Corporate Governance

The Board

The Board comprises of seven Directors, of whom three are executive and four are non-executive.

The Board is led by the Chair who is responsible for setting the Board’s agenda and monitoring its effectiveness. There is a clear division of responsibilities between the Chair and the Chief Executive Officer, and a description of the roles is set out in the “Split of Responsibilities” document below.

The Board is responsible for the overall management of the Group including the formulation and approval of the Group’s long-term objectives and strategy, the approval of budgets, the oversight of Group operations, the maintenance of sound internal control and risk management systems and the implementation of the Group’s strategy, policies and plans. Whilst the Board may delegate specific responsibilities, there is a formal schedule of matters specifically reserved for decision by the Board, a copy of which is available below.

The Board will meet formally a minimum of six times throughout the year. The Board has established an Audit & Risk Committee, Remuneration Committee and Nomination Committee with formally delegated duties and responsibilities, as described below.

Audit & Risk Committee

The Audit & Risk Committee has responsibility for monitoring the integrity of the Group’s financial statements, reviewing significant financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems, monitoring the effectiveness of the internal control environment and overseeing the relationship with the external auditors (including advising on their appointment, agreeing the scope of the audit and reviewing the audit findings).

On admission, the Audit & Risk Committee will comprise Richard Cotton as Chair, and Ceri Morgan and Anthony Bourne as the other Committee members. The Audit Committee is expected to meet at least three times a year at appropriate times in the reporting and audit cycle and otherwise as required. The Audit & Risk Committee will have unrestricted access to the Group’s external auditors.

The Terms of Reference of the Audit & Risk Committee are available below.

Remuneration Committee

The Remuneration Committee has responsibility for determining and agreeing with the Board the framework for the remuneration of the Executive Directors and other designated senior executives and, within the terms of the agreed framework, determining the total individual remuneration packages of the Executive Directors including, where appropriate, bonuses, incentive payments and share options or other share awards. The remuneration of Non-Executive Directors will be a matter for the Board. No Director will be involved in any decision as to his or her own remuneration.

The Remuneration Committee will comprise Anthony Bourne as Chair, and Richard Cotton and Ceri Morgan as the other Committee members. The Remuneration Committee is expected to meet at least twice a year and otherwise as necessary.

The Terms of Reference of the Remuneration Committee are available below.

Nomination Committee

The Nomination Committee has responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession planning. The Nomination Committee also has responsibility for recommending new appointments to the Board and to the other Board Committees. It is responsible for identifying suitable candidates for board membership and monitors the performance and suitability of the current Board on an on-going basis.

The Nomination Committee will comprise Douglas Le Fort as Chair, and Ceri Morgan, Anthony Bourne and Richard Cotton as the other Committee members. The Nomination Committee will meet at least once a year and otherwise as necessary.

The Terms of Reference of the Nomination Committee are available below.

Disclosure & AIM Rules Committee

The Disclosure & AIM Rules Committee will comprise Ceri Morgan as Chair and Douglas Le Fort, Michael Griffiths and Jayesh Pankhania as the other Committee members. It will meet at least annually to review the operation, adequacy and effectiveness of the Group’s disclosure procedures and as necessary for the purpose of assisting the Board in fulfilling its responsibilities under the Market Abuse Regulation, AIM Rules and Disclosure Guidelines and Transparency Rules.

The Terms of Reference of the Disclosure & AIM Rules Committee are available below.

QCA Code

AIM-quoted companies are required to adopt a recognised corporate governance code with effect from the date of admission to trading on AIM. However, there is no prescribed corporate governance regime for AIM companies. The Directors recognise the importance of good corporate governance commensurate with the size and nature of the Group and the interests of its Shareholders. The Directors have therefore adopted the QCA Code with effect from Admission and the Company will take steps to ensure compliance by the Directors and relevant employees with the key governance principles of the QCA Code. The Directors believe the framework of the QCA Code will help ensure that a strong level of governance is maintained, enabling the Company to embed the governance culture that exists within the organisation already as part of building a successful and sustainable business for all of its stakeholders. Details of how the Company intends to apply these key governance principles from Admission are set out below.

Principle 1: Establish a strategy and business model which promotes long-term value for Shareholders

The Directors believe that the Group’s business model and growth strategy will promote long-term value for Shareholders. The Directors intend to subject this strategy to ongoing review and will provide an update on it from time to time in the strategic report that will be included in the annual report and accounts of the Group. As part of this review, the Directors will continue to monitor and identify risks facing the Group and where so identified, intend to formulate a mitigation strategy to manage these risks.

Principle 2: Seek to understand and meet shareholder needs and expectations

The Directors intend to communicate with Shareholders on a regular basis. Contact details for shareholder communication can be found in the ‘Investor Relations’ section of the Company’s website at www.aotinc.net and the Board also encourages all Shareholders to attend its annual general meeting (AGM), where they will be given opportunities to ask questions of the Board.

Shareholders will also be kept up to date via announcements made by the Company through a Regulatory Information Service in respect of, inter alia, financial information, matters of material substance and/or a regulatory nature and the results of its AGM.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long term success

The Group takes its corporate social responsibilities seriously and is focused on maintaining effective working relationships across a wide range of stakeholders including, inter alia, its Shareholders, staff, patients, payers and suppliers, as part of its business strategy. The Executive Directors intend to maintain an ongoing and collaborative dialogue with such stakeholders, as part of the decision-making process and day-to-day running of the business.

