Terms of Reference – Audit Committee

The Audit Committee (the “Committee”) is a committee of the Board of Directors of The Biotech Growth Trust PLC (the “Board”), from which it derives its authority and to which it reports.

1. Membership, Appointment and Attendees 

1.1 The Committee is appointed by the Board, in accordance with the Articles of Association of the Company and with reference to recommendations made by the Nominations Committee. 

Membership

1.2 The Committee shall comprise three or more independent non-executive Directors appointed by the Board.

1.3 The Chairman of the Board may be a member of the Committee but will not act as Chairman of the Committee.

1.4 At least one member of the Committee shall have significant, recent and relevant financial experience and competence in accounting and/or auditing.

1.5 The Committee as a whole shall have competence relevant to the sector in which the Company operates.

1.6 Members must declare any conflicts of interest or potential conflicts of interest at the start of each meeting.

Appointments 

1.7 Appointments to the Committee shall be for an initial period of three years which may be extended for further period(s) of three years subject to the Committee member still meeting the criteria for membership of the Committee.

1.8 All Directors seek re-election on an annual basis. Members are appointed to this Committee on the same basis.

1.9 The Chairman of the Committee shall be appointed by a majority of the Board, giving particular consideration to those Board members with relevant financial experience and may be paid an additional fee in recognition of the extra duties involved. 

Secretary 

1.10 The Company Secretary to the Board shall act as Secretary of the Committee, and provide governance and administrative support to the Committee.

1.11 Attendees 

(a) Any other Board members;
(b) The external independent auditor;
(c) A representative of the Company Secretary;
(d) Any person or persons from the AIFM or Portfolio Manager invited by the Committee;
(e) Any other person(s) who the Committee may invite from time to time.

The attendees, listed above, are not members of the Committee and accordingly will be required to leave a meeting of the Committee (permanently or temporarily) if the Committee, or the Chairman of the Committee, considers it appropriate or desirable for them to do so.

2. Meetings and Quorum 

Frequency of Meetings 

2.1 Meetings will be held at least twice each year to i) review the Company’s draft Annual Report & Financial Statements, ii) review the Half Year Report of the Company, and also for audit planning purposes prior to the start of each annual audit cycle. It may also meet at such other times as the Chairman of the Committee shall require.

2.2 A representative of the external auditors shall attend not less than one meeting per year, such meeting will include the review of the annual results.  The Chairman or another member shall meet the audit partner at least once during the year to discuss audit planning, the auditors remit and without management, to discuss matters relating to its remit and any issues arising from the audits.

2.3 The external auditors may request additional meetings if they consider them necessary.

Notice of Meetings 

2.4 Unless otherwise agreed, notice of each meeting confirming the venue, date and time, together with an agenda of items to be discussed and supporting papers, shall be forwarded to each member of the Committee not less than three working days prior to the date of the meeting.

2.5 The Committee shall, at least once a year, evaluate its own performance, constitution and terms and make any necessary recommendations for change to the Board, to ensure the continued maximum effectiveness of the Committee. 
    
Annual General Meeting 

2.6 The Chairman of the Committee shall attend the Annual General Meeting of the Company to respond to any questions that may be raised as matters within the Committee’s area of responsibility.

Quorum 

2.7 The quorum necessary for the transaction of business shall be two members of the Committee.

2.8 A meeting of the Directors may consist of a conference between Directors some or all of whom are in different places provided that each Director who participates in the meeting is able: to hear each of the other participating Directors addressing the meeting; and if he so wishes, to address each of the other participating Directors simultaneously, whether directly, by conference telephone or by any other form of communication equipment (whether in use when this article is adopted or developed subsequently) or by a combination of such methods.

3. Minutes, Reporting and Disclosure

Minutes

3.1 The Committee shall cause minutes of all proceedings of the Committee to be taken.

3.2 The signed minutes of each meeting of the Committee shall be circulated to all Directors and attendees as appropriate provided that no conflict or conflicts of interest would arise thereby.

Reporting 

3.3 The Chairman of the Committee will report to the Board on how it has discharged its responsibilities and the Committee’s decisions and recommendations.

3.4 The work of the Committee in discharging its responsibilities shall be disclosed in the Company’s Annual Report. The Committee shall ensure disclosure in the Annual Report of all the relevant requirements set out in the AIC Code of Corporate Governance, as amended from time to time.

