Melqart Asset Management London | ESG Policy information

Melqart Asset Management (UK) Limited’s SRD II Disclosure

The Shareholders Rights Directive EU 2017/828 (“SRD II”) amended the original Shareholder Rights Directive to strengthen shareholder engagement and increase transparency for asset managers and owners. It came into force on 09 June 2017 and most of its provisions were implemented into national law by 10 June 2019 and those on the identification of shareholders and communication with shareholders through intermediaries by 3 September 2020.

Firms that are in scope of SRD II are asset managers with a trading strategy that includes investing in shares traded on regulated markets in the UK and other comparable markets. Asset managers for these purposes include MiFID managers, full scope AIFMs, and UCITS schemes and management companies and these will set out as per the FCA Handbook section COBS 2.2B.7R an engagement policy as regards to engagement with investee companies, the related processes and requirements relevant to UK firms. As a result Melqart Asset Management (UK) Ltd (“Melqart” or the “Firm”) considers itself to be in scope to consider the application of SRD II.

SRD II Election

While Melqart supports the objectives of SRD II, it does publicly disclose an engagement policy which meets the requirements of FCA Handbook section COBS 2.2B.6R, nor does it report on its voting behaviour on an annual basis, in relation to the Firm’s portfolio management services, for the following reasons::

The Firm’s business model includes funds and accounts being managed by a variety of portfolio managers who operate independently of each other and as such, enforcing a uniform approach to shareholder engagement is not feasible or appropriate;
The investment strategies employed by each portfolio manager are also diverse, meaning that it is not possible to apply a firmwide shareholder engagement policy to all strategies or to have a single policy that covers all situations;
Sometimes the funds and accounts are managed for temporary periods only and it would not be either feasible or appropriate to make temporary changes to the investment approach;
We determine our approach to engagement on a case by case basis, taking into account the actions that will lead to the most favourable outcome for the value of our investments .

Should any of the above factors change, we will review our commitment to SRD II at that time and make an appropriate adjustment to this disclosure.

Transparency for SRD Institutional Investors
Melqart has elected not to comply with the requirements and obligations of SRD II, however, where it manages assets on a discretionary basis in a segregated account or through a collective investment undertaking for ‘SRD institutional investors’ (broadly, as incorporated into UK law, UK occupational pension schemes or life assurance clients), additional client-by-client disclosures are required irrespective of whether the Firm elects to disclose an engagement policy.

As a result, the Firm, on an annual basis, undertakes an evaluation to determine if it has any SRD institutional investors and if appropriate, will disclose to the relevant SRD institutional investor, how its investment strategy and its implementation:

Complies with the application of the rule; and
Contributes to the medium to long-term performance of the assets of the SRD institutional investor or of the fund that they are invested in.

In addition, the annual disclosure must include the following information:

The key material medium to long-term risks associated with the portfolio’s investments;
Portfolio composition;
Portfolio turnover and costs associated with it;
The use of proxy advisors for the purpose of engagement activities;
The firm’s policy on securities lending and how that policy is applied to supports the firm’s engagement activities if applicable, particularly at the time of the general meeting of the investee companies;
Whether and, if so, how, the firm makes investment decisions based on evaluation of medium- to long-term performance of an investee company, including non-financial performance; and
Whether and, if so, which conflicts of interests have arisen in connection with engagement activities and how the firm has dealt with these conflicts.

Where the presence of such an investor cannot be readily ascertained, the Firm must be able to provide this information upon request, and investors can contact Compliance@melqart.com in relation to any such request

SRD II Annual Disclosure

Annual disclosure required under FCA COBS 2.2B.7 R should include a summary of the implementation of the firm’s engagement policy, together with a general description of voting behaviour in the period, an explanation of the most significant votes and reporting on the use of the services of proxy advisors.

Melqart, as a Full Scope AIFM, has evaluated the SRD II requirements and while it does not consider it in the best interests of the Firm’s clients to publicly disclose its policies in relation to shareholder engagement or feasible to do so based on the factors above; the Firm does take these matters seriously in how it conducts its business on behalf of its clients and the Firm’s general approach is outlined below.

