Introduction from the Chair
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The Board is committed to providing leadership and strategic direction of the highest standard of corporate governance and accountability to shareholders.
Caroline Foulger Independent Chair
Dear Shareholder
On behalf of the Directors, I am pleased to report on the performance of the Company for the year ended on 31 December 2023, as well as to provide an overview of the Company’s corporate governance during this period.
In this section, we report on the Company’s compliance with the AIC Code of Corporate Governance (the ‘AIC Code’) and sets out how we, the Board, have operated during the past year. The AIC Code sets out principles and provisions regarding matters including stakeholder engagement and the culture of the Company, against which we have reported in the Stakeholder reporting section.
We, the Board of Directors, meet regularly at our offices in Bermuda and are committed to providing leadership and strategic direction of the highest standard of corporate governance and accountability to shareholders. Through strong governance and active ongoing engagement with our key stakeholders, we aim to continue to deliver long-term sustainable value for the Company’s shareholders.
Director independence
Stewart Porter retired from his role as Independent Non-Executive Director in November 2023. In accordance with the FCA Listing Rules and considering the AIC Code, which the Board has chosen to voluntarily comply with, the Board has reviewed the status of its individual Directors and the Board as a whole and has determined all Directors continue to be considered independent except for Peter Dubens and his alternate, David Till. During the period, discussions were held with a potential independent non-executive director candidate for the Board in 2023. Although these discussions did not come to fruition, the Board is committed to revisiting this process in 2024.
Independence is determined by ensuring that, apart from receiving their fees for acting as Directors or owning shares, Non-Executive Directors do not have any other material relationships with, nor derive additional remuneration from or as a result of transactions with, the Company, its management or its partners, which in the judgement of the Board may affect, or could appear to affect, the independence of their judgement.
The Directors serve as directors within businesses outside of the Company and Oakley. These appointments, which are detailed in the Board of Directors section, are subject to regular review to ensure any conflicts of interest are handled appropriately. Having due regard to their obligations to the Company, the Directors have concluded that the Board continues to have an appropriate balance of skills and experience, independence and knowledge of the Company to enable it to provide effective strategic leadership and sound governance.
It is noted that Caroline Foulger and Fiona Beck each hold overlapping external directorships for another publicly listed entity, Ocean Wilsons Holdings Limited. Having considered the activities of Ocean Wilsons Holdings Limited, the Board has assessed these overlapping external directorship, and concluded that neither these directorships nor any other external directorships held by the Directors, present a conflict or otherwise create an issue for the Company or its shareholders.
Economic substance
To ensure proper delivery of the economic substance declaration, the Board commissioned a tax policy to provide guidance on economic substances matters and guidance on Board meeting attendance when travelling outside of Bermuda.
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Through strong governance and active ongoing engagement with our stakeholders, we aim to continue to deliver long-term sustainable value for the Company’s shareholders.
Caroline Foulger Independent Chair
Managing conflicts of interest
Conflicts of interest is a standing agenda item at each of the Company’s Board and committee meetings, requiring Directors to confirm any existing conflicts of interest and disclose any new potential conflicts as may arise. All conflicts are maintained within the Company’s conflicts of interest register. Conflicted Directors do not take part in the relevant discussion or decision and are not counted in any relevant voting.
In particular, the independent members of the Board are responsible for making decisions about investments into Oakley Funds, selecting and engaging service providers, monitoring financial performance, ensuring an adequate system of internal controls, setting and monitoring the Company’s risk appetite, and ensuring that responsibilities to shareholders are understood and met.
The Company voluntarily applies the FCA Listing Rules where appropriate. Listing Rule 9.8.4C requires the Company to include certain information in a single identifiable section of this Annual Report or a cross-reference table indicating where this information is set out. The Directors confirm that there are no disclosures to be made in this regard, save that:
(i) The Remuneration Committee determined that Peter Dubens is not entitled to a Directors’ fee; and
(ii) the Company has in place an Administration Agreement and an Investment Advisory and Operational Services Agreement with Oakley Capital Limited, which is majority owned by Peter Dubens, a Director of the Company.