Disclosure 

3.4 A description of the Committee’s duties and activities during the year shall be disclosed in the Annual Report.

4. Resources, Advice and Training 

Resource 

4.1 The Committee shall be provided with sufficient resources to undertake its duties.

4.2 The Committee shall have access to the services of the Company Secretary on all Committee matters including:

  • assisting the Chairman of the Committee in planning the Committee’s work;
  • drawing up meeting agendas;
  • maintenance of minutes;
  • drafting of material about its activities for the annual report;
  • collection and distribution of information and provision of any necessary practical support.

Advice 

4.3 The Committee shall have the power to engage independent counsel and other professional advisers at the expense of the Company.

Induction and Training 

4.4 The Committee shall establish any process it considers necessary for the induction of new Committee members and, where required, ongoing training of existing Committee members.

5. Scope of Authority 

The Committee is authorised to:

5.1 to carry out any investigation relevant to its terms of reference.  

5.2 to take independent professional advice and to request any officer or adviser as they see fit, and at the expense of the Company, to attend meetings of the Committee in order to obtain such information or advice.

5.3 seek any information it reasonably requires from a representative of any third party service provider in order to perform its duties;

5.4 request a representative of a third party service provider to attend any meeting of the Committee;

5.5 have timely and unrestricted access to relevant documents relating to the affairs of the Company.

6. Responsibilities of the Committee 

6.1 The principal responsibilities of the Committee are:

  • to monitor the Company’s accounting policies, the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance;
  • to review the financial and management reporting of the Company and ensure that it is fair, balanced and understandable;
  • to review the Company’s internal financial controls and the Company’s internal control and risk management systems;
  • to review the performance fee calculation in consultation with the external auditor.
  • to make recommendations to the Board in relation to the appointment of the external auditor and their remuneration;
  • to annually review and monitor the scope and effectiveness of the external audit and the auditor’s independence and objectivity;
  • to manage the relationship with the external auditor including the development and implementation of policy on the supply of non-audit services;
  • to review compliance with regulatory and financial reporting standards; and
  • to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.

The Committee members must act in accordance with the Directors’ Duties set out in ss. 171 -177 of the Companies Act 2006.

6.2 Financial Reporting 

The Committee shall:

  • review the significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, Announcements of Results and related formal statements (e.g. release of price sensitive information);
  • consider significant accounting policies and whether the polices adopted are appropriate, any changes to them and any significant estimates and judgments;
  • review the adequacy and scope of the external audit thereof and compliance with regulatory and financial reporting requirements, the clarity and completeness of disclosures in the financial statements and consider whether the disclosures made are set properly in context;
  • satisfy itself that the Annual and Half Year Reports and any other significant published financial information are properly and carefully prepared, and taken as a whole give a fair representation of the Company's affairs;
  • review related information presented with the financial statements, including the operating and financial review, and corporate governance statements relating to the audit and to risk management;
  • where Board approval is required for other statements containing financial information (for example, summary financial statements, significant financial returns to regulators and release of price sensitive information), whenever practicable (without being inconsistent with any requirement for prompt reporting under the Listing Rules) the Committee shall review such statements first.

6.3 Internal Controls and Risk Management Systems 

The Committee shall:

  • review the reports on the internal controls of the Company’s service providers which identify the risk management systems in place for assessing, managing and monitoring risks applicable to such service providers;
  • establish a process for identifying, assessing, managing and monitoring the risks which may have a financial impact on the Company;
  • review reports on the conclusions of any testing carried out by the external auditor;
  • review and approve the statements included in the Annual Report in relation to internal control, the management of risk and the viability statement.

6.4 Whistleblowing 

The Committee shall review the arrangements by which staff of service providers to the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and satisfy itself that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action.

Audit

6.5 Internal 

The Committee annually shall monitor and review the need for an internal audit function, make an appropriate recommendation to the Board and where applicable ensure that the reasons for the absence of such a function are explained in the relevant section of the Annual Report.

