As an AIM listed group, Nektan plc (‘Nektan’) is not required to follow the provisions of the UK Corporate Governance Code (the ‘Code’). The Board however recognises the importance and value of good corporate governance procedures and accordingly have selected those elements of the Code they consider to be relevant and appropriate to the Group, given its size and structure.
Role of the board
The Board comprises 3 directors, including the non-executive Chairman, 1 executive Director and 1 non-executive Director. The Board meets regularly to consider strategy, performance and the framework of internal controls.
The Board has been formed so that it has effective composition, size and commitment to adequately discharge its responsibilities and duties given the size and scale of operations of the Company. The Director appointments are based on the specific skills required by the Company and the Board combines a group of Directors with diverse backgrounds that combine to provide the resources and expertise to drive the continuing development of the Group and advance its commercial objectives.
The Directors have established an Audit Committee, a Remuneration Committee and a Nominations Committee with formally delegated rules and responsibilities. Each of the committees currently comprises the Non-executive Directors and meets at least twice a year.
The Audit Committee meets at least twice a year and is responsible for ensuring that the Group’s financial performance is properly monitored, controlled and reported. The Audit Committee is responsible for the scope and effectiveness of the external audit and compliance by the Group with statutory and other regulatory requirements. It meets at least once per year without the Executive Directors being present. The Audit Committee is comprised of Jim Wilkinson (Chairman) and Sandeep Reddy. Jim Wilkinson is deemed to have recent and relevant financial experience and is the Audit Committee financial expert.
The Remuneration Committee determines and agrees with the Board the framework or broad policy for the remuneration of the Directors and determines the total individual remuneration package of each Executive Director, including bonuses, incentive payments and share options, with due regard to the interests of shareholders. The Remuneration Committee ensures that contractual terms are fair to the individual and the Company and determines the structure and targets for any performance-related pay schemes operated by the Company. The Remuneration Committee is comprised of Sandeep Reddy (Chairman) and Jim Wilkinson.
The Nominations Committee is responsible for reviewing the size, structure and composition of the Board and for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise. The Nominations Committee gives full consideration to succession planning in the course of its work, taking into account the challenges and opportunities facing the Group, and the skills and expertise needed on the Board. The Nominations Committee is comprised of Jim Wilkinson (Chairman).
Risk management and internal controls
The Board has ensured there has been an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. The Board considers the principal risk factors likely to impact the financial position and prospects of the Group, including any changes thereto. The identified risks are monitored through the day to day operations with the involvement of the relevant parties. This monitoring process is guided by a risk template set out in the Group’s separate Overview of Strategic Risk Management.
The Group’s internal control procedures continue to be reviewed, progressively developed and formalised to ensure that they sufficiently meet the requirements of the Group. Executive members of the Board are involved daily in all aspects of the business and attend regular management meetings at which performance against plan and business prospects are reviewed.
The Bribery Act 2010 (‘Bribery Act’) which came into force in the UK on 1 July 2011 prescribes criminal offences for individuals and businesses relating to the payment of bribes and, in certain cases, a failure to prevent the payment of bribes. The Group therefore has established procedures designed to ensure that no member of the Group engages in conduct for which a prosecution under the Bribery Act may result.
The Audit Committee meets periodically to review the adequacy of the Group’s internal control systems, accounting policies and compliance with applicable accounting standards and to consider the appointment of external auditors and audit fees.
As a matter of best practice and in accordance with International Standard on Auditing 260, the auditors have held discussions with the Audit Committee on the subject of auditor independence and have confirmed their independence.