Result of AGM
The Directors recognise the importance of sound corporate governance and the Enlarged Group will comply with the provisions of the Corporate Governance Code for Small and Mid-Size Quoted Companies ("QCA Code"), as published by the Quoted Companies Alliance, to the extent they consider appropriate in light of the Enlarged Group's size, stage of development and resources.
The Enlarged Group will hold board meetings periodically as issues arise which require the attention of the New Board. The New Board will be responsible for the management of the business of the Enlarged Group, setting the strategic direction of the Enlarged Group and establishing the policies of the Enlarged Group. It will be the New Board's responsibility to oversee and monitor the financial position, the business and affairs of the Enlarged Group on behalf of the Shareholders, to whom the directors are accountable. The primary duty of the New Board will be to act in the best interests of the Enlarged Group at all times. The New Board will also address issues relating to internal control and the Enlarged Group's approach to risk management.
The Enlarged Group has also established a remuneration committee (the "Remuneration Committee"), an audit committee (the "Audit Committee") and an AIM Rules compliance committee (the "AIM Compliance Committee") with formally delegated duties and responsibilities.
The Remuneration Committee, which comprises Neil Davidson as Chairman and Peter Wennström, will meet not less than twice each year. The committee will be responsible for the review and recommendation of the scale and structure of remuneration for senior management, including any bonus arrangements or the award of share options with due regard to the interests of the Shareholders and the performance of the Enlarged Group.
The Audit Committee, which comprises Peter Wennström as Chairman and Neil Davidson, will meet not less than twice a year. The committee will meet not less than twice a year. The committee will be responsible for making recommendations to the New Board on the appointment of auditors and the audit fee and for ensuring that the financial performance of the Enlarged Group is properly monitored and reported. In addition, the Audit Committee will receive and review reports from management and the auditors relating to the interim report, the annual report and accounts and the internal control systems of the Enlarged Group.
The AIM Compliance Committee, which comprises Neil Davidson as Chairman, will be responsible for ensuring that (i) the New Board remain at all times fully cognisant of their obligations under the AIM Rules for Companies and (ii) regular contact is maintained with the Company's nominated adviser so that it is kept up to date with all relevant developments at the Company.
The Enlarged Group has adopted and will operate a share dealing code governing the share dealings in the Company's shares of the New Board and applicable employees with a view to ensuring compliance with the AIM Rules.
Compliance with Governance Code
Following the recent consultation by the London Stock Exchange, new AIM Rules were published in March 2018. One of the key amendments is in respect of AIM Rule 26 (as set out in AIM Notice 50), which now requires AIM companies to state on their website which recognised corporate governance code they apply and how they have applied that code.
The Board of Directors of OptiBiotix Health Plc is committed to developing and applying high standards of corporate governance. The Board of Directors seeks to apply the QCA Code, revised in April 2018 as devised by the Quoted Companies Alliance.
The Quoted Companies Alliance is the independent membership organisation that champions the interests of small to mid-size quoted companies. The QCA Code takes key elements of good governance and applies them in a manner which is workable for the different needs of growing companies.
A revised version of the QCA Code (the "Revised Code") was published in April 2018, based on the 'comply or explain' principle.
The QCA Code is constructed around ten broad principles (accompanied by an explanation of what these principles entail, under 'application') and a set of disclosures. The Code states what is considered to be appropriate arrangements for growing companies, and asks companies to provide an explanation about how they are meeting the principles through the prescribed disclosures.
The table below sets out the principles, the application recommended by the QCA code. It then sets out how OptiBiotix complies with these requirements and departures from code, and provides links to appropriate disclosures. These are based upon the recommended disclosures provided in the QCA code.
These disclosures were last reviewed on the 28 September 2018.
How we comply with the QCA Code in this area
Departure from Code and Reason
1. Establish a strategy and business model which promote 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.
OptiBiotix Health PLC has clearly articulated its strategy and business model in the annual report and accounts and on the company website, www.optibiotix.com.
The Board of Directors meet on a regular basis to discuss the strategic direction of the Company, and progress in achieving against its aims.
The Company's programme of research and development is intended to build long-term shareholder value through a reliance on strong science, backed by human studies, and supported by key opinion leaders, allowing us to deliver quality ingredients and superior white label food and supplement solutions.
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 Company recognises the importance of engaging with its shareholders and reports formally to them when its full-year and half-year results are published.
The Board also seeks to engage with shareholders to understand their needs and expectations, primarily through meetings with the Executive Directors, both individually as required (this mainly applies to institutional investors and/or those with significant shareholdings) and at annual general meetings, at which all shareholders are welcome.
The CEO and Executive Directors regularly present at private investment events during the year.
Investors may contact the Company directly through the investor enquiries email address [email protected]
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.
