Governance Framework
The Board
The Board is chaired by Stephen Whyte as from 14 February 2023. The Board is collectively responsible to stakeholders for the long-term success of the Group. This is achieved by reviewing trading performance, budgets and funding, setting and monitoring the Group’s strategic objectives, reviewing acquisition opportunities and engaging with stakeholders. The Board is supported by a number of committees whose terms of reference (TORs) are available on our website.
Chairman
Responsible for leadership of the Board and for ensuring its effectiveness in all aspects of its role.
Chief Executive Officer
Responsible for the successful planning and execution of the objectives and strategies agreed by the Board.
Independent Non-Executive Directors
Responsible for bringing an external perspective, sound judgement and objectivity to the Board’s decisionmaking. Scrutinise management performance and constructively challenge strategy.
Non-Executive Warrant Director
Responsible for giving or withholding approval to certain matters set out in the warrant instrument.
Audit Committee
Responsible for oversight of the Group’s financial reporting processes. Scrutinises the work of the external auditor and regularly reviews the risk
management framework and the work of internal audit.
Chair:
Fiona Paulus
Nomination and Governance Committee
Reviews the structure, size and composition of the Board and its committees and makes recommendations to the Board accordingly, and leads the process for new
Board appointments.
Chair:
Chris Cox
Remuneration Committee
Reviews and recommends to the Board the executive Remuneration Policy
and determines the remuneration packages of the Directors.
Chair:
Christopher Hopkinson
Strategy Committee
Assists the Board to fulfil its responsibilities in relation to strategy.
Chair:
Stephen Whyte
Company Secretary
Responsible for advising the Board, through the Chairman, on all governance matters and for ensuring that Board procedures are complied with and there is a good flow of information between the Board and its committees. The appointment of the Company Secretary is a matter reserved to the Board as a whole.
Company Secretary:
Thomas Hartnett
Senior management team
The Senior management team supports the Chief Executive Officer in making important decisions regarding the overall management of the Group in respect of all Group matters that are not reserved for the Board and in ensuring that operational activities and performance are aligned with the overarching strategy of the Group. Each member of the team reports directly to the Chief Executive Officer, who then directly reports to the Board.
The functional responsibilities of the senior management team members in their respective areas include but are not limited to implementing Chief Executive Officer and Board decisions, allocating resources, managing risk, maximising efficiencies, guiding and developing employees, reviewing performance and supporting cross-functional integration.
Finance
Responsible for supporting the Group and the Board in matters relating to: (i) corporate finance (ii) investor relations (iii) economic analysis (iv) public relations (v) external communications (vi) accounting and reporting (vii) tax (viii) budgeting and control (ix) insurance (x) treasury and cash management (xi) liaison with internal audit (xii) risk management (xiii) ICT (xiv) company administration (accounting and tax matters) and (xv) capital markets analysis.
Head:
Ulugbek Makhmadiyarov
Operations
Responsible for supporting the Group and the Board in matters relating to: (i) production engineering and reservoir management (ii) drilling and workover management production (iii) production (iv) engineering and construction field operations (v) relations with governmental authorities (vi) procurement (vii) security and (viii) administration.
Head:
Robert Tinkhof
Legal
Responsible for supporting the Group and the Board in matters relating to: (i) all legal matters (ii) compliance (iii) corporate governance (iv) company administration (legal and governance matters).
Head:
Thomas Hartnett
Sales and Marketing
Responsible for supporting the Group and the Board in matters relating to: (i) sales of oil and gas products (ii) marketing and (iii) logistics and transportation.
Head:
Abi Zivs
QHSE
Responsible for supporting the Group and the Board in matters relating to: (i) product quality (ii) personnel and community health and safety and (iii) environmental protection.
Head:
Daulet Tulegenov
Human Resources
Responsible for supporting the Group and the Board in matters relating to: (i) personnel and workforce matters generally (ii) training and (iii) remuneration.
Acting Head:
Thomas Hartnett
Board policies and governance arrangements
Nostrum recognises the important role that good corporate governance plays in the success of the Company. As a result, the Board promotes high standards of corporate governance as a key component of its activities. Clearly defined roles and responsibilities, non-executive independence, boardroom and workplace diversity, an open and transparent culture and the work of our committees in implementing the Company’s values and policies throughout the Group are all vital ingredients to get this right for our stakeholders.
