Section 172 of Companies Act 2006

Statement required following amendment of the Companies Act 2006 the “Act”)

FFollowing amendments made to the Act in 2018 the Directors have a duty under section 172 to act in the way they consider ‘most likely to promote the success of the company’ and to explain in their strategic report how in doing so they have had regard inter alia to a number of other matters set out in section 172(1)(a) to {f) of the Act:

(a) the likely consequences of any decision in the long term

As value investors, who admire legendary investor Warren Buffett’s statement that his favourite holding period for an investment is “for ever”, every material decision of the directors is made with regard to its potential long­ term effects.

(b) the interests of the company’s employees

Apart from the directors themselves the firm has only one part-time employee, who has been with the firm for thirteen years, which suggests to the directors that he is content with the way in which they have considered his interests during his employment.

(c) the need to foster the company’s business relationships with suppliers, customers and others

• The firm has always had a policy of paying suppliers not just on time, but as soon as possible, which is key to maintaining a relationship with any supplier and is particularly important during the current pandemic.
• Strong, long-term relationships with the firm’s three investment advisory clients (and in the case of the fund advised, the fund’s investors) are critical to the firm’s business and the directors communicate and meet with them frequently to nurture these relationships.
• The directors do not believe in chopping and changing for some temporary business advantage but in building personal relationships for the long term. Such relationships have been established with the firm’s compliance consultants, the administrator of the fund advised, the trust company administering the investment companies advised, the firm’s insurers, and others. The directors attach particular importance to ensuring returns to HMRC and the FCA are always made on time.

(d) the impact of the company’s operations on the community and the environment

The firm has been based in London’s West End for a long time and feels very much part of that community. The directors are saddened by the effect of the pandemic, which has turned the vibrant, bustling area around the firm’s office into a wasteland. The firm’s impact on the environment, happily, is negligible.

(e) the desirability of the company maintaining a reputation for high standards of business conduct

The firm’s chief executive has a high profile in the UK’s Jain community, is much involved in charitable activities,and is aware that any damage to the firm’s reputation could negatively impact his own. Of particular importance to maintaining the firm’s currently spotless reputation is the independent oversight of and challenge to the executive directors provided by the firm’s unpaid non-executive chairman, a chartered accountant and the CFO of a significantly larger firm, and also by the firm’s part-time compliance officer, another qualified accountant employed as compliance manager at an FCA regulated investment manager, a position which gives him a certain independence from this firm that a full-time employee might not necessarily have.

(f) the need to act fairly as between members of the company

Section 172 of the Act requires directors to promote the success of the company ‘for the benefit of its members as a whole’. As the firm’s chief executive owns all the firm’s shares, it is clear that no conflict between the interests of its members can arise. Instead the focus of the firm is on identifying, avoiding or mitigating potential conflicts between the firm, its directors and its clients, particularly where they have holdings in the same underlying investments.