Since September 2018, the AIM Rules require companies to maintain on their websites details of a recognised corporate governance code including how they comply with or deviate from that code. The information must be reviewed annually and websites should include the date on which the information was last reviewed. The Directors recognise the importance of sound corporate governance and this statement sets out the Company’s compliance with these requirements.

I am pleased to present the Corporate Governance Statement of Arc Minerals Ltd (“Arc” or the “Company”). This statement sets out the key features of Arc’s governance structures and provides an insight into the workings of our Board and Board Committees. I believe that integrity, transparency and accountability are key principles of corporate governance and I intend to uphold these principles in my role as Executive Chairman of the Board. I look forward to working closely with the members of our Board and senior management, and indeed our wider stakeholders to ensure that Arc operates under a robust governance framework which facilitates the growth and delivers returns for shareholders. I was appointed Executive Chairman in September 2017. I intend to continue to have an open dialogue with our major shareholders and ensure that there is strong communication between our shareholders, wider stakeholders and the Board. The Arc Board comprises five directors of whom four are Independent Non-Executive Directors, each bringing considerable experience and expertise to the benefit of the Company and its shareholders.

The QCA Corporate Governance Code

In ensuring good governance Arc has adopted The Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code”) and applies the ten principles of the QCA Code as set out in this statement. The Board has also adopted a set of internal corporate governance policies that support compliance with the QCA Code on an on-going basis by the Board, its Committees and its employees, and in relations with wider stakeholders. These policies are also described in more detail in this statement.

Business Model & Strategy

The QCA Code states that ‘the board must be able to express a shared view of the Company’s purpose, business model and strategy.’

Arc’s strategy is to invest in early stage copper-cobalt and gold exploration assets primarily in Africa and to realise their potential either through sale or development. Our aim is to create value for our shareholders by improving on and expanding existing exploration assets and identifying new exploration targets around existing licence areas.
Arc is currently focused primarily on the copper-cobalt projects of Zamsort Limited and Zaco Limited in Zambia.

Arc delivers on its strategic aims by (i) defining additional reserves and resources at its projects and surrounding licence areas; (ii) securing appropriate funding; (iii) developing mineral resources in situ; (v) maintaining good community relationships; and (vi) employing compliant environmental governance practices.

Understanding Shareholder Needs and Expectations

The QCA Code states ‘the directors must develop a good understanding of the needs and expectations of the Company’s shareholder base.’

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. Significant developments are disseminated through the Regulatory News Service (“RNS”) and timely updates to the Company’s website. Additionally, the Company holds Investor update calls when appropriate during which Investors have access to the Chairman and other Officers. Arc has an active and effective investor relations programme, which is the responsibility of the Chairman, that includes institutional road-shows and presentations, effective Annual General Meetings with presentations to shareholders and a high level of disclosure of activity to its shareholders.

Considering Wider Stakeholder and Social Responsibilities

The QCA Code states that long-term success relies upon good relations with a range of different stakeholder groups both internal and external. The board needs to identify the Company’s stakeholders and understand their needs, interests and expectations.

The method used by the Company to obtain feedback from stakeholders is discussed below under the heading Shareholder Communication.

The board has identified the Company’s stakeholders to include staff, suppliers, customers, partners, local government and wider communities. A key part of Arc’s business model is identifying the impact that activities will have on the surrounding communities at Arc’s projects. The Company is always looking for opportunity to develop the wider communities in which it operates and Arc behaves ethically in its recruitment, training and engagements. The environmental impact of Arc’s activities is also carefully considered and the maintenance of high environmental standards applied. Arc has established relationships with local and national governments in the territories of its projects.

Risk Management

The QCA Code states that the board needs to ensure that the Company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver the Company’s strategy.

Whilst the Board is ultimately responsible for identifying and managing areas of significant business risk, it has established an Audit and Risk Committee that ensures effective Risk Management systems are in place that identify and manage key Company risks, establish and maintain effective controls, and ensure compliance with risk management policies and the reporting of any non-compliance occurrences.

The Company’s risk management systems have identified the following key risks as applicable to the Company and appropriate mitigation controls are in place:

Exploration and Development Risk
Political Risk in DRC and Zambia
Licencing Risk
Partner Risk
Market Risk
Community Relations
Retention of Key Personnel
Financing Risk
Liquidity Risk
Credit Risk

Further details of these risks and measures taken to mitigate and control them can be found in Arc’s Annual Report for the year ended 31 December 2017.

