Corporate Governance Statement
The Board of Directors of Victoria Petroleum N.L. is responsible for the corporate governance of the Group. The Board guides and monitors the business and affairs of Victoria Petroleum N.L. on behalf of the shareholders by whom they are elected and to whom they are accountable.
The Board of Directors supports the Principles of Good Corporate Governance and Best Practice Recommendations developed by the ASX Corporate Governance Council (“Council”). The Company’s practices are largely consistent with the Council’s guidelines, however the Board considers that the implementation of some recommendations are not appropriate given the nature and scale of the Company’s activities and size of the Board.
Principle 1 – Lay solid foundations for management supervision and review
BOARD RESPONSIBILITIES
To ensure the Board is well equipped to discharge its responsibilities, it has established guidelines for the nomination and selection of the directors and for the operation of the Board.
Whilst not formally documented, the Board recognises and acknowledges that it acts on behalf of and is accountable to the shareholders. 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 seeks to discharge these responsibilities in a number of ways.
The responsibility for the operation and administration of the Group is delegated by the Board to the Managing Director and the executive team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and regularly reviews and assesses the performance of the Managing Director and the executive 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. These mechanisms include the following:
- implementation of operating plans and budgets by management and Board monitoring of progress against budget. This includes the establishment and monitoring of key performance indicators (both financial and non-financial) for all significant business processes; and
- procedures to allow directors, in the furtherance of their duties, to seek independent professional advice at the Company’s expense.
Principle 2 – Structure the Board to add value
COMPOSITION OF THE BOARD
The composition of the Board is determined in accordance with the following principles and guidelines:
- the Board shall comprise at least four directors and should maintain a majority of non-executive independent directors;
- the chairperson must be a non-executive independent director;
- the Board should comprise directors with an appropriate range of qualifications and experience; and
- the Board shall meet at least bi-monthly and following meeting guidelines set down to ensure all directors are made aware of, and have available all necessary information, to participate in an informed discussion of all agenda items.
The directors in office at the date of this statement are:
Name Position
D F Patten Chairman, Independent Non-Executive Director
J T Kopcheff Managing Director
B M McKeown Non-Executive Director
R J Pett Independent Non-Executive Director
N C Fearis Alternate Director
INDEPENDENCE
An independent director, in the view of the Company, is a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement.
In determining the independent status of a director, the Board considers whether the director:
- is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company;
- is employed, or has previously been employed, in an executive capacity by the Company or another group member, and there has not been a period of at least three years between ceasing such employment and serving on the Board;
- has within the last three years been a principal of a material professional adviser or a material consultant to the Company or another group member, or an employee materially associated with the service provided;
- is a material supplier or customer of the Company or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; and
- has a material contractual relationship with the Company or another group member other than as a director.
NOMINATION COMMITTEE
The Group does not have a formally appointed nomination committee, as the directors believe the size of the Group’s operations do not warrant the establishment of such a committee.
The Board is responsible for devising criteria for Board membership, reviewing the need for various skills and experience on the Board, identifying specific individuals for nomination as directors and overseeing Board and executive succession planning.
Principle 2 – Structure the Board to add value (continued)
PERFORMANCE REVIEW AND EVALUATION
It is the policy of the Board to ensure that the directors and executives of the Company are equipped with the knowledge and information they need to discharge their responsibilities effectively. The performance of all directors and executives is reviewed annually by the chairman. Although the Company is not of a size to warrant the development of formal performance review processes, there is on-going monitoring by the chairman and the Board. The chairman also speaks to directors on an individual basis regarding their role as a director.
Directors whose performance is unsatisfactory may be asked to retire. The Board has not formally documented the results of performance evaluations to date.
Principle 3 – Promote ethical and responsible decision-making
CODE OF CONDUCT
Due to the size and nature of the operations of the Group, it does not have a formally documented code of conduct for its directors and executives. Despite this, the Board maintains high standards of ethical responsible decision making, recognising legitimate interests of all stakeholders.
SHARE DEALINGS AND DISCLOSURES
The Company’s policy regarding directors, executives and employees dealing in its securities is set by the Board. The Board restricts directors, executives and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the security price. Directors, executives and employees are required to consult the chairman, prior to dealing in securities in the Company or other companies in which the Company has a relationship.
Dealings are not permitted at any time whilst in the possession of price sensitive information not already available to the market. In addition, the Corporations Act 2001 prohibits the purchase or sale of securities whilst a person is in possession of inside information.