In order to ensure that it is involved in making important decisions for the Group and to ensure a clear division of responsibilities between the Board and executive management, the Board has identified certain “reserved matters” that are subject to its approval. Other matters, responsibilities and authorities have been delegated to its committees and the senior management team, as set out in the governance framework. The schedule of matters reserved for the Board is reviewed annually and is available here.
Division of responsibilities
On 27 November 2018, the Board resolved to expand the role of the Company’s Chairman, Atul Gupta, to give him certain executive responsibilities, in particular in relation to business development, strategic initiatives and investor relations. Notwithstanding this, in accordance with the Code, and with the exception of the period from 30 September 2020 to 25 January 2021, the roles of Chairman and Chief Executive remained separate, with each having distinct and clearly defined responsibilities, as summarised in the Board structure diagram.
Mr Gupta’s role as Executive Chairman was to guide, advise, counsel and assist the Chief Executive Officer in overseeing the Company’s implementation of its strategy. The Chief Executive remained responsible for line management of his direct reports and implementation of the Company’s strategy.
The Company’s Chairman as from 14 February 2023, Stephen Whyte, is a non-executive director who also chairs the Company’s Strategy Committee. The Chief Executive Officer is also a member of the Strategy Committee and his strategic capabilities are strengthened by the Senior management team.
Independence
Robust oversight is crucial for strong corporate governance and the Board is committed to securing this through an appropriate balance of independent Non-Executive Directors.
At the date of this Annual Report, the Board considers all of its Non-Executive Directors other than the Chairman and Martin Gudgeon to be independent within the meaning of this term as defined in the Code.
Equality and diversity
The Board has due regard for the importance of, and benefits from, diversity in its membership, including gender diversity, and strives to maintain an appropriate balance on the Board. The Board is composed of individuals with diverse sectoral experience, ages, geographic and ethnic origin, and gender.
As at 14 February 2023 the Company has 17% female representation on its Board. The Nomination and Governance Committee remains satisfied that the Board has the right mix of skills and experience to operate effectively. However, the skills and experience mix will be revisited following the successful restructuring of the Existing Notes. The Nomination and Governance Committee remains committed to monitoring diversity closely as part of future succession planning.
On 7 December 2017, the Board approved its Equality and Diversity Policy, to which the Company continued to adhere throughout 2022. Clarificatory amendments were made to the Company’s Equality and Diversity Policy on 14 September 2022.
In accordance with the policy, the Group is committed to eliminating discrimination and encouraging equality and diversity in all of our business activities, including the provision of employment. The policy applies to all who work for the Group, including Directors, together with the managerial, supervisory and administrative bodies of all entities within the Group.
The policy also applies equally to the treatment of our supply chain, applicants and visitors by our staff and the treatment of our staff by these third parties. The objective of the policy is to promote equality of opportunity and to ensure that no individual suffers unlawful discrimination, directly or indirectly, on the grounds of race, colour, ethnicity, religion, sex, gender identity or expression, gender reassignment, national origin, age, marital status, disability or sexual orientation.
The Group aims to ensure the objective of the policy is met by:
- Ensuring all recruitment advertising and publicity aims to encourage applications from any individual who has appropriate qualifications and/or experience;
- Not offering discriminatory conditions of employment;
- Ensuring all promotions are made strictly on the basis of the ability to do the job and no such decision is made on a discriminatory basis;
- Considering requests for part-time work or job-sharing opportunities wherever appropriate and practicable, and aiming to ensure that part-time employees receive fair treatment;
- Ensuring that the demands of religion (e.g. prayer time and religious holidays), culture (e.g. traditional dress) and special dietary needs are accommodated where possible; and
- Taking reasonable steps to assist employees with domestic responsibilities (e.g. young children and dependent elderly relatives).
During 2022, special attention and significant efforts were focused on the promotion of equality and diversity throughout our organisation. We are only at the beginning of a long-term project for our company, but take-off was achieved in 2022 and efforts to raise awareness of the richness of our differences will only increase in the coming years. The following are the steps that have been taken in 2022 to implement this policy:
- Communicating the important concepts of diversity and inclusion through the provision of informative material in the workplace as well as a point of reference for any questions related to this subject.