6.6 External 

The Committee shall:

  • be responsible for making recommendations to the Board on the appointment, reappointment and removal of the Company’s external auditor and on their terms of engagement and remuneration;meet annually with the auditor to review the annual results and to discuss any major issues that arose during the course of the audit;
  • satisfy itself that the level of fee payable in respect of the audit services provided is appropriate for an effective audit to be conducted;
  • review and if necessary seek amendments to the Letter of Representation to be given by the Board to the external auditor;
  • review and discuss with the auditor their engagement letter issued at the start of each audit, ensuring that it has been updated to reflect changes in circumstances arising since the previous year and the scope of the audit process proposed to be undertaken by the external auditor;
  • arrange for additional work to be undertaken, if the Committee is not satisfied as to the adequacy of the scope of the proposed audit;
  • annually assess the qualification, expertise and resources, and independence of the external auditor and the effectiveness of the audit process;
  • seek confirmation of the audit firm’s policy on the rotation of audit partners (normal rotation period five years);
  • develop and recommend to the Board the Company's policy on the provision of non-audit services by the external auditor, specifying the types of non-audit work from which the auditor is excluded, taking into account relevant ethical guidance regarding the provision of non-audit services;
  • consider and if appropriate approve all non-audit work to be carried out by the external auditor and, where non-audit services are provided, ensure that the relevant disclosures are made in the Annual Report regarding auditor objectivity, independence and the fees paid for non-audit work;
  • consider whether the risk of the withdrawal of the external auditor from the market need be included in risk evaluation and planning;
  • if the external auditor were to resign, investigate the issues giving rise to such resignation and consider whether any action is required;
  • oversee the selection process, where it recommends considering the selection of possible new appointees as external auditor;
  • ensure that the appropriate plans are in place for the audit, at the start of each audit cycle; 
  • at the end of the annual audit cycle, assess the effectiveness of the audit process including:
  • reviewing whether the auditor has met the agreed audit plan;
  • understanding the reasons for any changes, including changes in perceived audit risks and the work undertaken by the external auditor to address those risks;
  • review and monitor management’s responsiveness to the external auditors findings and recommendations;
  • considering the robustness and perceptiveness of the external auditor in their handling of the key accounting and audit judgments identified and in responding to questions from the audit committee, and in their commentary where appropriate on the systems of internal control.

​​​​7. Annual Report Disclosure

There should be full disclosure of information about the Board. 

The Committee shall ensure that this is addressed by:

  • disclosing the workings of the Committee in the Annual Report including an explanation of why it believes that it is appropriate for the Company Chairman to be a member of the Committee;
  • disclosing the number of Committee meetings held during the year;
  • disclosing how the Committees performance evaluation has been conducted;
  • disclosing how the Committee composition requirements have been addressed, and the names and qualifications of all members of the Committee during the period;
  • ensuring that the Annual Report includes an explanation of how the Committee has assessed the effectiveness of the external audit process;
  • disclosing any significant issues that arose during the year;
  • where applicable disclosing the nature and extent of interaction (if any) with the FRC’s Corporate Reporting Review Team;
  • ensuring that the Terms of Reference for the Committee are generally available upon request and by including these Terms of Reference on the Company’s website;
  • ensuring the Annual Report contains the Directors’ explanation of their responsibility for preparing the accounts and a statement by the auditor about their reporting responsibilities.

The Board should ensure that shareholders are provided with sufficient information for them to understand the risk/reward balance to which they are exposed by holding the shares.

The Committee shall ensure disclosure in the Annual Report of:

  • the Company’s investment objective and investment policy and the Company’s full portfolio listing;
  • those areas of decision-making reserved to the Board and those over which the investment manager has discretion including but not limited to:
    • the level of gearing set by the Board and if the investment manager operates  within pre-set limits;
    • the portfolio managers’ remit regarding voting and corporate governance issues by reference to its policy in respect of the UK Stewardship Code.
  • the portfolio managers’ overall performance; 
  • the level of ongoing charges;
  • the going concern basis; and
  • the viability statement.

Terms of Reference – Management Engagement Committee

The Management Engagement Committee (the “Committee”) is a committee of the Board of Directors of The Biotech Growth Trust PLC (the “Board”), from which it derives its authority and to which it reports.

1. Membership, Appointment and Attendees  

1.1 The Committee is appointed by the Board, in accordance with the Articles of Association of the Company and with reference to the Nominations Committee.

