Annual report: Period Ended 31 December 2012 - Invesco Perpetual

26 City Merchants High Yield Trust Limited
Report of the Directors
continued
Corporate Governance Statement
Principles and Compliance
The Board is committed to maintaining high standards of Corporate Governance and is accountable
to shareholders for the governance of the Company’s affairs.
The Board of City Merchants High Yield Trust Limited has considered the principles and
recommendations of the Jersey edition of the AIC Code of Corporate Governance (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 investment companies.
The Company has complied with the recommendations of the AIC Code and the provisions of the UK
Corporate Governance Code, except the provisions relating to:
– the role of the chief executive;
– executive directors’ remuneration;
– the need for an internal audit function; and
– nomination of a senior independent director.
The Board considers the first three of these provisions are not relevant to the position of City
Merchants High Yield Trust Limited, being an externally managed investment company, since it has
no executive employees and in view of the Manager having an internal audit function.
In relation to the fourth, the Board takes the view that the nature of the Company and the relationship
between the Board and the Manager are such that it is unnecessary to identify a senior independent
director other than the Chairman. All Directors are available to shareholders if they have concerns
that cannot be resolved through contact with the Chairman or the Manager or for which such contact
is inappropriate.
The Board
The Board comprises five Directors, all of whom are non-executive. The Board regards all of the
Directors to be independent of the Company’s Manager. However, Philip Austin was recently
appointed to the board of Invesco Property Income Trust Limited, which is managed by the
Company’s Manager, and as such is deemed not to be independent under the UKLA Listing Rules.
The Directors have a range of financial, business and asset management skills as well as recent and
relevant experience pertinent to the direction and control of the Company. Brief biographical details
of the members of the Board are shown on page 14.
Chairman
The Chairman of the Board is Clive Nicholson, a non-executive and independent Director who has
no conflicting relationships. Mr Nicholson also served as a Director and Chairman of the Company’s
predecessor, City Merchants High Yield Trust plc.
Board Responsibilities
Directors have a duty to promote the success of the Company, taking into consideration the likely
long-term consequences of any decisions; the need to foster the Company’s business relationships
with its Manager and advisers; the impact of the Company’s operations on the community and the
environment; the desirability of the Company maintaining a reputation for high standards of business
conduct; and the need to act fairly as between the shareholders of the Company.
The Directors are equally responsible for the proper conduct of the Company’s affairs and for
promoting the success of the Company by directing and supervising its affairs within a framework
of effective controls which enable risk to be assessed and managed. In addition, the Directors are
responsible for ensuring that the Company’s policies and operations are in the best interest of all of
its shareholders and that the interests of other stakeholders such as creditors and suppliers to the
Company are also properly considered.