Governance

The Company continues to be guided by the Quoted Companies Alliance Corporate Governance Code. The Company complies with all aspects of the QCA Code and completes periodic reviews of its charter in order to maintain the robustness of its governance systems.

The Company is committed to maintaining the highest standards in corporate governance throughout its operations and to ensure all of its practices are conducted transparently, ethically and efficiently. The Company believes scrutinising all aspects of its business and reflecting, analysing and improving its procedures will result in the continued success of the Company and deliver value to shareholders. Therefore, and in accordance with the AIM Rules for Companies (the “AIM Rules”), the Company has chosen to formalise its governance policies by complying with the UK’s Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code”).

The Board currently consists of five Directors: the Executive Chairman, and four Non-Executive Directors (“NEDs”). The Board considers that appropriate oversight of the Company is provided by the currently constituted Board.

Corporate Governance Report

The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles:

Principle One
Business Model and Strategy

The business objective of the Group is to successfully evaluate, permit, finance and develop the Eastern Minerals Project in Sri Lanka into a profitable mining operation in a socially and environmentally responsible way. The Company’s business model and strategy are outlined in the strategic report.

Principle Two
Understanding Shareholder Needs and Expectations

The Board is committed to maintaining good communications and having constructive dialogue with its shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting and any other General Meetings that are held throughout the year.

Investors also have access to current information on the Company through its website www.capitalmetals.com and its Executive Chairman, who is available to answer investor relations enquiries at: info@capitalmetals.com. The Company provides regulatory, financial and business news updates through the Regulatory News Service in accordance with the AIM Rules for Companies.

Principle Three
Considering Wider Stakeholder and Social Responsibilities

The Board recognises that the long-term success of the Group is reliant upon the collective efforts of management, employees, consultants, suppliers, regulators and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships, including ongoing two-way communication, control and feedback processes to enable appropriate and timely response.

As part of the Industrial Mining Licences application by the Group for the Project in Sri Lanka, which were subsequently granted in the year, a detailed social impact assessment study was undertaken, as well as a public stakeholder consultation process. The results of this public consultation and engagement process have been overall positive, with the Project receiving overall support from relevant stakeholders.

Principle Four
Risk Management

The Board regularly reviews the risks to which the Group is exposed and ensures through its meetings and regular reporting that these risks are minimised as far as possible whilst recognising that its business opportunities carry an inherently high level of risk. The principal risks and uncertainties facing the Group at this stage and in the foreseeable future are detailed in the Risk Factors report of the Company’s AIM Admission Document which is available on the Company’s website.

Principle Five
A Well-Functioning Board of Directors

The Board’s role is to agree the Company’s long-term direction and strategy and monitor achievement of key milestones against its business objectives. The Board meets formally at regular intervals for these purposes and holds additional meetings when necessary to transact other business. The Board receives reports for consideration on all significant strategic, operational and financial matters.

The Board is comprised of an Executive Chairman (Greg Martyr) and four NEDs (James Leahy, Teh Kwan Wey, Aravinda De Silva, and Savanth Sebastian). Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a Director. The Board meets regularly throughout the year as deemed appropriate formally and informally, in person and by telephone.

The Company constantly keeps under review the constitution of the Board and may seek to add more members as required as the Company grows and develops. Biographies for each member of the Board is provided on the Company’s website.

The Board considers James Leahy and Teh Kwan Wey to be independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement

The Board has implemented an effective committee structure to assist in the discharge of its responsibilities. All committees of the Board have written terms of reference dealing with their authority and duties. The Company Secretary acts as secretary to each of these committees.

Principle Six
Appropriate Skills and Experience of the Directors

The Board considers the current balance of sector, financial and public market skills and experience which it embodies is appropriate for the size and stage of development of the Company and that the Board has the skills and requisite experience necessary to execute the Company’s strategy and business plan whilst also enabling each Director to discharge their fiduciary duties effectively. Biographies for each member of the Board is provided on the Company’s website.

All Directors, through their involvement in other listed companies as well as the Company, including attendance at seminars, forums and industry events and through their memberships of various professional bodies, keep their skill sets up to date.

The Board reviews annually, and when required, the appropriateness of its mix of skills and experience to ensure that it meets the changing needs of the Company.

The Company has a professional Company Secretary in the UK who assists the Board in preparing for and running effective Board meetings, including the timely dissemination of appropriate information. The Company Secretary provides advice and guidance to the extent required by the Board on the legal and regulatory environment.

Principle Seven
Evaluation of Board Performance

Review of the Group’s progress against the long-term strategy and aims of the business provides a means to measure the effectiveness of the Board. This progress is reviewed in Board meetings held at least six times a year. The executive directors performance is reviewed once a year by the Board and measured against a definitive list of strategic targets set by the Board.

The Group conducts periodic reviews of its Board succession planning protocols which includes an assessment of the number of Board members and relative experience of each Board member vis-a-vis the Company’s requirements given its stage of development, with the goal of having in place an adequate and sufficiently experienced Board at all times.

Principle Eight
Corporate Culture

The corporate culture of the Company is promoted throughout its employees and consultants and is underpinned by compliance with local regulations and the implementation and regular review and enforcement of various policies including a Share Dealing Policy and Code, Anti-Corruption and Anti-Bribery Policy, Matters Reserved for the Board, Code of Business Ethics, Whistle Blowing Policy, and Media and Communications Policy, so that all aspects of the Company are run in a robust and responsible way.

The Board is aware that the culture set by the Board will impact all aspects of the Group and the way that employees and consultants behave. The exploration, evaluation and development of mineral resources can have a significant impact and it is important that the communities view the Group’s activities positively. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Group to successfully achieve its corporate objectives.

