Corporate Governance

The Company is committed to the pursuit of creating value for shareholders, while at the same time meeting shareholders’ expectations of sound corporate governance practices. As with all its business activities, the Company is proactive in respect of corporate governance and puts in place those arrangements which it considers are in the best interests of shareholders, and consistent with its responsibilities to other stakeholders.

THE BOARD OF DIRECTORS

The Board determines the corporate governance arrangements of the Company.

This statement discloses the Company’s adoption of the Corporate Governance Principles and Recommendations (3rd edition) (the “Principles”) released by the Australian Securities Exchange Corporate Governance Council in March 2014, effective 1 July 2014. The Principles can be viewed at www.asx.com.au. The Principles are not prescriptive; however, listed entities (including the Company) are required to disclose the extent of their compliance with the Principles, and to explain why they have not adopted a Principle (the ‘if not, why not’ approach). The Principles have operated throughout the year unless otherwise indicated.

The table at the end of this statement provides cross references between the disclosures and statements in this Corporate Governance Statement and the relevant Principles.

ROLE OF THE BOARD

The Directors must act in the best interest of the Company and in general are responsible for, and have the authority to determine, all matters relating to the policies, management and operations of the Company.

The Board’s responsibilities, in summary, include:

  • providing strategic direction and reviewing and approving corporate strategic initiatives;
  • overseeing and monitoring organisational performance and the achievement of the Company’s strategic goals and objectives;
  • appointing, monitoring the performance of, and, if necessary, removing the Managing Director;
  • ratifying the appointment or removal, and contributing to the performance assessment of the members of the senior management team;
  • planning for Board and executive succession;
  • ensuring there are effective management processes in place and approving major corporate initiatives;
  • adopting an annual budget and monitoring management and financial performance and plans;
  • monitoring the adequacy, appropriateness and operation of internal controls;
  • identifying significant business risks and reviewing how they are managed;
  • considering and approving the Company’s Annual Financial Report and the interim financial and activities reports;
  • enhancing and protecting the reputation of the Company;
  • reporting to, and communicating with, shareholders; and
  • setting business standards and standards for social and ethical practices.

Day to day management of the Company and implementation of Board policies and strategies has been formally delegated to senior executives and management. It is the responsibility of the Board to oversee the activities of management in executing delegated tasks. In particular, the Board has delegated management responsibility for:

  • delivering key objectives and milestones in accordance with market expectation as are set by the Board;
  • developing project budgets for capital and operating expenditure for Board review and if appropriate, approval;
  • developing and maintaining an effective risk management framework and keeping the Board and the market fully informed about risk;
  • the prudent management of the Company’s cash reserves in accordance with the approved annual operating budget;
  • regulatory compliance across all jurisdictions in which the Company undertakes business covering amongst other things health and safety, tax, accounting and company reporting.

COMPOSITION OF THE BOARD

The Board currently comprises two non-executive Directors and two executive Directors with a broad range of skills, expertise and experience, and all of whom add value to the operation of the Board. Given the Company’s current stage of development, the Board considers its structure effectively and efficiently meets the Company’s requirements.

In considering new candidates, the nomination committee (presently the full Board) evaluates the range of skills, experience and expertise of the existing Board in accordance with the Company’s Board skills matrix. In particular, the nomination committee identifies 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 11 August 2016

David Fawcett – Non-executive Director, appointed 9 December 2016

The independence of Directors is important to the Board. Independence is determined by objective criteria acknowledged as being desirable to protect investor interests and optimise value to investors.

The Board regularly assesses the independence of its Directors. In determining the status of a Director, the Company considers that a Director is independent when he or she is independent of management and free of any business or other relationship (for example a significant shareholding) that could materially interfere with, or could reasonably be perceived to interfere with the exercise of unfettered and independent judgement. The Company’s criteria for assessing independence are in line with standards set by the Principles.

The appointment and removal of Directors is governed by the Company’s constitution. Under the Constitution the Board must comprise of a minimum of three Directors. The nomination committee is responsible for selecting and approving candidates to fill any casual vacancies that may arise on the Board from time to time.

