GLOSSARY

Significant shareholder definition

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What does Significant shareholder mean?

A term defined in the AIM Rules as any person with a holding of 3% or more in any class of AIM security (excluding treasury shares). This term is relevant in: • Rule 2 of the AIM Rules under which an applicant to AIM must disclose significant shareholders in its Schedule One information • Rule 17 under which an AIM company must notify any relevant changes to significant shareholders, and • Rule 26 under which an AIM company’s website must disclose significant shareholders.

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2017–2019 Corporate governance reforms [Archived]

2017–2019 Corporate governance reforms [Archived] This archived Practice Note provided an overview of various corporate governance reforms that were announced and/or implemented between 2017–2019, including the Companies (Miscellaneous Reporting) Regulations 2018, the 2018 UK Corporate Governance Code, the Wates Corporate Governance Principles, the 2018 revisions to the AIM Rules and the QCA Code, the BEIS consultation on insolvency and corporate governance and the Kingman review. It has not been updated since 2019. Background In November 2016 the government, acting through the Department for Business, Energy and Industrial Strategy (BEIS), published a green paper on corporate governance reform (Green Paper). The Green Paper sought views on the following areas where the government was considering updating the UK’s corporate governance framework: • executive pay • strengthening the voice of employees, customers and other stakeholders • extending some of the features of the corporate governance regime to large private companies The government invited comments on the Green Paper by 17 February 2017. Following the consultation, in August 2017 the government published its response to the Green Paper in which it announced a package of reforms focused on these three areas. Executive pay The government felt that a small minority of businesses continued to disregard shareholders’ views on executive pay. There were concerns that remuneration committees were not taking sufficient account of wider workforce pay and conditions in setting executive remuneration and that executive pay had become unnecessarily complex

2018 UK Corporate Governance Code—Section 1—Leadership and purpose

2018 governance-code'>UK Corporate Governance Code—Section 1—Leadership and purpose This Resource Note outlines the main provisions of Section 1 (Leadership and Purpose) of the UK Corporate Governance Code (UKCG Code) and highlights relevant third party materials, guidance, commentary and analysis, as well as resources, to give practical guidance on its application. Materials covered in this Resource Note include: • the Financial Reporting Council (FRC)'s 2018 Guidance on Board Effectiveness • guidance issued by the Chartered Governance Institute (previously known as ICSA: The Governance Institute) (CGI) • the 2022 United Kingdom and Ireland Proxy Voting Guidelines published by Institutional Shareholder Services (ISS) • the Stewardship and Voting Guidelines 2022 published by the Pensions and Lifetime Savings Association (PLSA) • the Shareholder Voting Guidelines, published by Pensions & Investment Research Consultants Ltd (PIRC), available for purchase from PIRC's website • the EY/IA joint report on Board effectiveness—continuing the journey • resources in the Corporate practice area Mini-index Section 1—Setting the scene Principle A Principle B Principle C Principle D Principle E Provision 1 Provision 2 Provision 3 Provision 4 Provision 5 Provision 6 Provision 7 Provision 8 Notes Section 1—Setting the scene In a nutshell... Section 1 deals with the function of the board and its role in establishing the company’s purpose, values and strategy. It also encourages the board to consider the culture of the company and wider stakeholder interests and to ensure that workforce policies and practices are consistent with the company’s values. Versions of the UKCG Code In

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Memorandum on the responsibilities and obligations of a director of an AIM company

Memorandum on the responsibilities and obligations of a director of an AIM company 1 Introduction 1.1 This memorandum has been prepared for the directors and proposed directors (the Directors) of the Company to provide a general introduction to the principal responsibilities and obligations of a director of a company whose shares are admitted, or will be admitted, to AIM, a market operated by London Stock Exchange plc (LSE). 1.2 Once a company’s securities are admitted to trading on AIM, a company and its directors are subject to an increased layer of regulation. This includes requirements set out in the AIM Rules for Companies published by the LSE (AIM Rules), the Disclosure Guidance and Transparency Rules sourcebook (DTRs), the Prospectus Rules and the Market Abuse Regulation. 1.3 As a Director, you will be responsible (individually and collectively with your fellow Directors) for the Company's compliance with these provisions. The LSE has the power to fine or publicly censure an AIM company in the case of a breach of the AIM Rules and can suspend or cancel the admission of the Company’s securities to AIM. 1.4 It is a requirement of the AIM Rules (a copy of which is contained at Appendix 1) that an AIM company at all times retains a nominated adviser (Nomad) and must seek advice from its Nomad regarding compliance with the AIM Rules. The Nomad is responsible

