As an organisation, we seek to achieve and maintain best practice in corporate governance and acknowledge the requirement for companies admitted to trading on AIM to apply a recognised corporate governance code and explain compliance with that code.
The Directors confirm that the Company complies with the provisions of the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Sized Quoted Companies (QCA Code) which has become a widely recognised benchmark for corporate governance of smaller quoted companies, particularly AIM companies.
Updated: 25 September 2018
Board and committee independence
The Chairman is responsible for leading the Board, setting its agenda and monitoring its effectiveness. The role of the Non-Executive Directors as a whole is to supportively challenge and help to develop the direction of the business, and also to assess the performance of management. The role of the Executive Directors is to manage the day-to-day business activities and implement the strategy.
The Board consists of the Chairman (who is not considered to be independent since he was previously Executive Chairman); three independent non-executive directors; and two executive directors. The Company regards the non-executive directors as "independent non-executive directors" within the meaning of the UK Corporate Governance Code and free from any relationship that could materially interfere with the exercise of their independent judgement. Details of director's biographies are listed on the About Us / Our People / Board of Directors page and by clicking here.
In the case of Ms Ferguson, despite the fact that she has now served as a director for some 15 years, the Board considers her to still be independent for the following reasons. During the time Ms Ferguson has served as a director, there have been three different management teams running the Company for consecutive periods of around four, one and nine and a half years. Of the present Board, one director was appointed seven years ago and one director three years ago. The CEO and CFO were appointed approximately nine and a half years ago. Accordingly, the length of service of individual current members of the Board has varied over the period Ms Ferguson has been a director. Ms Ferguson has not been, and is not now, a member of any board which has among its members any other of the current directors of the Company.
The Board evaluates its performance and that of its Committees through a process of regular dialogue and periodic formal Board evaluations. The last formal evaluation was carried out in 2017 and is summarised in the 2016/17 Annual Report including the criteria against which the board, committee and individual effectiveness was considered.
The Board and its committees
The Board holds around six scheduled meetings per year (with additional meetings when circumstances and urgent business dictate) to review, formulate and approve the Company's strategy, budgets, corporate actions and oversee the Company's progress towards its goals.
It has established an Audit Committee, a Remuneration Committee and a Nominations and Corporate Governance Committee, each with formally delegated duties and responsibilities and with written terms of reference.
The below table provides details of our Board and Committee membership, including independence, and has links to pdf copies of the matters reserved to the Board and the terms of reference for each of our Board Committees together with our Code of Conduct and Ethics policy:
Note: To view PDF files, you will need the Adobe Acrobat Reader. This can be downloaded free of charge from the Adobe website.
The Audit Committee members are all independent non-executive directors. It is chaired by Ms Ferguson, whom the Board considers has recent and relevant financial experience and its other members are Mr Sheail, Ms Schoenberg and, until his resignation on 22 August 2018, Dr Gilham. The Audit Committee is expected to meet formally at least twice a year and otherwise as required. It is responsible for ensuring that the financial performance of the Group is properly reported on and it reviews and reports to the Board on the Group's annual financial statements, interim reports and considers the Group's accounting policies and the effectiveness of the internal control and risk management systems.
The Remuneration Committee members are all independent non-executive directors. It was chaired by Dr Gilham, until his resignation on 22 August 2018 and, thereafter has been chaired by Ms Ferguson. Its other members are Mr Sheail and Ms Schoenberg. The Remuneration Committee is expected to meet at least twice each year. It determines the terms of service and remuneration of the executive directors and senior employees with advice from external remuneration consultants. It also determines overall remuneration policy for all other Company employees and sets targets for performance-related pay schemes operated by the Group. The remuneration of non-executive directors is also based on advice from the same remuneration consultants. No director or manager will be allowed to partake in any discussions as to their own remuneration.
The majority of the Nominations and Corporate Governance Committee members are independent. It is chaired by Dr Fellner and its other members are Ms Ferguson, Mr Sheail, Ms Schoenberg, Mr Garland and, until his resignation on 22 August 2018, Dr Gilham. The Nominations and Corporate Governance Committee is responsible for determining the qualities and experience required of the Group's executive and non-executive directors and for identifying suitable candidates, assisted where appropriate by recruitment consultants. It is also responsible for succession planning and for reviewing and making recommendations in relation to the Group's corporate governance procedures which the full Board then considers.
Internal Controls and Risk Management
The Board is responsible for establishing and monitoring risk management and internal control systems throughout the Group and assessing their effectiveness. The Board recognises that rigorous systems of internal control are critical to the Group's achievement of its business objectives and that those systems are designed to manage rather than eliminate risk of failure to achieve business objectives.
There is a continual process for identifying, evaluating and managing the significant risks faced by the Group. The Audit Committee reviews the Group's internal financial controls and risk management systems and the Board reviews the effectiveness of all of the Group's internal controls including operational and compliance controls and risk management systems in effect. This process involves a review of each area of the business to identify material risks and the controls in place to manage these risks and to assess whether any improvements to such controls are necessary.
The Group annually reviews its insurance policies with its insurance broker to ensure that the policies are appropriate for the Group's activities and exposures and it maintains insurance in respect of its Directors and Officers against liabilities in relation to the Company.
The Group has a number of policies in place which support corporate governance and risk management including:
Code of Conduct and Whistleblowing Procedure
This sets out the principles of business conduct and ethics expected of all Vernalis employees and directors including compliance with law (including anti-bribery), dealing with conflicts of interest, fair dealing, proper disclosure and use and protection of Group assets. All employees must be familiar with the Code and adhere to those principles and procedures that apply to them.
In general, the Code has been adopted to:
- promote honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest;
- promote full, fair, accurate, timely and understandable disclosure;
- promote compliance with applicable laws and governmental rules and regulations;
- ensure the protection of the Company's legitimate business interests, including corporate opportunities, assets and confidential information; and
- deter wrongdoing.
The Code is supported by a Whistleblowing Procedure which provides an internal mechanism for reporting, investigating and remedying any wrongdoing in the workplace.
The Group finances its operations through equity and holds its cash as a liquid resource to fund the obligations of the Group. Decisions regarding the management of these assets are approved by the Board.
Share Dealing Policy
The Group has a share dealing policy regulating trading and confidentiality of inside information that applies to all employees and directors, with additional obligations placed on those discharging managerial responsibilities (and their closely associated persons), which contains provisions appropriate for a company whose shares are admitted to trading on AIM). All such persons are prohibited from trading in the Company's securities if they are in possession of 'inside information'. Subject to this condition and trading prohibitions applying to closed periods, trading can occur provided the individual has received the appropriate clearance.
Relations with Shareholders and stakeholders
The Board recognises that it is accountable to shareholders for the performance and activities of the Company and to this end is committed to providing effective communication with the shareholders. The Group reports formally to shareholders when its full-year and half-year results are published. At the same time, executive directors present the results to institutional investors, analysts and the media. Significant developments are disseminated through stock exchange announcements and regular updates of the Company website. See Investor Centre for further information.
Contact with major shareholders is principally maintained by the Chief Executive Officer and the Chief Financial Officer, who ensure that their views are communicated to the Board as a whole. The Chairman is also available to discuss governance and other matters directly with major shareholders. At every Board meeting, the Board is provided with brokers' reports, a summary of the contents of meetings with shareholders and reports by analysts. The Board considers that the provision of these documents is a practical and efficient way for the Chairman, and the Senior Independent Director and the other Directors to be informed of major shareholders' opinions on governance and strategy and to understand any shareholder issues and concerns.
Shareholders who need to get in touch can find the relevant Advisor and Investor contact details here.