Corporate Governance Report
The Group’s directors recognise the importance of sound corporate governance. As such the Board has adopted the Quoted Companies Alliance Corporate Governance Code (“the QCA Code”).
Tim McCarthy, Chairman and Chief Executive Officer, has assumed responsibility for ensuring that the Group has appropriate corporate governance standards and that these standards are applied throughout the Group.
The Board, through its adoption of the QCA Code, believes in the value of putting the necessary systems and processes in place to support the medium to long-term delivery of the Company’s strategic objectives. The Board is aware of the importance of communicating these strategic objectives to stakeholders and in reporting performance in a manner that encourages constructive dialogue to support the production of sustainable value in the long term. The Board recognise their role in setting the strategic direction of the business as well as in establishing the organisation’s risk appetite. This is supported with a strong belief in appropriate accountability and performance measures. Further, the Board is cognisant of the key role it plays in setting the tone and culture of the entire Group.
The Board currently consists of five directors, two of which are executive and three are non-executive.
The Board has considered each of the 10 principles contained within the QCA Code and where the Group does not fully comply with each principle an explanation is provided as to why it does not currently do so.
In addition, the Company has implemented a code of conduct for dealing in the shares of the Company by directors and employees (see Principle 9 below).
Principle 1 – Establish a strategy and business model which promote long-term value for shareholders
ImmuPharma is an ethical organisation with the vision to develop novel drugs to treat serious medical conditions, delivering value to patients, medical professionals, healthcare payers and its shareholders.
ImmuPharma’s principal business objective is to enhance shareholder value through the development and commercialisation of novel drugs. Its strategies for achieving this objective include:
- Pursuing a low-cost model of accessing world class research through collaboration with the CNRS in France;
- Selecting specialist therapeutic areas where there are high unmet needs;
- Managing clinical development of novel drug candidates;
- Seeking collaborative agreements with partner companies to further the development and commercialisation of novel drug candidates; and
- Maintaining a small corporate infrastructure to minimise costs.
Key activities and discussions in 2024 in relation to strategy and performance were revolving around product pipeline (see Strategic Report on pages 10-13 of the Annual report for more information).
Principle 2 – Seek to understand and meet shareholder needs and expectations
ImmuPharma strives to engage in active dialogue with shareholders through regular communication including investor events, participation in conferences, the Company’s Annual General Meeting, any meetings that are held throughout the year and one-on-one discussions.
Over the past 12 months, ImmuPharma’s shareholder communications have included participation at investor events, regular announcements regarding the Company’s clinical progress, the Annual General Meeting and numerous one-on-one meetings and interviews. These meetings seek to foster a mutual understanding of both the Company’s and shareholders’ objectives. Such meetings are conducted in a format to protect price sensitive information that has not already been made generally available to all the Company’s shareholders.
Similar guidelines also apply to other communications between the Company and other parties, such as financial analysts, brokers and the media.
In addition, the Board is provided with market summary reports which detail share price and share register movements.
All members of the Board are scheduled to attend the Annual General Meeting. Notice of the Meeting is dispatched to shareholders at least 21 working days before the Meeting. The information sent to shareholders includes a summary of the business to be covered, with a separate resolution prepared for each substantive matter. When a vote is taken on a show of hands, the level of proxies received for and against the resolution and any abstentions are disclosed at the Meeting. The results of votes lodged for and against each resolution are announced to the London Stock Exchange and displayed on the Company’s website. At the Meeting there will be an opportunity, following the formal business, for informal communications between shareholders and directors.
Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises the importance of its wider stakeholders – employees, contractors, suppliers, regulators and advisors – to its long-term success. The Board has established expectations that these key resources and relationships are valued and monitored. In particular, the Company’s business model of outsourcing clinical trials requires reliable dialogue with contractors to ensure the success pursuit of long-term strategic objectives. Furthermore, the Board actively seek to engage regularly with our corporate advisers to ensure proactive communication regarding the Company’s activities. In doing so, the Company is able to take any feedback into account and adjust its actions accordingly to ensure it stays focused on long-term performance.
The Board recognises that the Company operates within the wider pharmaceutical industry and strives to remain alert to developments in a wider industry/society context. See stakeholder engagement within Directors’ Report for further details on the pages 31-32.
Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the organisation
ImmuPharma operates within a complex business environment and an industry that is fundamentally driven by regulatory processes. The Board has set out its understanding of the principal risks and uncertainties in its Strategic Report and regularly reviews its strategies for minimising any adverse impact to the Company or its investors.
