The QCA 10 Principles of Corporate Governance

The Board of Directors of Argo Blockchain Plc recognizes the importance of sound corporate governance and has decided to apply the Corporate Governance Code published by the Quoted Companies Alliance (the ”QCA Code”). The QCA Code sets out a standard of minimum best practice for small and midsize quoted companies. The QCA’s ten principles of corporate governance are set out below together with reference to the relevant pages of the Group’s 2018 Annual Report.

Principle 1: Establish a strategy and business model which promotes long-term value for shareholders

The Group is a UK based provider of cryptocurrency mining services with its mining facilities located in Canada.  The business focusses on acquiring the most up to date and efficient hardware to support its mining facilities at the most cost-effective prices and utilizes hydro electrical power at the most competitive prices.

See Chairman’s Statement and Strategic Report for further details.

Principle 2: Seek to understand and meet shareholder needs and expectations

The Group seeks to communicate with shareholders to ensure that its financial performance and strategy are clearly understood.  This is achieved through regular updates by RNS to the London Stock Exchange and meetings with various shareholders.  The Group attends investor conferences in the UK and ensures its website provides accurate information and is kept up to date.
See Directors’ Report and Corporate Governance Report.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

Our stakeholder groups include our employees in Canada and our business partners.  Employees are kept up to date as much as possible by way of weekly meetings and have access to the Board at all times.  We aim to recruit and retain our staff by ensuring our pay and conditions are competitive in the market place and offer training where appropriate.  We seek to maintain a good business relationship with our business partners who are well-respected experts in their field.
See Corporate Governance Report.

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

 Controls
The Group has only four directors and four employees and as such maintains internal financial controls commensurate with that small number. The Board is responsible for overall company strategy and ensuring it is implemented and operates close supervision of all purchasing and revenue functions.

Regular financial reporting is performed in Canada and the UK and consolidated results are prepared by the Finance Director and reviewed by the Board and clarification sought where necessary.   Due to the small number of directors and employees, there is much closer supervision of all aspects of the business by the Chairman and President which allows for action to be taken if inefficiencies or irregularities are uncovered.
See Strategic Report.

Principle 5: Maintain the board as a well-functioning, balanced team led by the chair

The Board includes the Executive Chairman, Executive President, Finance Director and Non-Executive Director.  The Board considers that each director has the required level of expertise and experience in his field and regular Board meeting are held to discuss all key matters.
See Directors’ Report and Directors biographies.

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

The Board considers that as a whole it contains individuals who between them have the necessary level of skills and experience in the field in which they operate.  All the directors receive regular updates on the Group’s operational and financial performance and attend frequent Board meeting where key issues are discussed at length. The Board is responsible for the appointment, removal and re-election of directors and when such a decision is required it will take account of the Company’s need for a balance of market, operational and financial expertise. All directors have the ability to take independent professional advice at the company’s expense where they consider it necessary to ensure they fulfill their duties in an appropriate manner.
See Remuneration Report

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

The Board is constantly reviewing the Group’s and its own performance.
See Remuneration Report.

Principle 8: Promote a corporate culture that is based on ethical values and behaviours

The Board considers it acts in a professional manner at all times and imparts that corporate culture throughout the Group.  It also considers that at all times it promotes ethical values and behaviour to its employees.
See the Background to the Team on the website.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision making by the board

As a company with a Standard Listing, the Company is not required to comply with the provisions of the Corporate Governance Code published by the Financial Reporting Council (FRC Corporate Governance Code).  The Company notes that it will not undertake the following steps required by the FRC Corporate Governance Code in that:

  • given the size of the Board and the Company’s current status, certain provisions of the FRC Corporate Governance Code (in particular the provisions relating to the composition of the Board and the division of responsibilities between the Chairman and chief executive and executive compensation), are not being complied with by the Company as the Board considers these provisions to be inapplicable to the Company;

  • the Company will not initially have separate audit and risk, nominations or remuneration committees.  The Board as a whole will instead review audit and risk matters, as well as the Board’s size, structure and composition and the scale and structure of the Directors’ fees, taking into account the interests of Shareholders and the performance of the Company, and will take responsibility for the appointment of auditors and payment of their audit fee, monitor and review the integrity of the Company’s financial statements and take responsibility for any formal announcements on the Company’s financial performance;

  • the FRC Corporate Governance Code recommends that the submission of all directors for re-election at annual intervals.  None of the Directors will be required to be submitted for re-election until the first annual general meeting of the Company;

  • the Board does not comply with the provision of the FRC Corporate Governance Code that at least half of the Board, excluding the Chairman, should comprise non-executive directors determined by the Board to be independent.  In addition, the Company has not appointed a senior independent director.  The Company intends to appoint additional independent non-executive directors in the future so that the Board complies with these provisions.

However, in the interests of observing best practice on corporate governance, the Company intends to comply with the provisions of the Corporate Governance Code published by the Quote Companies Alliance (QCA Corporate Governance Code) insofar as is appropriate having regard to the size and nature of the Company and the size and composition of the Board.

The Company’s Standard Listing means that it is also not required to comply with those provisions of the Listing Rules which only apply to companies on the Premium List. The UK Listing Authority will not have the authority to (and will not) monitor the Company’s compliance with any of the Listing Rules which the Company has indicated that it intends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by the Company so to comply.
See Corporate Governance section in Directors’ Report.

