Boku Inc.

BOKU INC. (“Boku”) Chairman’s Corporate Governance Statement 2020

Chairman’s Introduction

Dear Shareholder,

Part of my role as Chairman is to ensure that the highest levels of corporate governance are maintained throughout the Company and also at board level.

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 corporate governance of the Company. It is the Board’s continuing belief that the QCA Code continues to be the most appropriate governance code for the Company.

Good corporate governance is not a static process. As a result, we have continued to develop existing structures and practices during 2019 and the following report summarises how the QCA Code has been applied.

The Board believes that the company substantially complies with the QCA Code and there are no significant areas where the Company’s governance structures and practices differ from the expectations set by it. Any divergence from the QCA Code these is mentioned in this report.

My Board colleagues and I believe that good governance allows our internal processes and controls to operate efficiently and helps mitigate financial and other risks which could otherwise impact the value of the Company. This provides a platform upon which the Company’s medium to long-term success can be built.

Mark Britto
Non-executive Chairman
25 March 2020

Statement of Compliance

Application of the QCA Corporate Governance Code

Deliver Growth

 PrincipleApplication
1Establish a strategy and business model which promote long-term value for shareholdersAt Boku we seek to develop an entrepreneurial and supportive culture across our business so 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 18.
2Seek to understand and meet shareholder needs and expectationsA 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. In 2019, we held a well attended Capital Markets Day.
3Take into account wider stakeholder and social responsibilities and their implications for long-term successBoku’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 which give its 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 relationships. These relationships are regularly monitored by the Board.
4Embed effective risk management, considering both opportunities and threats, throughout the organisationThe 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 18 and 19.

Maintain a Dynamic Management Framework

 PrincipleApplication
5Maintain 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 currently made up of two executive directors and 3 non-executive directors.
The names of the current directors and a note of those who are considered to be independent are set out on page 28. There were six Board meetings held during 2019 and each Director attended all meetings.
The Board is satisfied that its directors have an effective and appropriate balance of skills and experience, and that there is a suitable balance between independence of character and judgement, and knowledge of the Company, to enable it to discharge its duties and responsibilities effectively. All directors are encouraged to use their independent judgement and to constructively challenge all matters, whether strategic or operational.
6Ensure that between them the directors have the necessary up-to-date experience, skills and capabilitiesThe current directors, their background and experience are described on pages 20 to 23. Collectively, our team has all the necessary skills and experience, to carry out the group’s strategy and business model effectively.
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.
Appropriate training is also available to all directors to develop their knowledge and ensure they stay up to date on matters for which they have responsibility as a Board member.
7Evaluate board performance based on clear and relevant objectives, seeking continuous improvementThis exercise is expected to be repeated by the Board in Q3 2020.
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, and gaps and actions for improvement identified.
8Promote a corporate culture that is based on ethical values and behavioursAn outline of the corporate culture promoted by the Board is set out in the section of the Company’s website headed Core Values.
9Maintain governance structures and processes that are fit for purpose and support good decision-making by the boardFormal board meetings are held every two months to review strategy, management and performance of the group. Additional meetings between those dates are convened as necessary. We have two board committees: the Audit Committee and the Remuneration Committee. The terms of reference of both these committees have been revised to reflect the principles of the QCA Code. The terms of reference can be viewed at www.boku.com. Due to the current size of the Company a Nominations Committee is not considered to be appropriate, any decisions relating to appointments to the Board will be a matter for the consideration to the Board.
From time to time, separate committees may be set up by the Board to consider specific issues when the need arises.
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 28.
The principal responsibilities of board members are as set out below
Amongst other things the Chairman is responsible for:
Promoting the highest standards of Corporate Governance and ethical leadership
Developing effective working relationships with the Executive Directors
Promoting effective relationships between all board members
Setting the agenda for board meetings and ensuring that sufficient time is devoted to the consideration of agenda items and that each director can express their views on matters
Ensuring that the Board monitors and determines the nature of the significant risks the Company embraces in the implementation of its strategy
Ensuring the Company maintains effective communications with shareholders and other stakeholders and that the Board as a whole is made aware of shareholder and stakeholder issues and concerns.
The Chief Executive is responsible for the following matters amongst others:
Developing and implementing strategy following approval by the Board
Reporting on a regular basis to the Board of progress in respect of strategy, Company performance and business matters
Developing the senior management teams and create the appropriate organizational environment to deliver the strategy
Acting as the principal spokesman for the Company
The Chief Financial Officer is primarily responsible for the delivery of high quality information to the Board on the financial position of the Company.
The non-executive Directors are responsible for providing a challenge to the Executives where required and to make the Board aware of their views on matters before Board decisions are made. They must be able to devote sufficient time to develop their knowledge and skills to be able to make a positive contribution to the Board.
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
The Board and its committees receive appropriate and timely information before each meeting, a formal agenda is produced for each meeting, and Board and committee papers are distributed several days before meetings take place allowing all Board members to contribute even if they cannot attend. Any director can challenge proposals, and decisions are taken democratically after discussion. Any director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated to all directors. Specific actions arising from such meetings are agreed by the Board or relevant committee and then followed up by management.
Over the past year, the Board continued to receive departmental ‘deep dives’ during the Board meetings, which has increased Board exposure to the executive committee and other senior management.

Build Trust

 PrincipleApplication
10Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholdersReports on the work of the Board and its committees are set out as follows:
Board: pages 38
Audit Committee: pages 30
Remuneration Committee: pages 32
Information about shareholder voting at the 2019 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 2019 and retrospective years are available from the Group’s website.

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.

Following Keith Butcher’s change of role from Non-Executive Director to CFO and Stuart Neal’s move to become Chief Business Officer, Identity on 1 October 2019, Mr Neal agreed to remain as a member of the Board until a new Non-Executive Director had been appointed. Following the appointment of Stewart Roberts as a Non-Executive Director on 1 January 2020, Mr Neal resigned as a Director. On appointment, Mr Roberts was appointed as Chairman of the Audit Committee and is a member of the Remuneration Committee.

By rotation, Directors are subject to reappointment by a shareholder vote at our Annual General Meeting. Mr Prideaux and Mr Britto are up for re-election at the meeting scheduled for 8 July 2020. 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 also addresses 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 monitors 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. 

Audit committee

The audit committee is chaired by Stewart Roberts 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 of 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.

Remuneration committee

The remuneration committee is chaired by Richard Hargreaves and its other members are Mark Britto and Stewart Roberts, 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.

Shareholders

The Board is committed to regular, open and effective communication with shareholders to ensure that the Company’s strategy and performance are clearly understood. The Company provides 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 8 July 2020.

The Boku Board is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood.

All references used herein are references to sections contained in Boku’s Annual Report 2019.