Terms of Reference

Constitution

The Board resolves to establish a Committee of the Board to be known as the Audit Committee (the “Committee”).

Membership

The Committee shall be appointed by the Board and shall comprise the independent non-executive directors of the Company. The Committee as a whole should have competence relevant to the investment trust sector. At least one member of the Committee shall have significant, recent and relevant financial experience and competence in accounting and/or auditing.

A quorum shall be three members.

The Chair of the Committee shall be appointed by the Board.

The Chair of the Board may be a member of the Committee but may not act as Chair of the Committee.

Meetings

The Committee shall meet at least three times a year, and where appropriate meetings should coincide with key dates in the Company’s financial reporting cycle.  The Committee shall have the opportunity to meet the Company’s external auditor without representatives from the AIFM or the Portfolio Manager being present. The external auditor may request a meeting if they consider that one is necessary.

The Company Secretary shall be appointed as Secretary of the Committee.

Authority

The Committee is authorised by the Board to:

• investigate any activity within its terms of reference.
• seek any information that it requires from the AIFM or the Portfolio Manager or any other supplier to the Company in order to perform its duties.
• obtain, at the expense of the Company, outside legal or other independent professional advice on any matters within its terms of reference and such advisors may attend a meeting as necessary.
• have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required.

Evaluation

The Committee shall annually 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. 

Duties

The Committee shall carry out the following:

External Auditor

The Committee shall:

• make recommendations to the Board in relation to the appointment, re-appointment and removal of the Company’s external auditor.
• be responsible for the selection process of the external auditor by tender (at least every 10 years), rotation or by way of casual vacancy and if an auditor resigns the Committee shall investigate the issues leading to this and decide whether any action is required.
• have primary responsibility for the relationship with the external auditor, including:
  • approval of their remuneration and its appropriateness given the quality of work;
  • scope of audit work;
  • terms of engagement;
  • influencing the appointment of the engagement partner;
  • develop and implement policy on the supply of non-audit services by the external auditor to avoid any threat to auditor objectivity and independence, taking into account any relevant ethical guidance; and
  • pre-approval of any non-audit work to be provided by the auditor and the fees in respect of non-audit services provided (in line with the Company’s policy).
     
• assess annually:
  • the qualifications, expertise and resources of the external auditor and the effectiveness of the audit process which shall include a report from the auditor on their own internal quality procedures; and
  • the independence and objectivity of the external auditor, taking into account relevant UK professional and regulatory requirements (including compliance with Ethical Standards) and the relationship with the external auditor as a whole including the provision of any non-audit services.
     
• satisfy itself that there are no relationships between the external auditor and the Company (other than in the ordinary course of business) which could adversely affect the external auditor’s independence and objectivity.
• agree with the Board a policy on the employment of former employees of the Company’s external auditor and monitor the implementation of this policy.
• monitor the external auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partners and tendering of audits and the safeguarding of the quality of the audit. If an engagement partner is to act for more than five years (a maximum of seven is permitted) then the reasons for extending the appointment must be explained to shareholders as early as practicable.
  
  
• review the findings of the external audit with the external auditor including:
  • any major issues, accounting and audit judgements which arose during the external audit and how they were resolved or not;
  • any views from the external auditor on the interaction with the Portfolio Manager and AIFM in conducting the external audit and the quality of the information received;
  • consider any evidence in relation to each of the areas of significant judgement and review key accounting and audit judgements;
  • levels of errors identified during the external audit and the effectiveness of the audit; and
  • review any correspondence received from the external auditor in the course of the year, including any letters of representation to be given by the Board to the external auditor.

Internal Controls and Risk Management Systems

The Board has ultimate responsibility for the risk management and internal control systems and the Committee assists the Board in discharging this responsibility. The Committee will review the controls in place to manage these risks by the utilisation of a Risk Matrix through which the Company’s and its suppliers’ internal controls can be robustly reviewed and monitored, via the AIFM where appropriate, throughout the financial year.

