The Board of Directors of CuDeco Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.
In accordance with the Australian Securities Exchange Corporate Governance Council’s (“CGC”) “Principles of Good Corporate Governance and Best Practice Recommendations” the Corporate Governance Statement must contain certain specific information and must disclose the extent to which the Company has followed the guidelines during the period. Where a recommendation has not been followed, that fact must be disclosed together with the reasons for the departure.
The Company’s corporate governance practices were in place throughout the financial year ended 30 June 2008 and were compliant, unless otherwise stated, with the CGC’s principles and recommendations, which are noted below. The Board as a whole is involved in matters where larger Boards would ordinarily operate through sub-committees. For these reasons, some of the best practices recommended by CGC are not cost effective for adoption in a small company environment.
- Principle 1. Lay solid foundations for management and oversight
- Principle 2. Structure the board to add value
- Principle 3. Promote ethical and responsible decision making
- Principle 4. Safeguard integrity in financial reporting
- Principle 5. Make timely and balanced disclosure
- Principle 6. Respect the rights of shareholders
- Principle 7. Recognise and manage risk
- Principle 8. Encourage enhanced performance
- Principle 9. Remunerate fairly and responsibly
- Principle 10. Recognise the legitimate interests of stakeholders
The Board’s primary role is the protection and enhancement of long-term shareholder value. The Board is responsible for setting the strategic direction and establishing the policies of the Group. It is responsible for overseeing the financial position, and for monitoring the business and affairs on behalf of the shareholders, by whom the Directors are elected and to whom they are accountable. The Board also addresses issues relating to internal controls and approaches to risk management. The Board is responsible for the overall Corporate Governance of the consolidated entity
The Company did not comply with ASX Recommendation 1.1 as there was no formalisation and disclosure of separate functions between the Board and management during the reporting period. Throughout the reporting period the Board consisted of two executive directors and two non-executive directors. The executive directors were the management of the Company. The Board considers that, given the size of the Company and the early stage of development of its lead project, it would not be practicable or cost effective to have a larger Board comprising a majority of independent directors.
It is proposed the Board will hold scheduled meetings at least once every two months, plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise.
The agenda for meetings is prepared in conjunction with the Chairman and executive directors. Standing items include the executive directors’ report, financial reports, strategic matters, governance and compliance. Submissions are circulated in advance.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time, and has not adhered to ASX Recommendations 2.4 and 9.2 during the financial year. Again, given the size and the relative simplicity of the Company’s activities, the Board as a whole is able to deal effectively with matters such as the external audit process and remuneration of employees. In September 2007 the Board appointed an audit committee.
The Board conducts an annual review of its processes to ensure that it is able to carry out its functions in the most effective manner.
The names, qualifications and relative experience of the directors of the company in office at the date of this Statement are set out in the Directors’ Report.
The composition of the Board is determined using the following principles:
- the Board should comprise at least three directors. This number may be increased where it is felt that additional expertise is required in specific areas, or when an outstanding candidate is identified
- the Board should not comprise a majority of executive directors
- the Board should comprise directors with a broad range of expertise
- directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors are subject to re-election at least every three years
During the financial year, all the Board, including the Chairman were executives who cannot be considered independent, which is not consistent with ASX Recommendations 2.1 and 2.2. However, the Board is of the view that there is a broad mix of skills required and that given their experience each of the directors are aware of and capable of acting in an independent manner and in the best interests of the shareholders. Since year-end two non-executive, independent directors have been appointed.
The composition of the Board is reviewed on an annual basis to ensure that the Board has the appropriate mix of expertise and experience. When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new director with particular skills, a panel of candidates is selected with the appropriate expertise and experience. External advisers may be used to assist in such a process. The Board then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders.
The Company did not adhere to ASX Recommendation 9.1 as remuneration policies have not been formulated in a formal manner. Given the size of the Company and the below market rates paid to executive directors and there being no other executives, the Board does not consider it necessary to formulate the policies at this time. The Financial Report and the Directors Report do however disclose details of remuneration paid or payable (broken down by separate constituents of the remuneration package) to each of the directors.
The Chairman reviews the performance of all directors each year. Directors whose performance is unsatisfactory are asked to retire.
In accordance with the Corporations Act 2001 and the Company’s constitution directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the company. Where the Board believes that a significant conflict exists the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.
INDEPENDANT PROFESSIONAL ADVICE AND ACCESS TO COMPANY INFORMATION
Each director has the right of access to all relevant company information and to the Company’s executives and, subject to prior consultation with the Chairman, may seek independent professional advice at the consolidated entity’s expense. A copy of advice received by the director is made available to all other members of the Board.
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 the following internal control framework:
Continuous disclosure – The Company is a “Disclosing Entity” within the meaning of section 111AC of the Corporations Act. As such, regular reporting and disclosure obligations will require the Company to disclose to the ASX information of which it is, or becomes, aware that concerns the Company which a reasonable person would expect to have a material effect on the price or value of the Company unless certain exceptions from the obligation to disclose apply.
The Board monitors and receives advice on areas of operational and financial risk, and considers strategies for appropriate risk management arrangements. Major business risks arise from such matters as commodities price and foreign currency fluctuations, human resources, the environment, the technical risks of mineral exploration and mining and continuous disclosure obligations.
The Board acknowledges the need for continued maintenance of the highest standards of corporate governance practice and ethical conduct by all Directors and employees. A fundamental theme of the Company’s code of ethics is that all business affairs are conducted legally, ethically and with the strict observance of the highest standards of integrity and propriety. The Directors and management have the responsibility to carry out their functions with a view to maximising financial performance of the consolidated entity.
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 consolidated entity.
The Company did not comply with ASX Recommendation 3.2 as it does not have a formal written policy regarding trading in company securities by directors, officers and employees, however there is a clear understanding as to when trading is inappropriate.
The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the Company. In addition to complying with the continuous disclosure rules of the ASX, information is communicated to the shareholders through:
- The annual report which is distributed to all shareholders;
- The half yearly financial report lodged with the ASX;
- Advising shareholders of the key issues affecting the Company;
- Posting all ASX announcements on the Company’s website; and
- Conducting an Annual General Meeting each year that incorporates an address by the Chairman and/or the Executive Directors, and other meetings called to obtain shareholder approval for specific matters
