Corporate Governance
As Non-Executive Chair, I have ultimate responsibility for the leadership of the Board and the Group’s approach to corporate governance.
The Board recognises the importance of good corporate governance as one of the foundations of a sustainable corporate growth strategy and sound decision making and has considered the corporate governance codes available which would best suit the Company given its specific stage of development, the sector in which it operates and the Company’s size. The Board considers The Quoted Companies Alliance (“QCA”) Corporate Governance Code (2018) as updated in 2023 (the “2023 QCA Code”), to be the most suitable code for the Company.
The Board has reviewed the Company’s corporate governance and how it complies with the Principles of the 2023 QCA Code and this is explained in the Statement of Compliance below together with the disclosures required by the 2023 QCA Code.
The Directors recognise the value and importance of high standards of corporate governance and as such the Company takes steps to ensure compliance by the Board and applicable employees with the terms of the 2023 QCA Code. The information set out in the Statement of Compliance below outlines the structures, processes and procedures by which the Board ensures that high standards of corporate governance are maintained throughout the Group.
Chris Train
Chair
Statement of Compliance with 2023 QCA Code
The 2023 QCA Code sets out ten broad principles which should be applied.
This Statement of Compliance sets out the 2023 QCA Code principles and provides an explanation of how the Company applies each principle and the reasons for any instances of non-compliance.
CPH2 is a UK-based technology and manufacturing company focused on the commercial production of green hydrogen in a simple, safe, and sustainable manner using its IP-protected MFE technology.
The details of our purpose, strategy and business model are set out in the Strategic Report in the Company’s 2024 Annual Report & Accounts. The Strategic Report also sets out the key challenges being faced by the Company and how these are being addressed and overcome.
The Company’s purpose is to “reduce the creation of harmful emissions by participating in the growth of the hydrogen economy”. Our strategy, which is derived from our purpose, is to deliver the lowest Levelised Cost of Hydrogen (“LCOH”) in the market and in relation to the production of green hydrogen, to reach 4GW of electrolyser production by 2030. This will be achieved by developing and scaling in-house manufacturing, licensing to manufacturing partners and continuing to focus on R&D.
The Company’s strategy has been set by the Board, in line with the Company’s vision and mission and the detailed strategic plans are developed by the Chief Executive Officer, the Chief Financial Officer and the senior management team, and approved by the Board. Progress is actively tracked and reviewed by the Directors, as well as by the Company’s independent Chair and Non-Executive Directors, to ensure it establishes a balance between the interests of management and the Company’s stakeholders. The senior management team, led by the Chief Executive Officer, is responsible for the effective delivery and implementation of the strategy.
The Board understands that a high level of corporate culture, conduct and ethical values leads to a successful business.
The Board seeks to promote an open, authentic and inclusive work culture that encourages employee expression and fosters trust, respect and creativity.
The Board firmly believes that corporate culture starts with leaders setting the tone for values, behaviours and expectations throughout the Company. The Board and the Executives seek to embody the Company’s values in all their decisions and actions and regularly communicate the values in their internal messaging and daily interactions.
The Company’s staff are its greatest asset in achieving the strategic objective to deliver the lowest LCOH in the market and to reach 4GW of electrolyser production by 2030, and as such the Board recognises that it is vital to continue attracting and retaining the best talent. The Company works hard to create an environment in which employees at all levels can thrive, develop and achieve their ambitions, and do so in ways that first and foremost promote the Company’s values. Employees are encouraged to join operational committees and actively participate in the decision-making and operational management. Employee feedback is sought frequently and regular progress and performance updates provided to all employees.
The Company has a Code of Conduct, an Anti-Bribery and Corruption Policy and a Modern Slavery Statement. The Company also has policies and procedures relating to whistleblowing which state the Company’s commitment to conducting its business with honesty and integrity, its expectation that staff will maintain high standards, and the arrangements for the workforce to raise concerns, in confidence and anonymously, about possible wrongdoing. The appointment of the Chair of the Audit & Risk Committee as the Whistleblowing Officer reinforces that the Company has an open culture where concerns are taken seriously and acted upon.