Each Director’s shareholding in the Company is detailed as part of the Remuneration report and is considered for fair dealing purposes as a declared interest when a relevant event, such as a share buy-back, is under consideration.
Directors’ terms of appointment
The terms and conditions of appointment for Non-Executive Directors are outlined in their letters of appointment and are available for inspection at the Company’s registered office during normal business hours.
In accordance with the Company’s bye-laws and best practice, Directors wishing to continue as Directors put themselves forward for annual re-election at every AGM.
The Board’s process for the appointment of new Directors and proposed reappointment of existing Directors is conducted in a transparent, engaged and open manner.
The Nomination Committee oversees the nomination of Board members, as outlined in the committee’s report.
After five years of service as an Independent Director, Stewart Porter retired from the Board following the AGM held in November 2023. Recognising the value of refreshing its membership regularly, the Board has established fixed tenure for each of the three remaining Independent Directors, including the Chair, which is renewable by mutual agreement. The Nomination Committee of the Board prefers to retain the flexibility to assess the balance of skills and experience of the Board as a whole, while also noting the benefits of Board member longevity through private equity investment cycles. The Board has implemented a Board Succession Policy, which reflects this sentiment and guides the Nomination Committee in recommending potential director candidates. Further information is contained within the Nomination Committee report.
Board training
To ensure the Directors continue to maintain a high degree of awareness and understanding of their duties, along with the risks and opportunities the Company faces, they are provided with a tailored training programme. Training is provided when Directors first join the Board and on an ongoing basis throughout their tenure. The Board also has continued access to the Company’s various legal counsel, subject matter experts within Oakley and other specialists, as appropriate.
Board information and support
The Board receives, in a timely manner, information of an appropriate quality to enable it to adequately discharge its responsibilities. Papers are provided to the Directors in advance of the relevant Board or committee meeting to allow for further enquiries prior to the meeting, should they so wish. Advanced issuance of materials also allows any Director who is unable to join on occasion to submit views in advance of the meeting.
The Board of Directors has regular and open access to Oakley which supports open discussion at Board meetings.
Reports from the committees of the Board
The Board has delegated specified areas of responsibility to its committees. The terms of reference of all committees are available on the Company’s website here: https://www.oakleycapitalinvestments.com/about/board-and-governance/.
In practice, all Board members are eligible to attend all committee meetings, unless conflicts would preclude a Board member from attending.
The Board annually assesses each committee’s performance against its terms of reference and obtains Directors’ views of its effectiveness. Additionally, a Board Effectiveness Review is completed annually, considering the Board as a whole.
Ongoing costs
For the period ended 31 December 2023, the Company’s ongoing charges were calculated as 2.82% (2022: 2.66%) of NAV.
The calculation is based on ongoing charges expressed as a percentage of the average NAV for the year. Ongoing charges are calculated in accordance with the guidelines issued by the AIC. They comprise recurring costs, including operating expenses that relate to the investment company as a collective fund and also OCI’s share of the management fees paid by the underlying Oakley Funds. The calculation specifically excludes expenses, gains and losses relating to the acquisition or disposal of investments, performance-related fees and financing charges.
The Company has taken a proactive approach in engaging the AIC and the Treasury to ensure that any cost disclosure regime that might apply to listed investment companies is fit for purpose; allowing retail investors to: (a) compare "like-for-like" products; (b) easily interpret and use such comparison; and (c) clearly understand which are the "like-for-like" products that are helpful to compare (versus those that are not helpful to compare against). We look forward to hearing the outcome of the further deliberations on this subject.
The AIC Code
The purpose of the AIC Code is to provide a framework of best practice in respect of the governance of investment companies. The Board considers on an ongoing basis the Principles and Provisions of the AIC Code. The AIC Code addresses the Principles and Provisions set out in the 2019 UK Corporate Governance Code (the ‘UK Code’), as well as setting out additional Principles on issues that are of specific relevance to the Company.
The Board considers that reporting consistent with the Principles of the AIC Code, which has been endorsed by the Financial Reporting Council, will provide shareholders with a market-comparable assessment of its governance programme.
The Company sets out how it has complied with the Principles and Provisions of the AIC Code throughout the year ending 31 December 2023.