Corporate Governance

Statement of Compliance with the AIC Code

The Directors place a high degree of importance on ensuring that high standards of corporate governance are maintained and have therefore chosen to comply with the provisions of the AIC Code of Corporate Governance for Investment Companies published in February 2015 (AIC Code).

The Board of HVPE has considered the principles and recommendations of the AIC Code by refer­ence to the AIC Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to HVPE.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorpo­rates the UK Corporate Governance Code), will provide better information to shareholders. The Company has complied with the recommendations of the AIC Code except as set out below.

The UK Corporate Governance Code includes provisions relating to:

  • the role of the chief executive
  • executive directors’ remuneration
  • the need for an internal audit function

For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions not relevant to the position of HVPE, being an externally-managed investment company. In particular, all of the Company’s day-to-day management and admin-istrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. Other areas of non-compliance with the AIC Code by the Company, and the reasons therefore, are as follows:

  • Two of the independent directors are also directors of HarbourVest Structured Solutions II GP Ltd. (previously Conversus Capital prior to its acquisition by HarbourVest-managed funds including HVPE), which acts as the general partner of a limited partnership managed by the Investment Manager. This is not in accordance with the recommendations of the AIC Code but given that HVPE invests in the limited partnership, the Board unanimously considers that there is no conflict of interest between HVPE and the limited partnership. The Board nevertheless keeps the matter under review.
  • Each director is appointed for an initial term of three years and is subject to re-election by the holders of Class B shares every third year thereafter. This differs from the recommendation of the AIC Code where directors are subject to re-election at the first Annual General Meeting after their appointment.
  • There is no separate remuneration committee, which is not in accordance with the AIC Code. Given that the Board is comprised of five independent directors and two directors affiliated with the Investment Manager, it is felt that it is appropriate for the whole Board to consider these matters.
  • The Board has not formalised a policy on diversity. The Board has renewed its commitment to appointing the best applicant for any Board positions becoming open and will use external search consultants if required to ensure that there is a strong and varied pool of applicants. The Board’s priority is to assure it is composed of directors with a broad balance of skills, experience and opinions.
  • The Board has not formalised a policy on tenure, which is not in accordance with the AIC Code. The Board has agreed to keep the matter under review.

Audit Committee

An Audit Committee consists of Mr. Keith Corbin (Chairman), Mr. Andrew Moore, Mr. Alan Hodson, and Mr. Jean-Bernard Schmidt. The Audit Committee examines the effectiveness of the Company’s internal control systems, the annual and interim reports and financial statements, the auditor’s remuneration and engagement, as well as the auditor’s independence and any non-audit services provided by them. The Audit Committee ensures that the Company’s contracts of engagement with the Investment Manager, Secretary, and other service providers are operating satisfactorily so as to ensure the safe and accurate management and administration of the Company’s affairs and business and are competitive and reasonable for the shareholders. Additionally, the Audit Committee makes appropriate recom­mendations to the Board and ensures that the Company complies to the best of its ability with applicable laws and regulations and adheres to the tenet of generally-accepted codes of conduct.

The Audit Committee receives information from the Company Secretary's compliance department and the external auditor.

Audit Committee Terms of Reference

The Company considers the ongoing interests of investors on the basis of open and regular dialogue with the Investment Manager. The Company keeps abreast of regulatory and statutory changes and responds as appropriate.

Nomination Committee

A Nomination Committee consists of Sir Michael Bunbury (Chairman), Mr. Andrew Moore, Mr. Alan Hodson, Mr. Jean-Bernard Schmidt, and Mr. Keith Corbin. The Nomination Committee reviews the structure, size, and composition of the Board of directors. It reviews tenure and succession planning and as part of this is responsible for the identifying and nominating candidates to Board vacancies as and when they arise.

Nomination Committee Terms of Reference

Service Provider Committee

A Service Provider Committee consists of Sir Michael Bunbury (Chairman), Mr. Andrew Moore, Mr. Alan Hodson, and Mr. Jean-Bernard Schmidt. The Service Provider Committee is responsible for reviewing the Company's service providers and the Investment Manager. It undertakes periodic reviews and reports its recommendations to the Board of directors.

Service Provider Committee Terms of Reference