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Terms of Reference

Terms of Reference – Audit Committee

MEMBERSHIP

The Board appoints the Chairman and the members of the Audit Committee with reference to recommendations made by the Nominations Committee. The Chairman of the Committee will not usually be the Chairman of the Board and shall be appointed by a majority of the Board, giving particular consideration to those Board members with recent and relevant financial experience.

The Committee shall consist of the following independent Directors:

Jo Dixon (Chairman); Professor Duncan Geddes; Dr David Holbrook; Anthony Townsend

A quorum for meetings and decisions of the Committee shall be two members present. A member of the management company may also be invited to each Audit Committee meeting.

Members shall be appointed for an initial period of 3 years, which may be renewed or extended providing the director remains independent.

MEETINGS AND ATTENDANCE

The Committee shall meet at least twice per year and at such other times as it sees fit.

A representative of the external auditors shall attend not less than one meeting per year, such meeting will include the review of the annual results. The Chairman or another member shall meet the audit partner at least once during the year to discuss audit planning and the auditors remit.

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

The Company Secretary will be the Secretary of the Committee.

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

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

AUTHORITY

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

DUTIES

The Committee will at all times comply with the Listing Rules published by the Financial Services Authority (“the Listing Rules”), the recommendations of the Combined Code (Principles of Good Governance and Code of Best Practice – revised July 2003 and June 2010 (also renamed the UK Code of Corporate Governance)) and guidance from the Association of Investment Companies contained in the AIC Code and Guide published in February 2006 and revised in May 2007, March 2009 and October 2010.

In particular, the duties of the Committee are:

  • to monitor the integrity of the financial statements (including the interim management statement) and the interim and annual preliminary results announcements (see 1 below).
  • to review the internal financial controls and risk management systems, including the effectiveness of any internal audit activities (see 2-3 below).

in relation to the external auditors:

  • to recommend to the board their appointment, re-appointment or removal;
  • to develop and implement a policy on the engagement of the external auditors
  • for non-audit services (see 4-8 below);
  • to approve their remuneration and terms of engagement;
  • to review and monitor their independence and objectivity; and
  • to review the effectiveness of the audit process.
  • to consider other topics, as defined by the Board

1. to review the interim and annual report and accounts before submission to the Board, focusing particularly on:

1.1 any changes in accounting policies and practices;

1.2 major judgmental areas;

1.3 significant adjustments resulting from the audit;

1.4 the going concern assumption adopted in the annual report and accounts;

1.5 compliance with accounting standards;

1.6 statement concerning internal controls and risk management; and

1.7 compliance with the Listing Rules and tax and legal requirements.

2. to analyse the Board’s key procedures adopted to provide effective internal control, to review the effectiveness of such procedures and make recommendations to the Board and to consider whether the Board should express an opinion on the effectiveness of the procedures; and

3. to receive and review information from the Company’s manager and investment manager on internal audit and compliance;

4. to discuss and agree with the external auditors, before the audit commences, the nature and scope of the audit;

5. to review annually the qualifications, expertise, resources and effectiveness of the audit process and procedures;

6. to monitor the auditors compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the company to the overall income of the audit firm, office or partner;

7. to discuss problems and reservations arising from the annual audit, the interim technical review where applicable, and any other matters the external auditors may wish to discuss;

8. where the auditors supply a substantial volume of non-audit services, to keep the nature and extent of such services under review; and

9. to review, on an annual basis, the anti bribery and corruption policies put in place by the Company itself and also by its principal service providers.

REPORTING PROCEDURES

The Secretary of the Committee shall minute the proceedings and resolutions of all meetings and will produce and circulate the minutes to all Committee members, once agreed, the minutes will be circulated to all members of the Board at the next scheduled Board meeting following the Committee meeting. The Chairman of the Committee shall report formally to the Board where it is deemed necessary.

The Committee shall compile a report to shareholders on its activities to be included in the Annual Report.

Terms of Reference – Nominations Committee

MEMBERSHIP

The Board appoints the Chairman and members of the Nomination Committee.

The Chairman of the Committee will usually be the Chairman of the Board with the exception of meetings dealing with Board Chairmanship succession.

The Committee shall consist of the whole Board, the majority of which is independent. A quorum for meetings and decisions of the Committee shall be three members present, provided at least two of these are independent. A member of the management company may also be invited to each Nominations Committee meeting.

MEETINGS AND ATTENDANCE

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

The Company Secretary shall be the Secretary of the Committee when requested by the Chairman, otherwise a nominated Director shall act as Secretary to the Committee.

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

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

AUTHORITY

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

DUTIES

The Committee will at all times comply with the Listing Rules published by the Financial Services Authority (“the Listing Rules”), the recommendations of the Combined Code (Principles of Good Governance and Code of Best Practice – revised July 2003 and June 2010 (also renamed the UK Code of Corporate Governance)) and guidance from the Association of Investment Companies contained in the AIC Code and Guide published in February 2006 and revised in May 2007, March 2009 and October 2010.

