Corporate Governance Statement
Shaw River Manganese Limited (Shaw River) and its related bodies corporate (Group) is committed to implementing and maintaining the highest standards of corporate governance. The Group recognises that highstandards of corporate governance are essential to achieving that objective.
The Shaw River Board of Directors (the Board) has the responsibility for ensuring that Shaw River is properly managed so as to protect and enhance shareholders' interests in a manner that is consistent with the Company's responsibility to meet its obligations to all stakeholders. For this reason, the Board is committed to applying appropriate standards of corporate governance across the organisation.
As part of its commitment to enhancing its corporate governance, and as a listed company, the Board has adopted relevant practices which are consistent with the ASX Corporate Governance Principles (Principles).
Details of the Company's corporate governance practices are included below.
1. BOARD OF DIRECTORS
1.1 ROLE OF BOARD
The Board is responsible for setting the strategic direction and establishing and overseeing the policies and financial position of the Group, and monitoring the business and affairs on behalf of its shareholders, by whom the Directors are elected and to whom they are accountable. To fulfil its role, the Board is responsible for the overall Corporate Governance of the Group including the strategic direction, establishing goals for management and monitoring the achievement of these goals.
Specific accountabilities and responsibilities of the Board include:
- to oversee the Group, including its control and accountability systems;
- to develop, review and monitor the Group's long-term business strategies and provide strategic direction to management;
- to ensure policies and procedures are in place to safeguard the Group's assets and business and to enable the Group to act ethically and prudently;
- to develop and promote a system of corporate governance which ensures the Group is properly managed and controlled;
- to identify the Group's principal risks and ensure that it has in place appropriate systems of risk management, internal control, reporting and compliance and that management is taking appropriate action to minimise those risks;
- to review and approve the Group's financial statements and other financial reports;
- to monitor management's performance and the Group's financial results on a regular basis;
- to appoint, ratify, appraise and determine the remuneration and benefits of the Managing Director;
- to delegate powers to the Managing Director as necessary to enable the day-to-day business of the Group to be carried on, and to regularly review those delegations;
- to monitor the performance of senior management, including the implementation of strategy, and ensuring appropriate resources are available to them;
- to ensure that the Group has in place appropriate systems to comply with relevant legal and regulatory requirements that impact on its operations;
- to ensure that appropriate internal and external audit arrangement are in place and operating effectively;
- to determine the appropriate capital management for the Group including share and loan capital and dividend payments;
- in conjunction with members of the senior management team, to develop corporate objectives, strategies and operations plans and approve and appropriately monitor plans, new investments, major capital and operating expenditures, use of capital, acquisitions, divestitures and major funding activities; and
- to determine and regularly review an appropriate remuneration policy for employees of the Group.
The Board has a charter, a copy of which is located on Shaw River's website, which it reviews annually to ensure that it remains consistent with the Board's objectives and responsibilities.
The Group has established the functions that are reserved for management. Management is responsible, on a shared basis with and subject to the approval of the Board, for developing strategy, and is directly responsible for implementing the strategies into the Group's business activities. Management is also responsible for safeguarding the Group's assets, maximising the utilisation of available resources and for creating wealth for Shaw River's shareholders.
1.2 COMPOSITION OF THE BOARD
The Board comprises of three Directors, being one Executive Director and two Non-Executive Directors.
Term in office
No - Managing Director
The relevant skills, experience and expertise for each of the Directors are set out in the Directors' Report.
The composition of the Board is determined using the following principles:-
- the Board shall comprise at least three (3) Directors and may be increased where it is felt that additional expertise is required in specific areas, or when an outstanding candidate is identified; and
- the Board should comprise Directors with a broad range of expertise.
The Board reviews its composition on an annual basis to ensure that it has the appropriate diverse mix of expertise and experience. 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 panel of candidates with the appropriate expertise and experience in the Group's operating segments.
The Board does not comply with Recommendation 2.1 of the Principles which states the majority of Directors should be independent Directors, nor does it comply with Recommendation 2.2 which requires that the chair be an independent Director. The Chairman, Mr Walsh is a representative of Shaw River's major shareholder, Atlas Iron Limited.
The Board is mindful of the Principles and the preference for Boards to have a majority of independent Directors. The Board will continue to monitor and review its composition, but at this stage does not believe substantive changes will deliver greater shareholder value than the existing Board structure. The Board reviews the independent status of each Director throughout the year.
1.3 EVALUATION OF THE BOARD, COMMITTEES AND SENIOR MANAGEMENT
The performance of all Directors is reviewed by the Chairman on an ongoing basis. The Managing Director's performance is evaluated annually by the Non-Executive Directors against a range of key performance indicators and targets. The Chairman's performance is reviewed by the other Board members annually.
Senior Executive performance is reviewed by the Board annually, at the end of the financial year. Performance is evaluated against their responsibilities as outlined in their contract and other measures determined by the Board.
Remuneration levels are competitively set to attract and retain qualified and experienced Directors and Senior Executives. Independent advice will be obtained by the Board on the appropriateness of remuneration packages, where considered necessary.
As noted below, there are currently no separate committees operating independently of the Board.
1.4 INDEPENDENT PROFESSIONAL ADVICE AND ACCESS TO COMPANY INFORMATION
All Directors have the right of access to all relevant Company information, to the Company's Executives and, subject to prior consultation with the Chairman, may seek independent professional advice concerning any aspect of the Company's operations or undertakings at the Company's expense.