Well-functioning Board of Directors

The QCA Code states that the board must be maintained as a well-functioning, balanced team led by the Chair. The board should have an appropriate balance between executive and non- executive directors and have at least two independent non-executive directors.

Profiles of the Arc directors are available on the Company website at www.arcminerals.com.

The Board is currently comprised of a chief executive (Nick von Schirnding, Executive Chairman) and five non-executive directors (Don Bailey, Mushinge Mumena, Brian McMaster, Jonathan De Thierry and Rémy Welschinger). Each Director serves on the Board until the Annual General Meeting following his election or appointment. The Executive Director works full time for the Company. NEDs generally allocate at least 12 days per year to the Company.

As at the date of this statement Arc’s board composition complies with the QCA Code and each independent director has been assessed and is considered to be independent by the board. All directors are expected to devote the necessary time commitments required by their position.

Appropriate Skills and Experience of the Directors

The QCA Code states that the board must have an appropriate balance of skills and experience and not be dominated by one person or group of people.

Arc complies with the QCA Code and full biographical details of the directors and their skills and experience can be found at www.arcminerals.com/about-us/board-and-management. The Directors who have been appointed to the Company have been chosen because of the range of their skills and experience and which are appropriate for the strategy and objectives of the Company. The Board recognises that it currently is limited in diversity and this continues to form part of recruitment consideration.

The Board considers the current balance of sector, financial and public market skills and experience which it embodies is appropriate for the size and stage of development of the Company and that the Board has the skills and requisite experience necessary to execute the Company’s strategy and business plan whilst enabling each Director to discharge his fiduciary duties effectively.

The Board reviews annually, and when required, the appropriateness of its mix of skills and experience to ensure that it meets the changing business needs.

The Company has a professional Company Secretary who assists the Executive Chairman in preparing for and running effective board meetings, including the timely dissemination of appropriate information. The Company Secretary provides advice and guidance to the extent required by the board on the legal and regulatory environment.

Evaluating Board Performance

The QCA Code states that the board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and individual directors.

Arc reviews Board, Committee and individual director performance on an ongoing basis in the context of its contribution to the Company’s financial performance.

The Remuneration Committee compares the performance of the Board with the requirements of its Terms of Reference, the Company Vision and KPI’s and critically reviews the composition of the Board. The evaluation of the Board is carried out annually and on a three-yearly cycle and the Committee may enlist an independent evaluator as and when it deems it appropriate.

The Review Process, includes the following key considerations:
Board’s mission and goals
Board composition and effectiveness
Performance against Strategic Plan
Board’s protocols and processes
Relationships with Stakeholders – the CEO, membership, clients and funding bodies
Continuous professional learning of Board Members

Succession planning is considered by the Board as a whole and reviewed annually.

Corporate Culture

The QCA Code states that the board should promote a corporate culture that is based on ethical values and behaviours.

The corporate culture of the Company is promoted throughout its employees and contractors and is underpinned by compliance with local regulations and the implementation and regular review and enforcement of various policies as set out below so that all aspects of the Company are run responsibly.

It is the Board’s view that Arc’s corporate culture is consistent with its objectives, strategy and business model. A significant part of the Company’s activities is centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives.

The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The board adheres to its group-wide corporate governance policies which include:

anti-corruption and bribery;
whistleblowing;
health and safety;
environment and community;
IT, communications and systems; and
social media,

Maintenance of Governance Structures and Processes

The QCA Code states the Company should maintain governance structures and processes in line with its corporate culture and appropriate to its size and complexity.

Board of Directors

Arc’s key strategic, financial and operational decisions are reserved exclusively for the Board. The Board aims to meet every six to eight weeks or more frequently if activities require and is supplied with appropriate and timely information. The Directors are free to seek any further information that they consider necessary. All Directors have access to advice from the company secretariat and office of Chief Financial Officer as well as independent professionals at the Group's expense. Training is available for new Directors and other Directors as necessary. The directors’ biographies can be found on the Company’s website at www.arcminerals.com/about-us/board-and-management.

It is important that the board itself contains the right mix of skills and experience in order to deliver the strategy of the Company. As such, the board is comprised of:

an executive chairman, whose responsibility is the delivery of the Company's strategy and governance model and communication with shareholders, and
four independent, non-executive directors;
one non-independent, non-executive director;

Director Position  Independent (Y/N) Remuneration Committee Membership Nomination Committee Membership Audit & Risk Committee Membership
Nicholas von Schirnding Executive Chairman N - - -
Brian McMaster Senior Independent Director Y Chairman Member -
Jonathan de Thierry Non-Executive Director Y Member Chairman Member
Don Bailey Non-Executive Director Y Member - Member
Mumena Mushinge Non-Executive Director N - - -
Rémy Welschinger Non-Executive Director Y - Member Chairman

 

A Director is considered non-independent if he is a PDMR within a subsidiary.

The board has appointed Mr Brian McMaster as Senior Independent Director. Additionally, the Company has appointed a Company Secretary who assists the chairman in preparing for and running effective board meetings, including the timely dissemination of appropriate information. The Company Secretary provides advice and guidance to the extent required by the Board on the legal and regulatory environment. The Company does not specify any minimum time commitment from Directors and instead reviews their time commitment as part of their individual evaluations.
Each director serves on the board until the annual general meeting following his election or appointment, and the board meets at least three times a year. Non-independent directors are not part of any board committees.

The following matters are reserved for the Board:

Management Structure and Appointments
Executive Director responsibilities.
Board appointments or removals.
Board and senior management succession, training, development and appraisal.
Appointment or removal of Company Secretary.
Appointment or removal of internal auditor.
Remuneration, contracts, grants of options and incentive arrangements for Executive      Directors and senior management, including any plans to be put to shareholders for approval.
Delegation of the Board's powers.
Agreeing membership and terms of reference of board committees and task forces.
Approval of delegated levels of authority, include the CEO’s limits, which must be in writing.
Matters referred to the Board by the board committees.

Strategic/Policy Considerations

Business strategy.
Diversification/retrenchment policy.
Ensuring maintenance of a sound system of internal control and risk management, including:
Group’s risk appetite statements
Procedures for detection of fraud and the prevention of bribery
Approval of the overall levels of insurance for the group, including directors’ and officers’ liability insurance
Agreement of codes of ethics and business practices.
An on-going assessment of significant risks and effectiveness of internal controls.  
Calling of shareholders' meetings and approval of resolutions and corresponding documentation to be put forward to shareholders at a general meeting, plus any circulars, prospectuses and listing particulars.
Avoidance of wrongful or fraudulent trading.
Ensuring a satisfactory dialogue with shareholders based on the mutual understanding of objectives.
Considering the balance of interests between shareholders, employees, customers and the community.
Reviewing the group’s overall corporate governance arrangements.
Undertaking an annual review of its own performance, that of its committees and individual directors and the division of responsibilities.

Transactions
Transactions which are notifiable under the AIM Rules.
Approval of major capital projects.
Contracts which are material strategically or by reason of size entered into by the Company in the ordinary course of business e.g. bank borrowings over £1 million and acquisitions or disposals of fixed assets (including intangible assets such as intellectual property) above £1 million.
Major investments (including the acquisition or disposal of interests of more than 3 per cent. in the voting shares of any company or the making of any takeover offer.
Contracts not in the ordinary course of business.
Actions or transactions where there may be doubt over propriety.
Approval of certain announcements, prospectuses, circulars and similar documents.
Disclosure of directors' interests.
Transactions with directors or other related parties.

Finance

Raising new capital and confirmation of major financing facilities.
Changes relating to the group’s capital structure, including the reduction of capital and/or share issues.
Treasury policies requested to be put in place by the Board.
Discussion of any proposed emphasis of matter on the accounts.
Final approval of annual and interim reports and accounts and material changes to accounting policies.
Appointment/reappointment or removal of the external auditor, to be put to shareholders for approval in general meeting, following the recommendation of the Board or its Committee.
Charitable and political donations.
Approval and recommendation of dividends.
Approval before each year starts of operating and capital expenditure budgets for the year and any material changes to them.

General

Major changes to the Group’s corporate structure.
Any changes to the Company’s listing status and status as a plc.
Approval of key policy documents including the share dealing code and MAR policy, anti- bribery policy and whistleblowing policy.
This schedule of matters reserved for board decisions.

