IMPERIAL MINERALS PLC
Board Governance Principles
The IMP Board is responsible for the direction and oversight of Imperial Minerals Plc (IMP) on behalf of the shareholders and is accountable to them, as owners, for all aspects of IMP’s business. The Board recognises that in conducting its business, IMP should be responsive to other relevant constituencies.
The IMP Board believes that good governance involves the clarity of roles and responsibilities, and the proper utilisation of distinct skills and processes. The Board therefore focuses on activities that enable it to promote shareholders’ interests, such as the active consideration of long-term strategy, the monitoring of executive action, and ongoing Board and executive management succession.
The Board believes that the governance of IMP is best achieved by the delegation of its authority for the executive management of IMP to the Chairman (Chairman) subject to defined limits and monitoring by the Board.
To reflect this approach, these Board Governance Principles (the Board Principles) are designed to enable the Board to operate within a clear governance framework.
1 THE IMP GOAL
The short term purpose of the Group is to lay the foundations for a significant business with a portfolio of mining assets and sustainable positive cash flows.
In the longer term, the Group aims to maximise shareholder value through the allocation of its resources towards the sourcing, vetting and securing of one or more natural resources exploration, development or production assets in order to develop the Group into a self-sustained natural resources business. IMP’s ultimate objective will not necessarily involve bringing assets to production in situations where onward sale of such assets to a mining major or other strategic investor would be more likely to unlock value added during the asset development process.
2 THE ROLE OF THE BOARD
2.1 The Board’s Role
The Board is collectively responsible for pursuing the IMP Goal and is accountable to shareholders for all IMP’s actions.
The Board’s role is to govern IMP by discharging its unique responsibilities, which include those responsibilities set out in paragraphs 2.2 to 2.4 below.
In carrying out its responsibilities the Board will:
a) focus primarily on strategic issues;
b) have regard to economic, political and social issues and any other relevant external matters which may influence or affect the development of IMP’s business; and
c) seek to exemplify through these Board Principles (including the Executive Limitations) its expectations for the conduct of IMP’s business and employees.
The Board will review and where appropriate determine the long term strategy (the Strategy) for IMP based on proposals made by the Chairman for achieving the IMP Goal.
The Board will monitor the decisions and actions of the Chairman and the performance of IMP including:
a) the implementation of, and performance against, the Strategy; and
b) the exercise of authority delegated to the Chairman.
The Board will satisfy itself that:
a) the material risks to IMP are identified and understood and that systems of risk management, compliance and control are in place to mitigate such risks; and
b) its expectations for the conduct of IMP’s business and employees are reflected in a set of values established by the Chairman.
The Board will ensure that systems and processes are in place for the succession, evaluation and compensation of the Chairman, any Executive directors and/or other key members of senior management.
3 THE BOARD AND ITS PROCESSES
The Board is committed to promoting the success of IMP. It represents the interests of all shareholders and seeks to act fairly between them. The Board will engage in an appropriate dialogue with shareholders and seek to obtain the view of the shareholders as a whole.
IMP currently has a single shareholder with an equity stake representing in excess of 50% of its fully diluted ordinary share capital. The Chairman will maintain, and be afforded, a direct link with this shareholder in order to assist with the implementation of the Strategy.
3.2 Board Meetings
The Board will determine the key items for consideration by it for each coming financial year.
The agenda will be set by the Chairman.
Discussion at Board meetings will be open and constructive. All discussions of the Board and their record will be maintained in confidence unless there is a specific decision or legal requirement to make disclosure.
In participating in Board discussions, Directors are expected to discharge their responsibilities as directors of IMP and not to act solely as the representative of any particular activity for which they bear responsibility.
3.3 Independent Advice
Any director is entitled to obtain independent professional advice relating to their own responsibilities and the affairs of IMP. Each director should obtain independent advice where there is a need to consider any matter in which they may have an interest which may conflict with the interests of the Company.
Where advice is to be sought, the director will first discuss it with the Chairman or, if it is not appropriate to discuss it with him, the Senior Independent Non-Executive Director (SID) and, having done so, shall be free to proceed.
3.4 Board Composition and Compensation
3.4.1 Composition, Size, Independence and Tenure
The Board will ideally comprise a mix of individuals that ensures an appropriate range of knowledge, views and experience.
Generally, Board members will be expected to have:
a) experience in dealing with strategic issues and long-term perspectives;
b) leadership experience, a superior knowledge of business principles and capacity for independent thought;
c) an ability to participate constructively in deliberations; and
d) a willingness to exercise authority in a collective manner.
Tenure will be determined on the basis of contribution and continued evidence of the exercise of independent judgement. Any term beyond six years (e.g. two three-year terms) for a Non-Executive director will be subject to particularly rigorous review and will take into account the need for progressive refreshing of the Board.
