Although Marine Produce Australia Limited is not listed on the ASX, the Board is committed to following the ASX Corporate Governance Council Corporate Governance Principles and Recommendations (ASX Recommendations) and the Board and Management regularly review the Company’s policies and practices to ensure that the Company continues to maintain and improve its governance standards.
The specific aspects that support the implementation of this approach are described below in accordance with the ASX Recommendations.
Lay Solid Foundations for Management and Oversight
The Board operates in accordance with the broad principles set out in its charter which can be downloaded from the corporate governance section of the Company’s website.
The Board is responsible of the overall operation and stewardship of the Company. The Board’s specific responsibilities include:
- input into and approval of the strategic direction of the Company;
- approving and monitoring capital expenditure;
- monitoring of financial performance including reviewing and ratifying the systems in place that manage the material risks to the Company;
- appointing, removing and setting succession policies for the managing director, directors and seniors executives;
- establishing and monitoring the achievement of management’s goals;
- encouraging ethical behaviour throughout the organisation.
Clause 6 of the Board Charter sets out the Board’s delegation of the responsibility to allow senior management being the chief financial officer and the general manager operations, to carry out day-to-day operations and administration of the Company. In carrying out this delegation, senior management reports regularly to the Board on the Company’s progress on achieving the short, medium and long term plans of the Company. Senior management is accountable to the Board for the authority that is delegated by the Board.
The Board Charter supports all delegations of responsibility by formally defining the specific functions reserved for the Board of Committees, and those matters delegated to management.
Performance Review of Senior Executives
In accordance with the clause 5.5 if it’s Charter, each year the Board approves the criteria for assessing the performance of senior management.
In addition, performance reviews of the senior management are conducted regularly during the year by the full Board. The performance of senior management is reviewed by comparing performance against agreed measures, examining the effectiveness and quality of the individual, assessing key contributions, identifying areas of potential improvement and assessing whether various expectations of shareholders have been met.
Further details of how the Company assesses the performance of senior management are set out in the Remuneration Report of the Annual Report.
Structure the Board to Add Value
The Board strives to ensure that it is comprised of strongly performing individuals of the utmost integrity whose complementary skills, experience, qualifications and personal characteristics are suited to the Company’s needs.
The Company’s Constitution provides for a minimum of three and a maximum of ten directors.
At the commencement of the 2010 financial year, the Board comprised three directors. A profile of each director, including their skills, experience, relevant expertise, special responsibilities and the date each director was appointed to the Board of the Company is set out in the Directors’ Report of the 2010 Annual Report
At present the Board does not comprise a majority of independent directors. The Board defines ‘independence’ in accordance with the ASX Recommendations.
In order to ensure that any ‘interests’ of a Director in a matter to be considered by the Board are known by each Director, each Director had contracted with the Company to disclose any relationships, duties or interests held that may give rise to a potential conflict. Directors are required to adhere strictly to constraints on their participation and voting in relation to any matters in which they may have an interest. Each Director is required by the Company to declare on an annual basis the details of any financial or other relevant interests that they may have in the Company.
Our Chairman is a Non-executive director. The Chairman is responsible for the leadership of the Board and to ensure that the Board functions effectively.
The Nomination and Remuneration Committee
The full Board of the Company carries out the duties of the Nomination and Remuneration Committee.
Selection and Appointment of Directors
The full Board considers and identifies candidates who may be qualified to become directors. The nomination of all new directors including the Managing Director is considered by the full Board. The Board assesses the nominees against a range of specific criteria including their experience, professional skills, potential conflicts of interest and the requirement for independence. All new appointments to the Board are subject to shareholder approval.
Retirement and Re-election of Directors
The Company’s constitution requires one-third of the directors (rounded down to the next lowest number) to retire by rotation at each general meeting (AGM). In selecting the directors to retire the Board has regard to a number of factors including the optimal composition of the Board having regard to the on-going needs of the Company, the skills and experience of the directors, their potential conflict of interests, and the length of time the Director has held office.
