This document discloses the extent to which Cue Energy Resources Limited ACN 066 383 971 (Company) has followed the recommendations set by the ASX Corporate Governance Council in the third edition of its Corporate Governance Principles and Recommendations (ASX Recommendations) during the relevant part of the reporting period.
This document is current as at 27 September 2017 and has been approved by the board of the Company. Principle 1: Laying solid foundations for management and oversight Recommendation 1.1: Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions. The role of the Board is to lead and oversee the management and direction of the Company. After appropriate consultation with Executive Management, the Board:
The Board has delegated all day to day management of the Company to the executive management, subject to any specific expertise requested by management of the Board, on a case by case basis. Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives. Cue undertakes appropriate background and screening checks prior to nominating a Director for election by shareholders, and provides to shareholders all material information in its possession concerning the Director standing for election or re-election in the explanatory notes accompanying the notice of meeting. Recommendation 1.3: A listing entity should have a written agreement with each director and senior executive setting out the terms of their employment. The Company issues a formal letter of appointment to directors setting out the terms and conditions of that appointment and the expectations of the role of the director. Recommendation 1.4: The Company Secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the Board.
The appointment and removal of a Company Secretary is a matter for decision by the Board. The Company Secretary, Melanie Leydin, is accountable directly to the Board (through the Chairman) on all matters to do with the proper functioning of the Board.
Details of the Company Secretary are set out in the Annual Report.
The Company established a formal policy on diversity in June 2012. This policy supports the existing equal opportunity policy and non-discrimination policy as well as states a commitment to improving gender diversity within the Company.
The measurable objectives set by the Board for achieving gender diversity include:
The proportion of women on the board, women in senior executive positions and women employees in the whole organisation as at reporting date was as follows:
The Board is responsible for evaluating Board candidates and recommending individuals for appointment to the Board. The Board may engage an independent recruitment firm to undertake a search for suitable candidates.
The Chairman of the Board will undertake annual performance evaluations.The performance evaluations will be designed to review the Board’s performance and effectiveness of achieving its set objectives and targets.
Performance evaluations were not conducted during the reporting period ending 30 June 2017. This is partly due to the board and leadership changes that occurred during the financial year. Reviews will be completed annuallygoing forward.
The Board is responsible for the performance evaluations of the senior executives, individually and together. This is reviewed against the discussed and agreed objectives of the Company and their effectiveness in carrying out those objectives.
Performance evaluations were not conducted during the reporting period ending 30 June 2017. This is partly due to the leadership changes that occurred during the financial year. Reviews will be completed in 2018.
Principle 2: Structure the Board to Add Value Recommendation 2.1: A majority of the board should be independent directors. The Board has determined that due to its small size it would not be efficient to maintain a separate Remuneration and Nomination Committee. The responsibilities generally performed by this committee have been assumed by the Board.
The Company intends to disclose the matters contemplated by Recommendation 2.1(b) in future annual reports. Recommendation 2.2: The Chair should be an independent director.
Given the size of the Board, a formal board skills matrix has not been adopted.
The Board comprises a broad base of industry, business, technical, administrative, corporate skills and experience considered necessary to represent the shareholders and fulfil the business objectives of the Company. The details of background, experience and professional skills of each Director are set out on the Company’s website.
Each of the Directors is entitled to seek independent advice at the Company’s expense to assist them to carrying out their responsibilities.
The Board reviews, at least annually, the composition of the Board to determine if additional core strengths are required to be added in light of the nature of the Company’s businesses and its objectives.
One third of the Directors retires annually and is free to seek re-election by shareholders.
Details of the skills, expertise and experience of each director are provided in the Director’s Report contained in the Company’s 2017 Annual Report.
Recommendation 2.3: The role of the Chairman and the CEO should not be exercised by the same individual.
The Board has one independent Director. Koh Ban Heng Non-Executive Director.
The Board has considered the holdings of shares in the Company by Koh Ban Heng and is of the opinion that his respective interests in shares would not materially interfere with, or could be reasonably perceived to interfere with, the independent exercise of his judgement in his position as a Director. The Board also considers that he is otherwise free from any business or other relationship that could materially interfere with, or reasonably be perceived to interfere with, the independent exercise of his judgement, and that he is able to fulfil the role of independent Director for the purposes of the ASX Recommendations.
