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Corporate Governance
Board of Directors and Its Committees
The Board is responsible for the overall Corporate Governance of the company including strategic direction, establishing goals for management and
monitoring the achievement of these goals.
It has established an Audit Committee to assist in the execution of its responsibilities.
The Board has also established a framework for the management of the company including a system of internal controls and the establishment of
appropriate ethical standards. The Board recognises that no cost effective internal control system will preclude all errors and irregularities.
Composition of the Board
The Board must have at least three directors and not more than five directors, which number may be increased or reduced by the shareholders where
considered appropriate. The Board includes three non-executive directors. The Board identifies suitable candidates to fill vacancies as they arise.
The Nomination Committee oversees the selection and appointment process for directors. The Committee annually reviews the composition of the Board and
makes recommendations on the appropriate skill mix, personal qualities, expertise and diversity required. Where a vacancy exists the Committee develops
selection criteria and generates a list of potential candidates, for review, determination of an order of preference and ultimate selection by the
Board.
The terms and conditions of the appointment and retirement of non-executive Directors are set out in a letter of appointment. The Nomination Committee
is responsible for the performance review of the Board and its Committees. Individual Directors are subject to continuous review by the Chairman.
Directors whose performance is unsatisfactory are asked to retire.
No Directors other than the Chief Executive Officer shall hold office for a period in excess of three years or until the third AGM following their
appointment without submitting their self for re-election.
In addition, the performance of service providers (JP Morgan, White Outsourcing Pty Ltd and White Funds Management Pty Ltd) is the subject of
continuous oversight by the Chairman and the Board as a whole.
Remuneration of Executives & Directors
Non-executive Directors' fees are set at acceptable market levels after considering the scope of the company's operations, and the frequency of Board
meetings. The Chief Executive Officer is a member of entities which provide the company with management services and operational facilities. The fee
arrangement is reviewed on a regular basis, and is calculated as a percentage of the company's investment assets. This outsourcing arrangement enables
the company to access professional accounting, administration, share registry, and investment management services at a lower cost than could be
otherwise achieved.
A Remuneration Committee reviews and makes recommendations to the Board on remuneration of the Directors themselves.
The Company provides no equity based remuneration, such as share or options plans, to Directors.
Independent Professional Advice and Access to Company Information
Each director has the right of access to all relevant Company information and to the Company's executives and subject to prior consultation with the
Chairman, may seek independent professional advice at the entity's expense. A copy of advice received by the director is made available to all other
members of the Board.
Audit Committee
An Audit Committee meets to (a) advise on the establishment and maintenance of a framework of internal control, financial reporting practices and
appropriate ethical standards for the management of the company and (b) give the Board of Directors additional assurance regarding the quality and
reliability of financial information. All members of the Committee must be non-executive directors. The Audit Committee liaises with and reviews the
performance of the external auditor, and conducts an annual review of the Chief Executive Officer's performance.
The Board monitors the performance of the annual & half-yearly audit performed by the External Auditor. If the Board consider that the external
auditor of the Company should be changed a special resolution will be put to shareholder vote at the following Annual General Meeting. External audit
engagement partners are required by legislation to rotate their appointment every five years.
The external auditor is required to attend the Annual General Meeting and is available to answer shareholder questions.
Risk Management Policy
The Board acknowledges that it is responsible for the overall system of internal control but recognises that no cost effective internal control system
will preclude all errors and irregularities. The Board has delegated responsibility for reviewing the risk profile including material business risks
and reporting on the operation of the internal control system to the Audit Committee.
The Audit Committee (a) requires executive management to report annually on the operation of internal controls, (b) reviews the external audit of
internal controls and liaises with the external auditor and (c) conducts any other investigations and obtains any other information it requires in
order to report to the Board on the effectiveness of the internal control system.
The Board identifies the following business risks as having the potential to significantly or materially impact the company's performance (a)
administrative risks including operational, compliance and financial reporting and (b) market related risks.
Administrative Risks
The Company has outsourced its administrative functions to service providers, JP Morgan (custody), White Outsourcing Pty Limited (accounting and
Company Secretarial) and White Funds Management Pty Limited (investment management) accordingly risk issues associated with these activities are
handled in accordance with the service providers policies and procedures. White Outsourcing Pty Limited is responsible for recognising and managing
administrative risks including (a) operational, (b) compliance and (c) financial reporting. Certificates of insurance currency are obtained annually
from all key service providers.
The Company Secretary provides a declaration to the Board twice annually, to certify that the Company's financial statements and notes present a true
and fair view, in all material respects, of the Company's financial condition and operational results and that they have been prepared and maintained
in accordance with relevant Accounting Standards and the Corporations Act 2001.
