Corporate Governance Philosophy
Ultimate responsibility for corporate governance of the Company will reside with the Board of Directors. The Board sees strong corporate governance and stewardship as fundamental to the strong performance of the Company and, accordingly, the Board’s commitment is to the highest standards of business behaviour and accountability.
Outlined below are the main corporate governance, practices in place, which, in the Board’s opinion, comply with the NZX Corporate Governance Best Practice Code and the Principles of Corporate Governance and Guidelines originally published by the Securities Commission and adopted by the Financial Markets Authority, unless otherwise stated.
The Board will adopt a Code of Ethics identical to that previously adopted by the board of the Manager, which sets out the ethical and behavioural standards expected of directors, officers and employees. The purpose of the Code of Ethics is to uphold the highest ethical standards, acting in good faith and in the best interests of shareholders at all times. The Code of Ethics outlines policies in respect of conflicts of interest, fair dealing, compliance with applicable laws and regulations, maintaining confidentiality of information, dealing with company assets and use of company information.
Procedures for dealing with breaches of these policies are contained in the Code of Ethics, which forms part of every employees’ conditions of employment.
Composition of the Board
The Company is committed to having a Board whose members have the capacity to act independently and have the composite skills to optimise the financial performance of the Company and returns to shareholders. The Constitution provides for there to be not fewer than three directors. All the members of the Board are non-executive directors. The Board does not impose a restriction on the tenure of any director as it considers that such a restriction may lead to the loss of experience and expertise from the Board.
The Company recognises that independent directors are important in assuring shareholders that the Board is properly fulfilling its role and is diligent in holding management accountable for its performance. The procedures in place for determining independence is whether the director is independent of management and free of any business or other relationship that could materially interfere with, or could reasonablybe perceived to materially interfere with, the exercise of their unfettered and independent judgement. Asrequired under Listing Rule 3.3.2, the Board has determined that Peter Brook, Trevor Scott, MichaelSmith, and Andrew Evans are considered to be independent directors under the NZSX Listing Rules as none of them has a disqualifying relationship with the Company.
Board and Director Performance
The Board has a formal annual performance selfassessment, carried out under the direction of the Chairman. The self-assessment process involves reviewing the performance of the Board and its committees, together with setting forth the goals and objectives of the Company for the upcoming year. Assessment of individual directors’ performance is a process determined by the Chairman, taking into account attendance, contribution and experience of each individual director concerned.
Insider Trading and Restricted Persons Trading
Directors, officers and employees, their families and related parties must comply with the Insider Trading Policy and the Restricted Persons Trading policy. Amongst other requirements this identifies two ‘blackout periods’ where trading in the Company’s shares is prohibited, namely between 1 March until the day following the full year announcement date and from 31 August until the day following the half year announcement date, each year. On-going fixed trading by participation in the Distribution Reinvestment
Plan is available throughout the year. At all other times trading requires that an application is made and approval obtained from any two directors, or a director and the Chief Financial Officer, in order to buy or sell shares.
Directors and Officers Indemnification and Insurance
The Company has arranged directors and officers liability insurance covering directors, senior executives and employees for their personal liability arising out of duties as directors and officers. The insurer reimburses the Company where it has indemnified the directors.
Board committees assist with the execution of the Board’s responsibilities to shareholders. Each committee operates under a charter agreed by the Board, setting out its role, responsibilities, authority, relationship with the Board, reporting requirements, composition, structure and membership.
The Board has established an Audit Committee, which is responsible for overseeing the financial and accounting responsibilities of the Company. The minimum number of members on the Audit Committee is three. All members must be directors, the majority must be independent directors and at least one member must have an accounting or financial background. The members of the Audit Committee are Trevor Scott (Chairman), Michael Smith and Peter Brook. The Audit Committee assists the Board in fulfilling its corporate governance and disclosure responsibilities with particular reference to financial matters, and internal and external audit, and is specifically responsible for:
- the appointment of the external auditor of the Company;
- supervising and monitoring external audit requirements;
- reviewing annual and interim financial statements prior to submission for Board approvals;
reviewing the performance and independence of the external auditor; and
- monitoring compliance with the Financial Reporting Act 1993, Companies Act 1993 and the NZSX Listing Rules.
External Audit Firm Guidelines
In addition to the formal charter under which the Audit Committee operates, the Audit Committee has also developed a Charter of Audit Independence, which sets out the procedures that need to be followed to ensure the independence of the Company’s external auditor.
The Audit Committee is responsible for recommending the appointment of the external auditor and maintaining procedures for the rotation of the external audit engagement partner. Under the Audit Charter, the external audit engagement partner must be rotated every five years. The charter covers provision of non-audit services with the general principle being that the external auditor should not have any involvement in the production of financial information or preparation of financial statements such that they might be perceived as auditing their own work. It is however appropriate for the external auditor to provide services of due diligence on proposed transactions and accounting policy advice.
The Board aims to ensure that shareholders are informed of all information necessary to assess the Company’s performance. It does so through a communication strategy which includes:
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