Directors who have been appointed to fill casual vacancies, other than the Managing Director, must offer themselves for re-election at the next annual general meeting of the Company. In addition, at each annual general meeting, at least one Director, other than the Managing Director, must be a candidate for re-election and no Director, other than the Managing Director, shall serve more than three years without being a candidate for re-election.

In making decisions regarding the appointment of Directors, the Board assesses the appropriate mix of skills, experience and expertise required by the Board and assesses the extent to which the required skills and experience are represented on the Board. When a vacancy exists, the Board determines the selection criteria based on the skills deemed necessary. The Board identifies potential candidates, and if appropriate, will utilise an external consultant to assist in identifying potential candidates. The Board then appoints the most suitable candidate.

The composition of the Board is to be reviewed regularly against the Company’s Board skills matrix prepared and maintained by the Board to ensure the appropriate mix of skills and expertise is present to facilitate successful strategic direction.

The Board will undertake appropriate background checks and screening checks prior to nominating a Director for election by shareholders and provides to shareholders all material information in its possession concerning the Director standing for election or re-election in the explanatory notes to accompany the notice of meeting. New Directors will participate in an induction program to assist them to understand the Company’s business and the particular issues it faces.

The Board collectively has the right to seek independent professional advice as it sees fit. Each Director individually has the right to seek independent professional advice, subject to the approval of the Chairman. All Directors have direct access to the Company Secretary.

Directors also have complete access to the senior management team. In addition to regular reports by senior management to the Board meetings, Directors may seek briefings from senior management on specific matters and are entitled to request additional information at any time when they consider it appropriate.

THE ROLE OF THE CHAIRMAN

  • The Chairman is responsible for the leadership of the Board, ensuring it is effective, setting the agenda of the Board, conducting the Board meetings, ensuring then approving that an accurate record of the minutes of board meetings is held by the Company and conducting the shareholder meetings.
  • Where practical, the Chairman should be a non-executive Director. If a Chairman ceases to be an independent Director then the Board will consider appointing a lead independent Director.
  • Where practical, the Managing Director should not be the Chairman of the Company during his term as Managing Director or in the future.
  • The Chairman must be able to commit the time to discharge the role effectively.
  • The Chairman should facilitate the effective contribution of all Directors and promote constructive and respectful relations between Board members and management.

BOARD COMMITTEES

The Board generally operates as a whole across the range of its responsibilities but, to increase its effectiveness, uses committees where closer attention to particular matters is required given the nature and scale of the Company’s operations.

The Board maintains two Board Committees covering Remuneration and Nomination, and Audit and Risk. Details regarding the number of Board and committee meetings held during the year and the attendance of each member is set out in the Annual Report.

The charter of each Board Committee must be approved by the Board and reviewed following any applicable regulatory changes.

Remuneration and Nomination Committee

As and when it is required a Remuneration and Nomination Committee will be established by resolution of the Board.  Given the Company’s size and stage of development, the Remuneration and Nomination Committee is comprised of the Board as a whole.

The Remuneration Committee advises the Board on remuneration and incentive policies and practices. It makes specific recommendations on remuneration packages and other terms of employment for Non-Executive and Executive Directors and senior executives.

Any increase in the maximum remuneration of Non-Executive Directors is the subject of shareholder resolution in accordance with the Company’s constitution, the Corporations Act and the ASX Listing Rules, as applicable.  The apportionment of Non-Executive remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-Executive Director.

The Board may award additional remuneration to Non-Executive and Executive Directors called upon to perform extra services or undertake special duties on behalf of the Company.

Audit and Risk Committee

As and when it is required an Audit and Risk Committee will be established by resolution of the Board.  Given the Company’s size and stage of development, the Audit and Risk Committee is comprised of the Board as a whole.

The main responsibilities of the Audit and Risk Committee are to:

  • review and report to the Board on the periodic reports and financial statements;
  • provide assurance to the Board that it is receiving adequate, timely and reliable information;
  • assist the Board in reviewing effectiveness of the Company’s internal control environment covering compliance with applicable laws and regulations and reliability of financial reporting;
  • liaise with the external auditors and ensure that the annual audit and half-year review are conducted in an efficient manner; and
  • ensure that the Company has an effective risk management system and that major risks to the Company are reported to the Board and are appropriately managed.

