K3 adopts the Quoted Companies Alliance’s (QCA) Corporate Governance Code (“the Code”) being, in the view of the Board, the most appropriate recognised corporate governance code having regard to the size and nature of the K3 Group.
As Chairman of the Board, I am responsible for implementing corporate governance at the K3 Group, working with the other members of the Board and the Company Secretary. I chair meetings of the Board and am responsible for ensuring the Board agenda appropriately focuses on the Group’s potential, strategy, business model and delivery against its strategic objectives. I am also a member of each Board committee.
We have reviewed and considered where and how we apply each of the ten (10) principles of the Code, and we set out an explanation of this on our website at https://www.k3btg.com/investor-centre/financial-information/.
O Scott Chairman
26 September 2024
1. Establish a strategy and business model which promote long-term value for shareholders
The Board is responsible for determining the potential and main aims of the Company and agreeing a strategy to achieve those aims. The Board is also responsible for monitoring progress against the Company’s strategic and financial goals and for allocating investment or initiating any corrective measures. The strategic report in our most recent annual report, a copy of which is available on our web-site at https://www.k3btg.com/investor-centre/financial-information/ sets out the Board’s strategy and business model to promote long-term value for shareholders.
2. Seek to understand and meet shareholder needs and expectations
Continued shareholder consultation is embedded within the Board’s activities; the views of major shareholders are obtained through direct face-to-face contact and analysts’ or brokers’ briefings and through the corporate representation of Kestrel Partners on the Board itself.
The Group’s executive Directors also make presentations to institutional shareholders covering interim and full year results and investor presentations are broad to enhance investor engagement with management, and to elicit feedback. All shareholders also have the opportunity, formally or informally, to put questions to the Company’s AGM.
The Group re-evaluates its market strategy annually and ensures that strategy, technology, product and business development is market led and market informed with focus on the strategically chosen fashion and apparel vertical. The Group assesses the investment needed for each product at each point in its natural product lifecycle with regard to ROI and protection of shareholder value.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
See Section 172 statement in our most recent annual report, a copy of which is available on our web-site at https://www.k3btg.com/investor-centre/financial-information/
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board recognises the importance of maintaining an effective system of internal control which is appropriate in relation to the scope, size, nature and risk of the Group’s activities.
The responsibility for managing risks on a day-to-day basis lies with the CEO, the CFO and Senior Leadership Team. The principal business risks and the actions to mitigate the risks are included in our most recent annual report, a copy of which is available on our web-site at https://www.k3btg.com/investor-centre/financial-information/
The key elements which enable the Board to review the effectiveness of the system of internal controls are:
- establishment of a formal management structure, including the specification of matters reserved for decision by the Board;
- setting and reviewing the strategic objectives of the Group;
- Board involvement in the setting and review of the annual business plan;
- the regular review of the Group’s performance compared with plan and forecasts;
- pre and post investment appraisal of K3 product development investment; and
- group reporting instructions and procedures including delegation of authority and authorisation levels, segregation of duties and other control procedures, and standardised accounting policies.
5. Maintain the board as a well-functioning, balanced team led by the chair
The Board comprises the two executive directors and three non-executive Directors. Biographical details of the Board are included at https://www.k3btg.com/investor-centre/the-board/.
All non-executive directors have written terms of appointment and are paid a fixed fee for their office which is not performance or incentive based. The only exception to this is the Tom Crawford’s participation in the K3 LTIP, details of which are set out at https://www.k3btg.com/investor-centre/financial-information/, but this is not regarded as compromising his independence.
The Company currently has two independent non-executive directors (G Hase and Tom Crawford), who are considered to be independent, as recommended by the QCA Code. Tom Crawford was from 27 October 2023 to 4 July 2024 Executive Chairman and Chairman until 17 July 2024.
The Chair is a founding partner of a significant shareholder, Kestrel Partners LLP, and, accordingly, Mr Scott would likely not be regarded as independent in accordance with the Code.
Notwithstanding this, the Board believes that the interests of each non-executive director are aligned with those of shareholders and that the Board composition is appropriate for the circumstances of the Company.
