AIM-listed Real Good Food has admitted to not disclosing payments to directors in its related parties transaction notes within its annual reports for three financial years from 2014 to 2016.

These notes should have revealed the payment of consultancy fees to two of its directors - its executive chairman, Pieter Totté and a non-executive director, Peter Salter. The company said these fees are believed to amount to £250,000 to Totté and £25,000 to Salter in FY 2014, £358,000 and £20,000 respectively in FY 2015 and £1.21 million to Totté in FY 2016. Following the announcement by the company Salter resigned as a non-executive director and a member of its board.

Real Good Food was formed by Totté in 2003 and was listed on AIM in September that year. The company has three divisions cake decorating, food ingredients and premium bakery and within them owns long-standing food brands such as Renshaws, R&W Scott and Haydens.

The company has been criticised by corporate governance experts because Totté having begun as a non-executive chairman has been executive chairman since 2009 and as the company has no chief executive effectively acts as a combined chairman and chief executive in this role. The board comprises of Totté, David Newman, the finance director and company secretary and, since Salter's departure, three non-executive directors all of whom are men.

As AIM-listed companies are not listed on the main market they are not subject to the full UK corporate governance code but are encouraged to comply with the corporate governance guide developed by the Quoted Companies Alliance. There is also a role for the company's Nominated Adviser (NOMAD) in ensuring companies have appropriate governance frameworks.

In its recently published discussion paper on the AIM rules the London Stock Exchange emphasised the importance of good board composition. The paper also asked for feedback on whether in future AIM-listed companies should be required to report annually against a governance code and whether the current corporate governance role of the NOMAD is actually effective. The deadline for responses on this consultation is 8th September and they can be sent to aimnotices@lseg.com.