Corporate Governance Provisions
Corporate Governance Framework 2018-2019
As an AIM-quoted company, Bahamas Petroleum Company plc (“BPC” or the “Company”) and its subsidiaries (together the “Group”) is not subject to the requirements of the UK Corporate Governance Code, though the Company is required to apply a recognised corporate governance code, demonstrating how BPC complies with such corporate governance code and where it departs from it.
The Directors of the Company have formally taken the decision to apply the QCA Corporate Governance Code (the “QCA Code”) as the standard against which the Company chooses to measure itself in 2018-2019. This QCA Code emphasises the need for well balanced, effective boards, with a strong emphasis on overseeing risk management aimed at protecting the Company from unnecessary risk to enable the Company to secure its long-term future. In addition, the QCA Code highlights the alignment of remuneration policies with shareholder interests and sound shareholder relations. The Company will provide annual updates on its compliance with the QCA Code in its Annual Report.
The Board’s overall mission is: – to build a sustainable business through consistent growth and to promote transparency and integrity in business with sound ethical values and behaviours and to ensure that we act responsibly in creating and maintaining a flexible, efficient and effective framework for entrepreneurial management that delivers growth in shareholder value over the long term.
Board roles and responsibilities.
The Board agrees with the role for Boards given in the QCA Code, which it has adopted in its Governance Framework:
- To maintain an effective corporate governance regime and attract and retain long term institutional investment;
- To maintain an entrepreneurial environment of prudent and effective controls which enables risk to be assessed and managed;
- To establish the Company’s strategic aims, ensuring that adequate financial and human resources are in place for the Company to meet its objectives and review management performance;
- To set the Company’s values and standards to avoid the Company from unnecessary risk and ensure that its obligations to its shareholders and others are understood and met; and
- To deliver growth in long term shareholder value.
The Board meets regularly to discuss and consider all aspects of the Company’s activities. A Charter of the Board has been approved and adopted which sets out the membership roles and responsibilities of the Board. The Board is primarily responsible for formulating, reviewing and approving the Group’s Strategy, budgets, major items of capital expenditure and acquisitions and overall the Board is responsible for the long-term success of the Company and providing leadership to the business including culture, values and ethics and ensuring effective corporate governance and succession planning.
The Board operates in an accountable open and transparent environment where the views of all Directors and the actions of Executive Directors can be challenged. The Board is satisfied it has the appropriate balance of skills and experience on the one hand, and, independence and knowledge on the other, to enable it to discharge its respective duties and responsibilities effectively, and that all Directors have adequate time to fill their roles.
The Board currently consists of the Chairman (William Schrader) The Chief Executive Officer (Simon Potter) and four Non-executive Directors (Adrian Collins, Edward Shallcross, Ross McDonald and James Smith). Full details of the current Directors, their roles and background are set out on the Board of Directors page of this site.
Chairman—is responsible for leadership of the Board and ensuring its effectiveness on all aspects of its role. The Chairman has an adequate separation from day-to-day business in order to make independent decisions and leads the Board effectively with a strong focus on strategy, accountability, performance and value creation, and oversees the adoption, delivery and communication of the Company’s governance model.
Chief Executive Officer—leads the development of the Company’s strategic direction and implements the agreed strategy, whilst identifying and establishing new business opportunities.The Chief Executive Officercommunicates with shareholders and key stakeholders and updates institutional investors on the business strategy and performance whilst continuing to apply the principles within the QCA Code. The Chief Executive Officer also displays a clear vision and focus on strategy acting in a manner that brings a positive governance culture throughout the Company.
Non-executive Directors—Our Non-executive Directors have the wide range of skills and experience necessary to enable them to provide constructive challenges, scrutinise performance and help develop our Strategy.
Company Secretary—the Company Secretary is responsible for developing implementing and sustaining high standards of corporate governance. Key responsibilities relative to the QCA Code are:
- Keeping abreast of legal and regulatory compliance and ensuring governance developments which impact the business and advising the Board accordingly.
- Supporting the Chairman and CEO and other Board members as necessary in preparing for and running effective Board and Committee meetings and their evaluation.
- To act as a conduit for all Directors, particularly the Non-Executives into the working of the Company and providing advice and guidance.
- When appropriate, providing a discreet but challenging voice to the Board.
- To act as a link between the Company and Shareholders on matters of governance and investor relations ensuring that the Board is kept informed of their opinions.
Application of the QCA Code
In the spirit of the QCA Code, it is the Board’s job to ensure that the Group is managed for the long-term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate governance is an important part of that job, reducing risk and adding value to the Group. The Board will continue to monitor the governance framework of the Group as it grows.
The Company remains committed to listening to, and communicating openly with, its shareholders to ensure that its strategy, business model and performance are clearly understood. The AGM is a forum for shareholders to engage in dialogue with the Board. The results of the AGM will be published via RNS – London Stock Exchange and on the Company’s website.
