Chairman’s Corporate Governance Statement

Date last reviewed and updated : - 23rd December 2020

As Chairman of the Company I am acutely aware of the need, particularly in these uncertain times, for an effective and focused Board that leads the business and builds upon its successes. I and my fellow directors believe in the value and importance of strong corporate governance, at executive level and throughout the operation of the business, and in our accountability to all stakeholders.

In line with the AIM Rules requirement to adopt a recognised corporate governance code, the Directors have chosen to adopt the Quoted Companies Alliance Corporate Governance Code published in 2018 (the “QCA Code”). The Directors believe that the QCA Code is the most appropriate recognised governance code for the Company. The QCA Code has ten broad principles and a set of disclosures. The Directors have considered how it applies each principle to the extent it judges to be appropriate in the circumstances and in the statements that follow, we explain our approach to governance and how the Board and its committees operate.

I am committed to working with the Board to build upon the existing values that are in place and ensure that good corporate governance continues to be embraced within the organisation.

1 Establish a strategy and business model which promotes long-term value for shareholders

The Company heads an established and profitable commercial lending group that offers secured loans primarily to businesses located in the United Kingdom. The Company works with selected commercial finance brokers who concentrate on the bridging segment and the Directors believe that the Group has become the lender of choice for borrowers who need fast decisions and turnarounds.

To achieve its objective of smooth growth the Company is seeking to gradually increase its facilities from wholesale banks and other institutional lenders. Further details of the Strategy and Business model are contained in paragraph [6] of Part I of this Document and will be contained in the Company’s future Annual Reports.

The promotion of long term shareholder value is underpinned by the Board’s commitment to act with integrity; be consistently open and ethical in its dealings with all stakeholders; provide fair and objective reporting and seek to ensure that the Group’s strategy, business model and performance are clearly communicated and understood. The Directors believe the best way to achieve this is through inclusion of relevant information in the half year and full year reports to shareholders. Moreover, the Directors believe that its values of integrity and transparency protect the Company from any unnecessary risk and secure its’ long term future.

2 Seek to understand and meet shareholder needs and expectations

The Board aims to provide clear and transparent information as to the Company’s activities, strategy, performance, and financial position to its shareholders.

Following Admission, the Directors are committed to communicating with shareholders through the Annual Report and Accounts, full-year and half year announcements and the annual general meeting (“AGM”). Shareholders will be encouraged to participate in the AGM and the number of proxy votes received for each resolution will be announced at the AGM and the results of the AGM will be announced.

Details of all shareholder communications will be available on the Company’s website.

3 Take into account wider stakeholder responsibilities and their implications for long term success

The Board works closely with the executive team with clear and open communication both within and outside the boardroom.

Shareholders

The Directors value the feedback they receive from the Company’s shareholders and take every opportunity to ensure that the comments of shareholders are considered.

Employees

The Company has a small number of employees and operates an open-door policy where employees’ opinions and suggestions are listened to and valued.

Suppliers

The Company has a limited number of suppliers and maintains a close working relationship with them.

Customers

The Company provides business loans to its customers with whom it develops an understanding of the financing requirement and maintains a close relationship during the course of the loan period.

4 Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board is responsible for establishing and maintaining internal controls  within the Company which are designed to meet the particular risks to the Company and mitigate risks to which it is exposed.

The Key elements of the internal controls are:

  • The Board meets regularly. An agenda and board pack are circulated in advance of each meeting and minutes are prepared and agreed.
  • The Company has information systems for monitoring its financial performance against budget.
  • The Board monitors the performance of the Company at each Board meeting against a set of agreed Key Performance Indicators.
  • The Board has established an Audit  and Risk Committee which typically meets with the external auditors on at least an annual basis without the Executive Directors present.

The Company, due to its size, does not at this stage consider it appropriate to have an internal audit function

The principal risks and uncertainties faced by the Company are set out in the Risk Factors in Part II of this Document and going forward will be contained in the Annual Report which will be available on the Company’s website.

5 Maintain the Board as a well-functioning, balanced team led by the chair

The Board comprises four directors: two executive directors, a non-executive chairman and a non-executive director. The Chairman has a casting vote at meetings of the Board (unless he is not entitled to vote on the matter in question).

Agam Jain, Chief Executive Officer, is expected to devote substantially the whole of his time to his duties with the Company.  Agam Jain is the controlling shareholder of Vector Holdings, which is itself the controlling shareholder of the Company. A Relationship Agreement is in place between Vector Holdings and the Company under which Vector Holdings has agreed, amongst over matters, to exercise its voting rights to procure that the Group and Business shall be managed for the benefit of the Shareholders as a whole; that it will not seek to influence the running of the Company or any member of the Group at an operational level and will not in the period of five years following Admission carry on or be employed, engaged or interested in any business which would compete with the Company. This agreement also contains provisions requiring that the Board at all times has a majority of directors who are not appointed to the Board by or with the votes of Vector Holdings.  For these purposes the current Directors other than Agam Jain are not treated as having been appointed to the Board by or with the votes of Vector Holdings.