We recognise that we are responsible not only to our shareholders and employees, but to a wider group of stakeholders (including our customers and suppliers) and the communities in which we operate.
The Company carefully assesses each of the companies it works with to ensure the requisite standards and values are in place.
OptiBiotix Health Plc is committed to the highest standards of corporate social responsibility in its activities, as outlined in more detail in the annual report and accounts.
Feedback from stakeholders is reviewed by the CEO and any concerns he has raised at the next board meeting as a separate item on the agenda.
4. Embed effective risk management, considering both opportunities and threats, throughout 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).
The Board has identified what we believe to be a sensible approach to risk management for a company of our size.
We outline the Company's approach to risk management and the principal risks we face, along with what we do to mitigate those risks, in our annual report and accounts.
The Company receives regular feedback from its external auditors on the state of its risk management and internal controls.
This area is subject to regular review as our business and the risks we face evolve.
5. Maintain the board as a well-functioning, balanced 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 fulfil their roles.
The Board includes a balance of Executive and Non-Executive Directors.
The Board currently comprises 4 Executive and 3 Non-Executive Directors with an appropriate balance of sector, financial and public market skills and experience.
The board is comprised of:-
Neil Davidson, Non-executive Chairman
The directors' roles and responsibilities are shown on the website http://optibiotix.com/corporate/. The Board's activities are supported by Nomination, Audit and Remuneration Committees.
All the Directors have appropriate skills and experience for the roles they perform at the Company, including as members of Board Committees.
Directors are subject to re-election at least every three years in accordance with the articles of association.
The Company is satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf of all stakeholders and will consider the requirement for additional Non-Executive Directors as the Company fulfils its growth objectives.
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.
Details of the skills and experience of the Directors are provided in the annual report and accounts and at http://optibiotix.com/corporate/.
The experience and knowledge of each of the Directors gives them the ability to constructively challenge the strategy and to scrutinise performance.
The Board has access to external advisors where necessary.
The Board and Committees receive training as appropriate. In particular, the members of the Audit Committee receive technical updates from the Company's external auditors to keep them abreast of the latest accounting, auditing, tax and reporting developments.
The Directors also receive regular briefings and updates from the Company's NOMAD in respect of continued compliance with the AIM Rules.
7. Evaluate board performance 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.
Evaluation of the performance of the company's board has historically been implemented by the Remuneration Committee in an informal manner.
The Remuneration Committee, which comprises Neil Davidson as Chair and Peter Wennström, will meet not less than twice each year. The committee is responsible for the review and recommendation of the scale and structure of remuneration for senior management, including any bonus arrangements or the award of share options with due regard to the interests of the Shareholders and the performance of the Enlarged Group.
From 2018 however, the Remuneration Committee will formally review and consider the performance of each director at or around the time of publication of the company's annual report.
The review will look at director performance during the year, which will include but not limited to: financial targets; adherence to company policies, effectiveness of management as well as attendance and contribution at company meetings.
On an ongoing basis, board members maintain a watching brief to identify relevant internal and external candidates who may be suitable additions to or backup for current board members.
The Company has yet to carry out a formal assessment of board effectiveness.
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 Board believes that the promotion of a corporate culture based on sound ethical values and behaviours is essential to maximise shareholder value.
The Company operates virtually and aside from its board has only two full-time employees. The Executive team engenders open and positive interactions with a key focus on; scientific rigour, innovation, creative solutions and collective responsibility. As the Company expands its human capability it will look to formalise its culture through an agreed set of values and standards.
The Company's policies set out its zero tolerance approach towards any form of modern slavery, discrimination or unethical behaviour relating to bribery, corruption or business conduct.
9. Maintain 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:
The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.
The roles and responsibilities of specific Directors and Board Committees are available on our website http://optibiotix.com/corporate/.
The Board meets formally at least eight times per year.
Each Committee has terms of reference outlining the specific responsibilities delegated to it.
The terms of reference and roles of each Committee can be found on the corporate governance section of the Company website . http://optibiotix-ir.com/content/investors/governance.asp.
The appropriateness of the Board's structures and processes are reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Chairman together with the other Directors, and these will evolve in parallel with the Company's objectives, strategy and business model as the Company develops.
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 structures should exist between the board and all constituent parts of its shareholder base.
This will assist:
It should be clear where these communication practices are described (annual report or website).
The Company communicates progress throughout the year through Regulatory News Service announcements and in more detail in its interim financial statements and annual report and accounts.
Results of shareholder votes are made public on the Company's website after the meetings concerned [email protected].
Historical annual reports and other governance-related material, notices of all general meetings over the last five years can be found on the website.
There have been no votes where a significant proportion of votes (e.g. 20% of independent votes) have been cast against a resolution at any general meeting.
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