AOTI seeks to be a socially responsible company which has a positive impact on the communities in which it operates. No discrimination is tolerated and the Company endeavours to give all employees the opportunity to develop their capabilities.

AOTI is committed to being a responsible employer in all aspects of its business. Equal opportunities are offered regardless of race, gender, gender identity or assignment, age, disability, religion and sexual orientation. The Company encourages employees to participate in employee satisfaction surveys and feedback is considered by the Board to ensure that an optimum working environment is established.

The Group also takes the matter of health equity seriously and the Directors believe the Group has a significant positive impact on improving access to effective care by reducing diabetes-related amputations and hospitalisations by 71 per cent and 88 per cent, respectively.

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Directors have identified the risks and uncertainties which they consider to be the most significant for prospective investors. The Board will have ongoing responsibility for ensuring that the risks faced by the Group are appropriately managed in order to allow for the execution and delivery of its strategy and will take appropriate steps to identify risks and undertake a mitigation strategy to manage these risks, including the establishment of an Audit & Risk Committee (further details of which are set out below). It will also review such risks on, at least, an annual basis; the results of which will be included in its annual report and accounts going forwards.

Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair

The Board will comprises four Non-executive Directors (including the Non-executive Chairman and the Senior Independent Director) and three Executive Directors. The Non-executive Directors, Anthony Bourne and Dr. Ceri Morgan, and the Senior Independent Director, Richard Cotton, are considered to be independent and were selected with the objective of bringing experience and independent judgment to the Board. The Non-executive Chairman, Douglas Le Fort, is not considered to be independent solely by virtue of his pre-IPO consulting agreement with the Company. As a result of this, and the recent recruitment of Jayesh Pankhania as CFO, the Board composition does not satisfy this QCA principle of having an equal balance between independent and non-independent directors. The Board believes it is important to retain Anthony Moffatt, COO and former CFO, as a Director to ensure an effective transfer of knowledge to Jayesh Pankhania. Anthony Moffatt will stand down as a director at the next AGM, after which the composition of the Board will meet the requirements of this QCA principle.

The Board will be supported by four committees as described here

The Board will meet regularly and processes are in place to ensure that each Director is, at all times, provided with such high quality information as is necessary to enable each Director to discharge his or her respective duties. The Group is satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf of all stakeholders.

Principle 6: Ensure that between them the Directors have the necessary up to date experience, skills and capabilities.

The Board considers that its members have an effective and appropriate balance of skills and experience, running and growing public companies, capital markets experience, including mergers and acquisitions and capital raising, and experience in the highly regulated fields of medical technology and healthcare. The Board therefore believes that its members possess the relevant qualifications and skills necessary to oversee and execute the Group’s strategy effectively. The Board is not dominated by one individual and all Directors have the ability to challenge information and strategies put forward to the Board. The Board are also free to seek advice from their corporate advisers (nominated adviser, lawyers and accountants) as needed and have received a briefing from the Company’s Nominated Adviser in respect of continued compliance with, inter alia, the AIM Rules and MAR and the Company’s solicitors in respect of continued compliance with, inter alia, MAR.

Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Directors will consider the effectiveness of the Board, the Audit & Risk Committee, the Remuneration Committee and the individual performance of each Director. The Company also has a Nomination Committee which will conduct a regular assessment of the individual contributions of each member of the Board to ensure that their contribution is relevant and effective. The outcomes of performance will be described in the annual report and accounts of the Group so as to ensure that Shareholders are kept well-informed.

In addition, the Remuneration Committee reviews the performance of the Executive Directors and makes recommendations to the Board on matters relating to their terms of employment and remuneration, including short-term bonus and long-term incentives.

Principle 8: Promote a corporate culture that is based on ethical values and behaviours

The Group has a responsibility towards its staff and other stakeholders. The Board promotes a culture of integrity, honesty, trust and respect and all employees of the Group are expected to operate in an ethical manner in all of their internal and external dealings.

The Group employee handbook and policies, which address matters such as whistleblowing, social media and anti-bribery and corruption, further engender and promote this culture. The Board takes responsibility for the promotion of ethical values and behaviours throughout the Group and for ensuring that such values and behaviours guide the objectives and strategy of the Group. The culture is set by the Board who intend for it to be discussed at Board meetings on an ongoing basis.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Non-executive Chairman leads the Board and is responsible for its governance structures, performance and effectiveness. The Board retains ultimate accountability for good governance and is responsible for monitoring the activities of the executive team. The Non-executive Directors are responsible for bringing independent and objective judgment to Board decisions. The Executive Directors are responsible for the operation of the business and delivering the strategic goals agreed by the Board.

The Board is supported by the Audit & Risk Committee, Remuneration Committee, Disclosure and AIM Rules Compliance Committee and Nomination Committee, further details of which are set out under principle 5 above. There are certain material matters which are reserved for consideration by the full Board. Each of the committees has access to information and external advice, as necessary, to enable the committee to fulfil its duties.

The Board intends to review the Group’s governance framework on an annual basis to ensure it remains effective and appropriate for the business going forward.

Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with Shareholders and other relevant stakeholders

The Company’s annual report and accounts, as well as its half year report, will be key communication channels through which stakeholders will be informed as to how the Company is governed, how the Group is progressing in meeting its objectives and any updates to its strategic targets. Additionally, the Board will use the Company’s AGM as a mechanism to engage directly with Shareholders, to give information and receive feedback about the Group and its progress. The Company’s website will be updated with information regarding the Group’s activities and performance, including financial information, and contact details for shareholder communication can be found in the ‘Investor Relations’ section of the Company’s website at www.aotinc.net.