Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the Company are set and achieved, how risk is monitored and assessed, and how performance is optimised. Good corporate governance structures encourage companies to create value (through entrepreneurism, innovation, development and exploration) and provide accountability and control systems commensurate with risks involved.
Good corporate governance will evolve with the changing circumstances of a company and must be tailored to meet these circumstances.
Mindax Limited (“the Company” or, including its subsidiaries, “the Group”) is a junior exploration company now transitioning to be a project developer and eventual producer. Its’ Board and management are committed to a high standard of corporate governance practices, ensuring that the Company and its’ subsidiaries comply with the Corporations Act 2001, Australian Securities Exchange (ASX) Listing Rules, Company Constitution and other applicable laws and regulations.
At the present point in the Company’s corporate development, the ASX Corporate Governance Principles and Recommendations are likely to be implemented in stages as the Company evolves, given the size and simplicity of the business. The principles, recommendations and details of the current and evolving governance practices are identified in the following pages.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
The relationship between the Board and senior management is critical to the group’s long-term success. The directors are responsible to the shareholders for the performance of the Group in both the short and the longer term; and seek to balance sometimes competing objectives in the best interests of the Group as a whole. Their focus is to enhance the interests of all shareholders and other key stakeholders and to ensure the group is properly managed. To fulfil this role, the Board is ultimately responsible for:
• providing strategic guidance to the Group including contributing to the development of and approving the corporate strategy;
• reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives;
• overseeing and monitoring:
- organisational performance and the achievement of the Group’s strategic goals and objectives;
- compliance with the Group’s codes of conduct;
- progress of major capital expenditures and other significant corporate projects including any acquisitions or divestments;
• monitoring financial performance including approval of the annual and half-year financial reports and liaison with the Company’s auditors;
• appointment, performance assessment and, if necessary, removal of the Managing Director;
• ratifying the appointment and/or removal and contributing to the performance assessment for the members of the senior management team including the Chief Financial Officer and the Company Secretary;
• ensuring there are effective management processes in place and approving major corporate initiatives
• enhancing and protecting the reputation of the organisation;
• overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders;
• ensuring appropriate resources are available to senior management.
Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives are the responsibility of the Managing Director. The Managing Director’s performance is reviewed annually by the other non-executive Board members. Further, the Chairman is responsible for administering an evaluation of Board performance on an annual basis.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
The Board operates in accordance with the broad principles set out in its Board Charter (which was formally adopted on 16 August 2010). The charter details, amongst other things, the Board’s composition, roles, responsibilities and Board evaluation processes.
The Company has a five member Board comprising one executive director and four non-executive directors, including the Chairman. The roles of Chairman and Managing Director are not combined. Four of the five directors reside in Australia with one director (Mr Loh) residing in Singapore.
The Group’s Managing Director, Dr Ward is not considered independent by virtue of his executive role in the Group, neither are Messrs George, Chow or Loh by virtue of financial remuneration received as consultants during the previous three financial years or post financial year end. Mr Tsang is a substantial shareholder of the Company and is therefore not considered independent. The Board has considered its materiality threshold and deemed it too small to have a majority of independent directors on the Board.
The full Board currently hold a number of scheduled meetings each year, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address significant matters as they arise.
Standing Board meeting agenda items include the Managing Director’s report, financial reports, strategic matters, governance and compliance.
Board members possess complimentary business disciplines and experience aligned with the Company objectives. The experience and qualifications of directors are noted in the Directors’ Report.
Where any director has a personal interest in a matter, the director is not permitted to be present during discussions or to vote on the matter. The enforcement of this requirement ensures that the interest of shareholders, as a whole, are pursued and not jeopardised by a lack of a majority of independent directors.
Where appropriate the Company will engage Board members as consultants to provide specialist input into Company matters.
Mr George acts as Chairman of the Company and while not satisfying the ‘independence test’ set out in the ASX’s Corporate Governance Principles and Recommendations, it is considered Mr George’s appointment is in the best interests of the Company and is without conflict given its size.