All directors are subject to election by shareholders at the first opportunity after their appointment. The Articles of Association of the Company require that no fewer than one-third of directors should be subject to re-election at each AGM. Any non-executive director serving over 9 years since first appointment is also subject to re-election at each AGM in accordance with the Company’s articles.
Board Meetings and Effectiveness
The Board is supplied with information to enable it to discharge its duties, which includes a regular monthly Board pack including updates from the executive management team and detailed financial information measured against plan or forecast.
The Board is also provided with ad-hoc operational updates, and non-executive directors regularly communicate with executive directors between formal board meetings.
Board Meetings
The Board met on 11 occasions during the financial period. Directors are expected to attend all meetings, and to dedicate sufficient time to the Group’s business and affairs to enable them to discharge their duties. Board (and committee) meeting attendance during the financial period was as set out below.
| Director | Board (11) | Remuneration (2) | Audit (2) | Nomination (2) |
| Mr T Crawford | 11 | 2* | 2* | 2* |
| E Dodd | 7 | n/a | n/a | n/a |
| Mr O Scott | 11 | 2 | 2 | 2 |
| R D Price | 3 | n/a | n/a | n/a |
| M Vergani | 9 | n/a | n/a | n/a |
| G Hase | 11 | 2 | 2 | 2 |
| P Fabricius | 10 | 2 | 2 | 2 |
* Tom Crawford participated in these meetings in a Non-Executive capacity prior to becoming Executive Chairman, a role he has now relinquished.
Board Committees
The Board has established three standing sub-committees to assist in the discharge of corporate governance responsibilities. They are the nominations committee, remuneration committee and audit committee. The roles of the committees and their activities are available at https://www.k3btg.com/investor-centre/corporate-governance/.
All three non-executive directors are members of each committee.
6. Ensure that between them the directors have the necessary up-to-date experience, skills, and capabilities
The composition of the Board is designed to provide an appropriate balance of Group, industry and general commercial experience and is reviewed as required to ensure that it remains appropriate to the nature of the Group’s activities.
Biographical details of the Board (including relevant skills and experience) are included at https://www.k3btg.com/investor-centre/the-board/.
Recommendations for appointments to the Board are the responsibility of the Nominations Committee.
The Directors also have access to the Company’s Nominated Advisor for support in the furtherance of their duties.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The Board has established an annual process of Board performance review, once per calendar year, the most recent examples of which was in March 2024, assists the board in identifying any structural, procedural or individual development needs by reference to clear review areas and topics.
8. Promote a corporate culture that is based on ethical values and behaviours
The Group seeks to carry out its business with the highest standards of integrity, based on sound ethical values, and its corporate culture seeks to reflect this premise.
The Board maintains oversight of this through engagement and management reporting, which would, where appropriate, raise any material issues relating to corporate culture and integrity and ethics, including any updates to or non-compliance with key internal ethics policies.
The Group maintains written policies and procedures concerning a number of areas that impact on its ethical values, and these policies, which are shared with all the Group’s staff, underpin some of the ethical elements of the Group’s culture. These include detailed policies addressing health and safety, anti-bribery and corruption, whistleblowing, equal opportunities, and antiharassment.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board
The Board has responsibility for promoting the success of the Company and for the strategic leadership of the Group, with day-to-day management of the business of the Group the responsibility of the executive directors and Business Unit heads.
The Chairman of the Board is responsible for running the Board, and has overall responsibility for corporate governance, but with the support of the other Directors. Shareholder relations are primarily managed by the CEO and CFO.
The Board has determined those matters which are retained for Board sanction and those matters which are delegated to the executive management of the business. The types of decisions which are to be taken by the Board are:
- approval of the financial statements and plans for the Group;
- approval of all shareholders’ circulars and announcements;
- the purchase or sale of any business or subsidiary;
- any new borrowings, facilities, and related guarantees; and
- any asset purchase or lease hire purchase facility or rental agreement over prescribed authority limits.
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Company communicates regularly with shareholders, as further described in relation to Code Principle 2 above.
The Company maintains RNS details on its website at: https://www.k3btg.com/investor-centre/regulatory-news/regulatory-news/.
These include notices, as well as results, of the most recent AGM, together with prior years’ annual reports.