A Director must retire in any event at the third AGM since he or she was last elected or re-elected. Retiring directors may offer themselves for re-election.
The Managing Director is not subject to retirement by rotation and is not to be taken into account in determining the number of directors required retiring by rotation.
Director Induction and Education
The Company has a process to educate new directors about the nature of the business, current issues, the corporate strategy and the expectations of the Company concerning the performance of the directors. Directors are given access to continuing education opportunities to update and enhance their skills and knowledge.
It is the practice of directors to visit the Company’s projects and meet with management to gain a better understanding of the business on a regular basis.
New directors also receive a letter of appointment which outlines their main responsibilities and provides new directors with a broad range of information about the Company.
Independent Professional Advice and Access to Company Information
Directors have a right of access to all relevant Company information and, subject to prior consultation with the Chairman, may seek independent advice from suitably qualified advisors at the Company’s expense.
Evaluating Board Performance
The criterion for the evaluation of each Director is their contribution to specific Board objectives, including the following:
- setting corporate strategies;
- identification, analysis and responses to risks and issues;
- monitoring of the Company’s progress against its business objectives;
- understanding and analysing of the Board papers presented by management;
- use of industry, financial and broad knowledge to add value to the deliberations of the Board.
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. The Board as a whole is able to address the governance aspects of the full scope of the Company’s activities and to ensure that it adherers to appropriate ethical standards. The full Board currently holds meetings at such times as may be necessary to address any general or specific matters as required. When the Company’s activities increase in size, scope and nature, the appointment of separate or special committees will be reviewed by the Board and implemented if appropriate.
Promote Ethical and Responsible Decision-Making
The Board acknowledges the need for continued maintenance of a professional standard of a corporate governance practice and ethical conduct by all directors and employees of the Company. The Board and the Company’s employees are expected to uphold the highest levels of integrity and professional behaviour in their relationships with all of the Company’s stakeholders.
Code of Conduct
The code describes standards for appropriate ethical and professional behaviour for all directors, employees and contractors working for the Company. The Code of Conduct requires all directors, employees and contractors to conduct business with the highest ethical standards including compliance with the law and to report any interest that may give rise to a conflict of interest. Breaches of the Code of Conduct are taken seriously by the Company. The Code of Conduct is made available to all employees.
The Company has also implemented a set of values designed as a guide by the directors and all employees in their day-to-day dealings with each other, competitors, customers and the community. The values established are summarised under the headings Respect, Integrity, Action and Results.
Trading in the Company’s Shares
To safeguard against insider trading the Company’s Securities Trading policy prohibits directors and employees from trading the Company’s securities if they are aware of any information that would be expected to have a material effect on the price of the Company’s securities.
Directors must consult with the Chairman of the Board, or in his absence or conflict, the Deputy Chairman, before dealing in shares or other securities of the Company.
Dealings (whether purchases or sales) in the Company’s shares or other securities by related personnel may not be carried out during a closed period, being the period 14 days prior to and ending 1 day following the date of announcement of the Company annual, half yearly or quarterly report.
“Major” is defined as an announcement that may as a direct result, affect the share price, or an announcement affecting the operations of the Company. If within that period any further announcement arises that may separately affect the share price, the Chairman or in his absence the Deputy may impose a lock-down period on the ability to trade.
All related persons must give details of any acquisitions or disposal of shares or other securities in the Company, within one business day to the Company Secretary of the Company.
All related persons must ensure that they at all times observe the insider trading rules of the Corporations Act.
The Company discloses to ASX any transaction conducted by the directors in the Company’s securities in accordance with the ASX Listing Rules.
Safeguard Integrity in Financial Reporting
The full Board forms the Company’s Audit Committee. The Board acknowledges that it does not at this stage comply with ASX recommendation 4.1 but is reviewing this recommendation having regard to the changes in the Company’s operations.