Jonathan Pugsley, Finance Director, will contribute as much of his time to the Company as is required for the proper performance of his duties to the Company.

Robin Stevens is the non-Executive Chairman and Ross Andrews is a non-executive director. Each of Mr Stevens and Mr Andrews will devote such time as is necessary for the proper performance of their respective duties to the Company.

The Chairman and the other non-executive director are considered by the Directors to be independent under the QCA Code’s guidance for determining such independence.

For the Board to discharge its duties it has access to all relevant information in a timely manner and meets on a monthly basis.

The Board is supported by audit and risk, remuneration and nominations committees and the Directors consider that the members of those committees have the necessary skills, knowledge and experience to discharge their responsibilities effectively.

6 Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

The Board comprises experienced executive and non-executive directors.

Executive directors are experienced in their management disciplines, i.e. commercial lending to businesses and finance.

Non-executive directors are from outside businesses and experienced in advising and supporting a variety of public and private companies.

Directors’ biographies are set out in paragraph [7] of Part I of this document.

Company Secretarial support is provided by Allazo Ltd, a company registered with the Association of Chartered Certified Accountants. Jonathan Pugsley, Finance Director, is the sole director of Allazo Ltd.

All directors are encouraged to maintain individual continuing professional development programmes.

The Board is supported where necessary by its external advisers (details of the Company’s nomad and broker, auditors, solicitors and registrar can be found on page [•] of this document. The Board continually reviews the performance of third-party advisers to ensure that they are the most effective business partners for the Company. The Company retains Gunnercooke LLP to advise on all its commercial loans.

7 Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Chairman will review the contribution of each Board member on an on-going basis, both individually and in relation to the performance of the Company as a whole. These reviews will consider the individual contribution; whether they are carrying out their responsibilities effectively and to the highest standard; and where, relevant, whether they have maintained their independence.

Annual performance reviews will be carried out by the Remuneration Committee.

The balance of the Board, both in terms of number, experience and split between executive and non-executive is formally assessed on an annual basis as a minimum.

A Nominations Committee has been established. The composition and remit of the Remuneration Committee and Nominations committee is contained in paragraph [16] of Part I of this document.

8 Promote a corporate culture that is based on ethical values and behaviours

The Company promotes honesty and integrity in all its dealings.

The Directors are mindful of the industry in which the Company operates and take all issues of ethical behaviour seriously.

The Board has a series of matters reserved for discussion and has approved terms of reference for the Audit, Remuneration and Nominations Committees.

Recognising that Agam Jain is the controlling shareholder of Vector Holdings, which is itself the controlling shareholder of the Company, a Relationship Agreement is in place between Vector Holdings and the Company. Under this agreement Vector Holdings has agreed, amongst other matters, to exercise its voting rights to procure that the Group and Business shall be managed for the benefit of the Shareholders as a whole; that it will not seek to influence the running of the Company or any member of the Group at an operational level and will not in the period of five years following Admission carry on or be employed, engaged or interested in any business which would compete with the Company. This agreement also contains provisions requiring that the Board at all times has a majority of directors who are not appointed to the Board by or with the votes of Vector Holdings. The Directors, other than Agam Jain, are not treated as having been appointed by or with the votes of Vector Holdings for these purposes.

Other policies and procedures in place include an Anti-Corruption and Bribery prevention policy and a Social Media Policy.

9 Maintaining governance structures and processes that are fit for purpose and support good decision-making by the board

The Board is responsible to shareholders for the proper management of the Group.

The Board comprises Agam Jain, Chief Executive Officer, Jonathan Pugsley, Finance Director, Robin Stevens, Non-executive Chairman and Ross Andrews, Non-executive Director.

Given the current size of the Company the Directors consider the current size, constitution and experience of the Board is appropriate. As the Company increases in size it may be appropriate to appoint additional directors with complementary skills and experience.

The Board is responsible for:

·         setting the commercial strategy

·         approving annual budgets

·         approving the half year and full year results

·         approving the dividend policy

·         approving board structure

·         approving major capital expenditure

·         approving resolutions to be put to shareholders at general meetings

The following governance committees have been established to assist the Board in fulfilling its oversight responsibilities.

Audit and Risk Committee: responsibilities comprise the reviewing and monitoring the integrity of the financial statements; the system of internal controls and risk management, the  attitude towards risk and how risk is reported as well as the reviewing the audit process and liaison with the auditors. While Robin Stevens chairing the committee at the same time as being chairman of the Company is not compliant with the QCA Code, the directors consider this appropriate for the Company in view of his extensive accounting experience.

Remuneration Committee: responsibilities comprise determining and agreeing with the Board the framework and policy for the remuneration of the Chairperson and the executive directors.

