A summary of the Company's corporate governance practices is set out below.
1.1 Summary of Board Charter
The role of the Board is to provide leadership for and supervision of senior management. The Board provides strategic direction and regularly measures the progression by senior management of that strategic direction. The Board also reviews the Company's policies on risk oversight and management, internal compliance and control, its Code of Conduct, and legal compliance. There are mechanisms in place so that the Board can satisfy itself that senior management has developed and implemented a sound system of risk management and internal controls in relation to financial reporting risk and material business risks.
The Board Charter also sets out quantitative and qualitative materiality thresholds.
The Board delegates to senior management the responsibility of the day-to-day activities in fulfilling the Board's responsibility. Senior executives are responsible for supporting the Managing Director and assisting the Managing Director in implementing the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board.
Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first instance to the Managing Director or, if the matter concerns the Managing Director then directly to the Chair or the lead independent Director, as appropriate.
The Board Charter describes the division of responsibilities between the Chair, the lead independent Director (if any) and the Managing Director.
The role of non-executive and independent Directors is also set out in the Board Charter.
1.2 Summary of Audit Committee Charter
The role of the audit committee is to monitor and review the integrity of the financial reporting of the Company and to review significant financial reporting judgments. The audit committee is also to review internal financial control system and risk management systems and to monitor, review and oversee the external audit function.
The audit committee has the power to conduct or authorise investigations into any matters within the audit committee's scope of responsibilities. The audit committee has the authority, as it deems necessary or appropriate, to retain independent legal, accounting or other advisors.
The audit committee also assesses whether external reporting is consistent with audit committee members' information and knowledge and is adequate for shareholder needs and assesses the management processes supporting external reporting.
1.3 Summary of Nomination Committee Charter
The role of the nomination committee is to effectively examine the selection and appointment practices of the Company. The nomination committee regularly reviews the size and composition of the Board and makes recommendations on any appropriate changes. The nomination committee identifies and assesses necessary and desirable director competencies with a view to enhancing the Board.
The nomination committee also regularly reviews the time required from non-executive Directors and whether non-executive Directors are meeting that requirement.
Initial Director appointments are made by the Board. Any new Director will be required to stand for election at the Company's next annual general meeting following their appointment.
1.4 Summary of Remuneration Committee Charter
The function of the remuneration committee is to review and make appropriate recommendations on remuneration packages of executive Directors, non-executive Directors and senior executives. The remuneration committee is also responsible for reviewing any employee incentive and equity-based plans, including the appropriateness of performance hurdles and total payments proposed.
1.5 Summary of Remuneration Policy
Emoluments of Directors and senior executives are set by reference to payments made by other companies of similar size and industry, and by reference to the skills and experience of the Directors and executives.
The Company’s policy is to remunerate non-executive Directors at a fixed fee for time, commitment and responsibilities. Fees for non-executive Directors are not linked to individual performance. Given the Company is at its early stage of development and the financial restrictions placed on it, the Company may consider it appropriate to issue individual options to non-executive Directors, subject to obtaining relevant shareholder approvals. This policy is subject to annual review. All of the Directors' option holdings are fully disclosed.
Executive pay and reward consists of a base salary and performance incentives. Long term performance incentives may include options granted at the discretion of the Board and subject to obtaining the relevant regulatory and shareholder approvals. The grant of options is designed to recognise and reward efforts as well as to provide additional incentive and may be subject to the successful completion of performance hurdles.
Executives are prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.
As an incentive, the Board may in its discretion approve the Company adopting an employee incentive scheme. The purpose of the scheme is to give employees, Directors and officers of the Company an opportunity, in the form of options, to subscribe for shares. The Directors consider the scheme will enable the Company to retain and attract skilled and experienced employees, board members and officers, and provide them with the motivation to make the Company more successful.
1.6 Summary of Code of Conduct
The Code of Conduct sets out the principles and standards which the Board, management and employees are encouraged to strive towards when dealing with each other, shareholders, other stakeholders and the broader community.
The Company is to comply with all legislative and common law requirements which affect its business. The Company will deal with others in a way that is fair and will not engage in deceptive practices.
The Code of Conduct sets out directives for Directors, management and staff relating to conflicts of interests, protection of the Company's assets and confidentiality.
1.7 Summary of Policy and Procedure for Selection and (Re)Appointment of Directors
In considering new candidates, the nomination committee evaluates the range of skills, experience and expertise of the existing Board. In particular, the nomination committee is to identify the particular skills that will best increase the Board's effectiveness. Consideration is also given to the balance of independent Directors on the Board. Reference is made to the Company's size and operations as they evolve from time to time.
