Regulatory Disclosures

Introduction

The UK Stewardship Code, published by the Financial Reporting Council (FRC) in July 2010, is a voluntary code which sets out a number of principles relating to engagement by investors with UK equity issuers. It sets stewardship standards for those investing money on behalf of UK clients and those that support them, with the aim of enhancing the quality of engagement between institutional investors and companies so as to help improve long‐term returns to shareholders and the efficient exercise of governance responsibilities.

The code applies to:

• Asset owners such as pension schemes, foundations, endowments and sovereign wealth funds.
• Asset managers who manage assets on behalf of UK clients or invest in UK assets.
• Service providers such as investment consultants, advisors, data and research providers who support asset owners and asset managers to exercise their stewardship responsibilities.

The principles of the Code are that institutional investors should:

1. Publicly disclose their policy on how they will discharge their stewardship responsibilities.
2. Have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.
3. Monitor their investee companies.
4. Establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.
5. Be willing to act collectively with other investors where appropriate.
6. Have a clear policy on voting and disclosure of voting activity.
7. Report periodically on their stewardship and voting activities.

The Code is designed to be applied by firms on a ‘comply or explain’ basis and the FRC recognises that not all parts of the Code will be relevant to all institutional investors and some of its principles and guidance may be judged to be disproportionate for smaller institutions.

Argonaut Capital LLP (‘Argonaut’) pursues a fundamental investment strategy across a variety of jurisdictions globally with a core focus on Europe, including UK equities. A consistent approach is taken to engagement with issuers and their management across all jurisdictions in which the firm invests. In this context, Argonaut does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction. Similarly, elements of Argonaut’s investment strategy make it difficult to formally engage with investee companies through voting rights. Thus, while Argonaut is supportive of the objectives that underlie the Code it is not currently a formal signatory to the Code. We do however naturally adhere to many of the principles of the Code.

As an FCA-regulated firm and per rule 2.2.3 of the Financial Conduct Authority’s (“FCA”) Conduct of Business Sourcebook, Argonaut Capital Partners LLP (‘Argonaut’) sets out below its statement of compliance in relation to the seven principles of the Code. 

For further information on Argonaut’s approach please contact Rory Sheward – rory.sheward@argocap.co.uk

Principle 1 – Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities 

We regard good stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and other beneficiaries. We see this as intrinsically linked to our fiduciary duty which is to preserve and enhance the value of our client’s capital within our specified risk framework and the regulatory regime within which we operate. We believe the optimal form of stewardship combines responsible management and allocation of resources in a manner that does not compromise or conflict with our ability to effectively act in the best interests of clients as defined in the FCA’s Conduct of Business Sourcebook (‘Best interests’ rule’ in COBS 2.1).

We are supportive of many of the objectives that underlie the UK Stewardship Code yet we are mindful of the need, in practice, to always retain a core focus on our fiduciary obligations as outlined in COBS 2.1 when discharging our stewardship responsibilities.

Argonaut may therefore vote on securities where it believes such voting to be in the best interests of its clients. So, while procedures for proxy voting exist these are not necessarily always exercised. Voting is assessed on case-by-case basis always with client interests in mind.

Principle 2 – Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed

Argonaut maintains a robust approach to managing conflicts of interest with a detailed policy, in accordance with existing FCA regulations, designed to identify, prevent or manage any and all such conflicts that may arise in the course of its business. This policy includes but is not limited to Personal Account Dealing, Client Order Handling, Best Execution, and Use of Dealing Commissions. It is the responsibility of all Argonaut staff members to familiarise themselves with the contents of this Policy and report conflicts of interest to the Compliance Officer using the relevant channels.

Conflicts of interest can be either ‘potential’ or ‘actual’ and Argonaut will assess all conflicts accordingly. All decisions are taken wholly in the interest of clients and Argonaut aims to ensure that all conflicts (both potential and actual) are identified, managed and recorded.

Argonaut’s conflict of interest policy is available on request.

Principle 3 – Institutional investors should monitor their investee companies

Primary research on listed businesses and continuous monitoring of investee companies is a key part of Argonaut’s investment process. A variety of research and support tools are utilised to help meet this principle and the investee company monitoring process will typically include meeting with senior management figures, analysing annual reports and financial statements, using independent third party and broker research and attending company meetings. Argonaut’s CIO Barry Norris’ work as a European equity specialist for almost twenty-five years represents unique experience in the company monitoring process. That he has met with hundreds of European corporate management teams in this period provides unique insight into the monitoring process.

