Ncondezi is committed to the highest standards of corporate governance. As an AIM-listed company, Ncondezi is not formally required to comply with the UK Corporate Governance Code,which applies to companies that are fully listed on the London Stock Exchange.
The Board has, however, given consideration to the provisions set out in Section 1 of the UK Corporate Governance Code and the Directors support the objectives of this code and intend to comply with those aspects which they consider relevant to the Group’s size and circumstances.
Details of the key areas relating to the UK Corporate Governance Code are set out below. A statement of the Directors’ responsibilities in respect of the financial statements is set out on page 25 of the 2011 Annual Report.
Below is a brief description of the role of the Board and its committees, including a statement regarding the Group’s system of internal financial control.
The workings of the Board and its committees
The Board of Directors
The Board currently comprises a Non-Executive Chairman, (Michael Haworth) and seven further Non-Executive Directors (Graham Mascall, Estevão Pale, Richard Stuart, Nigel Sutherland, Peter O'Connor, Christiaan Schutte and Mark Trevan). An Executive Director will be appointed once the Chief Executive Officer appointment has been confirmed.
The Board considers that Peter O'Connor, Christiaan Schutte, Estevão Pale, Nigel Sutherland and Mark Trevan are independent of management and free from any business or other relationships which could materially interfere with the exercise of their independent judgement.
An agreed procedure exists for Directors in the furtherance of their duties to take independent professional advice. With the prior approval of the Chairman, all Directors have the right to seek independent legal and other professional advice at the Company’s expense concerning any aspect of the Company’s operations or undertakings in order to fulfil their duties and responsibilities as Directors. If the Chairman is unable or unwilling to give approval, Board approval will be sufficient. Newly appointed Directors are made aware of their responsibilities through the Company Secretary. The Company does not make any provision for formal training of new Directors.
The Company has established properly constituted audit and remuneration committees of the Board with formally delegated duties and responsibilities.
Conflicts of interest
The Board confirms that it has instituted a process for reporting and managing any conflicts of interest held by Directors. Under the Company’s Articles of Association, the Board has the authority to authorise, to the fullest extent permitted by law:
(a) any matter which would otherwise result in a Director infringing his duty to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company and which may reasonably be regarded as likely to give rise to a conflict of interest (including a conflict of interest and duty or conflict of duties); and
(b) a Director to accept or continue in any office, employment or position in addition to his office as a Director of the Company and may authorise the manner in which a conflict of interest arising out of such office, employment or position may be dealt with, either before or at the time that such a conflict of interest arises provided that for this purpose the Director in question and any other interested Director are not counted in the quorum at any Board meeting at which such matter, or such office employment or position, is approved and it is agreed to without their voting or would have been agreed to if their votes had not been counted.
A Relationship Agreement was executed on 3 June 2010 between the Company and Strata Limited (“Strata”) in order to manage inter alia potential conflicts of interest in respect of Directors nominated by Strata. Under the terms of this agreement, Strata has the right to nominate up to two Directors to the Board of the Company, and has nominated Richard Stuart and Michael Haworth.
Company materiality threshold
The Board acknowledges that assessment on materiality and subsequent appropriate thresholds are subjective and open to change. As well as the applicable laws and recommendations, the Board has considered quantitative, qualitative and cumulative factors when determining the materiality of a specific relationship of Directors.
The Board has not adopted a formal code of conduct however, as part of the Board’s commitment to the highest standard of conduct, the Board will consider adopting a code of conduct to guide executives, management and employees in carrying out their duties and responsibilities. The code of conduct will cover such matters as:
- Responsibilities to shareholders;
- Compliance with laws and regulations;
- Relations with customers and suppliers;
- Ethical responsibilities;
- Employment practices; and
- Responsibility to the environment and the community.
It is Ncondezi’s policy to conduct all of its business in an honest and ethical manner and takes a zero-tolerance approach to bribery and corruption. The Company is committed to acting professionally, fairly and with integrity in all of its business dealings and relationships wherever it operates, implementing and enforcing effective systems to counter bribery.
Ncondezi will uphold all laws relevant to countering bribery and corruption in all the jurisdictions in which it operates and remain bound by the laws of the UK, including the Bribery Act 2010, in respect of its conduct both at home and abroad.