AIFM and Portfolio Manager

The Committee shall:

• review the AIFM and the Portfolio Manager’s internal controls, financial reporting and risk management including monitoring arrangements in relation to the Company including any internal audit programme. Any reports issued by them shall be made available to the Committee so far as they relate to the Company.
• consider the AIFM and the Portfolio Manager’s response to any major external or internal audit recommendations.
• receive and consider reports from the AIFM and the Portfolio Manager on:
  • their current status with the Regulatory Authorities.
  • the structure and nature of their compliance monitoring of the Company’s activities.
  • any compliance matters that have arisen concerning, or in relation to their business which may have an impact on the Company.

Other Suppliers

The Committee shall review the internal controls reports provided by the Company’s other principal service providers.

Risk Management

The Committee shall:

• keep under review the adequacy and effectiveness of the Company’s internal controls and risk management systems.
• undertake an annual review of any policies, practices and controls, including any reports for breaches or potential breaches of directly applicable UK legislation. This will include the monitoring of the risk and compliance functions of the AIFM and the Portfolio Manager and of the Company’s other principal suppliers to ensure that these are in place for the prevention and investigation of fraud, bribery or other financial wrongdoing.
• review on an annual basis, the anti-bribery and corruption and the prevention of the facilitation of tax evasion policies put in place by the Company itself and also by its principal service providers.
• consider at each Committee meeting a monitoring report on emerging risks and changes to the existing risks or controls.
• review and recommend approval of the statements to be included in the annual report concerning internal controls and risk management.

Internal Audit

The Committee shall monitor and review annually the need for an internal audit function in the context of the Company’s overall risk management system, make an appropriate recommendation to the Board and where applicable ensure that the reasons for the absence of such a function are explained in the relevant section of the Annual Report.  The Committee shall consider the other processes needed to provide assurance that the internal controls are functioning as intended and the effectiveness of such other processes.

Financial Reporting and Published Financial Information

The Committee shall monitor the integrity of the annual and half-year financial statements before submission to the Board, and any formal announcements relating to the Company’s financial performance, focusing particularly on:

• any changes in accounting principles, policies and practices;
• significant estimates and judgements;
• significant adjustments resulting from audit;
• the clarity and completeness of disclosures in the financial statements;
• the going concern assumption;
• the viability statement;
• compliance with accounting standards and all relevant statutory requirements;
• compliance with the UK Listing Authority; and
• providing advice to the Board on whether the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, position, business model and strategy.

The Committee shall review and challenge where necessary:

• the consistency of, and any changes to, accounting policies both on a year on year basis and across the Company and compliance with accounting standards.
• the methods used to account for significant or unusual transactions where different approaches are possible.
• whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor.
• the clarity of disclosure in the Company’s financial reports and the context in which statements are made including compliance with the stock exchange and other legal requirements.

Reporting Procedures

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Committee in advance of the next Committee meeting. Copies of the minutes will also be included in the papers for the next Board meeting following the meeting of the Committee.  The Chair of the Committee will report to the Board on the Committee’s decisions and recommendations, identifying any matters in respect of which the Committee considers that action or improvement is needed and making recommendations as to the steps to be taken.

The work of the Committee in discharging its responsibilities shall be disclosed in the Company’s Annual Report.  The Committee shall ensure disclosure in the Annual Report of all the relevant requirements set out in the AIC Code of Corporate Governance, as amended from time to time.

The Chair of the Committee shall attend the AGM and answer questions, through the Chair of the Board, on the Committee’s activities and responsibilities. 

Constitution

The Board has established a Committee of the Board to be known as the Nomination Committee.

Membership 

The Nomination Committee shall, until otherwise determined by the Board, consist of all members of the Board. A majority of the Committee should be independent of the AIFM and the Portfolio Manager and a quorum shall be two members.

The Chair of the Nomination Committee shall be appointed by the Board.  The Chair of the Board may chair the Committee except when the Committee is dealing with the appointment of his/her successor.

Meetings

The Nomination Committee shall meet at least once a year.

The Company Secretary shall be appointed as Secretary of the Committee.

Authority

The Nomination Committee is authorised by the Board to investigate any activity within its terms of reference.  The Nomination Committee is authorised to obtain outside legal or other independent professional advice where necessary.