Principle 4 – Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value

Argonaut retains discretion over how and when it may escalate its activities in respect of intervention. Active intervention may take place if Argonaut believes this course of action to be in the best interests of its clients though typically, in the event that confidence in the management of an investee company is lost, the investment will be divested.

On the long side, Argonaut seeks to invest in companies that it believes to be well managed and, as part of the research and monitoring process, Argonaut may well express concerns or express its views to company management and/or directors in meetings or via other channels. Any concerns or views expressed will generally be motivated by the perceived failure of management to uphold shareholder value. 

The approach taken to escalate concerns to protect and enhance shareholder value will vary on a case-by-case basis.

Principle 5 – Institutional investors should be willing to act collectively with other investors where appropriate

Argonaut is supportive of collective action by investors if it can protect and/or enhance shareholder value. Thus, where legally permissible and if deemed to be in the best interests of clients and consistent with company strategy, Argonaut is willing to work collectively with other investors to protect and/or enhance shareholder value. Argonaut will determine on a case-by-case basis whether such collaboration is in the best interests of its clients.

Principle 6 – Institutional investors should have a clear policy on voting and disclosure of voting activity

Argonaut’s policy is to exercise voting rights where it believes it is in the best interests of the underlying clients for such rights to be exercised, with the primary aim of enhancing the total return of the assets it manages for those clients. Argonaut’s voting record is available to its clients either directly from Argonaut or via its custodian. Argonaut does not publicly disclose voting records as it believes such information is confidential to its clients. 

Principle 7 – Institutional investors should report periodically on their stewardship and voting activities

Upon request, Argonaut will happily provide to its Clients any details of how Argonaut voted on their behalf on any particular proxy, in a format agreed with each client.

Shareholders Rights Directive II (‘SRD II’) – Statement of Engagement

The EU Directive (EU) 2017/828 (“SRD II”) was implemented in the UK on 10 June 2019. The objective of SRD II is to encourage long-term shareholder engagement with investee companies regarding performance on strategy, governance, environmental and social issues.

Firms operating within the scope of SRD II are obliged to develop and publicly disclose an engagement policy which complies with the requirements set out in the FCA’s Conduct of Business Sourcebook and publicly disclose on an annual basis how that engagement policy has been implemented in a way that meets the requirements (including disclosure of certain voting activities in respect of shares in investee companies) or to publish a clear and reasoned explanation of why they have chosen not to comply.

The engagement policy must describe how a firm:

• Integrates shareholder engagement in its investment strategies.
• Monitors investee companies on relevant matters (e.g. strategy, financial, non-financial performance and risk, capital structure, social and environmental impact and corporate governance).
• Conducts dialogues with investee companies.
• Exercises voting and any other shareholder rights.
• Cooperates with other shareholders.
• Communicates with relevant stakeholders of investee companies.
• Manages actual and potential conflicts of interests in relation to Argonaut’s engagement.

Per rule 2.2B.6 of the Financial Conduct Authority’s (“FCA”) Conduct of Business Sourcebook, Argonaut Capital Partners LLP (‘Argonaut’) sets out below its approach to meeting the requirements set out in SRD II.

Integration of shareholder engagement in its investment strategies

Argonaut’s investment process involves rigorous fundamental analysis of prospective and current investee companies. This often involves direct engagement with senior management of investee companies in order to understand their strategy and approach.

Monitoring investee companies on relevant matters (e.g. strategy, financial, non-financial performance and risk, capital structure, social and environmental impact and corporate governance)

Argonaut’s investment process involves direct meetings with the senior management of investee companies. During these meetings a broad range of issues will typically be discussed including, but not limited to, strategies for long term growth, capital allocation, financing plans and corporate governance. Social and environmental issues may also be discussed. Argonaut’s CIO Barry Norris has worked in European equity markets for over twenty-five years and thus has unique experience in the company monitoring process. His extensive body of knowledge and experience from having repeatedly met with European corporate management teams further informs the monitoring process.

