CORPORATE GOVERNANCE
Tel Aviv Stock Exchange
Since June 1998, the Company's shares have been trading on the Tel Aviv Stock Exchange. Consequently, the Company is subject to a body of corporate law dealing with a variety of issues of corporate governance, among which are the election of two Independent Non-Executive External Directors and their qualifications, the establishment of an audit committee and internal controller and procedures for approving transactions with related parties and others. All of which has a major affect of the Company's governance.
Following the AGM in 2007, the Board has been composed of six members. The Executive Directors on this Board are David Sapiro, the Company's CEO and Chaim Helfgott, its Secretary and General Counsel.
BOARD, AUDIT COMMITTEE AND MANAGEMENT
The Board is responsible for the overall direction and strategy of the Group and it has reserved for its resolutions a list of matters, among which are the following:
• Setting the policy guidelines for the Company and supervision of the performance and activities of the Chief Executive.
• Approval of appointments and removals of direct reports to the CEO (excluding administrative and support staff) to include the appointment and removal of MD's of subsidiary companies, the CFO & Company Secretary.
• Business strategy and corporate structure.
• Acquisitions/disposals of all companies, or major business portfolios including formation of major joint ventures and agency agreements.
• Capital expenditure/disposal projects in excess of £50,000 regardless of financing method.
• Substantial commitments, including unbudgeted short-term revenue expenditures in excess of £50,000 per item.
• Setting the limit of the credit which the Company may take upon itself.
• Setting procedures to maintain a sound system of internal controls and reviewing its effectiveness with respect to financial, operational and compliance controls and risk management.
The Board meets for regular business at least four times a year; each meeting lasting the better portion of one day in which both strategy and its implementation is discussed.
Prior to the full Board Meeting and on an “as needed” basis, the Audit Committee, comprising the two independent External Directors and Trevor Toolan as its Chairman, meets. The Audit Committee functions include the determination of malfunction in the business management of the Company as well as the approval of certain transactions with the Company's interested parties, including the remuneration of its Directors.
The Company has also established a Remuneration Committee concerning non directors' remunerations. The Committee comprises an External Director, as Chairman, Chaim Helfgott and Trevor Toolan . The Committee's function is to prepare and bring for approval by the Board, the Company's bonuses and option plans and the remuneration payable to senior officers of the Company and its subsidiaries.
Mr. Ami Emanueli, the Company's Internal Auditor, reviews the compliance of the Company with the law and proper business practices. His annual work programme is submitted to, and approved by, the Audit Committee.
Mr. Jonathan Berger , the Company's CFO, is responsible for the financial monitoring functions of the Group and Chaim Helfgott , its Secretary and General Counsel, looks after its legal needs.
CORPORATE INFORMATION AND MONITORING SYSTEMS
The Company's CFO is in charge of the implementation and monitoring of the corporate financial controls. The Group operates a comprehensive budgeting system for each company of the Group. After having received the individual figures of the companies broken down by cost centres, the CFO prepares a consolidated report, all of which are approved by the full Board of Directors. As time progresses and actual performance figures are collected, the budget is revisited and revised.
In addition, the Board monitors the Group's performance against monthly budgets and variances are thoroughly investigated, resulting in the recommendation of specific actions to improve performance.
CASH AND RISK MANAGEMENT
The CFO monitors the cash situation of the Group. All borrowing and investment of short and long-term cash surplus is supervised and directed by the CFO, who also determines whether or not to use the Company's cash reserves, or to let the individual subsidiary company satisfy its needs by borrowing from banks.
The CFO is in charge of managing the Group's financial risks while the CEO manages its market risk, which include technological changes as well as those associated with the overall market strength of each country of Pilat's operations.
COMPLIANCE WITH THE COMBINED CODE
The Company agrees to comply, as far as is practicable for a company of its size and location, with the recommendation for corporate governance as set out in the Combined Code. As described in the previous sections, among the six members of the Board, four are non-executive directors, two of which are independent non-executive directors; the Company has established both an Audit Committee and an internal audit function and maintains internal controls to safeguard the shareholders' investment and the Company's assets. Its Secretary is an experienced attorney and corporate secretary, well versed in the legal requirements both in Israel and the UK .
Nevertheless, an internal control system is designed to manage, rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable (not absolute) assurance against material misstatement or loss.
