PROACTIS Holdings PLC is subject to the UK City Code on Takeovers and Mergers. Whilst the Company is listed on AIM, it is not required to adopt the provisions of the Code on Corporate Governance ("the Combined Code"). However, the Board is committed to the maintenance of high standards of corporate governance and after due consideration it has adopted many aspects of the Combined Code as described below.
The Board of Directors and Committees of the Board of Directors
The Board, which is headed by the Chairman who is non-executive, comprises one other non-executive and three executive members as at 31 July 2014. The Board met regularly throughout the year with ad hoc meetings being held also. The role of the Board is to provide leadership of the Company and to set strategic aims but within a framework of prudent and effective controls which enable risk to be managed. The Board has agreed the Schedule of Matters reserved for its decision which includes ensuring that the necessary financial and human resources are in place to meet its obligations to its shareholders and others. It also approves acquisitions and disposals of businesses, major capital expenditure, the annual financial budgets and recommends interim and final dividends. It receives recommendations from the Audit Committee in relation to the appointment of auditors, their remuneration and the policy relating to non-audit services. The Board agrees the framework for executive directors' remuneration with the Remuneration Committee and determines fees paid to non-executive directors. Board papers are circulated before Board meetings in sufficient time to be meaningful.
The division of responsibilities between the Chairman and the Chief Executive Officer is clearly defined. The Chairman's primary responsibility is ensuring the effectiveness of the Board and setting its agenda. The Chairman has no involvement in the day-to-day business of the Group. The Chief Executive Officer has direct charge of the Group on a day-to-day basis and is accountable to the Board for the financial and operational performance of the Group.
The performance of the Board is evaluated on an ongoing basis with reference to all aspects of its operation including, but not limited to: the appropriateness of its skill level; the way its meetings are conducted and administered (including the content of those meetings); the effectiveness of the various Committees; whether Corporate Governance issues are handled in a satisfactory manner; and, whether there is a clear strategy and objectives.
A new director, on appointment, is briefed on the activities of the Company. Professional induction training is also given as appropriate. The Chairman briefs non-executive directors on issues arising at Board meetings if required and non-executive directors have access to the Chairman at any time. Ongoing training is provided as needed. Directors are continually updated on the Group's business and on issues covering insurance, pensions, social, ethical, environmental and health and safety by means of Board presentations.
In the furtherance of his duties or in relation to acts carried out by the Board or the Company, each director has been informed that he is entitled to seek independent professional advice at the expense of the Company. The Company maintains appropriate cover under a Directors and Officers insurance policy if legal action is taken against any director.
The non-executive directors are considered by the Board to be free to exercise independence of judgement. They have never been employees of the Company nor do they participate in any of the Company's pension schemes or bonus arrangements. They receive no other remuneration from the Company other than their fees.
It is recognised that the Combined Code does not treat the Chairman as independent and it is considered best practice that he should not sit on the Audit or Remuneration Committees.* However the Board takes the view that as the number of non-executive directors is only two, including the Chairman, and as the Chairman does not chair either of those Committees, his participation will continue as each of the Committees gain the benefit of his external expertise and experience in areas which the Company considers important.
The Remuneration Committee reviews the performance of the Executive Directors and sets the scale and structure of their remuneration and it reviews the basis of their service agreements with regard to the interests of the shareholders. Other board members may be invited to attend meetings. The Remuneration Committee also makes recommendations to the Directors concerning the allocation of share options to Directors and employees. The remuneration and terms of appointment of Non-Executive Directors is set by the Board.
The Audit Committee meets at least twice each year and is responsible for monitoring the quality of internal control, ensuring that the financial performance of the Company is properly measured and reported on, meeting with the auditors and reviewing reports from the auditors relating to accounting and internal controls. The Chief Financial Officer will be invited to attend meetings but the committee will meet with the auditors at least once each year without the Chief Financial Officer being present.
There is no formal Nominations Committee, the appointment of new Directors is being considered by the full Board.