AUDIT COMMITTEE TERMS OF REFERENCE
1. Constitution
1.1. The Board of directors of K3 Business Technology Group plc (the Board) has resolved to establish a Committee of the Board to be known as the Audit Committee (the Committee), in accordance with the articles of association of K3 Business Technology Group plc (the Company). These terms of reference replace all previous terms of reference and constitutions of the Committee.
2. Membership and Chairman
2.1. The members of the Committee shall be appointed (and removed) by the Board, on the recommendation of the Nominations Committee of the Board (if one). The majority of the members of the Committee should be non-executive directors.
2.2. At least one Committee member shall be an independent non-executive director as determined by the Board (in accordance with the principles of an applicable Corporate Governance Code), and at least one Committee member should have recent and relevant experience working with financial and accounting matters with competence in accounting and/or auditing.
2.3. The Chairperson of the Committee shall be appointed by the Board, and should be a non-executive director.
2.4. In the absence of the Chairperson, the remaining members present at any meeting shall elect one of their number to Chair any duly convened meeting.
2.5. The Chairperson of the Committee shall not Chair the Committee when it is considering succession to the Chair of the Committee.
2.6. The Board shall be entitled to resolve that some or all appointments to the Committee are for a fixed maximum duration.
2.7. The Committee shall have at least two members.
2.8. The quorum for meetings of the Committee shall be two members comprising at least two non-executive directors provided always that no meeting of the Committee shall be quorate for the purpose of exercising any of its powers or authorities unless a majority of those present are Directors of the Company. Only members of the Committee have the right to attend Committee meetings. Other individuals may be invited to attend for all or part of any meetings, as and when appropriate and as determined by the Committee.
2.9. The Secretary of the Committee shall be the Company Secretary, unless determined otherwise by the Board.
3. Meetings
3.1. The Committee shall meet during the year as agreed between the members of the Committee or as otherwise requested, and at least sufficient to discharge the Committee’s duties.
3.2. The proceedings of the Committee shall be subject to the articles of association of the Company which regulate the proceedings of the Board so far as they are capable of applying, including but not limited to Article 25 (Proceedings of Directors), Article 26 (Minutes) and Article 30 (Directors’ Interests).
3.3. Once approved, the minutes of each meeting of the Committee will be submitted to the Board of directors as a formal record of the decisions of the Committee on behalf of the Board of directors unless it would be inappropriate to do so.
3.4. Questions arising at any Committee meeting shall be determined by a majority of votes. In the case of an equality of votes the chairperson of the meeting shall have a second or casting vote.
4. Authority
4.1. The Committee is authorised by the Board of directors to examine any activity within its terms of reference and is authorised to obtain, at the company’s expense, legal, accounting or professional advice on any matter within its terms of reference. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. The Committee is authorised to seek any information it requires from any employee or director, and all such employees or directors will be directed to co-operate with any request made by the Committee.
5. General
5.1. The Chairperson of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee’s activities.
5.2. The Committee shall arrange for periodic reviews of its own performance and is expected, at least once a year, to review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
5.3. The Committee is entitled to make whatever recommendations to the Board it deems appropriate on any area within its remit where it believes action or improvement is required.
5.4. The Committee shall be provided with such training, which may be in the form of an induction programme for new members or on an ongoing basis for all members, as reasonably required by the Committee.
5.5. The Committee shall have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required.
5.6. The Committee shall give due consideration to all laws and regulations, the AIM Rules and the applicable corporate governance code as appropriate.
6. Role
6.1. The role of the Committee is to assist the Board in fulfilling its oversight responsibilities by reviewing and monitoring:
a) The integrity of the financial and narrative statements and other financial information provided to shareholders;
b) The Company’s system of internal controls and risk management;
c) That there is an effective relationship between management and the members of the Audit Committee
d) The internal and external audit process and auditors;
e) The processes for compliance with laws, regulations and ethical codes of practice.
7. Duties
The Committee shall have oversight of the Company and its subsidiaries (Group) as a whole and (unless required otherwise by regulation) carry out the following duties for the Group as appropriate:
7.1. External audit. The Committee shall, taking into account any applicable law and legislation:
a) Appointment, reappointment and resignation – consider and make recommendations to the Board, to be put to shareholders for approval at the Company’s AGM, on the appointment, reappointment or removal of the Company’s external auditor;
b) Terms of engagement – oversee the relationship with the external auditor and negotiate and agree their terms of engagement, including any engagement letter issued at the start of each audit, the scope of the audit and, in consultation with the executive directors, agree and approve their remuneration (including fees for both the audit and non-audit services) to ensure that the level of fees is appropriate;
c) Independence and expertise – review and assess on an annual basis;
(A) the external auditor’s independence and objectivity taking into account the relevant UK law, the Ethical Standard and other professional and regulatory requirements and the relationship with the auditor as a whole, including any threats to the auditor’s independence and the safeguards to mitigate those threats including the provision of any non-audit services; and
(B) the qualifications, expertise and resources of the external auditor and, taking into account relevant UK professional and regulatory requirements, the effectiveness of the external audit process, which shall include a report from the external auditor on their own internal quality procedures;
(C) seek reassurance from the external auditor and their staff and satisfy itself that they have no relationships with the Company (other than in the ordinary course of business) which could adversely affect the auditor’s independence and objectivity.
d) at least annually, seek information from the external audit firm about, and monitor, the external audit firm’s policies and processes for maintaining independence and its compliance with the relevant UK law, regulation and other professional requirements and the Ethical Standard, including guidance on the rotation of the audit partner and staff;
e) agree with the Board the Company’s policy on employment of former employees of the Company’s external auditor, taking into account the Ethical Standard and legal requirements and monitor the application of this policy;
f) Non-audit services – develop and recommend to the Board, and implement, the Company’s formal policy on the external auditor’s provision of non-audit services, including the Committee’s approval of non-audit services and the types of non-audit service to be pre-approved, and assessment of whether non-audit services have a direct or material effect on the audited financial statements. The policy should include assessment of:
(A) threats to the external auditor’s independence and objectivity and any safeguards in place to eliminate or reduce threats;
(B) the nature of the non-audit services;
(C) in light of the external audit firm’s skills and experience, whether it is the most suitable supplier of the non-audit service;
(D) the fees for the non-audit services, both for individual services and in aggregate, relative to the audit fee, including special terms and conditions; and
(E) the criteria governing compensation of the individuals performing the audit;
(F) ensure that the provision of the non-audit services does not impair the external auditor’s independence or objectivity, satisfying itself that there are no relationships between the auditor and the Company outside the ordinary course of business (including the level of non-audit fees) that could adversely affect the auditor’s independence and objectivity, or the audit process; and
(G) keep the policy for the provision of non-audit services under review;
g) Audit cycle
(A) review and approve the annual audit plan at the start of the audit cycle and ensure it is consistent with the scope of the audit engagement, having regard to the seniority, expertise and experience of the audit team;
(B) meet regularly with the external auditor (including once at the planning stage before the audit and once after the audit at the reporting stage) and at least once a year, without the executive directors or management being present, to review and discuss the auditor’s remit and the findings of the audit including (but not limited to) any major resolved or unresolved issues that arose during the audit, the auditor’s explanation of how risks to audit quality were addressed, key accounting and audit judgements, the auditor’s view of their interactions with senior management and levels of errors identified during the audit;
(C) consider communications from the external auditor on audit planning and findings on material weaknesses in accounting and internal control systems that come to the auditor’s attention, including a review of material items of correspondence between the Company and the external auditor;
(D) review any representation letter(s) requested by the external auditor before they are signed by management and consider whether, based on its knowledge, the information provided is complete and appropriate;
(E) review, before its consideration by the Board, the external auditor’s report to the directors and their management letter, including management’s response to the auditor’s findings and recommendations;
(F) at the end of the audit cycle, assess the effectiveness of the audit process.