Principle Nine
Maintenance of Governance Structures and Processes

The Board is responsible for setting the vision and strategy for the Company to deliver value to the Company’s shareholders by effectively putting in place its business model.

The roles and responsibility of the Executive Chairman and other Directors are laid out below:

• The Executive Chairman’s primary responsibilities are to: lead the Board and to ensure the effective working of the Board; in consultation with the Board, ensure good corporate governance and set clear expectations with regards to the Company culture, values and behaviour; set the Board’s agenda and ensures that all Directors are encouraged to participate fully in the decision-making process of the Board and take responsibility for relationships with the Company’s professional advisers and major shareholders.
• The Company’s NEDs participate in all Board level decisions and play a particular role in the determination and articulation of strategy. The Company’s NEDs provide oversight and scrutiny of the performance of the Executive Directors, whilst both constructively challenging and inspiring them, thereby ensuring the business develops, communicate and execute the agreed strategy and operate within the risk management framework.
• The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

The whole Board is responsible for the appointment of all additional and replacement Executive and Non-Executive Directors.

The Board is supported by the audit and remuneration committees as described below.

Audit Committee

The Audit Committee comprises Teh Kwan Wey (Chair), James Leahy, and Savanth Sebastian.

The Audit Committee reviews reports from management and from PKF Littlejohn LLP, the Company’s auditor, relating to the interim and annual accounts and to the system of internal financial control.

The Audit Committee is responsible for assisting the Board’s oversight of the integrity of the financial statements and other financial reporting, the independence and performance of PKF Littlejohn LLP, the regulation and risk profile of the Company and the review and approval of any related party transactions. The Audit Committee may hold private sessions with PKF Littlejohn LLP without management present. Further, the Audit Committee is responsible for making recommendations to the Board on the appointment of PKF Littlejohn LLP and the audit fee and reviews reports from management and PKF Littlejohn LLP on the financial accounts and internal control systems used throughout the Company.

The Audit Committee meets at least two times a year and is responsible for ensuring that the Company’s financial performance is properly monitored, controlled and reported. The Audit Committee is responsible for the scope and effectiveness of the external audit and compliance by the Company with statutory and other regulatory requirements.

The Audit Committee:

• monitors in discussion with PKF Littlejohn LLP the integrity of the financial statements of the Company, any formal announcements relating to the Company’s financial performance and reviews significant financial reporting judgments contained in them;
• reviews the Company’s internal financial controls and reviews the Company’s internal control and risk management systems;
• considers annually whether there is a need for an internal audit function and makes a recommendation to the Board;
• makes recommendations to the Board for it to put to the shareholders for their approval in the general meeting, in relation to the appointment, re-appointment and removal of PKF Littlejohn LLP and to approve the remuneration and terms of engagement of PKF Littlejohn LLP;
• reviews and monitors PKF Littlejohn LLP’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements;
• develops and implements policy on the engagement of PKF Littlejohn LLP to supply non-audit services, taking into account relevant external guidance regarding the provision of non-audit services by PKF Littlejohn LLP; and
  reports to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.
• Orana Corporate LLP, the Company Secretary, may attend Audit Committee meetings in a guest/advisory capacity where required.
  PKF Littlejohn LLP were reappointed as the Group’s external auditor in September 2023.

Having assessed the performance, objectivity and independence of the auditor, the Committee will be recommending the reappointment of PKF Littlejohn LLP as auditor to the Company at the 2024 Annual General Meeting.

The Audit Committee also reviews arrangements by which the staff of the Company and the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and ensure that arrangements are in place for the proportionate and independent investigation of such matters with appropriate follow-up action.

Remuneration Committee

The Remuneration Committee comprises James Leahy (Chair), Teh Kwan Wey, and Aravinda De Silva.

The Remuneration Committee is responsible for considering all material elements of remuneration policy, the remuneration and incentivisation of Executive Directors and senior management (as appropriate) and to make recommendations to the Board on the framework for executive remuneration and its cost. The role of the Remuneration Committee is to keep under review the Company’s remuneration policies to ensure that the Company attracts, retains and motivates the most qualified talent who will contribute to the long-term success of the Company.

The Remuneration Committee is also responsible for reviewing the terms of granting options by the Company, in particular, the price per share and the application of the performance standards which may apply to any grant, ensuring in determining such remuneration packages and arrangements, due regard is given to any relevant legal requirements, the provisions and recommendations in the AIM Rules and The QCA Code.

The Remuneration Committee:

• determines and agrees with the Board the framework or broad policy for the remuneration of the Executive Chairman;
• determines targets for any performance-related pay schemes operated by the Company;
• ensures that contractual terms on termination and any payments made are fair to the individual, the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised;
• determines the total individual remuneration package of the Executive Chairman, including bonuses, incentive payments and share options;
• is aware of and advises on any major changes in employees’ benefit structures throughout the Company;
• ensures that provisions regarding disclosure, including pensions, as set out in the (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, are fulfilled; and
• is exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Remuneration Committee.

Principle Ten
Shareholder Communication

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with key private shareholder, analysts and brokers, providing the opportunity to discuss issues and provide feedback at meetings with the Company.

The Company also provides regular updates on the progress of the Company, detailing recent business and strategy developments, in news releases which is available on the Company’s website. The Company’s financial reports can also be found on its website.

All shareholders are encouraged to attend the Company’s Annual General Meeting and any general meetings held by the Company. The Company has elected to host its AGMs in London. The Directors believe hosting the AGM in London will enhance engagement with the Company’s shareholders by making the meeting more accessible. The Board is always open to receiving feedback from shareholders. Communications should be directed to info@capitalmetals.com

The Company also participates in various investor events including conferences and presentation evenings, at which shareholders can meet with management in person to answer queries, provide information on current developments and to take into consideration shareholder views and suggestions.