L1 recognises that our success rests on maintaining best-in-class corporate governance and a sound business reputation. While L1 is a privately held business, we implement governance practices that are benchmarked against the best public company international standards.
We are committed to ensuring the highest standards of corporate governance, business practice and ethics.
Following a period of relative stability, L1 is now embarking on a growth phase. It remains vital for L1 to maintain its best-in-class governance and compliance standards to drive better decision-making, create greater transparency with all its stakeholders and build trust. This approach has been positively acknowledged by regulators, banks, auditors and other key stakeholders. L1 is leading the way as a business dealing with challenging external circumstances.
LetterOne is an international investment business consisting of two groups:
At a corporate level, L1 operates through two Boards of Directors, each with executive, shareholder and independent directors. The Boards are supported by their Audit & Compliance, and Nomination & Remuneration Committees. The Board of Directors of L1 Holdings is responsible for setting investment strategy and approving investment decisions for L1 Energy. The Board of Directors of L1 Investment Holdings is responsible for setting investment strategy and approving investment decisions for L1 Technology, L1 Treasury, L1 Health and L1 Retail.
L1 Holdings is the ultimate parent of the group comprising L1 Energy, which invests in the energy sector. L1 Investment Holdings is the ultimate parent of the group comprising L1 Technology, L1 Health, L1 Retail and L1 Treasury. L1 Investment Holdings makes investments in the telecoms and technology sectors through L1 Technology, in the healthcare sector through L1 Health and in the retail sector through L1 Retail. L1 Treasury manages L1’s liquidity and financial investments.
The investment teams in L1 Energy, L1 Technology, L1 Health and L1 Retail put forward investment recommendations. The corporate structure of L1 has been carefully designed so that investment decisions are scrutinised thoroughly, before they are presented to the L1 Holdings and L1 Investment Holdings Boards for an investment decision. To challenge our investment teams’ recommendations and to challenge our assumptions, we have recruited sector investment advisory boards consisting of internationally respected chief executives and entrepreneurs. Each advisory board provides advice on whether or not to proceed with a particular opportunity in its sector. The advisory boards play an essential role in our investment governance process. The oversight of our wholly owned companies, and strategic equity holdings, is undertaken by separate teams in L1 Energy, L1 Technology, L1 Health and L1 Retail. They work actively with the management of the companies we invest in, providing strategic input and monitoring the operational performance of each portfolio. They are responsible for setting strategy, finance, capital allocation, performance management and top team talent management within their companies.
L1 Treasury’s investment parameters are set by the Investment and Risk Committee, delegated by the L1 Treasury Board within a framework approved by the Board of L1 Investment Holdings. Individual investment decisions are then taken by a separate L1 Treasury team headed by the CIO of L1 Treasury.
L1 is committed to the highest standards of governance, including transparent financial and tax reporting. L1 strongly believes that pursuing a transparent tax policy is a part of doing business. This is in line with L1’s Code of Conduct. In addition, the interests of all relevant stakeholders – shareholders, employees, governments, suppliers, business partners, and minority investors – are balanced with our policy.
Governance
The L1 Tax Director is responsible for our tax policy, which is approved by the main Board and Audit Committees. The L1 Tax Director is also responsible for maintaining and updating this policy and for ensuring that procedures supporting the policy are in place, maintained, and used consistently throughout L1.
To safeguard adherence to its tax policy, L1 maintains a well-educated staff of tax and finance professionals who are in constant contact with L1’s business units and senior management. The L1 Tax Team will provide guidance to the business unit on the tax implications of particular transactions. In addition, L1 makes use of the services of accredited tax advisors at all relevant levels in L1 and has included tax compliance in its internal audit programme.
Tax planning
L1 reports and pays taxes in the jurisdictions in which it operates in accordance with all relevant tax laws and regulations. L1 complies with such laws and regulations as well as what we believe to be the spirit of those laws and regulations.
Transactions must be driven by a legitimate commercial purpose and will consider appropriate tax planning when entering into such commercial arrangements. In addition, consideration is also given to the reputation of L1 and to its corporate and social responsibilities.
L1 staff are required to file all the required tax-relevant filings with the appropriate tax authorities in a timely and complete manner. To assure timeliness and completeness, tax filings are monitored through L1’s comprehensive tax control framework, which is regularly reviewed and updated. L1 has a very low tolerance for errors in tax processes, including tax compliance processes.
Transactions conducted between L1 companies located in different countries are conducted on an arm’s length basis and in line with current OECD principles and other local transfer-pricing regulations. L1 has implemented a Transfer Pricing Policy to ensure consistent application of international recharging throughout L1.
