MENU Corporate Governance THE BOARD The Company has two Executive Directors and four Non-Executive Directors. All major decisions relating to the Group are made by the Board as a whole. Operations are conducted by the subsidiaries of the Company (principally Shanta Mining Company Limited) under the direction of the Chairman of each of the subsidiary companies. The Company is represented on the board of Shanta Mining Company Limited. The Board aims to meet at least quarterly and as required from time to time to consider specific issues required for decision by the Board. The Board is responsible for setting the Company strategy, ensuring corporate governance is of an appropriate standard, approves the one and five-year business plan and appoints the Chief Executive Officer. The Board reviews key business risks regularly, including the financial and non-financial risks facing the Group in the operation of its business and taking into consideration the Company’s extended business, such as its supply chain. The individual directors of the Board have a wealth of experience from diverse professional and personal backgrounds. The Chairman is responsible for leading the Board, including ensuring that an appropriate level of diversity is maintained to promote distinct perspectives on Group and Company matters, and for implementing a robust governance framework. The Chief Executive Officer is responsible for leading the Company in its strategic pursuits and for ensuring that the Company’s business model is implemented effectively and in line with the Company’s values. The Group operates a share dealing code for Directors on the basis set out in the AIM Rules. GOVERNANCE From 28 September 2018 the Company is required to adopt a recognised governance code and then 'comply or explain'. For many companies, this means adopting either the UK Corporate Governance Code or the QCA Corporate Governance Code, both of which have recently been updated. The Directors have elected to follow the main principles of the QCA Corporate Governance Code. This information was last reviewed on 27 February 2020. The QCA Corporate Governance Code identifies ten principles that focus on the pursuit of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which the company was created: 1. STRATEGY AND BUSINESS MODEL The Board seeks to maximise value for all our shareholders whilst ensuring continuity and consistency through sustainable and responsible mining. Our primary asset (“New Luika”) transitioned to a predominantly underground operation and entered commercial production in June 2017. Our objective is to quickly repay the Company’s debt and to reward shareholders for their patience using the cash generated from this project. We implement a disciplined and modern approach to driving operational efficiencies across the organisation, a philosophy embraced by the entire Shanta team. This ensures that Shanta runs an efficient operation without compromising on growth opportunities as we continue to build on strong foundations to take the Company forward. With the underground mine at New Luika fully established, exploration activities are currently being conducted in three distinct areas: Targeted locations with the existing mining licences adjacent to the existing reserves at our Bauhinia Creek and Ilunga deposits; Within the economic circle of New Luika; and, Regionally, utilizing prospective exploration ground held by the Company within the Lupa Goldfield. The roll-out of this exploration programme is designed to ensure longevity for the Company’s existing operations. 2. UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS The Board is aware of the needs and expectations of shareholders. The Company engages with its shareholders through quarterly calls and at its Annual General Meeting. The board supports the use of the AGM to communicate with both institutional and private investors. All shareholders are given the opportunity to ask questions and raise issues; this can be done formally during the meeting or informally with the directors afterwards. At the AGM, separate resolutions are proposed on each substantially separate issue. For each resolution, proxy appointment forms are issued alongside the release of the Annual Report, which provide voting shareholders with the option to vote in advance of the AGM if they are unable to attend in person. All valid proxy votes received for the AGM are properly recorded and counted by Computershare, our registrars. As soon as practicable after the AGM has finished, the results of the meeting are released via RNS and a copy of the announcement is posted on the Company News page at www.shantagold.com/news-media/news/. At last year’s AGM, all resolutions were duly passed. The Executive Directors, Eric Zurrin and Luke Leslie, have a regular programme of individual meetings with institutional shareholders and analysts following the release of each set of quarterly, half-yearly and annual results. These meetings provide a platform for detailed updates on the performance of the business. Feedback from these meetings is shared with the Board to ensure that shareholder opinion is central to ongoing strategic decision-making. The Company Secretary can be contacted by shareholders on matters of governance, as can Eric Zurrin and Luke Leslie. Contact details are provided within every Company announcement. The Board is mindful of the need to protect the interests of minority shareholders. The Board does not consider there to be a dominant shareholder whereby it would be necessary for any specific contractual arrangements to be put in place to protect the interests of minority shareholders. 3. WIDER STAKEHOLDER NEEDS AND SOCIAL RESPONSIBILITIES The Company’s long-term success relies upon good relations with all its stakeholder groups, both internal and external. The Board affords highest priority to ensuring that it maintains a strong understanding of the needs and expectations of all stakeholders. Feedback is sought regularly across several platforms. The group’s stakeholders include shareholders, employees, suppliers, customers, regulators, industry bodies and creditors (including the group’s lending banks). The principal ways in which their feedback on the group is gathered are via meetings and conversations. Regular dialogue is held externally with wider stakeholder group representatives to ensure that the Company’s presence in Tanzania is positive for all parties. The Company’s responsibilities to its stakeholders are considered crucial to the Company’s business plan. The Company also engages with it shareholders through quarterly calls and at its Annual General Meeting, both of which provide an effective platform for two-way communication and feedback. 