Corporate governance

Introduction

On 4 July 2018, the Board of genedrive plc decided to apply The QCA Corporate Governance Code (2018 edition) (the QCA Code).

As a result of deciding to apply the QCA Code, the corporate governance principles which now apply to us are those contained in the QCA Code. These principles, how we apply them and references to where further information can be found are:

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.

Our business model and the market opportunities for Genedrive® which explain how we create value is set out on page 8 of the 2022/23 annual report and accounts

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.

Copies of our annual report (which includes the notice of AGM) and the interim report are sent to all shareholders and copies can be downloaded from the investors section of www.genedriveplc.com.
Other information for shareholders (and other interested parties) is also provided on our website, including the preliminary and half-year results presentations to the City.
We have an on-going programme of individual meetings with institutional shareholders and analysts following the preliminary and half-year results presentations to the City. These meetings allow the Chief Executive and the Chief Financial Officer to update shareholders on strategy and the group’s performance.
Additional meetings with institutional investors and / or analysts are arranged from time to time.

All Board members receive copies of feedback reports from the City presentations and meetings, thus keeping them in touch with shareholder opinion.

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 Company is close to the issues of developing world disease treatment and funding as this is central to its business model.
The Company regularly attends disease specific events such as the annual International Liver Congress (ILC) and the annual European Association Study of the Liver (EASL). Full details of the events attended by the Company can be found on the “News and Events” page of www.genedrive.com.

The Company operates policies for Equal Opportunities, Harassment and Anti-bribery.

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).

Page 20 of the 2022/23 annual report and accounts details the Company’s principle risks and uncertainties, with direction of travel for each risk.

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 Board of Directors is formed of five Directors. Two members of the Board are executive directors and three are non-executive directors, one of whom is the Chairman. Up to date biographies of the Board can be found at http://www.genedriveplc.com/genedrive-at-a-glance/directors.php

There is a clear division of responsibilities between the Chairman and the Chief Executive. Each role has its own formal written description of specific responsibilities.
The Chairman takes ultimate responsibility for corporate governance.
The Non-Executive Directors bring independence and a wide range of experience to the Board. Their role is to help develop strategy and to promote constructive debate and challenge in Board discussions.
The Board considers Ian Gilham, Tom Lindsay and Chris Yates to be independent.
The Company Secretary advises the Board through the Chairman on all governance matters. All Directors have access to the services of the Company Secretary and may take independent professional advice at the Company’s expense in conducting their duties.
The Company has a formal schedule of board meetings and specific agenda for each meeting. Board attendance is covered on page 25 of our 2022/23 annual report.
Reports from the Executive Directors are circulated in advance of each Board meeting which focus on major operational matters.
To ensure that the Directors are kept fully informed on the status of the business, presentations from the senior management team are also delivered to the Board. During the year, overviews were presented by each member of the Executive Team.

The Board delegates certain activities to the committees, as explained on pages 24-25 of our 2022/23 annual report.

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.

The Board has a balanced composition, with relevant skills and expertise. Up to date biographies of the Board can be found at http://www.genedriveplc.com/genedrive-at-a-glance/directors.php

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.

We review the Board effectiveness annually.
As part of this business change the Board has taken decision that all Directors be proposed for election or re-election at the next Annual General Meeting of the Company.

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.

Being a Healthcare Company, we also adopt the Principles of the USA’s Physician Payments Sunshine Act 2010, providing significant transparency on payments and items and value given to decision makers in Healthcare companies.
The Company has training routines in place for anti-bribery and money laundering that requires annual training for high-risk employees.

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.

Dr Ian Gilham, as Chairman, is responsible for leading an effective Board, fostering a good corporate governance culture and ensuring appropriate strategic focus and direction.
The Chief Executive, Gino Miele, has overall responsibility for proposing the strategic focus to the Board, implementing the strategy once it has been approved and managing the group’s business.
Audit committee: its primary focus is on corporate reporting (from an external perspective) and on monitoring the company’s internal control and risk management systems (from an internal perspective). Further details on the committee’s responsibilities and activities are on pages 27 to 29 of our 2022/23 annual report.
Chris Yates is Chairman of the Audit Committee
Remuneration committee: its primary function is to determine, on behalf of the board, the remuneration packages of the executive directors. Further details on the committee and the company’s reward policy are on pages 30 to 35 of our 2022/23 annual report.
Nomination committee: in practice, the chairman and the chief executive lead on the board nomination and appointment process. They consider the balance of skills, knowledge and experience on the board and make appropriate recommendations for consideration by the whole board. Each board member is invited to meet with the candidate. This process has been used effectively for a number of years and has led the board to remain of the view that it should continue to operate in this way rather than through a more formal nomination committee. Other senior appointments are made by the Chief Executive in discussion with the Chairman.
A summary of the terms of reference for the audit, remuneration and nominations committees can be found in the investors section www.genedriveplc.com

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, appropriate communication and reporting structures 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).

The Group recognises the importance of communications with its shareholders to ensure that its strategy and performance is understood and that it remains accountable to shareholders. The Board as a whole is responsible for ensuring that a satisfactory dialogue with shareholders takes place, while the Chairman and Chief Executive ensure that the views of the shareholders are communicated to the Board as a whole. The Board ensures that the Group’s strategic plans have been carefully reviewed in terms of their ability to deliver long-term shareholder value.
As soon as practicable after any general meeting has concluded, the results of the meeting are released through a regulatory news service and a copy of the announcement is posted on the Company News page within the investors section of www.genedrive.com.
The announcement also provides, for information, details of the total number of voting shares in issue and the number of shares in respect of which valid proxy appointments were received; a table is included showing the number of votes for and against each resolution and also the number within the Chairman’s discretion - excluded from the table are abstentions / votes withheld and proxy appointments received from holders who appointed someone other than the Chairman of the meeting as their proxy.
The investors section of www.genedriveplc.com includes full details on the Group and how it is governed.
Notices of the annual general meetings and the work of the Board are contained within the relevant annual reports, which are available on the Company’s website.

Board Committees

A constitution and terms of reference of each of the Board Committees of the Company are reviewed periodically. The constitution and terms of reference adopted for each of the Committees are available in downloadable PDF documents below: