CORPORATE GOVERNANCE POLICY
The Board of Directors oversees and monitors the business and affairs of the Group. To assist the Board in discharging its responsibilities, the Board has adopted the following principles of corporate governance that are considered, having regards to cost effectiveness, appropriate for the present size and scope of operations of the Group and that unless otherwise explained, follows the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council which is chaired by the ASX Group (ASX).
Principle 1: Lay solid foundations for management and oversight.
The Board is responsible for:
i) developing, approving and monitoring implementation by management of corporate policy, strategy and performance objectives;
ii) developing and monitoring adoption of appropriate principles of corporate governance;
iii) reviewing, ratifying and monitoring systems of accountability, risk management and internal control, codes of conduct and legal compliance;
iv) approving and monitoring management implementation of financial and other reporting;
v) approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestments delegated to management for implementation;
vi) reviewing and approving business plans, operating and capital budgets developed by and for implementation by management;
vii) reviewing, ratifying and monitoring systems implemented by management for health, safety and environment management and controls;
viii) appointing, removal and evaluating the performance of the chief executive officer and senior executives; and
ix) selecting and appointing new Directors to the Board, and evaluating the performance of allmembers of the Board.
The Board delegates responsibility for the day to day operations and administration of the Group to the Managing Director.
Principle 2: Structure the Board to add value
Composition of the Board
The composition of the Board is determined in accordance with the following principles and guidelines:
i) the Board shall comprise at least three Directors, increasing where additional expertise is considered necessary in certain areas to a maximum of nine Directors;
ii) Directors are initially appointed by the Board and are subject to re-election at the annual general meeting by shareholders at three-yearly intervals, or at the next annual general meeting after their initial appointment;
iii) to the extent practicable and having regards to the stage of development of the Company and cost, the Board shall comprise a majority of non-executive and independent Directors with the Chairman being a non-executive and independent person; and
iv) The Board shall comprise of Directors with a range of skills and experience that are appropriate and can assist the Directors in performing their duties within the scope of the Group's operations.
The Board reviews its composition regularly to ensure that it has the appropriate mix of expertise and experience. Where a vacancy exists, for whatever reason, or where it is considered that the Board would benefit from the services of a new Director with particular skills and expertise, the Board selects that new Director from appropriate candidates with relevant qualifications, skills, expertise and experience.
The Board presently is composed of three Non-Executive Directors, Mr David Munns (Chairman), Mr Darren Reeder and Mr Patrick Sam Yue and one Executive Director (Managing Director), Mr Dennis Morton. Mr David Munns, Mr Darren Reeder and Mr Dennis Morton are substantial shareholders and under the ASX Corporate Governance Council guidance are considered to be not independent. Consequently, the Company is not complying with Principles 2.1 and 2.2 of the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council at this early stage of development to contain costs. With a majority of substantial shareholders, the Board has interest to add value for the benefit of all shareholders.
Given the present size of the Group, the existing Board structure is able to meet the needs of the Group in the examination of selection and appointment practices without the establishment of a nomination committee of the Board as recommended under Principle 2.4 of the Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council.
Independent Professional Advice
Directors have the right, in connection with their duties and responsibilities as directors, to seek independent professional advice at the Group's expense. Prior approval of the Chairman is required, which will not be unreasonably withheld.
The Board undertakes annual self- assessment of its collective performance and the performance of the Chairman.
The Chairman undertakes an annual assessment of the performance of individual directors. Any deficiency identified in a Director's performance is addressed directly with the relevant Director.
Principle 3: Promote ethical and responsible decision-making
Code of Conduct
The Board’s policy is for the Directors and management to conduct themselves with the highest ethical standards in addition to compliance with their legal obligations and having regard to the reasonable expectations of the Group’s stakeholders. All Directors and employees are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Group.
In particular, Directors and employees must at all times: manage situations where their personal interests may conflict with the interests of the Group; not take advantage of property, information or position for personal gain; not compete with the Group; not use non-public information except where disclosure is authorised or legally mandated; deal fairly with customers, suppliers, competitors and employees; protect and make proper use of the Group’s assets; comply with laws and regulations, and actively promote compliance; and report any unlawful or unethical behaviour knowing that they will have proper protection by the Board when making such reports in good faith.
The Board has set a policy on dealing with securities of the Company. Directors and employees, and their family members and close associates, may not buy, sell or subscribe for any securities of the Company, whether on their own account or on behalf of another person while in possession of price sensitive information which is not generally available to the public. They may not deal in the securities of the Company during a two week period before the release to ASX of the quarterly report, the half year or full year financial results, the half year report or the annual report of the Group until one day after the release of those reports or results to ASX. They may not also deal in securities of the Company during the period when a material transaction is being negotiated by the Group or drilling is being carried out until one day after an announcement has been made to ASX on the results.
The Board has established a policy concerning diversity recognising the benefits that it can bring to the Group. Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Group encourages an environment conducive to the appointment of well qualified employee, consultants, senior management and Board candidates so that there is appropriate diversity to maximise the achievement of corporate goals.
The Board has set the following objectives for achieving diversity in the next few years as the Group’s business develops from its current early stage of operations:
i) 75% of field and support workers be Philippines nationals for operations in Philippines;
ii) 30% female participants in operations and support positions;
iii) 20% female in senior executive positions;
iv) 20% female in Board positions.