Make Timely Balanced Disclosure
The Company is committed to providing relevant up-to-date information to its shareholders and the broader investment community in accordance with the continuous disclosure requirements under the ASX Listing Rules and the Corporations Act.
The Board has authorised the Financial Manager and Company Secretary as the Disclosure Officers, to ensure that information is released by the Company in a timely and accurate fashion.
To supplement the Continuous Disclosure Policy the Board has also approved Disclosure Protocols and Procedures to provide further guidance to staff on understanding and complying with the Company’s continuous disclosure obligations.
Respect the Right of Shareholders
The Board aims to ensure that shareholders are informed of all information necessary to assess the performance of the Company. To achieve this during 2010 the Board Shareholder Communication Policy which outlines the process through which the Company will endeavour to ensure timely and accurate information is provided equally to all shareholders.
Information is communicated to Shareholders through:
- The annual report which is available to all shareholders (in both hardcopy and electronic form);
- The release to the ASX and on the Company’s website, of the half yearly financial report, quarterly production and activities report and other information, including ASX releases in accordance with the Company’s continuous disclosure obligations;
- Providing information on the Company’s website about the Company, including the Charters that govern the Board and Board Committees, the Company’s key policies, statutory reports of the last 2 years and releases to the ASX;
- The release to ASX and the Company’s website of all Company presentations made during briefings conducted with analysts and institutions from time to time.
Shareholders are also encouraged to attend the AGM and use the opportunity to ask questions. Questions can be lodged prior to the meeting by completing the relevant form accompanying the notice of meeting. The Company makes every endeavour to respond to the most commonly asked questions. The external auditor attends the meeting and is available to answer questions in relation to the conduct of audit.
Recognise and Manage Risk
The Company is exposed to numerous risks across its business, most of which are common to the resources industry. The Company’s commitment and approach to managing these risks is outlined in the Company’s Risk Management Policy and is on the Company’s website.
The Board receives reporting on the control mechanisms which are designed and implemented by management to ensure that the safety, environment, legal and reputation risks faced by the Company are identified, assessed and managed.
The Board also reviews and assesses the adequacy of the Company’s internal control and financial management systems and accounting and business policies. The Board is given further assurance on the Company’s financial management systems through the Company’s independent internal audit function.
Senior management are responsible for risk management in their respective areas of accountability. They ensure that procedures exist to monitor risks and, through observation and audit, gain assurance that affective controls are implemented and consistently applied.
The Board has recognised the need to implement a common risk management framework across the group. The Company is in the process of developing this framework and it will be rolled out during 2010. This process includes the implementation at all sites of the Company’s Sustainability Standards. These are comprehensive sets of standards that provide a systematic approach to the management of Safety, Health, Environment and Community related risks.
Management Reporting and Certifications
Management reports to the Board on the material business risks faced by the Company, the effectiveness of the Company’s risk management and internal control system, and the Company’s management of its material business risks.
The Financial Manager has declared in writing to the Board that the financial records of the Company for 2010 have been properly maintained and present a true and fair view of the Company’s financial position and financial results, in accordance with the Corporations Act and the relevant accounting standards.
The reporting and control mechanisms support the written certifications given by the Financial Manager to the Board annually, that the Company’s financial reports are based on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
Remunerate Fairly and Responsibly
The Board provides recommendations and directions for the Company’s remuneration practices. The Board, as the Remuneration Committee, ensures that a significant proportion of each Senior Manager’s Remuneration is linked to his or her performance and the Company’s performance. Performance reviews are conducted regularly to assess the performance of Senior Managers and to determine the proportion of remuneration that will be ‘at risk’ for the upcoming year. For further details on this see Remuneration Report within the 2010 Annual Report.
The total annual remuneration paid to non-executive directors may not exceed the limit set by the shareholders at an AGM. The remuneration of the non-executive directors is fixed rather than variable.