There have been instances and may be instances in the future where Argonaut believe that a portfolio company can make improvements to its governance or to other aspects of its business. In such cases Argonaut will typically discuss their concerns directly with the management team of the investee company. If the management team fail to provide a satisfactory response or respond to the stated concerns, this may result in an adjustment to Argonaut’s investment thesis. If the issue is deemed significant, Argonaut would then decide whether to continue to hold shares in the company or divest their shares altogether. Such decisions are taken on a case-by-case basis and always made with the best interests of clients in mind.

Conducting dialogue with investee companies

Argonaut’s investment process involves frequent dialogue with the senior management of investee companies. During these meetings a broad range of issues will typically be discussed including, but not limited to, strategies for long term growth, capital allocation, financing plans and corporate governance. Social and environmental issues may also be discussed. 

Exercising of voting and any other shareholder rights

A resolution proposed by an investee company that is subject to a shareholder vote in which Argonaut is eligible to participate will always be considered by Argonaut. Argonaut’s policy is to exercise voting rights where it believes it is in the best interests of the underlying clients (‘Best interests’ rule’ in COBS 2.1) for such rights to be exercised, with the primary aim of enhancing the total return of the assets it manages for those clients.

The voting decision may involve abstaining or voting against management if management actions and objectives do not match up with what Argonaut believes to be in the best interests of shareholders. Argonaut may also abstain when the vote is deemed to be more administrative than strategic in terms of subject matter. It should be noted also that Argonaut may hold positions in portfolio companies in derivative form, in which case they may not be eligible to vote.

Argonaut’s voting record is available to its clients either directly from Argonaut or via its custodian. Argonaut does not publicly disclose voting records as it believes such information is confidential to its clients.

Cooperation with other shareholders

Argonaut does not generally engage in shareholder ‘activism’ though it is supportive of collective action and/or corporation with other investors if it can protect and/or enhance shareholder value. Thus, where legally permissible and if deemed to be in the best interests of clients and consistent with company strategy, Argonaut is willing to work collectively with other investors to protect and/or enhance shareholder value. Argonaut will determine on a case-by-case basis whether such collaboration is in the best interests of its clients.

Communication with relevant stakeholders of investee companies

Argonaut is prepared to communicate directly with other relevant stakeholders of portfolio companies if it is deemed to be in the best interests of Argonauts underlying clients.

Manages actual and potential conflicts of interests in relation to Argonaut’s engagement

Argonaut maintains a robust approach to managing conflicts of interest with a detailed policy, in accordance with existing FCA regulations, that is designed to identify, prevent or manage any and all such conflicts that may arise in the course of engagement activities.

Conflicts of interest can be either ‘potential’ or ‘actual’ and Argonaut will assess all conflicts and assess them accordingly. 

Argonaut’s conflict of interest policy is available on request.

Introduction

The Investment Firms Prudential Regime (‘IFPR’) is the UK Financial Conduct Authority’s (‘FCA’) prudential regime for MiFID investment firms which aims to streamline and simplify the prudential reporting and disclosure requirements for MiFID investment firms.

IFPR came into force on 1-Jan-22 and replaced, for investment managers, the previous framework of the Capital Requirements Directive (CRD) IV and Capital Requirements Regulation (CRR).

IFPR requires firms to establish, implement and maintain adequate policies and procedures and to undertake the Internal Capital Adequacy and Risk Assessment (‘ICARA’) process on a regular basis, as enacted via MIFIPRU in the FCA Handbook. 

The ICARA process refers to the internal systems and controls which a firm must operate to identify and manage potential harms which may arise from the operation of the Firm’s business, and to ensure that its business can, if necessary, be wound down in an orderly manner.

Argonaut Capital Partners LLP (‘Argonaut’) falls within the scope of IFPR as a small non-interconnected investment firm (SNI firm) and therefore under FCA rules is required to implement the ICARA.

The Financial Conduct Authority expects all firms to make public certain information as per the IFPR and MIFIDPRU 8. 

This Public Disclosure Document has been produced by Argonaut to meet the requirements of MIFIDPRU 8.

Argonaut’s business activities are to provide discretionary investment management and distribution services for a range of OEIC funds. Argonaut pursues a valuation-orientated investment strategy focused primarily on listed equities across a variety of jurisdictions globally, with a core focus on pan Europe.

Governance 

Argonaut is privately owned by the founding partner Barry Norris and the corporate partner Norris Capital Limited. As founding partner and Chief Investment Officer (CIO) Barry Norris carries out the senior management functions of SMF1 and SMF27. Justin Mashford is the Chief Financial Officer (CFO) and holds the senior management function of compliance oversight (SMF16) and MLRO (SMF17).