- Distribution of monthly newsletters to all company employees with a reference person for any desired interaction on the topics developed in the newsletters.
The topics that have been addressed this year to understand the vocabulary and concepts specific to diversity and inclusion are:
- An introduction and explanation of the project and the values of the company.
- Explanation about the concepts of Diversity and Inclusion
- Distinction of the concepts of Equity and equality
- Presentation of bias and stereotypes concepts
- Identification of discrimination and prejudice
- Implications of disabilities at work
- Consequences of sexism at work
- Apprehension of the concepts of culture, cultural differences, Lewis’s model, corporate culture
- Explanation of the concepts of intercultural communication, cultural competence, communicative competence
- Analysis of the concept of microaggression
- Distribution of quick tests on the subjects covered in the newsletters as well as the sharing of the results anonymously to improve understanding and be able to clarify any misunderstanding if necessary.
- Also distribution of questionnaires with open questions to give everyone the opportunity to express themselves, to share an experience anonymously, to suggest ways of improving the work environment and to increase awareness and sensitivity to the considerations of diversity and promote interaction on various D&I topics.
- We engaged employees in the production of a video which was then distributed to all on the importance of D&I and the specific journey the company is taking in this regard.
- Our Senior Management Team had a first tailor-made workshop on Diversity and Inclusion – Intercultural competence to learn how to create an inclusive workplace and how to make equity, diversity and Inclusion the responsibility of all leaders & managers of our company.
- Guidelines were distributed to advise and help employees to create and sustain a pleasant, friendly and full of respectful work environment.
We also commit with the broader community on social media by fostering diversity and inclusion. We trust that these communications help to create a more inclusive environment.
Conflict of interest
A Director has a duty to avoid a situation in which they have, or may have, a direct or indirect interest that conflicts or may conflict with the interests of the Company.
Formal procedures are in place to ensure that the Board’s powers of authorisation of conflicts or potential conflicts of interest of Directors are operated effectively. The Board is satisfied that during 2022 these procedures were enforced and adhered to appropriately.
Appointment and tenure
All Executive Directors have service agreements with the Company. All Non-Executive Directors have letters of appointment with the Company.
For all Executive Directors engaged through service agreements, there is no term limit on their services, as the Company proposes all Executive Directors for annual reelection at each subsequent Annual General Meeting of the Company.
Each Non-Executive Director appointment is for an initial term of three years, subject to being re-elected at each subsequent Annual General Meeting.
Bribery, corruption and Whistle-blowing
Bribery and corruption are significant risks in the oil and gas industry and, as such, the Company operates a Group-wide Anti- Corruption and Bribery Policy, which applies to all Group employees and contractor staff. The policy requires: annual bribery and corruption risk assessments; risk-based due diligence on all parties with whom the Company does business; appropriate anti-bribery and corruption clauses in contracts; and the training of personnel in anti-bribery and corruption measures.
In addition, the Company’s Code of Conduct requires that employees or others working on behalf of the Company do not engage in bribery or corruption in any form. Corruption-related risks are evaluated on a Group-wide basis (not in respect of divisions). No confirmed corruption cases were identified in 2022.
Steps were taken in relation to training on anti-corruption policies in 2022. The Company has also adopted a Whistleblowing Policy that takes account of the Whistleblowing Arrangements Code of Practice issued by the British Standards Institute and Public Concern at Work. Further information can be found on page 66. One whistleblowing activity was reported in 2022 and was resolved to the satisfaction of the Audit Committee. Clarificatory changes were made to the Code of Conduct on 31 March 2022, to the Whistleblowing Policy on 13 July 2022 and to the Anti- Corruption and Bribery Policy on 20 October 2022. A new Political Involvement Policy was adopted on 20 October 2022.
Anti-facilitation of tax evasion
Further to the new rules under the Criminal Finances Act 2017 (CFA) in the UK, in 2018 the Board approved a new Anti-Facilitation of Tax Evasion Policy applicable to the Group and its associated persons. In connection with the preparation of this policy, the Company commissioned an independent bespoke risk assessment and incorporated findings from the assessment into the policy. Training on the anti-facilitation of tax evasion policy was undertaken in 2022.