Duties

The duties of the Nomination Committee are:

a) To be responsible for reviewing and nominating candidates for the approval of the Board to fill vacancies on the Board of Directors.  The Committee will ensure that the search for Board candidates is conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender and ethnicity.

b) To make recommendations to the Board regarding membership of the audit, nominations, engagement and remuneration, and sales, marketing and communications committees.

c) To consider and review the composition, size, structure and balance of the Board (including its skills, knowledge, experience and diversity) from time to time and, where appropriate, to make recommendations to the Board with regard to any changes.

d) To ensure plans are in place for orderly succession to the Board, taking into account the challenges and opportunities facing the Company, and the skills and expertise needed on the board in the future.

e) To prepare a job specification before any appointment is made by the Board (in light of the evaluation of the Board’s balance of skills, knowledge, experience and diversity) including an assessment of the time commitment expected, recognising the need for availability during unusual events.

f) To review and recommend for approval by the Board the policy on the tenure of the Chair of the Board (and other non-executive directors, if deemed appropriate) and the Company’s diversity policy. A clear rationale for the expected tenure should be provided, and the policy should explain how this is consistent with the need for regular refreshment and diversity.

g) To consider the arrangements for the annual board evaluation and to be responsible for the selection, appointment and setting of the terms of reference for any external evaluators.  The Committee will ensure that any external evaluator is identified in the annual report and a statement made about any other connection it has with the Company or individual directors.

h) To review the election and re-election of Directors, under the terms of their appointment and the AIC Code of Corporate Governance and the UK Corporate Governance Code, and to make recommendations to the Board as considered appropriate.  The Committee should have due regard to the Directors’ performance and ability, and why their contribution is important to the Company’s long-term sustainable success in the light of the skills, experience and knowledge required and the need for progressive refreshing of the Board, taking into account the length of service of individual directors, the chair and the Board as a whole.

i) To consider other topics, as defined by the Board.

Reporting Procedures

The Secretary shall circulate the minutes of meetings of the Nomination Committee to all members of the Board at the next Board meeting following a Nomination Committee meeting. 

The Committee Chair shall report to the Board on the Committee’s proceedings after each meeting.

The Committee shall make a statement in the Annual Report about its activities, decisions and the rationale for those decisions including:

• The process used in relation to appointments, the approach to succession planning and how both support developing a diverse pipeline;
• How the Board evaluation has been conducted, the nature and extent of an external evaluator’s contact with the board and individual directors, the outcomes and actions taken, and how it has or will influence board composition; and
• The policy on diversity and inclusion, its objectives and linkage to company strategy, how it has been implemented and progress on achieving the objectives.

The Chair 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.

Membership:   

A M Impey (Chair)
M C Ginman
S E Hansen
N Sahgal
R E Talbut
E T A Troughton

Constitution

The Board has established a Committee of the Board to be known as the Engagement and Remuneration Committee.

Membership

The Engagement and Remuneration Committee shall be appointed by the Board from amongst the independent non-executive directors of the Company. 

A quorum shall be two members.

The Chair of the Engagement and Remuneration Committee shall be appointed by the Board. 

Meetings

The Engagement and Remuneration Committee shall meet at least once a year.

Authority

The Engagement and Remuneration Committee is authorised by the Board to advise on any activity within its terms of reference. 

The Engagement and Remuneration Committee is authorised to obtain independent professional advice where necessary.

Duties

The duties of the Engagement and Remuneration Committee are:

• To review the terms and conditions of the appointment of the Portfolio Manager and the AIFM (including the level and method of remuneration and the notice period) and also the Company’s other principal service providers, to ensure they are competitive and in the interests of shareholders.
  
• To review the terms and conditions of the Directors’ appointments.
• To review and recommend for approval by the Board the Directors’ remuneration policy.
• To be responsible for the selection, appointment and setting of the terms of reference for any remuneration consultants who advise the Committee.
• To make proposals to the Board on any matter within its remit.

Reporting Procedures

The Company Secretary shall circulate the minutes of meetings of the Engagement and Remuneration Committee to all members of the Board.

The Committee Chair shall report to the Board on its proceedings after each meeting. 

The Committee shall make a statement in the Annual Report about its activities, decisions and the rationale for those decisions.