Argonaut has an established risk management and governance structure to ensure that it has effective systems and controls in place to identify, monitor and manage risks arising in the business. The risk management process is overseen by Chief Operating Officer (COO) Rory Sheward with Argonaut’s management team, led by CIO Barry Norris, holding overall responsibility for the risk appetite of the firm. Argonaut’s management team is responsible for determining the strategic direction, senior-level hires, material issues and risk appetite of the firm. This includes control of areas such as financial projections, business performance, strategic initiatives, recruiting, remuneration, compliance and regulation, and risk management and the control environment.

The Management team meets on a regular basis to discuss current projections for profitability, cash flow, regulatory capital, management, business planning, and risk management. The firm also retains a library of policies and procedures with regard to the relevant laws, standards, principles, and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.

Risk management objectives and policies

Argonaut has implemented and embedded risk management processes and policies across all relevant risk areas of its business. Argonaut’s management team set the business strategy and risk appetite, which flows through to its risk management framework. Argonaut will also seek to identify and further assesses key risks via its Internal Capital and Risk Assessment (“ICARA”) process.

Argonaut is an SNI Firm. It acts solely as an agent and is a single legal entity. It does not, therefore, fall into consolidated recording.

Overall, Argonaut seeks to mitigate risk by implementing sound systems and controls and a robust corporate governance arrangement, as described above.

Below are outlined Argonaut’s risk policies on certain key areas:

Own funds requirements (MIFIDPRU 4)

• 4.4 – as an SNI firm without permissions for holding client money or client assets in the course of MIFID business, Argonaut is subject to a Permanent Minimum Requirement of £75,000. 
• 4.5 – Argonaut calculates its own funds requirements based on the Fixed Overhead Requirement (“FOR”) calculation. This is one quarter of the relevant expenditure from the previous full financial year.
• The Firm has further assessed any risks facing its business operations within its ICARA and quantified additional own funds and liquidity, where required.

Concentration risk (MIFIDPRU):

• Argonaut does not conduct any trading on own account and does not have regulatory permissions for dealing as principal. The Firm therefore does not have any concentration risks on or off-balance sheet and does not operate a trading book.

Basic liquid assets requirement (MIFIDPRU 6)

• Argonaut maintains minimum liquidity at all times, in compliance with the Basic Liquid Asset Requirement (BLAR), being at least 1/3 of its FOR.
• Argonaut does not provide any client guarantees and therefore its entire liquidity requirement is driven by its expenses, as captured by the FOR.
• As part of the ICARA, Argonaut maintains liquidity to satisfy its net wind-down costs and any additional liquidity requirements which the ICARA identified for supporting the ongoing business activities of the Firm.

Own funds requirements

Argonaut calculates its own funds requirements as an SNI firm in line with the rules and requirements in MIFIDPRU 4.3 for SNI firms (data shown in £000’s).

Total Expenses £1,218
FOR £305

Remuneration policies & practices

In accordance with MIFIDPRU 8.6.2, Argonaut makes the following qualitative remuneration disclosures:

• Argonaut’s remuneration policies and practices are reviewed annually to ensure they are appropriate and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the firm.
• The management team, as the Remuneration Committee, is directly responsible for the overall remuneration policy.
• Argonaut ensures that its remuneration structure promotes effective risk management and balances the fixed and variable remuneration components for all Staff.
• Variable remuneration is adjusted in line with capital and liquidity requirements as well as the firm’s performance.

At the heart of Argonaut’s Remuneration Policy is the need to ensure that the structure of an employee’s remuneration is consistent with, and promotes, sound and effective behaviour and that it does not encourage excessive risk-taking or behaviour inconsistent with the values and objectives of the business.

Performance assessment will not relate solely relate to financial criteria but will also include compliance with regulatory obligations, internal policies and general contribution to the business. For example, attendance of compliance training and the correct and timely submission of Personal Account (PA) dealing requests is monitored and reviewed for all employees. Considerations such as these will factor in an employee’s annual appraisal and ultimately their remuneration.

The firm does not award guaranteed bonuses. The management group set aside a proportion of the firm’s profits to form a bonus pool out of which variable remuneration awards will be made. The size of the bonus pool will be at the discretion of Argonaut’s directors, and duly recorded, giving due consideration to both the need to incentivise personnel and to the current and future stability and profitability of the firm.