The Company has an induction process in place for all new employees that covers the Company’s relevant policies and procedures, as well as cultural orientation as part of new employee onboarding. The Company also offers ongoing training and refreshers for existing employees where appropriate.
The Board places great importance on having positive relationships with all shareholders and seeks to ensure that an appropriate and proactive level of communication takes place through multiple platforms so that the Company’s strategy and performance are clearly understood.
The Company engages with its shareholders through London Stock Exchange regulatory announcements, providing financial results on a half-yearly basis, operational updates to maintain information on overall performance, additional news flow when there is a significant development and releases relating to matters of material importance to the Company’s business.
The Company maintains an informative and regularly updated website www.cph2.com through which shareholders can obtain copies of the Company’s Annual Report, interim results and other regulatory documents and regulatory news service releases. The website includes copies of all presentations made from time to time to analysts, shareholders and the general market and
In order to facilitate open channels of communication and feedback from shareholders, any shareholders with queries should email: [email protected]
The Company’s AGM is a regular opportunity for shareholders to meet with the Board and receive a corporate presentation. There is also an opportunity for shareholders to ask questions after the presentation, during the formal business of the meeting and informally following the meeting and present their views to the whole Board. The Board welcomes the attendance and participation of all shareholders at the Company’s AGM. Shareholder voting on AGM resolutions is monitored and reported.
Beyond the AGM, the Board maintains a proactive approach to engagement with investors and major shareholders throughout the year, addressing any concerns raised and considering suggestions to further align with shareholder expectations. This ongoing dialogue underscores the Company’s commitment to fostering transparency and trust with its shareholder community.
The Chief Executive Officer and the Chief Financial Officer are together responsible for shareholder liaison and are a listening board for shareholders. The Chief Executive Officer and the Chief Financial Officer extensively engage with the Company’s corporate broker and financial PR consultants and meet regularly with investors and analysts to provide them with presentations of the Company’s announcements of the year-end results and the half-year results as well as updates on the business and to obtain investor feedback regarding the market’s expectations of the Company. The IR activities encompass dialogue with both institutional and private investors.
The Chair leads on ensuring that there is proactive engagement with shareholders on governance matters. The Chairs of the Audit & Risk Committee and the Remuneration Committee also make themselves available to meet with shareholders and attend the AGM to answer shareholder questions regarding the activities of their respective Committees.
CPH2’s business is at the heart of the green hydrogen industry and the Directors believe the Company is playing a significant part in the drive towards clean energy and net zero targets.
The Board’s primary goal is to create shareholder value in a responsible way that serves all stakeholders. The Board considers its key stakeholders to be its employees, customers, manufacturing partners, shareholders, suppliers and the communities and environment in which it operates. There are systems in place to solicit, consider and act on feedback from all stakeholders. We value the feedback we receive from our stakeholders, and we take every opportunity to ensure that, where possible, their wishes are duly considered.
The Company understands that long-term success relies upon good relationships with a range of different stakeholders and is fully cognisant of its responsibilities to all stakeholders. Our employees in particular are fundamental to both the delivery of our strategy, whilst upholding our reputation and positively contributing to the communities in which CPH2 operates. We prioritise the health, safety and wellbeing of our employees and seek to foster an inclusive, supportive and engaging workplace that offers challenges and opportunities for growth. We value an open, authentic and inclusive work culture that encourages employee expression and fosters trust, respect and creativity.
The Company also has policies and procedures relating to whistleblowing which are overseen by the Audit & Risk Committee. These state the Company’s commitment to conducting its business with honesty and integrity, its expectation that staff will maintain high standards, and the arrangements for the workforce to raise concerns, in confidence and anonymously, about possible wrongdoing. The Audit & Risk Committee also ensures that there are arrangements which allow for proportionate and independent investigation of whistleblowing matters and appropriate follow-up action. The Chair of the Audit & Risk Committee has been appointed as the Whistleblowing Officer.
Sustainability is a fundamental part of CPH2’s identity, with its approach aligning with the UN 2023 Agenda for Sustainable Development. The Board sets the tone on all ESG issues and is working on developing a strategy to include KPIs to track performance on ESG matters.
