As a company whose shares are traded on AIM, the Company is subject to the AIM Rules (the ‘AIM Rules’) for Companies. Pursuant to (amended) AIM Rule 26, every company whose shares are traded on AIM is required to state on its website which corporate governance code it applies, how it complies with that code, and where it departs from its chosen corporate governance code an explanation of the reasons for doing so (Corporate Governance Statement).

The Board has elected to report against the UK Corporate Governance Code as we believe that it encompasses the best practice in UK governance. At its heart, the Code emphasises the value of good corporate governance to long-term sustainable success and this fits with our own corporate ethos. Although AIM listed companies are not required to comply with the Code (unlike those with a premium listing on the Main Market), the Board’s election to follow it underpins our belief that effective corporate governance assists the delivery of the Group’s corporate strategy, the management of risk and the generation of shareholder value. Good governance improves Board efficiency, boosts investor confidence, reduces cost of capital and helps protect our shareholders’ long-term interests. Clinigen values corporate governance highly, not only in the boardroom but across the whole business of the Group.

Whilst the Clinigen Board follows both the Code and AIM Rules when ensuring that the highest standards of governance are met, we are also influenced by our corporate culture and our Company purpose. Our culture, which encompasses the values of excellence, teamwork, putting patients first, ethics and integrity is known internally as the ‘Clinigen Way’ as referenced in the ESG section on page 32 of the Annual Report. Our Company purpose of ‘Right Medicine, Right Patient, Right Time’ is set out in our Strategic Report on pages 8 to 11. The following section outlines in broad terms how the Board has managed and applied standards of corporate governance that are appropriate for the Group’s size and circumstances

Board Leadership and Company Purpose

Clinigen is led by an effective and entrepreneurial Board which establishes the vision and strategy for the Group and takes responsibility for the long term success of the Company. The individual members of the Board have equal responsibility for the overall stewardship, management and performance of the Group and for the approval of its long-term objectives and strategic plans.

The Board is responsible to the Company’s shareholders, and other stakeholders, with its main objective to increase the sustainable value of assets and long-term viability of the Company. The Board reviews business opportunities and determines the risks and control framework. It also makes decisions on budgets, Group strategy and major capital expenditure. The day-to-day management of the business is delegated to the Executive Directors and the Executive Management Team.

The Board has a schedule of matters specifically reserved for its approval (which is reviewed annually) and follows an annual work schedule which is designed to ensure that all matters, which fall under its remit, are considered at the appropriate times of the year. Matters are delegated to the Board Committees, Executive Directors, Executive Management Team and senior management where appropriate and there is an effective feedback loop in place to ensure that the Board has continuous oversight on progress. The schedule of matters reserved for the Board and terms of reference for each of its Committees can be found on the website www.clinigengroup.com.

