Establish a purpose, 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.

A company’s purpose is its essential reason for being. The business model and strategy should fall out of this. A board should be able to explain, beyond a simple description of products and corporate structures, how the company intends to deliver shareholder value in the medium to long-term.

In explaining the strategy, the board should have specific long-term objectives against which it can determine if the company is succeeding and in so doing delivering on its purpose.

The board 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.

ESO Compliance

The annual and interim reports detail the Company’s purpose, investment strategy, long-term objectives, historic performance and future outlook.

These reports discuss challenges faced by the Company and the portfolio and how these are mitigated.

Key performance indicators (“KPIs”) are included in these reports to quantify the Company’s performance against long-term objectives and delivery of shareholder value.

The Company provides updates to shareholders on significant changes in the Company’s or the portfolio’s position or prospects through ad hoc announcements, as required.

The Investment Advisor defines and executes long term valuation creation plans to develop the Company’s portfolio assets. The Board and the Investment Advisor closely monitor progress against these value creation plans and continue to refine these plans through the investment period to reflect changing circumstances.

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 which is supportive of the delivery of the company’s established purpose, strategy and business model.

The desired culture should be reflected in the actions and decisions of the board and executive management team. Corporate values should guide the objectives and strategy of the company.

The culture should be visible throughout the company’s operations, including recruitment, nominations, training and engagement. The performance and reward system throughout the company should reflect and reinforce the maintenance of this culture.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other communications by the company, both internal and external.

ESO Compliance

The Company seeks to invest capital in line with the Company’s established purpose and strategy and in a responsible and ethical manner, generating benefit to shareholders, its portfolio companies and the wider economy.

The Company, as a vehicle for holding investments, has no employees and limited capacity to effect changes in culture in companies it is affiliated with. That said, the Board seeks that the portfolio companies, in which the Company has an interest, act in an ethical manner and with consideration to the wider community.

The Board ensures that all portfolio companies have policies in place to comply with applicable governance laws and regulations, such as anti-bribery and modern day slavery. The Board has a zero tolerance approach to breaches of these laws and regulations.

The Board promotes ethical behaviour throughout the portfolio, through direction to the Company’s Investment Advisor, who seek to ensure the ethical management and operation of the portfolio.

No diversity policy has been applied by the Company as it qualifies as a medium company in accordance with DTR 7.2.8 B and DTR 1B.1.7R. Diversity targets and data are not disclosed in the annual report, given that the requirements of UK Listing Rules 16.3.29R do not apply to main market listings of non-equity shares.

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.

Where not already required, companies with a controlling shareholder (for example, an investor controlling 30% or more of the votes able to be cast at a general meeting of the company) should consider putting in place arrangements to protect minority shareholders which may include a relationship agreement or other measures.

The board should ensure proactive engagement with shareholders on governance matters. This should be led by the chair or, where appropriate, the Senior Independent Director. Other directors, such as the chairs of the board’s sub-committees, should also make themselves available for engagement with shareholders.

The Board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

ESO Compliance

The Board seeks to develop a strong and ongoing understanding with the Company’s shareholders.

The Board is available to respond to or address any queries or concerns raised by shareholders. Such concerns should be raised via the Company’s Investment Advisor or the Company’s Administrator, as appropriate.

The Company’s annual and interim reports, regulatory announcements and website state the details of points of contact at the Investment Advisor, Administrator and Nominated Advisor (“Nomad”). Throughout the year the Company’s Investment Advisor and Nomad meet with key shareholders to keep them informed of the Company’s progress. Both these advisors report to the Board on these interactions regularly.

The Company holds general meetings of its shareholders on an annual basis, where the annual report is presented to shareholders for their approval. Shareholders are invited to submit questions and comments for discussion at the meeting. The Board attends these meetings and is available to respond to or address any queries or concerns raised by attendees.

The Company has a single shareholder with a greater than 30% holding in the Company, Giles Brand, the Managing Partner of the Investment Advisor. The Company is governed by an independent Board of Directors and does not consider additional minority protection arrangements to be required. Giles Brand and the Investment Advisor are engaged under the investment advisory agreement between EPIC Investment Partners LLP and the Company. Giles Brand is present at the Company’s board meetings, as a representative of the Investment Advisor.

