Corporate Governance

Corporate Governance

AFH Financial Group plc (the "company") is committed to maintaining the highest standards of corporate governance throughout its operations and to ensuring that all of its practices are conducted transparently, ethically and efficiently.  The company believes that scrutinising all aspects of its business and reflecting, analysing and improving its procedures will result in the continued success of the company and improve shareholder value. Therefore, and in compliance with the updated AIM Rules for Companies, the company has chosen to formalise its governance policies by complying with the UK's Quoted Companies Alliance Corporate Governance Guidelines for Small and Mid-Size Quoted Companies (the "QCA Code").

Accordingly, the company has established specific committees and implemented certain policies, to ensure that:

  • it is led by an effective board which is collectively responsible for the long-term success of the company;
  • the board and the committees have the appropriate balance of skills, experience, independence, and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively;
  • the board establish a formal and transparent arrangement for considering how it applies the corporate reporting, risk management, and internal control principles and for maintaining an appropriate relationship with the company's auditors; and
  • there is a dialogue with shareholders based on the mutual understanding of objectives.

In addition, the company has adopted policies in relation to:

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

so that all aspects of the company are run in a robust and responsible way.

The Board of Directors

The board of directors is responsible for the proper management of the company by formulating, reviewing and approving the company's strategy, budgets, and corporate actions. In order to achieve its objectives, the board adopts the ten principles of the QCA Code. Through successfully implementing these principles, the company is able to deliver long-term growth for shareholders and maintain a flexible, efficient and effective management framework within an entrepreneurial environment.

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:

  • a chairman, whose primary responsibility is the delivery of the company's corporate governance model. The chairman has a clear separation from the day-to-day business of the company which allows him to make independent decisions;
  • 4 executive directors; and
  • 2 independent, non-executive directors.

The board considers that Susan Lewis and Mark Chambers are independent within the meaning of the UK Corporate Governance Code. The board believes that the size and composition of the board is appropriate given the size and stage of development of the company and that the directors brings a desirable range of skills and experience in light of the company’s challenges and opportunities, while at the same time ensuring that no individual (or a small group of individuals) can dominate the board’s decision making.

The board is responsible for the overall management the company and, save for those matters reserved for committees of the board, all matters pertaining to the overall management of the company and the measurement and review of its performance are reserved for the board. The board will meet monthly and otherwise on an as required basis, to review, formulate and approve the company’s strategy, budgets, corporate actions and oversee the company’s progress towards its goals.

The key procedures which the board has established with a view to providing effective internal financial control include the following:

  • a monthly management reporting process to enable the Board to monitor the performance of the company;
  • the board has adopted and reviewed a comprehensive annual budget for the company. Monthly results are examined against the budget and deviations are closely monitored by the board; and
  • the board is responsible for maintaining and identifying major business risks faced by the company and for determining the appropriate courses of action to manage those risks.

The company has established an Audit Committee and a Remuneration Committee, each with formally delegated duties and responsibilities and with written terms of reference. At this stage of the company’s development the board does not consider it appropriate to establish a Nominations Committee and the board will take decisions regarding the appointment of new directors as a whole, following a thorough assessment of a potential candidate’s skill and suitability for the role. The merits of constituting a separate nominations committee will be kept under review.

Audit Committee

The purpose of the Audit Committee is to monitor the integrity of the financial statements of the company.

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 judgments, 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; and
  • overseeing the appointment of and the relationship with the external auditor.

The Audit Committee has three members, two of whom are independent, non-executive directors and at least one member has recent and relevant financial experience. The current members of the committee are John Wheatley as the Chairman, Susan Lewis and Mark Chambers.

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 the executive directors as well as the composition of the board itself.

Some of the Remuneration Committee's duties include:

  • reviewing the pay and employment conditions across the company, including the board of directors; and
  • approving targets and performance related pay schemes operated by the company and all share incentive plans and pension arrangements;

The Remuneration Committee has four members, two of whom are independent, non-executive directors. The current members of the committee are Susan Lewis as the Chairman, Mark Chambers, John Wheatley and Alan Hudson.

Evaluating Board Performance

At the current stage of the company’s development, assessment of the board’s performance and that of its committees will be undertaken by the Board as a whole, led by the company’s Chairman. Although the company has no formal procedure for measuring the effectiveness of the board, the board will be carefully reviewing its effectiveness and the need to refresh its membership by reference to financial performance, adherence to budgets and the overall growth of the company and taking account of the opinions and insights of its auditors, Nominated Adviser, broker, legal and other advisers. The method of assessing board effectiveness and performance will be reviewed on a continuing basis.

Promoting Ethical Values and Behaviours

The company is committed to ensuring that the company operates according to the highest ethical standards for which the board has primary responsibility. The Directors believe that the main determinant of whether a business behaves ethically and with integrity is the quality of its people. As the board currently fulfils the responsibilities that might otherwise be assumed by a Nominations Committee, the Directors have responsibility for ensuring that individuals employed by the company demonstrate the highest levels of integrity. In addition, the company has a formal Bribery and anti-corruption policy and a Share Dealing Policy.

Bribery and Anti-Corruption Policy

The company has a robust anti-bribery and anti-corruption policy which applies to the company, all employees of the company and persons associated with the company (such as consultants, contractors or agency staff), requiring them to observe and uphold a zero tolerance position on bribery and corruption, as well as providing guidance on how to recognise and deal with bribery and corruption issues and their potential consequences, while preserving acceptable boundaries of corporate hospitality and entertainment. The board expects all employees and persons associated with the company to conduct their day-to-day business activities in a fair, honest and ethical manner, be aware of and refer to this policy in all of their business activities worldwide and to conduct business on the company’s behalf in compliance with it. Management at all levels are responsible for ensuring that those reporting to them, internally and externally, are made aware of and understand this policy.

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 compliant 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.

Shareholder and Stakeholder Engagement

The company will communicate with shareholders and the market generally using a Regulatory Information Service provider for regulatory news releases which, in accordance with AIM Rule 26, will be available on the company’s website along with interim and annual accounts, shareholder notifications and other corporate governance material for at least the last five years. Shareholder votes will be notified and kept on the website in a clear and transparent manner.

Shareholders will have the opportunity to meet board members at general meetings and there may be other opportunities such as investor meetings and presentations and webcasts at which shareholders and stakeholders will be able to ask questions of management.

In addition to shareholders the company recognises the different stakeholder groups, both internal and external, on which the business relies and has established structures to communicate and to receive feedback from these various groups. In the case of internal groups meetings are held monthly for both employee elected representatives to meet with the Chief Executive Officer and other senior management and for advisers to meet with senior management in open forum. Major suppliers to the business have been identified and regular meetings are held to ensure a constant review and feedback cycle.

For more information on AFH Financial Group plc, please complete our Contact Us form.

Other Stakeholders

The board believes that other than shareholders, the company’s key stakeholders are the company’s staff and customers. Given the size of the company, all matters relating to customers and key employees are dealt with at board level.

Takeover Code

The UK City Code on Takeovers and Mergers applies to the company.

Date on which this information was last reviewed: 23 January 2020 

Corporate Governance Disclosures Checklist



Establish a strategy and business model which promotes long-term value for shareholders.

See page 11 of the Annual Report for the year ended October 2019

Seek to understand and meet shareholder needs and expectations.

See “Shareholder and Stakeholder Engagement” section of website.

Take into account wider stakeholder and social responsibilities and their implications for long term success.

See “Shareholder and Stakeholder Engagement” section of website

Embed effective risk management, considering both opportunities and threats, throughout the organisation.

See page 14 of the Annual Report for the year ended October 2019

Maintain the board as a well-functioning, balanced team led by the chair.

See page 17 of the Annual Report for the year ended October 2019

Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.

See page 18 of the Annual Report for the year ended October 2019

Evaluate all elements of board performance based on clear and relevant objectives, seeking continuous improvement.

See “Evaluating Board Performance” section of website

Promote a corporate culture that is based on sound ethical values and behaviours.

See “Promoting Ethical Values and Behaviours” section of website

Maintain governance structures and processes that are fit for purpose and support good decision making by the board.

See “The Board”, “Audit Committee” and “Remuneration Committee” sections of website

Communicate how the company is governed by maintaining a dialogue with shareholders and other relevant stakeholders.

See “Shareholder and Stakeholder Engagement” section of website.


March 2020 AGM

The AFH Board notes approximately 23% of votes against Resolution 6 (to disapply pre-emption rights) at this year’s AGM notwithstanding its belief the resolution would be supported based on prior engagement with shareholders and approval of such resolution at previous AGMs.  The resolution is customarily proposed and passed by listed companies in the UK, and the AFH Board considers is in line with institutional investor guidance.  The AFH Board understands that certain of its shareholders typically vote against these resolutions as a matter of general principle. As always, the AFH Board will reflect on the feedback that it has received and will continue to consult with shareholders to understand their concerns.

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