The IMP Board is currently comprised of one part-time, director (the Chairman) and one Non-Executive director. It is intended that following the acquisition of one or more assets when IMP has a commercial natural resources business, one or more full time Executive directors shall be appointed but that at least half of the directors will comprise Non-Executive directors at least two of whom, not including any non-executive chairman, will be determined by the Board to be independent in character and judgement and free from any business or other relationship which could materially interfere with the exercise of their judgement.
The Board should be of a size which enables the full engagement of all the directors. The number of directors will not be less than two (its present number) or exceed eight.
The Board will maintain plans for the succession of any Executive directors.
All directors will stand for re-election by shareholders:
a) at the first annual general meeting of the Company following their appointment; and
b) at least once every three years (at least one third of the Board shall retire, chosen by rotation according to time served since their last election, and seek re-election at each annual general meeting of the Company); and
c) any Non-Executive director who has served longer than nine years shall be subject to annual re-election.
3.4.3 Terms of Engagement and Compensation
The Board will determine the terms of engagement and the level of remuneration paid to its members within the limitations approved by the shareholders.
The Chairman will be paid a salary, to be reviewed by the Board from time to time, and will receive other support from IMP appropriate to his office and part-time status.
Non-Executive directors are currently unremunerated.
3.4.4 Board and Director Evaluation
The Board will evaluate its own processes and performance to ensure its on-going effectiveness as a high performing board. This evaluation process will take place annually, in accordance with the procedures adopted by the Board from time to time.
The performance and contribution of individual directors as members of the Board will be reviewed periodically, with the Chairman’s performance being reviewed annually.
The performance of the Chairman will be monitored solely by the Non-Executive directors. The performance of any Executive directors will be monitored by the Chairman and the Non-Executive directors.
3.4.5 Board Induction and Education
An induction programme and continuing training and education will be available to all directors to enable them to fulfil their responsibilities as directors.
3.4.6 Other Directorships
Membership of the Board represents a significant time commitment and Non-Executive directors must be prepared to give sufficient time for the discharge of their IMP responsibilities.
All directors should regularly inform the Board, through the Company Secretary, of other directorships they hold.
All appointments of part-time or Executive directors to other boards shall be subject to the approval of the Chairman (or, in the case of the Chairman, that of the Board) and reported to the Board.
3.5 The Chairman and SID
The Board will appoint from among their number a chairman and a SID, the latter not being an employed executive of the Group.
The Board will develop and maintain a plan for the succession of both the Chairman and the SID.
3.5.2 Role of the Chairman
The Chairman will provide leadership to the Board and will act as facilitator for meetings.
The Chairman has authority to act and speak for the Board between meetings on all matters relating to the Board Principles and will engage with the SID on behalf of the Board as required. The Chairman is empowered to make any decision, establish any policy, take any action or enter into any obligation which is consistent with the Board Principles and, in so doing, may interpret the Board Principles in any reasonable manner. The Chairman will report to the next meeting of the Board on any material or sensitive exercise of this authority.
The Chairman will ensure that systems are in place to provide directors with accurate, timely and clear information to enable the Board to consider properly all matters before it. The Chairman is responsible for ensuring the integrity and effectiveness of the Board Principles.
3.5.3. Role of the SID
The SID will provide a sounding board for the Chairman and serve as an intermediary for any other directors when necessary. He will be available to shareholders if they have concerns that have not been resolved through contact with the normal channels of Chairman, any subsequently appointed Chief Executive or other Executive directors or when such contact is inappropriate.
The SID will lead any Non-Executive directors in the annual appraisal of the Chairman, taking into account the views of any Executive directors, and meet with them on such other occasions as are deemed appropriate. The Chairman will not be present on such occasions.
The SID should attend sufficient meetings with a range of major shareholders to listen to their views in order to develop a balanced understanding of the issues and concerns of major shareholders.
3.6 Board Committees
The Board may at any time establish Committees of the Board to assist it in carrying out its responsibilities. Any Committee will be subject to the Board Principles and will speak or act for the Board only when and to the extent so authorised.
Any Committee may establish more detailed processes and procedures for carrying out its responsibilities which are consistent with the Board Principles.
Due to the small size of the Company the Board itself currently conducts the roles of the Remuneration Committee, the Audit Committee and the Nomination Committee.
3.7 The Advisory Committee
The Board may at any time establish an Advisory Committee, comprising of Directors and any other suitably qualified individuals who may or may not be employees of the Group, to assist it in the identification and screening of assets for acquisition in line with the Strategy. Membership of the Advisory Committee will be determined by the Board at its absolute discretion. The Chairman shall have a casting vote on the appointment or de-selection of any Advisory Committee member. The Advisory Committee will be subject to the Board Principles but will not have the authority to speak or act for the Board.
The Chairman will be a member of the Advisory Committee and will have a casting vote. The decisions of the Advisory Committee will not be binding upon the Board.