Membership

1.2 The Committee shall comprise three or more independent non-executive Directors appointed by the Board.

1.3 The Chairman of the Committee shall be an independent non-executive Director determined by the Board. 

At the Board meeting held on 2 November 2016, it was resolved that Mr Steve Bates would hold the position as Chairman of the Committee.

1.4 Members must declare any conflicts of interest or potential conflicts of interest at the start of each meeting.

Appointments 
 
1.5 Appointments to the Committee shall be for a period up to three years which may be extended. For further period(s) of three years subject to the Committee member still meeting the criteria for membership of the Committee.

1.6 All Directors seek re-election on an annual basis.  Members appointed to this Committee on the same basis.

1.7 The Chairman of the Committee shall be appointed by a majority of the Board and may be paid an additional fee in recognition of the extra duties involved.

Secretary 

1.8 The Company Secretary to the Board shall act as Secretary of the Committee and provide governance and administrative support to the Committee.

1.9 Attendees 

(a) Any other Board members;
(b) A representative of the Company Secretary;
(c) Any person or persons from the AIFM or Portfolio Manager invited by the Committee;
(d) Any other person(s) who the Committee may invite from time to time.

The attendees, listed above, are not members of the Committee and accordingly will be required to leave a meeting of the Committee (permanently or temporarily) if the Committee, or the Chairman of the Committee, considers it appropriate or desirable for them to do so.

2. Meetings and Quorum 

Frequency of Meetings 

2.1 The Committee will meet at least annually in February of each year and/or as and when deemed appropriate or convened by the Board. 

Notice of Meetings 

2.2 Unless otherwise agreed, notice of each meeting confirming the venue, date and time, together with an agenda of items to be discussed and supporting papers, shall be forwarded to each member of the Committee not less than three working days prior to the date of the meeting.

2.3 The Committee shall, at least once a year, evaluate its own performance, constitution and terms and make any necessary recommendations for change to the Board, to ensure the continued maximum effectiveness of the Committee.

Annual General Meeting 

2.4 The Chairman of the Committee shall attend the Annual General Meeting and be prepared to respond to any shareholder questions on the Committee's activities. 

Quorum 

2.5 The quorum necessary for the transaction of business shall be two members of the Committee.

2.6 A meeting of the Directors may consist of a conference between Directors some or all of whom are in different places provided that each Director who participates in the meeting is able: to hear each of the other participating Directors addressing the meeting; and if he so wishes, to address each of the other participating Directors simultaneously, whether directly, by conference telephone or by any other form of communication equipment (whether in use when this article is adopted or developed subsequently) or by a combination of such methods.

3. Minutes, Reporting and Disclosure

Minutes 

3.1 The Committee shall cause minutes of all proceedings of the Committee to be taken.

3.2 The signed minutes of each meeting of the Committee shall be circulated to all Directors and attendees as appropriate provided that no conflict or conflicts of interest would arise thereby.

Reporting 

3.3 The Chairman of the Committee will report to the Board on the Committee’s decisions and recommendations.

Disclosure 

3.4 A description of the Committee’s duties and activities during the year shall be disclosed in the Annual Report.

4. Resources, Advice and Training 

Resource 

4.1 The Committee shall be provided with sufficient resources to undertake its duties.

4.2 The Committee shall have access to the services of the Company Secretary on all Committee matters including:

  • assisting the Chairman of the Committee in planning the Committee’s work;
  • drawing up meeting agendas;
  • maintenance of minutes;
  • drafting of material about its activities for the annual report;
  • collection and distribution of information and provision of any necessary practical support.

Advice 

4.3 The Committee shall have the power to engage independent counsel and other professional advisers at the expense of the Company.

Induction and Training

4.4 The Committee shall establish any process it considers necessary for the induction of new Committee members and, where required, ongoing training of existing Committee members.

5. Duties 

5.1 To regularly review the engagement and performance of the AIFM and the Portfolio Managers and also to review the terms of the AIFM and the Portfolio Management agreement, to ensure they are competitive and in the interests of shareholders in particular:

  • to review the level of fees payable to the AIFM and Portfolio Manager and to make recommendations to the Board;
  • to keep under review the contract notice period of the AIFM and Portfolio Management Agreements; and
  • to review the additional marketing, company secretarial and other sundry services provided by the AIFM.

