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The London Stock Exchange now requires all AIM-quoted companies to adopt a recognised corporate governance code, explain how the company complies with that code’s requirements, and identify and explain areas of non-compliance. The Company has elected to adopt the Quoted Companies Alliance Corporate Governance Code (“QCA Code” or the “Code”).

The Directors recognise the importance of sound corporate governance. Set out below is a description of how the Company complies with the QCA Code and explains the areas of non-compliance.

The Directors remain committed to evolving the Company’s corporate governance arrangements following the acquisition of the Company’s platform asset.

Principle 1: Establish a strategy and business model which promote long term value for shareholders

Safe Harbour aims to become a global leader in B2B distribution and/or business services, through a well-executed buy-and-build strategy. The management team intend to draw upon their extensive managerial and operational experience in consolidation and integration to drive business transformation and thus achieve attractive, long-term compounding returns for shareholders.

Safe Harbour intends to initially acquire a controlling stake in a platform asset of scale which operates in a sector demonstrating a large addressable market opportunity, a steady growth outlook, and a high level of fragmentation, thereby allowing the deployment of a meaningful buy-and-build strategy to capitalise on economies of scale. The intention is for the platform asset to be headquartered in the UK, Europe, or North America with an enterprise value in the region of £250 million to £1.5 billion.

The Company is led by a highly experienced, knowledgeable and reputable Board, who are central to the Company achieving its strategic objectives. The biographies of the Board are detailed here.

The Company’s 31 December 2017 financial statements provide further detail on the key challenges faced by the Company in achieving its strategy. Details on the how these are addressed are set out under Principle 4.

Principle 2: Seek to understand and meet shareholder needs and expectations

The Company is committed to maintaining an open dialogue and engaging in constructive conversations with both current and potential shareholders. All shareholders have the opportunity, and are encouraged, to attend and vote at the annual general meeting of the Company during which the Board will be available to discuss issues affecting the Company. The Board stays informed of shareholders’ views via regular meetings and other communications, and of institutional shareholders’ views via its Nominated Adviser.

Corporate information (including all Company announcements) is available on the Company’s website, www.safeharbourplc.com

Rodrigo Mascarenhas, Chief Executive Officer (“CEO”) of the Company, is primarily responsible for shareholder liaison, and can be contacted, as required, via the Company’s financial PR advisers, Tulchan Communications, on +44 (0)20 7353 4200.

Additional Contact Details

Axio Capital Solutions Limited, the Company Secretary, can be contacted using the following email address: SafeHarbour@axiocs.com

Cenkos Securities plc, the Company’s Nominated Adviser and Joint Broker may be contacted using the following details: Stephen Keys /Harry Hargreaves Tel: +44(0)207 397 8900

The Company registrar, Link Market Services (Jersey) Limited can also be contacted for shareholder queries and their contact details are 0871 664 0300 (calls cost 12p per minute plus network extras); from outside the UK they can be contacted on +44 (0) 37 1664 0300. Lines are open Monday - Friday, 9:00am - 5:30pm, excluding public holidays in England and Wales.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long term success

The Directors are aware of the importance of taking into account the Company’s social responsibilities for the long term success of the business. 

The Company has not yet acquired a platform asset and therefore does not run an operating business and, until it does, has a very limited number of stakeholders. The Company currently has no customers and its suppliers are primarily professional advisers. The Company has frequent interactions with its limited workforce and with its shareholders, as noted under Principle 2. Following the acquisition of a platform asset, the Directors will further consider the Company’s wider stakeholders and its social responsibilities.

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

In preparation for the Company’s IPO, the Directors, in consultation with the Company’s advisers, identified a comprehensive list of risks to which the business is exposed, both in its current form and, potentially, following the acquisition of the Company’s platform asset. The risks are detailed in Part II of the Company’s Admission Document which is available here

The Directors have subsequently reviewed this list of risks and assessed those which they believe have the greatest potential impact on the business in its current form, including those which may jeopardise the successful acquisition of the Company’s platform asset and the ongoing liquidity and solvency of the Group. These risks are described in more detail in the Company’s financial statements for the period ended 31 December 2017 which are available here. In response to these risks, the Directors have considered appropriate mitigating controls.