The Firm’s Voting Behaviour
The Firm is authorised by certain of its clients, in its absolute discretion, to exercise or refrain from exercising any voting or other rights attached to investments in the relevant client’s portfolio. Some clients may ask the Firm to exercise votes a particular way, or to engage with one or more proxy voting services. Some strategies for clients do not exercise voting rights, as a matter of client strategy. Where votes are potentially exercisable, the exercise (or otherwise) of voting or other rights as are applicable to the shares of investee companies is considered taking into account a range of factors including without limitation, the relevant client’s investment strategy, client guidelines, the cost/benefit of exercise and legal restrictions.

The Firm’s Engagement Strategy.

The Firm’s investment team reviews various different aspects of the investee companies. These include, amongst other things, matters of financial and non-financial performance, capital structure, social and environmental impact and corporate governance. The Firm’s investment team may actively monitor and engage with the management of its investee companies and regularly meet the representatives of such companies. These meetings are useful, not only to better understand the companies’ perceptions of matters, but also to allow the Firm to provide constructive feedback. The Firm considers the meetings with the executive management of investee companies to be a highly effective mechanism for raising matters that are of concern.

Occasions on which the Firm participates in collective action are likely to be infrequent as one-to-one meetings are usually an effective means of drawing the attention of companies to the Firm’s concerns. Melqart will consider consulting and/or cooperating with other shareholders where such action is believed by the Firm to be in the best interests of the Firm’s clients and having considered potential conflicts of interest in relation to the Firm’s engagement. For example, the Firm may feel that a one-to-one discussion with an investee company is not achieving adequate progress or the matters are of such severity that a collective approach is considered to be the most effective way of influencing a company’s directors; prior to such participation the Firm will consider whether it is to the overall benefit of Melqart’s clients and that action outweighs potential adverse consequences that may arise from such involvement.

The Firm aims to its conduct business according to the principle that it must at all times treat its client’s fairly and meet expected business standards of the relationship, including managing conflicts of interest fairly, both between the Firm and its clients and between one client and another.

Melqart Asset Management (UK) Limited’s ESG Policy

Melqart Asset Management (UK) Ltd (“Melqart” or the “Firm”) has implemented an Environmental, Social and Governance policy (“ESG Policy”) which will apply at both a firm level and also in respect of its investment management activities when investing on behalf of its clients. The purpose of this ESG Policy is to outline the methods through which Melqart has implemented its ESG Policy and adheres to the principles within its internal corporate operations as well as within its fund management activities. ESG issues are a reality and have been wrongly tolerated for a long time both by society generally and specifically the investment management community. Melqart believes that continuing in this laissez faire fashion will create significant problems for future generations and therefore wants to be part of shaping the future for the better.

By holding investee companies and service providers accountable for the impact they have with respect to ESG factors, the Firm hopes to influence them to change their behaviour positively; specifically to make them actively address the ESG issues that each faces such that each of them makes a positive contribution to the future. It is also important that the Firm exercises its right to divest holdings in investee companies and terminate service provider relationships to ensure that each understands the importance that the Firm attaches to ESG issues.

Melqart is a voluntary adherent to the UNPRI principles which are set out in Schedule 1 and is currently looking at how its ESG Policy may evolve in the future and how Melqart may become a signatory to the UNPRI principles.

This ESG Policy is reviewed at least annually by both the Firm’s Risk Committee and Board of Directors. The CIO is ultimately responsible for the implementation of the ESG Policy with respect to the investment portfolios. The Firm’s Risk Committee is responsible for the implementation of the ESG policy with respect to the operations of the Firm.

ESG assessment is a core component of developing an investment thesis and is integrated into the Firm’s risk management framework.

Investment Management
This ESG Policy sets out how we adhere to the following principles as they relate to responsible investing whilst carrying out investment management activities on behalf of our clients:

Our investment objective is to achieve positive risk adjusted returns through the cycle;
We invest only in businesses which would be considered lawful if they operated in the UK;
We comply with national and international environmental, social, health and safety regulations applicable to our operations and business;
We aim to invest primarily in ethical, socially and environmentally responsible companies.

In applying these principles, we strive to be both principled and pragmatic whilst taking into account industry norms, corporate performance, competitive issues, regulatory requirements and other factors necessary to put specific issues into a fair and practical context.

With respect to portfolio construction, Melqart aspires to integrate the ESG Policy into the investment management processes for all asset classes within the portfolio as responsible corporate behaviour with respect to ESG factors can generally have a positive influence on long-term financial performance. Each investment case prepared by Melqart’s investment team must include an assessment of the environmental, social and governance impact and therefore ESG factors form an integral part of the investment process. Due to the size of the Firm’s business there is no dedicated personnel for ESG matters but every member of the investment team is responsible for incorporating ESG factors into their research and the CIO is responsible for oversight and implementation of the policy from an investment management perspective.

Melqart is currently in the process of evaluating the following third-party services for ESG data evaluation with a view to integrating one of these into the Firm’s investment process shortly:

Bloomberg ESG
MSCI ESG
Sustainalytics
Truvalue Labs
Vigeo Eiris

When the Firm has finished its evaluation, the chosen third-party service provider will be used by the investment team to assess the ESG factors inherent within each investment thesis. Further to the completion of the evaluation process and implementation of the system, ESG risk limits are to be determined by the Risk Committee and integrated into the Firm’s risk management framework and monitored by the CIO and Risk Manager on a daily basis and reviewed by the Risk Committee on a monthly basis.

The Firm’s investment team reviews various different aspects of the investee companies. These include, amongst other things, matters of financial and non-financial performance, capital structure, social and environmental impact and corporate governance. The Firm’s investment team may actively monitor and engage with the management of its investee companies and regularly meet the representatives of such companies. These meetings are useful, not only to better understand the companies’ perceptions of matters, but also to allow the Firm to provide constructive feedback. The Firm considers the meetings with the executive management of investee companies to be a highly effective mechanism for raising matters that are of concern.

Occasions where the Firm participates in collective action are likely to be infrequent as one-to-one meetings are usually an effective means of drawing the attention of companies to the Firm’s concerns. Melqart will consider consulting with other shareholders where such action is believed by the Firm to be in the best interests of the Firm’s clients, having considered potential conflicts of interest in relation to the Firm’s engagement. For example, the Firm may feel that a one-to-one discussion with an investee company is not achieving adequate progress or the matters are of such severity that a collective approach is considered to be the most effective way of influencing a company’s directors; prior to such participation the Firm will consider whether it is to the overall benefit of Melqart’s clients and that action outweighs potential adverse consequences that may arise from such involvement.

Furthermore, the CIO assesses the exposure to climate risk of each position in the portfolio, both at the time the position is originally put on and on an ongoing basis. The Firm does not monitor the carbon footprint of the investment portfolio as reliable data sources for quantifying the carbon footprint of the portfolio are not currently available.

Melqart does not screen stocks or eliminate investments based on ESG factors but Melqart considers the securities of any issuer whose businesses are lawful as eligible for investment.

Melqart will not knowingly invest directly in securities (equity or debt) of listed companies involved in the manufacture, development or trade of anti-personnel mines or cluster munitions or components or services of the core weapon system which are considered tailor-made and essential for the lethal use of the weapon. These weapons are subject to international and national laws and are of concern due to humanitarian consequences and the unacceptable harm caused to civilians through their use.

The Anti-personnel Landmines Convention 1997 bans the use, stockpiling, production and transfer of anti-personnel mines and prohibits assisting others in these prohibited acts. This treaty is enforced in UK law through the Landmines Act 1998.

The Convention on Cluster Munitions 2008 bans the use, production, stockpiling and transfer of cluster munitions. Countries that have signed the Convention undertake “never under any circumstances to assist, encourage or induce anyone to engage in any activity prohibited”. This treaty is enforced in the UK via the Cluster Munitions (Prohibitions) Act 2010.

