Corporate Governance Statement
IMPORTANCE OF CORPORATE GOVERNANCE
The board of directors of Berklee Limited (the board) is responsible for the corporate governance of the consolidated entity.Corporate governance is a matter of high importance in the company and is undertaken with due regard to all of the company’s stakeholders.
The Board has approved corporate governance guidelines, which set out the specific roles, duties, responsibilities and rights of the directors of the company. Each director is expected to have regard to these guidelines in the performance of his or her duties as a director of the company.
The major processes by which the directors of Berklee Limited meet their duties are described in this corporate governance statement.
RESPONSIBILITIES AND FUNCTIONS OF THE BOARD
The Board of directors is responsible for guiding and monitoring the company on behalf of the shareholders by whom they are elected and to whom they are accountable.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.
The Board has adopted a formal charter that details the functions and responsibilities of the Board. The charter is detailed below as follows:
- 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.
- The responsibility for the operation and administration of the company is delegated by the board to the chief executive officer and the 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 chief executive officer and the executive management team.
- Whilst at all times the board retains full responsibility for guiding and monitoring the company, in discharging its stewardship it makes use of sub-committees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the board.
Other functions reserved to the board include:
- Approval of the annual and half-yearly financial reports.
- Approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestures.
- Ensuring that any significant risks that arise are identified, assessed, appropriately managed and monitored.
- Reporting to shareholders.
SELECTION AND APPOINTMENT OF DIRECTORS
Due to the size of the company, all directors are involved in the selection of candidates for the position of director.The composition of the board is consistently monitored to ensure the appropriate mix of expertise, experience and competence.
When a vacancy exists or where it is considered that the board would benefit from the services of a new director with particular skills, the board selects a potential director with the appropriate expertise and experience.
Potential directors are approached by the board and their interest in joining the board, together with the responsibilities such an appointment entail, are discussed. Terms and conditions of the appointment, including the level of remuneration, are also communicated to the nominees.
If accepted the board will appoint the new director(s) during the year, and that person(s) will then stand for election by shareholders at the next Annual General Meeting. Shareholders are provided with relevant information on the candidates for election.
When appointed to the board, all new directors receive an induction appropriate to their experience to familiarise them with matters relating to the company’s business, its strategy and current issues.
NOMINATION COMMITTEE
Berklee Limited does not currently have a separate nomination committee which is a departure from ASX Corporate Governance Principles & Recommendations number 2.4.The board does not recommend the establishment of a separate nomination committee as due to the size of the company all directors are involved in the selection of candidates for the position of director and the establishment of a separate nomination committee would not add any additional value to the company.
CODE OF CONDUCT
The Berklee Limited Group has a formal code of conduct to guide directors, managers and employees which is as follows:In pursuing high standards of corporate governance, all directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the economic entity and to maintain confidence in the company’s integrity.
All directors, managers and employees of the Berklee Limited Group are expected to abide by this code of conduct.
DEALING IN SECURITIES POLICY
The board has a policy which applies to Key Management Personnel in respect of dealing in securities. Click to view policy.The policy supplements the Corporations Act provisions that preclude persons from dealing in securities when they are in possession of “insider information”.
AUDIT COMMITTEE CHARTER
This charter governs the operations of the audit committee.The committee shall review and reassess the charter at least annually and obtain the approval of the board of directors.
The charter is set out hereunder:
Membership
The committee shall be members of, and appointed by, the board of directors and shall comprise at least two directors that have diverse, complementary backgrounds, and are independent of management and the company. In addition, the committee chair shall have leadership experience and a strong finance, accounting and/ or business background.All committee members shall be financially literate, or become financially literate within a reasonable period of time after appointment. Furthermore, at least one member shall have accounting and/ or related financial management expertise as determined by the board of directors.
Members of the committee shall be considered independent so long as they do not have any relationship with the company that may interfere with the exercise of independent judgement. The only compensation shall be directors’ fees for services provided to the audit committee.
Meetings
The committee shall meet at least twice each year.The purpose of these meetings shall be to:
- Review and approve external audit plans.
