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Corporate Governance

INTRODUCTION

The board of directors is accountable to the shareholders for the performance of ORH Limited.
The board undertakes to serve the interests of the shareholders and other stakeholders honestly, fairly, diligently and in accordance with applicable laws.

ROLE OF THE BOARD

The board’s responsibilities include the following:

  • Contributing to the development of and approving corporate strategy.
  • Appoint and review the performance of the managing director.
  • Reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives.
  • Arrange for effective budgeting and financial supervision.
  • Ensure that effective and appropriate reporting systems in place will, in particular, assure the board that proper financial, operational, compliance and risk management controls function adequately.
  • Ensure that appropriate audit arrangements are in place.
  • Reporting to shareholders.

The board delegates to the Managing Director the responsibility for managing the day to day operations of the company.  The Managing Director consults with the chair in the first instance on matters which are sensitive, extraordinary or strategic in nature.

BOARD SIZE AND COMPOSITION

The board determines the size and composition of the board subject to the company’s constitution.  The constitution provides for a minimum of three Directors and a maximum of nine.  At present time the board has determined that the number of Directors should be three, two of which are non-executive and one being the Managing Director is executive.
The board has determined at the time there is no necessity for a Nomination Committee.  Potential new Directors to commend to shareholders are identified by the board based on expertise encompassing the current and proposed activities of the company.  The board will seek to nominate potential Directors who can exercise independent and informed judgement on matters which will come before the board and are free from any relationship with the company which may interfere with their ability to make independent and informed judgements.

ROLE OF CHAIR

The chair’s role consists of leading the board and general meetings of the company.  They are responsible for ensuring the directors are well informed and effective; ensuring all Director’s are contributing effectively and all matters are properly considered and there is clear decision making.
The chair is responsible for ensuring meetings are conducted competently and ethically including ensuring that shareholders have adequate opportunity to express their views and obtain answers to any queries raised.
The chair is responsible for setting the agenda for board and general meetings and the review of the minutes of board and general meetings.
The chair’s other responsibilities include:

  • Representative of and spokesperson for the board,
  • Ensure all new board members are well briefed and have access to all aspects of the Company’s operations,
  • Act as the board’s representative in dealing with management.

BOARD MEETINGS

The board meets formally at least three times per annum and whenever necessary to deal with other matters which may arise between scheduled meetings.
Other consultants may attend the meeting at the chair’s request to present reports and advise on matters.  However, discussion of management issues and other issues of a sensitive nature for which the board is responsible are conducted with only board members present.

BOARD COMMITTEES

The company is not of a size nor will the current board structure allow the formation of Committees. Any issues which would be considered by the applicable committee are considered by the full board of the company, including remuneration of senior management, audit issues, risk management issues and nominations to the board.

MATERIALITY

The Board considers the independence of directors having regard to the relationships listed in Box 2.1 of the Principles & Recommendations and the Company’s materiality thresholds.

The Board has agreed on the following guidelines for assessing the materiality of matters:

  • Balance sheet items are material if they have a value of more than 5% of pro-forma net asset.
  • Profit and loss items are material if they will have an impact on the current year operating result of 5% or more.
  • Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary course of business, could affect the Company’s rights to its assets, if accumulated would trigger the quantitative tests, involve a contingent liability that would have a probable effect of 5% or more on balance sheet or profit and loss items, or will have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than 5%.
  • Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either party will default, and the default may trigger any of the quantitative or qualitative tests, are essential to the activities of the Company and cannot be replaced, or cannot be replaced without an increase in cost which triggers any of the quantitative tests, contain or trigger change of control provisions, are between or for the benefit of related parties, or otherwise trigger the quantitative tests.

INDEPENDENT ADVICE

  • To assist directors with independent judgement, it is the Board’s policy that if a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of their office as a director then, provided the director first obtains approval from the Chair for incurring such expense, the Company will pay the reasonable expenses associated with obtaining such advice.

SENIOR EXECUTIVES

  • Senior executives are responsible for supporting the Managing Director and assisting the Managing Director in implementing the running of the general operations and financial business of the Company in accordance with the delegated authority of the Board.  Senior executives are responsible for reporting all matters which fall within the Company’s materiality thresholds at first instance to the Managing Director or, if the matter concerns the Managing Director, directly to the Chair.
ORH Limited recognises the needs for Directors’ and employees’ to observe the highest standards of behaviour and business ethics in conducting its business and intends to maintain a reputation of integrity.

The company does not currently believe it is of a size to warrant the development of formal ethical guidelines however, the company subscribes to a general Code of Conduct.