Briefing for directors—general duties under the Companies Act 2006

Briefing for directors—general duties under the Companies Act 2006 Every director of a company owes a number of duties to the company they are appointed to. Many of those duties have been developed by the courts over hundreds of years. The main directors' duties are set out in statute in sections 171 to 177 of the Companies Act 2006 (CA 2006). This briefing is intended to give you, the directors [and the company secretary ] of [insert company name] [Limited OR PLC] (the Company) an overview of the general duties set out in the CA 2006 and to provide some practical guidance to help you comply with those duties. The failure by a director to comply with any of the general duties has potentially serious consequences for that director. This briefing is not intended to give legal advice, which should be sought on any specific issues that arise in relation to directors' duties. Who owes the general duties? Every director of a company owes each of the general duties to that company. Compliance with each of the general duties is the personal responsibility of each director. Under the CA 2006, any person occupying the position of director, whether or not they are actually named director and or have been validly appointed, is a director of the company and will be subject to the general duties. In addition, shadow directors will be subject to

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What different types of director are there?

What different types of director are there? There are a number of different types of director. The definition of director in the Companies Act 2006 (CA 2006) is not exhaustive; CA 2006, s 250 broadly defines a director as 'any person occupying the position of director, by whatever name called'. Accordingly, in order to determine whether a person is a director, it may be necessary to examine the function of the person, the company's articles of association (and any other constitutional documents) and the terms of any contract between the person and the company. Within the definition of director, case law has established that there are two categories of director: de jure and de facto directors. A de jure director is a person that has been validly appointed as a director in accordance with the company's articles of association and CA 2006, whereas, a de facto director is a person that has not been formally appointed as a director, because the procedural or formal requirements set out in the company’s articles have not been followed or satisfied, but the person undertakes the role of director. In determining whether someone is a de facto director, it is important to consider whether that person actually plays a role that only a director could play. It will not be enough to merely show that the person is carrying out a management role; the

Could you please direct me to 'good leaver' and 'bad leaver' provisions for use in a private equity or venture capital context?

Could you please direct me to 'good leaver' and 'bad leaver' provisions for use in a private equity or venture capital context? Leaver provisions are often seen in the context of companies which have private equity or venture capital investment. These are provisions where by way of example, a significant shareholder/investor in a company will use the grant of shares to company employees/management to incentivise them, ie the purpose of these provisions is to deprive these employees/management members of the shares allocated to them if they 'leave' the company. Here, the concept of such shareholders 'leaving' the company would encompass not only typical leaving events such as their dismissal and resignation from the company, but also deemed events such as death and bankruptcy. Leaver provisions would typically be contained in a company’s articles of association. In broad terms leaver provisions might typically provide that if an employee or management member 'leaves' the company, the significant shareholder/investor could then trigger a process for the compulsory transfer of company shares held by the 'leaver'. The transfer of these shares could be to the company that issued them, other existing company shareholders or another nominated party. The most controversial issues for leaver provisions are: • how the sale price is determined, and • how many of the particular employee/manager’s shares should be subject to the leaver provisions The starting point for determining sale price

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Share Incentives weekly highlights—17 February 2022

This week's edition of Share Incentives weekly highlights include (1) the Money Laundering and Terrorist Financing (Amendment) Regulations 2022 and (2) significant shareholder votes against executive pay proposals at EasyJet and Liontrust at their AGMs.

Navigating FCPA risks of minority-owned joint ventures

Law360, Expert analysis: The US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) will likely continue to focus on third-party risks under the Foreign Corrupt Practices Act (FCPA), so companies with minority-owned joint ventures should take several steps to mitigate related compliance challenges, say Ben Kimberley at The Clorox Company and Addison Thompson at Covington.

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