TopicDiscussionConsiderationsDelegation and feedback
Strategy
  • Strategic Review
  • Acquisitions, disposals and earn-outs
The generation and preservation of Company valueDay-to-day implementation of the strategy is delegated to the Executive Management team. The CEO provides a detailed report on progress at each Board meeting.
Culture
  • ESG/Sustainability
  • Approval of a Human Rights Policy
  • Approval of a Supplier Code of Conduct
  • Review and approval of the Modern Slavery Act 2015 Statement for 2021/22, including a Modern Slavery Risk Assessment for 2021
  • Agreeing the Clinigen 'Valuing Diversity' Commitment
The necessity that our Directors, the wider workforce and those companies and individuals we work with exhibit behaviours and actions which fit with the Company’s culture. The need to ensure that all who work for Clinigen commit to creating a workplace that maximises the potential of all people and where everyone is valued and feels empowered to contribute to our continued success.
  • The Sustainability Steering Group is tasked with operationalising our sustainability framework. This group reports to the Board at regular intervals
  • The Group’s HR and legal teams monitor developments in the field of human rights, modern slavery and employment law to assess any impact on the rights of the workforce, our customers or stakeholders.
  • The procurement team ensures that the companies we work with comply with our Supplier Code of Conduct and report back to the senior leadership if there are any issues or discrepancies.
Finance
  • Approval of the financial statements and trading updates
  • Annual budget
The need to provide transparent and accurate information to the market and the need to ensure that the Company generates and preserves value over the long term
  • The Audit Committee reviews the financial statements and relevant market announcements before making recommendations to the Board.
  • The CEO and the CFO present the budget to the Board for scrutiny and challenge and report financial performance against budget at each Board meeting.
Risk and internal control
  • External and Internal Audit plans
The need for the Board to establish formal and transparent policies and procedures to ensure the effectiveness of its internal controls systems and the integrity of financial statementsThe Audit Committee scrutinises the plans, and the performance against plan, before making recommendations to the Board.
Governance
  • Consideration of the Directors’ duties under Section 172 of the Companies Act 2006
  • Monitoring of developments within the sphere of corporate governance
To ensure high standards of governance and adherence to applicable regulations throughout the Group.The General Counsel and Company Secretary is tasked with monitoring corporate governance developments and reports to the Board on any significant issues of relevance to the Group. She also provides training and information papers on governance topics at regular intervals.
Shareholder Engagement 
  • An investor relations report is a standing item on Board agendas
  • Review of investor presentations
  • Discussions on any meetings individual Directors have had with shareholders
Recognising the need to ensure that investors are provided with timely and accurate information and that there is a process by which the views of the investors can be fed back to the Board.The CEO and the Investor Relations Director take responsibility for the investor relations program, ensuring that investors have opportunities to meet with the Board, where appropriate, and have their views relayed to the Board for consideration.
Workforce Engagement
  • Regular review of the output from the Peakon employee engagement platform
  • Presentation by the Workforce Engagement Director on his program of work for the year
The need for the Board to ensure that the workforce is engaged, is aligned with the Company culture and that the Board is alert to any concerns employees may have.
  • The Workforce Engagement Director, along with the SVP HR, are tasked with ensuring that the views of the workforce are communicated to the Board and with ongoing communication to the workforce about how the Board has considered and acted on feedback.
  • The Workforce Engagement Director ensures that the views of the workforce are taken into consideration during Board discussions.
Other Key Stakeholder EngagementOngoing consideration of how any decision made by the Board will impact the Company’s key stakeholdersThe need to consider all stakeholders when making strategic decisions.
  • The Executive Directors and Executive Management Team are required to demonstrate consideration of the Company’s key stakeholders when putting proposals to the Board.
  • The impact of the Company’s activities on its key stakeholders are included in any review of the significant risks faced by the Company.
AGM OutcomesReview of voting at the 2020 AGMRecognising the need to take into account any significant numbers of votes against any of the resolutions at the Company’s AGM.
  • Monitoring of votes as they are cast by the General Counsel and Company Secretary who updates the Board regularly on any dissent.
  • The votes cast in favour of each of the resolutions put to the 2020 AGM were well over 80% of total votes cast.
WhistlebowingApproval of the Freedom to Speak Up Policy, including an anonymous email function available to all employees globally.Recognition that employees and contractors must be able to access a means of reporting any concerns of illegality or wrongdoing at work. This system must provide anonymity for users if this is desired.
  • The Audit and Risk Committee regularly reviews any reports which come up through the Freedom to Speak Up system and, where necessary, would escalate these up to the Board.
  • The legal team monitors the system and would escalate any serious matters which come to light between regular Audit and Board meetings.
Conflicts of InterestDirectors are required to declare any conflicts of interest on any matter to be discussed at the beginning of each Board meeting.The need for Directors to avoid situational conflicts of interest and recuse him/herself from any discussions where a conflict of interest might arise.
  • Any conflicts or potential conflicts of interest are dealt with at the time they arise.
  • The Board does not delegate this responsibility.
Recording of any matters of concernAny matters of concern expressed by any Board member will be included in the minutes of that meeting.The necessity to ensure that minutes accurately reflect the views of the Directors, including any that conflict with the general consensus.
  • The General Counsel and Secretary produces accurate minutes.
  • These are reviewed by all Board members before they are approved.