The Board formed an Audit committee (commenced December 2004) currently comprising Messrs Loh, Chow and George; as well as a Remuneration committee (commenced December 2004) which currently comprises Messrs Tsang, Chow and George.
The Company has also formed a Nominations Committee (formalised September 2010) comprised of the non-executive directors of the Company. The Nominations Committee and the Board give consideration to the appointment of specialist and independent directors when the activities and scale of operations of the Group warrant such appointments.
Details of the directors’ qualifications and attendance at such committee meetings are set out in the Directors’ Report.
New directors are provided with a letter of appointment setting out the Company’s expectations, their responsibilities, rights and the terms and conditions of their employment. All new directors participate in a comprehensive formal induction program which covers the operation of the Board and its committees and financial, strategic, operations and risk management issues.
The Constitution of the Company notes that non-executive directors cannot hold office for a period longer than three years without submitting themselves for re-election at the next relevant AGM. One third of the non-executive directors must retire by rotation at each AGM together with any new directors appointed by the Board during the period since the last general meeting. Retiring directors are eligible to stand for re-election.
Each year the Board will conduct an evaluation of its performance. The Chairman is responsible for administering such evaluation.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING
Code of conduct
The Company has developed a statement of values and a Code of Conduct (“the Code”) which has been endorsed by the Board and applies to all directors and employees. The Code was formally adopted in 2010 and updated in September 2012. The Code will be reviewed at least once every two years and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Group’s integrity and to take into account legal obligations and reasonable expectations of the Company’s stakeholders.
In summary, the Code requires that at all times all company personnel act with integrity, objectivity and in compliance with the letter and spirit of any applicable law, rule or regulation; together with the protocols, policies and procedures of the Group.
The Code requires employees who are aware of unethical practices within the Group or breaches of the Group’s policies to promptly report these using the Group’s whistle-blower program. This can be done anonymously.
The Audit Committee reports directly to the Board on the compliance with the Code and has responsibility for the initial investigations for significant issues raised under the whistle-blower program.
Dealing in Company Securities, Misuse of Price Sensitive Information and Insider Trading
Mindax Limited has in place a formal policy on “Dealing in Company Securities, Misuse of Price Sensitive Information and Insider Trading” which applies to all directors and employees.
Any proposed trading in the Company’s securities by directors (other than the Managing Director), staff and other company officers is to be firstly advised to the Managing Director. The Managing Director must himself/herself advise the Chairman of any trade proposed by him/her. Once the Managing Director or Chairman (as applicable) has given approval, the relevant trade may be executed. Such policy clearly mitigates the risk of breaching the insider trading provisions and gives the Managing Director control to restrict trading if the Managing Director may be privy to sensitive information before the other Company officers and personnel are, or the Managing Director has knowledge that certain sensitive information (e.g.: exploration results) are due for receipt within a short term timeframe.
The Board may also impose trading bans at any time if it considers that as a consequence of any circumstances that have not been disclosed to the market, there is a risk that they or the Group's employees or other company officers may trade inappropriately.
Group directors, staff and other company officers are prohibited from trading during the following 'closed periods':
a) during the two week period immediately before the release of Mindax’s quarterly reports;
b) two weeks immediately before the Company’s Annual General Meeting when it is customary for the Chairman and Managing Director to provide further information about the Group’s current business activities; and
c) not until after a reasonable amount of time has passed in respect of a market announcement that released what was price sensitive information, which was not previously available to the market, is released (generally two trading days, unless another period is considered appropriate by the Board).
Directors, officers and employees with any non-public sensitive information are prohibited from purchasing or disposing of Company securities, in accordance with the Corporations Act 2001.
Directors must advise the Company of any transactions conducted by them in the securities of the Company, in accordance with the Corporations Act 2001 and ASX Listing Rules.
The Directors are satisfied that the Group has complied with its policies on ethical standards, including trading in securities.
