Corporate Governance

In order to ensure the Board makes the right decisions for the Company and its stakeholders, it is essential that a good corporate governance structure is in place

Governance framework

The Board keeps all aspects of corporate governance under review by following an established governance framework. This framework continues to be refined as the Group expands internationally and grows financially.

The Board has adopted the governance code for its framework as published by the Quoted Company Alliance (the “QCA Code”).  We strive to follow its guidance and principles by embedding them into how we develop our strategy, run our business model, manage risk, run our Board and how we engage with our various stakeholders.  The table below directs you to some of the relevant sections covered elsewhere in this annual report that directly apply to the 10 QCA code principles:

1. The Group does not have a formal system of training for the Directors for their on-going roles, instead they are expected to keep up-to-date personally with matters relevant to their own positions through memberships of relevant professional societies, regular briefings and webinars from lawyers and accountants as well as other professional advisors and industry specialists. 
2. The Board has not established a Nominations Committee at this time, given the current early stage and size of the Group’s business and its Board. Accordingly, all matters relating to the appointment of directors are reserved for the full Board.
3. The Company Secretary, William Good, is also the Chief Financial Officer of the Group.  Given the current size of the Group’s business and its Board, separation of these two roles is not considered economically necessary at this time.

Overview of the Board

The Board of PCI PAL Plc is made up of an independent Non-Executive Chair, two independent Non-Executive Directors, plus the CEO and the CFO, who are employed on a full-time basis. Details of the Board’s experience are shown on the Board of Directors pages, which describe the range of skills and insight that they bring to the Board. It is important that the Non-Executive Directors bring a wide range of skills to the Board to provide robust challenges to the Executive Directors and to ensure that shareholders’ interests are represented.

The Board is collectively responsible for the long-term success of the Group.   The CEO is responsible for setting the strategic direction of the Group and these plans are periodically presented by the executives to the Board.  The Non-Executives have suitable industry and public markets experience to provide input, guidance and advice to the Board as well as constructively challenge the Executives.  The CFO, as the Company Secretary, provides guidance on the protocols, legal processes and matters reserved for the Board.  The goal is to achieve a successful and sustainable business.  The Board has a specific list of matters and activities that can only be authorised by the full Board and has delegated other matters to the CEO. These matters are published on the Company website within the corporate governance section of the investor relation pages.

To assist the CEO, and the wider Board, the Group has established an Advisory Committee (the “PAC”), consisting of three members. The PAC brings additional deep international expertise in the areas of payments, product management and customer success. In addition to providing the CEO with advice in these areas, the PAC also provides the Board as a whole an additional source of expert knowledge to help it assess the ongoing risks and opportunities faced by the Group, thereby helping the Board fulfil its duties.

Division of roles and responsibilities

The Chair is responsible for the leadership of the Board and ensuring the effectiveness of all aspects of its role. Each scheduled meeting includes an agenda that allows each Executive Director to report to the Board on performance of the business including risk analysis and monitoring. Non-scheduled meetings are normally called to discuss single points of matter and, as a general trend, the number of meetings are increasing, each with shorter agendas, as the Board evolves to a hybrid approach for its meetings.

The Chair of the Board’s role and the Chief Executives role have been divided. The Chair sets the agenda for each meeting and ensures compliance with Board procedures and sets the highest standards of integrity, probity, and corporate governance throughout the Group. The Chief Executive is responsible for running the Group’s business by developing and proposing the Group’s strategy and overall commercial objectives. The Chief Executive also ensures that the Chair is notified of forthcoming matters that may affect the running of the Group that the Chair may not be aware of.

Independent non-executive directors

The three Non-Executive Directors are deemed to be independent. In reaching this conclusion, the Board has explicitly considered the prior consulting relationship of Simon Wilson with the Company, when he provided consulting advice to the Board and senior management in its market entry to, and expansion in, North America during the period 2017 to 2019.  As part of his compensation for those services, Mr Wilson was granted 250,000 options, the details of which are included in the Directors’ Report.

The Non-Executive Directors are required to be available to attend Board meetings and to deal with both regular and ad-hoc matters and they are expected to commit sufficient time to fully discharge their responsibilities. All Non-Executive Directors have confirmed and demonstrated that they have adequate time available to meet the requirements of the role and that they have no conflicts.