In addition, White Outsourcing Pty Ltd (accounting and Company Secretarial) will confirm half-yearly in writing to the Board that the declaration
provided above is founded on a sound system of risk management and internal control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
Market Risks
The Board is primarily responsible for recognising and managing market related risks. By its nature as a Listed Investment Company, the Company will
always carry investment risk because it must invest its capital in securities which are not risk free. However, the Company seeks to reduce this
investment risk by a policy of diversification of investments across industries and companies operating in various sectors of the market.
White Funds Management Pty Ltd (investment manager), is required to act in accordance with the Board approved investment management agreement and
reports to the Board quarterly on the portfolio's performance, material actions of the investment manager during that quarter and an explanation of the
investment manager's material proposed actions for the upcoming quarter. In addition, the investment manager is required to report half-yearly that
White Funds Management Pty Ltd have invested the Company's assets in accordance with the approved investment mandate and complied with the Investment
Management Agreement requirements during the reporting period.
In assessing the Company's risk tolerance level the Board considers any instance which materially affects the Company's monthly Net Tangible Asset
backing announcement released to the ASX.
The Audit Committee and the Board perform a risk review on an annual basis to ensure that adequate controls are in place to mitigate risk associated
with investment manager performance, market risk, fraud, transaction reporting errors, material reporting risks and compliance risk.
Executive Management
The companies operations are conducted through White Funds Management Pty Ltd (Investment Manager) and White Outsourcing Pty Limited (Administration
Manager). These entities incorporate the specialist wholesale investment and administration personnel who undertake the Company's executive operations.
The Company's executive management arrangements have been structured to provide investors with a cost efficient investment vehicle and access to a
significant depth of professional resources.
The company provides no equity based remuneration, such as share option plans, to executives.
Ethical Standards
All directors, and persons involved in the management of the company are expected to act with the utmost integrity and objectivity, striving at all
times to enhance the reputation and performance of the company.
Shareholder Rights
Shareholders are entitled to vote on significant matters impacting on the business, which include the election and remuneration of directors, changes
to the constitution and are able to receive the annual and interim financial statements if requested. Shareholders are strongly encouraged to attend
and participate in the Annual General Meetings of Sylvastate Limited, to lodge questions to be responded by the Board, and are able to appoint proxies.
Continuous Disclosure
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:
- Half-yearly reporting
- Annual report; and
- Monthly net asset backing per share within 14 days of the end of the month. All Australian Stock Exchange releases are available on the ASX website.
Shareholder Communication
The communications policy is designed to promote effective communication with shareholders. The Board encourages full participation of shareholders at
the Annual General Meeting to ensure a high level of accountability and identification with the company's strategy and goals.
The objective is to provide shareholders and potential investors with information that will assist them to assess Sylvastates's performance. All
announcements to the ASX will be available through their website. These include:
- Monthly net asset backing per share
- Quarterly report
- Half yearly report
- Annual Report
- Notice of Annual General Meeting and Explanatory Memorandum
- Notice of Extraordinary General Meeting
- The Chairman's Address to the Annual General Meeting
The default option for receiving annual reports is via the company website. Shareholders also have the option of receiving a printed version of the
annual report or alternatively receiving all communications via email.
Shareholders are able to make their communication preference by contacting:
Computershare Investor Services Pty Limited
Level 2, 60 Carrington Street
GPO Box 7045
Sydney NSW 2001
Australia
Enquiries (within Australia) 1300 850 505
(outside Australia) +61 3 9415 4000
Facsimile +61 3 9473 2500
web.enquiries@computershare.com.au
www.computershare.com
To assist with enquiries please quote your current address and Security Reference Number (SRN) or Holder Identification Number (HIN)
Director Dealing in Company Shares
Directors and senior management may acquire shares in the Company, but are prohibited from dealing in Company shares (a) between the close of a month
and the release of the company's net asset backing to the ASX or (b) whilst in possession of price-sensitive information.
Ethical Standards
The Board expects all executive and non-executive directors to act professionally in their conduct. The Company is committed to increasing shareholder
value in a manner consistent with its responsibilities to all stakeholders. Sylvastate Limited is committed to conducting its business in a way that is
open, ensuring that the Company acts with integrity and objectivity. Adherence to the Board adopted Code of Conduct and Ethics will ensure that
Sylvastate's reputation is maintained, help promote investor understanding and confidence in the Company's disclosure, reporting and compliance
activities
Policies, Charters and Codes
The following Policies, Charters and Codes have been adopted to provide sound corporate governance practices:
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