All Directors are required to consider the number and nature of their directorships and calls on their time from other commitments.
The following directors are considered by the Board to be independent directors:
Malcolm Carson – Non-executive Chairman, appointed 12 August 2016David Fawcett – Non-executive Director, appointed 9 December 2016
1.8 Summary of Process for Performance Evaluation
The Chair evaluates the performance of the Board by way of ongoing review. The Chair reports back to the Board as to its performance at least annually.
The Chair reviews the performance of the committees of the Board by assessing the performance and contribution of the Committee to the Board and the Company.
The Chair meets with each individual Director to discuss that individual Director's performance and contribution to the Board.
The Managing Director's performance evaluation is reviewed by the Board. Given the current size and structure of the Company, in addition to the process for evaluation of the Board as described above, specific evaluation of the Managing Director may be carried out on an ongoing basis through open and regular communication between the Board and the Managing Director to identify and monitor the achievement of key performance indicators, to provide feedback and to provide guidance and support where any issues may become evident.
The Managing Director reviews the performance of the senior executives and management, reporting to the Board (as the Nomination Committee and Remuneration Committee) at least annually.
The current size and structure of the Company allows the Managing Director to conduct informal performance evaluations of senior executives regularly. Approximately annually, individual performance may be more formally assessed in conjunction with a remuneration review.
1.9 Summary of Policy for Trading in Company Securities
The Board has adopted a policy which prohibits dealing the Company's securities by Directors, officers, employees, contractors and, where applicable, consultants when those persons possess inside information. The policy also contains a blackout period within which Directors, officers, employees, contractors and consultants are prohibited from trading. The policy prohibits short term or speculative trading of the Company's securities. Trading may be permitted in a blackout period in certain exceptional circumstances subject to obtaining prior written clearance. Directors, officers and employees are required to obtain clearance prior to trading at all times. A copy of the Company's Policy for Trading in Company Securities will be released to the market in accordance with ASX Listing Rule 12.9.
1.10 Summary of Diversity Policy
The Board has adopted a Diversity Policy which describes the Company's commitment to ensuring a diverse mix of skills and talent exists amongst its Directors, officers and employees, to enhance Company performance. The Diversity Policy addresses equal opportunities in the hiring, training and career advancement of Directors, officers and employees. The Diversity Policy outlines the process by which the Board may set targets to achieve the objectives of its Diversity Policy. The Board is responsible for monitoring Company performance in meeting the Diversity Policy requirements, including the achievement of any diversity targets.
1.11 Summary of Compliance Procedures
The Board has adopted Compliance Procedures to assist it to comply with the ASX Listing Rules disclosure requirements. Under the Compliance Procedures, a responsible officer is appointed who is primarily responsible for ensuring the Company complies with its disclosure obligations. The Compliance Procedures provide guidelines as to the type of information that needs to be disclosed. The Compliance Procedures contain information on avoiding a false market, safeguarding confidentiality of corporate information, and information on external communication for the purpose of protecting the Company's price sensitive information.
1.12 Summary of Procedure for the Selection, Appointment and Rotation of External Auditor
The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as per the recommendations of the Audit Committee.
Candidates for the position of external auditor of the Company must be able to demonstrate complete independence from the Company and an ability to maintain independence through the engagement period.
The Audit Committee will review the performance of the external auditor on an annual basis and make any recommendations to the Board.
1.13 Summary of Shareholder Communication Strategy
The Board aims to ensure that the shareholders are informed of all major developments affecting the Company. The Company provides shareholder materials directly to shareholders through electronic means. A shareholder may request a hard copy of the Company's annual report to be posted to them. The Company maintains a website on which the Company makes certain information available on a regular basis.
1.14 Summary of Risk Management Policy
The Board has adopted a Risk Management Policy. Under the policy, the Board delegates day-to-day management of risk to the Managing Director, with the assistance of senior management as required. The Policy sets out the role of the Managing Director and accountabilities. It also contains the Company's risk profile and describes some of the policies and practices the Company has in place to manage specific business risks.
The Managing Director is required to report on the progress of, and on all matters associated with risk management. The Managing Director is to report to the Board as to the effectiveness of the Company's management of its material business risks at least annually.
The Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself at least annually that management has developed and implemented a sound system of risk management and internal control.