- Review and approve the half-year financial report.
- Update the external audit plans.
- Review and approve the annual financial report.
Purpose
The audit committee shall provide assistance to the board of directors in fulfilling its corporate governance and oversight responsibilities in relation to the company’s financial reporting, internal control structure, risk management systems, and the external audit function. In doing so, it is the responsibility of the committee to maintain free and open communication between the committee, external auditors and management of the company.In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the company and the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties.
Duties and Responsibilities
Understanding the business
The committee shall ensure it understands the company’s structure, controls, and types of transactions in order to adequately assess the significant risks faced by the company in the current environment.Financial reporting
The primary responsibility of the audit committee is to oversee the company’s financial reporting process on behalf of the board and report the results of its activities to the board.Whilst the audit committee has the responsibilities and powers set forth in this charter, it is not the duty of the audit committee to plan or conduct audits.
The board of directors is responsible for the company’s financial reports including the appropriateness of the accounting policies and principles that are used by the company. The external auditors are responsible for auditing the company’s financial reports and for reviewing the company’s unaudited interim financial reports.
The committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The committee will take appropriate actions to set the overall corporate ‘tone’ for quality financial reporting, sound business risk practices, and ethical behaviour. The following shall be the principal duties and responsibilities of the audit committee. These are set forth as a guide with the understanding that the committee may supplement them as appropriate.
Assessment of accounting, financial and internal controls
The committee shall discuss with management and the external auditors, the adequacy and effectiveness of the accounting and financial controls, including the company’s policies and procedures to assess, monitor, and manage business risk, and legal and ethical compliance programs. Any opinion obtained from the external auditors on the company’s choice of accounting policies or methods should include an opinion on the appropriateness and not just the acceptability of that choice or method.The committee shall meet separately periodically with management, and the external auditors to discuss issues and concerns warranting committee attention, including but not limited to their assessments of the effectiveness of internal controls and the process for improvement. The committee shall provide sufficient opportunity for the external auditors to meet privately with the members of the committee. The committee shall review with the external auditor any audit problems or difficulties and management’s response.
The committee shall receive regular reports from the external auditor on the critical policies and practices of the company, and all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management.
Appointment of external auditors
The committee shall be directly responsible for making recommendations to the board of directors on the appointment, reappointment or replacement (subject to shareholder ratification), remuneration, monitoring of the effectiveness, and independence of the external auditors, including resolution of disagreements between management and the auditor regarding financial reporting. The committee shall pre-approve all audit and non-audit services provided by the external auditors and shall not engage the external auditors to perform any non-audit / assurance services that may impair or appear to impair the external auditor’s judgement or independence in respect of the company.Assessment of the external audit
The committee, at least on an annual basis, shall obtain and review a report by the external auditors describing:- The audit firm’s internal quality control procedures.
- Any material issues raised by the most recent internal quality control review, or peer review, of the audit firm.
- All relationships between the external auditor and the company (to assess the auditor’s independence).
Independence of the external auditors
The committee shall review and assess the independence of the external auditor, including but not limited to any relationships with the company or any other entity that may impair the external auditor’s judgement or independence in respect of the company. Furthermore, the committee shall draft an annual statement for inclusion in the company’s annual report of whether the committee is satisfied the provision of non-audit services is compatible with external auditor independence.Scope of the external audit
The committee shall discuss with the external auditors the overall scope of the external audit, including identified risk areas and any additional agreed-upon procedures. In addition, the committee shall also review the external auditor’s compensation to ensure that an effective, comprehensive and complete audit can be conducted for the agreed compensation level.Communications with stakeholders
The committee shall review and discuss ASX press releases, as well as financial information prior to their release.The committee shall review the half-year financial report and Appendix 4D prior to the filing of these with the ASX. Also, the committee shall discuss the results of the half-year review and any other matters required to be communicated to the committee by the external auditors under generally accepted auditing standards.
The committee shall review all representation letters signed by management to ensure that the information provided is complete and appropriate. Also, the committee shall discuss the results of the annual audit and any other matters required to be communicated to the committee by the external auditors under generally accepted auditing standards.
