuneration Committee has not yet had reason to meet and will be convened when it is required.