Argonaut seeks an appropriate and balanced ratio between fixed and variable components of staff remuneration. At its core, the firm believes in merit-based renumeration where strong performance is rewarded. However, it also seeks to guard against excessive risk-taking and thus overall, staff are paid sufficiently high levels of fixed remuneration relative to variable remuneration to enable the operation of a fully flexible policy on variable components, including the possibility of paying no variable remuneration at all in any single year.

Where remuneration is performance-related, then in addition to the performance of the individual Argonaut will also take into account the overall results of the firm.

Remuneration quantitative disclosures

Audited accounts FYE 31 December 2023 

Introduction

While the UK is no longer part of the European Union (EU), Argonaut Capital Partners LLP (‘Argonaut’) would like to show its commitment to its EU clients by making certain disclosures in relation to the Sustainable Finance Disclosure Regulation (SFDR). SFDR is part of the EU Sustainable Finance agenda and was introduced by the European Commission as a core part of its 2018 Sustainable Finance Action Plan.

The stated aim of SFDR is to ‘reduce information asymmetries in principal‐agent relationships with regard to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment, by requiring financial market participants and financial advisers to make pre‐contractual and ongoing disclosures to end investors when they act as agents of those end investors (principals)’¹. 

Sustainability risk is defined as ‘an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment’².

Sustainability risk is typically known as Environmental, Social and Governance (ESG) risk and any single examination of ESG risk is complex given the necessary data is often difficult to obtain, inaccurate or out of date. Furthermore, there is no common requirement for entities to publish ESG data using the same template, standard or data points. Although this is likely to change in time it is an important point and serves to highlight just how nascent this part of the investment industry is.

More philosophically, ESG investing ultimately involves excluding certain stocks from an investment universe based on a subjective moral non-economic objection. If one is minded to do so, it is possible to find a moral objection to the behaviour of almost every corporation. It is also, in practice, almost impossible to have an investor client base whose own views will agree with every non-pecuniary grievance held by their fund manager.

Therefore, rather than impose a subjective view on our unitholders, Argonaut’s current approach is to have no formal policy on ESG matters.

However, in the spirit of transparency and with regard to Argonaut’s European clients in particular, we outline some further thinking on sustainability risk and our approach to ESG below.

Sustainability risk

The integration of sustainability risk into the investment decision-making process is a key objective of SFDR.

The EU defines sustainability risk as ‘an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment’.

Argonaut do not run ESG mandates or investment strategies that are governed by ESG considerations yet this does not mean environmental, social and governance matters are not considered within Argonaut’s investment process.

The occurrence of environmental and social events which negatively affect shareholder value may be fairly infrequent, yet their impact can be large thus the consideration of environmental and social factors – at both industry and enterprise level – is a relevant part of any fundamental equity analysis.

Governance meanwhile has always been a key element of Argonaut’s investment process with honest, competent corporate management teams with a clear sense of duty towards the creation of shareholder value a basic prerequisite for Argonaut long positions. 

Overall, there remains no common standard for the practical analysis or evaluation of environmental, social or governance risks and while Argonaut does not consider itself to run ESG-integrated investment strategies, the risks identified in the EU’s definition of ‘sustainability risk’ are risks that are already identified and considered within Argonaut’s existing investment process.

Indeed, by some measures it could be argued that Argonaut’s investment process takes a significantly more robust approach to identifying such risks. 

For example, the wider investment industry’s interpretation and analysis of governance risk enabled the Wirecard fraud to go undetected for almost a decade whereas Argonaut’s investment process identified this early on. Steinhoff, NMC Healthcare and Adler are similar such examples.

Such instances highlight the complexity of ESG integration as well as the nascency of the regulation generally.

Practical considerations for long-running niche investment strategies in a new and rapidly evolving regulatory framework 

While sceptical on the method of application, Argonaut is supportive of many of the core principles that underlie efforts to mitigate the risk of environmental, social and governance events negatively impacting the value of investments.

The practical implementation of such regulation is fraught with complexity and conflict risk, particularly for non-mainstream or actively differentiated investment strategies.

For example, the legally-enshrined objective of the VT Argonaut Absolute Return Fund is to provide positive returns over a 3-year period regardless of market conditions³.

The fund is not (and never has been since it’s 2009 inception) marketed or promoted as an ESG or sustainable product and investors are well-aware of this when they decide to purchase units in the fund.

