Corporate Governance

Corporate Governance

Corporate Governance

Statement of Compliance with the QCA Corporate Governance Code

Chairman's Introduction

Tissue Regenix Group plc's vision is to become a leader in regenerative medicine. This vision is underpinned by its core values to maintain a sustainable, ethical and responsible company. Sound corporate governance is a key part of this. As an AIM traded company, we recognise the need for ensuring that an effective governance framework is in place to give confidence to our investors, employees and other stakeholders that the business is run effectively, sustainably and responsibly.

John Samuel, Chairman

Compliance with QCA Corporate Governance Code

We have agreed to report against the QCA Corporate Governance Code published by the Quoted Companies Alliance ("QCA Code") and this report sets out an overview of how we comply with the QCA Code at this point in time. We will provide updates as circumstances change.

A full version of the QCA Code is available to download (free for members or for a fee for non-members) from the Quoted Companies Alliance website at https://www.theqca.com/shop/guides/.

Deliver Growth

 

1. "Establish a strategy and business model which promote long-term value for shareholders"

Tissue Regenix Group has established a growing portfolio of regenerative medical products to address critical and growing clinical needs, transforming patient care and providing favourable health economic outcomes. We aim to expand the adoption of our dCell® and BioRinse Technologies and become a partner of choice for both clinicians and strategic partners. Our commercial model employs both a direct and indirect sales approach, aiming to optimize the adoption of our technology and driving additional revenues more rapidly.

We set out further details of our outlook, strategic focus and strategic objectives (including risks and risk mitigation) on pages 9, 10 and 11 of our Annual Report for the financial year ended 31 December 2017 which is available on our website at  https://www.tissueregenix.com/... ("Annual Report").

2. "Seek to understand and meet shareholder needs and expectations"

The Company actively engages with its shareholders throughout the year both through direct meetings, website communications and through stock exchange announcements. Presentations which the Company has given to analysts are also made available on the Company's website.

Senior management typically the Chief Executive Officer and Chief Financial Officer aim to meet with or speak with significant shareholders in the Company at least twice in each year usually after the interim and annual results announcements to update on strategy and progress of the Company and the group as a whole, and to receive shareholder feedback.

The Company also holds an annual general meeting each year at which all shareholders are welcome to attend and speak with management.

Company contact details are included on the Company's website and on all regulatory announcements in the event that any shareholders have any questions.

3. "Take into account wider stakeholder and social responsibilities and their implications for long-terms success"

The board of directors of the Company ("Board") considers relationships with stakeholders of the Tissue Regenix Group as fundamental to its success.

In the past 12 months, the Tissue Regenix Group has embarked on an intensive employee engagement programme focussing on vision and culture, involving meeting face-to-face with employees in the Tissue Regenix Group to obtain feedback. This has been backed up by on-line surveys and a new programme of "town-hall" style meetings being introduced twice annually for all employees. Six work streams have come out of the programme to date which the Company is focussing on topics including leadership, vision and strategy, values and behaviours, Employee   development, communications and branding and external perception.

In relation to our joint venture company in Rostock, Germany, quarterly board meetings are held involving both joint venture parties along with less formal monthly update calls.

In respect of organ procurement and tissue sourcing, Tissue Regenix Group actively audits these suppliers on a regular basis to ensure that tissues are from a properly regulated source to the highest ethical standards, as further noted in pages 19, 20 and 21 of our Annual Report.

As a Global company we consider our carbon footprint and environmental responsibility ensuring that the need to undertake significant international air travel is essential and could not be facilitated by alternative means such as a WebEx meeting. 

Further details of our corporate social responsibility strategy are set out at page 21 of our Annual Report.

The board considers feedback from its advisers and stakeholders formally at its monthly board meetings or sooner on a more informal basis as required.