This ESG Policy applies to any fund where Melqart has the discretion over security selection and applies to long and short positions in companies that manufacture, develop or trade in the core weapon systems which are components or services that are tailor-made and essential for the lethal use of the weapon.

Melqart is authorised, in its absolute discretion, to exercise or refrain from exercising any voting or other rights attaching to the investments comprising the relevant client’s portfolio. The exercise (or otherwise) of voting or other rights as are applicable to the shares of investee companies is considered in the performance of the Firm’s investment strategy. Each such exercise of a voting or other right is assessed in light of each client’s objectives at that time as well as the Firm’s opinion of the matter on which voting rights are capable of exercise. Therefore, the Firm’s voting policy is not prescribed as each vote is considered on an individual basis, taking into account many factors.

Corporate Responsibility
Melqart aims to manage and minimise its corporate environmental footprint by engaging in activities and initiatives which are environmentally responsible. Melqart builds environmental awareness internally by encouraging all employees to recycle where possible by providing the resources needed to do so. Melqart also discourages the use of single use plastics such as cups and cutlery by providing glassware and crockery which are reused. Printing is discouraged unless necessary.

Melqart will promote respect for and protection of human rights and safe and healthy work conditions. Melqart will not tolerate violations and abuse of human rights, discrimination based on race, gender, sexual orientation, religion or age or business practices considered generally unethical and unacceptable. All staff undertake Equality and Diversity training modules upon joining the Firm, and thereafter on an annual basis which reinforces the Firm’s culture with regards to how employees should behave.

Melqart advocates responsible management throughout the Firm and views openness, honesty and accountability as key parts of its governance framework. This is covered in the Staff Handbook.

Schedule 1 – UNPRI Principles for Responsible Investment

The six Principles for Responsible Investment are a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice.

The Principles were developed by investors, for investors. In implementing them, signatories contribute to developing a more sustainable global financial system. They have attracted a global signatory base representing a majority of the world’s professionally managed investments.

Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.

Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

Principle 6: We will each report on our activities and progress towards implementing the Principles.

For further information on the Firm’s approach contact: compliance@melqart.com

Complaints Handling Procedure

Melqart Asset Management (UK) Ltd.’s complaints handling procedure is in line with Financial Conduct Authority’s rules regarding complaints handling. A copy of Melqart’s Complaints Policy is available upon request, please contact: compliance@melqart.com

Complaints may be made to Melqart by the following means:

By email: compliance@melqart.com

In writing addressed to:
Compliance Officer
Melqart Asset Management (UK) Ltd
5 St James’s Square
London
SW1Y 4JU
United Kingdom

A complainant may also have the right to take their complaint to the Financial Ombudsman Service. More information can be found in the Complaints Policy.

The Financial Ombudsman Service can be contacted at:
Email: complaint.info@financial-ombudsman.org.uk
Website: www.financial-ombudsman.org.uk

Privacy Notice

Your privacy is very important to us. This notice (“Privacy Notice”) is provided by Melqart Asset Management (UK) Ltd (“we” or “us”) and sets out our policies with respect to the collection, sharing and use of personal information.

How we collect information about you
We may collect personal data about you through:

information provided directly to us by you, or another person on your behalf, through our website, by email or post, or in person;
information that we obtain in relation to any transactions between you and us; or
recording and monitoring of telephone conversations and electronic communications with you as described below.

We may also, in some circumstances, receive personal information about you from third parties, such as service providers or trading counterparties, regulatory or law enforcement agencies, credit reference agencies and agencies conducting background checks. Personal information may also be obtained from publicly accessible sources of information, such as public databases, industry associations, social media and online professional networks

Why we collect information about you
We may collect and use your personal information for the purposes of administering the relationship between us, marketing our products and services to you or the businesses with which you are associated, monitoring and analysing our activities, and complying with applicable legal or regulatory requirements.

We will use one of the permitted grounds under the applicable law to process your information. Such grounds include instances where you have given your consent and cases where your consent is not required under applicable law, such as where we are required to comply with a legal obligation, or where we or a third party determine that is necessary for our legitimate interests to collect and use your personal information.