Grant Worner, Non-Executive Chairman is considered by the Board to not be independent on the basis that he was engaged in an interim executive role with the Company (Executive Chairman and Chief Executive Officer for the period 23 March 2016 to 30 June 2017). Duration of this tenure was considered in determining this assessment of independence.
Duncan Saville, Non-Executive Director is considered by the Board to not be independent on the basis that he is a director of a substantial shareholder of the Company.
The lengths of service are as follows:
Recommendation 2.4: The board should establish a nomination committee.
As noted above in Recommendation 2.3, the Board does not currently have a majority of independent directors.
Whilst the Board recognises that it is desirable for the majority of the Board to be independent directors, the Board also considers that the current Board composition reflects an appropriate balance of skills, expertise and experience to achieve its objective of creating and delivering long-term shareholder value.
The Board makes an annual determination in respect of the independence of each Board member. The Board consider that there are appropriate controls such that where required non-independent directors exclude themselvesfrom any items of business where there may be a conflict.
The Chairman, Grant Worner is considered not to be an independent Non- Executive Director.
The roles of Chairman and Chief Executive Officer are exercised by different individuals, being Grant Worner and Matthew Boyall respectively.
Recommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.
Recommendation 2.6: Company induction and professional development of directors The Company has a program for the induction of new Directors. This induction covers all aspects of the Company’s operations so as to ensure that new Directors are able to fulfil their responsibilities and contribute to Board decisions. Principle 3: Act ethically and responsibly Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to the practices necessary to maintain confidence in the Company’s integrity, the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders and the responsibility and accountability of the individuals for reporting and investigating reports of unethical practices.
The Company has established a code of conduct which recognises the Company’s commitment to business and corporate ethics and recognition of the interests of shareholders. Directors, senior management, employees and where relevant and to the extent possible, contractors of the Company are required to comply with the code of conduct.
Directors are required to disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the Director or the interests of any other party in so far as it affects the activities of the Company and to act in accordance with the Corporations Act if conflict cannot be removed or persists. That involves taking no part in the decision making process or discussions where that conflict does arise.
Directors are required to make disclosure of any share trading. The Company’s policy in relation to share trading is that officers, employees and contractors are prohibited from trading whilst in possession of unpublished price sensitive information concerning the Company. That is information which a reasonable person would expect to have a material effect on the value of the Company’s shares. An officer must discuss the proposal to acquire or sell shares with the Chairman prior to doing so to ensure that there is no price sensitive information of which that officer might not be aware. The undertaking of any trading in shares must also be notified to the Company Secretary who makes disclosure to the ASX. Principle 4: Safeguard integrity in financial reporting Recommendation 4.1: The board should establish an audit committee.
The Company has established an Audit Committee, which has responsibility for audit matters. The Committee comprises of three non-executive directors, only one of which is an independent Director, being Koh Ban Heng. The Committee Chair is not the Chairman of the Board as recommended in the Corporate Governance guidelines.
A copy of the Committee’s Charter is available on the Company’s website at the following link:
The Members of the Committee are:
The primary role of the Audit and Risk Committee is to assist the Board to fulfil its corporate governance responsibilities relating to financial accounting practices, external financial reporting, financial risk management and internal control, the internal and external audit function, compliance with laws and regulations relating to these areas of responsibility and identification and development of strategies and actions to manage business risk.
Details of the skills, expertise and experience of each member are provided in the Director’s Report contained in the Company’s 2017 Annual Report.
The number of times the Committee met throughout the period and the individual attendances of the Members at those meetings is disclosed in the Director’s Report contained in the Company’s 2017 Annual Report.
Recommendation 4.2: The audit committee should be structured so that it consists only of non-executive directors, a majority of independent directors, is chaired by an independent chair who is not the chair of the board, and has at least two members.
The CEO and CFO state in writing to the Board every financial year that the statements made by them regarding the integrity of the financial statements are founded on a sound system of risk management, internal compliance and control, which in all material respects implements the policy as adopted by the Board and that the risk management and internal compliance control to the extent that they relate to financial reporting are operating effectively and efficiently in all material respects. Risk exposures to financial instruments and the Company’s responses are included in the annual report.
Recommendation 4.3: The audit committee should have a formal charter. The Board ensures that a representative of the external auditor of the Company attends the AGM to allow shareholders to ask the external auditor any questions about the conduct of the audit, the preparation and content of the auditor’s report, the accounting policies adopted by the Company in relation to the preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. Principle 5: Make timely and balanced disclosure Recommendation 5.1: Companies should establish written policies designed to ensure compliance with the ASX listing rules disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.