The Committee reviews the performance of the external auditors on an annual basis. A representative of the committee meets with the auditors during the year to discuss the external audit plan, any significant problems that may arise, and to review the fees proposed for the audit work to be performed.

Any written matters raised by the auditors are discussed and dealt with at full Board meetings. The auditors, by request, may attend committee and Board meetings to discuss any matter that they believe warrants attention by the Board. The auditors also attend shareholder meetings of the Company.

BOARD MEETINGS

  • The Directors may determine the quorum necessary for the transaction of business at a meeting, however, until otherwise determined, there must be two Directors present at a meeting to constitute a quorum.
  • The Board will schedule formal Board meetings at least quarterly and hold additional meetings, including by telephone, as may be required.
  • Non-executive Directors may confer at scheduled times without management being present.
  • The minutes of each Board meeting shall be prepared by the Company Secretary, approved by the Chairman and circulated to Directors after each meeting.
  • The Company Secretary shall ensure that the business at Board and committee meetings is accurately captured in the minutes.
  • The Company Secretary shall co-ordinate the timely completion and distribution of Board and committee papers for each meeting of the Board and any committee.
  • Minutes of meetings must be approved at the next Board meeting.
  • Further details regarding Board meetings are set out in the Company's Constitution.

COMPANY SECRETARY

  • When requested by the Board, the Company Secretary will facilitate the flow of information of the Board, between the Board and its Committees and between senior executives and non-executive Directors.
  • The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board.
  • The Company Secretary is to facilitate the induction and professional development of Directors.
  • The Company Secretary is to facilitate and monitor the implementation of Board policies and procedures.
  • The Company Secretary is to provide advice to the Board on corporate governance matters, the application of the Company's Constitution, the ASX Listing Rules and applicable other laws.
  • All Directors have access to the advice and services provided by the Company Secretary.
  • The Board has the responsibility for the appointment and removal, by resolution, of the Company Secretary.

PERFORMANCE EVALUATION AND REMUNERATION

Performance Evaluation

The Company has a documented performance evaluation policy.  The Chairman has undertaken a formal performance evaluation of the Board, its Committees and its individual Directors. At an informal level, the Chairman frequently consults in each reporting period with the other Directors seeking guidance on ways in which the Board as a whole, as well as each individual Director, can improve its contribution and performance to the execution by the Board of its responsibilities.

The performance of the Managing Director is reviewed by the Chairman in consultation with other non-executive directors.

The performance of the Company’s senior executives is reviewed by the Managing Director as part of the annual remuneration review process and reported to the Remuneration Committee.

Director and Executive Remuneration

Remuneration levels are competitively set to attract and retain appropriately qualified and experienced personnel.

Performance, duties and responsibilities, market comparison and independent advice are all considered as part of the remuneration process. The total remuneration paid to Directors and key management personnel for the reporting period is set out in the Remuneration Report.

Directors’ fees are reviewed annually and are benchmarked against fees paid to Directors of similar organisations. Directors are not provided with retirement benefits other than statutory superannuation and do not participate in employee incentive schemes although they may be granted options as set out in the Directors' Report of the Annual Report.

To ensure that the Company’s senior executives properly perform their duties, the following procedures are in place:

  • performance is formally assessed each year as part of the Company’s formal employee performance review process;
  • all senior management are assessed in terms of their achievement of agreed KPIs (both financial and non-financial) for the period;
  • there is a strong link between the outcomes of this performance review process and the subsequent remuneration review as outlined in the Remuneration Report; and
  • senior management are provided with access to continuing education to update and enhance their skills and knowledge.

RISK MANAGEMENT AND INTERNAL CONTROLS

The Company has a formalised risk management framework encompassing market, financial, liquidity and corporate governance risk. The identification and effective management of risk, including calculated risk taking is viewed as an essential part of the Company’s approach to creating long term shareholder value. Compliance with risk management policies is monitored by the Board.