Risk assessment is a priority for the Board. The major risks to the business are laid out in detail in the Company’s Strategic Report on pages 15-18. They concern mainly the control and timely progress of clinical trials and the obtaining of regulatory approval and profitable agreements with other parties, with adequate financial resources to achieve these objectives.
Where a material new risk or opportunity is identified, or an existing risk escalates, the Board will communicate and meet outside of the regular Board meetings to ensure the required actions are taken and are effective.
Principle 5 – Maintain the board as a well-functioning, balanced team led by the Chairman
The Board members have a collective responsibility and legal obligation to promote the interests of the company.
In the table below, details of the Board of Directors are summarised:
| Name & Title | Independent | Commitee Memberships |
|---|---|---|
| Mr Tim McCarthy Chief Executive Officer and Chairman | Audit | |
| Dr Tim Franklin Chief Operational Officer | Audit | |
| Sebastien Goudreau Chief Scientific Officer | Audit | |
| Dr Laurence Reilly Senior Non-Executive Director | X | Audit, Remuneration |
| Lisa Baderoon Head of Investor Relations and Non-Executive Director | X | Audit, Remuneration |
Brief biographies of each Director are set out on page 20. The Company believes that the skills and experience of each Director are of the appropriate mix to provide effective governance and management of the business. The Board was supported in its governance and finance responsibilities by Ashley Clarke, acting as Chief Financial Officer (not a Director) and Company Secretary.
Following major changes in the Board structure in 2021, Tim McCarthy was appointed as CEO, while maintaining the position of Chairman. The Company has initiated the process to identify a suitable person to take over as Non-Executive Chair of the Company and during this interim period Tim will continue as Chairman.
The Company also appointed its non-executive directors, taking into consideration their independence and shareholders’ interest.The appointed independent directors have considerable relevant experience to sufficiently question and hold the executive directors to account.
Each Director is required to devote as much time as required to carry out the roles and responsibilities required.
The Company has adopted the practice of requiring all directors to be subject to re-election every three years.
The executive directors are employed under service agreements requiring 12 months’ notice by either party. Non-executive directors receive payments under appointment letters, which are terminable by three months’ notice by either party.
The Board meets regularly throughout the year with all decisions concerning the direction and control of the business made by a quorum of the Board. As of 31 December 2024, the Board met 9 times with the attendance records of the directors as follows:
Tim McCarthy, Chief Executive Officer and Chairman – 9/9
Tim Franklin, Chief Operational Officer – 9/9
Laurence Reilly, Senior Non-Executive Director – 8/9
Lisa Baderoon, Head of Investor Relations and Non-Executive Director – 9/9
Sebastien Goudreau, Non-Executive Director – 9/9
Principle 6 – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board has extensive mixture of skills and experience, which enable the delivery of Group’s strategy for the shareholders over the medium to long-term. These include scientific expertise, public market requirements, business acumen and financial knowledge. Please refer to Director biographies on pages 20-21.
Principle 7 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Internal evaluation of the Board, the Audit Committee and Remuneration Committee as well as individual directors is undertaken on an informal basis at present. The review takes the form of peer appraisal and discussions to determine the overall effectiveness of individual directors and the Board as a whole. Specific consideration will be given to evaluating the continued independence of the Group’s non-executive directors. Senior management appointments are discussed at the Board Meetings and are managed by the Chief Executive Officer and Chief Operating Officer with additional support from Non-Executive Directors where appropriate.
Principle 8 – Promote a corporate culture that is based on ethical values and behaviours
The Board recognises its role in establishing and monitoring not only the strategic direction and risk appetite but also the tone and culture of the organisation. As a pharmaceutical drug development company, an ethical approach is essential. As such, the Board places great importance on the serious pursuit of therapeutic innovation and making effective use of limited resources. It applies to the directors as well as all group employees and consultants. It is a key belief of the Company and helps to define its competitive advantage in relation to its peers.
Upon joining the Company, employees have an induction meeting in relation to the Company’s code of conduct and ethics. This includes example behaviours that are considered unacceptable by the Group.
Principle 9 – Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board is responsible for long-term success of the Company. There is a schedule of matters reserved for the Board that guides the Board’s activities.
An Audit Committee and a Remuneration Committee have been established with formally delegated duties and responsibilities.
Audit Committee
The Audit Committee, which determines the engagement of the Company’s auditors and, in consultation with them, the scope of their audit. The Audit Committee meets a minimum of two times per year. The Audit Committee receives and reviews reports from management and the auditors relating to the annual financial statements and the accounting and internal control systems in use by the Company. It has unrestricted access to the auditors.