Board meetings

The Board typically meets formally four to six times per year to review and discuss the operating and financial performance of the company relative to its annual operating plan and budget, assess any matters specifically reserved for the board, and to review progress towards its longer-term strategic goals. This year more meetings were held to allow discussion on the Patent case and also relating to the insolvency of Silicon Valley Bank. The Board also authorises and holds sub-committee meetings for specific delegated matters. All such meetings and attendance thereof, as well as Audit and Remuneration Committee meetings, are separately identified below:

Directors’ meeting attendance 2022/23

* = attended by invitation of the Chair of the Committee

** = during the year James Barham and William Good held short notice Board meetings as an authorised committee of the Board

Directors can formally attend meetings either: in person, or remotely by conference call or by video conferencing. Since the advent of the coronavirus pandemic, the majority of meetings have been held remotely by video conference.  A hybrid approach to board meetings using a mix of face to face and/or video conference was adopted in the financial year and is expected to continue in this mixed format going forward.   Wherever possible all Directors attend in the same manner, e.g. all in person or all by video to ensure optimal interaction and discussion.

Committees

The Board has established two committees to assist in its considerations and to make recommendations to the Board.  These committees are the Audit Committee and the Remuneration Committee, the terms of reference for each are published in full on the company website under the Corporate Governance section.  A detailed report of their work can be found in the relevant reviews below.

Articles of Association

Under the articles of association, the Board has the authority to approve any conflicts or potential conflicts of interest that are declared by individual Directors; conditions may be attached to such approvals and Directors will generally not be entitled to participate in discussions or vote on matters in which they have or may have a conflict of interest.

All Directors are subject to election by the shareholders at the first Annual General Meeting following their appointment, and to re-election thereafter every three years.

The Group maintains appropriate insurance cover in respect of legal action against the Directors.

Experience, skills and capabilities

The Directors have a broad range of experiences, as shown in the Board of Directors section, allowing the Board to assess and monitor a full spectrum of risks and requirements of the Group. Where required the Directors will take further advice from professional advisors such as lawyers, accountants, functional and industry experts, remuneration and tax specialists. Each Director has the full authority of the Board to take any advice they feel necessary to undertake their individual roles.

The Board has authorised the creation of an advisory committee (the “PAC”). The charter of the advisory committee and role of each member is to provide additional breadth of market, industry and functional perspectives to the CEO and the Board of Directors as a whole as the Company navigates its future. The Board believes that being able to engage over time with excellent industry expertise through the PAC, will enhance the Board’s ability to fulfil its responsibilities in the areas of strategy and risk management and to more fully address the dynamics of PCI Pal’s fast-developing global opportunity and marketplace.

Evaluation of Board performance

Board members are appointed with full consideration of the knowledge and skills that they will contribute to the Board and are aligned to both the current and anticipated needs of the Company at that time. The Chair ensures that the development of the Board is addressed by reviewing the Board composition annually in consultation with the other Board members, as well as overseeing an evaluation of its performance annually. In FY23 this evaluation was undertaken by an external specialist organisation via an interactive online questionnaire and the feedback was delivered by the Chair followed by a full and open discussion within the Board members. No specific recommendations were made. The Board, through its Remuneration Committee, ensures that appropriate annual performance targets are set for Executive Board members.

The Chair routinely reviews the management and performance of the Board Committees and will address any performance concerns directly with the Chair of, and/or participants of, that Committee.

The Board is satisfied that it has an appropriate balance between independence and knowledge of the business to allow it to discharge its duties and responsibilities effectively but will continue to review the composition of the Board regularly.

The Group does not have a formal system of training for the Directors for their on-going roles, instead they are expected to keep up-to-date personally with matters relevant to their own positions through other relevant professional roles, memberships of relevant professional societies, regular briefings and webinars from lawyers and accountants as well as other professional advisors and industry specialists. In addition, the Board receives regular presentations by senior management and/or outside advisors on operational and strategic matters with high relevance to the Company. The goal of these presentations and associated discussions is to enhance and build a deeper knowledge, and understanding of, the business in particular for the non-executive directors. The Advisory Committee provides a rich source of additional information and knowledge from which the Board intends to continue to build the Board’s knowledge of the Group’s business and its risks and opportunities into the future.