Board meetings are held on average every quarter. Decisions concerning the direction and control of the business are made by the Board. Generally, the powers and obligations of the Board are governed by the Company’s Memorandum and Articles and the BVI Business Companies Act 2004 as amended, and the other laws of the jurisdictions in which it operates. The Board is responsible, inter alia, for setting and monitoring the Group’s strategy, reviewing trading performance, ensuring adequate funding, examining major acquisition opportunities, formulating policy on key issues and reporting to shareholders.
The Audit Committee
The Audit Committee comprises Mark Trevan (Committee Chairman) and Richard Stuart.
The Committee provides a forum for reporting by the Group’s external auditors. Meetings are held on average twice a year and are also attended, by invitation, by other Non-Executive Directors.
The Audit Committee is responsible for reviewing a wide range of financial matters including the annual and half year results, financial statements and accompanying reports before their submission to the Board and monitoring the controls which ensure the integrity of the financial information reported to shareholders.
The Remuneration Committee
The Remuneration Committee comprises Nigel Sutherland (Committee Chairman) and Richard Stuart.
The Committee is responsible for making recommendations to the Board, within the agreed terms of reference, on the Company’s framework of executive remuneration and its cost. The Remuneration Committee determines the contract terms, remuneration and other benefits for the Executive Directors, including performance related bonus schemes, compensation payments and option schemes.
The Remuneration packages are determined with reference to market remuneration levels, individual performance and the financial position of the Company and the Group. The Board determines the remuneration of the Non-Executive Directors within the limits set by the Company’s Articles of Association. They have letters of engagement with the Company and their appointments are terminable on one month’s or three month’s written notice on either side.
None of the Directors have a service contract which is terminable on greater than one year’s notice.
The Company has adopted a standard level of fees for Non-Executive Directors of £40,000 per annum and £70,000 for the Chairman. The current chairman, Michael Haworth, will forego his fee for the financial year ending 31 December 2012. Richard Stuart will also forego his Non-Executive Director fee for the financial year ending 31 December 2012.
The following table sets out an analysis of the pre-tax remuneration for the year ended 31 December 2011 for individual Directors who held office in the Company during the period. All amounts are in US dollars.
Internal financial control
The Board is responsible for establishing and maintaining the Group’s system of internal financial controls. Internal financial control systems are designed to meet the particular needs of the Group and the risk to which it is exposed, and by its very nature can provide reasonable, but not absolute, assurance against material misstatement or loss.
The Directors are conscious of the need to keep effective internal financial control, particularly in view of the cash resources of the Group. Due to the relatively small size of the Group’s operations, the Executive Director and senior management are very closely involved in the day-to-day running of the business and as such have less need for a detailed formal system of internal financial control. The Directors have reviewed the effectiveness of the procedures presently in place and consider that they are still appropriate to the nature and scale of the operations of the Group.
Continuous disclosure and shareholder communication
The Board is committed to the promotion of investor confidence by ensuring that trading in the Company’s securities takes place in an efficient, competitive and informed market. The Company has procedures in place to ensure that all price sensitive information is identified, reviewed by management and disclosed to the AIM in a timely manner.
Shareholders are forwarded documents relating to each Annual General Meeting, being the Annual Report, Notice of Meeting and Explanatory Memorandum and Proxy Form, and are invited to attend these meetings.
Managing business risk
The Board constantly monitors the operational and financial aspects of the Company’s activities and is responsible for the implementation and ongoing review of business risks that could affect the Company. Duties in relation to risk management that are conducted by the Directors include but are not limited to:
- Initiate action to prevent or reduce the adverse effects of risk
- Control further treatment of risks until the level of risk becomes acceptable
- Identify and record any problems relating to the management of risk
- Initiate recommend or provide solutions through designated channels
- Verify the implementation of solutions
- Communicate and consult internally and externally as appropriate
- Inform investors of material changes to the Company’s risk profile
Ongoing review of the overall risk management programme (inclusive of the review of adequacy of treatment plans) is conducted by external parties where appropriate. The Board ensures that recommendations made by the external parties are investigated and, where considered necessary, appropriate action is taken to ensure that the Company has an appropriate internal control environment in place to manage the key risks identified.