Corporate Governance

In 2017, following the combination of Andes Energia plc and Trefoil Holdings B.V., the Board decided to follow the principal provisions of the UK Corporate Governance Code 2016 (“the Code”) on a comply or explain basis, commensurate with the standards expected by stakeholders of Premium Listed companies.

The market for oil and gas companies became very challenging in 2020 and as part of our response and to safeguard the future of the company, we had to make changes to the size of the board and reduce headcount. Recognising this reduced capacity in the business, the board agreed to adopt and report against the provisions of the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as opposed to the Code. The QCA code provisions cover many of the same areas as the UK Corporate Governance Code but provides additional flexibility in the manner of reporting and the application of certain provisions.

The QCA has ten principles of corporate governance that the Company, as far as possible and practicable, has committed to apply within the business. The Board and employees across the business work to ensure that these principles are adhered to and any departure from these principals is detailed below together with the reasons for non-compliance, our views on mitigating factors and our plans to move to compliance where appropriate and as much as the Company is able.

Details of how the Company follows these ten principles can be found here and in our Annual Report

PRINCIPLE 1 Establish a strategy and business model which promotes long-term value for all shareholders

Phoenix Global Resources plc (the “Company” or “Phoenix”) is an upstream oil and gas company offering its investors an opportunity to invest directly into Argentina’s Vaca Muerta shale formation and other unconventional resources.

The Vaca Muerta is the only producing shale outside North America and has attracted significant major entrants including Total, BP, Chevron, ExxonMobil, Qatar, Petroleum, Petronas, Shell and Equinor. The Company has 560,000 net Vaca Muerta acres covering approximately 7.5% of the formation, with three core Vaca Muerta areas (Puesto Rojas, Mata Mora and Corralera). The Company’s unconventional acreage is underpinned by 57.2 MMboe conventional proven and probable reserves and 11,070 boepd of production in 2017.

The Company’s strategy is to invest in drilling activity in its Vaca Muerta acreage to increase resources, reserves and production and is well capitalised and of a scale to do so.

Our purpose is to help develop Argentina’s unconventional oil and gas resources, safely and responsibly whilst making a positive contribution to the economies, communities and creating stakeholder value.

The Group’s strategy can be found in the Strategic Report contained in the Annual Report

PRINCIPLE 2 Seek to understand and meet shareholder needs and expectations

The board ensures that the interests and views of shareholders are considered as part of its decision-making process and is laid out in more detail in the Stakeholder Engagement section contained in the Annual Report.

Engaging effectively with and understanding the objectives of our diverse stakeholder groups is key to the long-term success of Phoenix in Argentina. The board ensures that the interests and views of stakeholders are considered as part of its decision-making process. This Includes regular engagement with minority shareholders as well as the major shareholder.

The Company seeks an open and transparent dialogue with shareholders with the desire to hear shareholder views on the performance of Phoenix and to understand shareholder objectives and expectations. There is a dedicated investor relations email address (info@phoenixglobalresources.com) and any feedback received by shareholders is discussed at board meetings.

Whilst Covid-19 restrictions continue the Company will endeavour to host any shareholder meetings on an electronic platform (with votes cast by proxy) to allow all shareholders access to management. Once Covid-19 restrictions are eased it is the Company’s intention to hold physical shareholder meetings as it has done previously. All Directors are available at the AGM and will answer shareholder questions submitted prior to the meeting.

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

As a responsible international corporate citizen, we understand that we operate within a multi-faceted economic, legislative and social environment. We will engage with our stakeholders to ensure that the interests and views of shareholders are considered as part of the Company’s decision-making process, which is laid out in more detail in the Stakeholder Engagement section contained in the Annual Report.

The Company has a stated objective in 2021 to develop a clear policy and road map to ensure the Company has in place procedures and policies to manage its environmental, social and corporate governance responsibilities and established clear goals that minimise the impact of our operations on all stakeholders and the environment. Our first step in this process is to establish the baseline against which this will be measured and report our achievement against these targets.

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

Understanding the Company’s principal risks and ensuring that appropriate controls in place to manage those risks, is critical to our growth and success. Managing business risks and
opportunities is a key consideration in determining and then delivering against the Group’s strategy. The Group’s approach to risk management is not intended to eliminate risk entirely, but provides the means to identify, prioritise and manage risks and opportunities. This, in turn, enables the Group to effectively deliver on its strategic objectives in line with its appetite for risk.

The Group’s approach to risk management is laid out in detail in the Risk Management section contained in the Annual Report.

PRINCIPLE 5 Maintain the board as a well-functioning, balanced team led by the Chair

The board comprises the Non-Executive Chairman who was independent at the time of his appointment to the board and five non-executive directors, three who the board considers independent.

