Sirius Minerals

Corporate governance

The Board recognises the importance of sound corporate governance and has adopted policies and procedures which reflect the principles of the UK Corporate Governance Code that are consistent with the Corporate Governance Guidelines for Smaller Quoted Companies, published by the Quoted Companies Alliance in May 2013, of which the Company is a member.

The Board

The Board comprises two Executive Directors and six Non-Executive Directors providing an appropriate balance of executive and non-executive positions on the Board. The directors have a broad range of relevant strategic, industry, financial, governance and other experience to enable the Company to fulfil its objective of becoming one of the world’s most important producers of multi-nutrient fertilizer.

A clear separation is maintained between the responsibilities of the Chairman and the Managing Director and CEO. The Chairman is responsible for leading the Board and the Managing Director and CEO is responsible for the overall performance of the Company.

The Chairman, Russell Scrimshaw is non-executive. The Executive Directors are Chris Fraser, the Managing Director and CEO and Thomas Staley, Finance Director and CFO. The remaining five Non-Executive Directors are Louise Hardy, Jane Lodge, Noel Harwerth, Lord Hutton and Keith Clarke.

The Board considers Louise Hardy, Jane Lodge, Noel Harwerth, Lord Hutton and Keith Clarke to be independent in character and independent in judgement and are therefore independent directors. Although not all of these directors fully satisfy the guidelines set out in the UK Corporate Governance Code the Board has considered the situation of each director and the relevance of the differences with the guidelines in the context of the Company being listed on AIM and has concluded on each directors’ independence.

If a potential conflict of interest exists or arises for any director he or she is required to declare such conflicts, which will be recorded, and the Board will exercise its authority under the Company’s Articles of Association as appropriate in considering such conflict.

The Board meets regularly during the year, at least every six to eight weeks, to discuss significant matters including long term strategy, short-term operational activities and financial performance. The latest management reports and accounts, including variances to budget, are presented at each Board meeting.

The Company’s Articles of Association require one third of the directors to retire from office by rotation at every Annual General Meeting.

The Company has an Audit Committee, Remuneration Committee and a Nominations Committee. All of the committees have formally delegated responsibilities by way of terms of reference.

Audit Commitee

The members of the Audit Committee are Noel Harwerth, Jane Lodge and Keith Clarke. Jane Lodge is Chairman of the committee. The committee consists entirely of Non-Executive Directors and all directors are deemed to be independent. The duties of the committee include reviewing the Company and Group financial statements, reviewing the effectiveness of the Company’s internal controls and risk management systems and overseeing the relationship with the external auditor. The committee meets at least three times a year. The executive director attends meetings by invitation.

Remuneration Committee

The members of the Remuneration Committee are Lord Hutton, Russell Scrimshaw and Jane Lodge. Lord Hutton is Chairman of the committee. The committee consists entirely of Non-Executive Directors and Lord Hutton and Jane Lodge are deemed to be independent. The duties of the committee include reviewing the remuneration and service contracts of executive directors and reviewing the design of all share incentive plans. The committee meets at least once a year.

Nominations Committee

The Nominations Committee includes Russell Scrimshaw, Noel Harwerth and Keith Clarke who is Chairman of the committee. The committee consists entirely of Non-Executive Directors and Noel Harwerth and Keith Clarke are deemed to be independent. The duties of the committee include evaluating the balance of skills, knowledge and experience on the Board before any appointments are made. The committee meets at least once a year.

The performance of the Board, committees and individual directors are evaluated on a regular basis. Individual director evaluation includes whether each director continues to contribute effectively and demonstrates commitment to their role by attending Board meetings.

Further ad hoc meetings are held during the year to approve certain matters during the period leading to the placing and on other matters.

Internal controls

The Board has overall responsibility for the effectiveness of the Group’s internal controls in safeguarding the assets of the Group. The internal control systems are designed to identify and manage risks to ensure that the possibilities of material misstatements or loss are kept to a minimum.

The processes used by the Board to review the effectiveness of the internal controls are through the Audit Committee and the executive management reporting to the Board on a regular basis where business plans, budgets and authorisation limits for the approval of significant expenditure including investment are appraised and agreed. The Board also seeks to ensure that there is a proper organisational and management structure with clear responsibilities and accountability.

The Company has adopted and applies a share dealing code on the dealing in securities of the Company by directors and employees, to ensure compliance with Rule 21 of the AIM Rules.

The Company has undertaken a risk assessment to determine the Company’s exposure to bribery and corruption risk in the countries, sectors and markets in which it operates.

Following this assessment the Board considered that the Company’s risk exposure in these areas was low, but implemented certain policies and procedures to ensure compliance with the requirements of the Bribery Act 2010 and that the Company’s employees were suitably briefed on these policies and procedures. The Company will continue to monitor risk regularly and to determine the adequacy of the briefing of employees to ensure compliance.

Due to the small size of the Group, an internal audit function has not been established. The Board receives sufficient assurance on risk, control and governance from other assurance activities within the Group including from regular management information and the external auditors.

Communication with shareholders

The Board places importance on effective communication with shareholders and maintains regular dialogue with and gives briefings to analysts and institutional investors. Presentations are generally given by the Executive Director and senior members of the executive management and on occasion by the Chairman. In particular a presentation is made at the Annual General Meeting. Care is taken to ensure that any price-sensitive information is released promptly to all shareholders through the Regulated News Service, the circulation of such releases to all shareholders who have registered for inclusion on the Company’s circulation list and through placing the release on the Company’s website. The Notice of Annual General Meeting, annual report and audited accounts and interim financial statements in particular are issued in this manner.