Governance

The following summarises the corporate governance practices adopted by the Board. The Company’s objective is to achieve best practice in corporate governance, and the Company’s officers and employees are committed to achieving this objective.

Board of Directors

Role of the Board
The Board’s primary responsibility is to oversee the Company’s business activities and management for the benefit of Shareholders by:

1. taking steps designed to protect the Company’s financial position and its ability to meet its debts as and when they fall due;
2. adopting a strategic plan for the Company, including general and specific goals and comparing actual results with the plan;
3. adopting an annual budget for the financial performance of the Company and monitoring the results on a regular basis;
4. agreeing performance indicators with management;
5. ensuring that systems are in place which facilitate the effective monitoring and management of the principal risks to which the Company is exposed;
6. determining that the Company has instituted adequate reporting systems and internal controls together with appropriate monitoring of compliance activities;
7. selecting and, if necessary, replacing the chief executive, settling an appropriate remuneration package, ensuring adequate succession and giving guidance and ratifying the appointment and remuneration of other senior management;
8. approving the remuneration package, incentive and bonus package and performance criteria for senior executives;
9. ensuring that the Company has in place a policy that enables it to communicate effectively with Shareholders, other stakeholders and the public generally;
10. adopting formal processes for the selection of new directors and recommending them for the consideration of Shareholders at general meetings with adequate information to allow Shareholders to make informed decisions; and
11. reviewing its own processes and effectiveness, and the balance of competence on the Board.

The Board has delegated responsibilities and authorities to management to enable management to conduct the Company’s day to day activities. Matters which are not covered by these delegations, such as approvals which exceed certain limits, require Board approval.

Board composition

The directors are subject to election by Shareholders. All directors are subject to re-election by rotation within every three years. The Company’s constitution provides that one-third of the directors retire by rotation at each annual general meeting. Those directors who are retiring may submit themselves for re-election by Shareholders, including any director appointed to fill a casual vacancy since the date of the previous annual general meeting. The composition of the Board is reviewed at least annually to ensure the balance of skills and experience is appropriate.

Independence of non-executive directors

The Board considers an independent director to be a non-executive director who meets the criteria for independence included in the ASX Best Practice Recommendations. The Board considers that all the directors meet these criteria. They have no material business or contractual relationship with the Company, other than as directors, and no conflicts of interest which could interfere with the exercise of independent judgement. Accordingly, they are considered to be independent.

Independent Professional Advice

The Board has adopted a formal policy on access to independent professional advice which provides that directors are entitled to seek independent professional advice for the purposes of the proper performance of their duties. The advice is at the Company’s expense, subject to the prior approval of the chairman. Advice so obtained is made available to all directors.

Committees

Due to the size of the Company the Board has not formally constituted an Audit Committee. The entire Board currently undertakes the duties of an Audit Committee which include:

1. establishing and monitoring policies directed to ensure that the Company complies with the laws and confirms with the highest standards of financial and ethical behaviour;
2. determining that the Company accounts are in conformity with Australian Accounting Standards and are true and fair;
3. determining that satisfactory arrangements are in place for auditing the Company’s financial affairs and the scope of the external audit is adequate;
4. selecting and recommending auditors to Shareholders at general meetings;
5. making recommendations about accounting and disclosure policies and procedures;
6. monitoring and assessing the entity’s inherent control and business risk; and
7. assessing the impact of non-audit services on audit independence.

The Company’s auditor is invited to attend the annual general meeting and the Company supports the principle of the auditor being available to answer questions on the conduct of the audit and the content of the audit report.
Similarly, due to its size, the Board has not formally constituted a Nomination Committee or Remuneration Committee. The whole Board conducts the functions of a Nomination Committee and Remuneration Committee.

Remuneration

Executive directors and key executives are remunerated by way of a salary or consultancy fees, commensurate with their required level of services. Non-executive directors receive a fixed monthly fee for their services as non-executive directors and those non-executive directors’ fees are capped at $150,000 per annum in aggregate.

Risk Management

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that includes the following:

1. Financial reporting – monthly management accounts together with a financial report are provided to the Board at each Board meeting. Periodic reports are provided to the Board. Quarterly, half yearly and annual reports are prepared in accordance with the Corporations Act and ASX Listing Rules.
2. The managing director and the chief financial officer are required to confirm in writing that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results are in accordance with relevant accounting standards.
3. The Company has written policies covering the conduct of its directors, employees, contractors and consultants, including the areas of health and safety.

Ethical Standards

The Board is committed to promoting the practice of high ethical standards. All directors and employees are expected to act with the utmost integrity and objectivity striving at all times to enhance the reputation and performance of the Company, in the following areas:

1. professional conduct;
2. dealings with suppliers, advisers and regulators;
3. dealings with the community; and
4. dealings with other employees.

Trading in the Company’s securities by Directors and Senior Executives
The Board has adopted a policy in relation to dealings in the securities of the Company which applies to all directors and senior executives. Under the policy, directors and senior executives are prohibited from trading in the Company’s securities whilst in possession of inside information.
At any other time, directors must notify the managing director (or in the case of the managing director, the remaining members of the Board) of any proposed transaction and must obtain clearance for the transaction to proceed. Senior executives may, at any other time, deal in the Company’s securities, after first obtaining the consent of the managing director.

Continuous Disclosure

The Board is committed to the promotion of investor confidence by ensuring that trading in the Company’s securities takes place in an efficient, competitive and informed market. In accordance with the continuous disclosure requirements under the ASX Listing Rules, the Company has procedures in place to ensure that all price sensitive information is identified, reviewed by management and disclosed to the ASX in a timely manner and that all information provided to the ASX is immediately available to Shareholders and the market on the Company’s website.
Communication with Shareholders
The Board aims to ensure that Shareholders are kept informed of all major developments affecting the Company. Information is communicated to Shareholders through:

1. continuous disclosure in the form of public announcements on ASX;
2. annual and quarterly reports to Shareholders;
3. investor briefings;
4. the Chairman’s address delivered at the annual general meeting;
5. notices of all meetings of Shareholders and explanatory notes of proposed resolutions; and
6. whenever there are other significant developments to report, by other means as well, such as by post.