The core motivation for investors purchasing units in the fund is an expectation of an unconstrained investment approach and the hope of non-correlated positive absolute return over a rolling 36-month period. 

COBS 2.1.1 states that a qualifying firm must act honestly, fairly and professionally in accordance with the best interests of clients⁴.

In the context of the VT Argonaut Absolute Return Fund’s prospectus, stated objective and how it has been marketed to clients since its 2009 inception, Argonaut considers ‘best interests’ to mean best economic interests.

Argonaut thus considers the maximizing of returns within the funds specified risk framework and regulatory regime in which it operates to be the prime consideration in discharging its fiduciary duty.

Argonaut is also of the view that a reduction in the fund’s investable universe and/or a compromising of investment returns due to an increased emphasis on non-pecuniary factors would conflict with its ability to act in clients best economic interests.

Transparency on adverse sustainability impacts

As a non-EU firm Argonaut has determined that it cannot currently commit to reporting as per the indicators in Table 1 of Annex 1 to the SFDR Level 2 Regulations, nor has it performed an assessment of the likely impact of sustainability risks on the returns of its investment products or those of its clients.

Argonaut anticipates that sustainability considerations will continue to evolve and does not rule out making such reporting in the future.

Remuneration policies in relation to sustainability risk

At the heart of Argonaut’s Remuneration Policy is the need to ensure that the structure of an employee’s remuneration is consistent with, and promotes, sound and effective behaviour and that it does not encourage excessive risk-taking or behaviour inconsistent with the values and objectives of the business.

Performance assessment will not relate solely to financial criteria but will also include compliance with regulatory obligations, internal policies and general contribution to the business. For example, attendance of compliance training and the correct and timely submission of Personal Account (PA) dealing requests is monitored and reviewed for all employees. Considerations such as these will factor in an employee’s annual appraisal and ultimately their remuneration.

The firm does not award guaranteed bonuses. The management group set aside a proportion of the firm’s profits to form a bonus pool out of which variable remuneration awards will be made. The size of the bonus pool will be at the discretion of Argonaut’s directors, and duly recorded, giving due consideration to both the need to incentivise personnel and to the current and future stability and profitability of the firm.

Argonaut seeks an appropriate and balanced ratio between fixed and variable components of staff remuneration. At its core, the firm believes in merit-based renumeration where strong performance is rewarded. However, it also seeks to guard against excessive risk-taking and thus overall, staff are paid sufficiently high levels of fixed remuneration relative to variable remuneration to enable the operation of a fully flexible policy on variable components, including the possibility of paying no variable remuneration at all in any single year.

Where remuneration is performance-related, then in addition to the performance of the individual Argonaut will also take into account the overall results of the firm.

Review

This disclosure will be reviewed annually.

Introduction

This statement is made in relation to Argonaut Capital Partners LLP (‘Argonaut’), pursuant to section 54(I) of the Modern Slavery Act 2015 (the ‘Act’) for the financial year ending 31 December 2023.

The purpose of this statement is to set out the steps that Argonaut has taken and continues to take to ensure that modern slavery or human trafficking does not take place in our business or our supply chain. 

Argonaut is committed to acting ethically and with integrity.

Our Business and Supply Chain 

Founded in 2005, Argonaut is a UK based group whose sole business activity is investment management. It pursues a fundamental investment strategy across a variety of jurisdictions globally with a core focus on Europe, including UK equities. Argonaut is authorised and regulated in the UK by the Financial Conduct Authority (FRN: 433809).

Argonaut does not tolerate modern slavery or human trafficking and takes a risk-based approach to its supply chain, including making inquiries where it is considered necessary to do so. The nature of Argonaut’s business means that it does not have complex supply chains and does not procure material services from suppliers located in high-risk countries. Argonaut sources the majority of its services from the UK and other low risk countries such as Ireland and the US where modern slavery is not prevalent. Argonaut’s suppliers are predominantly regulated financial and professional services companies, including banks, data service providers, technology providers, accountants and law firms. Argonaut also engages suppliers of equipment, maintenance and support services for its office location. 

Argonaut believes that it undertakes appropriate due diligence in relation to new suppliers and expects its suppliers and their supply chains to comply with all relevant legislation and regulation in the countries in which they operate. Argonaut has an escalation policy that allows employees to report issues and concerns without reprisals for doing so. The firms policies are periodically reviewed and, where necessary, updated to ensure its continuing commitment to the Act.

