Corporate Governance
Management Engagement Committee Terms of Reference
Approved by the Board on 22 February 2012
Function
- The function of the Management Engagement Committee is to ensure that the Company's investment management agreement is competitive and reasonable for the shareholders, along with the Company's agreements with all other third party service providers. The Committee shall also review the performance of the Investment Manager and the other third party service providers on a periodic basis.
Membership
- The Committee shall be appointed by the Board and shall consist of not less than three members all of which shall be independent non-executive Directors of the Company. A quorum shall be three members.
- Only members of the Committee have the right to attend Committee meetings. However, external advisers may be invited to attend for all or part of any meeting, as and when appropriate.
- The Chairman of the Committee shall be appointed by the Board.
Meeting
- The Committee shall meet as and when required and no less than once a year.
Secretary
- The Company Secretary shall be the secretary of the Committee and shall attend the annual meeting.
Authority
- The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
Responsibilities
- The responsibilities of the Committee shall be:-
(a) to review the terms of the investment management agreement between the Company and the Investment Manager, and to ensure that the terms are competitive, fair and reasonable for the shareholders;
(b) to review and make recommendations on any proposed amendment or material breach of the investment management agreement;
(c) to review the performance of the Investment Manager including the on-going suitability of the investment manager to manage the assets of the Company, on at least an annual basis; and
(d) to review performance of, and the terms of the Company's arrangements with, other third party service providers and to ensure that the terms are competitive, fair and reasonable for shareholders.
Reporting
- The Committee Chairman, or in his absence the elected Chairman of the relevant meeting, shall report on the issues raised at the meeting and make relevant recommendations to the Board at the earliest opportunity.
- The Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.
Membership (as at 22 February 2012)
Andrew Barker (Chairman)
John Aston
Veronique Bouchet
Alan Clifton
David Clough
Alex Hammond-Chambers
Nomination Committee Terms of Reference
Approved on 20 July 2011
Function
- The function of the Nomination Committee is to consider and make recommendations to the Board on the Board's composition and balance.
Membership and Attendance
- The Committee shall be appointed by the Board and shall consist of not less than three members all of which shall be independent non-executive Directors of the Company. A quorum shall be three members.
- The Chairman of the Committee shall be appointed by the Board.
- Only members of the Committee have the right to attend meetings. However, external advisers may be invited to attend for all part of any meeting, as and when appropriate.
- In the event that the Committee considers the appointment of a successor to the Chairman of the Board, the Committee shall elect a chairman other than the present Chairman, for those purposes alone, from among the other independent members.
Meetings
- The Committee shall meet as and when required and no less than once a year.
Secretary
- The Company Secretary shall be the secretary of the Committee and shall attend all meetings of the Committee.
Authority
- The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
Responsibilities
The responsibilities of the Committee shall be:-
In accordance with the adopted procedure for the appointment of new Directors:
(a) to evaluate the balance of skills, knowledge and experience on the Board of Directors and to prepare a description of the role and capabilities required for a particular appointment. In the case of the appointment of a Chairman, to prepare a job specification;
(b) to select potential candidates to fill vacancies on the Board of Directors for recommendation to the Board;
(c) to interview, or arrange for suitable Directors to interview, suitable candidates for Directors;
(d) prior to appointment of a Director, the candidates should disclose any other/future business interests that could result in a conflict of interest;
(e) ensure that on appointment to the Board, any new Directors receive a formal letter of appointment outlining what is expected of them in terms of time commitment, Committee service and involvement outside of Board meetings;
(f) ensure all newly appointed directors receive an appropriate induction; and
(g) make a statement in the Company's Annual Financial Report about its activities, the process used to make appointments and explain if external advice or open advertising has not been used.
In addition the Committee shall also:-
(h) periodically review the terms of appointment of the non-executive Directors;
(i) consider whether a Senior Independent Director should be appointed and, if appropriate, to identify and recommend to the Board suitable candidates for the role;
(j) satisfy itself that processes and plans are in place with regard to succession planning of the Board, taking into account the challenges and opportunities facing the Company, and what skills and expertise are therefore needed on the Board in the future;
(k) undertake a formal and rigorous evaluation of the Board's performance and that of its Committees and individual Directors;
(l) consider the re-election by shareholders of any Director under the retirement by rotation provisions or under the UK Listing Authority's Listing Rules; and
(m) consider other issues, as requested and defined by the Board.
Reporting procedures
- The Committee Chairman, or in his absence the elected Chairman of the relevant meeting, shall report on the issues raised at the meeting and make relevant recommendations to the Board at the earliest opportunity.
- The Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.
Membership (as at 20 July 2011)
Andrew Barker (Chairman)
John Aston
Veronique Bouchet
Alan Clifton
David Clough
Alex Hammond-Chambers
Schedule of Matters Reserved for Consideration and Decision by the Board
'Approved by the Board on 20 July 2011
Function
The role of the Board is to provide entrepreneurial leadership within a framework of prudent and
effective controls which enables risk to be assessed and managed. The Board should set the
company's strategic aims, ensure that the necessary financial and human resources are in place for
the Company to meet its objectives and review management performance.
The Board should set the company's values and standards and ensure that its obligations to its
shareholders and others are understood and met.
Investment Objective and Performance
- To determine, monitor and review the Company's investment objectives and policy, (including investment restrictions set out in the Company's Listing Particulars and the Investment Management Agreement (as amended) and to consider the future strategic direction and corporate activity of the Company.
- To monitor and review the shareholder base of the Company and marketing and shareholder communication strategies.
- To set, establish and monitor appropriate gearing levels and to regularly review the Company's currency exposure.
Discount monitoring/Purchases of Securities for Cancellation
- To monitor the share price discount/premium and to take appropriate action to manage it.