As required by the ASX Listing Rules, the Company notifies the ASX of any transaction conducted by directors in the securities of the Company.
CONFLICTS OF INTEREST
To ensure that directors are at all times acting in the interests of the Company, directors must disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interest of the director and the interests of any other parties in carrying out the activities of the Company.
If a director can not, or is unwilling to, remove a conflict of interest then the director must, as per the Corporations Act 2001, absent himself from the room when Board discussion and/or voting occurs on matters about which the conflict relates (save with the approval of the remaining directors and subject to the Corporations Act 2001.)
Principle 4 – Safeguard integrity in financial reporting
AUDIT COMMITTEE
The Group does not have a formally appointed audit committee, as the directors believe the size of the Group’s operations do not warrant the establishment of such a committee.
It is the responsibility of the Board to ensure that an effective internal control framework exists within the Group. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes. This also includes the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information.
Principle 5 – Make timely and balanced disclosure
ASX LISTING RULE COMPLIANCE
The Board has designated the Company Secretary as the person responsible for ensuring the Company is in compliance with the ASX Listing Rules.
CONTINUOUS DISCLOSURE TO ASX
The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with the ASX Listing Rules, the Company immediately notifies the ASX of information:
- concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities; and
- that would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the Company’s securities.
Principle 6 – Respect the rights of shareholders
COMMUNICATIONS
The Board recognises its duty to ensure that its shareholders are informed of all major developments affecting the Company’s state of affairs. Information is communicated to shareholders and the market through:
- The Annual Report, which is distributed to shareholders if they have elected to receive a printed version and otherwise available for viewing and downloading from the Company’s website;
- The Annual General Meeting and other general meetings called to obtain shareholder approvals as appropriate;
- The Quarterly Reports and Half-Yearly Directors’ and Financial Reports which are posted on to the Company’s website; and
- Other announcements released to the ASX as required under the continuous disclosure requirements of the ASX Listing Rules and other information that may be mailed to shareholders, which are posted on to the Company’s website.
The Company actively promotes communication with shareholders through a variety of measures, including the use of the Company’s website and email. The Company’s reports and ASX announcements may be viewed and downloaded from its website: www.vicpet.com.au or the ASX website: www.asx.com.au under ASX code “VPE.” The Company also maintains an email list for the distribution of the Company’s announcements via email in a timelier manner.
Principle 7 – Recognise and manage risk
RISK ASSESSMENT AND MANAGEMENT
The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control system. The Board requires the directors and executives to design and implement the risk management and internal control system to manage the Company, and to report to the Board.
The Group’s policies are designed to ensure strategic, operational, legal, reputation and financial risk are identified, assessed effectively and efficiently managed and monitored to enable achievement of the Group’s business objective.
The Board has determined that the Managing Director and the Company Secretary are the appropriate persons to make the chief executive and chief financial equivalent declarations respectively, in respect of the year ended 30 June 2008, on the risk management and internal compliance and control systems recommended by the Council.
Considerable importance is placed on maintaining a strong control environment. There is an organisation structure with clearly drawn lines of accountability and delegation of authority.
CORPORATE REPORTING
The Company Secretary has made the following assertions to the Board:
- that the Group’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Group and are in accordance with relevant accounting standards; and
- that the above statement is founded on a sound system of risk management and internal compliance and control, which implements the policies adopted by the Board and that the Group’s risk management and internal compliance and control is operating efficiently and effectively in all material respects.
Principle 8 – Remunerate fairly and responsibly
REMUNERATION COMMITTEE
Due to the nature and size of the Group’s operations, the directors do not believe the establishment of a remuneration committee is warranted.
The Board is responsible for determining and reviewing compensation arrangements for the directors. In determining the appropriate remuneration arrangements for directors, the Board considers the following guidelines:
- Non-executive directors are remunerated by way of fees, in the form of cash, non-cash benefits and superannuation contributions;
- Non-executive directors should not receive bonus payments; and
- Non-executive directors should not be provided with retirement benefits other than superannuation.
The Company has issued options and partly paid shares to non-executive directors, following approval granted by members at General Meetings. The issues of these options and shares were to provide additional remuneration to the non-executive directors.
Further detail in relation to the Company’s remuneration policies can be found in the Remuneration Report contained within the Company’s Annual Report.