Corporate Governance

The Directors are committed to maintaining high standards of corporate governance. The Directors have established procedures, so far as is practicable given the Company’s size, to comply with the QCA Corporate Governance Code (the “QCA Code”). The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as EPO, have been created. The specific areas of the QCA Code with which the Company does not apply are set out below, and the Company will provide annual updates on its compliance with the QCA Code in its Annual Report.

The Company has adopted and operates a share dealing code for Directors and senior employees on substantially the same terms as the Model Code, which is appended to the Listing Rules of the UKLA.

The Board

The Board meets throughout the year. To enable the Board to perform its duties, each of the Directors has full access to all relevant information and to the services of the Company Secretary. If necessary, the Non-Executive Directors may take independent professional advice at the Company’s expense. The Board currently includes five Non-Executive Directors. Full biographies for each Director can be found on the Company’s website at: http://www.epoil.co.uk/about-equatorisl-palm-oil-epo/directors/

The Group’s day-to-day operations are managed by the Executive Director. All Directors have access to the Company Secretary and any Director needing independent professional advice in the furtherance of his/her duties may obtain this advice at the expense of the Group.

The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the Company on the other, to enable it to discharge its duties and responsibilities effectively, and that all Directors have adequate time to fill their roles.

The role of the Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Group. In addition, the Chairman is responsible for the implementation and practice of sound corporate governance. The Chairman is considered to be an independent Non-Executive in terms of the QCA guidelines and has adequate separation from the day-to-day running of the Group.

The Board has delegated specific responsibilities to the committees, as described below.

The Audit Committee

The Company has established an Audit Committee, which comprises three Directors, Mr Lee Oi Hian, Ms Yap Miow Kien, and is chaired by Mr Michael Frayne. The Audit Committee meets at least twice each year and at any other time when it is appropriate to consider and discuss audit and accounting related issues. The Audit Committee is responsible for monitoring the quality of internal controls and for ensuring that the financial performance of the Company is properly monitored, controlled and reported on. It reviews a wide range of matters, including half-year and annual results before their submission to the Board. It also meets the Company’s auditors without the executive Board members present and reviews reports from the auditors relating to accounts and internal control systems.

The Remuneration Committee

The Company has established a Remuneration Committee, which comprises three Directors, Mr Michael Frayne, Ms Yap Miow Kien, and is chaired by Mr Lee Oi Hian. The Remuneration Committee reviews the performance of the Executive Directors and sets the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of shareholders. In determining the remuneration of Executive Directors, the Remuneration Committee seeks to enable the Company to attract and retain executives of the highest calibre. The Remuneration Committee also makes recommendations to the Board concerning the allocation of share options, bonus schemes, pension rights and compensation payments. No Director is permitted to participate in discussions or decisions concerning their own remuneration.

The Nominations Committee

The Company has established a Nominations Committee, which comprises three Directors, Mr Michael Frayne, Ms Yap Miow Kien, and is chaired by Mr Lee Oi Hian. This committee reviews the structure, size and composition (including the skills, knowledge and experience) required of the Board compared to its current position and makes recommendations to the Board with regard to any changes. In addition, it gives full consideration to succession planning for Directors and other senior executives, and is responsible for identifying, evaluating and nominating Board candidates. It also reviews annually the time required from Non-Executive Directors.

Application of the QCA Code

In the spirit of the QCA Code, it is the Board’s job to ensure that the Group is managed for the long-term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate governance is an important part of that job, reducing risk and adding value to the Group. The Board will continue to monitor the governance framework of the Group as it grows.

The Company remains committed to listening to, and communicating openly with, its shareholders to ensure that its strategy, business model and performance are clearly understood. The AGM is a forum for shareholders to engage in dialogue with the Board. The results of the AGM will be published via RNS and on the Company’s website. In addition, the Board organises update meetings with both the shareholders and the Company’s broker. Progress reports are also made via RNS and the point of contact is Geoffrey Brown, Executive Director – enquires@epoil.co.uk.

EPO maintains close relationships with all its stakeholders. EPO is continually seeking consent and feedback from the communities in which it operates. Furthermore, the Company is committed to the ongoing human rights due diligence process and will continually monitor and evaluate processes and procedures it operates to ensure that it respects human rights throughout its operations.

EPO’s senior management maintains a close dialogue with local communities and its workforce. Where issues are raised, the Board takes the matters seriously and, where appropriate, steps are taken to ensure that these are integrated into the Company’s strategy.

Particular attention is given to the way in which EPO goes about its operations. Sustainability is a key facet of EPO’s operations and EPO produces a separate Sustainability Report each year to describe EPO’s long-term policies on sustainability, the place of sustainable palm oil in Liberia and EPO’s commitment to ‘no-deforestation’,

Both the engagement with local communities and the performance of all activities in an environmentally and socially responsible way are closely monitored by the Board and ensure that ethical values and behaviours are recognised.

Departure from the QCA Code:

In accordance with the AIM Rules for Companies, EPO departs from the QCA Code in the following ways:

Principle 5 – “Maintain the board as a well-functioning, balanced team led by the chair”

The QCA Code recommends that the Board has two independent Non-Executive Directors. The Board operates to foster an attitude of independence of character and judgement. An example of this is where there is a related party transaction – such as a loan from a company related to KL-Kepong International Limited, the Company’s JV partner and a subsidiary of Kuala Lumpur Kepong Berhad (“KLK”), to Liberian Palm Developments Limited (JV company). In this instance a detailed Working Paper is drawn up for the Non-Related Directors to ensure that the loan is fair and reasonable in all respects. Both the Company’s lawyers and the Nomad are also consulted as part of the Non-Related Directors’ deliberations.

The QCA Code recommends the Remuneration Committee should be comprised of independent directors. The Company’s Remuneration Committee is currently made up of one independent director and two directors from KLK. Given the size and nature of EPO, the Company believes it has the necessary expertise on the Remuneration Committee.

Principle 7 – “Evaluate board performance based on clear and relevant objectives, seeking continuous improvement”

EPO’s Board is small and extremely focussed on implementing the Company’s strategy. However, given the size and nature of EPO, the Board does not consider it appropriate to have a formal performance evaluation procedure in place, as described and recommended in Principle 7 of the QCA Code. The Board will closely monitor the need for formal performance evaluation, in light of Principle 7 of the QCA Code, as the Company develops.

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