Board activities and the governance, culture and mission influences

Board committees

The Board has established a Nomination Committee, Audit and Risk Committee, and Remuneration Committee, each having separate duties and responsibilities. Reports from each of these committees can be found on pages 69 to 85 of the Annual Report.

Board and committee meetings

The Board meets on a formal basis regularly throughout the year and met eight times in the year ended 30 June 2021. The Committee meetings are scheduled around the Board meetings. Agendas, Committee papers and other appropriate information are distributed prior to each meeting to allow the Board to meet its duties. The non-executive directors meet regularly without management present.

Moving forward the Audit Committee shall meet regularly with an 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, meet with the external auditor without management being present, to discuss the auditor’s remit and any issues arising from the audit.

The Directors’ attendance during the year ended 30 June 2021 was as follows:

BoardAudit and Risk CommitteeRemuneration CommitteeNomination Committee
S Chilton8312141
N Keher8312141
P Allen8346
J Hartup23333
I Nicholson8346
A Hyland83421
A Boyd831-21
S Curran31--1

1 By invitation
2. Stepped down from the Board on 26 November 2020
3. Appointed to the Board on 27 April 2021

Division of Responsibilities

There is a clear division of responsibilities between the Chairman, the CEO of the Company and the Senior Independent Director. The Board includes an appropriate combination of Executive and Non-Executive directors, so that no one individual or small group dominates decision making.

The role of the Chairman is to lead and manage the Board, ensuring the Board’s effectiveness in all aspects. He ensures the active engagement by all Board members, promoting a culture of challenge, openness and scrutiny. The CEO manages the Group’s business and develops its strategy. The CEO leads the senior management team in delivering the Group’s strategic objectives. The Senior Independent Director (‘SID’) serves as a sounding board for the Chair and acts as an intermediary for other Directors. They hold annual meetings with non-executives, without the Chair present, to appraise the Chair’s performance. They are also available to meet with fellow non-executives on other such occasions if this proves necessary. Role descriptions of the Chairman, CEO and SID are available on the Company’s website www.clinigengroup.com.

The Workforce Engagement Director is the Non-Executive Director tasked with helping to ensure that the views and concerns of the workforce are brought to the Board and taken into account.

The Non-Executive Directors’ responsibilities are to challenge, guide and contribute towards the Group’s strategy, and to challenge the financial controls and systems around risk management to ensure that are suitably robust. They are tasked with appointing Executive Directors if and when vacancies arise and they are required to hold the incumbent executives and management to account. The Chairman ensures that the Non-Executive Directors meet at least once a year for discussion without management present. NonExecutive Directors are required to devote a minimum number of hours per annum to their roles on the Clinigen Board and this is set out in their letters of appointment. Directors are required to gain prior approval for any additional external appointments. The Code sets out criteria designed to assist the Board in determining whether there are circumstances that might affect, or could appear to affect, a Director’s judgement and therefore their independence. As required by the Code, half the members of the Board are deemed to be independent.

The Company Secretary, who is also the Group’s General Counsel, supports the Board and advises on all governance matters and, along with the Chairman, ensures that the Board has the policies, processes, information and resources to function effectively. She schedules the Board meetings, ensuring that sufficient time is allowed to consider all the relevant agenda items. All Directors have access to the advice of the Company Secretary and her appointment is a matter for the Board.

Board Composition, succession and evaluation

The Board believes that it has the right combination of skills and experience among its members and the members of the senior management team. Biographies are set out on pages 62 to 63 of the Annual Report.

SUCCESSION PLANNING

The Board continually assesses its membership to ensure it has the necessary qualities required to operate within a robust governance structure which the Board believes fits the requirements of the Group. During the year the Board strengthened its membership with the appointment of Sharon
Curran as an Independent Non-Executive Director. Sharon will take over as Chair of the Remuneration Committee when Ian Nicholson steps down from the Board in November.