Take into account wider stakeholder interests, including social and environmental responsibilities and their implications for long‑term success

Long-term success relies upon good relations with a range of different stakeholder groups.

The board should periodically identify the company’s key stakeholders – for example, suppliers, customers, employees, communities, regulators, or others. The board should understand their needs, interests and expectations.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholders.

The company should devote particular attention to its workforce and ensure that its practices towards its employees (direct and indirect) are consistent with the company’s values. Arrangements should be in place to enable employees to raise concerns in confidence and processes to ensure that such matters are considered and where appropriate actions are taken.

The governance and appropriate oversight of a company’s approach towards relevant environmental and social issues is a responsibility of the board. Matters that relate to the company’s impact on society, the communities within which it operates, or the environment – including those relating to or stemming from climate change – have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term. These matters must be integrated into the company’s strategy, risk management and business model. The QCA Practical Guide to ESG can assist companies in this regard.

ESO Compliance

The Company seeks to invest capital in a responsible manner, generating benefit to shareholders, its portfolio companies and the wider economy.

The Company, primarily through its Investment Advisor, engages in ongoing communication with all its stakeholders, in particular its shareholders. The Company holds general meetings of its shareholders on an annual basis, to which shareholders are invited to submit questions and comments for discussion at the meeting. The Board attends these meetings and is available to respond to or address any queries or concerns raised by attendees.

The Company has no direct employees.

The Board seeks to ensure that the portfolio companies, in which the Company has an interest, act in a responsible manner with consideration to their various stakeholders as well as their environmental and social impact.

The Company’s Investment Advisor, in its capacity as manager of these portfolio assets, provides feedback to the Board on their performance and interactions with the wider community.

The Board gives consideration to steps which might be taken to enhance the impact the Company’s investments might have on the wider economy, environment and society within the Company’s strategic objectives. The Board makes specific enquiry of the Investment Advisor where relevant to the activities of these portfolio assets.

Embed effective risk management, internal controls and assurance activities, 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 on its stated purpose and strategy. Companies need to consider not only the enterprise view but also their extended business, including the company’s entire supply chain, other material third-parties (including suppliers of outsourced services) and any reliance on strategic partners.

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 should ensure that a balanced view of risk is achieved, and, as well as threats should consider opportunities and the potential for value creation.

The board should ensure that all potential risks are considered, on a proportionate and material basis, including those relating to climate change.

The board should review and consider whether the company’s enterprise-wide internal controls are sufficiently robust to manage the identified risks adequately.

To achieve effective risk management, the board, and in particular the audit committee, must ensure that there are appropriate assurance activities in operation. This may be based on access to internal resources, or particularly in specialist or technical areas, the utilisation of external experts.

It is important to ensure that the company auditor is and is seen to be sufficiently independent of management. Further information is set out in the QCA Audit Committee Guide.

ESO Compliance

The Board maintains a robust risk management framework, which is reviewed and challenged on an ongoing basis.

The Board has established an Audit and Risk Committee to advise the Board on the Company’s risk management approach and overall risk profile. The Audit and Risk Committee meets at least twice a year and undertakes periodic business risk assessments. The key risks categories for the Company are portfolio performance and operational performance.

In relation to the risks associated with the portfolio’s performance, the Company’s Investment Advisor manages the portfolio.

The Investment Advisor defines and executes long term valuation creation plans to develop the Company’s portfolio assets. The Board and the Investment Advisor closely monitor progress against these value creation plans and continue to refine these plans through the investment period to reflect changing circumstances.

The performance and capabilities of the Investment Advisor are reviewed on an ongoing basis and in particular, via an annual site visit by the Board to the Investment Advisor. Further, the Board receives updates on the portfolio on a quarterly basis (and on an ad hoc basis, as required) and challenges the Investment Advisor, as appropriate. The portfolio is relatively concentrated with a target size of 2-10 assets. The Investment Advisor manages and reports on strategies and opportunities for value creation as part of their portfolio monitoring responsibilities.

The Board and the Investment Advisor considers climate change related risks as part of the review and approval process for new investments and the ongoing monitoring of portfolio companies. Concerns are to be raised within the portfolio updates provided by the Investment Advisor to the Board.

In relation to risks associated with the Company’s operational performance, the Company has no direct employees or operations, and has instead delegated its operations to certain service providers, in particular the Company’s Investment Advisor, Nomad, Administrator and Financial Administrator. The Company reviews the performance of these key suppliers on an annual basis with site visits and in-person meetings with all key advisors.

