CORPORATE GOVERNANCE STATEMENT
Updated 14 February 2022
From 28 September 2018 as an AIM company, the Company has been required to maintain on its website details of a recognised corporate governance code, how the Company complies with this code and an explanation of any departure from the code. The information needs to be reviewed annually and the website should include the date on which the information was last reviewed. This review has been undertaken after a period of substantial change in the business, including the following specific events:
- The company changed its name from RMS to nanosynth group plc on August 23, 2021
- Mark Duffin was appointed as CEO on September 1, 2021
- The Company disposed of its stake in Cloudveil on November 1, 2021
- John Richardson resigned as a director of the Company on November 1, 2021
- Anthony Legge resigned as Executive Chairman on November 9, 2021 and the Board appointed Richard Clarke as non-Executive Chairman as his replacement
- On December 10, 2021 the Company signed a joint venture agreement with Volz Luftfilter GmbH
- Dr Gareth Cave changed role from non-executive and became an Executive Director on December 22, 2021
- The Company appointed a CFO and COO and several members of the management team changed
Nanosynth group plc’s Corporate Governance Report
Following concerns raised during the financial year ended 31 December 2020 over the issue of warrants as part of a placing, and the subsequent appointment of two new independent directors, the Board appointed Mark Duffin as Chief Executive Officer on September 1, 2021 and Antony Legge moved to a position of non-Executive Chairman which was more consistent with the QCA code. Mr Duffin immediately assumed all strategic and operational responsibility for the Company and set about reinforcing and refining elements of the Company’s direction. On November 9, 2021 Antony Legge resigned from his role of non-Executive Chairman and was replaced by Richard Clarke who had previously been a non-Executive Director.
Corporate Governance Report
The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles:
Following the appointment of Mark Duffin as CEO, the Board reviewed the strategic direction of the business and a decision was taken to remove and reduce involvement in all non-core areas and increase its focus on the creation and deployment of nano-particles into a variety of industry sectors, focusing mainly on the investment into and growth of Pharm 2 Farm Ltd. As a result of this review the Company disposed of its interest in Cloudveil Ltd on November 1, 2021. On December 10, 2021 the Company signed a joint venture agreement with Volz Luftfilter GmbH and created Virosynth Ltd which will allow entry into the HVAC sector, and this is the first initiative to broaden the Company’s portfolio. The Company will continue to seek to grow organically both Pharm 2 Farm Ltd and Virosynth Ltd and will seek out further complementary acquisitions that create enhanced value.
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders and, as it grows, will look to cultivate relationships with institutional shareholders and analysts as appropriate. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting whenever possible. Investors also have access to current information on the Company though its website, www.nanosynthgroup.com, and via its appointed PR consultants, IFC Advisory.
The Board recognises that the long-term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. For example, all employees of the Company participate in a structured Company-wide annual assessment process which is designed to ensure that there is an open and confidential dialogue with each person in the Company to help ensure successful two-way communication with agreement on goals, targets and aspirations of the employee and the Company. These feedback processes help to ensure that the Company can respond to new issues and opportunities that arise to further the success of employees and the Company. The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company.
In addition to its other roles and responsibilities, the Audit and Compliance Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks and identifies their ownership and the controls that are in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit and Compliance Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The following principal risks and controls to mitigate them, have been identified:
|Management||Recruitment and retention of key staff||Reduction in operating capability||Stimulating and safe working environment |
Balancing salary with longer term incentive plans
|Related Party Transactions||Company forced to accept unfair or prejudicial terms||Strong, independent review of all deals with related parties coupled with advice from Company’s advisors|
|Regulatory adherence||Breach of rules||Censure or withdrawal of authorisation/certification||Strong compliance regime instilled at all levels of the Company|
|Strategic||Damage to reputation |
Inadequate disaster recovery procedures
|Inability to secure new capital or clients |
Loss of key operational and financial data
|Effective communications with shareholders coupled with consistent messaging to our customers |
Secure off-site storage of data
|Financial||Liquidity, market and credit risk |
Inappropriate controls and accounting policies
|Inability to continue as going concern |
Reduction in asset values Incorrect reporting of assets
|Robust capital management policies and procedures |
Appropriate authority and investment levels as set by Treasury and Investment Policies
Audit and Compliance Committee
The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the executive directors. However, the Board will continue to monitor the need for an internal audit function.