4. EFFECTIVE RISK MANAGEMENT THROUGHOUT THE ORGANISATION The Board has three Sub-Committees which meet a minimum of three times per year and are chaired by a non-executive Director: The Audit Committee is responsible for ensuring that appropriate financial reporting procedures are properly maintained and disclosed in accordance with governing regulations. The Sustainability Committee ensures the company is considerate of all stakeholders and operates in accordance with the laws of the country in which the company operates. The Remuneration and Nominations Committee ensures that the company has a remuneration strategy that attracts and retains the necessary skills. It is also responsible in conjunction with the Chairman for ensuring that the Board is correctly structured in terms of good corporate governance. As of September 2018, the structure and membership of Board Committees was as follows: Audit Committee Robin Fryer (Chairman) Anthony Durrant Ketan Patel Sustainability Committee* Ketan Patel (Chairman) Anthony Durrant Ketan Patel Robin Fryer * Responsible for safety, health & environment and corporate social responsibility. Remuneration and Nominations Committee Keith Marshall (Chairman) Anthony Durrant Robin Fryer Ketan Patel The Board has put in place mechanisms by which risks facing the Company are managed and reported internally. The Board reviews this internal reporting on a regular basis. The Board considers key business risks, including the financial risks facing the Company in the operation of its business. Control procedures have been put in place to appropriately monitor and mitigate these risks. The key financial risks faced by the Group are detailed on pages 70-72 of the 2019 Annual Report. The Company has an established framework of internal financial controls to address these risks, the effectiveness of which is regularly reviewed by the Executive Directors, the Audit Committee and the Board. The Board is responsible for reviewing and approving overall Company strategy, approving capital budgets and plans, and for determining the financial structure of the Company including treasury and tax. Monthly results and variances from plans are reported to the Board. The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business, and operational and financial controls. There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the Board business performance against those budgets and plans, and for forecasting expected performance over the remainder of the financial period. These procedures cover costs, cash flows, capital expenditure and balance sheet accounts. The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. This applies to mitigating both financial and non-financial risks faced by the Group. However, any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. The principal elements of the Group’s internal control system include: - Close management of the day-to-day activities of the Group by the Executive Directors - An organisational structure with defined levels of responsibility - A comprehensive annual budgeting process producing a detailed integrated profit and loss and cash flow, which is approved by the Board - Detailed monthly reporting of performance against budget - Central control over key areas such as capital expenditure authorisation and banking facilities The Group continues to review its system of internal control to ensure compliance with best practice, while also having regard to its size and the resources available. Non-financial controls covering areas such as health and safety, regulatory compliance, business integrity, risk management, business continuity and corporate social responsibility are continually assessed. The Board is committed to maintaining appropriate standards for all the Company’s business activities and ensuring that these standards are set out in written policies. Key examples of such standards and policies include the ‘Anti Modern Slavery Policy’ and ‘Anti Bribery Policy’. 5. A BALANCED AND WELL-FUNCTIONING BOARD LED BY THE CHAIR The Board and the committees regularly receive detailed and high-quality information to facilitate proper assessment of any matters requiring a decision or insight. The Board comprises the Chief Executive Officer, the Chief Financial Officer and four Non-Executive Directors including the Chairman. Two non-executive directors are independent, which the Board believes to be an appropriate composition to maintain effective corporate governance. A biography of each of the Directors is included within the Board of Directors section on this website at http://www.shantagold.com/corporate/board-of-directors/. Executive Directors are employed by the Group on a full-time basis whereas the Non-Executive Directors are remunerated on a fixed-fee part-time basis. The table below shows the attendance of existing Directors are board meetings during the year to 31 December 2019. Each board and committee meeting must meet quorum requirements. Board Audit Remuneration Sustainability Meeting Committee Committee Committee Eric Zurrin Executive 7 4 3 3 Luke Leslie Executive 7 4 3 3 Anthony Durrant Non-Executive 7 4 3 3 Ketan Patel Non-Executive 4 3 3 3 Robin Fryer Non-Executive 6 4 3 3 Keith Marshall Non-Executive 6 4 3 3 Number of meetings held in the year 7 4 3 3 6. EXPERIENCE, SKILLS AND CAPABILITIES OF THE BOARD Directors who have been appointed to the Company have been chosen because of the skills and experience they offer. The Board of Directors has strong, relevant experience across the areas of mining, accounting and banking. A biography of each of the Directors is included within the Board of Directors section on this website, at: http://www.shantagold.com/corporate/board-of-directors/ The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience, including in the areas of gold mining and exploration. All Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. Skills and knowledge have been gained through aggregated experience in gold mining and the wider sector and these are maintained through ongoing involvement and participation within the industry. All Directors retire by rotation at regular intervals in accordance with the Company’s Articles of Association. The Company Secretary, Vistra Fund Services (Guernsey) Limited, ensures that the Group is compliant with relevant legislation and regulatory requirements, and keeps the Board informed of its legal responsibilities. 