The recruitment, retention and engagement of an experienced management team is considered central to ensuring the successful acquisition of the Company’s platform asset. The Directors have extensive experience and knowledge, and the Company has established an incentive scheme to motivate the Executive Directors and align their interests with those of the Shareholders. The Non-Executive Chairman and independent Non-Executive Director provide constructive challenge and useful experiences to Board discussions which, alongside the Company’s prudent approach to pre-acquisition due diligence, is regarded as a further measure to mitigate risks applicable to the acquisition of a platform asset. 

The Company has implemented financial procedures including controls over cash management, the safeguarding of cash, and monthly cash forecasting and budgeting to mitigate the risk of insolvency. The Company has in place numerous internal controls in relation to financial reporting, such as the segregation of roles between those preparing and those reviewing financial information. In addition, the Company has established a multi-tier review process with reviews undertaken by individuals with the appropriate level of seniority and experience, reducing the risk of misstatement and fraud. On a monthly basis, summary financial information, including a balance sheet, profit and loss, actual cash flow and detailed cash flow forecasts are reviewed by the CEO. Financial information is also tabled at the periodic Board meetings where it is discussed in detail by the Board.

The Company does not have a separate internal audit function as the Board does not feel this is necessary due to the current size of the business and the simplicity and low volume of transactions, coupled with the nature and the extent of internal controls, management and Board oversight and involvement.

The Board has reviewed the Company’s risk management and internal control systems and believes that the controls and risk management approach are satisfactory given the current nature and size of the Company and Group. At or around the time an operating business is acquired, the Board will further review the risks to which the new enlarged group is exposed and an appropriate risk management process will be put in place.

Principle 5: Maintain the Board as a well-functioning, balanced team led by the chair

The QCA Code requires a balance between executive and non-executive directors and at least two independent non-executive directors be in place. The Company deviates from the QCA Code in this respect as the Board comprises of one independent Non-Executive Director, the Non-Executive Chairman and three executive directors.

Avril Palmer-Baunack was appointed Non-Executive Chairman on 20 February 2018. Avril has over 20 years’ executive experience across the UK automotive, support services, industrial engineering and insurance services sectors. Avril is not deemed to be independent in view of her previous working relationship with James Corsellis and Mark Brangstrup Watts (having all served on the Board of BCA Marketplace plc) and her participation in the Transaction Success Fee (as described in further detail in the Admission Document). Notwithstanding this prior working relationship, it is considered that Avril has sufficient experience to effectively lead the Board and provide guidance with the requisite objectivity.

Chris Cole was appointed as an independent Non-Executive Director on 14 November 2018. Chris was appointed Non-Executive Chairman of the enlarged group, WSP Global Inc., in 2012 and he was Non-Executive Chairman at Ashtead Group plc, stepping down in September 2018, having served as Senior Independent Director since 2007 and latterly as Non-Executive Chairman. The Board believes that the appointment of Chris provides independent challenge, has further strengthened the capabilities of the Board, and demonstrates the positive intent to continue to challenge and enhance the Group’s corporate governance framework as the business grows and evolves.

The Board consider Chris to be independent in character and judgment and does not believe that he has any relationships or circumstances which are likely to affect, or could appear to affect, his judgment as a Non-Executive Director.

The Directors believe that the current structure of the Board provides sufficient experience and know-how to enable the Company to pursue its platform asset. The Directors will review the composition of the Board following acquisition of a platform asset.

A finance director was not appointed to the Board at the time of the Company’s IPO. The Company does not currently own an operating business and therefore its operations, finances and transactions are relatively simple and the requisite administrative functions have been outsourced to capable finance professionals, with oversight from the Executive Directors as appropriate. The Company intends to appoint a finance director to the Board at or around the time of the acquisition of a platform asset, in conjunction with a broader re-evaluation of the Company’s corporate governance framework.