In relation to the financial reporting process :

• The Company receives an independent agreed upon procedures compliance report on a three year cycle (and when procedures are significantly amended) regarding the Financial Administrator.
• The Audit and Risk Committee monitors the reporting process and reviews and submits recommendations to the Board regarding the financial statements.
• The Audit and Risk Committee reviews the assessments of going concern, longer-term prospects and viability.
• The Audit and Risk Committee considers proposed changes to accounting policy.
• The Audit and Risk Committee reviews and receives confirmation of the independence of the Company’s auditor.

The Subsidiary investment holding vehicles have their own Boards and governance structures in place. The Subsidiary Boards’ review and approve the direct investments. The Subsidiary investment holding vehicles are not consolidated in the group’s financial statements in accordance with IFRS 10. The internal control and risk management systems in relation to the financial reporting process for the subsidiaries are in line with the controls followed by the Company.

The Company also controls an employee benefit trust (“EBT”) established to operate the jointly owned share plan and share based payment scheme for the Company’s Directors and certain employees of the Investment Advisor. The EBT subsidiary’s financial statements are consolidated in the financial statements as presented in this Report and Accounts. The EBT subsidiary has its own Trustees and they act independently to the Company. The financial reporting process and controls of the EBT subsidiary are in line with the Company. The Board considers the EBT subsidiary a non-material component to the consolidated financial statements.

The Audit and Risk Committee ensures that all service providers remain compliant with relevant regulations and remain suitable to provide their contracted services.

Establish and 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. The board should not be dominated by one person or a group of people, and each director must be able to commit the time necessary to fulfil their role. Ultimate responsibility for the quality and effectiveness of the board lies with the chair.

Shareholders should be given the opportunity to vote annually on the (re-) election of all individual directors to the board.

In order to uphold the quality of board independence, the board should be comprised of an appropriate balance between executive and non-executive directors. The independent non-executive directors should comprise at least half of the board. The chair, if independent upon appointment and still considered independent, can be included in this calculation. However, as a minimum there should be at least two non-executive directors whom the board considers to be independent.

Key committees, in particular the audit committee and remuneration committee, should comprise at least a majority of independent NEDs and ideally aim for full independence. The company should consider whether it is appropriate to have a senior independent director.

Boards should be sensitive to both real and perceived impediments to independence. Consideration should be given to those factors which may impede independence which include (but are not limited to): length of board tenure; size of shareholding; prior and/ or current commercial or contractual relationships with the company; prior and/or current commercial or contractual relationships with executive directors; and significant incentive pay arrangements beyond a director’s fee.

Since independence can be easily compromised, NEDs should rarely participate in performance-related remuneration schemes or have a significant interest in a company share option scheme. Where performance- related remuneration is considered beneficial, it should be proportionate, and shareholders should be consulted before proceeding.

The board should reflect on its own levels of diversity. Of most importance is ensuring the board possesses the necessary knowledge and skillset – while avoiding groupthink. Consideration should be given to factors such as socio-economic backgrounds, nationality, educational attainment, gender, ethnicity and age. Boards should assess how their collective and individual perspectives add to board discussions and ensure there is sufficiently wide-ranging and business relevant input, to deliver the best decision-making process in the context of the company’s business model, geographic footprint and forward-looking strategy. This assessment should feed into ongoing succession planning for the board.

ESO Compliance

All members of the Board are considered to be of independent thought and are non-executive directors. In particular, the Board feel that they are sufficiently independent of the Investment Advisor and that they sufficiently challenge the advice received from the Investment Advisor.

The annual and interim reports, and Company website include biographies of the directors which outline the experience and skills of each director.

The Board reviews the experience and skills of the Board, as a collective, on an annual basis, along with the efficacy of the Board’s operations. The Board gives consideration to the diversity of its members to ensure that they have the requisite knowledge and skillset to oversee the execution of the Company’s strategy.

Some Board members have long periods of service. The Board believe that the experience and familiarity with the Company is to the benefit of the Company, its portfolio, its shareholders and objectives. The investment period of portfolio assets matches the long period of service held by certain Board members, providing deep knowledge of the Company’s investment portfolio.