Tax risk management
L1 adopts a neutral tax risk position and adheres to very high standards of governance in its approach to managing tax risk. This includes the signoff of complex matters by external advisors. To ensure that tax matters are appropriately addressed in transactional activity undertaken by L1 (both in its corporate capacity and in respect of joint ventures), the L1 Tax Team is notified whenever a transaction is proposed.
The tax positions adopted by L1 must be those, which we are confident are robust and in accordance with relevant legislation, based on the tax laws at the particular time. L1 will obtain external opinions in relation to the level of risk for more significant transactions, and consultation may be sought from a tax authority, if appropriate.
All notifications of tax audits or enquiries must immediately be referred to the L1 Tax Director, who will determine, in consultation with the business unit, the approach to be taken and which advisors to use.
Relationships with governments
L1 aims for open and constructive dialogue with tax authorities, including HMRC, on the basis of disclosure of all relevant facts and circumstances. L1 intends to be clear about all aspects pertaining to its tax position and share these in a transparent manner with tax authorities to achieve upfront certainty on tax matters.
This tax strategy applies to the accounting period ended 31 December 2017. L1 adopts the same tax strategy for its global group and does not alter this policy for the UK. Accordingly, L1 regards this publication as complying with its duties under Schedule 19 of the Finance Act 2016.
Ernst & Young UK LLP (Luxembourg and London)
Throughout 2024, L1 has continued to reinforce its governance, compliance framework and control processes to become a leading example in navigating the new challenges we now face.
L1 considers compliance with laws, regulations and high ethical standards not only a legal obligation but also a fundamental aspect of our organisational values and the philosophy that supports our operations to ensure that the business, employees and reputation of L1 are secure. L1 takes a zero-tolerance approach to compliance risks arising from violating any law or regulation. Any actual or perceived violation of compliance standards is immediately investigated by the Group Compliance Director and escalated to the General Counsel, the CEO and the Audit Risk & Compliance Committee. L1’s whistleblowing channels are clearly communicated and remain effective in L1 and its portfolio companies.
Following the imposition of sanctions on two of our shareholders in 2022, L1 moved swiftly to put in place extensive restrictive and distancing measures, checks and controls to ensure that L1 could not be controlled, nor could it be deemed to be controlled, by its sanctioned shareholders. The sanctioned shareholders are not involved in any way, directly or indirectly, in the management, administration or supervision of L1 or any of its subsidiaries.
L1’s Board was overhauled and comprises industry-leading, independent non-executive directors. At present, the L1 Board is made up of nine individuals comprising EU, UK and Swiss (including dual) nationals.
To ensure L1 can survive as a business with two sanctioned shareholders, L1 has developed best-in-class compliance oversight, reporting and monitoring standards across the whole business. Committed to the highest standards, L1 takes its ongoing sanctions compliance obligations extremely seriously and has a robust set of procedures to ensure compliance with sanctions. L1 has embedded a culture of compliance, transparency and accountability within its operations and those of our portfolio entities. This ensures that L1 not only adheres to regulatory obligations, legal mandates and corporate best practices but also safeguards its reputation and enhances its market standing.
In 2024, L1 has recorded 100% compliance with its sanctions compliance measures. This includes the payments blacklist procedures and the monthly attestation process requiring all staff to attest to the CEO and the Board that no benefits or instructions have been given to or received from the sanctioned shareholders and that there have been no transactions with any person or entity on the payments blacklist. L1’s auditors externally validate these measures as part of the statutory audit process.
Furthermore, L1 maintains a comprehensive sanctions compliance policy and conducts sanctions training for all staff to ensure that everyone working for L1 operates to the highest standards. Whistleblowing remains an integral part of the compliance framework, with four channels (internal and external) made available to employees (named or anonymous at their election).
We can proudly say that all our staff are highly aware of sanctions laws, market conduct regulations, anti-bribery legislation and anti-money laundering laws. L1 has a strong compliance culture, overseen by the Group Compliance Director, who reports to the General Counsel and the Audit Risk & Compliance Committee.
1 Board-level Governance
At a corporate level, L1 operates through two Boards of Directors, each with one executive and eight independent non-executive directors.
The Board of Directors of LetterOne Holdings SA is responsible for setting investment strategy and approving investment decisions for L1 Energy and New Energy. The Board of Directors of LetterOne Investment Holdings SA is responsible for setting investment strategy and approving investment decisions for L1 Technology, L1 Treasury, L1 Health, L1 Retail, L1 Impact and Fund investments. The Boards are supported by the Audit Risk & Compliance, Nomination, Remuneration and Sustainability Committees.
For up-to-date details of our Board members visit Our Board – LetterOne.
2 Board of Directors
The L1 Boards have full control over L1. The Boards convene in person at least four times a year, in Luxembourg, and make decisions on capital allocation
(including investments and divestments), strategy and budgets. The L1 Boards take decisions by majority vote, with each member having one vote and no member having a veto or other special voting right. In the case of a tie, the Chair does not have a casting vote.