The Audit and Risk Committee and Nomination and Remuneration Committee have been established with effect from 20 November 2018.

Board attendance

The Board meets a minimum of six times a year, with ad hoc meetings held as required. The Board held numerous ad hoc meetings during 2018 to discuss the IPO and potential acquisition opportunities. Going forward the Company will include a schedule detailing the number of meetings held during the year, as well as the attendees at each meeting, in its financial statements, beginning with the financial statements for the year ended 31 December 2018.  

Directors’ terms of service

The Articles of Association of the Company require that, at each annual general meeting of the Company, one third of the Directors retire from office and offer themselves for re-election, and each Director shall retire from office and stand for re-election at least every three years. Furthermore, each Director appointed in the period since the previous annual general meeting shall stand for election at the subsequent annual general meeting. Chris Cole will stand for election at the next annual general meeting of the Company.

The Director’s service contracts establish the time commitment each Director must devote to the Company. Rodrigo Mascarenhas is required to commit the whole of his time during normal office hours, and such other time as may reasonably be required, in the performance of his role. Mark Brangstrup Watts, James Corsellis, Avril Palmer-Baunack and Chris Cole are to devote the time necessary to ensure the proper performance of their duties as detailed in their respective service contracts.

Board Committees

The Board has established two committees with effect from 20 November 2018, the Audit and Risk Committee and the Nomination and Remuneration Committee, to assist the Board in the execution if its duties. If the need should arise, the Board may set up additional committees as appropriate. The terms of reference for the Committees are available here. Each of the Committees is authorised, at the Company’s expense, to obtain legal or other professional advice to assist in carrying out its duties. No person other than a Committee member is entitled to attend the meetings of these Committees, except by invitation of the Chairman of that Committee. It is anticipated that the Company’s auditor, PwC, will be invited to attend meetings of the Audit and Risk Committee.

Membership of the Committees is as follows:

 

Audit and Risk Committee

Nomination and Remuneration Committee

Chairman James Corsellis Chris Cole
Member Chris Cole Mark Brangstrup Watts
Member Mark Brangstrup Watts James Corsellis

The composition of the Committees will be reviewed regularly to consider the recommendations of the Nomination and Remuneration Committee. The Board recognises that, where possible, the Committees should consist of a majority of non-executive independent directors, and as such the composition of the Committees will be reviewed on the appointment of any further independent non-executive directors to the Board.

Each committee will prepare an annual report to be included in the Company’s financial statements, beginning with the financial statements for the year ended 31 December 2018. 

The Company also recognises the importance of having systems and procedures in place to ensure compliance by the Board, the Company, and its applicable employees in relation to dealings in securities of the Company and the management of inside information in accordance with the EU Market Abuse Regulation (2014/596/EU). The Board has established a Disclosure Committee, which consists of Rodrigo Mascarenhas, Mark Brangstrup Watts and James Corsellis and upon admission to trading on AIM adopted a share dealing code for this purpose. The Directors believe that these procedures and policies adopted by the Board are appropriate for the Company’s size and complexity and that they comply with the EU Market Abuse Regulation.

Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Board has a wealth of knowledge and experience, as is illustrated by the Directors’ Biographies. The Board believes that it has the appropriate mix of experience, expertise, personal qualities and skills to support the business of the Group in its current form.

Board Diversity

The Board considers diversity to be much broader than the traditional definition which focuses on: race, gender, age, beliefs, disability, ethnic origin, marital status, religion and sexual orientation. Productive Board discussions require a breadth of experience and perspectives achieved through hiring Board members with diverse experience. Board directors shall be appointed in order to bring the required skills, knowledge and experience and are expected to positively impact the chemistry and dynamics of the Board.

The Board is currently led by a female non-executive chair, and a Brazilian-born Chief Executive runs the company with support from two other male executive directors along with one male independent non-executive director. It is believed that the Board has the requisite experience and skills for the Company to achieve its immediate objective of acquiring a business in the B2B distribution and/or business services sector. The composition of the Board will continue to be considered as the Company progresses with its stated strategy.

Around the time of the Company’s platform acquisition the Board and Committee composition will be revisited to ensure that it meets the changing needs of the business. During the recruitment process for new directors, the Nomination and Remuneration Committee will ensure that the diversity of the Board is considered in detail.

Ongoing personal development 

The Company Secretary is responsible for ensuring that the Directors regularly receive high quality information, including financial and operational reports. 

The Board considers and reviews the requirement for continued professional development. The Board undertakes to ensure that the Directors’ awareness of developments in corporate governance and the regulatory framework is current, and that they are up-to-speed with all industry-specific updates. The Company Secretary, Nominated Adviser and specialist external advisers all serve to strengthen this development by providing guidance and updates as required.

Chairman

The Chairman is responsible for leading the Board effectively and overseeing the adoption, delivery and communication of the Company’s corporate governance model. The Chairman must display clear vision and focus on strategy, capitalising on the skills, experience, characteristics and qualities of the Board and fostering a positive governance culture throughout the Company. 

Independent Non-Executive Director

The independent Non-Executive Director is responsible for constructively challenging the Board and should devote time to developing and refreshing his knowledge and skills, including those of communication, to ensure that he continues to make a positive contribution to the Board. The independent Non-Executive Director should support the chairman and Executive Directors in instilling the appropriate culture, values and behaviours in the boardroom and beyond. The independent Non-Executive Director should assist in ensuring the Company communicates to its shareholders in an open and transparent manner.

Executive Directors

The Executive Directors are charged with the delivery of the business model within the strategy set by the Board. The Executive Directors work with the Non-Executive Chairman and independent Non-Executive Director in an open and transparent way, providing updates, both at formal meetings and on an ad hoc basis, on the operational performance, risks and any other issues in the Company.

Company Secretary

The QCA Code provides details on the roles and responsibilities of the Company Secretary within a Company. The Company Secretary for the Group is Axio Capital Solutions Limited (“Axio”).

Axio performs the function of Company Secretary as outlined in the Code. The role includes preparing for and running effective Board meetings, including the timely dissemination of appropriate information. In addition, the Company Secretary is responsible for assisting the Directors in ensuring that group entities are managed, controlled and administered within the parameters of their governing documents and are compliant with regulatory requirements and filing obligations. 

Axio has established direct lines of communication with each of the Directors and provides information, advice and guidance as required.

Axio plays an active and central role in ensuring good governance and provides an additional point of contact between the Company and its advisers on matters of governance and investor relations.

External advisers

A list of the Group’s key service providers and their roles can be found in the Company’s Financial Statements. The Company is currently pursuing its investment strategy and as a result it is expected that further advisers and industry experts will be engaged to help facilitate this.

Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Board has not yet undertaken a Board effectiveness review but, in consideration of the time passed since incorporation, the Board believes it will be beneficial to conduct an annual evaluation of its own performance and is committed to undertaking its first evaluation in the twelve months following publication of the Company’s next interim financial statements.

The Board intends to carry out the initial Board effectiveness review by means of a questionnaire requiring written responses from the Directors. To ensure independence and objectivity, the Board intends for the questionnaire to be designed, administered and reviewed on a confidential basis by the Company Secretary. The questionnaire will have due regard to the balance of skills, experience, independence and knowledge contributed by members of the Board, as well as the successful operation of the Board as a unit, its diversity and other factors relevant to its effectiveness. The questionnaire will ask the Directors a range of questions to provoke an analysis of how Board meetings are run, including an assessment of the meeting agendas and Board materials received, to assess whether the meetings are conducive to effective performance, are flexible and encourage debate. The Directors will be required to assess whether Board members attend and actively contribute to meetings, as well as their thoughts on Board composition, risk management processes, director remuneration, external advisers, performance of the company secretary and personal development, amongst other things.

