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The Board is responsible for the long-term success of the Group and agrees the business strategy, implementation plans and management of risk. It provides leadership and is responsible for the overall corporate governance of the Company. The Directors are responsible for ensuring that the strategy, operations, financial reporting and management of risk are underpinned by processes which promote a culture of engagement, transparency and responsibility throughout the Group. The Board believes that good corporate governance is an integral part of the mid and long-term success of the Group. Accordingly, the Directors have adopted the QCA Code to establish the governance framework for the business of the Group and as appropriate for its size.
As Chair, I assume principal responsibility for the Group’s corporate governance environment and together with my fellow Board members, set clear expectations concerning the Group’s culture and conduct. As a Board we monitor internal control processes to ensure that good standards of corporate governance operate throughout the Group.
As directors we acknowledge the importance of high standards of corporate governance and the principles set out in the Corporate Governance Code for small and mid-sized companies issued by the QCA (“QCA Code”). The QCA Code has become a widely recognised benchmark for corporate governance of small and mid-sized companies, particularly AIM companies. It takes key elements of good governance and applies them in a manner which is workable for the different needs of growing companies. Accordingly, we have adopted and apply the QCA Code to the extent that is appropriate for a business of the Group’s size and stage of development.
The Board comprises seven Directors including a Non-Executive Chair, two full-time Executive Directors and four Non-Executive Directors, of which three are considered independent.
The Directors have complementary experiences and backgrounds, different skills and knowledge. Our board composition brings together relevant experience to meet the Group’s challenges and opportunities as a public company, product development expertise in the markets within which it operates and ensures that no individual (or a small group of individuals) can dominate the Board’s decision making.
The Board meets regularly to review the Group’s progress towards its strategic goals and to approve corporate plans and actions, budgets and financial reporting. The Board is supported by committees which fulfil specific functions and have clear terms of reference that set out defined duties and responsibilities.
The Audit & Risk Committee and Remuneration Committee meet at least three times per year and otherwise as required. Both committees are chaired by independent Non-Executive Directors.
The Nomination Committee meets at least once per year and otherwise as required.
When the need arises, separate committees may also be set up by the Board to consider specific issues.
Andrew Richards
Chair
Last updated: 22 August 2022
Establish a strategy and business model which promote long-term value for shareholders
The Group’s strategy is to develop an in-house portfolio of enhanced proprietary products to optimal value inflexion points prior to partnering with major healthcare companies under a revenue-generating licence model with the potential for the Group to receive royalties and significant milestone payments.
The Group also operates a technology licensing arrangement to develop enhanced reformulations of partners’ products, with the potential for milestone and royalty payments.
The Group’s proprietary product development can be divided into diabetes and specialty hospital care. In addition, the Group also develops novel enhanced formulations of its partners’ biological products that include biosimilars, biological products and vaccines, which are derived from the Group’s formulation development and technology licensing programmes and are referred to as Technology Partnerships.
The Board holds at least one session each year dedicated to strategy, including input from the leadership team and external advisers as appropriate.
Seek to understand and meet shareholder needs and expectations
The Board is committed to open and ongoing engagement between itself and shareholders. The Board communicates with shareholders through:
- annual report and accounts;
- interim and full-year results announcements;
- trading updates (where required or appropriate);
- the annual general meetings; and
- the Company’s investor relations website (in particular, the “RNS News” and “AIM Rule 26” pages).
Regular meetings are held with the Chief Executive Officer, Chief Financial Officer and institutional investors and analysts to ensure that the Company’s strategy, financial and business development activities are communicated effectively. The Chair is also available for discussions with shareholders as and when appropriate.
The Chief Financial Officer as Company Secretary is the primary contact for shareholders. There is a dedicated e-mail address for shareholder questions and comments.
Board members attend the Annual General Meeting (‘AGM’) and are available to answer questions raised by shareholders. After the conclusion of the AGM, the Company provides an opportunity for shareholders to speak or raise questions with the Board on a more informal basis.
Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the long-term success of the Company is reliant upon the efforts of all stakeholders.
The Arecor team is key to the business and regular meetings are held to ensure that all staff are aware of the direction of the business, key milestones and progress to date. Communication with employees includes Company-wide meetings and Meet-the-Board sessions with the Directors.
The Group draws upon a range of different resources and relationships to drive the business forward. The focus on pharmaceutical products means working collaboratively in a matrix organisation and as part of cross functional teams.
External relationships reflect our business objective of building and maintaining a network of pharma industry partners, academia, key opinion leaders, clinicians, and regulators. These relationships are valued and underpinned by processes and systems to ensure that there is appropriate oversight and engagement.
The Group takes its corporate social responsibilities very seriously and is focused on maintaining effective working relationships and communication across a wide range of stakeholders including employees, existing and new customers, academic and advisory groups as part of the normal course of business.
Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for establishing the system of internal control used by the Group and reviewing its effectiveness. This system is intended to understand and manage risk which could potentially impact the business. The Board also monitors expenditure and information used in decision making. Established controls include:
- Monthly management accounts issued to the Board
- Detailed board reports of progress against company goals
- Annual budget and rolling forecasts reviewed and approved by the Directors
- Authority limits approved by the Board, with matters reserved for the Board including approval of significant contracts and overall project expenditure
- Ongoing review of the IP strategy including status of IP applications and grants
The Board has ultimate responsibility for the Company’s system of risk management and internal control, including reviewing its effectiveness. The Board’s oversight of internal controls operates through a framework of policies and procedures with authorisation procedures for operating and capital expenditure. The leadership team operates within an organisational structure with defined levels of responsibility.
In addition to its other roles and responsibilities, the Audit & Risk Committee is responsible to the Board for monitoring the effectiveness of internal controls and authorities across the Group. This includes a corporate risk register which sets out risks and mitigation steps in the normal course of business.
Maintain the board as a well-functioning, balanced team led by the chair
The Group is governed through its Board of Directors, comprising the Chair, Chief Executive Officer, Chief Financial Officer and four Non-Executive Directors. The names of the current Directors together with their biographical details, skills, experience and other directorships are set out on here.
All Directors are subject to election by the shareholders at the general meeting immediately following their appointment to the Board and at re-election intervals of not more than three years.
The Board believes that all Non-Executive Directors together with the Non-Executive Chair bring an independent judgement to bear. No Non-Executive Director has been an employee of the Group, has had a material relationship with the Group, receives remuneration other than Directors fees, has close family ties with any of the Group’s advisers, Directors or senior employees, or holds cross-directorships. The Non-Executive Chair and one of the Non-Executive directors has served on the board of directors for more than nine years and therefore do not meet the definition of independent in the Combined Code.
The Board is aware of the other commitments of its Directors and changes to these commitments are reported to the Board. The Group has procedures in place to deal with conflicts of interest, the Directors do not participate in any vote in which they have a conflict of interest and do not contribute to discussions involving such interests.
The Board comprises seven directors: Andrew Richards (Chair), Sam Fazeli, Alan Smith, Christine Soden and Jeremy Morgan as Non-Executive Directors; Sarah Howell (Chief Executive Officer) and Susan Lowther (Chief Financial Officer) as Executive Directors.
Christine Soden, Jeremy Morgan and Sam Fazeli are considered by the Board to be independent Non-Executive Directors and were selected with the objective of bringing experience and independent judgement. Andrew Richards, Sam Fazeli and Alan Smith bring extensive knowledge of the business, the sector it operates in and experience of public markets to the Board.
The Board is also supported by the Audit and Risk Committee, Nomination Committee and Remuneration Committee.
The Board meets regularly and at least eight times a year.
Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board has been constructed to ensure that it has the right balance of skills, experience, independence and knowledge of the business. The board structure provides a breadth and depth of skills and experience to deliver the business strategy of the Group for the benefit of shareholders over the medium to long-term.
The Directors believe that the Board has an appropriate balance of sector, financial, and public markets skills and experience. Board members are kept up to date on a regular basis on key issues and developments pertaining to the Company as well as their responsibilities as members of the Board.
The Board are supported by an experienced senior management team. The Directors believe that the senior management team is appropriately structured for the Group’s size and is not overly dependent upon any one individual.
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
On appointment each Director takes part in an induction programme in which they receive information about the Group and the role of the Board including matters reserved for its decision, the terms and reference of the Board and committees. They receive guidance about the responsibilities of AIM company directors as set out in the AIM Rules for Companies and relevant aspects of the Market Abuse Regulation legislation.
The Directors can access independent professional advice at the Group’s expense when it is considered necessary as part of meeting their responsibilities.
Evaluation of the Board and individual Directors is carried out to determine effectiveness and performance of the Board and the Directors’ continued independence and capacity. The criteria against which effectiveness is considered is aligned to the strategy and business plans of the Company.
This evaluation of Board performance is co-ordinated and led by the Chair. The process includes peer appraisal, completion of questionnaires and discussions. The most recent evaluation was in March 2022.
Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Group. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Group, its performance and the way that employees behave. The importance of sound ethical values and behaviours is crucial to the ability of the Group to successfully achieve its corporate objectives.
The Board assessment of the culture within the Group includes respect for all individuals, open dialogue and a commitment to maintain relationships with key stakeholders.
The Group takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all business dealings and relationships wherever they occur. The Company has adopted an anti-bribery and anti-corruption policy which provides guidance to those working for the Group on how to recognise and deal with bribery and corruption issues and the potential consequences. This applies to all persons working for the Group or on its behalf in any capacity, including employees at all levels, Directors, officers, consultants and agents.
The Group adopted, with effect from Admission, a share dealing policy regulating trading and confidentiality of inside information for the Directors and other persons discharging managerial responsibilities (and their persons closely associated) which contains provisions appropriate for a company whose shares are admitted to trading on AIM (particularly relating to dealing during closed periods which will be in line with the Market Abuse Regulation).
