Governance

Compliance with the Combined Code
The Board of Directors has a strong commitment to high standards of corporate governance integrity and ethics. The Financial Reporting Council (FRC) published the new ‘UK Corporate Governance Code’ in June 2010, replacing the ‘Combined Code on Corporate Governance’, and in September 2010 the Quoted Company Alliance (QCA) published ‘Corporate Governance Guidelines for Smaller Quoted Companies’ replacing previous guidelines issued in 2004 and 2005. Although as an AIM listed company it is not formally required to do so, the Group has followed the principles of the ‘UK Corporate governance Code’ so far as is practicable and appropriate for the nature and size of the Group. The Group supports the recommendations on corporate governance of the QCA and has implemented steps to reach compliance.

The Board and its operation
The Board of Prime People PLC is the body responsible for corporate governance, establishing policies and objectives, and reviewing the management of the Group’s resources. The Board consists of an executive chairman, Robert Macdonald, two other executive Directors and two non-executive Directors. The non-executive Directors are John Lewis and Simon Murphy. Both receive a fixed fee for their services.

The Board meets up to 6 times each year and more frequently where business needs require and the Directors receive monthly management accounts detailing the performance of the Group.  The Board has a general responsibility for overseeing all day to day matters of the Company with specific responsibility for reviewing trading performance, resources (including key appointments), finding, setting and monitoring strategy, examining acquisition opportunities and reporting to shareholders.  The non-executive Directors have a responsibility to ensure the strategies proposed by the executive Directors are fully considered and to bring their judgment to bear in this role. To enable the Board to function effectively and Directors to discharge their responsibilities, full and timely access is given to all relevant information.  In the case of Board meetings, this consists of a comprehensive set of papers, including monthly business progress reports and discussion documents regarding specific matters. Directors are free to and regularly make further enquiries where they feel it is necessary and they are able to take independent professional advice as required at the Company's expense.  This is in addition to the access, which every Director has to the company secretary.

The Board considers itself to be a "small board", and therefore has not set up a separate Nomination Committee.  Appointments to the Board of both executive and non-executive Directors are based on approval by the full Board. Any Director appointed during the year is required, under the provisions of the company's Articles of Association, to retire and seek reappointment by shareholders at the next Annual General Meeting.  The Articles also require that one-third of the Directors retire by rotation each year and seek reappointment at the Annual General Meeting.
The executive Directors abstain from any discussion or voting at full board meetings on Remuneration Committee recommendations where the recommendations have a direct bearing on their own remuneration package. The remuneration of non-executive Directors is determined by the Board.  Non-executive Directors abstain from discussions concerning their own remuneration.

Audit Committee
The Audit Committee comprises the two non-executive Directors of the Company and is chaired by Simon Murphy. Its terms of reference require it to meet not less than twice each year and it provides a forum for reporting by the Group’s auditors. By invitation, the meetings are also attended by the Finance Director. The Audit Committee’s principal tasks are to ensure the integrity of the Company’s Financial Reporting process, review the effectiveness of the Group’s internal controls including risk management, review the scope of the work of the external auditors and their independence, consider issues raised by the external auditor, review audit effectiveness and review the half-yearly and annual accounts focusing in particular on accounting policies and compliance and on areas of management judgement and estimates.

Remuneration Committee
The members of the Remuneration Committee comprise the two non-executive Directors of the Company and is chaired by John Lewis. The committee reviews the Group policy on the Executive Directors’ remuneration and terms of employment, makes recommendations on this and also approves the provision of policies for the incentivisation of senior employees, including share schemes.

Internal controls
The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness which,
by its nature, can only provide reasonable and not absolute assurance against material misstatement or loss. When undertaking their review the Directors have considered all material controls including operational, compliance and risk management, as well as financial.

Risk Management
The Directors and operating company management have a clear responsibility for identifying risks facing each of the businesses and for putting in place procedures to mitigate and monitor risks. Risks are assessed during the annual budget process, which is monitored by the Board and the ongoing Group strategy process.

Whistle-blowing policy
The Company is committed to maintaining the highest ethical standards and the personal and professional integrity of its employees, suppliers, contractors and consultants. It encourages all individuals to raise any concerns that they may have about the conduct of others in the business or the way in which the business is run. The aim of the policy is to ensure that, as afar as is possible, employees are able to inform the Board about any wrong doing at work, which is believed to have occurred or is likely to occur.

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