About Tetragon

Corporate Structure & Governance

Organizational Structure and Corporate Governance of TFG

Organizational Structure

Tetragon Financial Group Limited (“TFG”) is a Guernsey closed-end investment company that currently invests through a “master-feeder” structure whereby TFG’s only direct investment is in shares of Tetragon Financial Group Master Fund Limited (the “Master Fund”).  The following is a summary of certain provisions of the Memorandum and Articles of Incorporation of TFG and the Master Fund and is qualified in its entirety by reference to all of the provisions of each Memorandum and Articles of Incorporation found at the links below.

Capital Structure of TFG

TFG has an authorized share capital of $1,000,000 divided into 10 Voting Shares (the “Voting Shares”), having a par value of $0.001 each and 999,999,990 non-voting shares (the “Shares”), having a par value of $0.001 each.  The Shares are listed on the Euronext Amsterdam Exchange under the ticker symbol “TFG”.  The 10 Voting Shares in issue were issued at par and are owned by Polygon Credit Holdings II Limited, which is a non-U.S. affiliate of the Investment Manager and Polygon.

The Voting Shares are the only shares of TFG entitled to vote for the election of TFG’s Directors and on all other matters, subject to the limited rights of the Shares described in TFG’s Memorandum and Articles of Incorporation.  The Voting Shares are not entitled to receive dividends.

Except as described in TFG’s Memorandum and Articles of Incorporation, the Shares are not entitled to vote on any matter.  The Shares carry a right to any dividends or other distributions declared by TFG.

Board Structure, Practices and Committees of TFG and the Master Fund

The structure, practices and committees of the Board of Directors of each of TFG and the Master Fund, including matters relating to the size, independence and composition of the Board of Directors, the election and removal of Directors, requirements relating to board action and the powers delegated to board committees, are governed by each entity’s respective Memorandum and Articles of Incorporation.

Size, Independence and Composition of the Board of Directors of TFG and the Master Fund

Each of TFG and the Master Fund has seven directors (“Directors”).  Subject as set out below and as elsewhere described in the risk factors found on TFG’s website at http://www.tetragoninv.com/tfg/investor/riskfactors/, not less than a majority of the Directors are independent.  A Director will be an “Independent Director” if the Board of Directors determines that the person satisfies the standards for independence contained in the U.K. Combined Code in all material respects.  If the death, resignation or removal of an Independent Director results in the Board of Directors having less than a majority of Independent Directors, the vacancy must be filled promptly.  Pending the filling of such vacancy, the Board of Directors may temporarily consist of less than a majority of Independent Directors and those Directors who do not meet the standards for independence may continue to hold office.  A Director who is not an Independent Director will not be required to resign as a Director as a result of an Independent Director’s death, resignation or removal.  In addition, the TFG’s Memorandum and Articles of Incorporation prohibit the Board of Directors from consisting of a majority of Directors who are resident in the United Kingdom.

Election and Removal of Directors of TFG and the Master Fund

Each member of the TFG’s Board of Directors is elected annually by the holders of its Voting Shares.  All vacancies on the Board of Directors including by reason of death or resignation may be filled, and additional Directors may be appointed, by a resolution of the holders of TFG’s Voting Shares.

A Director may be removed from office for any reason by notice requesting resignation signed by all other Directors then holding office, if the Director is absent from four successive meetings without leave expressed by a resolution of the Directors or for any reason by a resolution of the holders of Voting Shares.  A Director will also be removed from the Board of Directors if he becomes bankrupt, if he becomes of unsound mind, if he becomes a resident of the United Kingdom and such residency results in a majority of the Board of Directors being residents of the United Kingdom or if he becomes prohibited by law from acting as a Director.  A Director is not required to retire upon reaching a certain age.

Action by the Board of Directors of TFG and the Master Fund

The Board of Directors may take action in a duly convened meeting, for which a quorum is five Directors, or by a written resolution signed by at least five Directors.  When action is to be taken by the Board of Directors, the affirmative vote of five of the Directors then holding office is required for any action to be taken.  As a result, the Board of Directors will not be able to act without the affirmative vote of one or more directors affiliated with Polygon.

The Directors are responsible for the management of TFG.  They have delegated to the Investment Manager certain functions, including broad discretion to adopt an investment strategy to implement TFG’s investment objective.  However, certain matters are specifically reserved for the Board of Directors under the Memorandum and Articles of Incorporation.