GOVERNANCE POLICIES

Integrity, ethical standards and compliance

The Company has adopted a formal Code of Conduct for its Directors and employees. The Code seeks to set the standards for dealing ethically with employees, investors, customers, regulatory bodies and the financial and wider community, and the responsibility and accountability of individuals for reporting and investigating reports of unethical behaviour.

The Company is committed to being a good corporate citizen within all jurisdictions that it undertakes its business activities, and the Board has undertaken to ensure that the Company implements:

  • practices necessary to maintain confidence in the Company’s integrity;
  • practices necessary to take into account its legal obligations and the reasonable expectations of its stakeholders; and
  • responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Directors are provided with Board reports in advance of Board meetings which contain sufficient information to enable informed discussion of all agenda items.

The Board has the responsibility for the integrity of the Company’s financial reporting. To assist the Board in fulfilling its responsibility, the processes discussed below have been adopted with a view to ensuring that the Company’s financial reporting is a truthful and factual presentation of the Company’s financial performance and position.

Dealing in Securities

The Company has in place a formal Securities Trading Policy which regulates the manner in which Directors and staff involved in the management of the Company can deal in Company securities. It requires that they conduct their personal investment activities in a manner that is lawful and avoids conflicts between their own interests and those of the Company and contains all contents suggested in the ASX Corporate Governance Principles and Recommendations.

The policy specifies trading blackouts as the periods during which trading securities cannot occur.

Trading is always prohibited if the relevant person is in possession of non-public price sensitive information regarding the Company. A copy of the current Security Trading Policy is available on the Company’s website.

Diversity

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 measurable objectives to achieve the aims of its Diversity Policy. The Board is responsible for monitoring Company performance in meeting the Diversity Policy requirements, including the achievement of any diversity objectives.

The Company actively values and embraces the diversity of its employees and is committed to creating an inclusive workplace where everyone is treated equally and fairly and where discrimination, harassment and inequity is not tolerated. The Company is committed to fostering diversity at all levels.  However, due to the Company’s current stage of development, measurable objectives have yet to be set.

Health, safety and environment

The Company has continued its emphasis on health and safety in the workplace with the aim of ensuring that people achieve outcomes in a safe manner, thereby contributing to operational effectiveness and business sustainability.

During the reporting period there were no reported environmental incidents and no Lost Time Injuries (LTIs).

CONTINUOUS DISCLOSURE AND COMMUNICATIONS WITH SHAREHOLDERS

The Company is committed to providing relevant and timely information to its shareholders and to the broader market, in accordance with its obligations under the ASX continuous disclosure regime.

The Board complies with the following processes to ensure that information is communicated to shareholders and the wider market:

  • the Company’s website is updated regularly with business activity information and is linked to all announcements published on the ASX allegiancecoal.com.au;
  • the Annual Report is distributed to eligible shareholders. The Board ensures that the Annual Report includes relevant information about the operations of the group during the year, changes in the state of affairs of the group and details of future developments, in addition to other disclosures required by Corporations Act 2001;
  • quarterly reports and half-yearly financial statements are lodged with the ASX and copies are sent to any shareholder upon request;
  • any proposed major changes in the group which may impact on the share ownership rights would be submitted to a vote of shareholders;
  • the Board ensures that the continuous disclosure requirements of the ASX are fully complied with, ensuring that shareholders are kept informed on significant events affecting the group; and
  • investor roadshows are held periodically throughout Australia and internationally. Where they contain new information, investor and roadshow presentations are released to the ASX and included on the Company’s website.

CONTINUOUS REVIEW OF CORPORATE GOVERNANCE

Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient from time to time in light of changing circumstances and economic conditions. The Directors recognise that mineral exploration is an inherently risky business and that operational strategies adopted should, notwithstanding, be directed towards improving or maintaining the net worth of the Company.

VIEW INDIVIDUAL COMPANY POLICIES:

 Corporate Governance Statement

 Audit and Risk Committee Charter

 Board Skills Matrix

 Code of Conduct

 Continuous Disclosure Policy

 Diversity Policy

 Performance Evaluation Policy

 Remuneration and Nomination Committee Charter

 Risk Management Policy

 Selection and Rotation of External Auditors Policy

 Shareholder Communications Strategy

 Securities Trading Policy