Evaluation

The Committee shall, at least once a year, review its own performance, constitution and terms of reference, ensuring it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

Membership:

S E Hansen (Chair)
M C Ginman
E Troughton
R E Talbut
A M Impey
N Sahgal

Reference to the “Committee” shall mean the Sales, Marketing & Communications Committee. Reference to the “Board” shall mean The Board of Directors.

Constitution

The Board resolves that a Committee of the Board to be known as the Sales, Marketing & Communications Committee be hereby established (the “Committee”).

Membership

The Committee shall be appointed by the Board and shall comprise the independent non-executive directors of the Company.

The Board shall appoint the Committee Chair who may be the Chair of the Board. In the absence of the Committee Chair and/or an appointed deputy, the remaining members present shall elect one of their number to chair the meeting.

If a Committee member is unable to act due to absence, illness or any other cause, the Chair of the Committee may appoint another director of the Company to serve as an alternate member.

Care should be taken to minimise the risk of any conflict of interest that might be seen to give rise to an unacceptable influence.

Quorum

The quorum necessary for the transaction of business shall be two. 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. /p>

Secretary

The Company Secretary or their nominee shall act as the Secretary of the Committee.

Frequency of Meetings

The Committee shall meet not less than twice a year and at such other times as the Chair of the Committee shall require.

Notice of Meetings

Meetings of the Committee shall be convened by the Secretary of the Committee at the request of the Chair of the Committee.

Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee no fewer than five working days prior to the date of the meeting. /p>

Authority

The Committee is authorised by the Board to investigate any activity within its terms of reference and to seek any information it requires. The Portfolio Manager shall cooperate with any reasonable request made by the Committee.

The Committee is authorised by the Board to obtain, at the Company’s expense, outside legal or other professional advice on any matters within its terms of reference. However, prior to doing this the Committee should consult with the Chair of the Board to agree fee levels.:

Evaluation

The Committee shall annually 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.

Duties

The Committee shall:

• In partnership with the Portfolio Manager, develop a marketing and promotional strategy for the Company, including long-term aims, measures of success and the mechanisms, including specific communication and media channels, to be used by the Company,
• In partnership with the Portfolio Manager, develop and agree a shorter-term marketing, promotional and media plan to achieve the longer-term aims set out above. This plan will address messaging and branding congruent with the aims and objectives of the Company, communication channels to be used, activity levels, measures of success and budgeted expenditure.
• Where deemed necessary, consider the retention of third-party agencies and consultants by the Company to support and enhance the marketing efforts of the Company and Portfolio Manager.
• Review marketing materials produced by the Portfolio Manager and other third parties and make recommendations, where appropriate, on the form and content of these materials.
• Review the activity undertaken by the Company, the Portfolio Manager, the Broker and other third parties against agreed plans, consider performance indicators and enhancements and amendments that may be required to the Company’s marketing plans in the light of these outcomes.

It shall also make recommendations to the Board:

• with regard to marketing strategy, including recommendations for the form and content of an agreed marketing plan, budget and performance indicators.
• with regard to the measurement and effectiveness of marketing activity, including recommendations for amendments to the marketing plans, budgets, proposed activity levels where appropriate and recommend feedback to be communicated to the Portfolio Manager and other third parties on the effectiveness and quality of marketing support received including recommendations for change or improvement to service levels received.
• with regard to the appropriate levels of expenditure to be devoted to marketing and promotional activity, including recommendations for a budget including details of proposed levels of activity and expenditure by communication/promotional channel.
• with regard to the retention of third-party agencies and consultants, including recommendations of the organisations to be appointed and the terms of their appointment, including their remuneration.
• with regard to the communication of the marketing strategy and activity to shareholders, including recommendations for suitable wording for inclusion in the Company’s annual report and financial statements and other communications with shareholders. 

Reporting Procedures

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Committee in advance of the next Committee meeting. Copies of the minutes will also be included in the papers for the next Board meeting following the meeting of the Committee.  The Chair of the Committee will report to the Board on the Committee’s decisions and recommendations, identifying any matters in respect of which the Committee considers that action or improvement is needed and making recommendations as to the steps to be taken.

The work of the Committee in discharging its responsibilities shall be disclosed in the Company’s Annual Report. 

The Chair of the Committee shall attend the Annual General Meeting and be prepared to respond to any shareholder questions on the Committee’s activities and/or responsibilities.