Principal 4: Safeguard integrity in financial reporting
The Board has established an Audit Committee consisting of three Non-Executive Directors, Mr Patrick Sam Yue (Chair), an independent Director, Mr David Munns and Mr Darren Reeder, non-independent Directors, to assist in matters relating to the audit functions and to safeguard the integrity of the Group’s financial reporting. The composition of the Audit Committee is not in compliance with Principle 4.2 of the ASX Corporate Governance Council because of the small size of the Board. However, the Board considers that the experience and qualifications of the Audit Committee members will provide the formal processes of an audit committee to assure the integrity of the financial statements of the Group and the independence of the external auditor.
Senior executives and the auditors are invited to attend meetings as required to assist the Audit Committee with its deliberations. The Audit Committee shall meet at least two times a year.
The Audit Committee ensures that the auditor is invited to attend all general meetings of shareholders.
Under its formal charter, the Audit Committee is responsible for:
i) reviewing the quality and integrity of the Group’s financial reporting to shareholders, ASX and the Australian Securities and Investments Commission;
ii) reviewing the accounting policies, internal controls, practices and disclosures to assist the Board in making informed decisions, with direct access to management;
iii) reviewing the scope and outcome of external audits, with direct access to external auditors;
iv) nominating external auditors and reviewing the adequacy of existing external audit arrangements;
v) ensuring the independence of external auditors and reviewing any other services provided by them;
vi) reviewing the Group’s risk management systems; and
vii) reporting to the Board on its meetings and the results of any assessments and reviews.
The Board has ratified an Audit Policy which states the services that may or may not normally be conducted by the Group’s external auditing firm under the following guiding principles:
The auditing firm may provide audit and audit-related services that are consistent with the role of auditor, although outside the scope of the audit required under the Corporations Act 2001. These include audit-related services and reviews required by third parties. Examples include:
- financial audits;
- audits of regulatory returns;
- reviews undertaken for trustees of convertible notes, bankers, joint venture partners and owners of royalty and net profit interests; and
- reviews of the adequacy of controls and recommendations for improvements.
The auditing firm should not provide services that are perceived to be materially in conflict with the role of auditor. These include investigations and consulting advice and subcontracting of operational activities normally undertaken by management, and where the auditor may ultimately be required to express an opinion on its own work. Examples include:
- due diligence on potential acquisitions or investments/divestments;
- advice on deal structuring and assistance in deal documentation;
- tax planning and strategy;
- designing or implementing new IT systems or financial controls;
- advice on sales and purchasing contracts;
- executive recruitment and appointments;
- senior management secondments; and
- internal audit activities.
Services Subject to Specific Approval
The auditing firm may be permitted to provide non-audit services that are not perceived to be materially in conflict with the role of auditor, subject to the express approval of the Audit Committee. Examples include:
- advice on appropriate accounting standards; and
- review of legislation and advice on its application to the Group.
An exception can be made to the above policy where the variation is in the interests of the Group and arrangements are put in place to preserve the integrity of the audit of the Group’s financial statements. Any such exception requires the approval of the Board.
Principle 5: Make timely and balanced disclosure
The Board’s policy is for all investors to have equal and timely access to material information concerning the Group, including its financial position, performance, ownership and governance.
The Board has delegated the function of continuous disclosure under ASX’s Listing Rules and the Corporations Act 2001 to the Managing Director to assess the type of information that needs to be disclosed and to ensure that Group’s announcements are made in a timely manner with the assistance of the Company Secretary, are factual, do not omit material information and are in compliance with the Listing Rules and Corporations Act 2001. Information which is considered to be price sensitive is approved by the Board before its release.
Principle 6: Respect the rights of shareholders
The Board shall establish practices to facilitate communication with the Company’s shareholders. The Managing Director and the Company Secretary oversee this process through the Group’s website and direct mailing by email and/or post. Regular briefings are held with professional investors. Prior to such briefings, information to be given is first released to ASX and later broadcast to shareholders/investors who have registered their email address with the Group.
Principle 7: Recognise and manage risk
The Board monitors and receives advice as required on areas of operational and financial risk, and considers appropriate risk management strategies.
Specific areas of risk that are identified are regularly considered by the Board. Included in these areas are performance of activities, human resources, health, safety and the environment, continuous disclosure obligations, asset protection and financial exposures.
Environment, Health and Safety Management
The Board recognises the importance of environmental, occupational health and safety issues, and is committed to the highest standards of performance. All Directors and employees are required to comply with all relevant legislation, continually assess and improve the impact of the Group’s operations on the environment, and encourage the adoption of similar standards by the Group’s principal suppliers, contractors and joint venture partners.
The Board regularly reviews risk management with the Managing Director who is required to report on its effectiveness.
To assist the Board in approving the Group’s financial report, the Managing Director and the Audit Committee are required to present a statement with regard to the integrity of the financial statements of the Group to confirm to the Board that the Group’s financial statements present a true and fair view in all material respects of the Group’s financial position and that operational results are in accordance with applicable accounting standards and the Corporations Act 2001.
Principle 8: Remunerate fairly and responsibly
The Board has established a Remuneration Committee consisting of three Non-Executive Directors, Mr Patrick Sam Yue (Chair), Mr Darren Reeder and Mr David Munns. The Remuneration Committee reviews the remuneration packages and policies applicable to all Directors and senior executives on an annual basis and makes recommendations to the Board. The policy is for remuneration levels to be competitively set to retain and/or attract qualified and experienced Directors and senior executives. Where necessary, the Remuneration Committee obtains independent advice on the appropriateness of remuneration packages.