2. BOARD COMMITTEES
2.1 Nomination committee
A separate nomination committee has not been formed. The Board considers the selection and appointment of Directors should be the responsibility of the full Board and that no benefits or efficiencies are to be gained by delegating this function to a separate committee. Where appropriate, the Board engages independent consultants to identify possible new candidates.
2.2 Audit committee
Due to its size and composition, the Board has not established a separate audit committee. The external auditor has full access to the Board throughout the year.
2.3 Remuneration committee
Due to the relatively small size of Shaw River, remuneration is considered by the full Board. The Board reviews remuneration packages and policies applicable to the Managing Director and each of the Non-Executive Directors. Remuneration levels are competitively set to attract the most qualified and experienced Directors and Senior Executives. The Board obtains independent advice on the appropriateness of remuneration packages.
A full disclosure of the Company's remuneration philosophy and framework and the remuneration received by Directors and Executives in the current year are set out in the remuneration report, which is contained within the Directors' Report.
3. CODE OF CONDUCT
The Board acknowledges its responsibility to set the ethical tone and standards of Shaw River. Accordingly it has clarified the standards of ethical and professional behaviour required of Directors and employees through the establishment of a Code of Conduct.
The Code of Conduct requires all Directors and employees to conduct themselves in a manner consistent with current community and corporate standards and in compliance with all legislation. In addition, they are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of Shaw River. Compliance with the Code of Conduct is mandatory with breaches taken seriously.
Shaw River values diversity in all aspects of its business and is committed to creating a working environment that recognises and utilises the contribution of all of its employees. Shaw River recognises that diversity in its business helps create sustainable shareholder value, provides a more dynamic and enjoyable work environment and will often create new opportunities for the Company.
Shaw River has adopted an Equal Employment Opportunity and Diversity Policy that actively seeks to maintain a diverse workforce to create a workplace that is fair and inclusive, applies fair and equitable employment practices and provides a working environment that will allow all employees to reach their full potential.
4. TRADING IN COMPANY SECURITIES BY DIRECTORS' AND EMPLOYEES
To safeguard against insider trading, Shaw River's Securities Dealing Policy prohibits Directors, employees and contractors from trading in any securities of Shaw River at any time when they are in possession of unpublished, price-sensitive information in relation to those securities.
The Securities Dealing Policy aims to:
- explain the type of conduct in relation to dealings in securities prohibited under the Corporations Act which is applicable to all officers, employees and contractors of the Group;
- establish a best practice procedure relating to buying and selling securities that provides protection to Shaw River's officers, employees and contractors against misuse of unpublished information which could materially affect the value of securities;
- identify ‘window periods' for employees (other than Directors and senior management) to buy and sell securities in Shaw River, but prohibits dealing in Shaw River shares or exercising options whilst in possession of price sensitive information not yet released to the market;
- identify procedures for any proposed dealing in Shaw River securities; and
- identify those restricted from trading. Directors and Senior Executives may acquire shares in Shaw River in accordance with procedures outlined in the Policy, but are prohibited from dealing in Shaw River securities during fixed "black out" periods.
As required by the ASX Listing Rules, Shaw River notifies the ASX of any transaction conducted by Directors in the securities of the Company.
Directors, employees and contractors are required to comply with the Group's Securities Dealing Policy at all times.
5. CONTINUOUS DISCLOSURE AND SHAREHOLDER COMMUNICATION
In adopting a Continuous Disclosure and Information Policy, the Board ensures that shareholders are provided with up to date information to satisfy Shaw River's continuous disclosure obligations under the ASX Listing Rules and the Corporations Act.
Communication to shareholders is facilitated by the production of the annual report, quarterly and half yearly reports, public announcements and the posting of all ASX announcements and other information (including presentations) on Shaw River's website.
Shareholders are encouraged to attend and participate in Shaw River's Annual General Meeting (AGM). Shareholders may raise questions at the AGM and the external auditor is in attendance at such meetings to address any questions in relation to the conduct of the audit.
6. RECOGNISE AND MANAGE RISK
Ultimate responsibility for risk oversight and risk management rests with the full Board. Risk oversight, risk management and internal controls are dealt with on a continuous basis by management and the Board, with differing degrees of involvement from various Directors and management, depending upon the nature and materiality of the matter. The Board actively promotes a culture of quality and integrity with emphasis placed on maintaining a strong control environment.
Significant business risk areas of concern are discussed at Board level. When appropriate, experts are invited to address Board meetings on the major risks facing the Group and to develop strategies to mitigate those risks.
During the financial reporting period, the Board had no formal policy in place to recognise and manage risk as required by Recommendation 7.1. As the management team increases, a more formal organisational structure with clear lines of accountability and delegation of authority will be established, which will enable management to put in place formal policies for the oversight and management of material business risks.
The Managing Director (acting as CEO) and the 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 sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and
- that the Company's risk management and internal compliance and control system is operating effectively in all material respects.
7. ASX CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS
The table below lists each of the ASX Best Practice Recommendations applicable to the Group as at the date of its financial year end, being 30 June 2011, and whether it was in compliance with the recommendations at that date. Where the Group considers that it is divergent from these recommendations, or that it is not practical to comply, there is an explanation of the Group's reasons.