5.2 To negotiate terms with the AIFM and the Portfolio Manager. 

5.3 To consider the performance of the Company’s other principal service providers and to review the terms on which they are employed.

5.4 To make proposals to the Board on any matter within its term of remit. 

Background

These terms of reference have been produced to accord with the relevant Principles of The AIC Code of Corporate Governance published in July 2016.

The Financial Reporting Council has confirmed that AIC Member companies that report against the AIC Code of Corporate Governance and who follow the AIC’s Corporate Governance Guide for Investment Companies will be meeting their obligations in relation its UK Corporate Governance Code published in April 2016 and Listing Rule 9.8.6.

Terms of Reference – Nominations Committee

The Nominations Committee (the “Committee”) is a committee of the Board of Directors of The Biotech Growth Trust PLC (the “Board”), from which it derives its authority and to which it reports.

1. Membership, Appointment and Attendees 

1.1 The Committee is appointed by the Board, in accordance with the Articles of Association of the Company. 

Membership 

1.2 The Committee shall comprise three or more independent non-executive Directors appointed by the Board. 

1.3 The Chairman of the Board will continue to be the Chair of the Committee with the exception of Committee meetings dealing with Board Chairmanship succession. 

Appointments 

1.4 Appointments to the Committee shall be for an initial period of three years which may be extended for further period(s) of three years subject to the Committee member still meeting the criteria for membership of the Committee.

1.5 All Directors seek re-election on an annual basis. Members are appointed to this Committee on the same basis.

1.6 Members must declare any conflicts of interest or potential conflicts of interest at the start of each meeting.

Secretary 

1.6 The Company Secretary to the Board shall act as Secretary of the Committee and provide governance and administrative support to the Committee.

1.7 Attendees 

(a) Any other Board members;
(b) A representative of the Company Secretary;
(c) Any person or persons from the AIFM or Portfolio Manager invited by the Committee;
(d) Any other person(s) who the Committee may invite from time to time.

The attendees, listed above, are not members of the Committee and accordingly will be required to leave a meeting of the Committee (permanently or temporarily) if the Committee, or the Chair of the Committee, considers it appropriate or desirable for them to do so.

2. Meetings and Quorum 

Frequency of Meetings 

2.1 The Committee will meet at least once per year and at such other times as it sees fit.  

Notice of Meetings

2.2 Unless otherwise agreed, notice of each meeting confirming the venue, date and time, together with an agenda of items to be discussed and supporting papers, shall be forwarded to each member of the Committee not less than three working days prior to the date of the meeting.

2.3 The Committee shall, at least once a year, evaluate its own performance, constitution and terms and make any necessary recommendations for change to the Board, to ensure the continued maximum effectiveness of the Committee.

Annual General Meeting 

2.4 The Chair of the Committee shall attend the Annual General Meeting of the Company to respond to any questions that may be raised as matters within the Committee’s area of responsibility.

Quorum 

2.5 The quorum necessary for the transaction of business shall be two members of the Committee.

2.6 A meeting of the Directors may consist of a conference between Directors some or all of whom are in different places provided that each Director who participates in the meeting is able: to hear each of the other participating Directors addressing the meeting; and if he so wishes, to address each of the other participating Directors simultaneously, whether directly, by conference telephone or by any other form of communication equipment (whether in use when this article is adopted or developed subsequently) or by a combination of such methods.

3. Minutes, Reporting and Disclosure

Minutes 

3.1 The Committee shall cause minutes of all proceedings of the Committee to be taken.

3.2 The signed minutes of each meeting of the Committee shall be circulated to all Directors and attendees as appropriate provided that no conflict or conflicts of interest would arise thereby.

Reporting 

3.3 The Chair of the Committee will report to the Board on the Committee’s decisions and recommendations.

3.4 The work of the Committee in discharging its responsibilities shall be disclosed in the Company’s Annual Report. The Committee shall ensure disclosure in the Annual Report of all the relevant requirements set out in the AIC Code of Corporate Governance, as amended from time to time.

Disclosure 

3.5 A description of the Committee’s duties and activities during the year shall be disclosed in the Annual Report.

4. Resources, Advice and Training 

Resource 

4.1 The Committee shall be provided with sufficient resources to undertake its duties.

4.2 The Committee shall have access to the services of the Company Secretary on all Committee matters including:

  • assisting the Chair of the Committee in planning the Committee’s work;
  • drawing up meeting agendas;
  • maintenance of minutes;
  • drafting of material about its activities for the annual report;
  • collection and distribution of information and provision of any necessary practical support.