Historically, an individual Board member has voluntarily sought re-election by shareholder vote, on an annual rotational basis. In order to bring its policies in to line with the updated governance code, all directors will seek re-election on an annual basis at future annual general meetings.

The Board has established the following committee to advise on the Board’s responsibilities:

• Audit and Risk Committee

All directors are members of this committee.

The Board does not consider that the establishment of either a Remuneration Committee or a Nomination Committee would be appropriate for an investment company of the Company’s current size.

The Board meets at least four times a year to review the Company’s performance and operations. All directors attended the majority of the routine meetings convened in the last twelve months.

The Board may convene additional meetings, as required to address investment opportunities and other matters arising. Where directors are not able to attend (often given the short notice), directors typically communicate their input on the subject matter under discussion to the rest of the Board ahead of time such that it may be incorporated in the Board meeting’s deliberations.

The Audit and Risk Committee meets at least twice a year. The Chairman of the Audit and Risk Committee meets with the Company’s auditors at least three times a year.

The time commitment required of directors varies dependent upon the activity level of the Company. It is anticipated that 8-12 days per annum are required of directors for the attendance of routine meetings of the Board. In addition it is anticipated that 4-10 days per annum are required for the participation in other matters arising.

The directors of the Company participate in a share-based remuneration scheme. Participation in this scheme requires the purchase by directors of shares in the Company. The Board considers that this scheme is appropriate as equity participation in the Company is important for fostering alignment with shareholders. The scheme has caps on director participation and has been approved by a general meeting of shareholders.

Maintain appropriate governance structures and ensure that individually and collectively the directors have the necessary up‑to‑date experience, skills and capabilities

The company should maintain governance structures and processes in line with its desired corporate culture and appropriate to its:

• Size and complexity; and
• Capacity, appetite and tolerance for risk.

The governance structures, processes and policies should evolve over time in parallel with its size, strategy and business model to reflect its maturity and stage of development.

The board should be supported by committees – typically at least an audit, remuneration and nomination committee – that also have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

The board should ensure that it has the necessary skills and experience to fulfil its governance responsibilities, including among other things with respect to cyber security, emerging technologies, and relevant sustainability matters such as climate change. The board should consider any need to establish further dedicated sub-committees and, where appropriate, seek input from external advisers on such matters.

All directors should continually update their skills and knowledge. As the company and the external environment evolves, the mix of skills and experience required on the board will change. The board should consider its training and development needs in this context, plan ahead and structure such provision accordingly.

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 consider this and the design and implementation of its decision-making processes to ensure they are effective.

ESO Compliance

The roles and responsibilities of the directors are detailed in the Governance Report in the annual and interim reports.

A summary of the role and responsibilities of the chairman of the Board is included on the Company’s website.

All significant matters related to the operation of the Company are reserved to the Board, in particular given the Company does not have an executive function.

The Audit and Risk committee of the Board has been established to advise the Board on certain matters.

A summary of the terms of reference of the Board and the committee of the Board is included on the Company’s website.

The experience and skills of the directors are detailed in their biographies included on the website and in the annual and interim reports. The Board includes individuals with extensive experience across the private equity sector.

The Board reviews the experience and skills of the Board, as a collective, on an annual basis, along with the efficacy of the Board’s operations. Any deficiencies identified by these exercises are mitigated, where possible, by development of individual directors or recruitment of directors, when necessary.

Each director is responsible for the maintenance of their skills. All directors hold other complementary directorships and are active participants in the investment management community.

By way of example, certain Jersey-based directors are required, given their directorships and under local regulations, to complete a certain amount of Continuing Professional Development (“CPD”) each year.

The Board has established the following committees to advise on the Board’s responsibilities:

• Audit and Risk Committee

All directors are members of this committee.

The Board does not consider that the establishment of either a Remuneration Committee or a Nomination Committee would be appropriate for an investment company of the Company’s current size.

The Board receives investment advice from its Investment Advisor on an ongoing basis. The Board receives compliance advice from the Nomad on an ongoing basis. The Board seeks legal advice where appropriate and for all significant corporate actions and legal agreements.

The Company’s secretary and Administrator provide compliance advice, as relevant.

The Company’s advisors are detailed on the Company’s website and in the annual and interim reports.

Michael Gray is the senior independent director of the Company.