The legitimate interests to collect your personal information may include any of the purposes identified above and any other purpose where we or a third party have determined that you have a reasonable expectation for us or a third party to collect or use your personal information for such purpose. You have the right to object to the use of your personal data for direct marketing purposes.

What are the consequences of failing to provide your personal information?
As a regulated financial services firm, we are subject to legal and regulatory obligations that may require us to collect and store your personal information, such as the requirements to comply with the applicable law on prevention of financial crime, tax and regulatory reporting, or the rules on recording and monitoring of communications (as described below).

We may also need to collect and use your personal information for the purposes of entering into or performance of a contractual arrangement between us.

A refusal to provide us with personal information may, depending on the purpose for which your personal information is required, have various consequences such as us being unable to communicate with you, the termination of any service or other contractual arrangement between us, or, where we have a reasonable suspicion of illegal activity, we may be required to make a report to regulatory or enforcement agencies.

The types of personal data we may collect and use
The categories of personal data we may collect will depend on the nature of our relationship with you and the purpose of which information is being collected. Such personal data may include names, residential addresses or other contact details, signature, nationality, date and place of birth, national insurance or other tax identification number, photographs, copies of identification documents, bank account details, information about assets or net worth, credit history, criminal and administrative offences, source of funds details, as well as special categories of data, such as biometric data, information about a person’s ethnic origin, religious beliefs, health, or other sensitive information.

Do we use automated decision-making processes?
No.

Do we share your personal information with third parties?
We may (to the extent relevant to the purpose for which we collect your information), share your personal data with third parties, such as:

our affiliates or other entities that are part of our group or with our clients;
any person to whom we have a right or obligation to disclose personal data, or where we determine that disclosure is necessary to protect or defend our rights or property, including with regulators, courts of law, governmental, regulatory or law enforcement agencies;
our internet, IT, telecommunications and other service providers, including legal advisers, accountants, payroll administrators, insurance and employee benefits providers and administrators;
service providers and trading counterparties to our clients, including placement agents or distributors, brokers, banks, trading venues, clearing houses, custodians, corporate services providers, administrators of our funds, and providers of customer relationship management tools;
credit reference agencies and other third parties conducting background checks in the context of employment or client, counterparty, or investment due diligence;
any person, as directed by you; or
any person to whom we transfer any of our rights or obligations under any agreement, or in connection with a sale, merger or consolidation of our business or other transfer of our assets, whether voluntarily or by operation of law, or who is otherwise deemed to be our successor or transferee.

Transfers of personal information to countries outside of the European Economic Area (EEA)
Due to the international nature of our business, your personal data may be transferred to countries outside of the UK or the EEA, such as to jurisdictions where we or our clients conduct business or have a service provider, including countries that may not have the same level of data protection as that afforded by the EU General Data Protection Regulation, the UK Data Protection Act 2018 and other data protection rules applicable to us (collectively, “Data Protection Laws”). In these circumstances, we take steps to ensure that the recipient agrees to keep your information confidential and that it is held securely in accordance with the requirements of such Data Protection Laws, such as by requesting appropriate contractual undertakings in our legal agreements with service providers.

For how long do we keep your personal information?
We will generally keep personal information about you for as long as necessary in relation to the purpose for which it was collected, or for such longer period if required under applicable law or necessary for the purposes of our other legitimate interests.

The applicable retention period will depend on various factors, such as any legal obligation to which we or our service providers are subject as well as on whether you decide to exercise your right to request the deletion of your information from our systems. As a minimum, information about you will be retained for the entire duration of any business relationship we may have with you, and for a minimum period of five years after the termination of any such relationship.

We will, from time to time, review the purpose for which we have collected information about you and decide whether to retain it, update it, or securely delete it, if the information is no longer required.

