CORPORATE GOVERNANCE STATEMENT
The Board of Directors monitors the business and affairs of the company on behalf of the shareholders by whom they are elected and to whom they are accountable. To assist the Board in discharging its responsibilities, the Board has adopted the following principles of corporate governance that are considered appropriate for the present size of the Company and that unless otherwise explained, follows the recommendations of the ASX Limited Corporate Governance Council.
The company has in place a corporate governance policy which it intends to make publicly available on the company's website once the website design is completed and updated.
BOARD CHARTER
The Board is responsible for:
| a) |
developing, approving and monitoring implementation of corporate policy, strategy and performance objectives; |
| b) |
developing and monitoring adoption of the most appropriate principles of corporate governance; |
| c) |
reviewing and ratifying systems of risk management and internal control, codes of conduct and legal compliance; |
| d) |
approving and monitoring the progress of major capital expenditure projects, funding programmes, acquisitions and divestments; |
| e) |
reviewing and approving annual business plans, operating and capital budgets; |
| f) |
reviewing and ratifying systems for health, safety and environment management and controls; |
| g) |
appointing and evaluating the performance of senior executives; and |
| h) |
selecting and appointing new Directors to the Board, and evaluating the performance of all members of the Board. |
COMPOSITION OF THE BOARD
The composition of the Board is determined in accordance with the following principles and guidelines:
| a) |
the Board shall comprise at least three Directors, increasing where additional expertise is considered desirable in certain areas; |
| b) |
at each annual general meeting a Director (except for the Managing Director) appointed since the last annual general meeting, one third of the other Directors, and any Director for whom that annual general meeting would be his third annual general meeting or who has been in office for three years since his last appointment, shall automatically retire and be eligible for re-election; |
| c) |
the Board shall comprise a majority of non-executive and independent Directors with the Chairman being a non-executive and independent person; and |
| d) |
Directors may bring characteristics that allow a mix of qualifications, skills, expertise and experience. |
The Board reviews its composition on an annual basis 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 a majority of non-executive and independent Directors. Dr Peter Power (non-executive Chairman) and T Sykes and P K Philip (non-executive Directors) are considered by the Board to be independent Directors. R A Adrey and T G Miller (executive Directors) are also Directors of International Energy Corporation, a wholly owned US subsidiary of AusTex Oil Limited. D Lanskey (Managing Director) is also a Director of International Energy Corporation.
Nomination
Given the present size of the Company, the existing Board structure is able to meet the needs of the Company in the examination of selection and appointment practices without the establishment of a nomination committee of the Board.
Independent Professional Advice
Each Director has the right to seek independent professional advice at the company's expense. However, prior approval from the Chairman is required, which cannot be unreasonably withheld.
Performance Assessment
The performance of individual Directors is reviewed annually by the Board under a peer review procedure. Any identified areas of unsatisfactory performance are addressed with the individual Director concerned.
Business 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 at Board meetings. Included in these areas are performance of activities, human resources, health, safety and the environment, continuous disclosure obligations, asset protection and financial exposures.
Remuneration of Directors
The company has established a remuneration committee which acts without the affected director participating in the remuneration decision making process.
The Board will distinguish the structure of non-executive directors' remuneration from that of executive directors and senior executives. The structure of Directors' remuneration will be disclosed in the remuneration report section of the annual report. The company will explain any departures from ASX recommendations in its future annual reports.
CODE OF CONDUCT
Ethical Standards
The Board's policy is for the Directors and management to conduct themselves with the highest ethical standards. All Directors and employees are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the company. In particular, Directors and employees must at all times: manage situations where their personal interests may conflict with the interests of the company; not take advantage of property, information or position for personal gain; not compete with the company; 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 company'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.
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 company's operations on the environment, and encourage the adoption of similar standards by the company's principal suppliers, contractors and joint venture partners. The Board regularly reviews risk management with management at Board meetings.
Securities Trading
The Board has set a policy on dealing with securities of the company. All the company's officers, employees and Directors are allowed to deal in any of the company's securities, except when in possession of unpublished price sensitive information. Directors and employees can not deal in the company's securities within two days of any ASX release. Directors and salaried employees are prohibited from dealing in the company's securities during specified periods as determined by the Board. Directors and salaried employees must notify either the Chairman or the Company Secretary prior to dealing in the company's securities.
FINANCIAL REPORTING
Financial Report
To assist the Board in approving the company's financial report, the Managing Director and the Chief Financial Officer are required to present a statement with regard to the integrity of the financial statements of the company to confirm to the Board that the company's financial statements present a true and fair view in all material respects of the company's financial condition and that operational results are in accordance with applicable accounting standards and the Corporations Act 2001. In addition management is required to complete a Directors' Questionnaire to support the statement.
Audit
The Board has established an Audit Committee, consisting of three non-executive Directors (two of whom are independent), chaired by a non-executive and independent Director, to assist in matters relating to the audit functions and to safeguard the integrity of the company's financial reporting. The Board has ratified an Audit Policy which states the services that may or may not normally be conducted by the company's external auditing firm under the following guiding principles:
Acceptable Services
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.
Unacceptable Services
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;
- book-keeping;
- valuations;
- 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 company.
Exception
An exception can be made to the above policy where the variation is in the interests of the company and arrangements are put in place to preserve the integrity of the audit of the company's accounts. Any such exception requires the approval of the Board.
Board Committees
The Directors have resolved that, all independent Directors may be included as members of the Audit and Risk, Remuneration and Health, Safety and environment Committees. The Board will adopt a formal charter for these committees as soon as practicable.
The Board does not believe a separate Nominations Committee serves any useful purpose and is inconsistent with the company's current size and status. Responsibilities normally associated with such a committee in larger organisations remains with the Board.
These responsibilities include:
- reviewing the performance of the Board and its committees; and
- periodically reviewing the composition of the Board to maintain an appropriate mix of qualifications, skills and experience consistent with AusTex Oil's needs and strategic direction.
No separate fee is payable to independent Directors for attendance at committee meetings other than to the chairman of a committee.
LISTING RULES DISCLOSURES
The Board's policy is for all investors to have equal and timely access to material information concerning the company, including its financial position, performance, ownership and governance.
The Board shall delegate the function of continuous disclosure to shareholders and as required (when the company is listed on ASX) under ASX's Listing Rules to the Managing Director and the Company Secretary to assess the type of information that needs to be disclosed and to ensure that Company's announcements are made in a timely manner, are factual, do not omit material information and are in compliance with the Listing Rules. Information which is considered to be price sensitive is approved by the Board before its release.
SHAREHOLDER COMMUNICATION
Information is proposed to be communicated to shareholders as follows:
- the Annual Financial Report will be distributed to all shareholders (unless a shareholder has specifically requested not to receive the document). The Annual Financial Report will include relevant information about the operations of the company during the year, changes in the state of affairs of the company and details of future developments;
- the half-yearly report will be distributed to all shareholders (unless a shareholder has specifically requested not to receive the document). The document will contain summarised financial information and a review of the operations of the company during the period; and
- all announcements and broker/investor relations presentations will be made available on the company's website as soon as practicable after their release to the ASX.
|
|