Each of the non-executive directors commit up to four days per month to the Company but are expected to devote additional time in periods of increased activity.

Further details about the board members and the number of board and committee meetings attended by members are detailed in the Annual Report.

PRINCIPLE 6 Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The board consists of six members with diverse backgrounds, with each director bringing different experience to bear for the benefit of the Company, its shareholders and other stakeholders. The primary collective experience of the board is focused on oil and gas industry experience and of operating in Argentina. However, the board also includes individuals with significant financial, legal and public company experience.

All directors have access to the advice and services of the Company Secretary who is responsible to the board for ensuring compliance with laws and regulations applicable to the Company. The directors, collectively or individually, are able to take independent professional advice if they believe such advice is required in the furtherance of their duties. Where such advice is taken, it is at the Company’s expense.

Full details of each board member and their relevant experience, skills and personal qualities are set out in the Annual Report and on our website.

PRINCIPLE 7 Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The board will implement a process for the evaluation of its own performance, its committees and individual directors, including the Chairman. The board has considered it appropriate, given the size and early stage of development of the Company, that the evaluation of performance is undertaken on an informal basis when it is considered appropriate and in the best interests of the Company. At that time, the board will also review the structure of its committees. The board considers that It has the necessary mix of experience, skills, personal qualities, and capabilities to deliver the strategy of the Company for the benefit of the shareholders over the medium to long-term. This will be assessed further at the same time performance is assessed.

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

The board recognises the need to develop a corporate culture consistent with the ethical values and behaviours that are expected and ensures its corporate governance policies and principles reflect this goal. The Company operates a performance scorecard to align individual objectives with KPIs and stakeholder interests.

The board not only sets expectations for the business but also works towards ensuring that strong values are set and carried out by the directors across the business. A strong corporate culture is paramount to the success of a business and the board strives to ensure that the objectives of the business, the principles and risks are underpinned by values of good governance that are fed down throughout the organisation.

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

Phoenix continually seeks to improve its governance framework, which will be enhanced by the objective in 2021 to develop a clear policy and road map to ensure the Company has in place procedures and policies to manage its environmental, social and corporate governance responsibilities and, established clear goals that minimise the impact of our operations on all stakeholders and the environment.

The Chairman leads the board and Company’s approach to key areas such as governance, corporate culture and risk appetite. The Chairman is the main point of contact for shareholders and other stakeholder groups.

The Senior Independent Director is available to shareholders or any of the directors or employees of the Company who have concerns which cannot be addressed through normal channels.

The CEO and CFO, whilst not members of the board, regularly attend board meetings and committee meetings. The CEO, interfaces with the Chairman, stakeholders and board on matters of strategy and material events. The CFO has overall responsibility for the management of the financial risks of the Group and ensures effective financial and regulatory compliance.

The board has established Audit and Risk, Remuneration and Nominations Committees.

Audit and Risk Committee
The Audit and Risk Committee consists of no less than three members, at least one of whom has recent and relevant financial experience and the quorum for meetings is two members. The majority of the committee is Independent Non-Executive Directors. The Chairman is an Independent Non-Executive Director and shall not be the Chairman of the company. The committee meets at such times as it may be necessary and at least four times a year.

Its responsibilities include: monitoring the integrity of the company’s financial statements and formal announcements; reviewing financial reporting issues and significant accounting policies and disclosures in financial reports; reviewing the effectiveness of the company’s internal audit function and risk management systems; making recommendations to the board on the appointment or re-appointment of the Group’s external auditors; overseeing the New board’s relationship with the external auditors (including an external reserves auditor) and, where appropriate, the selection of new external auditors; and ensuring that an effective whistle-blowing procedure is in place.

Members:
Martin Bachmann (Chair)
Sir Michael Rake
John Bentley

The terms of reference for the Audit and Risk Committee can be found here.

Remuneration Committee
The Remuneration Committee consists of not less than three members and the quorum for meetings is two members. The majority of the committee is Independent Non-Executive Directors. The chairman is an Independent Non-Executive Director and is not the chairman of the company. The committee meets at such times as may be necessary and at least three times a year.

The Remuneration Committee is responsible for determining, and agreeing with the board, the remuneration policy for the Chief Executive Officer, Chairman, Chief Financial Officer, Chief Operating Officer/Secretary and Executive Directors, (together, the “Relevant Individuals”) approving the design of, and determining targets for, an incentive plan for the executive directors and senior managers; reviewing the design of share incentive plans for approval by the board and Phoenix Global Resources Shareholders, approving the remuneration policy applicable to the Relevant Individual (no Relevant Individual being involved in any decisions as to their own remuneration); and within the terms of the agreed policy, determining the remainder of the remuneration packages (including pension) for each executive director and senior executive; reviewing and having regard to pay and employment conditions across the company, especially when determining annual salary increases.

