Corporate Governance

Corporate Governance Code

The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. To see how the Company addresses the key governance principles defined in the QCA Code please refer to the below table. Further information on compliance with the QCA Code will be provided in our next annual report.

Abdallah Al-Mouallimi

Chairman

The disclosure was last reviewed on 28th September 2018

 

 

QCA Code Principle

 

Application (as set out by the QCA) What we do and why
DELIVER GROWTH    
1.   Establish a strategy and business model which promotes long-term value for shareholders

The board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term.  It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.

 

The Group’s strategy is explained within our Strategic Report section on pages 6 to 11 of our Report and Accounts for the year ended 31 December 2017.

 

Our strategy is focused around four key areas: creating value for clients; providing the right product to the right clients; investing in our platform to support revenue growth; and creating value for our shareholders.

 

The key challenges to the business and how these are mitigated is detailed on pages 25 & 26 of our Report and Accounts for the year ended 31 December 2017.

 

 

2.   Seek to understand and meet shareholder needs and expectations

 

Directors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.

 

The Board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

 

The Board is committed to returning capital to its shareholders and has done so in the past few years by way of tender offer buy backs.

 

The Group encourages communications with its shareholders. The CEO and the Chairman talk regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

 

The AGM is an important opportunity for the Board to meet with its shareholders.

 

The Company Secretary and the Senior Independent Director are the main points of contact for such matters.

 

 

 

 

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

 

Long-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

 

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

 

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

 

The Group is committed to creating value for its stakeholders through sustainable progress.

 

This is evidenced and underpinned by our vision and values:

 

1.   Customers – Grow profitable sales

2.   Quality – Operational excellence

3.   Environment – Community

4.   Innovation – Excellent product design

5.   Team Work – Engage our people

 

As an investment holding company whose principal subsidiary is an asset manager, we seek feedback from all our stakeholders. In particular, we welcome feedback from our customers who trust us with their money. There are processes in place across the group to capture that feedback.

 

 

 

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

 

The board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.

 

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

 

How the Group manages risk is detailed on pages 23 to 26 of our Report and Accounts for the year ended 31 December 2017.  The key risks and how to manage each risk are clearly articulated in that section.

 

The Board considers risk to the business at every Board meeting (at least 4 meetings are held each year) and the risk register is updated at each meeting. The Company formally reviews and documents the principal risks to the business at least annually.

 

Both the Board and senior managers are responsible for reviewing and evaluating risk and the Executive Directors meet at least monthly to review ongoing trading performance, discuss budgets and forecasts and new risks associated with ongoing trading.

 

 

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

5.    Maintain the Board as a well-functioning, balance team led by the chair

 

The board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

 

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

 

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non- executive directors. Independence is a board judgement.

 

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

 

Directors must commit the time necessary to fulfill their roles.

 

The Company is controlled by the Board of Directors.

 

All Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. In addition, minutes of the Board are circulated to the Group Board of Directors. All Directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of their duties, if necessary, at the company’s expense.

 

The Board comprises two Executive Directors and four Non-Executive Directors. The Board considers that all Non-executive Directors bring an independent judgement to the business. Martin Barrow has been designated the Senior independent non-executive director.

 

The composition of the Board and its committees can be found on pages 17 & 18 of the Report and Accounts for the year ended 31 December 2017.

 

The non-executive directors and the Chairman are able to devote a significant portion of their time to Company matters. The executive Directors are all full-time.

Page 23 of the Report and Accounts for the year ended 31 December 2017 includes an attendance report of the directors at each board and committee meeting held during 2017.

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

 

The board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.

 

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

 

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

 

The Nomination & Remuneration (NRC) Committee of the Board oversees the process and makes recommendations to the Board on all new Board appointments.  Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender.

 

The Company website includes further information on each director experience, skills and personal qualities and capabilities. Directors attend sector conferences and, where appropriate, have access to specialist advisers, in order to keep their skillsets up-to-date.

 

The Board carries out an evaluation of its performance annually and this process is led by the NRC.

 

A skills evaluation is also conducted to identify where further training and development is needed.

 

7.    Evaluate Board performnce based on clear and relevant objectives, seeking continuous improvement

 

The board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.

 

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

 

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

 

 

The Board carries out an evaluation of its performance annually taking into account the Financial Reporting Council’s Guidance on Board Effectiveness.

 

All Non-Executive Directors must stand for re-election by the shareholders at the first AGM following their appointment and must also stand for re-election by shareholders at least every three years.

 

Evaluation procedures have not evolved significantly over the last few years but the Board continues to consider if these remain appropriate for the Company at its current stage of development.

 

The Nomination Committee also considers succession planning.

 

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

 

The board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

 

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team.

Corporate values should guide the objectives and strategy of the company.

 

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

 

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

 

The Group gives priority to building long-term relationships and maintaining the highest ethical standards.

The company has in place an Anti-Money Laundering and Anti-Bribery & Corruption Policy; Whistleblowing Policy; and a Finance Policy Manual setting out the company’s financial controls.

Our key values are client first; personal integrity and responsibility; pursuit of excellence; commitment to innovation; and passion to make a difference.

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

 

The company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

 

•  size and complexity; and

•  capacity, appetite and tolerance for risk.

 

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

 

Our Corporate Governance Statement in section 4 of our Report & Accounts for the year ended 31 December 2017 details the company’s governance structures and why they are appropriate and suitable for the company. It also sets out

–       the roles and responsibilities of the chair and the chief executive officer;

–       the roles of the board committees and their terms of reference; and

–       matters which are reserved for the board.