The Company’s approach to the management and identification of risk is set out in the Strategic Report in the Company’s 2024 Annual Report & Accounts.
The Board has ultimate responsibility for the Company’s risk management process and is supported in this by the Audit & Risk Committee, which oversees the risks facing the Company, and the effectiveness of the systems to manage and mitigate those risks. The Audit & Risk Committee is responsible for ensuring that risk management and all key risks are presented to the Board.
Management and mitigation of risks are discussed by the Board at every Board meeting. Whilst the Board has overall accountability for key risks there are certain risks which are considered in detail by the Board and others are delegated to Committees as appropriate.
The Company’s controls are subject to continuous improvement and are designed to manage and control risks rather than eliminate them. Mitigation can only provide reasonable, but not absolute, assurance against material misstatement or loss. As such, the Company maintains appropriate insurance cover for its activities, with the types of cover and insured values being reviewed on a periodic basis by the Board.
In Q1 2025, the Audit & Risk Committee undertook a review of its Terms of Reference in order to re-enforce the role of the Committee in monitoring the efficiency of internal controls and risk management systems and procedures. The Audit & Risk Committee changed its name from the ‘Audit Committee’ to the ‘Audit & Risk’ Committee’ in order to formalise the remit of the Committee with regards risk.
The Company remains committed to upholding the highest standards of quality, safety, and efficiency by aligning its operations with ISO (International Organization for Standardization) best practices. Demonstrating our dedication to continuous improvement and compliance, we have successfully: retained ISO 45001:2018 certification, following a comprehensive review of our Health & Safety Management System; completed the ISO 14001:2015 Environmental Management System surveillance audit, reaffirming our commitment to environmental sustainability; and achieved ISO 9001:2015 recertification, reinforcing our quality management excellence. These accomplishments reflect our ongoing efforts to enhance operational efficiency, regulatory compliance, and sustainable business practices. The Audit & Risk Committee formally assesses the independence of the Company’s auditor on an annual basis and considers that the auditor, its partners, senior managers and all individuals involved in the audit are independent. The Financial Reporting Council limits the amount of time that an audit engagement partner can be involved in the audit of a listed entity to five years before rotation is mandated. The Audit Engagement Partner for the Company has held the role for a collective period of three years.
The Board comprises the Independent Non-Executive Chair, the Chief Executive Officer, the Chief Financial Officer and the Independent Non-Executive Directors.
All Directors have extensive and complementary skills, knowledge and experience covering industry and commercial, strategy, governance, technology and financial expertise which covers all of the current requirements of the Board.
As the Company grows, the Board will have oversight of the Company’s requirements to ensure that the make-up of the Board is kept in line with the Company’s needs and provides the necessary mix of experience, skills, personal qualities and capabilities to oversee the Company. Full consideration is given to maintaining a healthy diversity where this is possible, including gender and ethnic diversity, and ensuring that there is sufficient wide-ranging and business-relevant input to deliver the best decision-making process.
The Chair is responsible for leadership of the Board and the Board’s approach to corporate governance. The Board adheres to the QCA Code recommendation that a board should have at least two independent directors.
The Board has reviewed the independence of the Non-Executive Directors, Chris Train, Natalie Fortescue and Rick Smith and all, including Rick Smith who holds options in the Company, are considered by the Board to be independent.
Rick Smith has substantial experience as a senior executive within a number of large organisations and as a consultant to private equity firms. His contribution to CPH2 in its early stages of development was invaluable and he was compensated with the grant of options.
The Board meets regularly and is provided with information on a timely basis. The Board works as a team drawing on its members’ in-depth experience of strategy, technology, international and financial matters. Meetings are characterised by debate and active idea generation and management are rigorously challenged and held to account.
The Board also actively seeks to develop and improve the information flow of the business to better inform it of the progress, challenges and opportunities it faces.