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 should be carried out on an annual basis and include opportunities for improvement with respect to the performance of the chair, and the operation of the board and its committees. The review should identify development or mentoring needs of individual directors and/or the wider senior management team.

The annual review can be carried out internally and should, ideally, be supplemented periodically by an external independent third-party review.

It is healthy for membership of the board to be periodically refreshed. No member of the board should become indispensable.

Succession planning for both the executives and non-executives is a vital task for boards. This should extend to contingency planning for the absence of key staff. There should be a robust process for the orderly appointment of new directors to the board and senior management positions. Consideration should be given to establishing a nomination committee to help with the process and ensure a diverse pipeline – both internally and externally – for succession. The skills, experience, capabilities and background required for directors and senior management to support the next stage of the company’s development should be identified and factored into succession planning.

ESO Compliance

The Board reviews the experience and skills of the Board, as a collective, on an annual basis, along with the efficacy of the Board’s operations. Any deficiencies identified by these exercises are mitigated, where possible, by development of individual directors or recruitment of directors, when necessary.

This review is conducted by an anonymised questionnaire completed by directors, with results collated by the Company’s Administrator. The matrix of skills and experience against which the Board reviews itself is broad and reflects the Company’s strategy and long-term objectives. The Board does not consider that an external independent third-party review would be appropriate for an investment company of the Company’s current size. The directors collectively review the succession plan for the Board on an annual basis, with recruitment of directors, when necessary, aligned to the skill reviews performed by the Board.

Some Board members have long periods of service. The Board believe that the experience and familiarity with the Company is to the benefit of the Company, its portfolio, its shareholders and objectives. The investment period of portfolio assets matches the long period of service held by certain Board members, providing deep knowledge of the Company’s investment portfolio.

Establish a remuneration policy which is supportive of long‑term value creation and the company’s purpose, strategy and culture

It is the board’s responsibility to establish an effective remuneration policy which is aligned with the company’s purpose, strategy and culture, as well as its stage of development.

A remuneration policy should motivate management and promote the long-term growth of shareholder value. Remuneration practices across the company, in particular for senior management, should support and reinforce the desired corporate culture and promote the right behaviours and decisions.

Pay structures for senior management should be simple and easy for participants to understand and foster alignment with shareholders through the building and holding of a meaningful shareholding in the company.

The remuneration committee should, as necessary, consult with other board committees in order to set appropriate incentive targets and to appraise performance in respect of those targets.

The annual remuneration report should be put to an advisory shareholder vote. Where not mandated to be put to a binding vote, remuneration policies should at least be put to an advisory vote. Larger companies may wish to follow best practice and put their remuneration policy to a binding shareholder vote. Given the significance and dilutive impact of such plans, new (or significant amendments to existing) share schemes or long-term incentive plans should be put to a shareholder vote.

ESO Compliance

The Board does not consider that the establishment of a Remuneration Committee would be appropriate for an investment company of the Company’s current size.

The annual report includes a remuneration report.

The directors of the Company participate in a share-based remuneration scheme. Participation in this scheme requires the purchase by directors of shares in the Company. The Board considers that this scheme is appropriate as equity participation in the Company is important for fostering alignment with shareholders. The scheme has caps on director participation and has been approved by a general meeting of shareholders.

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

A healthy dialogue should exist between the board and all of its key stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company. Board members, in particular the chair, should be proactive in their effort.

In particular, appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder base and other key stakeholders. This will assist:

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

Boards should ensure that corporate disclosures, in particular through annual reporting, are appropriate to satisfy the reporting needs of investors, including, but not limited to, sustainability matters. The QCA’s Practical Guide to ESG may be a useful resource to consider.

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

ESO Compliance

The annual report includes the following details:

• The work of the Board during the period of review – please see the Chairman’s Statement; and

• The work of the Audit and Risk Committee – please see the Governance Report.

The annual report includes a remuneration report.

Announcements regarding developments at the Company are disclosed on an ongoing basis via the Regulatory New Service (“RNS”).

The Company holds general meetings of its shareholders on an annual basis, to which shareholders are invited to submit questions and comments for discussion at the meeting. The notices of general meetings are contained on the Company’s website (last five years).

The outcomes of all votes of shareholders are disclosed shortly afterwards via announcement to the market. These announcements are retained on the Company’s website.

Historic interim and annual reports are contained on the Company’s website (last five years).