Training and Awareness

Argonaut’s Staff Compliance Manual and Code of Ethics require staff to act with integrity and abide by the firm’s policies and procedures (including, but not limited to policies relating to, Whistleblowing, AML and Anti-Bribery). All Argonaut staff are required to attest to this on a regular basis and are provided with appropriate ongoing training to ensure they are aware of their obligations to comply with the firms policies and procedures, including with respect to the risk of modern slavery. 

This statement will be reviewed annually and updated as required.

Introduction

Argonaut Capital Partners LLP (‘Argonaut’) is committed to ensuring adherence to the highest legal and ethical standards and recognises the damage that financial crime can cause to individuals, the economy and society as a whole.

Argonaut fully supports the FCA in its objective to reduce the scope for financial crime and is committed to acting fairly, professionally and with integrity and will not tolerate any form of bribery or corruption.

Bribery is a criminal offence and corrupt acts expose Argonaut and its employees to the risk of prosecution, fines and imprisonment, as well as endangering Argonaut’s reputation. Being involved in any form of bribery or corruption is very serious and will have serious implications for any employee, third party, sub-contractor or Adviser involved with the Firm.

Scope

This policy applies to Argonaut, its employees and agents. This policy has been adopted by Argonaut’s management team and is communicated to everyone involved in the business to ensure their commitment to it. Compliance with Argonaut’s Anti-Bribery and Corruption Policy is regarded as part of an employee’s contract of employment at the firm.

The Policy

Acts of bribery or corruption are designed to influence the individual in the performance of their duty and incline them to act dishonestly.

• Bribery: Is the offer, promise, giving, demanding or acceptance of an advantage as an inducement for an action which is illegal, unethical or breach of trust.
• Corruption: Is the misuse of a public office or power for private gain; or misuse of private power in relation to business outside the realm of government.

Argonaut has a zero tolerance to bribery and corruption and is committed to acting professionally, fairly and with integrity in all business dealings and relationships, implementing and enforcing effective systems. The zero tolerance to bribery extends to all of Argonaut business dealings. 

Therefore, Argonaut, its employees, officers and agents must not solicit, offer or accept any gift or inducement which may influence their independence or business judgement, or which could create a conflict with any duty owed to the company or its customers and other stakeholders.

Hence, Argonaut prohibits the offering, the promising, the giving, the solicitation and the acceptance of any bribe, whether cash or other inducement to or from any person or company, wherever they are situated and whether they are a public official or body or private person or company by any individual, employee, agent or other person or body acting on Argonaut’s behalf in order to gain:

1. Any commercial, contractual or regulatory advance for Argonaut in any way which is illegal and does not comply with The Bribery Act 2010 or
2. Any personal advantage, pecuniary or otherwise, for the individual or anyone connected with the individual.
   
   

Third Parties

Argonaut communicates our anti-bribery policy and requirements of third parties where appropriate, by the imposition of contractual terms. Argonaut requires business counterparties to implement effective policies to counter bribery and corruption in their own dealings and those associated with Argonaut, especially where there is no contractual business relationship.

(*Note: Third parties, here, include any individual or organisation doing business with Argonaut, or whom an employee comes into contact during the course of their work for Argonaut and therefore includes clients, advisers, suppliers, distributors, business contacts, correspondents, agents, service providers, brokers and government and public bodies).

Further Clarification

This policy is not meant to prohibit corporate gifts and hospitality which are considered to be incidental to the ordinary business of Argonaut. Examples of gifts and inducements which should not be offered or accepted include cash, gifts readily convertible into cash or any other object or hospitality of significant value. 

All gifts and hospitality over £100 should be reported to Compliance and added to the ‘Gift Log’. Normal business meals such as lunch, dinner, coffee meetings, etc. are excluded. Argonaut employees should always refer to Compliance if in doubt as to what they need to disclose. All gifts/ hospitality in excess of £250 in value have to be pre-agreed and signed off by a member of the management team and compliance before being accepted.

Employee Responsibility

The prevention, detection and reporting of bribery is the responsibility of all employees throughout Argonaut. Where knowledge or suspicion or reasonable grounds of suspicion exist, personnel should make a Suspicious Activity Report and/or refer the matter to the Compliance Officer.