What are your rights?
You have certain rights under Data Protection Laws in respect of the personal data we hold about you and which you may exercise. These rights are:

to request access to your information;
to request rectification of inaccurate or incomplete information;
to request erasure of your information (a “right to be forgotten”);
to restrict the processing of your information in certain circumstances;
to object to our use of your information, such as where we have considered such use to be necessary for our legitimate interests (e.g. in the case of direct marketing activities);
where relevant, to request the portability of your information;
where you have given consent to the processing of your data, to withdraw your consent; and
to lodge a complaint with the competent supervisory authority.

How to contact us
If you have any questions about this Privacy Notice or requests with regards to the personal data we hold about you, you may contact our Compliance Officer by email at compliance@melqart.com or by writing to Melqart Asset Management, 5 St James’s Square, London SW1Y 4JU, United Kingdom.

Complaining to ICO
You have the right to complain to the Information Commissioner’s Office (ICO). Further information is available from the ICO’s website https://ico.org.uk/

Recording and monitoring of communications
We may record and monitor telephone conversations and electronic communications with you for the purposes of:

ascertaining the details of instructions given, the terms on which any transaction was executed or any other relevant circumstances;
ensuring compliance with our regulatory obligations; or
detecting and preventing the commission of financial crime.
Copies of recordings will be stored for a period of five years, or such other longer period as we may determine from time to time.

Recording of Telephone Conversations and Electronic Communications

We may record and monitor telephone conversations and electronic communications with you for the purposes of: (1) ascertaining the details of instructions given, the terms on which any transaction was executed or any other relevant circumstances; (2) ensuring compliance with our regulatory obligations; and (3) detecting and preventing the commission of financial crime. Copies of recordings will be stored for a period of five years, or such longer period as may be determined by Melqart. For further information relating to how we use the information we collect, please refer to our Privacy Notice.

MIFIDPRU 8 Disclosure for Melqart Asset Management (UK) Limited (“Melqart” or the “Firm”)

August 2024

Introduction

The Financial Conduct Authority (“FCA” or “regulator”) in its Prudential sourcebook for MiFID Investment Firms (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Melqart. In particular, Chapter 8 of MIFIDPRU (“MIFIDPRU 8” or the “public disclosures requirements”) sets out public disclosure obligations with which the Firm must comply, further to those prudential obligations.

Melqart is classified under MIFIDPRU as a small and non-interconnected investment firm (“SNI MIFIDPRU investment firm”). As such, MIFIDPRU 8 requires Melqart to disclose information regarding the Firm’s remuneration policy and practices.

The purpose of these disclosures is to give stakeholders and market participants an insight into the Firm’s culture and to assist stakeholders in making more informed decisions about their relationship with the Firm.

This document has been prepared by Melqart in accordance with the requirements of MIFPRU 8 and is verified by the board. Unless otherwise stated, all figures are as at the 30 November 2023 (the financial year-end of the firm).

Remuneration Policy and Practices

Overview
As an SNI MIFIDPRU investment firm, Melqart is subject to the basic requirements of the MIFIDPRU Remuneration code as detailed in SYSC 19G of the FCA Handbook. As an alternative investment fund manager, Melqart is also classified as a collective portfolio management investment firm (CPMI), and as such, is also subject to the AIFM Remuneration Code (SYSC 19B) and prudentially regulated by the FCA in the UK. The Firm has determined the Remuneration Policy’s compliance with the 18 principles scheduled in SYSC 19B.1.5 to 19B.1.24 inclusive in a way which is appropriate to its size, internal organisation and the nature, scope and complexity of its activities. The Firm has also taken into account the MIFIDPRU proportionality principle detailed in SYSC 19G.2.R whereby SNI firms are subject to the ‘basic’ requirements of the MIFIDPRU Remuneration Code.

The purpose of the requirements on remuneration is to:

Promote effective risk management in the long-term interests of the Firm and its clients.
Ensure alignment between risk and individual reward.
Support positive behaviours and a healthy firm culture.
Discourage behaviours that can lead to misconduct and poor customer outcomes.

