Engagement update: Board independence within UK smaller companies

During the quarter, we engaged with two companies held in the Thoughtful UK Smaller Companies Fund on governance concerns relating to board independence. Here, Ffion Spencer talks through the engagement with Fintel and Judges Scientific.

Board independence is an important part of effective governance. We look for boards to have a sufficient number of independent directors, as they play an important role in providing objective challenge, holding management to account and reducing potential conflicts of interest. This is particularly important on key committees, such as audit and remuneration, where independent oversight is needed. Under our voting guidelines, directors who have served on a board for more than nine years are classified as non-independent, as long tenure can make it harder to evidence continued independence. We therefore look closely at whether boards have an appropriate balance of experience, independence and refreshment.

With this in mind, we met with Fintel ahead of its Annual General Meeting (AGM) to better understand the board’s approach to composition, succession planning and diversity. Under our guidelines, the board was considered less independent because two directors had reached or exceeded our nine-year tenure threshold and were therefore classified as non-independent. The board also had no female or ethnic diversity representation.

The discussion was constructive. The Chair acknowledged our concerns around long tenure and independence and explained that active succession planning was underway...

The discussion was constructive. The Chair acknowledged our concerns around long tenure and independence and explained that active succession planning was underway, with diversity being considered as part of the recruitment process. Significant board changes are expected over the next two years, with two existing directors due to step down and at least two new directors expected to be appointed. On this basis, we supported the relevant directors at this year’s AGM and will monitor progress to ensure these changes are implemented.

We also held a governance-focused call with Judges Scientific ahead of its AGM. Board independence remains relatively low, including the Chair, who is a former executive and has served on the board for a very long period. We also raised concerns about a non-independent director who had served on the board for 23 years and sat on the audit committee despite being a former employee. In our view, this is not aligned with best-practice expectations for audit committee independence.

The call was positive, and we expect some governance changes to be made. In light of the engagement and the company’s response, we chose to support the relevant resolutions at the AGM. We will continue to monitor both companies’ progress, particularly where board refreshment and committee independence remain areas for further improvement.

We will continue to monitor both companies’ progress, particularly where board refreshment and committee independence remain areas for further improvement.

Outcome: Our engagements with Fintel and Judges Scientific directly informed our voting decisions at their AGMs. We will continue to monitor both companies’ progress to ensure that the board changes are made in line with our recommendations.

Written by Ffion Spencer

This article was originally published as part of our Q2 2026 Investment Management Report (IMR).

Information is accurate as at 17.07.2026. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.