The Board recognise it is healthy for membership of the Board to be periodically refreshed and as such normally requires non-executive directors to retire after serving for a nine-year term.

Promotion of corporate culture

The corporate culture is at the heart of the Group – Security is Job Zero but it is Team First.

We have an established corporate and social responsibility policy as detailed in the Corporate and Social Responsibilities report.

Every new member of staff takes part in an induction programme which includes a full briefing on the company, the company handbook and an overview of departments. There is also an opportunity to meet key personnel across the business and we take this opportunity to lay out the Company’s requirements on the moral, ethical and behavioural standards expected by the Company and its employees. Every employee is given the opportunity to undertake further training at the Company’s expense, so as to align individual development with the long-term growth and success of the business.

Performance of individuals and teams is monitored on a monthly basis, and we also provide annual Personal Development Reviews to best align employees and managers on performance, career goals and associated development requirements.

The Group has a “no fault” policy to errors thereby actively encouraging employees to highlight any errors that have occurred and to allow the business to establish a solution to the error and to put in place any changes in systems and procedures designed to stop the error reoccurring.

The majority of new employee positions are also advertised to all employees within the Group and where possible we will look for opportunities to prepare and promote existing employees to more senior positions, before offering a position to a new externally hired person. In FY23 we continued to evolve our departmental structure in the face of the continuing expansion of the Group. The CEO has established a senior leadership team to assist in the delivery of the future strategy of the Group.

Every quarter the CEO holds an “all hands” briefing where he will outline the performance of the Group and the successes and challenges it has faced.  The Company invests in various software systems to support a remote-first working policy allowing all employees to have the simple ability to interact with colleagues or managers. Managers can use technology to performance monitor and engage with their people.

Maintain governance structures

The Directors review a management reporting pack each month focused upon financial and operating metrics and performance against budgets and other targets. These are discussed with the Executive Directors. More detailed Board reports are prepared by management on a quarterly basis, which cover both financial statements as well as operational and strategic topics considered important and timely to the business. As noted above, the board also now receives periodic deep dive presentations on the operations of the business from members of the Senior Leadership team.

Taken together, these reports, evolving organisational structure, and regular Board meetings enable the Directors to fulfil their duties of stewardship.

Simon Wilson
Non Executive Chair
8 November 2023

BOARD OF DIRECTORS

The Directors of the company have been delegated clear, individual responsibilities, in line with their skill sets and experience. Each director reports regularly to the full board on the performance of the company in relation to their areas of responsibility.

ATTENDANCE

Full details of the directors attendance at meetings are published in the annual report and accounts for the year.

DIVERSITY AND GENDER BALANCE

The Board is confident both that the opportunities in the Company are not excluded or limited by any diversity issues (including gender) and that the Board nevertheless contains the necessary mix of experience, skills and other personal qualities and capabilities necessary to deliver its strategy.

MATTERS RESERVED FOR THE BOARD OF DIRECTORS

The Board has delegated the day to day management of PCI-PAL PLC to the Chief Executive and the executive management team. This document sets out the list of matters which are to be decided by the Board of directors as a whole.

Matters which the Board considers suitable for delegation to its committees are contained in the terms of reference of its committees.
In addition, the Board will receive reports and recommendations from time to time on any matters which are significant to the company or which the Board requests due to the significance of such matters to the company or group.

The Board reserves to itself:

1. Strategy and Management
1.1. Responsibility for the overall leadership of the company.
1.2. Approval of the group’s strategic aims and objectives, vision and mission and values.
1.3. Approval of the company’s business plan and budgets and any material changes to them.
1.4. Oversight of the group’s operations and management.
1.5. Review of performance in the light of the group’s strategic aims, objectives, business plans and budgets and ensuring that any necessary corrective action is taken.
1.6. Extension of the group’s activities into new business or geographic areas
1.7. Any decision to cease to operate all or any material part of the group’s business

2. Structure and Capital
2.1. Major changes to the group’s corporate structure including, but not limited to, the establishment of affiliates and subsidiaries.
2.2. Changes to the group’s management structure.

