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The Company complies with the recommendations of the Australian Securities Exchange Corporate Governance Council (Council) as contained in the revised ASX Corporate Governance Principles and Recommendations, as updated in August 2007, to the extent that the Board believes they are practical and applicable to the Company. Entities are required to disclose corporate governance principles that they have not adopted and to state the reasons why specific principles have not been adopted and details of any departures are set out below. The corporate governance principles and policies of the Company have been structured with reference to the Council’s eight corporate governance principles.
(1) Lay solid foundations for management and oversight
The Board is responsible for protecting the rights and interests of shareholders and for the overall corporate governance of the Company. The responsibilities of the Board include:
(i) providing input into and final approval of management’s strategy and goals designed to promote the achievement of those strategic objectives;
(ii) delegating the necessary authorities and ensure appropriate resources are available to the CEO/MD and senior Executives to deal with the day-to-day operational aspects of the Company;
(iii) monitoring the performance of the CEO/MD and senior Executives against these goals and objectives;
(iv) ensuring that the business risks facing the Company are, wherever possible, identified and that the appropriate monitoring and reporting controls are in place to manage these risks; and
(v) appointing the CEO/MD, approving the performance evaluation and determining the remuneration of executive levels of management. Ensuring that appropriate policies and procedures are in place for recruitment, remuneration and succession planning.
Given the modest size of the Company and the focus on the advancement of the Tampakan Copper-Gold Project, the establishment of a formal performance evaluation strategy is considered inappropriate. Performance evaluation of the CEO/MD and senior executives is a matter for consideration by the entire Board, which meets annually to assess the performance of management. Performance evaluations for the year ending 31 December 2008 are scheduled to occur in April 2009.
(2) Structure the Board to add value
The Directors of the Company and details of their skills, qualifications, attendances at meetings and the period of office held are included in this Directors’ Report.
The Company has four Directors, three of whom are Non-Executive Directors.
The Board of the Company satisfies the Council’s Recommendation 2.1 that a majority of the Board members are independent, generally taking into account the factors set out in the commentary to Recommendation 2.1, namely Mr Phillips (Chairman), Mr Wightman and Mr Robbins. At the date of this report it is more than 22 months since Mr Robbins served as managing director. The Company considers Mr Robbins to be an independent director. The fourth member of the Board is Mr Laufmann who is CEO/MD. In addition, the Board has a diverse skills base with its members having substantial experience in mining, geosciences, commercial and financial activities. The Board also has extensive experience in financing, constructing, commissioning and operating mining projects.
Each Director has the right of access to all relevant Company information and to the Company’s Executives and, subject to prior consultation with and approval from the Chairman, may seek independent professional advice from a suitably qualified advisor at the Company’s expense. The Director must consult with an advisor suitably qualified in the relevant field and obtain the Chairman’s approval of the fee payable for the advice before proceeding with the consultation. A copy of the advice received by the Director is made available to all other members of the Board.
The Company has not established separate Remuneration and Nominations Committees. The duties and responsibilities of such committees are the responsibility of the full Board. The Board does not believe that any significant efficiencies or enhancements would be achieved by the establishment of separate Remuneration or Nominations Committees.
(3) Promote ethical and responsible decision-making
The Company recognises the need to ensure that the highest ethical standards are adopted at all times. As per the Company’s code of conduct policy (a copy of which can be found on the website), all Directors, Executives and employees must conduct themselves with the utmost integrity and objectivity in their business dealings, comply with their legal obligations, and have regard to reasonable expectations of its stakeholders.
In addition, the Company has well developed cultural awareness and social justice policies and practices that, where appropriate, contribute to the education and welfare of indigenous people within its areas of activity, including establishing the framework for sustainable development.
In relation to dealings in shares of the Company, the approved policy of the Board is that:
(i) Directors, Executives and employees are entitled to purchase/sell shares and other securities in the Company for a four-week period following the electronic release of the annual report, half-year report and quarterly reports.
(ii) The four-week period in which Directors, Executives and employees can purchase/sell shares and other securities in the Company will commence one business day after the release of these reports.
(iii) Where a Director, an Executive or employee wishes to transact in shares and other securities of the Company outside periods referred to above, the Director or Executive must seek the approval of the Chairman prior to purchasing/selling shares or other securities.
(iv) Where the Chairman wishes to transact in shares and other securities of the Company outside periods referred above, the Chairman must advise the CEO/MD prior to purchasing/selling shares or other securities.