The Board is supported by the Audit & Risk Committee and the Remuneration Committee, and the members of these Committees have the necessary skills and knowledge to discharge their duties and responsibilities effectively. The Board acts as the Nomination Committee which leads the process for appointments, ensures plans are in place for orderly succession to both the Board and senior management positions and overseeing the development of a diverse pipeline for succession.
The Executive Directors are expected to devote substantially the whole of their time to their duties with the Company. The Chair and the Non-Executive Directors have a lesser time commitment which is set out in their letter of appointment. It is anticipated that Chair and the Non-Executives will dedicate such time as necessary in order to fulfil their duties as Board members and as members from time to time of Board Committees.
There is no formal policy restricting the Directors’ external appointments, however the Board reviews external appointments and time commitments at least annually, and each Director discusses with the Chair any proposed additional appointments prior to being appointed
Non-Executive Directors are not awarded any performance-related pay.
The Board has agreed that at the 2025 Annual General Meeting all Directors will stand for annual re-election in accordance with the 2023 QCA.
The Board recognises the importance of high standards of corporate governance and has sought to address the matter in a proportionate way having regard to the size and resources of the Company. This will be regularly reviewed as the Company grows.
The Non-Executive Chair has ultimate responsibility for the leadership of the Board and the Company’s approach to corporate governance. The long-term success of the Company is the responsibility of the Board, which comprises three Non-Executive Directors, including the Non-Executive Chair, and two Executive Directors, namely, the Chief Executive Officer and the Chief Financial Officer. The Board as a whole is responsible for directing, providing appropriate advice, and supervising the Company’s business strategy, and is responsible to shareholders for the Company’s financial and operational performance, as well as its risk management.
The Executive Directors have responsibility for the operational management of the Company’s activities. The Chief Executive Officer has ultimate responsibility for implementing and delivering the strategic and commercial objectives of the Board and managing the day-to-day business activities of the Company.
The Non-Executive Directors are responsible for bringing independent and objective oversight and judgement to Board decisions. The Chair has ultimate responsibility for the operation, leadership and governance of the Board and the Company’s approach to corporate governance.
The Board has a formal schedule of matters reserved to the Board which include the determination of strategy, operational and financial decisions, the approval of budgets and major capital expenditure.
The CPH2 Board and its subsidiary Boards have a strong breadth and depth of highly relevant experience, skills and knowledge for the business. The Board regularly reviews the composition of both the CPH2 Board and the Company Board to ensure that they have the necessary skills to support the ongoing development and growth of the business and to fulfil its governance responsibilities.
The Board is satisfied that it has a suitable mix of skills, experience and competencies on both the CPH2 Board and Company Boards to enable the Company to deliver its strategy for the benefit of its shareholders over the medium to long term. Summary biographies of each Board member are included on the website at https://www.cph2.com/about/leadership/
Directors are required to keep their skills sets up to date through membership of professional bodies, attendances at conferences and forums, through their various external appointments and with ongoing training and development. The Directors regularly share sector updates and news articles to stay up to date with relevant industry developments.
The Board has put in place a training schedule for regular updates and annual refreshers to cover the AIM Rules, Director Duties and obligations under MAR provided by the Company’s Nomad, legal advisors and the Company Secretary. In Q1 2025, the Directors received an overview on the 2023 QCA Code and the application of the ten principles.
The Board is supported by the Audit & Risk Committee and the Remuneration Committee, and the members of these Committees have the necessary skills and knowledge to discharge their duties and responsibilities effectively. Further information is set out below in the Terms of Reference of the Audit & Risk Committee and the Remuneration Committee.
Each Committee has formal Terms of Reference which are reviewed and revised annually. The Audit & Risk Committee is chaired by Natalie Fortescue and the Remuneration Committee is chaired by Rick Smith. Membership of both Committees during the last financial year comprised exclusively of Non-Executive Directors.
During the year the Remuneration Committee engaged remuneration consultants to assist in various matters relating to executive remuneration.
The Directors have access to the Company’s Nominated Adviser, Company Secretary and lawyers and are able to obtain advice from other external bodies as and when required.
The Directors are in regular dialogue with the Company’s Nominated Adviser. The Nominated Adviser provides ongoing advice on matters pertaining to the Company’s compliance with the AIM Rules for Companies.
