Corporate Governance
The Tower Resources policy in respect of Corporate Governance is dictated by its current size and stage of development. The company subscribes to the principles inherent to the Combined Code on Corporate Governance and will meet a growing number of its specific requirements in the course of time. Nevertheless all regulatory requirements of the Alternative Investment Market (AIM) are fully met.
The following information and explanations are set out under the broad headings of the Combined Code.
A. Directors
B. Remuneration
C. Accountability and Audit
D. Relations with Shareholders
It reflects the size and maturity of the company and the fact that 48% of the shares are held by four non-executive directors or vehicles controlled by them (the Controlling Shareholders).
The Board comprises five directors, four of whom are non-executive and one has executive responsibilities, including the day-today management and financial control of the Company. Given the current status of the company’s development, all directors are actively involved in operations and will continue to do so until the Company’s operational commitments are adequately funded. All work on a part-time basis to ensure that management costs are kept to a reasonable minimum but this does not detract from the effective management of operational and development activities.
The Controlling Shareholders have a very successful track record in creating and developing fledgling oil and gas companies and are fully committed to using their experience to benefit all shareholders. The Chairman, Peter Kingston, cannot be independent under the Code rules but he is charged with managing shareholder relations and to ensuring that any potential conflicts of interest are avoided. He has many years experience as a senior independent director and is, therefore, fully familiar with the spirit of the Code’s intentions.
The Board meets formally four times per year but the four UK-based directors meet to review operational and administrative progress with technical and administrative consultants about twice per month. This provides an appropriate balance between strategic direction and rigorous oversight of operational priorities and activities. There are formally constituted Audit and Remuneration Committees (below). There is currently no formal Nominations Committee as the Board as a whole will participate in all relevant activities.
In common with many AIM-listed companies, all directors, excepting the Controlling Shareholders, are compensated with share options as well as a director’s fee. While this arrangement is inconsistent with the Code it serves the purpose of attracting highly experienced directors at a modest cash cost to the business. The Board believes that this is the best way to remunerate directors during the formative stage of the Company’s development. Control of management costs will be a priority for the foreseeable future. Director Service Contracts are in place which can be terminated with three months notice.
The Company has a Remuneration Committee, chaired by Peter Taylor, a Controlling Shareholder and including Mark Savage and Peter Blakey, both non-executive directors. The Committee Terms of Reference are based on the ICSA Guidance, modified to reflect the fact that there are currently no independent directors. The committee will meet at least once per year. The Board believes that all shareholder’s interests are well served by having at present a large shareholder in charge of the remuneration setting process.
The Company has adopted IFRS as the basis for financial control and preparing financial reports. Non-executive Director, Jeremy Asher has the responsibility for fulfilling those duties normally carried out by a Finance Director and Financial Controller. Financial issues are reviewed at least once per month at informal meetings of the UK-based directors. Jeremy Asher, as Chairman of the Audit Committee, and the Company Secretary maintain contact with the Auditors to ensure that adequate financial controls are being adhered to. The Auditors, according to IFRS requirements, have no involvement with the day-to-day financial management activities of the business. At present the scale of the Company’s activities are small and the risk of financial mismanagement is presently low. The interim and annual accounts are prepared by an experienced and independent consultant.
The Audit Committee comprises the three UK-based non-executive directors, none of whom are independent according to the Code and is chaired by Jeremy Asher. The committee will meet at least twice per year. The committee Terms of Reference are based on the ICSA Guidance modified to reflect the absence of independent directors.
The Chairman is responsible for maintaining communication with all shareholders who are not Controlling Shareholders. The Company maintains a website on which all material news is displayed. Any significant well information will be posted in accordance with AIM regulations.
The Company will work with its Corporate Broker, Blue Oar Securities, and its Public Relations advisers, Aquila Financial, to communicate with institutional and private shareholders via road shows and one-to-one meetings as appropriate. Contact will be maintained with other stockbroker analysts to disseminate the Company’s activities as wide as possible. A comprehensive Annual Report, containing statutory financial information and operational activities will be prepared and published after the end of each financial year. The Board will take note of the disclosure guidance provided in the Combined Code in the preparation of the Report. The Company will encourage shareholders to attend the AGM to facilitate the widest possible contact with all members of the Board.
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