FORESIGHT 4 VCT PLC - Foresight Group

7. CORPORATE GOVERNANCE
7.1 Board of Directors
The Company has a Board of three Non-Executive Directors, all of whom (other than Peter Dicks
who is considered non-independent under the listing rules by virtue of being a director of several
Foresight VCTs which are all managed by Foresight Group) are considered to be independent.
Peter Dicks is also a director of Foresight VCT plc, Foresight 2 VCT plc, Foresight 3 VCT plc,
Foresight 5 and Foresight Clearwater. The Board believes, having regard to the specialist nature of
VCTs and the fact that Foresight advises a number of VCTs, that it is in the best interests of
shareholders if, on each of the boards of the VCTs advised by Foresight, there are certain directors
who are common. That is to say, a common director is able to assess how Foresight performs in
respect of one fund with the valuable background knowledge of how well or badly Foresight is
performing in relation to other funds for which he also has responsibility as a director. Where
conflicts of interest arise between the different funds then the common director would seek to act
fairly and equitably between different groups of shareholders. Where this is difficult or others might
perceive that it was so, then decisions would be taken by the Directors who are not common
directors. The most likely source of potential conflicts would normally be the allocation of
investment opportunities but as these are allocated by Foresight pro rata to the cash raised by
each fund, subject to the availability of funds, in practice such conflicts do not arise. Additionally,
‘specialist funds’ may be allocated investments specific to their investment policy in priority to more
generalist funds.
The Board is responsible to shareholders for the proper management of the Company and meets
at least quarterly and on an ad hoc basis as required. It has formally adopted a schedule of matters
that are required to be brought to it for decision, thus ensuring that it maintains full and effective
control over appropriate strategic, financial, operational and compliance issues. A management
agreement between the Company and Foresight sets out the matters over which Foresight has
authority, including monitoring and managing the existing investment portfolio and the limits above
which Board approval must be sought. All other matters are reserved for the approval of the Board.
Foresight, in the absence of explicit instruction from the Board, is empowered to exercise discretion
in the use of the Company’s voting rights.
Individual Directors may, at the expense of the Company, seek independent professional advice on
any matter that concerns them in the furtherance of their duties. In view of its non-executive nature
and the requirements of the Articles of Association that all Directors retire by rotation at the annual
general meeting, the Board considers that it is not appropriate for the Directors to be appointed for
a specific term as recommended by the UK Corporate Governance Code (formerly the Combined
Code) (‘‘the Code’’) issued by the Financial Reporting Council (‘‘FRC’’) in May 2010 for all
companies who are now operating in financial years on or after 29 June 2010. However, the Board
has agreed that each Director will retire and, if appropriate, may seek re-election after three years’
service and annually after serving on the Board for more than nine years. Non-independent
Directors are required to retire annually. Full details of duties and obligations are provided at the
time of appointment and are supplemented by further details as requirements change, although
there is no formal induction programme for Directors as recommended by the Code. The Board has
access to a company secretary who also attends all Board meetings. A representative of Foresight
attends all formal Board meetings although the Directors may meet without the manager being
present. Informal meetings with management are also held between Board meetings as required.
The company secretary provides full information on the Company’s assets, liabilities and other
relevant information to the Board in advance of each Board meeting.
In the light of the responsibilities retained by the Board and its committees and of the
responsibilities delegated to Foresight, SGH Martineau LLP and the company secretary, the
Company has not appointed a chief executive officer, deputy chairman or a senior independent
non-executive director as recommended by the Code. The provisions of the Code which relate to
the division of responsibilities between a chairman and a chief executive officer are, accordingly,
not applicable to the Company.
7.2 Committees and Directors’ performance evaluation
The Board has adopted formal terms of reference, for three standing committees, namely the Audit
Committee, Remuneration Committee and Nomination Committee, each of which makes
recommendations to the Board in specific areas.
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