The L1 Boards are supported by the Chair’s Advisory Council, led by Sir Brandon Lewis. The Chair’s Advisory Council demonstrates L1’s commitment to outstanding governance as a business which is wholly separate of its founders.
3 Audit Risk & Compliance Committee (ARCC)
The ARCC meets in Luxembourg on a quarterly basis to review financial reporting, audit, tax, compliance, IT and risk management matters. Compliance is a standing item on the agenda and the Group Compliance Director presents a report covering the previous quarter on the ongoing compliance programme, reporting on monthly attestation completion rates, compliance statistics, compliance issues across the portfolio companies and a report on breaches or any compliance issues under investigation.
Our external auditor, E&Y, is invited to attend each meeting. The key roles of the ARCC are to ensure the integrity of L1’s financial statements, to maintain the effectiveness of the internal and external audit functions and to assess the effectiveness of the internal controls and risk management frameworks of L1 and its portfolio companies. Its role is also to ensure the overall adequacy of compliance programmes and policies, including their communication throughout the Group and portfolio companies, as well as the Group’s compliance with all legal and regulatory requirements.
In 2024, the ARCC played a pivotal role in ensuring that the effectiveness of sanctions-related control processes at L1 and its investee companies remained robust and provided guidance to the top management in response to the evolving landscape. The ARCC reviewed advice from external legal counsel on L1’s sanctions position and its compliance with laws and regulations.
4 Nomination Committee (NomCo)
The NomCo approves the employment of senior executives, sets the principles of the performance management process, approves KPIs and reviews performance. The NomCo ensures the Board embodies an appropriate mix of skills, independence and diversity. Developing and implementing a sound succession strategy for the Board and other key management positions is also within NomCo’s mandate.
5 Remuneration Committee (RemCo)
The RemCo makes decisions on remuneration and incentive schemes. Both the NomCo and the RemCo meet at least annually in Luxembourg, plus ad hoc when required.
6 Sustainability Committee
The Sustainability Committee oversees L1’s overall impact and reputation and ensures that they deliver on their stated aims and deliver tangible benefits for communities, colleagues, stakeholders and the business. The Sustainability Committee meets bi-annually in Luxembourg, plus ad hoc as required.
7 Corporate Governance
L1 has established a structured and systematic approach to managing compliance with legal requirements, industry standards and internal policies. We have integrated compliance culture into the fabric of our daily operations, aiming to prevent, detect and respond to compliance risks effectively. Delineating clear guidelines, responsibilities and procedures ensures that L1 not only adheres to applicable laws and regulations but also upholds ethical principles and maintains its reputation among stakeholders, especially in light of its delicate position with regard to the global sanctions regime.
Furthermore, L1 has facilitated a culture of compliance and accountability, enabling us to navigate the complexities of the regulatory environment confidently. A risk-based compliance framework provides a guide for strategic decision-making by providing mechanisms for continuous monitoring, assessment and improvement of compliance practices, ultimately contributing to L1’s long-term sustainability and success. High standards of due diligence measures are applied to all third parties with whom we do business or seek to do business (with no de minimis limit), including ongoing monitoring of all third party relationships and transactions.
L1 has maintained its strict anti-bribery and corruption and anti-money laundering (AML) procedures, including training for all staff. We require all business parties to comply with anti-bribery and AML laws. An annual compliance risk assessment identifies any areas of risk not addressed by existing policies and procedures and ensures that highly focused compliance policies remain effective and fit for purpose.
Since its establishment, L1 has produced consolidated IFRS financial statements, which are subject to annual audits by E&Y.
8 Role of Advisory Boards
The investment teams in L1 Energy, L1 Health, L1 Retail, L1 Technology, L1 Impact and Fund Investments put forward investment recommendations, which are scrutinised thoroughly before they are presented to the LetterOne Holdings SA and LetterOne Investment Holdings SA Boards for an investment decision. To challenge our investment teams’ recommendations and our assumptions, we have recruited sector investment Advisory Boards consisting of internationally respected chief executives, chairs and entrepreneurs. Each Advisory Board provides advice on whether to proceed with a particular opportunity in its sector. The Advisory Boards play an essential role in our investment governance process. The oversight of our wholly-owned companies and strategic equity holdings is undertaken by separate teams in L1 Energy, L1 Health, L1 Retail, L1 Technology, L1 Impact and Fund Investments. They work with the boards and management of the companies we invest in, providing strategic input and monitoring the operational performance of each portfolio company. They are responsible for setting strategy, finance, capital allocation, performance management and top team talent management within their companies.
L1 Treasury’s investment parameters are set by the Investment and Risk Committee, delegated by the L1 Treasury Board within a framework approved by the Board of LetterOne Investment Holdings SA.