Corporate governance

THE QUOTED COMPANY ALLIANCE (QCA) CODE

The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term”. The Directors anticipate that whilst the Company will continue to comply with the QCA Code, given the Group’s size and plans for the future, it will also endeavour to have regard to the provisions of the UK Corporate Governance Code as best practice guidance to the extent appropriate for a company of its size and nature. To see how the Company addresses the key governance principles defined in the QCA Code please refer to the below table.

Oliver Cooke, Chairman

This disclosure was last reviewed and updated on 24 September 2018

The Directors recognise the importance of sound corporate governance and with that aim, the Company has voluntarily adopted those of the recommendations of the QCA Guidelines that they consider appropriate to the Company’s size at this time. To the extent that the Company is not compliant with the QCA Guidelines it is intended that it will become so as its business matures.

The Board meets regularly to review key operational issues, strategic development and the financial performance of the Company. All matters of a significant nature are discussed in the forum of board meetings. The Board is responsible for internal controls to minimise the risk of financial or operational loss or material misstatement. These controls have been designed to meet the particular needs of the Company having regard to the nature of its business.

THE PRINCIPLES OF THE QCA CODE

DELIVER GROWTH

QCA Code Principle

Application (as set out by QCA)

What we do and why

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.

The Group has at its heart an investment management (IM) business that has been designed to operate on a substantially fixed cost basis. Consequently, the higher the level of funds under management (FUM), the higher the level of profitability achieved. The Group also operates a substantial, UK wide financial advisory business. Whilst the profitability of the advisory business is important, the key driver of the Group’s profitability and value is increased FUM. To grow the level of FUM the Group seeks to:

(i) optimise the use of its IM services by clients of the Group’s advisory business;

(ii  promote the use of its IM services by firms and clients outside the Group’s ownership;

(iii)  enter into affinity and/or partnership arrangements with appropriate entities capable of introducing additional FUM; and

(iv)promote the use of its IM services by investors outside the UK.

The Board’s focus, together with the risks and uncertainties faced by the business, is addressed in greater detail on pages 6 and 7 of our Report and Accounts for the year ended 31 March 2018.

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.

Shareholders achieve value through growth in the Company’s share price and by way of dividends. The Board appreciates that a higher rating is ascribed to the shares of companies that trade profitably and that manage a progressive dividend stream.
The Board is committed to the introduction of dividend payments at the earliest practical opportunity.

Tavistock encourages positive two-way communication with both its institutional and private investors. Both the Chairman and the Chief Executive talk regularly with the Group’s major shareholders and ensure that their views are communicated fully to the Board.

The Board recognises the AGM provides an important opportunity to meet with private shareholders and the Directors are always available to listen to the views of shareholders informally immediately following the AGM.

The Board will engage with any shareholders who are concerned regarding any resolution(s) proposed to a shareholder meeting, in order to understand and try to address any issues that they might have. The Chairman is the main point of contact for such matters.

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.

The Board’s ambition is to:

(i) build a group based on traditional values (always doing what is right for the investor)
(ii) set industry leading standards (adviser support and IM services)
(iii) treat all stakeholders fairly and honestly (clients, advisers, employees and shareholders).
The Company is in the process of finalising a Corporate Social Responsibility Policy. Once this has been completed a copy will be added to the Company’s website.

Whilst not directly linked to the Group’s commercial success, the Board supports a variety of worthwhile charitable causes, the majority of which are based in the communities close to its offices.

The Board also supports initiatives to reduce the level of plastic waste being generated by the business.

Great emphasis is placed on Customer feedback and a high priority is given to resolving any client complaints in a fair and equitable manner.

Staff are encouraged to share with management any ideas that they might have to improve the Company’s service proposition.

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 Company has established a separate Risk Committee, led by the Group’s Head of Compliance, which reports to the Board on a regular basis.

This committee proactively reviews the Group’s operations, identifies actual and contingent risks faced by the business and suggests remedial strategies. These are recorded in a risk weighted register.

In addition, the committee reviews all complaints processed by the compliance department to identify any potential underlying systemic weakness.