3. Financial Reporting
3.1. Approval of the Annual Report and Accounts, any narrative reporting contained in the Annual Report and any other formal documents that are made publicly available and which contain financial statements.

4. Risk Management and Internal Controls
4.1. Responsible for a sound system of internal control and risk management and oversight and review of risk management and internal control.

5. Approvals
5.1. Approval of major capital projects, investments or contracts in excess of the amounts delegated under the Delegated Signing Authority Policy approved by the Board from time to time.
5.2. Approval of any other contracts of the company (or any subsidiary) not covered by 5.1 that is not in the ordinary course of business, for example loans and repayments outside previously agreed payment arrangements.
5.3. Approval of giving notice of the suspension or termination of any material arrangements, contracts or transactions.
5.4. Commencement, defence or settlement of claims and/or legal proceedings being otherwise material to the interests of the group
5.5. Approval of any shareholder resolution required or requested by a subsidiary of the company.

6. Communication
6.1. Ensuring dialogue with stakeholders occurs based on the mutual understanding of objectives.

7. Board Membership and other Appointments
7.1. Appointments and removals: Board membership including Senior Independent Director, membership and chairmanship of Board committees and appointment of the Chief Executive.
7.2. The appointment and removal of the Chairman
7.3. Ensuring that adequate succession planning is in place for the Board, the Chief Executive and the executive management team.
7.4. Reviewing the Chief Executive’s appointments to the executive management team.
7.5. Approving the suspension or termination of service of the Chief Executive or any member of the executive management team as an employee of the company, subject to the law and their service contract.
7.6. Appointment or removal of the company secretary.
7.7. Appointment, reappointment or removal of the external auditor following the recommendation of the Audit Committee.
7.8. Appointments to the boards of subsidiaries.

8. Remuneration
8.1. Determining the remuneration policy and remuneration for the Chief Executive and the executive management team.
8.2. Determining the remuneration of the non-executive directors

9. Delegation of Authority
9.1. Approval of the division of responsibilities between the Chairman and the Chief Executive.
9.2. Approval of the delegated levels of authority, including the Chief Executive’s authority limits.
9.3. Approving the terms of reference of Board committees
9.4. The Board may instruct any Committee to undertake a detailed investigation of any matter which the Board considers significant to the company or group.

10. Corporate Governance Matters
10.1. Determining the independence of non-executive directors.
10.2. Reviewing the group’s overall corporate governance arrangements.
10.3. Receiving reports on the views of the company’s stakeholders to ensure they are communicated to the Board as a whole.

The Group does not have a formal system of training for the Directors for their on-going roles, instead they are expected to keep up-to-date personally with matters relevant to their own positions through memberships of relevant professional societies; regular briefings from lawyers and accountants as well as other professional advisers.

In light of the Company’s recent rapid growth, substantive change in its business and operating model, and changes in its executive leadership and board composition, the Board conducted its first formal evaluation of effectiveness during FY 20. Simon Wilson, the newly appointed director and Chairman conducted the evaluation using a mixed methodology of an anonymous survey tool, direct one-on-one conversations, and frank and open group discussion among all board directors together. The exercise was designed to evaluate the effectiveness of the operation of the board as a whole; the board’s individual committees; as well as the contributions of each individual director. The objective of these assessments is to enable the board, its committees and its directors to set out down a path of continuous and incremental improvement of our governance at all levels. As part of the goal for continuous improvement, the evaluation of board effectiveness will be on-going periodic assessment process.

The broad conclusions of this initial evaluation were that there were a number of areas where improvements in effectiveness could be made, and an acknowledgment that the work of the board naturally expands over time in the face of change, growth and complexity of the business. For example, in terms of the organisation of board meetings, focus and balance of agenda topics, increased attention to forward looking matters, deepening of non-executive directors’ knowledge of operational aspects of the new Cloud business, and expansion of committee work.

Examples of action already taken by the Board as a result of this evaluation process include; deep dive subject matter presentations by a variety of senior management, regularly scheduled closed board sessions where the non-executive directors can discuss matters openly without management present, more extensive and scheduled committee activities, use of outside advisors, rationalization of information provided by management to the Board, and active and timely assessment of the effectiveness of each individual board and committee meeting.

