MIKOH’s Corporate Governance Statement is structured with reference to the Corporate Governance Council’s principles and recommendations, which are as follows:
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 – Remunerate fairly and responsibly
1. Lay Solid Foundations for Management and Oversight
Governance Roles to achieve the Vision
The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report are included in the Directors’ Report.
The Board will be accountable to the Company shareholders for the performance of the Company and will have overall responsibility for its operations. Day to day management of the Company’s affairs, and the implementation of corporate strategy and policy initiatives, will be formally delegated by the Board to the Managing Director.
Key responsibilities of the Board will include:
- approving the strategic direction and related objectives of the Company, and monitoring management performance in the achievement of these objectives;
- adopting budgets and monitoring the financial performance of the Company;
- reviewing the performance of the Managing Director;
- overseeing the establishment and maintenance of adequate internal controls and effective monitoring systems;
- ensuring all major business risks are identified and effectively managed;
- ensuring that the Company meets its legal and statutory obligations; and
- having regard to the stage of development and the size of the company, the full Board will carry out the functions that would otherwise be delegated to a nominations committee or a remuneration committee.
Role of the Chairman
The role of the Chairman includes:
- Vision/Strategy:- Ensuring leadership in setting and reviewing vision;
- Board meetings:- Setting agenda with the Managing Director/Company Secretary, ensuring directors receive all relevant information, chairing meetings and dealing with conflicts;
- Shareholder Meetings:- Chairing shareholder meetings and ensuring shareholders as a whole have an opportunity to speak on relevant matters, ensuring audit partner attends the Annual General Meeting;
- External:- Spokesperson, with the Managing Director, on company matters;
- Managing Director:- Primary point of contact between the Board and the Managing Director, keeping fully informed on major matters by the Managing Director, chairing the performance appraisal of the Managing Director, and providing mentoring;
- Board:- Initiating Board and committee performance appraisal, ensuring agreed composition is maintained, and director induction plans are in place.
Role of the Managing Director
The role of the Managing Director includes:
- Vision/Strategy:- Formulating with the Board the vision and strategy of the Company, developing action plans to achieve the vision, and reporting regularly to the Board on progress.
- Management team and employees:- Providing leadership, appointing and negotiating terms of employment of senior executives (with Board approval where necessary), developing a succession plan, ensuring procedures are in place for education and training to ensure compliance with laws and policies.
- Board:- Responsible for bringing all matters requiring review/approval to the Board, advising on changes in risk profile, providing certification regarding the financial statements for the half-year and full-year, reporting to the Board on a monthly basis the performance of the Company, and for ensuring education of Directors on relevant matters.
- Delegated authority:- Levels for capital expenditure, sale of assets, etc.
Performance Evaluation
The Board will annually review the performance of the Managing Director having regard to performance measures set out at the commencement of each year. These will include financial measures, achievement of strategic objectives and other key performance indicators, and compliance.
The Managing Director evaluates the performance of other key executives in a similar manner.
2. Structure the Board to Add Value
Composition and Balance of Skills of Directors
The Directors consider the size and composition of the Board is appropriate given the size and status of the Company. However, the composition of the Board will be subject to review in a number of ways.
- The Company’s Constitution provides that at every Annual General Meeting one-third of the directors shall retire from office but may stand for re-election.
- Board composition will also be reviewed periodically either when a vacancy arises or if it is considered that the Board would benefit from the services of a new director, given the existing mix of skills and experience of the Board, which should match the strategic demands of the Company. Once it has been agreed that a new director is to be appointed, a search would be undertaken, using the services of external consultants where necessary. Nominations would then be reviewed by the Board.
- The Chief Executive Officer will be a director and will also have the title of Managing Director.
Details of the skills, experience and expertise of each director relevant to their position as director are included in the Directors’ Report for the year ended 30 June 2009.
Independence of Directors
The Board believes that the best interests of the Consolidated Entity will be served if a majority of the Directors are independent, as defined in the ASX Corporate Governance Principles and Recommendations. The Chairman is an independent director and non-executive. Directors of MIKOH Corporation Limited are considered to be independent when they are independent of management and free from any business or other relationship that could (or could reasonably be perceived to) materially interfere with the exercise of their unfettered and independent judgement.
The Board will review annually whether or not each director is independent.
The status of each director is as follows:
|
|
Term in Office |
P L Tyree - Chairman |
Independent |
Since 2 June 2009 |
J M Blomfield - Managing Director |
Non-independent |
Since 1 December 2004 |
D J Halley |
Independent |
Since 12 January 1988 |
J S Keniry |
Independent |
Since 11 March 1994 |
R O Holcomb |
Independent |
Since 14 June 2006 |
R Tayeh |
Independent |
Since 23 March 2009 |
The definition of independence is that as set out in the ASX Corporate Governance Guidelines and Recommendations.
The Board believes that where services provided by director related entities are at commercial rates, it is in the interests of the Consolidated Entity at this stage of its development to retain director involvement.
The structure of the Board complies with the ASX principle for a majority of the Board to be independent. Mr Halley has a relevant interest in 5.57% of the issued shares of the Company although, by virtue of a joint holding, his ultimate interest is less than 5%. The Board considers that Mr Halley is independent for the purpose of the discharge of his duties and is not compromised by his shareholder interests.
The Board believes in the renewal of Board members to ensure the ongoing vitality of the company. Generally, directors will serve for 10 years and will not seek re-election at the next AGM at which they retire by rotation, unless unanimously agreed otherwise by the other non-executive directors. The best interests of the company at the time will significantly influence any such decision.
Appointment of Directors
If the Board determines that there is a need to appoint another director for any reason they will:
- determine the appropriate skills, experience, and qualifications required, having regard to those of the existing directors;
- agree the process to seek such a person;
- set a timetable to appoint, having regards to the timing of the AGM and requirements of the Constitution; and
- prepare a short list and meet the candidates.
Given the size of the company and the Board, the directors have determined that the functions of a Nomination Committee are at this time better performed by the entire Board.
Performance Evaluation
The Board, through the Chairman, will carry out an evaluation, at least every three years, to:
- review the role of the Board;
- assess the performance of the Board with a view to assisting the Board to better perform its duties;
- review the type and timing of information provided to directors; and
- review the performance and contribution of each of the non-executive directors.
The Board may, from time to time, use an independent adviser to assist in the reviews.
The most recent review was conducted in June 2007.
The Board believes that the shareholders of the Company ultimately assess the performance of the Board, its committees, individual directors and senior management based on the financial performance of the Company in the context of the commercial, legal and ethical framework within which the Company operates.
Access to Independent Advice
Directors may obtain independent experts’ advice to enable them to fulfill their obligations, at the expense of the Consolidated Entity, and after obtaining approval from the Chairman.
3. Promote Ethical and Responsible Decision Making
Code of Conduct of Directors
The Directors are expected to use their skills commensurate with their knowledge and experience to increase the value of the Company.
To meet this obligation they must act honestly and should:
- execute due care and diligence;
- not misuse information or their position for their own gain;
- avoid or fully disclose potential conflicts;
- ensure that the market is fully informed of all matters that require disclosure; and
- actively promote the reputation of the company.
In accordance with the Corporations Act and the Company’s constitution, the 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 will not receive the relevant Board papers, will not be present at the meeting whilst the item is considered, and will take no part in any decision.
Directors must comply with the law on disclosure of benefits and related party transactions. Directors must have access to all relevant information on the company and this is to be sought through the Managing Director or agreed arrangements.
All directors must maintain strict confidentiality in relation to company matters.
Directors must be aware of insider trading laws and strictly abide by the law and company policies.
Directors are to ensure that the financial statements are drawn up to comply with Australian Corporations Law and Accounting Standards.
Directors must also be aware of environmental impacts of the company’s business and ensure the health, safety and well-being of their employees.
Deeds of access indemnity and insurance will be entered into with the directors to the extent permitted by law.
Trading in securities
The Company’s constitution permits the Directors to acquire securities in the Company. However the Company policy only permits trading in the Company’s securities by directors and management within one month after the day of the Annual General Meeting, and within one month after the day of the release to the ASX of the Company’s full year and half-year results, and even then not whilst in possession of price sensitive information.
Directors must advise the Chairman of the Board before buying or selling securities in the Company. All such transactions will be reported to the Board. In accordance with the provisions of the Corporations Act and the ASX Listing Rules, the Company will advise the ASX of any transaction conducted by the Directors in the Company’s securities.