The Board is supported in the work by 4 key committees. The working of the committees is essential to the effective operation of the Board. Each committee considers in greater depth and detail, on behalf of the Board, issues relevant to their Terms of Reference and reports to the Board after their meetings.
The Audit Committee comprises Edward Shallcross (Chairman), Ross McDonald and James Smith. This committee meets a minimum of twice during the year and is primarily responsible for ensuring that the financial performance of the Company is properly reported and monitored and has oversight responsibility for public reporting and the internal controls of the Company. The main roles and responsibilities of the committee are set out in written Terms of Reference and it retains the authority delegated to it by the Board. The Company Secretary acts as secretary to the committee and ensures that it receives information and papers in a timely manner to enable full and proper consideration of agenda items.
The committee has established a number of risk policies, all of which have been approved by the Board, including anti-bribery and anti-corruption policies in addition to an effective whistleblowing policy, which protects staff confidentiality and anonymity as well as establishing that whistle-blowers not be subject to victimisation.
PwC, the current external auditors, has been in office since 2010, which was the last time a tender for the audit took place. The external auditors are invited to attend the Audit Committee meeting to present their findings and this provides them with a direct line of communication to the Directors.
The Audit Committee does not consider there is a need for an internal audit function given the size and nature of the Company.
The Remuneration Committee comprises Adrian Collins (Chairman), William Schrader and Edward Shallcross. This committee is responsible for making recommendations to the Board of Directors regarding executive remuneration packages, including bonus awards and share options. The overall objective of the committee is to ensure that key management, and in particular executive directors, are motivated to accomplish specific strategic milestones, taking due account of risk and have their interests aligned with shareholder interests over the long-term.
The Nomination Committee comprises Adrian Collins (Chairman), William Schrader, Simon Potter and Edward Shallcross. The role of this committee is to assist the Board in fulfilling its responsibilities in the search for and evaluation of potential new Directors and ensuring that the size, composition and performance of the Board and the Company are appropriate for the scope of the Company’s activities.
Health Safety, Environmental and Security Committee
This committee comprises of William Schrader, Simon Potter and the Company Environmental Scientist (Non-Board). The committee’s purpose is to assist the Directors in reviewing, reporting and managing the Company’s performance, to assess compliance with applicable regulations, internal policies and goals and to contribute to the Company’s risk management processes.
The Directors are responsible for the Company’s internal control systems, which are designed to monitor adherence to the Company’s policies whilst ensuring the safeguarding of assets and sound application of the financial resources of the Company, whilst also ensuring the completeness and accuracy of the Company’s accounting records.
The key elements of the Company’s internal financial control procedures involve detailed financial projections for the current financial year are prepared and subject to formal review at Board meetings, with the Company’s performance against these projections being monitored through the preparation of quarterly management accounts which are reviewed by the Board at regular intervals.
Departure from the Code
In accordance with the AIM Rules for Companies, BPC departs from the QCA Code in the following way:
Principle 7 – “Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.”
BPC’s board is small and extremely focused on implementing the Company’s strategy. However, given the size and nature of the Company, the Board does not consider it appropriate to have a formal performance evaluation procedure in place, as described and recommended in Principle 7 of the QCA Code. The Board will closely monitor the situation as and when the Company grows.
This page was last updated 24 September 2018.
Disclosure and Transparency
The Company is admitted to trading on the London Stock Exchange’s AIM market and is therefore compelled to comply with all the strict disclosure and transparency rules applied to companies admitted to trading on AIM. In accordance with these rules, the company discloses all the information that could be deemed material to the performance of the business and the interests of shareholders.
All disclosures by the Company in compliance with AIM requirements and Company policy are undertaken through both the RNS system and content hosted on the Company. The Company does not engage in bilateral discolsure of information to the public nor does it, or any of its employees, engage in or comment on any discussions which take place in public or private forums, including internet forums, bulletin boards and investor chatrooms.
Compliance with International Rules
As a publicly traded company in the United Kingdom and a Bahamian International Business Company (“IBC”), Bahamas Petroleum Company is required to manage its business in compliance with all laws of both The Bahamas and the United Kingdom. This includes the UK Anti-Bribery and Corruption Act (see the Ministry of Justice guide to the Act). The Company has defined a strict anti-bribery and corruption policy consistent with the Act, and is committed to enabling staff to receive all necessary training to ensure full compliance with all procedures therein.
Further, rules governing the Company’s public listing require continuous disclosure of facts material to the performance of the business and the interests of shareholders. As and when the company becomes listed on BISX additional rules of compliance will be similarly adhered to.
Policy on Gifts, Donations and Sponsorship
The Company has adopted a gift and hospitality policy to ensure all staff throughout the Company are guided to act within the principles set out by the Board of Directors. This policy contains various procedures designed to ensure that the provision of any gifts, donations, sponsorships or hospitality/entertainment by any Company employee receives appropriate scrutiny for compliance with the principles of the policy, as well as those set out in the anti-bribery and corruption policy, prior to any such activities receiving approval for execution.
