Governance

Application of AIC code principles

The Board attaches great importance to ensuring that the Company operates to high ethical and compliance standards. In addition, the Board seeks to observe the principles set out in the AIC Code of Corporate Governance, established specifically for investment trust companies and endorsed by the Financial Reporting Council. By following the Code, the Company continues to meet its obligations in relation to the FRC’s UK Corporate Governance Code.

The Code provides a guide to best practice in certain areas of governance where the specific characteristics of investment trusts suggest that alternative approaches to those set out in the UK Corporate Governance Code may be preferable.

Compliance with the principles of the AIC code of corporate governance

Operation of the Board

Each of the Directors is independent of any association with the Manager which might interfere with the exercise of independent judgement. There is a formal schedule of matters to be specifically approved by the Board and individual Directors may seek independent advice at the expense of the Company within certain limits. The Board has delegated the investment management, within clearly defined parameters and dealing limits, and the administration of the business to Investec Fund Managers Limited. The Board makes all strategic decisions, reviews the performance of the Company at Board meetings and sets the objectives for the Manager. The Directors have a range of business and financial skills or experience relevant to the direction of the Company. Mr R W Jewson is the Senior Independent Director.

The Corporate Company Secretary (‘the Company Secretary’) is responsible to the Board, inter alia, for ensuring that Board procedures are followed and for compliance with applicable rules and regulations including the AIC Code. Appointment or removal of the nominated representative of the Company Secretary is a matter for the Board as a whole.

The content and presentation of Board papers circulated before each meeting contain sufficient information on the financial condition of the Company. Key representatives of IAM attend each Board meeting enabling Directors to probe on matters of concern or seek clarification on certain issues.

Independence of the Directors

Each of the Directors is independent of any association with the Manager and has no other relationships or circumstances which might be perceived to interfere with the exercise of independent judgement. Three of the six Directors (Mr Reeve, Mr Jewson and Mrs de Moller) have served on the Board for more than nine years from the date of their first election, but given the nature of the Company as an investment trust and the strongly independent mindset of the individuals involved, the Board is firmly of the view that all of the Directors can be considered to be independent. In arriving at this conclusion the Board makes a clear distinction between the activities of an investment trust and a conventional trading company. An investment trust has no employees or executive Directors, the only significant relationship being with the Manager. In overseeing this relationship it is the view of the Board that long service aids the understanding, judgement, objectivity and independence of the Directors and in no way detracts from any of these qualities.

Re-election of Directors

Directors are subject to re-election by shareholders at the first AGM following their appointment and, thereafter, are subject to retirement on an annual basis. In addition, the appointment of each Director is reviewed by other members of the Board every year. Directors are not, therefore, subject to automatic re-appointment. Non-executive Directors are not appointed for specified terms. Because of the nature of an investment trust the Board believes that the contribution and independence of a Director is not diminished by long service and, conversely, that a more detailed knowledge of the Company and its business has a beneficial impact.

Audit committee

The audit committee is a formally constituted committee of the Board with defined terms of reference which are available for inspection at the AGM and can be inspected at the registered office of the Company. It normally meets twice yearly and among its specific responsibilities are a review of the audit plan for the year, the review of the Company’s annual and half yearly results, together with associated documentation, and the review of the internal and financial controls applicable to the management company. The Committee also reviews the cost effectiveness, independence and objectivity of the auditor with particular regard to non-audit fees, of which there were none in either the current or prior financial years. All of the Directors are members of the audit committee and the Chairman is Mr Jewson. The Board believes that it is appropriate for the Company Chairman to be a member of the audit committee as it is important for him to be conversant with the detailed discussion related to the annual and interim report processes, including his own Statements to shareholders. The Board is satisfied that members of the audit committee have relevant and recent financial experience to fulfil their role effectively. The auditor, who the Board has identified as being independent, is invited to attend the audit committee meeting at which the annual accounts are considered and any other meetings that the committee deems necessary.

Terms of reference governing the operation of the committee can be found here.

Nomination committee

A nomination committee has been established to oversee a formal review procedure governing the appointment of new Directors and to evaluate the overall composition of the Board from time to time, taking into account the existing balance of skills and knowledge.

The committee is also responsible for assessing the individual performance of Directors and for making recommendations as to whether they should remain in office. This committee is chaired by Mr Reeve.

Terms of reference governing the operation of the committee can be found here.

Management engagement committee

As all the Directors are fully independent of the management company, the Board as a whole fulfils the function of a management engagement committee.

Board/audit committee/nomination committee/Director ongoing evaluation

On an annual basis the Board formally reviews its performance, together with that of the audit and nomination committees and the effectiveness and contribution of the individual Directors, including the Chairman, within the context of service on those bodies. The review encompasses an assessment of how cohesively these bodies work as a whole as well as the performance of the individuals within them. On the basis of these reviews the Board has concluded that it has a proper balance of skills and is operating effectively.

Relations with shareholders

Shareholder relations are given high priority by both the Board and the Manager. The principal medium by which the Company communicates with shareholders is through the half yearly reports, annual reports and interim management statements. The information contained therein is supplemented by daily NAV announcements and by a monthly fact sheet available on the Company’s website.

