BOKU INC. (“Boku”) Chairman’s Corporate Governance Statement 2019
In September 2018, the board of directors of Boku (the “Board”) decided to adopt The QCA Corporate Governance Code (the “QCA Code”) as the benchmark for the corporate governance of the Company. At that time, I reported on the key details of the Board’s application of the Code and this Corporate Governance Report provides an update on progress since that time.
Since the time of the Company’s IPO, a significant number of steps have been taken to establish a Board governance structure appropriate for an AIM-listed companies. We have continued to develop those structures and practices during 2018 and the following Report summarises how the QCA Code has been applied by the Board.
The Board and I believe that we substantially comply with the QCA Code and there are no significant areas where the Company’s governance structures and practices differ from the expectations set by the QCA Code. A significant milestone in measuring our progress will be the Board’s first evaluation, which is expected to be undertaken by the Board towards the end of 2019.
My Board colleagues and I believe that good governance allows the internal processes and controls of the Company to operate efficiently and helps mitigate financial and other risks which could otherwise impact the value in the Company. This provides a platform upon which the Company’s medium to long-term success can be built.
25 March 2019
Statement of Compliance
Application of the QCA Corporate Governance Code
|1||Establish a strategy and business model which promote long-term value for shareholders||At Boku we seek to develop an entrepreneurial and supportive culture across our business which means that these values are integral to everything else we do.
An explanation of the company’s business model and strategy, including key challenges in their execution (and how those will be addressed) is included on pages 5 to 21 of this Annual Report and Accounts for the year ended 31 December 2018.
|2||Seek to understand and meet shareholder needs and expectations||A description of the ways in which the Company seeks to engage with shareholders and how successful this has been is set out in the Shareholders section of the Boku. Website. The board engages with shareholders via a variety of channels and activities including the annual general meeting, updates to shareholders via reporting and the regulatory news services and institutional presentations.|
|3||Take into account wider stakeholder and social responsibilities and their implications for long-term success||Boku’s culture is very open and this includes reaching out and seeking feedback and insights from our various stakeholders. The Board has considered the key stakeholder relationships for Boku which give it competitive advantage and thereby contribute to the long-term success of the company. These key stakeholders are the skilled people employed by the company and its merchant and carrier customers. These relationships with these stakeholders are regularly monitored by the Board.|
|4||Embed effective risk management, considering both opportunities and threats, throughout the organisation||The board is responsible for identifying the major business risks faced by the group and for determining the appropriate course of action to manage those risks. Our risk management framework and approach to risk is summarised on pages 20 and 21 of this Annual Report|
Maintain a Dynamic Management Framework
|5||Maintain the board as a well-functioning, balanced team led by the chair.||The QCA Code requires that boards have an appropriate balance between executive and non-executive directors and that each board should have at least two independent directors. The Board is made up of two executive directors and 3 non-executive directors.
The names of the current directors and the designation of those who are considered to be independent are set out on page 22 of this Annual Report. There were 5 Board meetings held during 2018 and each Director had an attendance record of [100%] during 2018.
|6||Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities||The current directors, their background and experience are identified on pages 22 to 23 of this Annual Report. These demonstrate that our team collectively has the necessary skills and experience, as well as the required calibre to carry out the group’s strategy and business model effectively. The Company has appointed H2Glenfern to assist it with its remuneration strategy.
Richard Hargreaves is the senior independent director and he is available to speak with shareholders concerning the corporate governance of the Company. The Company Secretary, Deepa Kalikiri is responsible for advising the Board on governance matters and ensuring that decisions of the Board in relation to governance matters are implemented.
|7||Evaluate board performance based on clear and relevant objectives, seeking continuous improvement||The first evaluation exercise is expected to be undertaken by the Board in Q3 2019. Once it has been undertaken, further information will be set out in the Corporate Governance report. Low scoring or divergent scoring responses will be discussed, with gaps and actions for improvement identified.|
|8||Promote a corporate culture that is based on ethical values and behaviours||An outline of the corporate culture promoted by the Board is set out in the section of the Company’s website headed Corporate Values.|
|9||Maintain governance structures and processes that are fit for purpose and support good decision-making by the board||Formal board meetings are held quarterly to review strategy, management and performance of the group, with additional meetings between those dates convened as necessary. We have two board committees: the Audit Committee and the Remuneration Committee. The terms of reference
of both these committees of the Board have been revised to reflect the principles of the QCA Code and are available online.
The roles and responsibilities of the chair, chief executive and any other directors who have specific individual responsibilities or remits (e.g. for engagement with shareholders or other stakeholder groups) are set out on pages 22 to 23 of the 2018 Annual Report.