Principle 10: Communicate how the company is governed and is performing by maintaining dialogue with shareholders and other relevant stakeholders

By way of the Annual Report & Accounts, half year Interims, General Meetings, Annual General Meetings and RNS Market updates the Company communicates with its existing and potential shareholders.  In addition, the Company has a comprehensive website www.argomining.co
See Directors’ Report.

Application of Principles

As a company with a Standard Listing, the Company is not required to comply with the provisions of the Corporate Governance Code published by the Financial Reporting Council (FRC Corporate Governance Code).  The Company notes that it will not undertake the following steps required by the FRC Corporate Governance Code in that:

  • given the size of the Board and the Company’s current status, certain provisions of the FRC Corporate Governance Code (in particular the provisions relating to the composition of the Board and the division of responsibilities between the Chairman and chief executive and executive compensation), are not being complied with by the Company as the Board considers these provisions to be inapplicable to the Company;

  • the Company will not initially have separate audit and risk, nominations or remuneration committees.  The Board as a whole will instead review audit and risk matters, as well as the Board’s size, structure and composition and the scale and structure of the Directors’ fees, taking into account the interests of Shareholders and the performance of the Company, and will take responsibility for the appointment of auditors and payment of their audit fee, monitor and review the integrity of the Company’s financial statements and take responsibility for any formal announcements on the Company’s financial performance;

  • the FRC Corporate Governance Code recommends that the submission of all directors for re-election at annual intervals.  None of the Directors will be required to be submitted for re-election until the first annual general meeting of the Company; and

  • the Board does not comply with the provision of the FRC Corporate Governance Code that at least half of the Board, excluding the Chairman, should comprise non-executive directors determined by the Board to be independent.  In addition, the Company has not appointed a senior independent director.  The Company intends to appoint additional independent non-executive directors in the future so that the Board complies with these provisions.

However, in the interests of observing best practice on corporate governance, the Company intends to comply with the provisions of the Corporate Governance Code published by the Quote Companies Alliance (QCA Corporate Governance Code) insofar as is appropriate having regard to the size and nature of the Company and the size and composition of the Board.

The Company’s Standard Listing means that it is also not required to comply with those provisions of the Listing Rules which only apply to companies on the Premium List. The UK Listing Authority will not have the authority to (and will not) monitor the Company’s compliance with any of the Listing Rules which the Company has indicated that it intends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by the Company so to comply. However, the FCA would be able to impose sanctions for non-compliance where the statements in this Prospectus are themselves misleading, false or deceptive.

Argo Blockchain plc is subject to the City Code on Takeovers and Mergers.

Directors

The Board is responsible for the Company’s objectives and business strategy and its overall supervision.  Acquisition, divestment and other strategic decisions will all be considered and determined by the Board.

The Board will provide leadership within a framework of appropriate and effective controls.  The Board will set up, operate and monitor the corporate governance values of the Company, and will have overall responsibility for setting the Company’s strategic aims, defining the business objective, managing the financial and operational resources of the Company and reviewing the performance of the officers and management of the Company’s business.  The Board will take appropriate steps to ensure that the Company complies with Listing Principles 1 and 2 as set out in Chapter 7 of the Listing Rules and (notwithstanding that they only apply to companies with a Premium Listing) the Premium Listing Principles as set out in Chapter 7 of the Listing Rules.

The Company supports the concept of an effective Board leading and controlling the Company. The Board is responsible for approving Company policy and strategy. It meets quarterly and has a schedule of matters specifically reserved to it for decision. Management supply the Board with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company Secretary and independent professionals at the Company’s expense. Training is available for new Directors and other Directors as necessary.

All Directors are subject to re-election every three years and, on appointment, at the first AGM after appointment.

There is no separate nomination committee, given the size of the Board. All Director appointments are approved by the Board as a whole.

Communications with shareholders

Communications with shareholders are given a high priority. In addition to the publication of an annual report and an interim report, there will be regular dialogue with shareholders and analysts. The Annual General Meeting is viewed as a forum for communicating with shareholders, particularly private investors. Shareholders may question the Chairman and other members of the Board at the Annual General Meeting. All published information for shareholders is also available on the Company website, including annual and interim reports, circulars, announcements and significant shareholdings.

On 27 February 2018 the Company entered into a relationship agreement with Durban Holdings Ltd. pursuant to which the Company and Durban agreed certain matters, including but not limited to undertakings from Durban to ensure that the Company will be capable at all times of carrying on its business independently of the influence from Durban, and granting Durban the right to nominate a representative to the board of the Company for so long as it owns at least 15 per cent. of the issued share capital of the Company. The initial representative of Durban Holdings Ltd. on the board of the Company is Mike Edwards. Durban Holdings Ltd. is a company which is jointly owned by Jonathan Bixby and Mike Edwards, directors of the Company.

Accountability and Audit

The Board presents a balanced and understandable assessment of the company’s position and prospects in all interim and price sensitive reports to regulators as well as in the information required to be presented by statutory requirements. There is no separate audit committee, given the size of the Board. All matters normally considered by an Audit & Risk Committee are considered by the Board as a whole.

Internal control

The Directors acknowledge they are responsible for the Company’s systems of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the company failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss.