The Board is committed to ensuring that proper standards of corporate governance operate. As an AIM listed company Tax Systems plc is not required to comply with the principles and provisions of the UK Corporate Governance Code published by the Financial Reporting Council in 2016. However, the Board is committed to the maintenance of high standards of corporate governance and seeks to implement best practice as appropriate for smaller listed companies by reference to the provisions of the Quoted Companies Alliance’s Corporate Governance Code for Small and Mid-Sized Quoted Companies.
Board of Directors’ Responsibilities
The Board is responsible for the setting the overall strategy of the business, reviewing management performance, and ensuring the Group has sufficient financial and human resources to meet its objectives. It directs the Group’s activities in an effective manner through general Board meetings and monitors performance through timely and relevant reporting procedures. Where it deems necessary, the Board requests reports on specific areas outside the normal reporting regime.
The Non-Executive Chairman is responsible for the leadership of the Board and ensuring its effectiveness. The Board at present comprises two executives (the Chief Executive Officer and the Chief Financial Officer), the Non-Executive Chairman and two further non-executive directors. The size of the Board is considered to be appropriate to the current size and character of the Group. Clive Carver and Linda Beal are independent of management and any business or other relationships which could interfere with the exercise of their independent judgement.
Authority for the execution of the business plan and the daily running of the business is delegated to the Executive Directors and the senior management team who meet regularly to review current business performance, sales activity, operational projects, customer service, human resourcing matters and other day to day activities.
The board has established two standing committees, the Audit and Risk Committee and the Remuneration and Nomination Committee. Clive Carver is chairman of the Remuneration and Nomination Committee and Linda Beal of the Audit and Risk Committee
Formal agenda and reports are provided to the Board on a timely basis in advance of Board and Committee meetings and the Chairman ensures that all Directors are properly briefed on issues to be discussed at Board meetings. Directors are able to obtain further advice or seek clarity on issues raised at the meetings from within the Company or from external sources.
All Directors are subject to appraisal by the Board. The Non-Executive Directors are responsible for the evaluation of the Chairman.
A summary of responsibilities for each Committee is shown below.
Audit and Risk Committee
Role and responsibilities
The Audit and Risk Committee is responsible for monitoring the integrity of the Company’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Company’s internal control and risk management systems, monitoring the need for or the effectiveness of the internal audit function and overseeing the relationship with the Auditor (including advising on their appointment, agreeing the scope of the audit and reviewing the audit findings). The Audit and Risk Committee also reviews the nature and amount of non-audit work undertaken by the Auditor, if any, to satisfy itself that there is no effect on its independence. The Committee is satisfied that the Auditor is independent.
Composition of the Audit and Risk Committee
The Committee comprises Clive Carver, Paul Gibson and Linda Beal, and is chaired by Linda Beal. The Committee meets at least twice a year at appropriate times in the reporting and audit cycle and otherwise as required. The Chief Executive Officer and the Finance Director may be invited to attend meetings of the Committee. The Committee also meets regularly with the Company’s Auditor.
Internal Control and Risk Management
The Board is responsible for the Group’s systems of internal controls and for reviewing its effectiveness. The implementation and maintenance of the risk management and internal control systems are the responsibility of the Executive Directors and senior management. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Board confirms that there are ongoing processes for identifying, evaluating and mitigating the significant risks faced by the Group.
The key procedures that have been established in respect of internal financial control are as follows:
- An established operational management structure with clearly defined responsibilities and regular performance reviews;
- A comprehensive system for reporting financial and nonfinancial information to the Board, including review of annual budgets and strategy plans;
- Detailed monthly budgeting and reporting of trading results, balance sheets and cash flows, with regular review by management and the Board of variances from budget;
- The control of key financial risks through appropriate authorisation levels and segregation of accounting duties; and
- Review of reports issued by the external auditor.
The Audit and Risk Committee on behalf of the Board reviews reports from the external auditor together with management’s response regarding proposed actions.
Tax Systems is committed to open communication with all its shareholders. The Company believes it is important to explain business development and financial results to its shareholders, to understand shareholder concerns, and to ensure that suitable arrangements are in place to ensure a balanced understanding of the issues and concerns of major shareholders.
Copies of the Annual Report and Accounts are issued to all shareholders who have requested them and copies are available on the Group’s investor website www.taxsystemsplc.co.uk. The Group’s interim results are also made available on the Company’s website. The Group makes full use of its investor website to provide information to shareholders and other interested parties.
Shareholders are given the opportunity to raise questions at the Annual General Meeting and the Directors are available both before and after the meeting for further discussion with shareholders. As a matter of policy, the level of proxy votes (for, against and vote withheld) lodged on each resolution is declared at the meeting.
The CEO and CFO are primarily responsible for investor relations. Meetings are offered to major institutional to discuss strategy, financial performance and investment activity .immediately after the full year and interim results announcements. All the Non-Executive Directors are available to meet with major shareholders if such meetings are required. Feedback from such meetings with shareholders is provided to the Board to ensure the Directors have a balanced understanding of the issues and concerns of major shareholders. Trading updates and press releases are issued as appropriate and the Group’s brokers provide briefings on shareholder opinion and compile independent feedback from investor meetings.
The Audit and Risk Committee reports to the Board on the effectiveness of the Auditor and receives information from the Executive team in this regard. The Audit and Risk Committee and Board also consider the appointment of the Auditor annually prior to recommending the appointment of the Auditor at the Annual General Meeting in June.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is responsible for determining and agreeing with the Board the framework for remuneration of Executive Directors and other designated senior executives and, within the terms of the agreed framework, determining the total individual remuneration packages of such persons, including, where appropriate, bonuses, incentive payments and share options or other share awards.
The remuneration of Non-Executive Directors will be a matter for the Executive Directors. No Director will be involved in any decision as to his or her own remuneration.
The Remuneration and Nomination Committee comprises Clive Carver, Gavin Lyons and Linda Beal, and is chaired by Clive Carver. The Remuneration and Nomination Committee meets at least twice a year and otherwise as required.
For nominations, the Committee meets as and when necessary to consider the appointment of new executive and non-executive directors.
The Remuneration and Nomination Committee determines, on behalf of the Board, the Company’s policy for executive remuneration and the individual remuneration packages for the Executive Directors. The Remuneration and Nomination Committee determines the detailed terms of service of the Executive Directors, including basic salary, incentives and benefits and the terms upon which their service may be terminated.
The Group’s remuneration policy for Executive Directors is designed to attract, retain and motivate executives of the highest calibre to ensure the Group is managed successfully to the benefit of shareholders.
In setting remuneration levels, the Remuneration and Nomination Committee takes into consideration remuneration within the Group and the remuneration practices in other companies of a similar size in the markets and locations in which Tax Systems operates. The packages are designed to be competitive in value to those offered to the Directors of similar sized public companies in related sectors. It is the Board’s policy to align the long-term interests of managers with those of our shareholders in the granting of options and other equity rewards.