As an AIM company, the Company is not required to comply with the UK Corporate Governance Code. However, the Board believes in the importance of corporate governance and recognises the principles set out in the Quoted Companies Alliance's Corporate Governance Code. Although this code is not compulsory for companies whose shares are traded on AIM, the Board seeks to apply the recommendations set out in the QCA Corporate Governance Code, as far as it considers appropriate and practicable for a group of Quantum Pharma's size and nature.
The Company was incorporated on 17 October 2014 and its shares were admitted to trading on AIM on 11 December 2014.
The Board comprises five directors, two of whom are executive directors and three of whom are non-executive directors, each bringing a different set of experience and background. Dr John Brown is considered to be 'independent' under the criteria identified in the QCA Corporate Governance Code and he is a Senior Independent Director.
The Board is committed to setting out the vision and strategy of the Company and the Group and to ensuring that this is effectively communicated, internally and externally, as recommended by principles set out in the QCA Corporate Governance Code.
The Board meets regularly to consider strategy, performance and the framework of internal controls. Strategic matters are reserved for decision by the Board and these matters are set out in a written statement, adopted by the Board. The Board is responsible for formulating, implementing and developing strategy, setting annual budgets, reviewing performance and prospects of the Group, approving major capital expenditure and for risk management. The non-executive directors focus, in particular, on ensuring that strategic matters are carefully assessed and implemented.
To enable the Board to discharge its duties, all Directors receive appropriate and timely information as expected under the principles set out in the QCA Corporate Governance Code and all Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board procedures are followed and that applicable rules and regulations are complied with. In addition, the Directors are able to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company's expense.
The Directors have a duty to avoid situations in which they have or can have a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company. The Board requires each Director to declare to the Board the nature and extend of any direct or indirect interest in a proposed transaction or arrangement with the Company and the Company Secretary maintains a register of directors' other interests. The Board has power to authorise any potentially conflicting interests that are disclosed by a Director. Directors are required to notify the Company Secretary when any potential conflict of interest arises.
The Nomination Committee is convened to identify and nominate candidates to fill board vacancies as and when they arise and considers the composition of the Board and whether the Board has the necessary skills and expertise to drive forward the strategy of the Group. The Directors believe that it is important to have a balanced Board. The Company's Board consists of two executive directors and two non-executive directors. As noted above, the Board has at least two non-executive directors who are considered to be independent, in line with the recommendations of the QCA Corporate Governance Code. The Board received training during the course of the year from the Company Secretary and from its NOMAD.
Certain duties of the Board are delegated to committees:
The Audit Committee has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Company is properly measured and reported on, and reviewing reports form the Company's auditors relating to the Company's accounting and internal controls, in all cases having due regard to the interests of shareholders. The Audit Committee comprises Dr John Brown as Chairman, Christopher Mills and Ian Johnson.
The Nomination Committee is convened to identify and nominate candidates to fill board vacancies as and when they arise (for the approval of the Board). The Nomination Committee comprises Ian Johnson as Chairman, Christopher Mills, Chris Rigg and Dr John Brown.
The Remuneration Committee reviews the performance of the executive Directors and determines their terms and conditions of service, including their remuneration and the grant of share awards, having due regard to the interests of shareholders. The Remuneration Committee comprises the independent non-executive directors. The Remuneration Committee comprises Dr John Brown as Chairman, Christopher Mills and Ian Johnson.
The Remuneration Committee is responsible for formulating the remuneration policy, with the overall aim of ensuring that remuneration packages are set which motivate and incentivise, recognise and reward performance and give a sense of participation and alignment with the long term success of the Group and value creation for shareholders, in line with good corporate governance and risk management.
There are also, from time to time, ad hoc committees set up to deal with specific matters. The Senior Independent Director is Dr John Brown.
The Group encourages communications with all shareholders and regard this as important, in line with the recommendations of the principles set out in the QCA Corporate Governance Code. There is regular dialogue with major and/or institutional shareholders and presentations are held after the Group's announcements of half year and full year results. Presentations are also made to analysts at those times to present the Group's results. This assists with the promotion of knowledge of the Group in the investment marketplace and with shareholders. This also helps the Directors to understand the needs and expectations of shareholders.
The Directors use the annual report and financial statements and the Annual General Meeting as opportunities to engage with private and institutional investors. The Board believes that the Annual General Meeting offers an opportunity to communicate directly with shareholders.
The Board is committed to managing and communicating risk and implementing internal controls and regards the management of risk as an essential business practice, as highlighted by principles set out in the QCA Corporate Governance Code.
The Board has established and maintains a consolidated risk register, which is reviewed and updated quarterly. Each potential risk across the Group is assessed against the likelihood of occurrence and the impact on the business, should the risk be realised.
The Group has a disaster recovery and business continuity plan which is reviewed regularly. Where any weaknesses are identified, an action plan is prepared to address the issue and is then implemented. In addition, the Group is actively seeking to attain the ISO22301 Business Continuity Management standard.
Each year the Board approves the annual budget. Key risk areas are identified, reviewed and monitored. Performance is monitored against budget, relevant action is taken throughout the year and updated forecasts are prepared, as appropriate.
Capital and development expenditure is regulated by a budgetary process and authorisation levels. For expenditure beyond specified levels, detailed written proposals have to be submitted to the Board for approval. Reviews are carried out after the purchase is complete. The Board requires management to explain any major deviations from authorised capital processes and to seek further sanction from the Board.
In order to address certain areas of key risk and uncertainty, the Group's contract proposals (whether with customers or suppliers) are governed by a robust approval process prior to signature. In addition to budgetary and profitability checks and balances, each proposed contract is reviewed from a legal perspective prior to being approved for signature.
The Directors understand the importance of complying the AIM Rules relating to Directors' dealings and have established a share dealing code which is appropriate for an AIM quoted company.
The Board believes that good corporate governance encompasses assessing the Company's impact on and contribution to society, its community and the environment. The Board recognises its responsibilities to shareholders and also to other stakeholders, such as employees, customers and suppliers and to the patients who ultimately benefit from its products.
Page last updated: 1 February 2017
26 April 2017