Audit and Risk Committee

Arc’s Audit and Risk Committee is responsible for ensuring that the financial performance of the Company is properly monitored and reported on and in this capacity interacts as needed with the Company’s External Auditors. The Committee also considers risk management and internal financial controls. 

Some of the Audit Committee's duties include:

reviewing the Company's accounting policies and reports produced by internal and external audit functions.
considering whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor.
reporting its views to the board of directors if it is not satisfied with any aspect of the proposed financial reporting by the Company.
reviewing the adequacy and effectiveness of the Company’s internal financial controls and internal control and risk management systems.
reviewing the adequacy and effectiveness of the Company's anti-money laundering systems and controls for the prevention of bribery and receive reports on non-compliance.
overseeing the appointment of and the relationship with the external auditor.

The Audit and Risk Committee has three members, each of whom being independent, non-executive directors, and at least one member has recent and relevant financial experience. The current members of the committee are Jonathan de Thierry, Don Bailey and Rémy Welschinger. The committee chairman is Rémy Welschinger. The full Terms of Reference of the Remuneration Committee can be found here.

Remuneration Committee

The purpose of the Remuneration Committee is to determine and agree with the board the framework or broad policy for the remuneration of the Company’s chairperson and executive directors. The main duties of the Remuneration Committee include:
reviewing the pay and employment conditions across the Company, including the board of directors.
approving targets and performance related pay schemes operated by the Company and all share incentive plans and pension arrangements.

The Remuneration Committee has three members, each of whom being independent, non-executive directors. The current members of the committee are Brian McMaster, Jonathan de Thierry and Don Bailey. Brian McMaster is the chairman of the committee. The full Terms of Reference of the Remuneration Committee can be found here.

Nomination Committee

The purpose of the Nomination Committee is to evaluate and determine the composition of the Board itself. The main duties of the Nomination Committee therefore include:
Regularly reviewing the structure, size and composition (including the skills, knowledge, experience, independence and diversity) of the Board and make recommendations to the Board with regard to any changes, succession planning and vacancies.
identifying suitable candidates from a wide range of backgrounds to be considered for positions on the Board.

The Nomination Committee has three members, each of whom being independent, non-executive directors. The current members of the committee are Brian McMaster, Jonathan de Thierry and Rémy Welschinger. Jonathan de Thierry is the chairman of the committee. The full Terms of Reference of the Nomination Committee can be found here.

Share Dealing Code

The Company has adopted a share dealing code to ensure directors and certain employees do not abuse, and do not place themselves under suspicion of abusing inside information of which they are in possession and to comply with its obligations under the Market Abuse Regulation ("MAR") which applies to the Company by virtue of its shares being traded on AIM. Furthermore, the Company's share dealing code is complaint with the AIM Rules for companies published by the London Stock Exchange (as amended from time to time).

Under the share dealing code, the Company must:
disclose all inside information to the public as soon as possible by way of market announcement unless certain circumstances exist in which the disclosure of the inside information may be delayed;
keep a list of each person who is in possession of inside information relating to the Company;
procure that all persons discharging managerial responsibilities and certain employees are given clearance by the Company before they are allowed to trade in Company securities; and
procure that all persons discharging managerial responsibilities and persons closely associated to them notify both the Company and the Financial Conduct Authority of all trades in Company securities that they make.

Key Relationships

There are a number of key relationships and resources that are fundamental to the Company's success, such as maintaining good relationships with local communities and governments where the Company operates as well as with engineering and financing groups to ensure that the company has adequate resources to deliver its strategy.

Shareholder Communication

The QCA Code states a healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

The Company recognises that maintaining strong communications with its shareholders promotes transparency and will drive value in the medium to long-term. Accordingly, the Company will provide regular updates on the progress of the Company, detailing recent business and strategy developments, in news releases which will be posted on the Company's website. In order to continually improve transparency, the board would be delighted to receive feedback from shareholders. Communications should be directed to info@arcminerals.com. Nicholas von Schirnding has been appointed to manage the relationship between the Company and its shareholders and will review and report to the board on any communications received.

Arc Minerals is committed to providing full and transparent disclosure of its activities, via the RNS system of the London Stock Exchange. Historical annual reports and interim accounts are available on the Company’s website.


Nicholas von Schirnding
Executive Chairman

30 September 2019