SECTION 172(1) STATEMENT AND STAKEHOLDER ENGAGEMENT WITH EMPLOYEES AND OTHER STAKEHOLDERS
The Directors of the Company are required to act in accordance with a set of general duties, such duties being defined by Section 172 of the UK Companies Act 2006, which are summarised below:
A director of a company must act in the way he or she considers, in good faith, would be most likely to promote
the success of the company (i.e. short, medium and long term value creation) for the benefit of its members as a
whole and, in doing so, have regard (amongst other matters) to the:
(a) likely consequences of any decision in the long term
(b) interests of the company’s employees
(c) need to foster the company’s business relationships with suppliers, customers & others
(d) impact of the company’s operations on the community and the environment
(e) desirability of the company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly as between members of the company
The Section 172 duty needs to be applied along with the other duties of a director including the duty to exercise independent judgement (§173), reasonable care, skill and diligence (§174). In addition, each director must act within his/her powers (§171) and within the various conflict avoidance duties (§175-177).
The directors were given a detailed briefing on the Section 172 duties at the September 2019 Board meeting and, thereafter, each director is reminded of his duties under Section 172 at each meeting of the directors. Those responsible for preparing board papers are required to ensure that any relevant factors (including, but not limited to, the six s172 factors) are properly considered and if necessary, relevant factors can be included in the paper, or in any presentation made to the board. Responsibility for considering relevant factors can be delegated to the members of the management team preparing the relevant Board paper.
As is typical of a venture capital backed technology business, a significant majority of the voting shares and the economic interest in the business is in the hands of such venture capital funds, who are all represented on the Board of the Company and its parent, DisplayLink Corp, through the combination of Board and Observer seats. In addition, a number of employees are shareholders through the exercise of share options. During the year the shareholders were asked to approve certain resolutions relating to capital structure and share options.
Over the past twelve months, the important decisions made by the Directors of the Company have included (i) the approval of the annual budget for Financial Years 2019 and 2020 along with a discussion about a five-year plan to 2025, (ii) the approval of share options to all employees, thereby aligning the interests of employees with the Company's strategy, (iii) approval (including re-approval) of policies on Modern Slavery and Human Trafficking, Quality, Environmental, Business Continuity and Conflict Minerals, some of which appear on the Company's website, (iv) approval of audited financial statements for the year ended December 2018, (v) approval of a substantial investment in a new, much larger "state of the art" Cambridge facility to accommodate a rapidly expanding headcount, as well as investments in its various overseas facilities. In addition, a review of business operations, most of which are carried on by the Company, takes place monthly.
The Company regularly updates all of its employees on the performance of the business, in particular against corporate goals and objectives as well as sharing new plans and developments, which is followed by a Q&A session. These updates also include sharing information that is both sensitive and confidential. Such updates take place in close proximity to Board meetings, so that the updates reflect the latest news. During the year, the Company has invested significantly in expanding its Agile development framework, through communities of practice and the establishment of business area groups. In Q1-2020, the Company retained an employer branding partner to assist it in developing core values. This project involved communication with every employee globally and is still in an early phase. The Group also conducts annual staff surveys, with the results shared with all employees. During the financial year, a customer survey was completed, which gave the Company important customer feedback. Through the sales and operations teams, the Company keeps in very close contact with its direct (and indirect) customers as well as its supply chain partners.
This Section 172(1) statement can also be read on in the Company’s 2019 Audited Accounts.