Notes to the Financial Statements

Directors’ Reportcontinued14The Board ordinarily meets on a bi-monthly basisto determine strategy and to approve budgets andbusiness plans, major capital expenditure,acquisitions and disposals. Additional meetingsare held as appropriate to transact other business.Formal agendas, briefing papers and reports aresent to the Board in advance of its meetings. TheBoard delegates certain responsibilities to twoboard committees, which have clearly definedterms of reference as described below.The directors have access to the advice andservices of the Company Secretary, who is also adirector. Any director may also take independentprofessional advice at the Company’s expense inthe furtherance of his duties.In accordance with the Articles of Association,normally each year one third of the directors(generally those who have held office for thelongest time since their election) will retire fromoffice at the AGM. A retiring director may be reelectedif eligible and a director appointed by theBoard may also be elected, although in the lattercase the director’s period of prior appointment bythe Board will not be taken into account for thepurposes of rotation. In addition, any directorappointed by the board of directors shall holdoffice only until the next annual general meeting(“AGM”). Accordingly, this year, Valery Andosovand Mikhail Baranov will be offering themselves forre-election.Audit committeeThe Audit Committee is chaired by David Woodand its other members are Sir Michael Oliver andMikhail Baranov. The members of the Committeeare re-elected by the directors each year. TheCommittee meets at least twice a year and isresponsible for ensuring that the appropriatefinancial reporting procedures are properlymaintained and reported on and for meeting theauditors and reviewing their reports relating to thefinancial statements and internal control systems.It is also responsible for monitoring theindependence of the auditors. Executive directorsmay attend meetings of the Audit Committee byinvitation, however at least once a year theCommittee meets the auditors without executivedirectors being present.Remuneration committeeThe Remuneration Committee consists of SirMichael Oliver (Chairman), Mikhail Baranov andDavid Wood. The members of the Committee arere-elected by the directors each year. TheCommittee is responsible for determining theCompany’s policy on the remuneration and termsand conditions of service of the executive directorsand employees, reviewing the performance of theexecutive directors and other senior executives andfor determining appropriate levels of remuneration,in consultation with external advisers asappropriate, with due regard to the interests of theshareholders. The Committee meets at least twicea year. The remuneration of the non-executivedirectors will also be set by the RemunerationCommittee. The Committee also makesrecommendations to the Board in respect ofemployee incentives, including the granting ofshare options. No director is permitted toparticipate in discussions or decisions concerninghis own remuneration.Zirax has adopted a Code for dealing in ordinaryshares by directors and employees which isappropriate for an AIM quoted company.Internal controlThe Board is responsible for ensuring that theGroup maintains an adequate system of internalcontrol and risk management. The internalcontrols are designed to safeguard the Group’sassets and to ensure the reliability of financialinformation for both internal use by managementand external reporting.The directors are aware that no system can provideabsolute assurance against material misstatementor loss. They are satisfied that the current controlsand processes to manage significant risks areadequate with regard to the current stage of theGroup’s development.ZiRAX Annual Report & Accounts 2006