In addition, the objective of Melqart’s remuneration policies and practices is to establish, implement and maintain a culture:

Consistent with the business strategy and values of the Firm.
That promotes risk awareness, prudent risk taking and sound and effective risk management.
That does not encourage excessive risk-taking which is inconsistent with the risk profile of the Firm. and the services that it provides to its clients.
That contains measures to avoid conflicts of interest.
That shows how variable awards do not affect the Firm’s ability to ensure a sound capital base.

In addition, Melqart recognises that remuneration is a key component in how the Firm attracts, motivates and retains quality staff and sustains consistently high levels of performance, productivity and results. As such, the Firm’s remuneration philosophy is also grounded in the belief that its people are the Firm’s most important asset and greatest competitive advantage.

Melqart is committed to excellence, teamwork, ethical behaviour and the pursuit of exceptional outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, conduct and results.

Characteristics of the remuneration policy and practices

The Firm’s Remuneration Policy is gender neutral and additionally, does not discriminate against individuals on the basis of any of the nine characteristics as detailed under regulation 4 of the Equality Act 2010.

The remuneration of staff is based on the following factors:

Merit.
The performance of their activities.
Their adherence to the FCA Conduct Rules.

Bonuses paid to staff are fully discretionary and are dependent on the following factors:

Seniority and service of the member of staff.
Performance of the individual.
Performance of the Firm.
Whether the individual is part of the Business Management or Investment Team.

Remuneration – Fixed and Variable Components
Remuneration at Melqart is made up of a fixed and variable component.

The fixed component comprises salary and employee benefits in line with prevailing market conditions for the role taking into account an individual’s experience, skill set and educational background. The fixed component is also taken into account when allocating any variable component of remuneration to ensure that the total compensation of each individual is within the limits expressed in the Firm’s Remuneration Policy.

Variable remuneration of staff members comprises a discretionary bonus and is subject to an assessment of the individual’s financial and non-financial performance and determined on an individual basis within a set framework determined by the Governing Body, following an annual performance review and subject to the discretion of the Firm. As an SNI firm subject to the basic remuneration requirements, the Firm has not elected to set minimum and maximum performance percentages. The Firm utilises a balanced scorecard technique to document the results of the review and the evaluation is discussed with the individual during annual assessments. A weighted rating in favor of effective risk and compliance with the Firm’s policies and procedures is used to ensure an individual’s remuneration promotes effective risk management.

The fixed and variable components of remuneration are appropriately balanced: the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying a no-variable remuneration component, which the Firm would do in certain situations, such as where the Firm’s profitability performance is constrained, or where there is a risk that the Firm may not be able to meet its regulatory capital or liquidity requirements.

Governance and Oversight
The Firm’s Remuneration Committee is responsible for setting and overseeing the implementation of Melqart’s remuneration policy and practices and meets annually in January each year to consider the performance of individual staff and to determine salaries and bonuses.

The Firm’s Board sets the Firm’s Remuneration Policy for the following year. This includes:

A review of the Firm’s Remuneration Policy for the previous year and its performance and risk adjustments.
A thorough risk and capital planning assessment of the business for the next three years which is reviewed annually.
A determination of the size of the variable remuneration pool available, taking into consideration:
- The remuneration required to retain qualified and experienced staff.
- The capital requirements for the next three years.
- Any potential liabilities.
- The Firm’s liquidity requirements.
- Stress testing.

In addition, the following are also considered:

Remuneration policies and practices and the incentives created for managing risk, capital and liquidity.
Decisions which have implications for the risk and risk management of the Firm.
The public interest and the long-term interests of shareholders, investors and other stakeholders in the Firm.
Business strategy, objectives, values and interests of the Firm and of its clients.

The Firm ensures that individuals performing Control Functions remain independent from the business areas they oversee to avoid potential conflicts of interest. As Melqart is a relatively small firm with a limited number of personnel, it is inevitable that it will not always be possible to ensure independence. Where relevant, this is referenced in the firm’s Conflicts of Interest Policy. The Governing Body determines the remuneration of individuals performing Control Functions against specified objectives linked to the Firm’s adherence to its risk profile.