Transactions in which a Director has an Interest

Provided that a Director has disclosed to the other Directors the nature and extent of any interests of his in accordance with the Companies (Guernsey) Law, 2008, as amended, a Director, notwithstanding his office: (a) may be a party to, or otherwise interested in, any transaction or arrangement with TFG or the Master Fund or in which TFG or the Master Fund is otherwise interested; (b) may be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by TFG or the Master Fund or in which TFG of the Master Fund is otherwise interested; and (c) shall not be accountable to TFG or the Master Fund for any benefit derived from any such transaction or arrangement or from any interest in any such body corporate, and no such transaction or arrangement shall be void or voidable on the ground of any such interest or benefit or because such Director is present at or participates in the meeting of the Directors that approves such transaction or arrangement, provided that (i) the material facts as to the interest of such Director in such transaction or arrangement have been disclosed or are known to the Directors and the Directors in good faith authorize the transaction or arrangement and (ii) the approval of such transaction or arrangement includes the votes of a majority of the Directors that are not interested in such transaction or such transaction is otherwise found by the Directors (before or after the fact) to be fair to TFG or the Master Fund as of the time it is authorized. Under the Investment Management Agreement, the Directors have authorized the Investment Manager to enter into transactions on behalf of TFG or the Master Fund with persons who are affiliates of the Investment Manager, provided that in connection with any such transaction that exceeds $5 million of aggregate investment the Investment Manager informs the Directors of such transaction and obtains either (i) the approval of a majority of the Directors that do not have a material interest in such transaction or (ii) an opinion from a recognized investment bank, auditing firm or other appropriate professional firm substantively to the effect that the financial terms of the transaction are fair to TFG and the Master Fund from a financial point of view.

For information regarding certain transactions to occur in connection with the Master Fund’s purchase of Lyon Capital Management LLC in which certain Directors had a material interest please proceed to the following webpage:
LCM Transaction.

For information regarding certain transactions to occur in connection with the GreenOak investment transactions in which certain Directors had a material interest, please proceed to the following webpage: GreenOak Transaction.

Audit Committee of TFG

The Audit Committee of TFG is responsible for, among other items, assisting and advising TFG’s Board of Directors with matters relating to TFG’s accounting and financial reporting processes and the integrity and audits of TFG’s financial statements.  The Audit Committee is also responsible for reviewing and making recommendations with respect to the plans and results of each audit engagement with TFG’s and the Master Fund’s independent accountants, the audit and non-audit fees charged by the independent accountants and the adequacy of TFG’s and the Master Fund’s internal accounting controls. 

Compensation

The remuneration for Directors shall be determined by resolution of the Voting Shareholder.  Currently, the Directors’ annual fee is $50,000, in compensation for service on the Boards of Directors of both TFG and the Master Fund.  The Master Fund will pay the Directors’ fees.  The Polygon-affiliated Directors have waived their entitlement to a fee.  The Directors are entitled to be repaid by TFG for all travel, hotel and other expenses reasonably incurred by them in the discharge of their duties.  Directors of the Master Fund are compensated and reimbursed on the same basis.  None of the Directors has a contract with TFG or the Master Fund providing for benefits upon termination of employment.

Corporate Governance Rules

No formal corporate governance code applies to TFG or the Master Fund under Dutch law.  Please refer to the risk factors found on TFG’s website at http://www.tetragoninv.com/tfg/investor/riskfactors/ for more information.  TFG and the Master Fund are required to comply with all provisions of Guernsey company law relating to corporate governance to the extent the same are applicable and relevant to TFG’s activities.  In particular, each Director must seek to act in accordance with the “Code of Practice—Company Directors” issued by the Guernsey Financial Services Commission.

Indemnity

Each present and former Director or officer of TFG and the Master Fund will be indemnified against any loss or liability incurred by the Director or officer by reason of being or having been a Director or officer of TFG or the Master Fund.  In addition, the Directors may authorize the purchase or maintenance by TFG and the Master Fund for any Director or officer or former Director or officer of TFG or the Master Fund of any insurance, in respect of any liability which would otherwise attach to the Director or officer or former Director or officer.

 




The information contained in this webpage supersedes any previous disclosure by TFG or the Master Fund with respect to such information.

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