BUILD TRUST

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

 

A healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

 

In particular, appropriate communication and reporting structure should exist between the board and all constituent parts of its shareholder base. This will assist:

 

·         the communication of shareholders’ views to the board; and

·         the shareholders’ understanding of the unique circumstances and constraints faced by the company.

 

It should be clear where these communication practices are described (annual report or website).

 

The Group encourages two-way communication with both its institutional and private investors and responds quickly to all queries received. The CEO and Chairman talks regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

The Company will disclose outcomes of all votes at shareholder meetings in a clear and transparent manner by either publishing a market announcement or by reporting it on the Company’s website. If a considerable proportion of votes (20%) have been cast against a resolution at any meeting of shareholders, the Company will include an explanation of what actions it intends to take to understand the reasons behind that vote result and, where appropriate, any different action it has taken, or will take, as a result of the vote.

 

 

Constitution of the Board and its Sub-Committees

The Board considers that good corporate governance is central to achieving the Company’s objectives and has applied the Quoted Companies Alliance (QCA) Guidelines principles in drawing up the Company’s risk management framework which enables the Board to balance the need for systems and procedures with the need for flexibility and entrepreneurship that is essential in growth companies.

The Board and its Committees

The Company is led by a Board comprising Non-Executive and Executive Directors with significant experience in financial services and deep relationships in its core markets. The appointment of Directors is considered by the Nomination and Remuneration Committee and then the Board. Following the provisions in the Articles of Association, all Non-Executive Directors must stand for re-election by the shareholders at the first Annual General Meeting following their appointment and must also stand for re-election by the shareholders, at least every three years. Executive Directors normally retire at age 65, as required by their service agreements. Non-Executive Directors are appointed for three-year renewable terms, which may be terminated by giving three months’ notice.

The Board is required to meet at least three times a year. The Board has a programme designed to enable the Directors to review corporate strategy and the operations and results of the business and to discharge their duties within a framework of prudent and effective controls relating to the assessment and management of risk.

The matters specifically referred to the Board for decision include the approval of the annual report and financial statements; the payment of dividends; the long-term objectives of the Group; the strategies necessary to achieve these objectives; the Group’s budgets and plans; significant credit exposures; significant capital expenditure items; significant investments and disposals; the organisational structure of the Group; the arrangements for ensuring that the Group manages risk effectively; any significant change in accounting policies or practices; the appointment of the Group’s main professional advisers; and the appointment of senior executives within the organisation.

The Board has delegated to the Committees of Rasmala the power to make decisions on operational matters, including those relating to credit, liquidity, operational and market risk, within an agreed framework.

All Directors have access to the services of the Company Secretary, and independent professional advice is available to the Directors at the Group’s expense, where they judge it necessary to discharge their duties as Directors.

The Board reviews and approves its composition and charter in order to set the risk management framework of the Group at least annually. To assist the Board in executing its functions, it reviews and approves the composition and charters of the following Board sub-committees:

Board Committees

Board Risk Committee

The Board Risk Committee comprises Abdallah Al-Mouallimi (Chairman), Martin Barrow and Zak Hydari. The Board Risk Committee assists the Board in fulfilling its investment risk management responsibilities. These responsibilities include determining the Group’s risk profile and ensuring that management remains within the Board’s predetermined risk appetite. Meetings are held at least three times per annum and include the Chief Executive Officer and Finance Director and Head of Risk Management by standing invitation. The terms of reference include reviewing capital adequacy, liquidity, credit risk, market risk, operational risk and approvals under the Board’s delegated authority.

Audit Committee

The Audit Committee comprises John Wright (Chairman) and Michael Toxvaerd. In discharging its duties, the committee is required to review the external auditors’ remuneration and, in discussion with them, to assess their independence and recommend their re-appointment at the Annual General Meeting. The committee also reviews the financial statements published in the name of the Board and the quality and acceptability of the related accounting policies, practices and financial reporting disclosures; the scope of work of the internal auditor, reports from the internal auditor and the adequacy of their resources; the effectiveness of the systems for internal control, risk management and compliance with financial services legislation and regulations; procedures by which staff may raise concerns in confidence; and the results of the external audit and reports from the external auditor and their findings on accounting and internal control systems.

 

Nomination and Remuneration Committee

The Nomination and Remuneration Committee, which comprises Martin Barrow (Chairman) and Abdallah Al-Mouallimi, reviews the composition of the Board, taking into account the skills, knowledge and experience of Directors and considers and makes recommendations to the Board on potential candidates for appointment as Directors. The committee also makes recommendations to the Board concerning the re-appointment of any Non-Executive Director by the Board at the conclusion of his or her specified term; the re-election of any Director by the shareholders under the retirement provisions of the Articles of Association; any matters relating to the continuation in office of a Director; and the appointment of any Director to executive or other office.

The Nomination and Remuneration Committee evaluates the performance of the Board and its committees and makes appropriate recommendations to the Board. This is conducted through a self-assessment process that requires each Director to assess and rate the performance of the Board and its committees. The results of the exercise are considered by the Board and appropriate steps agreed and implemented to remedy any areas of deficiency or concern.

The Nomination and Remuneration Committee reviews the remuneration policy for senior management, to ensure that members of the executive are provided with appropriate incentives to encourage them to enhance the performance of the Group and that they are rewarded for their individual contribution to the success of the organisation. It is also made aware of, and advises on, major changes to employee benefits schemes.