4. "Embed effective risk management, considering both opportunities and threats, throughout the organisation"

The Board carefully considers the strengths, weaknesses, opportunities and risks facing the Tissue Regenix Group and endeavours to minimise the impact of weaknesses and risks through the necessary mitigation actions. Tissue Regenix Group is a pioneering international medical technology company, focussing on the development of regenerative products utilising our two platform technologies. We are helping to transform the treatment of patients in four key areas. BioSurgery (soft tissue replacement and repair in wounds, Uro/Gyn and Trauma), Orthopaedics, Dental and Cardiac. We have the ability to manufacture at our state of the art in house manufacturing facilities in the UK, Europe and North America. Tissue Regenix Group has an experienced and dedicated management and scientific team. There are multiple development and commercialisation opportunities to build upon our two platform technologies.

The prominent risks facing the Tissue Regenix Group are kept under review by the Company and are set out in the Annual Report (at page 19 and 20). The Company further details identified risks in respect of its specified objectives at page 11 of the Annual Report.

As noted above, Tissue Regenix Group regularly audits its suppliers to ensure that the highest ethical standards are maintained.

In respect of its intellectual property rights, the Company engages a professional patent and trade mark adviser to monitor its intellectual property portfolio.

Tissue Regenix Group maintains a central finance team, currently based in the UK but with two permanent team members in the US. Tissue Regenix Group seeks to operate consistent accounting policies and relies on annual external audits from professional auditors of its financial results.  The Board review monthly financial reports provided by the Chief Financial Officer in respect of the management of cash within the business and review against budgets and forecasts. During the period when the Company has not had a Chief Financial Officer, the Company has employed the services of an interim financial officer to ensure that the finance functions of the Company are run effectively and efficiently.

The Company also has a number of operational controls which all employees are expected to adhere to including management structure, Board reserved matters, financial monitoring, insider lists, internal policies, codes of conduct and training, health and safety monitoring and IT controls.

 

Maintain a dynamic management framework

 

5. "Maintain the board as a well-functioning, balanced team led by the Chair"

The Board is comprised of four independent non-executive directors, the Chairman and one executive director, the Chief Executive Officer. The Company has recruited a replacement Chief Financial Officer who is due to take up his position on 30 November 2018 and will join the Board as an Executive Director. The non-executive directors bring a mix of financial, clinical and industry experience to the Board. Biographies of each director are contained on the Company's website and also on pages 22 and 23 of the Annual Report.

At least ten Board meetings are held each year on a monthly basis with sufficient notice for directors to participate. A Board report is produced monthly and meeting agendas and Board papers are produced in advance of each meeting so that the Board can consider the matters to be discussed. The Company maintains minutes of the Board meetings. Directors are also expected to make themselves available on an ad hoc basis for consultation if the need arises.

There are two committees of the Board, the Audit Committee and the Remuneration Committee, each of which are formed by three of the non-executive directors of the Company each have policies to govern how they are run. The independent directors who form these two committees all have financial experience so are appropriate persons to advise on these committees. The Audit Committee meets twice per annum and is chaired by Alan Miller who has relevant financial experience. The Remuneration Committee meets no less than twice per annum and is chaired by Randeep Grewal who has financial experience and also experience of being an investor. Further details of these committees can be found on pages 25 and 26 of the Annual Report.

The Board has considered the merits of establishing a nomination committee, but is of the view that it is in the best interests of the Company that the Board collectively reviews, determines and approves the structure, size and composition of the Board as well as the appointment of any new director, as and when appropriate.

The non-executive directors are appointed through formal non-executive appointment letters which contain three month notice periods. The non-executive appointment letters contain an indicative time commitment of 20 days per annum however these indicate that this is an estimate and that all directors are expected to commit sufficient time to fully discharge their responsibilities. The Company has not had any issues with regular non-attendance at meetings.

Executive directors have formal service contracts which require them to work full-time in the business and have no other significant outside business commitments. These service agreements have a maximum of six-months' notice to terminate.

The Company follows the provisions in its Articles of Association in respect of the retirement and reappointment of directors at its annual general meeting each year.

The Board is satisfied that it has a suitable balance between independence and knowledge of the business to allow it to discharge its duties and responsibilities effectively and that effective controls have been put in place during the period while the Company has not had a Chief Financial Officer to maintain the effective oversight and discharge the financial functions of the Company.

6. "Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities"

 

 

The Board is satisfied that it has an effective balance of skills and relevant experience such that it is able to operate effectively. Biographies of the directors are contained on the Company's website and also at pages 22 and 23 of the Annual Report.