Succession planning

Given the size, composition and nature of the Company at this stage in its evolution, the creation and implementation of succession plans are not considered to be appropriate or relevant and as such no specific individual (or group of individuals) have been identified (or are capable of being identified) to succeed Rodrigo Mascarenhas as Chief Executive Officer.

Rodrigo is central to the Company achieving its immediate goal of acquiring a platform asset; he has exceptional experience and knowledge on which the Company’s strategy has been built. Once a platform asset has been acquired, succession planning will be revisited by the Board.

Principle 8: Promote a corporate culture that is based on ethical values and behaviours

The Board promotes a dynamic, entrepreneurial and transparent culture. The recruitment of highly skilled, adaptable, driven and experienced Directors and senior management is fundamental to executing the Company’s strategy. The Board therefore fosters a forum in which openness, constructive challenge and innovation are actively encouraged.

Ethical values and behaviours are embedded in the corporate culture which the Board uphold. The Board has created an effective corporate governance and compliance framework which will be developed to meet the requirements of an enlarged group following the acquisition of a platform asset. Currently, as a result of the Company’s limited headcount, the Board is able to determine that the ethical values and behaviours are recognised and respected through direct discussion with employees.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Board is led by Avril Palmer-Baunack as Non-Executive Chairman, and the day-to-day running of the Company and its subsidiaries (the “Group”) is the responsibility of the CEO. All Board members have full access to the Group’s advisers for seeking professional advice at the Company’s expense, and the Company’s culture is to openly discuss any important issues and frequently engage with Board members outside of formal meetings.

The role of the Non-Executive Chairman is to actively and constructively challenge the Board and draw on her extensive experience and knowledge to contribute to Board discussions and decisions. The Chairman is not responsible for executive decisions; instead, the Chairman’s principal responsibility is the effective running of the Board. This includes:

  • ensuring that the Board as a whole plays a full and constructive part in the development and determination of strategy and overall commercial objectives;
  • running the Board and setting its agenda;
  • ensuring that Board members receive accurate, timely and clear information on the Company’s performance, its issues, challenges and opportunities and on other matters which are reserved for the Board;
  • ensuring effective communication with shareholders;
  • ensuring that the performance of the Board is considered at least once a year; and
  • promoting the highest standards of integrity, probity and corporate governance.

Currently the CEO’s primary responsibility is, with the support of the Board, to achieve the Company’s immediate objective of acquiring an asset engaged in B2B distribution/or business services which, via an acquisitive growth strategy, will generate compounding returns for shareholders.

The Board meets formally at least six times a year but also meets additionally on an ad hoc basis where necessary. Meetings are prepared for using a standing agenda which is updated to incorporate all relevant ad hoc business, matters of interest and changes to applicable laws and regulations. The Board is presented with papers from management to support its discussions, including financial information, shareholder analysis and investor relations information, subsidiary management reporting and details of acquisition targets and deal progress.

Matters reserved for the Board can be found here.

The Board has established two committees, an Audit and Risk Committee and Nomination and Remuneration Committee. The terms of reference for the committees are available here:

Audit and Risk Committee Terms of Reference

Nomination and Remuneration Committee Terms of Reference

Around the time of the acquisition of a platform asset, the Group’s corporate governance framework, including Board and committee composition, will be reviewed and reconsidered to ensure that it meets the changing needs of the business.

Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Board is always available for communication with shareholders, and the Directors frequently engage constructively with current and potential shareholders. The Board stays informed of shareholders’ views via regular meetings and through its Nominated Adviser.

All shareholders have the opportunity, and are encouraged, to attend and vote at the annual general meeting of the Company during which the Board will be available to discuss issues affecting the Company.

The report of the Directors, independent auditors’ report and details of Directors’ remuneration are set out in the Company’s Financial Statements.

The Company’s website provides all historic annual reports and other governance related documentation such as AGM results.

Voting results

The Company has not published the results of historical voting on its website. The Company will disclose this information going forward, following publication of the results of its 2019 Annual General Meeting.