As at the date hereof the Board comprised, the non-executive Chairman, Richard Clarke, the Chief Executive Officer, Mark Duffin, the Chief Scientific Officer, Dr Gareth Cave and another non-Executive director, Dr Felicity Sartain, of whom both of the non-executives are considered to be independent. Biographical details of the current Directors are set out within Principle Six below.
Executive and Non-executive directors are subject to re-election at intervals of no more than three years. The letters of appointment of all Directors are available for inspection at the Company’s registered office during normal business hours. The Chief Executive Officer is currently employed on a full-time basis. Dr Gareth Cave is the founder and Chairman of the Company’s principal subsidiary, Pharm 2 Farm Ltd. The Board meets at least eight times per annum. It has established an Audit and Compliance Committee and a Remuneration Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not created a Nominations Committee. The Board considers that this is appropriate given the Company’s current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be at least two independent non-executives. Currently the Company has two independent non-executives in Richard Clarke and Dr Felicity Sartain. As the Company grows and develops the board will periodically review its corporate governance framework to ensure it remains appropriate for the size, complexity and risk profile of the Company. The Company has recently appointed a full time experienced CFO, Andrew Stedman, although this is not a Board position. This is to bolster the financial capabilities of the Company. The Company also took the decision to manage all company secretarial duties internally, thereby dispensing with the services of MSP Secretaries Limited.
Attendance at Board and Committee Meetings
The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. In order to be efficient, the Directors meet formally and informally both in person, by telephone and by video calls. During the year to 31 December 2021 there were regular Board meetings, with all directors being present at all meetings. The volume and frequency of such meetings is expected to continue at a similar rate.
The Board currently consists of four Directors and the Company believes that the current balance of skills in the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries and each of the Directors has experience in public markets. The Board has the necessary commercial, financial and legal skills required for the effective leadership of the Group. The Board recognises that it currently has a limited diversity, and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required. Each Director undertakes a mixture of formal and informal continuing professional development as necessary to ensure that their skills remain current and relevant to the needs of the Group.
The Board has undertaken an internal review of the Board, the Committees and individual Directors, in the form of peer appraisal and discussions, to determine their effectiveness and performance as well as the Directors’ continued independence. The evaluation concluded that the Board demonstrates the appropriate level of skills, knowledge and performance for the size and nature of the Group. The Directors will continue to review the need to strengthen the Board as the Group develops.
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. A large part of the Company’s activities is centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The Directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. There is frequent dialogue between the Directors and senior management of each of its subsidiaries. The Board monitors the corporate culture through a mix of formal and informal feedback, based on which the Board is confident that a healthy culture consistent with the principles adopted exists. The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.
Ultimate authority for all aspects of the Company’s activities rests with the Board, the respective responsibilities of the Chairman and Executive Directors arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved for the Board. The Chairman is responsible for the effectiveness of the Board and being the primary contact with shareholders, while management of the Company’s businesses has been delegated by the Board to the Chief Executive Officer.
Audit and Compliance Committee
The Audit and Compliance Committee comprises Richard Clarke, Dr Gareth Cave and Dr Felicity Sartain, and Richard Clarke chairs this committee. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit and Compliance Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company’s auditors.
The Remuneration Committee comprises Dr Felicity Sartain, Richard Clarke and Mark Duffin, and Dr Felicity Sartain chairs this committee. The Remuneration Committee reviews the performance of the executive directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Company’s Remuneration Policy.
The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee.
The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and which have been observed throughout the year. These provide for the orderly and constructive succession and rotation of the Chairman and non-executive directors insofar as both the Chairman and non-executive directors will be appointed for an initial term of three years and may, at the Board’s discretion believing it to be in the best interests of the Company, be appointed for subsequent terms. The Chairman may serve as a Non-Executive Director before commencing a first term as Chairman. In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or arrangement.
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company responds to all shareholders who contact the Directors, and as a result has positive ongoing relationships with a wide range of shareholders. All shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. The Company also provides shareholder updates whenever appropriate using both regulatory and other channels including video interviews on Proactive Investors. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting where possible. investors also have access to current information on the Company though its website, www.nanosynthgroup.com, and the Company’s retained Financial PR consultants, IFC Advisory Ltd, who are available to answer investor relations enquiries. The Company has also appointed an external investor relations firm which will provide a further point of contact for investors. The Board is also reviewing options for additional and more regular channels of communication with shareholders. The Company agreed in 2018 to move to electronic communications with shareholders in order to maximise efficiency. Paper communications will be maintained for the small number of shareholders who have specifically requested this. The Company includes, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.