Peter Allen, independent Non-Executive Chairman (‘Chairman’), who served the Company for nine years as Chairman of the Board, stepped down on 1 September 2021 and Ian Nicholson, who has also served for 9 years, will be
standing down at the Company’s AGM in November 2021. Elmar Schnee, who was appointed to the Board on 3 August 2021 was appointed Chairman on 1 September 2021. Ian Johnson was also appointed to the Board on 3 August 2021 and serves as the Company’s Senior Non-Executive Director.
Nick Keher stepped down from the Board on 24 August 2021.

Details of the process followed for both appointments and the work undertaken around succession planning within the Group is set out in the Nomination Committee report on page 69.

2021 BOARD EVALUATION

In June 2019, the Board conducted an externally facilitated evaluation and the recommendations of that report were set out in the 2020 annual report. The Board has not conducted an evaluation in the year under review and further details on the reasons for this are included in the Chairman’s introduction to this report.

As required by the Code all Directors, apart from Ian Nicholson who is stepping down, will offer themselves for election or re-election at the AGM.

BOARD COMPOSITION

APPOINTMENT PROCESS
Scoping

Nomination Committee Discussion
(both scheduled and ad hoc meetings including Executive Directors where appropriate)

Considerations

  • Identification of a vacancy
  • The needs of the organisation, currently and in the future
  • The personal skills and qualifications required
  • The dynamics of the current Board

Appointment of a Headhunter

Considerations

  • Market reputation
  • Reach
  • Understanding of the Clinigen culture and company purpose

Search

Production of a long list

Considerations

  • Skillset
  • Experience
  • Gender, ethnicity, and background diversity

Production of a short list

Considerations

  • Specific skills
  • Experience
  • Potential for overboarding

Board meetings with the short-listed candidates

Considerations

  • Cultural fit
  • Ability to challenge
Appointment

Nomination Committee recommendation to The Board

Considerations

  • Due Diligence findings
Post Appointment

Induction Programme

Considerations

  • Director's duties and responsibilities
  • Familiarisation with the business
  • Meetings with key employees

Nomination Committee Report

The Chairman of the Nomination Committee is Elmar Schnee, with Sharon Curran and Anne Hyland being the other members of the Committee. The Committee meets at such times as the Chairman of the Committee requires. The Committee met six times during the year to discuss succession planning and Board composition.

SUCCESSION PLANNING

The primary role of the Committee is regularly to review the structure, size and composition of the Board, give full consideration to succession planning for Directors and other senior executives and evaluate the balance of skills,
knowledge, experience and independence on the Board. When considering succession planning, the Committee is cognisant of the desirability to promote diversity of gender, social and ethnic backgrounds, and cognitive and personal skills. The terms of reference for the Committee can be found on the Company’s website www.clingengroup.com

Board Changes

At the AGM in November 2020, John Hartup stepped down from the Board. John had been on the Board for over 8 years, and during that period had served as Senior Independent Director, Workforce Engagement Director and a member of the Audit and Risk, Remuneration and Nomination Committees.

During the year the Committee considered the appointment of a new Non Executive Director and was assisted in its work by an external headhunter, RSA. Following a formal, rigorous and transparent procedure (set out below), the Committee was pleased to recommend the appointment of Sharon Curran to the Board. Sharon has significant experience in the pharmaceutical sector and the expertise she brings from the industry and other company boards fitted the criteria scoped out by the Committee. Sharon has also been identified as the successor to Ian Nicholson, as Chair of the Remuneration Committee, when Ian steps down from the Board in November.

There have been a number of changes to the Board since the year end. Elmar Schnee, joined the Board on 3 August 2021 as an independent Non Executive Director and designated successor to Peter Allen as Chairman. Peter Allen then stepped down from the Board on 1 September 2021 having served 9 years as Chairman.