SUCCESSION PLANNING

The Board does not carry out a formal assessment of succession planning for its members, but does so informally from time to time.

SECTION 172(1) STATEMENT – BOARD ENGAGEMENT WITH OUR STAKEHOLDERS

Section 172 of the Companies Act 2006 requires a Director of a Company to act in the way he or she considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. In doing this, section 172 requires a Director to have regard, among other matters, to:

• the likely consequences of any decision in the long-term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships with suppliers, customer and others;
• the impact of the Company’s operations on the community and the environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct; and
• the need to act fairly with members of the Company.

The Directors give careful consideration to the factors set out above in discharging their duties under section 172. The stakeholders we consider in this regard are the people who work for us, buy from us, supply to us, own us, regulate us, and live in the societies we serve and the world we all inhabit.

Interaction with the Board

The Board receives updates from the Executive Management on various metrics as well as feedback and survey results in relation to employees and customers. The Board also periodically receives updates from other members of the management team on issues concerning customers, the environment, communities, suppliers, employees, regulators, governments, and investors, which it takes into account in its decision-making process under section 172. In addition to this, the Board has open authority to understand the interests and views of the Group’s stakeholders by engaging with them directly as appropriate.

Our stakeholders

As our organisation grows in size and scope across an expanding geography, the Board have recognised that it is important to have professional and clear communication channels in place with our key stakeholders.

Reputation

It is the Group’s policy to manage and operate worldwide business activities in conformity with applicable laws and regulations as well as with the highest ethical standards. Both the Group’s Board of Directors and Executive Management are committed to full compliance with applicable law and regulations in all jurisdictions in which we operate, and to maintain the Company’s reputation for integrity and fairness in business dealings with third parties.  The Group is committed to maintain its PCI DSS Level 1 clearance and ISO27001 registration.

Further information on how the Board operates and discharges its duties can be found in the Corporate Governance report, the Environmental Social and Governance Report and the Statement of Corporate and Social Responsibilities above.

Key Board matters discussed in financial year

In September 2021 a claim for breach of patent was made by one of our competitors, Semafone Limited (now renamed Sycurio Limited), in the US and UK courts. The Board strongly refute the accusations being made. The executive directors have been instructed to defend the claim and to provide regular verbal updates to the non-executive directors on the progress being made and the strength of the defence. In the year to 30^th June 2023 our defence of the claims being made in the UK were finalised resulting in a UK Court hearing in June 2023.  In Sept 2023 the Court issued its judgement and completely dismissed the claims being made against the Company. In the US the defence process is ongoing. The total costs of the defence has been estimated at up to a total of £3.7 million, assuming the case is heard in both the UK and US courts, of which £2.8 million has been received to date in legal advice. The claims made have not had a material effect on the running of the business to date.

The Strategic Report for the Group was reviewed and approved by the Board of Directors on 8 November 2023.

Signed by Order of the Board

James Barham
Chief Executive Officer
8 November 2023

GOVERNANCE COMMITTEES

GOVERNANCE COMMITTEES

The Board of directors have established the following committees:

• An Audit Committee
• A Remuneration committee

The Board has not established a nominations committee responsible for overseeing the recruitment of Board directors and succession planning as they believe the Company is too small to warrant such a requirement.

Audit Committee

The Chairman of the Committee is Carolyn Rand

The terms of reference of the audit committee can be downloaded here.

Remuneration Committee

The Chair of the Committee is Jason Starr.

The terms of reference of the remuneration committee can be downloaded here.

The committee is responsible for setting the terms and conditions of employment for the executive directors and meet on two occasions during the year.

The current policy is to set remuneration in accordance with market conditions in order to attract, retain and motivate the executive board.

The committee reviews Group performance and arising from those reviews may determine performance related bonuses.

No director is involved in deciding his or her own remuneration level or performance related bonuses.

The fees for non-executive directors are set at smaller turnover AIM quoted market rates to attract individuals with the necessary experience and ability to make a substantial contribution to the Group’s affairs and its continued development.