7.2. Financial Reporting. The Committee shall:
a) monitor the integrity of the financial statements of the Group, including:
(A) the annual and half-yearly reports; and
(B) any other formal statements or narrative relating to its financial performance;
b) review significant financial reporting issues and judgements which the financial statements, interim reports, preliminary announcements and related formal statements contain having regard to matters communicated to it by the external auditor;
c) review and challenge where necessary:
(A) the application and appropriateness of significant accounting policies;
(B) any changes to significant accounting policies both on a year on year basis and across the Company and the Group, including the application of new accounting policies in interim accounts, and the plan to communicate those changes to shareholders and the market;
(C) management’s assessment of the impact of new accounting policies on the distributable reserves of the Company and its subsidiaries;
(D) whether the Company has made appropriate estimates and judgements, taking into account the external auditor’s views;
(E) the clarity and completeness of financial reporting disclosures and any changes to those disclosures, including the review of any material correspondence between the Company and the external auditor;
(F) the methods used to account for significant or unusual transactions (including any off balance sheet arrangements) where different approaches are possible;
(G) significant adjustments resulting from the external audit;
(H) the assumptions or qualifications in support of the going concern statement (including any material uncertainties as to the Company’s ability to continue as a going concern over a period of at least twelve months from the date of approval of the financial statements) and the longer term viability statement (including an assessment of the prospects of the Group looking forward over an appropriate and justified period), including the robustness of stress-testing and scenario planning, and disclosures around such analysis; and
(I) the legality of any proposed dividend and the company’s ability to pay it and remain a going concern;
d) monitor compliance with financial reporting standards and the AIM Rules and related guidance and other financial and governance reporting requirements;
e) review all material information presented with the financial statements, such as the strategic report and the corporate governance statements, insofar as it relates to audit and risk management;
f) where the Committee is not satisfied with any aspect of the proposed financial reporting by the Company, report its views to the Board.
7.3. Internal audit, risk management systems and internal controls
a) Internal audit. Whilst the Company has no internal audit function, the Committee shall regularly keep under review and consideration (at least annually) the need for such an internal audit function, make any recommendation to the Board and explain the reasons for the absence of such a function, how internal assurance is achieved and how this affects the external audit work to the Board for disclosure in the annual report.
b) Internal controls. Review the Company’s internal financial controls and internal control systems and, at least annually, carry out a review of their effectiveness and assess whether the processes applied by management to ensure that the internal controls systems are functioning as intended provide sufficient and objective assurance.
c) Risk assessment and management. The Committee shall, where requested by the Board, ensure that a robust assessment of the emerging and principal risks facing the Company has been undertaken (including those risks that would threaten its business model, future performance, solvency or liquidity and reputation), that procedures are in place to identify emerging risks and provide advice on the management and mitigation of those risks.
d) Management and internal and external audit reports. The Committee shall review the assurance reports from management on the effectiveness of the internal control and risk management systems and from any internal audit, the external auditor and others on the operational effectiveness of matters related to risk and control.
e) Whistleblowing. The Committee shall review the effectiveness, adequacy and security of the Company’s arrangements for its workforce to raise concerns, in confidence and anonymously, about possible wrongdoing in financial reporting or other matters.
f) Fraud. The Committee shall annually review the Company’s procedures for detecting fraud.
NOMINATIONS COMMITTEE TERMS OF REFERENCE
1. Constitution
1.1. The Board of directors of K3 Business Technology Group plc (the Board) has resolved to establish a Committee of the Board to be known as the Nominations Committee (the Committee), in accordance with the articles of association of K3 Business Technology Group plc (the Company). These terms of reference replace all previous terms of reference and constitutions of the Committee.
2. Membership and Chairman
2.1. The members of the Committee shall be appointed (and removed) by the Board. The majority of the members of the Committee should be non-executive directors.
2.2. The Chairperson of the Committee shall be appointed by the Board, and should be a non-executive director.
2.3. In the absence of the Chairperson, the remaining members present at any meeting shall elect one of their number to Chair any duly convened meeting.
2.4. The Chairperson of the Committee shall not Chair the Committee when it is considering succession to the Chair of the Committee.
2.5. The Board shall be entitled to resolve that some or all appointments to the Committee are for a fixed maximum duration.
2.6. The Committee shall have at least two members.
2.7. The quorum for meetings of the Committee shall be two members comprising at least two non-executive directors provided always that no meeting of the Committee shall be quorate for the purpose of exercising any of its powers or authorities unless a majority of those present are Directors of the Company. Only members of the Committee have the right to attend Committee meetings. Other individuals may be invited to attend for all or part of any meetings, as and when appropriate and as determined by the Committee.