The Company has in place an ASX Compliance procedure which outlines the requirements to comply with the ASX listing rules disclosure requirements and to ensure accountability at the senior executive level for that compliance.
The Public Officer, Company Secretary and Chief Financial Officer, Melanie Leydin, has been nominated as the person responsible for communications with the ASX. This role includes responsibility for ensuring compliance with the ASX listing rules and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, secondary exchanges, the media and the public.
Principle 6: Respect the rights of security holders Recommendation 6.1: Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. The Company maintains a website which is kept up to date with all relevant announcements to the market and related information after release to the ASX. The web address is www.cuenrg.com.au.
The Company has established a Communications Policy for promoting effective communication with shareholders and encouraging theirparticipation at general meetings.
A copy of the communications policy is available on the Company’s website.
The Company provides shareholders with information through the Company’s share registry, ASX platform, shareholder meetings, the Company’s website and issuing media releases.
This is disclosed in the Company’s Notice of Meetings when dispatched to Shareholders.
Shareholders are entitled to vote on significant matters impacting the business, which include the election and remuneration of directors and changes to the constitution. The Board actively encourages shareholders to attend and participate at General Meetings of the Company.
This is implemented by the Company’s Share Registry. Principle 7: Recognise and manage risk Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.
Risk recognition and management are viewed by the Company as integral to the Company’s objectives of creating and maintaining shareholder value, and to the successful execution of the Company’s strategies. The Board is currently responsible for the overall risk management framework, and is responsible for:
The Company intends to disclose the matters contemplated by Recommendation 7.1(b) in future annual reports.
Recommendation 7.2: The board should require management to design and implement the risk management and internal control system to manage the Company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.
Management is responsible for designing, implementing and reporting on theadequacy of the Company’s risk management and internal control system and has to report to the Audit and Risk Committee on:
The Company intends to disclose the matters contemplated by ASX Recommendation 7.2 in future annual reports.
Recommendation 7.3: The board should disclose whether it has received assurance from the chief executive officer and the chief financial officer that the declaration provided in accordance with section 295A of the Corporations Act 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. The Company does not have an internal audit function. Management of the Company annually perform an assessment of Company’s risks and identify measures to manage the risks to levels consistent with the risk appetite of the Company. A risk register for the Company is maintained to document the risks identified. Risk is reviewed as part of the Board meetings. A risk assessment procedure is used to assess all risks when the Company is contemplating a new business venture. Should the risk profile of the Company change, the risk register will be updated to reflect this accordingly and any further controls required will be implemented.
A risk register for the Company is maintained to document the risks identified. Risk is reviewed as part of the Board meetings. A risk assessment procedure is used to assess all risks when the Company is contemplating a new business venture. Should the risk profile of the Company change, the risk register will be updated to reflect this accordingly and any further controls required will be implemented.
The Company details the associated risks in its Director’s Report in the Company’s 2017 Annual Report. Principle 8: Remunerate fairly and responsibly Recommendation 8.1: The board should establish a remuneration committee.
Due to the current size of the Company and its Board, the Board will fulfil the roles and responsibilities in relation to the remuneration of directors and senior executives. The Company intends to disclose the matters contemplated by Recommendation 8.1(b) in future annual reports. Recommendation 8.2: The remuneration committee should be structured so that it consists of a majority of independent directors, is chaired by an independent chair and has at least two members.
Remuneration of Non-Executive Directors is determined by the Board within the maximum amount approved by the shareholders from time to time.
Further information on Directors and Executives remuneration is set out in the Directors’ Report and Remuneration Report. Recommendation 8.3: Companies should clearly distinguish the structure of non-executive director’s remuneration from that of executive directors and senior executives.
The Company does not have an equity based remuneration scheme in place.
ASX Corporate Governance Council recommendations checklist This table cross-references the ASXCGC Recommendations to the relevant sections of the Corporate Governance Statement, the Directors’ Report and the Remuneration Report.
A listed entity should: (a) have a diversity policy which includes requirements for the board: (1) to set measurable objectives for achieving gender diversity; and(2) to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period:(1) the measurable objectives for achieving gender diversity set by the board in accordance with the entity’s diversity policy and its progress towards achieving them; and(2) either: (A) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or(B) the entity’s “Gender Equality Indicators”, as defined in the Workplace Gender Equality Act 2012.
Document Links Diversity Policy Audit and Risk Committee Charter Shareholder Communication Policy