Members:
John Bentley (Chair)
Sir Michael Rake
Martin Bachmann

The terms of reference for the Remuneration Committee can be found here.

Nominations Committee
The Nomination Committee consists of not less than three members and the quorum for meetings is two members. The majority of the committee is Independent Non-Executive Directors. The chairman of the committee is the Chairman of the company or an independent non-executive Director. The chairman of the committee does not however chair the committee when it is dealing with the appointment of a successor to the chairmanship. The committee will meet at such times, as may be necessary and at least twice a year.

The Nomination Committee’s responsibilities include reviewing the structure, size and composition of the board and making recommendations to the board with regard to any changes required; succession planning for directors and other senior executives; identifying and nominating, for the board approval, candidates to fill board vacancies as and when they arise; reviewing annually the time commitment required of Non-Executive Directors and making recommendations to the board with regard to membership of the Audit and Risk Committee and Remuneration Committee in consultation with the chairman of each of these committees.

Members:
Sir Michael Rake (Chair)
Martin Bachmann
John Bentley

The terms of reference for the Nominations Committee can be found here.

Full details of the Company’s governance structures are set out in the governance report found in the Annual Report and are available on the Company website.

PRINCIPLE 10 Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Company’s website contains information about our business activities and gives access to the Company’s Annual Report and Accounts, the Company’s previous Notices of Annual General Meetings, and the Articles of Association.

The work of the Audit Committee, Remuneration Committee and Nominations Committee is set out in the Annual Report.

The members of each committee are summarised below:

Chairman

Members

Audit and Risk Committee Martin Bachmann John Bentley
Sir Michael Rake
Remuneration Committee John Bentley Martin Bachmann
Sir Michael Rake
Nomination Committee Sir Michael Rake John Bentley
Martin Bachmann

Audit and Risk Committee

The Audit and Risk Committee consists of no less than three members, at least one of whom has recent and relevant financial experience and the quorum for meetings is two members. The majority of the committee is Independent Non-Executive Directors. The Chairman is an Independent Non-Executive Director and shall not be the Chairman of the company. The committee meets at such times as it may be necessary and at least four times a year.

Its responsibilities include: monitoring the integrity of the company’s financial statements and formal announcements; reviewing financial reporting issues and significant accounting policies and disclosures in financial reports; reviewing the effectiveness of the company’s internal audit function and risk management systems; making recommendations to the Board on the appointment or re-appointment of the Group’s external auditors; overseeing the New Board’s relationship with the external auditors (including an external reserves auditor) and, where appropriate, the selection of new external auditors; and ensuring that an effective whistle-blowing procedure is in place.

Remuneration Committee

The Remuneration Committee consists of not less than three members and the quorum for meetings is two members. The majority of the committee is Independent Non-Executive Directors. The chairman is an Independent Non-Executive Director and is not the chairman of the company. The committee meets at such times as may be necessary and at least three times a year.

The Remuneration Committee is responsible for determining, and agreeing with the Board, the remuneration policy for the Chief Executive Officer, Chairman, Chief Financial Officer, Chief Operating Officer/Secretary and Executive Directors, (together, the “Relevant Individuals”) approving the design of, and determining targets for, an incentive plan for the executive directors and senior managers; reviewing the design of share incentive plans for approval by the Board and Phoenix Global Resources Shareholders, approving the remuneration policy applicable to the Relevant Individual (no Relevant Individual being involved in any decisions as to their own remuneration); and within the terms of the agreed policy, determining the remainder of the remuneration packages (including pension) for each executive director and senior executive; reviewing and having regard to pay and employment conditions across the company, especially when determining annual salary increases.

Nomination Committee

The Nomination Committee consists of not less than three members and the quorum for meetings is two members. The majority of the committee is Independent Non-Executive Directors. The chairman of the committee is the Chairman of the company or an independent non-executive Director. The chairman of the committee does not however chair the committee when it is dealing with the appointment of a successor to the chairmanship. The committee will meet at such times, as may be necessary and at least twice a year.

The Nomination Committee’s responsibilities include reviewing the structure, size and composition of the Board and making recommendations to the Board with regard to any changes required; succession planning for directors and other senior executives; identifying and nominating, for the Board approval, candidates to fill Board vacancies as and when they arise; reviewing annually the time commitment required of Non-Executive Directors and making recommendations to the Board with regard to membership of the Audit and Risk Committee and Remuneration Committee in consultation with the chairman of each of these committees.

Share Dealing Code

The company has adopted a share dealing code for Directors and applicable employees (within the meaning of the AIM Rules for Companies) of the company for the purpose of ensuring compliance by such persons with the provisions of the Market Abuse Regulation relating to dealings in the company’s securities. The Directors consider that this share dealing code is appropriate for a company whose shares are admitted to trading on AIM.