This policy relates to Directors’ and executives’ spouses and other parties over whom they have significant influence.
Interaction with the media
To ensure clear and consistent messages to the ASX and media, unless specifically approved otherwise, the Chairman and Managing Director are the only authorised spokespersons of the
company.
4. Safeguarding Integrity in Financial Reporting
Audit Committee
The Audit Committee, in accordance with its formal charter, monitors the independence, objectivity, effectiveness and scope of the external audit, and reviews the external auditor’s findings and recommendations. The committee oversees management’s approach in identifying key financial risk areas, and ensures programs are in place to manage identified risks. The committee also reviews the processes governing any non-audit work undertaken by the external auditor to ensure the independence of the external auditor is not affected by conflicts.
Members of the committee during the year ending 30 June 2009 were John Keniry (Chair) and Doug Halley. In July 2009 John Keniry resigned from the committee and Riad Tayeh joined as Chairman. Due to the small size of the Board of MIKOH Corporation Limited the Board believes it is not practical to have an Audit Committee comprising three members, as recommended by the ASX Corporate Governance Council.
The committee meets as required and, in conjunction with the external auditor, is satisfied that the reporting systems in place provide accurate and timely reports of the Consolidated Entity’s activities and position.
The Managing Director and the Financial Controller have provided certificates to the Board regarding the financial reports for the year ended 30 June 2009 giving a true and fair view and being in accordance with accounting standards.
Contracts and Transactions between the Consolidated Entity and its officers
Any proposed contract between an officer (including associates of the officer) and MIKOH Corporation Limited must be approved by the Board prior to its execution.
5. Make Timely and Balanced Disclosure
Continuous Disclosure
The Company has a policy that all Company shareholders and investors have equal access to the Company’s information. The Chairman of the Board and the Managing Director ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act and the ASX Listing Rules. The Company Secretary has primary responsibility for all communications with the ASX.
MIKOH Corporation Limited maintains a website which is regularly updated to provide the wider community with all of the available information that is released.
6. Respect the Rights of Shareholders
Communication Policy
The aim of the Board of Directors is to ensure that Company shareholders are informed of all major developments affecting the Company’s state of affairs. Information will be communicated in the following forms:
- the Annual Report will be distributed to all Company shareholders (unless a shareholder has specifically requested not to receive the document);
- the half-yearly report will contain summarised financial information and a review of the operations of the Company during the relevant period;
- the ASX quarterly cash reports will contain summarised financial information for the relevant period;
- regular shareholder updates and other disclosures posted to the ASX website;
- notices and explanatory memorandum for all meetings of the Company shareholders; and
- the Company’s website, www.mikoh.com.
It is the Company’s policy that the engagement partner of its auditors, Deloitte Touche Tohmatsu, be present at the Annual General Meeting and be available to answer relevant questions.
Risk Management and Internal Compliance and Control
The Board determines the Consolidated Entity’s risk profile and is responsible for overseeing and approving risk management strategy and policy.
This includes:
- establishing and monitoring the Consolidated Entity’s strategies, goals and objectives;
- identifying and measuring risks that might impact upon the achievement of those strategies, goals and objectives;
- formulating risk management strategies to manage the identified risks; and
- monitoring and improving the effectiveness of risks and internal compliance controls.
Certificate from MD / CFO equivalent
The Managing Director and the Financial Controller have advised the Board in writing that
- the integrity of the financial statements (as certified) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
- the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.
8. Remunerate Fairly and Responsibly
Remuneration Committee
The Board established a Remuneration Committee in July 2009. For the year ended 30 June 2009 directors felt that the functions of a separate Remuneration Committee were better performed by the entire Board, given the size of the Board, and of the Company.
Remuneration Policies
Non-Executive Directors
Fees including statutory superannuation paid to non-executive directors will generally be around the market average.
Directors will not be entitled to a retirement benefit.
Directors will not participate in share or option plans except with the approval of the shareholders.
Currently, the fee level is $20,000 per non-executive director per annum and $40,000 per annum for the Chairman. The total amount that may be payable by the Consolidated Entity by way of directors’ fees is subject to approval by shareholders.
Senior Executives
Remuneration packages will generally be set to be competitive to both retain executives and attract executives to the company.
Further information regarding remuneration policies can be found in the Remuneration Report included in the Directors’ Report for the year ended 30 June 2009.