Quantitative Remuneration Disclosures
For the financial year 1 December 2022 to 30 November 2023, the total amount of compensation (fixed and variable) paid to all Firm staff was as follows:

Fixed	2,365,180
Variable	3,016,180
Total	5,381,360

Melqart Asset Management (UK) Limited’s Commitment to the UK Stewardship Code

Under Rule 2.2.3R of the FCA’s Conduct of Business Sourcebook, Melqart Asset Management (UK) Limited (the “Firm”) is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council’s Stewardship Code (the “Code”) or, where it does not commit to the Code, its alternative investment strategy. The Code is a voluntary code and sets out a number of principles relating to engagement by investors with UK equity issuers. Investors that commit to the Code can either comply with it in full or choose not to comply with aspects of the Code, in which case they are required to explain their non compliance and state in general terms its alternative investment strategy.

The seven principles of the Code are that institutional investors should:

Publicly disclose their policy on how they will discharge their stewardship responsibilities
Have and publicly disclose a robust policy on managing conflicts of interest in relation to stewardship
Monitor their investee companies
Establish clear guidelines on when and how they will escalate their activities
Be willing to act collectively with other investors where appropriate
Have a clear policy on voting and disclosure of voting activity
Report periodically on their stewardship and voting activities

The Firm provides investment management services to various funds (“the Funds”) that pursue investment strategies that involve investing in a wide range of securities and instruments without limitation in various jurisdictions. If the Firm were to invest directly in UK single equities these would represent only a small part of the firm’s business. Hence, while the Firm generally supports the objectives that underlie the Code, the Firm has chosen not to commit to the Code. The approach of the Firm in relation to engagement with issuers and their management is determined globally. The Firm takes a consistent approach to engagement with issuers and their management in all of the jurisdictions in which it invests and, consequently, does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction.

For further information on the Firm’s approach contact: compliance@melqart.com

Modern Slavery Statement

Melqart Asset Management (UK) Ltd (“Melqart” or the “Firm”) has made the following statement on modern slavery and human trafficking pursuant to section 54 of the UK Modern Slavery Act 2015 (the “Act”).

The Act sets out a range of measures on how modern slavery and human trafficking should be dealt with in the UK to combat modern slavery from occurring in business supply chains and organisations.

Business and Organisation Structure
Melqart is an investment manager which is authorised and regulated by the UK Financial Conduct Authority (“FCA”) to undertake investment management activities on behalf of its clients, which are a range of collective investment schemes classified as Alternative Investment Funds (AIFs) under the Alternative Investment Fund Managers Directive (“AIFMD”).

Our policy
Melqart firmly believes in operating its business in an ethical manner and with high standards of integrity as expected of an FCA regulated entity. We are opposed to the use of any supply chains and services which may involve slavery, human trafficking or forced labour. To the best of our knowledge we believe this is not the case, but in the unlikely event that anything of this nature is identified then we reserve the right to take the necessary action, which includes a duty to notify the UK Home Office and termination of the relevant contract.

Supply Chain Review and Due diligence
Melqart does not deal in manufactured items, hard goods, and it does not have offices in any developing countries, nor does it purchase any goods from developing countries.

Our review has concluded that the services we provide and the supply chains which are used by Melqart are highly unlikely to involve any human trafficking or slavery.

As Melqart is involved in investment management, it only has a limited supply chain, and this involves the use of reputable service providers.

Risk Assessment
Melqart has reviewed its existing supply chain and service providers and believes the perceived level of risk is low.

Controls and Review Process
Melqart uses only reputable service providers and suppliers. As part of its on-boarding process we will review any supplier and request information on their hiring process and working practices. We will also confirm with the potential supplier our strict prohibition on the use of any supply chains and services which may involve slavery, human trafficking or forced labour. Melqart will undertake periodic reviews of its suppliers where it appears there is a potential risk involving a service provider.

This statement will be reviewed annually and where necessary this will be updated to reflect any changes in our practices regarding the use of supply chains and services that could be impacted.

ESG Policy

ESG Policy

INVESTMENT

CORPORATE COMMITMENT

INVESTMENT

CORPORATE COMMITMENT