The Group takes all reasonable steps to ensure that Directors and relevant employees comply with the terms of that share dealing policy.
Employees are at the heart of the Group’s corporate culture. Our employees know that they can make a positive contribution to people’s lives in the development of new treatments in areas of high unmet need. This is a strong motivator and drive for change, which is reflected in our core values of Ambition, Innovation, Creativity, Collaboration, Transparency and Integrity.
Maintain governance structures and processes that are fit for purpose and support good decision making by the Board
Ultimate authority for all aspects of the Group’s activities rests with the Board with the respective responsibilities of the Non-Executive Chair and Chief Executive Officer as delegated by the Board.
The division of responsibilities is clearly defined. The Chair is responsible for the effectiveness and leadership of the Board, promoting a culture of openness and debate by facilitating the effective contribution of Non-Executive Directors and ensuring constructive relations between the Executive and the Non-Executive Directors. The Chair is also responsible for ensuring that the Directors receive accurate, timely and clear information.
The Chief Executive Officer is responsible for day-to-day business activities.
Non-Executive Directors are appointed not only to provide independent oversight and constructive challenge but to provide strategic advice and guidance. There is a rigorous and transparent procedure for the appointment of new Directors to the Board. The search for Board candidates will be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board.
Board Committees
The Group has established Audit, Remuneration and Nomination Committees with written terms of reference for each which deal with their authorities and duties. If required, separate committees may also be set up by the Board to consider specific issues.
Audit and Risk Committee
The Audit and Risk Committee assists the Board in discharging its responsibilities of corporate governance, financial reporting, external and internal audits and controls. This includes, amongst other things, reviewing annual financial statements, monitoring the extent of the non-audit services undertaken by external auditors, advising on the appointment of external auditors, and reviewing the effectiveness of internal controls and risk management systems. The ultimate responsibility for reviewing and approving the annual report and accounts and the half yearly reports rests with the Board.
Membership of the Audit and Risk Committee comprises Christine Soden, Jeremy Morgan and Sam Fazeli and it is chaired by Christine Soden.
The Audit and Risk Committee meet not less than three times a year and otherwise as required.
Remuneration Committee
The Remuneration Committee is responsible for executive remuneration and the remuneration of individual Directors. This includes agreeing with the Board the framework for remuneration of the Executive Directors and such other members of the executive management of the Company as it is designated to consider. The Committee is responsible for determining the total remuneration package of each Director including, where appropriate, bonuses, incentive payments and share options. No Director is involved in any decision as to their own remuneration.
Membership of the Remuneration Committee comprises Jeremy Morgan, Alan Smith, Christine Soden and Andrew Richards, and is chaired by Jeremy Morgan.
The Remuneration Committee meet not less than three times a year and otherwise as required.
Nomination Committee
The Nomination Committee is responsible for the structure and composition of the Board and its committees taking into account the balance of skills and diversity. This includes consideration of the appointment and succession planning of Executive and Non-Executive Directors. The membership of the Nomination Committee comprises Andrew Richards, Christine Soden, Jeremy Morgan, Alan Smith and Sam Fazeli. The Committee is chaired by Andrew Richards.
The Nomination Committee meet each year and otherwise as required.
Board meetings
The Board will meet at least eight times each year or any other time deemed necessary for the good management of the business. They meet at a location agreed between the Board members. Face-to-face meetings occur where practicable.
The Executive Directors attend for part of Committee meetings at the invitation of the Chair.
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
Communication with shareholders includes:
- the annual report and accounts;
- the interim and full-year results announcements;
- trading updates (where required or appropriate)
- the annual general meetings; and
- the Company’s investor relations website (in particular, the “RNS News” and “AIM Rule 26” pages).
The website is reviewed on a regular basis. Reports presentations, notices of annual general meetings, and results of voting at shareholder meetings are also available in the Investor Centre on the website.
Environmental and Social Governance
As Arecor has grown as a business, so too has our dedication to behaving responsibly and introducing more formal processes to demonstrate our commitment to managing our environmental obligation and creating a sustainable environment. We are committed to ensuring that building enhancements are ethical and sustainable. We work with suppliers who share our commitment to recycling and zero landfill.
The Group’s business vision and strategy has a strong social focus, as our lead products are designed to improve the quality of life of people living with diabetes. We are developing rapid acting insulins to enable better control and management of the disease and facilitate the use of miniaturised insulin pumps. Our speciality hospital franchise is developing ready-to-administer and ready-to-use injectable medicines. The application of the Arestat technology to products which do not require cold chain (or ultralow temperatures) can improve access to healthcare in countries which do not have an established cold chain infrastructure. This can help to advance healthcare provision for underserved populations and geographical locations.
The Group is committed to the equal treatment of all employees and applicants regardless of their gender, marital status, sexual orientation, age, race, colour, nationality, ethnic origin, disability, or religious or philosophical beliefs.