The Board largely delegates responsibility for communication with shareholders to the management company and, through feedback both from the manager and the company's stockbroker, expects to be able to develop an understanding of their views. Members of the Board are willing to meet with shareholders for the purpose of discussing matters in relation to the operation and prospects of the Company.

The Board encourages investors to attend the AGM and welcomes questions and discussion on issues of concern or areas of uncertainty. In addition, special arrangements have been established to allow Temple Bar Savings Scheme investors to participate fully at AGMs. Following the formal AGM proceedings the Manager makes a presentation to the meeting outlining the key investment issues that face the Company.

Accountability, internal controls and audit

The Board pays careful attention to ensuring that all documents released by the Company, including the Annual Report, present a fair and accurate assessment of the Company’s position and prospects.

The Directors are responsible for the Company’s system of internal control and for reviewing its effectiveness. In order to facilitate the control process the Board has requested the Manager to confirm annually that it has conducted the Company’s affairs in compliance with the legal and regulatory obligations which apply to the Company and to report on the systems and procedures within IAM which are applicable to the management of Temple Bar’s affairs. The Board meets on seven scheduled occasions in each year and at each meeting receives sufficient financial and statistical information to enable it to monitor adequately the investment performance and status of the business.

The Board has also established a series of investment parameters, which are reviewed annually, designed to limit the risk inherent in managing a portfolio of investments. The safeguarding of assets is entrusted to an independent reputable custodian with whom the holdings are regularly reconciled.

The effectiveness of the overall system of internal control is reviewed on an annual basis by the Board. Such a system can provide only reasonable and not absolute assurance against material misstatement or loss. The Board believes that there is a robust framework of internal controls in place to meet the requirements of the AIC Code.

Stewardship/engagement

The Manager recognises its wider stewardship responsibilities to its clients as a major asset owner. To this end, it supports the introduction of the FRC Stewardship Code, which sets out the responsibilities of institutional shareholders in respect of investee companies. Under the Code, managers should:

  • publicly disclose their policy on how they will discharge their stewardship responsibilities to their clients;
  • disclose their policy on managing conflicts of interest;
  • monitor their investee companies;
  • establish clear guidelines on how they escalate engagement;
  • be willing to act collectively with other investors where appropriate;
  • have a clear policy on proxy voting and disclose their voting record; and
  • report to clients.

The Manager endorses the Stewardship Code for its UK investments and supports the principles as best practice elsewhere. The Manager believes that regular contact with the companies in which it invests is central to its investment process and it also recognises the importance of being an ‘active’ owner on behalf of its clients.

The Manager believes that companies should act in a socially responsible manner. Although its priority at all times is the best economic interests of its clients, it recognises that, increasingly, non-financial issues such as social and environmental factors have the potential to impact the share price, as well as the reputation of companies. Specialists within IAM’s environmental, social and governance team are tasked with assessing how companies deal with and report on social and environmental risks and issues specific to their industry.

The Manager’s Voting Policy and Corporate Governance Guidelines are available on request from the Company Secretary or can be downloaded from its website.

Voting at AGM

The Annual General Meeting of Temple Bar Investment Trust PLC was held on Monday 27 March 2017.

All resolutions as set out in the Notice of Meeting dated 17 February 2017 were passed.

The proxy votes cast on each resolution were as follows:

RESOLUTION

FOR / DISCRETIONARY

AGAINST

VOTES WITHHELD

ORDINARY BUSINESS:

1.

To approve the Company’s Annual Report and Financial Statements for the year ended 31 December 2016 (together with the reports of the directors and auditor thereon)

16,895,538
30,000
750

2.

To approve the report on directors’ remuneration for the year ended 31 December 2016

16,881,090
29,134
16,064

3.

To approve the Company’s remuneration policy

16,881,596
32,152
12,540

4.

To declare a final dividend of 16.18p per ordinary share

16,922,358
0
3,930

5.

To re-elect Mr A T Copple as a director of the Company

16,885,271
7,113
33,904

6.

To re-elect Mrs J F de Moller as a director of the Company

16,489,427
408,202
28,658

7.

To re-elect Mr R W Jewson as a director of the Company

16,432,496
459,565
34,225

8.

To re-elect Mr J Reeve as a director of the Company

16,476,500
417,077
32,709

9.

To re-elect Dr L R Sherratt as a director of the Company

16,882,862
8,054
35,372
10

To re-elect Mr D G C Webster as a director of the Company

16,883,086
8,799
34,403
11

To elect Mr N S L Lyons as a director of the Company of the Company

16,879,125
10,613
36,550

12.

To re-appoint Ernst & Young LLP as auditor and to authorise the audit committee to determine their remuneration

16,828,495
87,578
10,214

SPECIAL BUSINESS:

11.

To authorise the directors generally to allot ordinary shares

16,900,334
8,735
17,219

12.

To disapply pre-emption rights in issues of shares for cash in restricted circumstances

16,866,162
38,300
21,826

13.

To authorise the Company to make market purchases of its ordinary shares subject to certain limits

16,866,425
52,998
6,865

Resolutions 1 – 12 were passed as ordinary resolutions and resolutions 13 – 15 were passed as special resolutions.

© Temple Bar Investment Trust PLC

We recommend that you seek independent financial advice to ensure Temple Bar is suitable for your investment needs.

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