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Corporate Governance

Introduction

The Board of Directa Plus plc (the “Company”) fully supports good corporate governance and recognises that it enhances its decision-making processes by improving the success of the Company and increasing shareholder value over the medium to long-term.   The QCA Code, published by the Quoted Companies Alliance, sets out a minimum best practice standard for small and mid-size quoted companies, particularly AIM companies. The Company complies with the QCA Code and the Directors propose that the Company should continue to do so having regard to the Company’s size, board structure, stage of development and resources.

The Board applies the QCA Corporate Governance Code (the “QCA Code”) details of which and compliance with its principles together with any areas of non-compliance are set out below. Full compliance is expected by the publication of the Annual Report for the year ending 31 December 2018 (the “2018 Annual Report”) which will include further corporate governance disclosures.

Role of the Chairman

The Board as a whole is responsible for effective corporate governance. As Chairman of the Board, I have overall responsibility for the corporate governance arrangements of the Company in addition to ensuring that corporate governance arrangements are fully adopted within the Company.

In addition, my role as Chairman is to lead the Board, ensuring its smooth running and the effective contribution of all Board members. 

Strategy and business model

Directa Plus set out the Company’s business model, strategy and key markets in the Chief Executive Officer’s review of its Annual Report. A copy of the 2017 Annual Report is available here.

The 2018 Annual Report will include additional information relating to the Company’s purpose, business model and strategy, as well as key challenges in the execution of the Company’s strategy.

Relations with shareholders

The Chief Executive Officer and Chief Financial Officer are principally responsible for shareholder liaison and have regular dialogue with institutional investors in order to develop an understanding of their views.

Meetings with analysts and institutional shareholders of the Company take place following the interim and annual results announcements as well as on an ad hoc basis (where requested by fund manager).  These presentations are given by the Chief Executive Officer and the Chief Financial Officer, updating on relevant matters and, in particular, on the progress of the Company in terms of its operational performance, financial performance and strategic direction.

The Annual Report and accounts is published on the Company’s website, www.directaplus.com, and can be accessed by shareholders and non-shareholders. Shareholders have the opportunity to meet members of the Board at the Annual General Meeting of the Company where Board members, including Non-Executive Directors, will be happy to respond to questions.

The Board believes that its current approach to shareholder engagement is successful based on the feedback received following more than 25 institutional investor meetings held to present FY17 interim and annual results and the Proactive Investor interviews publicly available. In addition, as Chairman, I remain available to talk to shareholders whenever required.

The Company has not historically announced the detailed results of Shareholder voting to the market. It intends to do so from now on, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.

Stakeholder and social responsibilities

The Board considers its key stakeholder groups to include:

-          workforce – we are a responsible employer, compliant with relevant human resources legislation and recommended practices, as well as Health, Safety and Environmental Protection regulations;

-          customers – deep and wide relationships with our customers are crucial for the success of our business in developing novel recipes with our customers in developing their next generation of products;

-          suppliers – we aim to develop strong relationships with our suppliers based on trust, understanding and respect;

-          partners – we engage with commercial and scientific partners and we work with them to develop new applications, building strong and long-lasting relationships.

The Company obtains feedback from stakeholder groups by way of:

-          informal meetings and consultation with employees’ representatives, and reports received through the Group’s Whistleblowing policy;

-          regular meetings with main suppliers and undertaking a formal assessment at least once a year;

-          formal survey sent at least once a year to the main customers to assess our level of service;

-          maintaining a social media presence in order to understand the sentiment of and obtain feedback from our stakeholders.

The Company has always considered the health and safety of people and environmental protection as top priorities. We take a proactive approach to health, safety and environmental protection by monitoring our production process and products and continuously reviewing our policies so they are in line with the latest research on nanomaterials. Further information about the Company’s approach to sustainability is set out in the Health, Safety and Environmental Protection section of the Company’s website.

In addition, page 15 of the Company’s 2017 Annual Report highlights one example of how the Company works with commercial partners to improve environmental outcomes through the use of their own products. More information about the Company’s partnerships can be found here.

Risk Management

The Directors are responsible for establishing and maintaining the Company’s system of internal control and reviewing its effectiveness. Page 19 of the 2017 Annual Report sets out the Company’s approach to risk management and lists those risks which are considered to have a serious adverse impact on the Company’s performance.

Page 22 of the 2017 Annual Report includes additional information about the Company’s internal control systems.

Update risks review will be published in the 2018 Annual Report.

The Board

The Board is responsible for formulating, reviewing and approving the Group’s strategy, budget and major items of capital expenditure. In addition to me, the Board is comprised of two executive and three non-executive directors. The Board considers all of the non-executive directors to be independent.

The Company held nine meetings in 2017. The number of meetings attended by each member of the Board is disclosed on page 21 of the 2017 Annual Report.

The Board is responsible for formulating, reviewing and approving the Company’s strategy, budget, major items of capital expenditure, acquisitions, material related party transactions, RNS announcements related to non-routine matters, and major funding events, be they by way of equity or debt.

The Company has established an Audit Committee and a Remuneration Committee which follow the QCA’s guidance on Audit Committees and Remuneration Committees respectively. Details of the scope of both committees are disclosed on page 21 of the 2017 Annual Report and are available on Company’s website.