The Company values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its goals. Accordingly the Group has developed and adopted a Diversity Policy. This policy outlines the Group’s diversity objectives in relation to gender, age, cultural background and ethnicity. It includes requirements for the Board to establish measurable objectives for achieving diversity and for the Board to assess annually both the objectives, and the Group’s progress in achieving them.
The Diversity Policy provides a framework for the Group to achieve:
a) diverse and skilled workforce, leading to continuous improvement in service delivery and achievement of corporate goals;
b) workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;
c) improved employment and career development opportunities for women (noting that 25% of Mindax’s current employees are women);
d) work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and perspectives through improved awareness of the benefits of workforce diversity and successful management of diversity; and
e) awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity.
In accordance with this policy and ASX Corporate Governance Principles, the Board will establish objectives in relation to diversity. The aim is to achieve such objectives over the coming 1 to 2 years as director and senior executive positions become vacant and appropriately skilled candidates are available.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
The Audit Committee is responsible for reviewing and reporting to the Board on the Group’s financial reports and external audit processes.
The Managing Director and Chief Financial Officer ordinarily provide a certification to the Board on the integrity of the Company’s external financial reports. The Managing Director and Chief Financial Officer also normally provide additional certification that the financial statements are founded on sound risk management systems and that compliance and control systems are operating efficiently and effectively in respect to financial reporting risks. However, as the Company did not have a Managing Director as at 30 June 2012 (Dr Ward was not appointed until 30 July 2012), the Chair of the Audit Committee, Mr Loh, and the Chief Financial Officer provided such certifications.
The Board considers that risk management and internal compliance and control systems are sufficiently robust for the Board to place reliance on the integrity of the financial statements.
Audit processes and policies
The Audit Committee consists of the following non-executive directors:
E Loh (Chair)
Details of the directors’ attendance at Audit Committee meetings are set out in the Directors’ Report. The Board is also ultimately responsible for the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Group.
The responsibilities include:
• reviewing and approving statutory financial reports and all other financial information distributed externally;
• monitoring the effective operation of the risk management and compliance framework;
• reviewing the effectiveness of the Group’s internal control environment including compliance with applicable laws and regulations;
• the nomination of the external auditors and the review of the adequacy of the existing external audit arrangements;
• considering whether non-audit services provided by the external auditor are consistent with maintaining the external auditor’s independence; and
• review and monitor related party transactions and assess their propriety.
The minutes of all committee meetings are circulated to all directors.
The external auditor, BDO Audit (WA) Pty Ltd (“BDO Audit”) has engagement terms refreshed annually and has indicated its independence to the Board. BDO Audit were appointed as auditors in December 2003.
PRINCIPLE 5 & 6: MAKE TIMELY AND BALANCED DISCLOSURES AND RESPECT THE RIGHTS OF SHAREHOLDERS
The Board adopts communications strategies and practices to promote communication with shareholders, in language capable of interpretation, and to encourage effective participation at General Meetings. The external auditor will attend the annual general meeting to respond to specific questions from shareholders relating to the conduct of the audit and the preparation and content of the auditor’s report.
As set out in the Company’s Continuous Disclosure Policy, the Company Secretary has been nominated as the person responsible for communications with the ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules. The Managing Director and Chairman are responsible for communication with analysts, brokers, shareholders, the media and the public.
The Board aims to ensure that shareholders are informed of all major developments affecting the Company’s state of affairs. Information is communicated to shareholders as follows:
• electronic communication via the ASX website and the Company’s website; and
• notices of all meetings to shareholders.
The Board encourages full participation of shareholders at the General Meetings to ensure a high level of accountability and identification with the Company’s strategy and goals. Important issues are presented to shareholders as single resolutions.
Shareholders are requested to vote on the appointment of directors, the granting of options and shares to directors and changes to the Constitution. Copies of the Constitution are available to any shareholder upon request.
Timely and balanced disclosure
The Board supports the Australasian Investor Relations Association “Best Practice Guidelines for Communication between Listed Entities and the Investment Community”. The Board endorses a culture in favour of continuous disclosure and recognises the benefits of consistency to be achieved through a dedicated authorised spokesperson(s).