Nominations Committee: responsible for regular review of the structure, size and composition of the Board, succession planning and identifying candidates for any vacancies.

Each of the committees will comprise only Non-executive directors, except where the Company’s nominated advisor has provided its consent.

The

10 Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Board is open to an open dialogue with its shareholders and welcomes interaction.

The Directors are committed to ensuring that:

·                     The Company’s contact details are contained on the website;

·                     The contact details of the Chief Executive Officer  are contained on all announcements

·                     The outcome of all shareholder votes will be contained on the website in a clear and transparent manner

·                     Where 20per cent of independent votes have been cast against a resolution at any general meeting the Company will include on the website an explanation of what actions it intends to take to understand the reasons behind that vote result and any action it will take as a result of that vote.

·                     The website contains relevant information on the Company (including historical financial statements and other governance related material) and is updated on a regular basis.

The Company currently does not retain a Public Relations firm but will keep the matter under review.

All Shareholders are encouraged to attend the Annual General Meeting.

The Directors acknowledge the importance of high standards of corporate governance and the Company has adopted the QCA Code. The QCA Code sets out a standard of minimum best practice for small and mid-size quoted companies, particularly AIM companies.

The Board comprises four Directors, two of whom are Executive Directors and two of whom are Non-Executive Directors, reflecting a blend of different skills, experiences and backgrounds. The Directors consider that all Non-Executive Directors are independent having taken into account their shareholdings, length of service and their separation from the day-to-day running of the business.

The Board meets regularly to review, formulate and approve the Group’s strategy, budgets, corporate actions and oversee the Group’s progress towards its goals.

The Group has established properly constituted audit and risk; remuneration and nominations committees of the Board with formally delegated duties and responsibilities, a summary of which is set out below.

Audit and risk committee

The Audit and Risk Committee comprises Robin Stevens and Ross Andrews with Robin Stevens as chair of the committee. The Audit and Risk Committee meets as often as required and at least twice a year. The Audit and Risk Committee’s main functions include, inter alia, reviewing the effectiveness of internal control systems and risk assessment; considering the need for an internal audit function; making recommendations to the Board in relation to the appointment of the Company’s auditors; determining in consultation with the Board as a whole the auditors remuneration; and monitoring and reviewing annually the auditors independence, objectivity, effectiveness and qualifications. The Audit and Risk Committee also monitors the integrity of the financial statements of the Company including its annual and interim reports, preliminary results’ announcements and any other financial information provided to Shareholders. The Audit and Risk Committee is responsible for overseeing the Company’s relationship with the external auditors as a whole and also considers the nature, scope and results of the auditors’ work and reviews, and develops, recommends to the Board and implements policies on the supply of non-audit services that are to be provided by the external auditors. The Audit and Risk Committee further focuses on compliance with legal requirements, accounting standards and the relevant provisions of the AIM Rules for Companies and ensuring that an effective system of internal financial and non-financial controls is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts will remain with the Board. The membership of the Audit and Risk Committee and its terms of reference will be reviewed on an annual basis.

Remuneration committee

The Remuneration Committee comprises Robin Stevens and Ross Andrews with Ross Andrews  as chair of the committee. The Remuneration Committee’s main functions includes, inter alia, determining and agreeing with the Board the framework or broad policy for the remuneration of the Company’s Chairman and Executive Directors; approving the design of, and determining targets for, any performance related pay schemes operated by the Company and approving the total annual payments made under such schemes;  reviewing the design of all share incentive plans for approval by the Board and Shareholders together with determining each year whether awards will be made and, if so, the overall amount of such awards, the individual awards to Executive Directors, company secretary and other senior executives and the performance targets to be used; and determining the total individual remuneration package of the chairman, each executive director, the company secretary and other senior executives including bonuses, incentive payments and share options or other share awards.

Nomination committee

The Nomination Committee comprises Robin Stevens and Ross Andrews with Ross Andrews as chair of the committee. The Nomination Committee will lead the process for Board appointments and make recommendations to the Board. The Nomination Committee will regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes. The Nomination Committee will meet as and when necessary, but at least twice a year.

QCA Code

From Admission, the Company shall disclose on its website and within its annual report and accounts how the Company complies with the QCA Code and, where it departs from the QCA Code, will explain the reasons for doing so. This information is also set out below. The Company will review this information annually in accordance with the requirements of AIM Rule for Companies 26.

The Company’s Chairman leads the Board and oversees its function and direction, as well as having ultimate responsibility for implementing the Company’s corporate governance arrangements.

Vector Capital Plc is a public limited company specialising in providing principal finance to the private and corporate sector.

Location

Vector Capital Plc
13 Sovereign Park, Coronation Rd, London, NW10 7QP

t. 020 8191 7615

e. mail@vectorcapital.co.uk

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