Corporate Governance Statement

The Board of Directors of the company 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.

The Board has used its best endeavours to follow the best practice recommendations set out by the Australian Stock Exchange’s Corporate Governance Council.

RuralAus Investments Limited’s corporate governance practices were in place throughout the year ended 30 June 2009.

Various corporate governance practices are discussed within this statement. For further information on corporate governance policies adopted by RuralAus Investments Limited, please also refer to our website:

www.ruralaus.com.au
The table below summarises the Group’s compliance with the Corporate Governance Council’s recommendations:
 
 

Board Function

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to discharge its responsibilities, it has established guidelines for the nomination and selection of directors and for the operation of the Board.

The responsibility for the operation and administration of the company is delegated, by the Board, to the CEO and executive management team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the CEO and the executive management team.

The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risk identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved including:

  • Board approval of a strategic plan designed to meet stakeholders’ needs and manage business risk;
  • Ongoing development of the strategic plan and approving initiatives and strategies designed to ensure the continued growth and success of the entity; and
  • Implementation of budgets by management and monitoring progress against budget – via the establishment and reporting of both financial and non-financial key performance indicators.
Other functions reserved to the Board include:
  • Approval of the annual and half-yearly financial reports;
  • Approving and monitoring the progress of capital management, acquisitions and divestitures;
  • Ensuring that any significant risks that arise are identified, assessed, appropriately managed and monitored;
  • Reporting to shareholders;
  • Establishing and monitoring the company’s capital management strategy, including dividend payments;
  • Assessing the company’s funding requirements; and
  • Monitoring borrowings from financial institutions.

At all times the Board retains full responsibility for guiding and monitoring the company. Due to the size of the Board and company, apart from an Audit Committee and Remuneration Committee, there are no other separate committees of the Board, the Board maintaining full responsibility on matters of finance and treasury with assistance from the CEO and CFO.

Board composition and membership

The Board comprises four independent non-executive directors, being Paul McKenzie, Ian Olson, Peter Wallace and Fred Woollard. See the directors’ report for details of their experience and qualifications.

Directors are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgement.

The full Board is responsible for establishing criteria for Board membership, reviewing Board membership and identifying and nominating directors. Board membership is reviewed annually to ensure the Board has an appropriate mix of qualifications, skills and experience. External advisors may be used to assist in this process.

The terms and conditions of appointment and retirement of non-executive directors are set out in a letter of appointment that includes:

- the term of appointment
- the determination of remuneration
- the expectation of the Board in relation to attendance at and preparation for Board meetings
- procedures for dealing with conflicts of interest.

In view of the size of the parent entity, the directors have considered that establishing a nomination committee for new Board members would contribute little to its effective management and accordingly all directors participate in decisions regarding the nomination and election of new Board members.

Officers and executives are given the opportunity to receive their emoluments in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the consolidated entity. See the Remuneration Report in the attached Directors’ Report for details of remuneration policies.

The overall objective is to ensure maximum shareholder benefit from the retention of a quality Board and Executive Team.

Independent professional advice

In fulfilling their duties, the Directors may obtain independent professional advice at the company’s expense.

Ethical standards
The Board acknowledges the importance of ethical behaviour from the company’s directors, management and employees. The Board’s policy is for the directors, management and employees to conduct themselves with the highest ethical standards and the best practices of corporate governance.

Audit and Compliance Committee

The Board has established an Audit and Compliance committee, which comprises all non-executive directors and operates under a charter approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. The Board has delegated responsibility for establishing and maintaining this framework of internal control and ethical standards to the Audit Committee.

The Committee also provides the Board with additional assurance regarding the reliability of financial information for including in the financial reports. All members of the Audit Committee are non-executive directors.

As at 30 June 2009, the current members of the committee were:

  • Ian Olson (Chairman)
  • Peter Wallace

At a board meeting held on 24 July 2009, it was decided that all four directors are to be members of the Audit and Compliance Committee.

From time to time the company's senior management and the company's auditors, may be invited to attend meetings of the committee.

The number of meetings held during the year and the number of meetings attended by each director were as follows:
 
 
The responsibilities of the Audit and Compliance committee are contained within its charter and include:
  • Assessment and monitoring of internal control adequacy.
  • Monitoring the activities and effectiveness of the internal audit function.
  • Overseeing and monitoring integrity of financial reporting.
  • Review draft annual and half-yearly financial statements with management and external auditors and make recommendations to the full board.
  • Review and monitor the company's compliance with laws and ASX Listing Rules.
  • Review performance against the company's Code of Conduct.
  • Report regularly to the Board on its activities and findings.
  • Other responsibilities as required by the Board or considered appropriate.

Risk
The Board determines the company’s risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. The company’s process of risk management and internal compliance and control includes:
  • Establishing the company’s goals and objectives, and implementing and monitoring strategies and policies to achieve these goals and objectives;
  • Continuously identifying and measuring risks that might impact upon the achievement of the company’s goals and objectives, and monitoring the environment for emerging factors and trends that affect these risks;
  • Formulating risk management strategies to manage identified risks and designing and implementing appropriate risk management policies and internal controls;
  • Monitoring the performance of, and continuously improving the effectiveness of, risk management systems and internal compliance and control, including an annual assessment of the effectiveness of risk management and internal compliance and control.
To this end, comprehensive practices are in place that are directed towards achieving the following objectives:
  • Effectiveness and efficiency in the use of the company’s resources;
  • Compliance with applicable laws and regulations;
  • Preparation of reliable published financial information.

The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management. Management is required by the Board to assess risk management and associated internal compliance and control procedures and report back on the efficiency and effectiveness of risk management by benchmarking the company’s performance to the Australia/New Zealand Standard on Risk Management (AS/NZ 4360).

CEO and CFO Certification
 
The Chief Executive Officer and Chief Financial Officer have provided a written statement to the Board that:
  • Their view provided on the company’s financial report is founded on a system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and
  • The company’s risk management and internal compliance and control system is operating effectively in all material respects.
Remuneration
 
It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and Executive Team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. The expected outcomes of the remuneration structure are;
  • Retention and motivation of key executives;
  • Attraction of high quality management to the company; and
  • Performance incentives that allow executives to share in the success of RuralAus Investments Limited.

For a full discussion of the company’s remuneration philosophy and framework, details of the remuneration committee and the remuneration received by directors and executives in the current period please refer to the Remuneration Report, which is contained within the Directors’ Report.

There is no scheme to provide retirement benefits to non-executive directors.

Trading Policy

Under the company’s Securities Trading Policy, an Executive or Director must not trade in any securities of the company at any time when they are in possession of unpublished, price-sensitive information in relation to those securities.

Before commencing to trade, an Executive must first obtain the approval of the Company Secretary to do so and a Director must first obtain approval of the Chairman.

Only in exceptional circumstances will approval be forthcoming outside of the period, which is four weeks after:
  • One day following the announcement of the half yearly and full year results as the case may be;
  • One day following the holding of the Annual General Meeting;
  • One day after any other form of earnings forecast update is given to the market.

As required by the ASX Listing Rules, the company notifies the ASX of any transaction conducted by Directors in the securities of the company.