2.8. The Secretary of the Committee shall be the Company Secretary, unless determined otherwise by the Board.
3. Meetings
3.1. The Committee shall meet during the year as agreed between the members of the Committee or as otherwise requested, and at least sufficient to discharge the Committee’s duties.
3.2. The proceedings of the Committee shall be subject to the articles of association of the Company which regulate the proceedings of the Board so far as they are capable of applying, including but not limited to Article 25 (Proceedings of Directors), Article 26 (Minutes) and Article 30 (Directors’ Interests).
3.3. Once approved, the minutes of each meeting of the Committee will be submitted to the Board as a formal record of the decisions of the Committee on behalf of the Board unless it would be inappropriate to do so.
3.4. Questions arising at any Committee meeting shall be determined by a majority of votes. In the case of an equality of votes the chairperson of the meeting shall have a second or casting vote.
4. Authority
4.1. The Committee is authorised by the Board of directors to examine any activity within its terms of reference and is authorised to obtain, at the company’s expense, legal or professional advice on any matter within its terms of reference. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. The Committee is authorised to seek any information it requires from any employee or director, and all such employees or directors will be directed to co-operate with any request made by the Committee.
5. General
5.1. The Chairperson of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee’s activities.
5.2. The Committee shall arrange for periodic reviews of its own performance and is expected, at least once a year, to review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
5.3. The Committee is entitled to make whatever recommendations to the Board it deems appropriate on any area within its remit where it believes action or improvement is required.
5.4. The Committee shall be provided with such training, which may be in the form of an induction programme for new members or on an ongoing basis for all members, as reasonably required by the Committee.
5.5. The Committee shall have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required.
5.6. The Committee shall give due consideration to all laws and regulations, the AIM Rules and the applicable corporate governance code as appropriate.
6. Duties
The Committee shall:
6.1. be responsible, in consultation with the Chairman of the Board, for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise and, before appointment is made by the Board, evaluate the balance of skills, knowledge, experience and diversity on the Board;
6.2. ensure that on appointment to the Board, non-executive directors receive a formal letter of appointment setting out expectations in terms of time commitment, committee service and involvement outside Board meetings;
6.3. on an ongoing basis:
6.3.1. regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes;
6.3.2. consider succession planning for directors and other members of the Group senior leadership team (SLT), taking into account the challenges and opportunities facing the Company, and what skills and expertise are therefore needed on the Board and the SLT in the future;
6.3.3. keep under review the leadership needs of the organisation, both Board and SLT, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace;
6.4. on an annual basis:
6.4.1. contribute to the annual Board performance evaluation;
6.4.2. review the results of the Board performance evaluation process that relate to the composition of the Board; and
6.4.3. prepare a report for the Board outlining any recommendations relating to:
(a) Board composition and succession planning; and
(b) SLT composition and succession planning.
6.5. The Committee shall also make recommendations to the Board concerning:
6.5.1. membership of the Audit and Remuneration Committees, and any other Board committees as appropriate, in consultation with the Chairmen of those committees;
6.5.2. the re-appointment of any non-executive director at the conclusion of their specified term of office having given due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required;
6.5.3. the re-election by shareholders of any director under the “retirement by rotation” provisions in the company’s articles of association, having due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required and the need for progressive refreshing of the Board (particularly in relation to directors being re-elected for a term beyond six years); and
6.5.4. any matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the company subject to the provisions of the law and their service contract;
6.5.5. the appointment of any member of the SLT;
6.6. consider such other matters as may be requested by the Board.
REMUNERATION COMMITTEE TERMS OF REFERENCE
1. Constitution
1.1. The Board of directors of K3 Business Technology Group plc (the Board) has resolved to establish a Committee of the Board to be known as the Remuneration Committee (the Committee), in accordance with the articles of association of K3 Business Technology Group plc (the Company). These terms of reference replace all previous terms of reference and constitutions of the Committee.
2. Membership and Chairman
2.1. The members of the Committee shall be appointed (and removed) by the Board, on the recommendation of the Nominations Committee of the Board (if one). The majority of the members of the Committee should be non-executive directors.