Each Board member brings a different set of capabilities, for example, all the directors other than Shervanthi Homer-Vanniasinkam have financial experience, both Shervanthi Homer-Vanniasinkam and Randeep Grewal have clinical experience and Steven Couldwell and Jonathan Glenn both have relevant international industry experience.

The Board maintains its skillset through their day to day roles and uses external advisers to enhance its knowledge where necessary. In the event that any member of the Board considers that additional training is required to fulfil their role, the Company would seek to provide such training as and when necessary.

The Company keeps in regular contact with its nomad, Jefferies International, typically meeting once every six to eight weeks and ad hoc as required. The Company also seeks advice from its legal advisers and accountants as and where necessary including, for example, in relation to the acquisition of CellRight Technologies LLC. The Company employs accountants to audit its Annual Report.

The Company Secretary role is currently held by an interim officer but will be assumed by the new Chief Financial Officer from 30 November 2018.

Given the size of the Company, it has not sought to formally appoint a Senior Independent Director however Alan Miller is the longest serving non-executive director (excluding the Chairman).

7. "Evaluate board performance based on clear and relevant objectives, seeking continuous improvement"

 

The Executive Directors of the Company are measured against a clearly defined set of personal objectives agreed by the Board and monitored by the Renumeration Committee.  The Board keeps under review its composition and the balance of skills and experience of non-executive directors.

8. "Promote a corporate culture that is based on ethical values and behaviours"

As a company that operates in a highly regulated and sensitive environment, the Company ensures that it operates with a vigorous code of conduct and ethics. Tissue Regenix Group's core values are to maintain a sustainable, ethical and responsible company. The Company monitors any existing and potential partners to ensure that they align with Company values.

Over the past 12 months, the Company, led by the Chief Executive Officer, has embarked on a comprehensive employee engagement programme as outlined in relation to Principle 3 above in order to promote values and behaviours which consistently reflect the Company's ethos. In addition to this, the Company is intending to move towards more merit-based remuneration for employees to encourage positive behaviours.

Operating in an industry based upon processing of human and animal derived tissues demands the highest ethical standards and Tissue Regenix Group aspires to maintain the highest ethical standards across all business functions and relations. The Company undertakes regular audit checks to ensure that partners, suppliers and employees comply with the ethical standards and operate to meet our expectations. Please see page 21 of the Annual Report for details of the Company's corporate social responsibility strategy.

9. "Maintain governance structures and processes that are fit for purpose and support good decision-making by the board"

Please see the details of the Board and its committees set out in respect of Principles 5, 6 and 7 above. Details of the main roles of the Audit Committee and Remuneration Committee are set out in the Company's Annual Report and the Company's website.

The Board has considered the merits of establishing a nomination committee, but is of the view that it is in the best interests of the Company that the Board collectively reviews, determines and approves the structure, size and composition of the Board as well as the appointment of any new director, as and when appropriate.

In addition to this, Tissue Regenix Group operates a clear list of matters which are reserved for the Board.

To supplement the Board, Tissue Regenix maintains a team of senior management to inform the Board and keep it abreast of key developments throughout its business. The senior management are detailed on the Company's website and includes for example, Jesus Hernandez who is the Chief Executive Officer of Cellright and Joel Pickering, who is President of the BioSurgery division as well as other relevant senior managers. As well as the main Board, Tissue Regenix Group participates in the board of its joint venture company, GMB-V along with its joint venture partner. Having close ties to the senior management team and joint venture partners in this way allows the Company to ensure that all divisions of the business are kept up to date and facilitates the Company in ensuring that all its divisions are compliant with the Company's codes and practices.

10. "Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders"

Please see responses in respect of Principles 2, 3 and 5 above in relation to shareholder communications and meetings and board communications and meetings. In addition to this, the Company communicates with its shareholders through regulatory announcements and its Annual Report. Reports from both the Remuneration Committee and the Audit Committee are set out in the Annual Report.

In the event that the Company received a significant proportion of votes against a resolution at a general meeting, it would seek to review the rationale for this and consider appropriate actions.

 

The Company maintains copies of all of its reports and accounts since 2010 on its website.

27th September 2018