The Company Secretary advises on corporate governance, and attends and minutes all Board and Committee meetings. The Company Secretary works closely with the Chairman, CFO as well as other Board members and advisers of the Company as and when required.
Lawyers are engaged to provide legal advice when required by the management team and by the Board or Committees.
The Board appreciates that an annual performance evaluation of the Board is crucial for effective governance and the development of the Board’s capabilities and its effectiveness.
A formal external Board evaluation was conducted in Q1 2025 which covered Board Structure, Performance, Strategic Oversight, Risk Management, Leadership, Dynamics, Committees and Governance. The report has given Directors a greater insight into the functioning of the Board and will help to develop the overall performance of the Board and its Committees. Progress against the recommendations will be provided in the 2025 Annual Report.
All Directors will undergo a performance evaluation before being proposed for re-election to ensure that their performance is and continues to be effective, that, where appropriate, they continue to be independent and that they remain committed to their roles. They will be individually assessed on an annual basis through which their performance against predetermined objectives will be reviewed and their personal and professional development needs considered. These evaluations should allow Directors to identify areas for improvement or training.
In addition, the Non-Executive Directors will meet, without the Chair present, and will evaluate the Chair’s performance.
The Board regularly reviews its composition, particularly in conjunction with succession planning, and will utilise the results of performance evaluations when considering future Board composition and/or succession planning.
The Remuneration Committee meet regularly to discuss the remuneration structure to ensure that it motivates the executive teams and senior management team and promotes the long-term growth of shareholder value.
Pay structures for the executive team and senior management team are simple and easy to understand and foster alignment with shareholders through building and holding a meaningful shareholding in the Company.
The 2023 QCA Code recommends that companies submit both their annual remuneration report and their remuneration policy to an advisory shareholder vote. The Board acknowledges the importance of transparency and shareholder engagement in remuneration matters and is committed to aligning with best governance practices in this area.
At present, the Remuneration Committee is in the process of developing a comprehensive remuneration policy that reflects the Company’s strategic objectives, aligns with shareholder interests, and supports long-term value creation. Given that this work is ongoing, the Company anticipates putting the is not yet in a position to put the remuneration report and policy to an advisory vote. The Board remains committed to progressing towards full compliance with this aspect of the 2023 QCA Code and will keep shareholders informed of developments as the remuneration policy is finalised.
The Board recognises the importance of providing its stakeholders, including shareholders and investors, with clear and transparent information on the Company’s activities, strategy and financial position and does so in a number of ways, including:
- the Company’s Annual Report and Accounts;
- full-year and half-year results announcements;
- other regulatory announcements;
- the Annual General Meeting;
- update meetings with existing shareholders;
- investor presentations; and
- disclosure of all shareholder voting on Annual General Meeting resolutions in a clear and transparent manner.
A range of corporate information, including Annual Reports and regulatory announcements is available to shareholders, investors and the public through the Company’s website which is regularly updated. Users, including all stakeholders, can register to be alerted via email when material announcements are made. The Company’s contact details are on the website should stakeholders wish to make enquiries of the management from time to time.
The Company’s Annual Reports and Circulars and Notices of Annual General Meetings for 2022, 2023 and 2024 can be found at https://www.cph2.com/investors/
The results of all shareholder voting on Annual General Meeting resolutions are posted to the Company’s website and include any actions taken or to be taken as a result of resolutions for which votes against a resolution have been received from at least 20% of independent votes.
The Company has published all of the disclosures set out under Principles 1-10.
Committee Information
The Audit Committee consists of the following persons:
Name Position Natalie Fortescue Chair Ricki Smith Member The Terms of Reference of the Audit & Risk Committee can be read below:
The Remuneration Committee will review the performance of the executive directors and senior management and make recommendations to the Board on matters relating to their remuneration and terms of service.
The Remuneration Committee will also make recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time.
The Remuneration Committee consists of the following persons:
Name Position Ricki Smith Chair Natalie Fortescue Member Christopher Train Member
Page last updated 6 May 2025