Advice 

4.3 The Committee shall have the power to engage independent counsel and other professional advisers at the expense of the Company.

Induction and Training

4.4 The Committee shall establish any process it considers necessary for the induction of new Committee members and, where required, ongoing training of existing Committee members.

5. Scope of Authority 

5.1 The members of the Committee are authorised by the Board to carry out any action or investigation relevant to its terms of reference.  Members are authorised to seek any information they require from any Company officer and to obtain expert advice from the Company’s external auditors, professional advisers or otherwise, and to take independent professional advice and to request any officer or adviser as they see fit, and at the expense of the Company, to attend meetings of the Committee in order to obtain such information or advice.

6. Duties 

6.1 The Committee will at all times ensure that the Company follows the AIC Code, as amended from time to time. 

6.2 In particular, the duties of the Committee are:

  • to ensure plans are in place for orderly succession to the board and oversee the development of a diverse pipeline for succession. Any term beyond six years for a non-executive director should be subject to particularly rigorous review and should take into account the need for progressive refreshing of the board. 
  • to determine and disclose a policy on the tenure of the chair. A clear rationale for the expected tenure should be provided, and the policy should explain how this is consistent with the need for regular refreshment and diversity.
  • to regularly review the structure, size and composition of the Board in relation to its current position and any recommendations for change.
  • to evaluate the balance of skills, knowledge and experience on the board and, in light of this evaluation prepare a description of the role and capabilities for a particular appointment.
  • to lead the process for board appointments and make recommendations to the board. Ensuring that the search for board candidates is conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender. Open advertising and/or an external search consultancy should generally be used for the appointment of the chair and non-executive directors.
  • to review annually the time required from a non-executive director.
  • to keep under review the leadership needs of the organisation with a view to ensuring the continued ability of the Company to compete effectively in the market place.
  • for the appointment of a chairman to prepare a job specification, including an assessment of the time commitment expected, recognising the need for availability in the event of crises.
  • to ensure that on appointment to the board non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside board meetings.

Terms of Reference – Remuneration Committee

The Remuneration Committee (the “Committee”) is a committee of the Board of Directors of The Biotech Growth Trust PLC (the “Board”), from which it derives its authority and to which it reports.

1. Membership, Appointment and Attendees 

1.1 The Committee is appointed by the Board, in accordance with the Articles of Association of the Company and with reference to recommendations made by the Nominations Committee. 

Membership

1.2 The Committee shall comprise three or more independent non-executive Directors appointed by the Board.

1.3 The Chairman of the Board may be a member of the Committee but will not usually act as Chairman of the Committee.

On 10 July 2014 the Board appointed Mr Andrew Joy as Chairman of the Committee. On 12 July 2016 Mr Andrew Joy was succeeded by Professor Dame Kay Davies as Chairman of the Committee.

1.4 Members must declare any conflicts of interest or potential conflicts of interest at the start of each meeting.

Appointments 

1.5 Appointments to the Committee shall be for an initial period of three years which may be extended for further period(s) of three years subject to the Committee member still meeting the criteria for membership of the Committee.

1.6 All Directors seek re-election on an annual basis. Members are appointed to this Committee on the same basis.

1.7 The Chairman of the Committee shall be appointed by a majority of the Board, giving particular consideration to those Board members with relevant financial experience and may be paid an additional fee in recognition of the extra duties involved.

Secretary 

1.8 The Company Secretary to the Board shall act as Secretary of the Committee and provide governance and administrative support to the Committee.

1.9 Attendees 

(a) Any other Board members;
(b) The external independent auditor;
(c) A representative of the Company Secretary;
(d) Any person or persons from the AIFM or Portfolio Manager invited by the Committee;
(e) Any other person(s) who the Committee may invite from time to time.

The attendees, listed above, are not members of the Committee and accordingly will be required to leave a meeting of the Committee (permanently or temporarily) if the Committee, or the Chairman of the Committee, considers it appropriate or desirable for them to do so.