The committee shall establish procedures for the receipt, retention, and treatment of complaints received by the company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the company of concerns regarding questionable accounting or auditing matters. The committee shall receive corporate legal reports of evidence of a material violation of the Corporations Act, the ASX Listing Rules or breaches of fiduciary duty.
Committee performance
The committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively by reference to current best practice.AUDITOR SELECTION, APPOINTMENT AND LEAD PARTNER ROTATION
The board, in accordance with its charter, annually assesses the external auditor, focusing particularly on the quality and rigour of the audit, quality of the service provided, the audit firm’s internal quality control procedures, relationships between the external auditor and the company and the independence of the auditor.Should a change in auditor be considered necessary a formal tendering process will be undertaken. The board will identify the attributes required of an auditor and will ensure the selection process is sufficiently robust so as to ensure selection of an appropriate auditor.
The board shall ensure that prospective auditors have been provided with a sufficiently detailed understanding of the company, its operations, its key personnel and any other information including group structures and financial statements that will have a direct bearing on each firm’s ability to develop an appropriate proposal and fee estimate.
The board shall consider the appointment in conjunction with senior management.
In selecting an external auditor, particular consideration shall be given to determining whether the fee quoted is sufficient for the work required, that the work is undertaken by people with an appropriate level of seniority, skill and knowledge and whether the work proposed is sufficient to meet the company’s needs and expectations.
The board shall annually discuss with the auditor the provisions the audit firm has in place for rotation of the lead engagement partner and the independent review partner and the overall succession plan in place regarding all professional staff assigned to the company’s audit. The lead engagement partner was rotated after signing the accounts for year ended 30 June 2010.
The board shall satisfy itself on a regular, and at a minimum, on an annual basis, that the audit firms’ procedures regarding succession planning and lead engagement partner rotation are appropriate and will ensure an ongoing efficient and effective audit.
ASX LISTING RULE COMPLIANCE POLICY
The continuous disclosure requirements of the ASX are contained in Chapter Three of the listing rules. The general rule, in accordance with listing rule 3.1, is that once a company becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the company’s securities, the company must immediately tell the ASX that information.The focus of continuous disclosure is to provide access to information for all investors.
The company has nominated Mr Ed van Berkel (Managing Director) to have responsibility for:
- making sure that the company complies with continuous disclosure requirements;
- overseeing and co-ordinating disclosure of information to the stock exchange, analysts, brokers, shareholders, the media and the public; and
- educating directors and staff on the company’s disclosure policies and procedures and raising awareness of the principles underlying continuous disclosure.
COMMUNICATING WITH SHAREHOLDERS
The board of directors aims to ensure that the shareholders are informed of all major developments affecting the company’s state of affairs. Information is communicated to shareholders through:- The annual report
- The interim report
- Disclosures made to the Australian Stock Exchange
- The annual general meeting and other meetings so called to obtain approval for board action as appropriate.
RISK MANAGEMENT AND INTERNAL COMPLIANCE AND CONTROL
The board assesses 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 controls, including an annual assessment of the effectiveness of risk management and internal compliance and control.
At each Board meeting, there is a standing agenda and the matters included are:
- Document register
- Accounting
- Finance
- Share registry
- Matters arising at divisional level
- Risk management
- Directors’ declarations
- Any other matters which may be raised
PERFORMANCE EVALUATION OF THE BOARD
In order to ensure that the board continues to discharge its responsibilities in an appropriate manner, the performance of all directors is reviewed annually by the chairperson. The performance of the executives is reviewed annually by the Managing Director.REMUNERATION COMMITTEE
Duties and responsibilities
The remuneration committee of the board of directors is responsible for determining and reviewing compensation arrangements for the directors and the chief executive officer.The remuneration committee assesses the nature and amount of emoluments of the directors and the chief executive officer on a periodic basis to ensure they are appropriate and realistic having regard to the person’s responsibilities and relevant employment market conditions.