Ian Johnson joined the Board on 3 August 2021. Ian’s appointment was suggested by one of the Group’s major shareholders and the Board and Nomination Committee, having undertaken extensive due diligence, agreed that his appointment was appropriate. It was also agreed that Ian himself was aligned with the Group’s culture and would be provide the necessary rigour and challenge in the Board room. Given these factors and having only recently considered other candidates for a non-executive role, in the process to appoint Sharon Curran, the Board did not use the services of an external headhunter or consider a longlist of candidates. Ian was also been appointed Senior Independent Director, a role he took over from Anne Hyland who stepped into the position temporarily, following the departure of John Hartup. Nick Keher stepped down as a Director of the Company on 25 August 2021. He has agreed to remain in the business and will facilitate a smooth handover once his successor is found.

Ian Nicholson, who joined the Board in 2012, will be stepping down from the Board at the AGM. Ian has served on the Audit and Risk, Remuneration and Nomination Committees.

Remuneration Committee

The Chairman of the Remuneration Committee Sharon Curran, with Elmar Schnee and Anne Hyland being the other members of the committee. Anne was appointed to the Committee on 23 June 2020. Sharon joined the committee on 27th April 2021. The primary role of the Committee is to determine and agree the remuneration of the Company’s Chairman, CEO, Executive Directors and senior managers, with the objective to ensure there is an appropriate remuneration strategy in place to encourage enhanced performance and reward for individual contributions to the success of the Company. The Committee also reviews the design of all Group share incentive plans and oversees major changes to employee benefit structures across the wider business. The Committee reviews the performance targets regularly to ensure that they are both challenging and closely linked to the Group’s strategic priorities. The level of remuneration of the Directors is set out in the Group’s Remuneration Report below.

Remuneration Committee Terms of Reference

Risk Management and Internal Control

The Board has responsibility for establishing and maintaining the Group’s internal control systems. The Board regularly reviews, and evaluates internal controls, ensuring they meet the needs of the Group. The internal controls are designed to manage risk rather than eliminate it and therefore cannot provide absolute assurance against material misstatement or loss. Primary responsibility for reviewing internal controls has been delegated to the Audit and Risk Committee.

Communicating with Investors

The Board realises that effective communication with shareholders on strategy and governance is an important part of its responsibilities. The CEO and CFO have a regular dialogue with institutional shareholders engaging proactively with them and ensuring their views are communicated back to the Board. The Investor Relations department acts as a focal point for contact with investors throughout the year. The Chairman and Non-Executive Directors continue to be available to discuss matters of concern as requested. Interim and final results are communicated via formal meetings with roadshows, participation in conferences and additional dialogue with key investor representatives held in the intervening periods.

Prior to the AGM held in November 2019, the Board contacted the Group’s largest institutional investors and proxy companies and provided an opportunity for them to share their feedback on the resolutions past at the AGM and to cover questions more generally. Peter Allen, John Hartup and Ian Nicholson met with the governance representatives and fund managers from these institutions and communicated the feedback back to the wider Board.

The Board believes that appropriate steps are taken to ensure that the Board, and in particular the Non-Executive Directors, develop an understanding of the views of major shareholders. Prior to each Board meeting, an Investor Relations report is circulated which includes analysts’ and brokers’ briefings and following results roadshows, broker and adviser feedback is also passed to the Board.

Share Dealing

The Company has a Group share dealing code which complies with all applicable legislation, and all the Directors of the Group understand the importance of compliance with the Code.

AGM

The Company’s AGM is used by the Board to communicate with shareholders, who are all entitled to attend. The presentation of the results will be given by the CEO, followed by the formal business of the meeting. The meeting provides an opportunity to ask questions of each of the Board members as part of the agenda, or more informally after the meeting.

The Notice of AGM and all related papers are sent to each shareholder at least 20 working days before the meeting. The outcomes of the voting on resolutions are announced to the London Stock Exchange via the Regulatory News Service and added to the Clinigen website.

Whistleblowing

The Group operates a whistleblowing policy which allows all employees to raise concerns to senior management in strict confidence about any unethical business practices, fraud, misconduct or wrongdoing.