2. Meetings and Quorum 

Frequency of Meetings 

2.1 The Committee will meet at least once per year and at such other times as it sees fit.  

Notice of Meetings 

2.2 Unless otherwise agreed, notice of each meeting confirming the venue, date and time, together with an agenda of items to be discussed and supporting papers, shall be forwarded to each member of the Committee not less than three working days prior to the date of the meeting.

2.3 The Committee shall, at least once a year, evaluate its own performance, constitution and terms and make any necessary recommendations for change to the Board, to ensure the continued maximum effectiveness of the Committee.
    
Annual General Meeting 

2.4 The Chairman of the Committee shall attend the Annual General Meeting of the Company to respond to any questions that may be raised as matters within the Committee’s area of responsibility.

Quorum 

2.5 The quorum necessary for the transaction of business shall be two members of the Committee.

2.6 A meeting of the Directors may consist of a conference between Directors some or all of whom are in different places provided that each Director who participates in the meeting is able: to hear each of the other participating Directors addressing the meeting; and if he so wishes, to address each of the other participating Directors simultaneously, whether directly, by conference telephone or by any other form of communication equipment (whether in use when this article is adopted or developed subsequently) or by a combination of such methods.

3. Minutes, Reporting and Disclosure

Minutes 

3.1 The Committee shall cause minutes of all proceedings of the Committee to be taken.

3.2 The signed minutes of each meeting of the Committee shall be circulated to all Directors and attendees as appropriate provided that no conflict or conflicts of interest would arise thereby.
    
Reporting 

3.3 The Chairman of the Committee will report to the Board on the Committee’s decisions and recommendations.

Disclosure 

3.4 A description of the Committee’s duties and activities during the year shall be disclosed in the Annual Report.

4. Resources, Advice and Training 

Resource 

4.1 The Committee shall be provided with sufficient resources to undertake its duties.

4.2 The Committee shall have access to the services of the Company Secretary on all Committee matters including:

  • assisting the Chairman of the Committee in planning the Committee’s work;
  • drawing up meeting agendas;
  • maintenance of minutes;
  • drafting of material about its activities for the annual report;
  • collection and distribution of information and provision of any necessary practical support.

Advice 

4.3 The Committee shall have the power to engage independent counsel and other professional advisers at the expense of the Company.

Induction and Training

4.4 The Committee shall establish any process it considers necessary for the induction of new Committee members and, where required, ongoing training of existing Committee members.

5. Scope of Authority 

5.1 The members of the Committee are authorised by the Board to carry out any investigation relevant to its terms of reference.  Members are authorised to seek any information they require from any Company officer and to obtain expert advice from the Company’s external auditors, professional advisers or otherwise, and to take independent professional advice and to request any officer or adviser as they see fit, and at the expense of the Company, to attend meetings of the Committee in order to obtain such information or advice.

6. Duties 

6.1 In February 2006, the Financial Reporting Council endorsed the revised AIC Code, the terms of this endorsement meaning that AIC members who report against the AIC Code and who follow the AIC Corporate Governance Guide for Investment Companies are meeting their obligations under the Code and related disclosure requirements of the Listing Rules.  

The Committee will at all times ensure that the Company follows the AIC Code.  

In particular, the duties of the Committee are:

  • to agree with the Board a framework and broad policy for determining the remuneration of the non-executive officers of the Company in line with the peer group and general industry standards, no director or manager shall be involved in any decisions as to their own remuneration.
  • to recommend to the board remuneration of chairman, board members and the manager taking into consideration the level of commitment and responsibilities or each role
  • to be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee.
  • to ensure that provisions regarding disclosure of remuneration as set out in Sections 420 to 422 of the Companies Act 2006 and the revised Code are fulfilled.

Background

These terms of reference have been produced to accord with the relevant Principles of The AIC Code of Corporate Governance published in July 2016 (Principles 5, 13 and 21) and, where deemed applicable, to follow the Guidance on Audit Committees published by the Financial Reporting Council in September 2012 (FRC Guidance).
    
The Financial Reporting Council has confirmed that AIC Member companies that report against the AIC Code of Corporate Governance and who follow the AIC’s Corporate Governance Guide for Investment Companies will be meeting their obligations in relation its UK Corporate Governance Code published in April 2016 and Listing Rule 9.8.6.