Boku Inc.

BOKU INC. (“Boku”) Chairman’s Corporate Governance Statement 2018


This Statement is issued in compliance with Rule 26 of the AIM Rules.

The board of directors of Boku (the “Board”) has decided to adopt The QCA Corporate Governance Code (the “QCA Code”). This statement sets out the key details of the Board’s application of the Code.

Boku is incorporated in Delaware, USA and its shares are listed on the Alternative Investment Market of the London Stock Exchange (“AIM”) following its IPO in November 2017.

I am the Non-Executive chairman of Boku and I am responsible for the running of the Board and the overall governance of Boku. In this role, I am supported by the Senior Independent Director and the Company Secretary.

At the time of Boku’s IPO, a significant number of steps were taken to establish a Board governance structure appropriate for an AIM-listed company. The current status of the governance structures and practices were set out in our 2017 Annual Report. We have continued to develop those structures and practices during 2018. The table below 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 Boku’s governance structures and practices differ from the expectations set by the QCA Code. Boku has been listed on AIM for less than a year, therefore, the first Board evaluation exercise is not expected to be undertaken until Q3 2019.

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

Mark Britto
Non-Executive Chairman

Boku, Inc.,
26th September 2018

Deliver Growth

1Establish a strategy and business model which promote long-term value for shareholdersAn explanation of Boku’s business model and strategy, including key challenges in their execution (and how those will be addressed) was included on pages 8 to 10 of the 2017 Boku Inc, Annual Report and Accounts for the year ended 31 December 2017 (the 2017 Annual Report).
2Seek to understand and meet shareholder needs and expectationsThe Board is committed to providing shareholders with clear and transparent information on Boku’s financial position and strategy. Key documents and reports are publicly available and regularly updated on Boku’s website.

Also, Boku encourages its shareholders to attend the annual general meeting and provides shareholders with the opportunity to ask questions of the Board. The Board also makes itself available to shareholders on an ad hoc basis and encourages an open dialogue.
3Take into account wider stakeholder and social responsibilities and their implications for long-term successThe Board has considered the key stakeholder relationships which give Boku its competitive advantage and thereby contribute to its long-term success. These key stakeholders are the skilled people employed by Boku and its merchant and carrier customers. These relationships are described on page 9 of the 2017 Annual Report.

Employees of Boku are asked to fill in an Employee Survey every 6 months which includes feedback on the Boku culture and work environment. Boku also organises frequent Q&A sessions during which employees have the opportunity to put any questions they may have to the directors.

The Board also values feedback from its customers and encourages an open and ongoing dialogue. For example, after Boku’s services have been provided, Boku seeks customer feedback through follow up customer surveys.
4Embed effective risk management, considering both opportunities and threats, throughout the organisationOur risk management framework and approach to risk is summarised on pages 18 and 19 of the 2017 Annual Report.

Maintain a Dynamic Management Framework

5Maintain the board as a well-functioning, balanced team led by the chair.The names of the current directors and the designation of those who are considered to be independent are set out on page 23 of the 2017 Annual Report. There were eight Board meetings held during 2017 and each Director had an attendance record of 100%.

Directors are expected to attend a Board Meeting once every two months and to make themselves available on an ad hoc basis to deal with their committee duties as well as other company issues that come to light.
6Ensure that between them the directors have the necessary up-to-date experience, skills and capabilitiesRichard Hargreaves is the senior independent director and he is available to speak with shareholders concerning the corporate governance of Boku. 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.

Directors’ skills are kept up to date through relevant training and interaction with stakeholders. The independent Non-Executive directors have been carefully selected to ensure that the Board has a mix of relevant experience in the areas of finance, investment and operations. The current directors, their background and experience are identified on pages 20-21 of the 2017 Annual Report.

Consultants will also be engaged if the Board feels that it needs specific guidance in defined areas (for example, Boku appointed the remuneration consultant H2Glenfern to assist it with its 2017 remuneration strategy).
7Evaluate board performance based on clear and relevant objectives, seeking continuous improvementAs Boku has been listed on AIM for less than a year, the first evaluation exercise is not expected to be undertaken by the Board until Q3 2019. Once it has been undertaken, further information will be set out in the Corporate Governance report. Formal succession procedures will be developed in due course.

The Board will assess its effectiveness through formal questionnaires, seeking to ensure that it monitors Boku’s performance and strategy and produces accurate results and forecasting.
8Promote 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 Core Values section of Boku’s website

The Board places great emphasis on the importance of the culture of the company. Every executive team meeting includes a section on cultural aspects of the company. The Non-Executive directors, through informal contact with employees, ensure that a healthy workplace environment and culture is maintained.
9Maintain governance structures and processes that are fit for purpose and
support good decision-making by the board
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 24 to 29 of the 2017 Annual Report.

The Board has a schedule of matters reserved for the Board which requires the following key matters to be considered and approved by the Board

- strategy and overall management of Boku;
- 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; and
- approval of key policies.

Build Trust

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 in the 2017 Annual Report as follows:

- Board: pages 26 to 29
- Audit Committee: pages 26 to 27
- Remuneration Committee: pages 28 to 33 Further explanation will be included in the 2018 Annual Report.

Copies of the 2017 Annual Report and information about shareholder voting at the recent annual general meeting of Boku is set out on Boku’s website.

Corporate Governance

The Company’s main country of operation is the UK. The Company is incorporated in and subject to the laws of the State of Delaware, United States, and is subject to the exclusive jurisdiction of the courts of the State of Delaware and is governed by Delaware law and by the Company’s Certificate of Incorporation and Bylaws. As such, the Directors are subject to customary fiduciary duties under Delaware law. The rights of shareholders may be different from the rights of shareholders in a UK incorporated company.

The Board will meet at least once every two months to review, formulate and approve the Company’s strategy, budgets, corporate actions and oversee 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 Keith Butcher and its other members are Richard Hargreaves and Mark Britto, all of whom are non-executive directors. The audit committee will meet formally at least two times a year and otherwise as required. It will have the responsibility for ensuring that the financial performance of the Company is properly reported on 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 control 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.

Remuneration committee

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 is expected to meet not less than once a year and at such other times as required. It will have 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 will be allowed to partake in any discussions as to their own remuneration. In addition, the remuneration committee will have the responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession planning. It will also have responsibility for recommending new appointments to the Board.

Dealing code

The Company has adopted a dealing code for the Directors and certain employees, which is appropriate for a company whose stock is admitted to trading on AIM (particularly relating to the prohibition of dealing during closed periods). The Company will take all reasonable steps to ensure compliance by the Directors and any relevant employees with the terms of that dealing code.