7. BOARD EVALUATION The Company continually monitors personal and corporate performance of all of its employees and directors. A formal assessment process is conducted annually. Responsibility for assessing and monitoring the performance of the executive directors lies with the Chairman of the Remuneration and Nominations Committee. Agreed personal objectives and targets, including financial and non-financial metrics, are set each year for the Executive Directors and performance is measured against these metrics. Since the appointment of Anthony Durrant as Chairman, he has been responsible for assessing the individual contributions of each Director of the Board to ensure that: - Their contribution is relevant and effective; - They are committed; and, - Where relevant, they have maintained their independence. Succession planning is considered by the Board to be a crucial element of ensuring continued success and long-term prosperity for the Group. Regular reviews are conducted at Board and Executive Management level to ensure that high-potential individuals are identified and supported appropriately. 8. A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND BEHAVIOURS Corporate responsibility begins with our own people, employment practices and maintaining equitable treatment across all levels of our organisation. The Company has instituted various training and development programs in an effort to upgrade the skill level of all employees. The goal is to have a workforce where each individual takes full accountability for his/her work colleagues' safety and the critical role he/she plays in the success of Shanta Gold. We believe in taking care of our people who play a critical role in the success of our business. We are committed to the safety, health, and welfare of our employees, contractors, management and visitors to our worksites in Tanzania. We maintain a zero-tolerance policy in regards to negligence of health and safety best practices. Education, training and ongoing communication are key to ensuring an injury-free workplace and promoting safety. Health and safety is an integral pillar of our performance and is used to evaluate the performance of all employees on a monthly basis. Employees are recognised for their safety awareness and performance each month to encourage safe practices. We recognise the impact that our activities in Tanzania have on the local community in the operational areas of our mining activity. The Company believes it is critical that the local community is an integral stakeholder in the long-term sustainability of Shanta. We are focused on adding business value beyond the financial contributions made through tax and royalty payments. Shanta Gold has an objective of training and employing local residents and thereby yielding direct and sustainable benefits to the local communities. 99% of the Group’s employees are Tanzanian nationals and approximately half of these are permanent residents of the local villages. Further details of the Company's corporate governance arrangements are provided on this page and in the Company’s Annual Report. 9. GOVERNANCE STRUCTURES AND PROCESSES THAT SUPPORT GOOD DECISION-MAKING Details of the Company's corporate governance arrangements are provided on this page. There are no matters expressly reserved for the Board. The Board considers the Group’s governance framework is appropriate and in line with its plans for growth. 10. STRONG COMMUNICATION WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS The Board attaches great importance to providing shareholders with clear and transparent information on the Company's activities, strategy and financial position. The Board typically meets with large shareholders following the release of financial results and regards the Annual General Meeting (AGM) as a good opportunity to communicate directly with shareholders via an open question and answer session. The Company regularly holds public question and answer calls in support of announcements, providing smaller and private investors with direct access to management. The Board receives regular updates on the views of shareholders through briefings and reports from the Chief Executive Officer, Chief Financial Officer and the Company’s brokers. In addition, analysts’ notes and brokers’ briefings are reviewed to achieve a wide understanding of investors’ views. As described above the Board and the committees meet regularly and individual attendance has been disclosed above under Principle 5. Key work carried out over the past year has included approval of the Annual Report by the Audit Committee and approval of annual Board remuneration by the Remuneration Committee. The Committees expect to report on the key decisions made and work carried out in the year within the forthcoming Annual Report. The Company discloses contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board. Details of all shareholder communications are provided on the Group's website. Historical Annual Reports, notices of all general meetings from the last five years and the resolutions put to a vote at AGMs can be found on the Company’s website at: http://www.shantagold.com/news-media/news/. Over the last five years all resolutions put to a vote at AGMs have been duly passed. Where a significant proportion of votes are cast against a resolution at any general meeting the Board seeks to understand the rationale for this through its engagement with shareholders. The Board also analyses the best means by which to adapt the governing frameworks of the Company in order to appease shareholder concerns where appropriate. BRIBERY AND ANTI-CORRUPTION Shanta Gold is committed to acting fairly, ethically and with integrity in all territories in which it operates. A policy of the Company is not to engage in or tolerate bribery in any form within Shanta Gold, its subsidiaries, or within organisations with which it does business. As part of the Company’s compliance procedures in maintaining the highest standards of corporate governance, it adheres to the standards of the UK Bribery Act 2010. All officers and staff of Shanta Gold are required to comply with the Anti-Bribery Policy and, so far as is practicable, will third parties with whom the company does business. The Board of Directors of Shanta Gold has overall responsibility for bribery prevention within the Company and will closely monitor the effectiveness of the Anti-Bribery Policy. 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