2.2. The Chairperson of the Committee shall be appointed by the Board, and should be a non-executive director. The Chairperson of the Committee should not be the Chair of the Board.
2.3. In the absence of the Chairperson, the remaining members present at any meeting shall elect one of their number to Chair any duly convened meeting.
2.4. The Chairperson of the Committee shall not Chair the Committee when it is considering succession to the Chair of the Committee.
2.5. The Board shall be entitled to resolve that some or all appointments to the Committee are for a fixed maximum duration.
2.6. The Committee shall have at least two members.
2.7. The quorum for meetings of the Committee shall be two members comprising at least two non-executive directors provided always that no meeting of the Committee shall be quorate for the purpose of exercising any of its powers or authorities unless a majority of those present are Directors of the Company. Only members of the Committee have the right to attend Committee meetings. Other individuals may be invited to attend for all or part of any meetings, as and when appropriate and as determined by the Committee.
2.8. The Secretary of the Committee shall be the Company Secretary, unless determined otherwise by the Board.
3. Meetings
3.1. The Committee shall meet during the year as agreed between the members of the Committee or as otherwise requested, and at least sufficient to discharge the Committee’s duties.
3.2. The proceedings of the Committee shall be subject to the articles of association of the Company which regulate the proceedings of the Board so far as they are capable of applying, including but not limited to Article 25 (Proceedings of Directors), Article 26 (Minutes) and Article 30 (Directors’ Interests).
3.3. Once approved, the minutes of each meeting of the Committee will be submitted to the Board of directors as a formal record of the decisions of the Committee on behalf of the Board of directors unless it would be inappropriate to do so.
3.4. Questions arising at any Committee meeting shall be determined by a majority of votes. In the case of an equality of votes the Chairperson of the meeting shall have a second or casting vote.
3.5. If a matter that is considered by the Committee is one where a member of the Committee, either directly or indirectly has a personal interest, that member shall not be permitted to vote at the meeting.
4. Authority
4.1. The Committee is authorised by the Board of directors to examine any activity within its terms of reference and is authorised to obtain, at the company’s expense, legal or professional advice on any matter within its terms of reference. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. The Committee is authorised to seek any information it requires from any employee or director, and all such employees or directors will be directed to co-operate with any request made by the Committee.
5. General
5.1. The Chairperson of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee’s activities.
5.2. The Committee shall arrange for periodic reviews of its own performance and is expected, at least once a year, to review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
5.3. The Committee is entitled to make whatever recommendations to the Board it deems appropriate on any area within its remit where it believes action or improvement is required.
5.4. The Committee shall be provided with such training, which may be in the form of an induction programme for new members or on an ongoing basis for all members, as reasonably required by the Committee.
5.5. The Committee shall have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required.
5.6. The Committee shall give due consideration to all laws and regulations, the AIM Rules and the applicable corporate governance code as appropriate.
6. Duties
The Committee shall:
6.1. In consultation with the Chairperson and/or Chief Executive as the Committee deems appropriate, determine the remuneration (including pension, bonus, share awards and other incentives) and associated remuneration policies for the Company’s:
a) chairperson;
b) executive directors; and
c) senior leadership team (SLT)
The remuneration of non-executive directors shall be a matter for the Board or (if applicable) the shareholders (within the limits set in the articles of association). No person shall be involved in any decisions as to their own remuneration.
In determining such remuneration, the Committee shall take into account all factors which it deems necessary including any relevant legal and regulatory requirements and the provisions and recommendations of relevant guidance and/or corporate governance code(s);
6.2. review, recommend, have regard to and monitor the level and structure of remuneration for employees of the group as a whole;
6.3. have the authority to implement and oversee share incentive and share option schemes and plans (subject to any requirement for shareholder approval). For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the recipients of those awards and the performance targets to be used, and the other terms of such schemes and plans;
6.4. approve the design of, and determine targets for, any performance related pay (including bonus) schemes operated by the Company and approve the total annual payments and executive director payments made under such schemes;
6.5. be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee;
6.6. consider such other matters as may be requested by the Board and work and liaise as necessary with all other Board committees.