Due diligence is conducted on all counterparties with whom the Group has material commercial dealings.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

QCA Code Principle

Application (as set out by QCA)

What we do and why

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 Company is controlled by the Board of Directors. Oliver Cooke, the Chairman, is responsible for the running of the Board and Brian Raven, the Group Chief Executive, has executive responsibility for running the Group’s business and implementing the Board’s strategy.

All Directors receive regular and timely information packs regarding the Group’s operational and financial performance. Briefing papers, together with draft minutes of the previous meeting, are circulated to the Directors in advance of meetings. To the extent required for the proper discharge of their duties, Directors have direct access, at the Company’s expense, to the advice and services of the Company’s auditors and lawyers.

The Board comprises two Executive Directors and two Non-Executive Directors. The Board values the industry experience of the Non- executive Directors and by reference to the QCA’s guidelines both are regarded as independent.

The Board has a formal schedule of matters reserved to it and is supported by the Audit and Remuneration Committees, each of which has its own terms of reference. The Audit Committee is led by the Chairman, who is a Chartered Accountant, and the Remuneration Committee is comprised of the Non-executive Directors.

The Board meets at least ten times per annum and each of the committees meets at least twice a year.

Given the Company’s current size and stage of development, it is not considered necessary to have in place a separate Nominations Committee.

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.

Both Executive Directors have considerable experience of running public companies.

Both Non-executive Directors have considerable experience of operating at a senior level within the financial services industry, with a particular emphasis on corporate governance and regulatory compliance, enabling them to support, and where necessary to challenge, the views of the Executive Directors.

The skills and experience of Board members are considered to be complimentary in nature.

As the Company develops and grows in size, consideration will be given to increasing the size of the Board. This will present a natural opportunity to improve gender diversity.

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

The Company is currently at an early stage in its development and as a consequence has not yet introduced regular formal evaluations of the Board’s performance.

In due course, all Directors will undergo a performance evaluation before being proposed for re- election to ensure that their performance is and continues to be effective, that where appropriate, they maintain their independence, and that they are demonstrating continued commitment to the role.

All Directors are required to stand for re-election on a regular basis.

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.

As referred to on page 7 of the Report and Accounts for the year ended 31 March 2018, the Board actively promotes the Company’s ethos of acting at all times with honour, dependability and vigilance, and has established a culture within which the client (private investor) is placed at the centre of everything that the Company does.

This ethos and culture is reinforced through staff briefings at Company Days, as well as the messaging via wall art at every Company office. It is also reflected in the Report and Accounts, on the Company’s various websites and in its literature.

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:

• size and complexity; and
• capacity, appetite and tolerance for risk.

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

Further details of the Company’s corporate culture will be included in the Report and Accounts for the year ended 31 March 2019.

As the Company develops in size, appropriate consideration will be given to the establishment of a Nominations Committee and to increasing the size of the Board.

BUILD TRUST

QCA Code Principle

Application (as set out by QCA)

What we do and why

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, an appropriate communication and reporting structure should exist between the board and all constituent parts of its shareholder base. This will assist:

• the communication of shareholders’ views to the board; and
• the shareholders’ understanding of the unique circumstances and constraints faced by the company.

It should be clear where these communication practices are described (annual report or website).

Directors regularly update colleagues, both formally and informally, on the Company’s progress.

The Board also encourages two-way communication with both its institutional and private investors. The Chairman and the Chief Executive talk regularly with the Group’s major shareholders and ensure that their views are communicated fully to the Board.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM.

The Audit Committee

The audit committee is comprised of the Chairman and the non-executive directors and determines the terms of engagement of the Company’s auditors and will determine, in consultation with the auditors, the scope of the audit. The Audit Committee receives and reviews reports from management and the Company’s auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee has unrestricted access to the Company’s auditors and is chaired by Oliver Cooke, the Company’s Chairman.

The Remuneration Committee

The remuneration committee, which comprises the non-executive directors, is chaired by Roderic Rennison. The committee reviews the scale and structure of the executive directors’ and senior employees’ remuneration and the terms of their service or employment contracts, including share option schemes and other bonus arrangements. The remuneration and terms and conditions of the non-executive directors are set by the entire Board.

City Code on Takeover and Mergers

The Company is subject to the City Code on Takeovers and Mergers.

Join the Tavistock Revolution

Please leave your details below, complete the captcha sum (keeps out the robots) and click submit:

9 + 15 =