The Board and the Audit Committee review the need for an internal audit function on an annual basis and currently do not consider it necessary at this stage in the Company’s development.
The directors acknowledge their responsibilities for the Group’s system of internal financial controls. In the previous year, they carried out a review of internal financial controls, strengthening and updating the Company and its subsidiaries internal control policies. The Group’s financial reporting arrangements are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.
In 2023 the Audit Committee has deliberated two times. At these meetings the main point of discussion were annual and interim financial statements and working capital, the presentation of the annual report, audit report from CLA Evelyn Partners Limited, the audit fees and audit plan, updates on cash position, financial instruments and overall function of the committee and its members.
The Board ensured a robust internal assessment and review on the re-appointment of the external auditor based on their legacy work for ImmuPharma, including their knowledge of our business as a non-revenue based company and particularly our current financial position, and future revenue generation in respect to moving our drug pipeline forward including our late stage drug, Lupuzor for Lupus and also future partnering opportunities which may also bring in further revenues to ImmuPharma. ImmuPharma, as a statutory obligation for an AIM company, also includes the re-appointment of the auditor within resolutions proposed to shareholders as part of the Annual General Meeting and as such take the votes approving the re-appointment, as completed last year and again for the next AGM, as a firm and conclusive indication of the support for re-appointment of the auditor.
The Board of ImmuPharma, on an ongoing basis, during the financial year and prior years, review and agree auditor rotation strategies based on the current relationship with the incumbent auditor and any issues or not, which could compromise the relationship or create conflicts going forward. If there are suggestions by Board members to review the ongoing relationship with the incumbent auditor and to seek tenders for services with alternative auditors, this again will be agreed by the Board members and will highlight key criteria required, in respect to services essential to the robust audit process required for a company such as ImmuPharma.
There are no such current restrictions except a key understanding of the requirements to audit a public company listed on AIM, the sector in which we work, Biotech/Healthcare and that fees are reasonable in respect to the works carried out. References from existing clients of the auditors and understanding if there are any concerns over the managing of their own business (bad press or current outstanding litigations) will also be considered.
A robust interrogation of the services provided by the auditors are taken by the Board and Audit Committee during the financial review of the Company during year end reporting which includes regular discussions with ImmuPharma’s Finance Manager and updates / reviews at the monthly Board Meetings during the period of financial review post year end. Further guidance and approval may also be sought from the Company’s Nominated Advisor, SPARK, to provide comfort that certain processes are being carried out correctly and meet necessary regulatory requirements.
Regular reports are issued to the Board and audit committee to satisfy the team that a comprehensive review of the audit work is being carried out satisfactorily and adheres to the stringent regulatory requirements required by publicly listed company such as ImmuPharma. Where needed, the Board and the audit committee will seek guidance and review by the Company’s Nominated Advisor, to ensure that procedures are being actioned with due care and attention.
Remuneration Committee
The Remuneration Committee reviews the scale and structure of the executive directors’ remuneration and benefits and the terms of their service contracts. The remuneration of the non-executive directors is determined by the Board as a whole.
The Committee has formal terms of reference and meets at least twice a year. It is the duty of the Committee, inter alia, to determine and agree with the Board the framework or broad policy for the remuneration of the Company’s executive Board members. The remuneration packages are designed to motivate and retain executive directors to ensure the continuing development of the Company and to reward them for enhancing value to shareholders.
In 2024 the Remuneration Committee met two times. Amongst other items, it dealt with the temporary voluntary reduction of the salaries and fees of the Board. Directors’ remuneration is included within the directors’ report.
Nominations committee
The directors consider that the Company is not currently of a size to warrant the need for a separate nominations committee and any decisions which would usually be taken by the nomination committee will be taken by the Board as a whole.
Share Dealing Code
The Company has adopted a Share Dealing Code given the importance of having a clear and effective policy that sets out the rules and procedures for share dealings by the directors and other applicable employees.
Principle 10 – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Board is committed to maintaining good communication with its shareholders and in promoting effective dialogue regarding the Company’s strategic objectives and performance. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback via meetings with the Company. The Annual General Meeting and any other General Meetings that are held throughout the year are for shareholders to attend and question the directors on the Company’s performance. The results of any general meetings are released through LSE AIM RNS news as soon as practically possible. The Annual Reports and notice of all general meetings are available on the Group’s website.
The directors also periodically promote ImmuPharma’s activities, following the publication of regulatory announcements, through various media platforms such as Proactive Investors and Investor Meets Company.