(v) The Company prohibits the hedging of unvested options or trading in products that limit the economic risk of security entitlements in the Company over unvested entitlements.
(4) Safeguard integrity in financial reporting
The Audit Committee comprises two of the three Non-Executive Directors. Mr Wightman was appointed as Chairman of the Audit Committee on 14 February 2007. Mr Phillips is the other Audit Committee member. The members have a good knowledge of finance and accounting practices (see details of their respective skills and experience in the Directors` report). Given the size of the Board, the Company considers it appropriate to have two members in the Audit Committee, rather than three as proposed by the ASX Corporate Governance Recommendations. The Audit Committee held two meetings during the financial year ended 31 December 2008, which were attended by both members of the audit committee.
The external auditors are invited to attend every meeting of the Audit Committee.
The role of the Audit Committee is to consider any matters relating to the financial affairs of the Company and the Group as set out in the Audit Committee Charter (a copy of which is on the Company`s website) as well as other matters referred to it by the Board.
(5) Make timely and balanced disclosure
The Board is committed to the promotion of investor confidence by ensuring that trading in its securities takes place in an efficient, competitive and informed market. In accordance with the continuous disclosure requirements of the ASX Listing Rules, the Company has written policies and procedures in place (copies of which are on the Company`s website) to ensure that price sensitive information is identified, reviewed by management and disclosed to the ASX in a timely manner and that all information provided to the ASX is posted on the Company’s website as soon as possible after its disclosure to the ASX. The Company Secretary manages the Company’s compliance with its continuous disclosure obligations and is responsible for communications with the ASX.
From time to time, the Company conducts briefings with analysts, media representatives and major shareholders in order to promote a better understanding of the Company. In conducting such briefings, the Company takes care to ensure that any price sensitive information included in the content of the briefings has already been made available to the market.
(6) Respect the rights of shareholders
The Board aims to ensure that shareholders are informed of all information necessary to assess the performance of the Directors, Executives and the Company through:
(i) the half-yearly report and annual report;
(ii) quarterly reports;
(iii) the Annual General Meeting of Shareholders and any other meeting called to obtain approval for the Board to take appropriate action to strengthen the Company; and
(iv) the Indophil website, which contains ASX announcements, broker reports and other relevant information.
The Company welcomes questions and endeavours to answer such questions within the confines of information that is not market sensitive or that is already in the public domain.
The external auditor attends the Annual General Meeting of Shareholders and is available to answer questions in relation to the conduct of the audit and the audit report.
(7) Recognise and managing risk
As a matter of practice, the Board retains overall responsibility for risk oversight and management. Given the modest size of the Company, the Board does not consider it appropriate to have separate risk management and control systems designed by management which are to be reported to the Board.
The Board defines risk to be any event that, if it occurs, will have a material impact (whether financial or non-financial) on the Company’s ability to achieve its business objectives. The Board has established various policies and practices designed to identify and manage significant business risks, including:
(i) the Company’s business plan;
(ii) approval of budgets by the Board;
(iii) detailed monthly financial and operational reporting to the Board;
(iv) policies regarding internal controls, authority levels for expenditure, commitments and general decision making;
(v) policies and procedures relating to health, safety and environment designed to ensure a high standard of performance and regulatory compliance; and
(vi) policies and procedures to promote cultural awareness amongst employees and consultants. Day-to-day responsibility for risk oversight and management is delegated to the CEO/MD, who is primarily responsible for identifying risks, monitoring risks, promptly communicating risk events to the Board and responding to risk events.
The above policies can be found on the Company`s website.
The Board requires the CEO/MD and Chief Financial Officer to certify annually that the financial statements of the Company and the Group are founded on a sound system of risk management and internal control which implements the policies adopted by the Board and that these systems operate effectively in all material respects in relation to the financial reporting risks.
(8) Remunerate fairly and responsibly
Given the modest size of the Company and its Board, the Company does not have a separate Remuneration Committee. The full Board is responsible for determining and reviewing compensation arrangements for Non-Executive Directors, the CEO/MD, Executives and employees. As set out in the Remuneration Report, the Company distinguishes between the structure of remuneration for Non-Executive Directors and Executive Directors. The Board assesses the appropriateness of the nature and amount of remuneration of Directors, Executives and employees on a periodic basis by reference to relevant employment market conditions with the overall object of ensuring maximum stakeholder benefit from the retention of high quality Directors, Executives and employees.
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