Members of the Advisory Committee will not receive a fee for their services on that committee. They may claim expenses for such work provided that, in respect of persons who are not Directors or employees of the Group, any single claim in excess of £500 must be pre-approved by the Board.
3.8 The Company Secretary
All Board members will have access to the advice and services of the Company Secretary.
The Company Secretary reports to the Chairman and is responsible to the Board. His or her appointment and removal is a matter for the Board as a whole. The Board will be responsible for recommending candidates for appointment as Company Secretary and will determine the Company Secretary’s terms of engagement and remuneration.
4 THE BOARD’S RELATIONSHIP WITH THE EXECUTIVE MANAGEMENT
4.1 Delegation to the Chairman
The Board is responsible for reviewing and, where appropriate, determining the Strategy and the monitoring of risk and performance. It delegates to the Chairman authority for the executive management of IMP consistent with the IMP Goal and the Executive Limitations. The Board will hold the Chairman accountable for the discharge of this authority.
The Chairman will propose for Board consideration, the Strategy for achieving the IMP Goal.
Through the Executive Limitations, the Board will place limits on the practices, methods, conduct and other means by which the Chairman may carry out his delegated authority for the executive management of IMP. The Board will monitor the Chairman’s observance of the Executive Limitations.
The Chairman is authorised to establish any policy, make any decision, enter into any obligation, take any action and develop any activity that will achieve the IMP Goal and which is within a reasonable interpretation of the Executive Limitations.
The Board may at any time change the authority of the Chairman and in particular, may change the IMP Goal and the Executive Limitations. However, so long as any particular delegation of authority is in place, the Board will respect and support the Chairman’s decisions and judgement within the proper exercise of such authority.
Decisions or instructions of individual directors do not carry the authority of the Board, except in those instances where specific authorisation is given by the Board (such as to the Chairman between meetings).
4.2 The Executive Limitations
4.2.1 Limits on Executive Action
All actions and decisions of the Chairman will be carried out in accordance with commonly accepted business practice and professional ethics and within the Executive Limitations set out below.
4.2.2 General Limitations
The Chairman will not engage in or cause or permit any practice, activity or decision to be taken:
a) without having regard to:
• the health, safety and environmental consequences;
• the interests of any IMP employees or those of other parties doing work for IMP and, in particular, the need both to endeavour to treat them in an equitable and dignified manner and to maintain a safe working environment;
• the political consequences;
• the need to foster IMP’s business relationships with suppliers, customers and others; or
• its effect on the reputation of IMP;
b) which represents a material deviation from the Strategy and/or the Plan; and
c) without ensuring that a system of control is in place for the prevention of conduct which is dishonest, illegal or involves coercion.
4.2.3 Risk and Internal Control
The Chairman will not cause or permit IMP to operate without a comprehensive system of controls to identify and manage the risks that are material to IMP, to protect IMP’s assets and to monitor the application of IMP’s resources in a manner which meets the standards of external auditors.
4.2.4 Financial Limitations
The Chairman will not cause or permit IMP to operate in a manner which would or would be likely, to result in IMP becoming financially distressed and in particular, the Chairman will not cause or permit any of the following:
a) IMP to operate outside the financial limits, authorities or ratios determined by the Board from time to time;
b) the allocation of IMP’s capital and resources other than for the purpose of meeting the IMP Goal; or
c) IMP’s assets to be inadequately maintained, unnecessarily risked or unprotected.
4.3 Accountability and Monitoring
The Board will carry out its many monitoring responsibilities through whatever means it considers appropriate, using such internal or external sources as it deems relevant.
The Chairman will report to the Board at each meeting and advise the Board (or the relevant Board Committee) in a timely manner of all material matters currently or prospectively affecting IMP and its performance including, among others:
a) any potential strategically or politically significant developments or prospects;
b) progress on the development and implementation of the Strategy;
c) IMP’s business and financial performance including any materially under-performing business activities and proposals to remedy the situation;
d) any action or project that represents a material deviation from the Strategy or the Plan;
e) any action or project (otherwise than permitted by the Strategy or the Plan) that takes IMP into a new country;
f) any action or project (otherwise than permitted by the Plan) that will involve capital investment or revenue commitments exceeding the amounts determined by the Board from time to time;
g) any failure to observe the Executive Limitations;
h) the identification of the material risks to IMP and an assessment of the effectiveness of the controls in place to assess and manage such risks;
i) any material political, economic or other developments in the markets where IMP operates;
j) any material developments or issues concerning the skills and capability of IMP’s business;
k) all material matters currently or prospectively affecting IMP’s shareholders and the markets in which their interests are traded;
l) anything which may have a material adverse impact on IMP’s reputation; and
m) the outcome of any agreed actions or significant developments relating to any material agenda items considered at previous Board meetings.
Between Board meetings the Chairman will engage with the SID as the representative of the Board as and when required in respect of those matters referred to above.