All information disclosed to the ASX is posted on the Company’s website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Group’s operations, the material used in the presentation is released to the ASX and posted on the Company’s web site. Procedures have also been established for reviewing whether any price sensitive information has been inadvertently disclosed and, if so, this information is also immediately released to the market. Notably, continuous disclosure is discussed at all regular Board meetings and on an ongoing basis to support compliance.
The Group’s website also enables users to provide feedback and has an option for shareholders to register their email address for direct email updates on company matters.
The Group seeks to provide opportunities for shareholders to participate through electronic means. Initiatives to facilitate this include making all Company announcements, media briefings, details of Company meetings, press releases for the last three years and financial reports for the last five years available on the Company’s website.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
The Group has identified material business risks associated with its day-to-day operations and the possible impacts on the Group as a consequence. This is recorded in the Group’s internal register and is continuously being developed and updated. The Group aims to review its’ risk management policies on a six monthly basis to mitigate material risks identified from eventuating and to ensure a sound internal control system is in place. The Managing Director and Company Secretary are required to report to the Board if any material business risks that significantly impact on the business have arisen since the last Board meeting and if an effective internal control policy is in place and has been followed (as applicable). The Board declares that a sound and effective risk management and internal control system had been adhered to and operated during the financial year ended 30 June 2012.
In summary, the Group’s internal risk management policies are designed to ensure strategic, operational, legal, reputational and financial risks are identified, assessed, effectively and efficiently managed and monitored to enable achievement of the Group’s business objectives.
The Chair of the Audit Committee and the Chief Financial Officer have provided additional certification that the financial statements are founded on sound risk management systems and that compliance and control systems are operating efficiently and effectively in respect to financial reporting risks.
Considerable importance is placed on maintaining a strong control environment. The organisation has been structured in a way to clearly draw lines of accountability and delegation of authority. The Board actively promotes a culture of quality and integrity.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
The Remuneration Committee consists of the following non-executive directors:
Details of these directors’ attendance at Remuneration Committee meetings are set out in the Directors’ Report. The Remuneration Committee advises the Board on remuneration and incentive policies and practices generally and makes specific recommendations in relation to compensation arrangements for executive and non-executive directors and in respect of all equity based remuneration plans. Ultimate responsibility for the Company’s remuneration policy rests with the full Board.
The remuneration policy states that executive directors may participate in share option schemes with the prior approval of shareholders. Other executives may also participate in employee share option schemes, with any option issues normally being made in accordance with thresholds set in plans approved by shareholders. The Board however, considers it appropriate to retain the flexibility to issue options to executives outside of approved employee option plans in appropriate circumstances.
Information on directors’ and executives’ remuneration, including principles used to determine remuneration, is set out in the Directors’ Report under the 'Remuneration Report'. In accordance with Group policy, participants in equity-based remuneration plans are not permitted to enter into any transactions that would limit the economic risk of options or other unvested entitlements.
Each member of the senior executive team signs a formal employment agreement at the time of their appointment covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard agreement refers to a specific formal job description.
The Nominations Committee presently assumes responsibility for overseeing management succession planning, including the implementation of appropriate executive development programmes and ensuring adequate arrangements are in place, so that appropriate candidates are recruited for senior positions.
ACCESS TO PROFESSIONAL ADVICE BY THE BOARD AND COMMITTEES
Issues of substance are considered by the Remuneration Committee and Board with external advice from its professional advisers as required. The Board’s individual members can seek independent professional advice at the Company’s expense in carrying out their duties, subject to the Chairman approving the terms of such external advice.
Mindax Limited has adopted the following policies and charters:
• Board Charter;
• Code of Conduct;
• Securities Trading Policy;
• Diversity Policy;
• Audit Committee Charter;
• Continuous Disclosure Policy;
• Shareholder Communication Policy;
• Remuneration Committee Charter; and a
• Nominations Committee Charter.
The Company is non-compliant with respect to the majority of directors being considered independent for reasons stated. Other corporate practices are compliant and subject to regular review.