Who runs the company? Assessing management and insiders in micro caps

In brief

Why leadership matters more here than elsewhere

A large corporation survives a weak board. An explorer with a handful of staff essentially is its management: it decides where to drill, when to raise capital and on what terms. There is no structure to absorb a mistake.

What you can check publicly

Track record. Which companies were those responsible with before, and what became of them? A biography lists the successes; searching the earlier company names fills in the cases that did not make it into the CV.

Multiple mandates. In this segment the same people commonly sit on several boards. That is not inherently bad — experience transfers — but it raises the question of how much time goes to which project.

Remuneration relative to size. What the leadership costs appears in the annual report. In a company burning a few million a year, it matters what share of that goes to salaries and what share to the project.

Reading insider ownership properly

High ownership by management is considered a good sign because it aligns interests. Two qualifications belong with it.

First, how the holding was acquired matters: bought in the market, or granted as options. Purchased shares mean personal risk; granted options mean upside without downside.

Second, changes say more than holdings. Reportable insider transactions are published; someone adding over months sends a different signal from someone selling into every rally.

Related-party transactions

The notes to every set of accounts contain a section on transactions with related parties. That is where consultancy contracts with directors' own companies, project purchases from connected parties and similar arrangements appear.

Such deals are permitted and in small structures sometimes unavoidable. They deserve attention nonetheless: if a material share of spending flows back to people around the leadership, it changes the question of whom the company serves.

Frequently asked questions

Where do I find insider transactions?

Depending on the venue, in the national reporting systems and in the company's regulatory announcements. For Canadian and Australian companies these registers are publicly accessible.

Is a sale by management always a bad sign?

No. There are private reasons, and a single sale says little. Patterns are what matter: several people acting in the same direction over a longer period.

How much insider ownership is enough?

There is no fixed threshold. More important than the percentage is whether the amount is meaningful for the person concerned — and whether it came out of their own pocket.