The 2018 Annual Report will include the time commitment of, and the number of Board and Committee meetings attended by, the Directors.

Directors

The Board considers it collectively has an appropriate balance of skills and experience, as well as an appropriate balance of personal qualities and capabilities. Pages 16 and 17 of the 2017 Annual Report identify each Director and explain their experience and employment history.  

The Directors are advised of their responsibilities in connection with becoming a director of an AIM company from the Nominated Adviser and external lawyers.

The Board keeps under review the skills required to effectively pursue the Company’s strategy and discharge its duties. The Chief Financial Officer is also Company Secretary; the Board does not feel that a full time Company Secretary is currently required but will keep this under review. The Company is committed to a culture of equal opportunities for all employees regardless of gender. The Board will be diverse in terms of its range of culture, nationality and international experience. All 6 directors are currently male. If it is agreed to expand the Board at a later date, (or indeed if/when new replacement directors are sought in the future), the Board will, subject to identifying appropriate candidates look to fill at least one of the vacancies with a female director.

The Company does not have a director designated as a Senior Independent Director. In light of the size of the Board, and the Company’s stage of development, the Board does not consider it necessary to appoint a Senior Independent Director at this stage but will nevertheless keep this under review as part of the Board’s evaluation on Board effectiveness.

The 2018 Annual Report will include information about how the skillsets of the Directors remain up to date as well as information relating to external advisers. 

Board performance

The Board continually reflects on its performance and aims to identify areas for improvement where such areas exist.

The Board has not yet undertaken a formal review of its performance but has undertaken to complete an informal review shortly and will provide details of the review, its findings and the resulting actions agreed by the Board in the 2018 Annual Report.  It is intended that the Board will create a more formal process which will focus more closely on objectives and targets for improving performance.

The Company has not adopted a policy on succession planning in particular with regard to the Company’s chief executive. The chief executive is however required to give three months’ notice under his contract of employment if he wishes to leave the Company. The Board proposes, to consider succession planning as part of its regular review of Board effectiveness.

Ethical values and behaviours

The Board is committed to ensuring the highest legal and ethical standards and acknowledges its responsibilities in relation to corporate governance.

The Board has produced an Ethical Code which aims to ensure that the Company’s employees conduct themselves respectfully and honestly in all their dealings with other employees as well as third parties including clients, suppliers, public institutions, the media, competitors and legal authorities.

The Board will review the culture within the Company during the 2019 financial year and provide an update to shareholders in the 2019 Annual Report.

Governance structure and processes

Delivering growth and long-term shareholder value with effective and efficient decision-making is of high importance to the Board.

There is a clear division of responsibilities between the Chairman, who is responsible for the effective leadership and smooth running of the Board, and the Chief Executive Officer who, with the other Executive Director, is responsible for the running of the Company.

The Company has established an Audit Committee and a Remuneration Committee. Both committees meet at least twice a year. Details of both committees are disclosed on page 21 of the 2017 Annual Report.

The Company has adopted a share dealing code for the Directors and certain employees, which is appropriate for a company whose shares are admitted to trading on AIM (including relating to the restrictions on dealings during close periods in accordance with MAR and with Rule 21 of the AIM Rules for Companies). The Company takes all reasonable steps to ensure compliance with the share dealing code by the Directors and any relevant employees.

Sir Peter Middleton

Non-Executive Chairman

24 September 2018







Board Committees

Audit Committee

The Audit Committee is comprised of Neil Warner, Richard Hickinbotham and David Gann, and is chaired by Neil Warner. The Audit Committee, amongst other duties, determines and examines matters relating to the financial affairs of the Company including the terms of engagement of the Company’s auditors and, in consultation with the auditors, the scope of the audit. It receives and reviews reports from management and the Company’s auditors relating to the half yearly and annual accounts and the accounting and the internal control systems in use throughout the Company and its subsidiary undertakings.

Remuneration Committee

The Remuneration Committee is comprised of Neil Warner, Richard Hickinbotham and David Gann, and is chaired by Richard Hickinbotham. The Remuneration Committee reviews and makes recommendations in respect of the Directors’ remuneration and benefits packages and that of senior employees, including share options and the terms of their appointment. The Remuneration Committee also makes recommendations to the Board concerning the allocation of share options to employees under the Share Scheme.

The City Code

Directa Plus plc is a public company incorporated in England and Wales, and whose securities are traded on AIM, a market operated by the London Stock Exchange plc. The UK City Code on Takeovers and Mergers (the “City Code”) applies to all companies who have their registered office in the UK, Channel Islands or Isle of Man and whose securities are traded on a regulated market in the UK or a stock exchange in the Channel Islands or Isle of Man or a multilateral trading facility. Accordingly, the City Code applies to Directa Plus plc.

DIRECTA PLUS S.p.A - Company under the management and coordination of Directa Plus PLC - Via Cavour 2 - 22074 Lomazzo (CO) Italy - Tax/VAT number and Trade register N. 04783370960 – Rea CO 0310025 - Issued Capital Stock Euro 1.485.611,00