The Board has a schedule of matters reserved for the Board which requires the following key matters to considered and approved by the Board
- Strategy and overall management of the Group
- Financial reporting and controls
- Ensuring a sound system of internal controls
- Approval of major capital projects and contractors
- Communication with shareholders
- Board membership and appointments
- The Remuneration Policy
- Delegated authorities
- Corporate governance matters
- Approval of key policies
|10||Communicate how the company|
is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
|Reports on the work of the Board and its committees are set out in this Annual Report as follows:
- Board: pages 28 to 29
- Audit Committee: pages 30 to 31
- Remuneration Committee: pages 32 to 37
Information about shareholder voting at the 2018 annual general meeting of the Company is set out on Boku’s website.
The Group’s approach to investor and shareholder engagement is described under Principle 2 above. Annual Reports, Annual General Meeting notices, regulatory announcements, trading updates and other governance related materials for 2018 and retrospective years are available from the Group’s website.
Although the Company’s principal place of business is the UK, the Company is incorporated in and subject to the laws of the State of Delaware, United States. As a result, the Company is subject to the exclusive jurisdiction of the Delaware Courts and the Company’s Certificate of Incorporation and Bylaws. As such, the rights of shareholders may differ from the rights of shareholders in a UK incorporated company.
The Board Composition and Responsibilities
The Board currently consists of a non-executive Chairman, the Chief Executive Officer, the Chief Financial Officer and two non- executive Directors. There is a clear division of responsibilities between the Chairman and the executive officers and the Board considers two of the non-executive directors to be independent of management. The composition of the Board ensures that no single individual or group of individuals is able to dominate the decision-making process. Details of the individual Directors and their biographies are set out on pages 22 to 23.
By rotation, Directors are subject to reappointment by a shareholder vote at our Annual General Meeting. Mr Neal and Mr Hargreaves are up for re-election at the meeting scheduled for 22 May 2019. The directors evaluate the balance of skills, knowledge and experience of the Board when defining the role and capabilities required for new appointments.
The Board is responsible for setting the strategic direction and policies for the business. The Board meets regularly to attend to any issues which require its attention and oversees the financial position of the Company monitoring performance on behalf of the shareholders, to whom the Directors are accountable. The primary duty of the Board is to act in the best interests of the Company at all times. The Board will also address issues relating to internal controls and the Company’s approach to risk management.
The day-to-day management of the Company’s business is delegated to the Chief Executive Officer and the Executive Management Team.
The Board meets at least once every two months to review and is attended by all Directors either in person or over the phone. The Board formulates and approves the Company’s strategy, budgets, corporate actions and oversees the Company’s progress towards its goals.
It has established an audit committee and a remuneration committee with formally delegated duties and responsibilities and with written terms of reference.
From time to time, separate committees may be set up by the Board to consider specific issues when the need arises. Due to the size of the Company, the Directors have decided that issues concerning the nomination of directors will be dealt with by the Board rather than by a committee.
The audit committee is chaired by Keith Butcher and its other members are Richard Hargreaves and Mark Britto, all of whom are non-executive directors. The audit committee meets formally at least twice a year and otherwise as required. It has the responsibility for ensuring that the financial performance of the Company is properly reported and reviewed and its role includes monitoring the integrity of the financial statements of the Company (including annual and interim accounts and results announcements), reviewing internal controls and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors, and advising on the appointment of external auditors. A full report of the Audit committee can be found on page 30.
The remuneration committee is chaired by Richard Hargreaves and its other members are Mark Britto and Keith Butcher, all of whom are non-executive directors. The remuneration committee meets at least twice a year and at such other times as required.
It has responsibility for determining, within the agreed terms of reference, the Company’s policy on the remuneration packages of the Company’s chief executive, chairman, and the executive directors and such other members of the executive management as it is designated to consider. The remuneration of non-executive directors will be a matter for the chairman and executive directors of the Board. No director or manager is allowed to partake in any discussions as to their own remuneration. In addition, the remuneration committee has the responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and succession planning. It also has responsibility for recommending new appointments to the Board. A full report of the remuneration committee can be found on page 32.
Share Dealing code
The Company has adopted a dealing code for the Directors and all employees, which is appropriate for a company whose stock is admitted to trading on AIM. The Company takes all reasonable steps to ensure compliance by the Directors and employees with the terms of that dealing code.
The Board is committed to regular and effective communication with shareholders and will provide annual and interim statutory financial reports, investor and analyst presentations, regular trading and business updates to the London Stock Exchange. At the Annual General Meeting all shareholders will have the opportunity to meet and ask questions of the Board of Directors. The next Annual General Meeting is scheduled for 22nd May 2019.