In particular, the duties of the Committee are:

  • to monitor the integrity of the financial statements (including the interim management statement) and the interim and annual preliminary results announcements (see 1 below).
  • to review the internal financial controls and risk management systems, including the effectiveness of any internal audit activities (see 2-3 below).

in relation to the external auditors:

  • to recommend to the board their appointment, re-appointment or removal;
  • to develop and implement a policy on the engagement of the external auditors
  • for non-audit services (see 4-8 below);
  • to approve their remuneration and terms of engagement;
  • to review and monitor their independence and objectivity; and
  • to review the effectiveness of the audit process.
  • to consider other topics, as defined by the Board

1. to review the interim and annual report and accounts before submission to the Board, focusing particularly on:

1.1 any changes in accounting policies and practices;

1.2. major judgmental areas;

1.3. significant adjustments resulting from the audit;

1.4. the going concern assumption adopted in the annual report and accounts;

1.5. compliance with accounting standards;

1.6. statement concerning internal controls and risk management; and

1.7. compliance with the Listing Rules and tax and legal requirements.

2. to analyse the Board’s key procedures adopted to provide effective internal control, to review the effectiveness of such procedures and make recommendations to the Board and to consider whether the Board should express an opinion on the effectiveness of the procedures; and

3. to receive and review information from the Company’s manager and investment manager on internal audit and compliance;

4. to discuss and agree with the external auditors, before the audit commences, the nature and scope of the audit;

5. to review annually the qualifications, expertise, resources and effectiveness of the audit process and procedures;

6. to monitor the auditors compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the company to the overall income of the audit firm, office or partner;

7. to discuss problems and reservations arising from the annual audit, the interim technical review where applicable, and any other matters the external auditors may wish to discuss;

8. where the auditors supply a substantial volume of non-audit services, to keep the nature and extent of such services under review; and

9. to review, on an annual basis, the anti bribery and corruption policies put in place by the Company itself and also by its principal service providers.

REPORTING PROCEDURES

The Secretary of the Committee shall minute the proceedings and resolutions of all meetings and will produce and circulate the minutes to all Committee members, once agreed, the minutes will be circulated to all members of the Board, unless a conflict of interests exists, at the next scheduled Board meeting following the Committee meeting. The Chairman of the Committee shall report formally to the Board where it is deemed necessary.

Terms of Reference – Remuneration & Management Engagement Committee

MEMBERSHIP

The membership of the Committee shall consist of those Directors considered to be independent by the Board.

The Chairman of the Committee will usually be the Chairman of the Board.

The Committee shall consist of the whole Board, the majority of which is independent. A quorum for meetings and decisions of the Committee shall be three members present, provided at least two of these are independent. A member of the management company may also be invited to each Remuneration & Management Engagement Committee meeting.

MEETINGS AND ATTENDANCE

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

The Company Secretary shall be the Secretary of the Committee when requested by the Chairman, otherwise a nominated Director shall act as Secretary to the Committee.

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

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

AUTHORITY

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

DUTIES

The Committee will at all times comply with the Listing Rules published by the Financial Services Authority in force from time to time (“the Listing Rules”) and the AIC Code of Corporate Governance by reference to the AIC Corporate Governance Guide for Investment Companies, both issued in February 2006 and revised in May 2007, March 2009 and October 2010.

Remuneration
  • to agree with the Board a framework and broad policy for determining the remuneration of the executive and non-executive officers of the Company, no director or manager shall be involved in any decisions as to their own remuneration.
  • to recommend to the board remuneration of chairman, board members and the manager.
  • to determine any performance-related pay schemes operated by the company.
  • to carefully consider what compensation commitments the directors’ terms of appointment would entail in the event of early termination.
  • to ensure that contractual terms on termination, and any payments made, are fair to the individual and the company, that failure is not rewarded and that the duty to mitigate loss is fully recognised.
  • to be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the committee.
  • to ensure that provisions regarding disclosure of remuneration as set out in the Companies Act and the revised Code are fulfilled.
Management Engagement
  • to regularly review the terms of engagement of the Manager and Investment Manager and to make any recommendations for change;
  • to review the level of fees payable to the Manager and Investment Manager and to make recommendations to the Board;
  • to keep under review the contract notice period of the Management and Investment Management Agreements; and
  • to review the additional marketing, company secretarial and other sundry services provided by the Manager.
REPORTING PROCEDURES

The Secretary of the Committee shall minute the proceedings and resolutions of all meetings and will produce and circulate the minutes to all Committee members, once agreed, the minutes will be circulated to all members of the Board, unless a conflict of interest exists, at the next scheduled Board meeting following the Committee meeting. The Chairman of the Committee shall report formally to the Board where it is deemed necessary.