- To establish guidelines for and to consider on an on-going basis the purchase of the Company's own securities for cancellation.
- To establish guidelines for and consider on an ongoing basis the issue of securities in the
Company.
Directors
- Acting on advice of the Nomination Committee as appropriate, to consider appointments to and removals from the Board.
- To determine the Company's policy on tenure.
- To determine on an on-going basis whether directors are considered to be independent, with regard to and in accordance with the UK Corporate Governance Code.
- To consider and determine the level of Directors' remuneration, including any fees payable for membership of committees, within the maximum level permitted by the Company's Articles of Association.
- To approve minutes of proceedings at Board meetings.
- To review D&O Liability insurance arrangements for officers of the Company.
Committees
- To appoint an Audit Committee, a Nomination Committee and a Management Engagement Committee, and to determine specific terms of reference for each committee.
- To appoint the chairman of the committees and to consider their membership from time to time.
- To consider and, if appropriate, implement recommendations from the Management Engagement Committee regarding the terms of appointment of the Investment Manager, particularly the renewal or termination of the Investment Management Agreement, or of any other third party service provider.
- To consider and, if appropriate, implement recommendations from the Audit Committee, particularly any matters arising from the annual audit of the Company's financial statements, and the terms of engagement and fees of the Auditors.
- To consider and, if appropriate, implement recommendations from the Nomination Committee.
Corporate Governance
- To consider corporate governance matters and the implementation of recommendations concerning corporate governance.
- To monitor and keep under review the effectiveness of the company's internal controls and risk management systems.
Financial Reporting and Communications
- To prepare and approve, acting on advice of the Audit Committee as appropriate, the Company's Interim and Annual Report and Financial Statements for each financial year in accordance with applicable laws and accounting standards.
- To approve content of communications regarding major corporate issues, including circulars to shareholders and press releases to the market.
- To monitor the shareholder profile of the company to ensure that a satisfactory dialogue with shareholders takes place and to maintain sufficient contact with major shareholders to understand their issues and concerns.
- To ensure that shareholders are provided with sufficient information that enables them to understand the risk reward balance to which they are exposed by holding shares in the Company.
- To ensure that procedures are outlined in the Annual Report and Financial Statements to allow for shareholders to communicate directly with the Board.
- To ensure that the Annual General Meeting is used as a platform for effective communication with private investors.
Other Matters
- Any other matters which the Board considers should be reserved for its decision other than such matters as are delegated to the Investment Manager under the terms of the Investment Management Agreement.
- To consider appropriate action to be taken in the event that the Company or its directors face potential litigation or prosecution.
Audit Committee Terms of Reference
Approved by the Board on 20 July 2011
Function
- The function of the Audit Committee is to ensure that the Company maintains the highest standards of integrity in financial reporting and internal control.
Membership
- The Committee shall be appointed by the Board and shall consist of not less than three members all of which shall be independent non-executive Directors of the Company. At least one member of the Committee should be considered by the Board to have recent and relevant financial experience. A quorum shall be two members.
- The Chairman of the Committee, who shall not be the Chairman of the Board, shall be appointed by the Board.
- Only members of the Committee have the right to attend Committee meetings. However, external advisers may be invited to attend for all or part of any meeting, as and when appropriate.
- The external auditors will be invited to attend the Committee on at least on occasion per year and as required can also meet directly with members of the Board without other third parties being present.
Meetings
- The Committee shall meet at least twice a year. Meetings may be held more frequently if the Committee deems necessary or if required by the Company's auditors.
- The Company's auditors will be advised of the timing of Committee meetings and invited to meetings when appropriate and the Committee will have access to the auditors at any time if it so requires.
Secretary
- The Company Secretary shall be the secretary of the Committee and shall attend all meetings of the Committee.
Authority
- The Committee is authorised by the Board to investigate any activity within its terms of reference and to seek any information it may require. It is authorised to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. The Committee is further authorised to publish in the Company's Annual Financial Report details of any issues that cannot be resolved between the Committee and the Board.
Role and Responsibilities
- The responsibilities of the Committee shall be:-
Financial Statements
(a) to monitor the integrity of the financial statements of the company, and any formal announcements relating to the company's financial performance, reviewing significant financial reporting judgements contained in them;
(b) to review and, if appropriate, recommend to the Board, the Company's annual and interim reports;
Internal Control
(c) to monitor and review annually whether an internal audit function is required;
(d) to monitor the Company's accounting and financial internal control systems, and to monitor the internal control systems of the Investment Manager and other third party service providers, and to make recommendations on any improvements to such systems;
(e) to monitor the Company's procedures for ensuring compliance with regulatory and financial reporting requirements and its relationship with the relevant regulatory authorities;
(f) to review the Company's compliance with the UK Corporate Governance Code, taking into account the AIC Code of Corporate Governance, on an annual basis;
(g) to review the Company's risk map on an annual basis;
External audit and relationship with the external auditor
(h) to discuss any matters arising from the audit and recommendations made by the auditors;
(i) to make recommendations to the Board, for it to put to the shareholders for their approval in general meeting, in relation to the appointment, re-appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor;
(j) to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements;
(k) to develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;
(l) to review the Audit Plan and the auditors fees on an annual basis; and
(m) to consider other issues, as requested and defined by the Board.
Reporting procedures
- The Committee Chairman, or in his absence the elected chairman of the relevant meeting, shall report on the issues raised at the meeting and make relevant recommendations to the Board at the earliest opportunity.
- The Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.
Membership (as at 20 July 2011)
John Aston (Chairman)
Andrew Barker
Veronique Bouchet
Alan Clifton
David Clough
Alex Hammond-Chambers