Bahamas Petroleum Company’s exploration licences, individually held by Bahamian companies, each require a Resident Manager (specifically a resident of The Bahamas). The Company satisfies this requirement through the Bahamian residency of its executive management and legal counsel which are based at the Company’s substantial operational office in Nassau, The Bahamas. Prior to 2011, no such permanent corporate presence was maintained in The Bahamas. Consequently, the role of Resident Manager was fulfilled via an approved, contracted agent who undertook the provision of such regulated activities to the broader market for corporate services in The Bahamas.
The company is apolitical, has not, does not and will not make campaign contributions as any such activity would contravene a number of the company’s policies and procedures outlined above.
Numerous Solicitors and legal firms have been consulted by the company in the normal conduct of its business across several jurisdictions. Each advisor is selected based upon its demonstrated competency and relevant experience in the matter of concern. In no jurisdiction, where the company is active, is advice constrained to that of a single provider.
Board of Directors
The Board meets regularly to discuss and consider all aspects of the Company’s activities. A Charter of the Board has been approved and adopted which sets out the membership, roles and responsibilities of the Board. The Board is primarily responsible for formulating, reviewing and approving the Group’s strategy, budgets, major items of capital expenditure and acquisitions. The Board currently consists of the Non-Executive Chairman, the Chief Executive Officer, and three Non-Executive directors. The Group will hold at least four Board meetings throughout the year at which reports relating to the Group’s operations, together with finance reports, will be considered.
The Company operates with a remuneration committee, an audit committee, a nomination committee and a health and safety committee.
The remuneration committee comprises Adrian Collins, William Schrader and Edward Shallcross and is chaired by Edward Shallcross. It will meet at least twice a year and will review the performance of Executive Directors and, within agreed terms of reference, set the scale and structure of their remuneration including pension rights, the Group’s policy on compensation of the Executive Directors and the basis of their service agreements with due regard to the interests of shareholders. The remuneration committee also administers the Company’s share incentive schemes. No Director will participate in discussions or decisions concerning his own remuneration.
The audit committee comprises Edward Shallcross (Chairman), James Smith and Ross McDonald. It will meet at least twice a year and will be responsible for, amongst other things, ensuring that the financial performance of the Group is properly reported and monitored, focusing particularly on compliance with legal requirements, accounting standards and relevant regulatory requirements. It is also responsible for reviewing the auditors’ reports relating to the accounts and internal control systems. The audit committee will also meet the auditors at least once a year and will review the reports from the auditors relating to accounts and internal control systems.
The Nomination Committee comprises Adrian Collins, William Schrader, Simon Potter and Edward Shallcross, and is chaired by Adrian Collins. It will meet at least twice a year and assist the Board in fulfilling its responsibilities in the search for and evaluation of potential new directors and ensuring that the size, composition and performance of the Board is appropriate for the scope of the Company’s activities. It is recognised that shareholders of the Company have the ultimate responsibility for determining who should represent them on the Board.
Internal Controls and Risk Management
The directors acknowledge their responsibility for the Company’s system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage the risk of failure to achieve the Company’s strategic objectives. It cannot totally eliminate the risk of failure but will provide reasonable, although not absolute, assurance against material misstatement or loss.
Bahamas Petroleum Company’s shares are traded on AIM and as such the Company is not subject to the requirements of the UK Corporate Governance Code on corporate governance, nor is it required to disclose its specific policies in relation to corporate governance. The Quoted Companies’ Alliance has issued a guidance booklet setting out a code of best practice and via the framework described below, the Board of Directors of Bahamas Petroleum Company seeks to apply the principles within that code and within the UK Corporate Governance Code in so far as it is practicable for a Company of its size and complexity. Recognising the increasing work scope of the Company the Board has resolved to form a specific Risk Committee consisting of at least three members of the Board to assist the Board of Directors in fulfilling its responsibilities with respect to the oversight and governance control of the Company’s risk management activities. The Committee has overview and governance control responsibilities for strategic, operational, environmental, sustainability, project, market, ethical, reputational, financial, compliance, technology and human capital risk management. The Committee’s responsibilities are to be exercised through reports from and discussions with management. The Committee has authority from the Board to review and investigate any matter within its mandate and make recommendations to the Board in relation to the outcomes.
“Risk Committee Charter (PDF 422KB)”
Health, Safety, Environment and Security Committee
Given the importance to the Company of operating in a manner that causes no harm, the Company has also established a specific committee to examine and report on matters concerning health, safety, environment and security. This committee comprises William Schrader, Simon Potter and the Group Environmental Scientist (Non-Board).
“Health, Safety, Environment and Security Policy (PDF 430KB)“