All directors, officers, managers and employees are required to meet the following standards of ethical behaviour:

  • Act honestly, in good faith and in the best interests of the company as a whole.
  • Exercise care and diligence in carrying out all duties.
  • Recognize and respect the responsibility to shareholders and other stakeholders of the company.
  • Not misuse information, property or position for an improper purpose including for personal gain or to complete with the company.
  • Avoid conflicts of interest and manage conflicts of interest appropriately if they arise.
  • Observe the principals of independence in decision making.
  • Respect the confidentiality of all confidential information acquired as a result of position and not disclose such information without authorization.
  • Not engage in conduct likely to bring the company into disrepute.
  • Observe the spirit and letter of the law and comply with ethical and technical requirements of the appropriate regulatory bodies.

In addition to the general Code of Conduct all Directors and employees who are members of a professional body are required to comply with their respective body’s ethical standards.

Any breaches of the Code of Conduct should be reported to the chair in the first instance for notification to the board.  Any disciplinary action including formal warning or dismissal will be decided by the board and where necessary cases may be referred to the appropriate authorities.

The Company’s risk management policy is designed to provide the framework to identify, assess, monitor and manage the risks associated with the Company’s business.

The board adopts practices designed to identify significant areas of business risk and to effectively manage those risks in accordance with the Company’s risk profile.  Where necessary, the board draws on the expertise of appropriate external consultants to assist in dealing with or mitigating risk.

The Company’s main areas of risk include:

  • mining and construction industry focus;
  • fluctuating commodity prices and exchange rates,
  • political and economic climate in its areas or operation and,
  • continuous disclosure obligations.

Regular consideration is given to all these matters by the board.

The Company has in place an internal control framework to assist the board in identifying, assessing, monitoring and managing risk.  The framework can be described under the following headings:

  • Financial Reporting

Monthly accounts are prepared and reviewed by the Managing Director. Quarterly accounts are also prepared and reviewed by the Board. At this stage it is not deemed necessary to implement a formal budgeting policy.

  • Continuous Disclosure

The company has in place a Disclosure Policy which is reviewed regularly.

  • Operations Review

The Managing Director sends operations reports to the board for review on a regular basis.  These are currently informal but will be made more formal as Operations increase.

  • Investment Appraisal

The board has no guidelines which it applies to hedging contracts and review of capital investments as at this stage they are not relevant.

The Company’s internal control system is monitored by the board and assessed regularly to ensure effectiveness and relevance to the Company’s current and future operations.

Procedures have been put in place to ensure the Managing Director and the CFO (or equivalent) state in writing to the board that the integrity of the financial statements is founded on a sound system of risk management and internal compliance and control and that the Company’s risk management and internal compliance and control system is operating efficiently and effectively.

The Company is not currently of a size to enable the formation of committee’s, the full board currently has the responsibility for the risk management of the Company however, the board will assess the need to form a committee on a regular basis in conjunction with the necessity to form an audit committee.

ORH Limited recognises its obligations under continuous disclosure obligations of the Australian Stock Exchange (ASX) Listing Rules and Corporations Act to keep the market fully informed of information which may have a material effect on the price or value if its securities.
ASX Listing Rule 3.1 states that “Once an entity is or becomes aware of any information concerning if that a reasonable person would expect to have a material effect on the price or value of the entity’s securities, the entity must immediately tell ASX that information”
The company has formulated policies and procedures to discharge its disclosure requirements to ensure information is released promptly to the market and it fairly available to all those with an interest in the company.  These policies and procedures are summarised as follows:

  • The company has appointed the Managing Director, with assistance from the Company Secretary and Chairperson as required, to be responsible for communication with the ASX in relation to disclosure obligations and Listing Rule matters.
  • The Managing Director in consultation with the Company Secretary and the Chairman, if necessary, is responsible for assessing the materiality of information and drafting all disclosures.
  • Directors, officers and employees of the company must report immediately any potentially material information to the Managing Director and in the Managing Director’s absence, the Company Secretary and the Chairperson.
  • Only the Managing Director or Chairman is authorised to issue statements or make verbal comments to the media, analysts and other interested parties unless prior approval is give to other Directors or officers of the Company.
  • Any releases or statements to media, analysts and other interested parties containing material information must be first lodged with the ASX prior to being made public in any other way.
  • No information regarding actual or forecast financial performance will be provided to any external party unless it has been provided to the market generally via an ASX announcement.
  • There will be no communication with any external parties regarding financial performance of the company between the end of a reporting period and the release of financial results to the market generally via an ASX announcement.
  • Any presentations to analysts or communications with shareholders or other stakeholders on a one-on-one basis will not contain any information which may have a material effect on the price of the company’s securities unless it has previously provided to the market generally via an ASX announcement.

These procedures are supported by procedures to provide the shareholders with important information in a timely manner via electronic communication.  The shareholder communication policies are summarised below and operate in conjunction with the general disclosure policies.

  • The company aims to maintain an up to date website which includes all information announced to ASX as well as other company information.  All ASX announcements are posted to the company website as soon as possible after confirmation of receipt is received from ASX, including all financial reports.
  • The website can be used as an effective tool for shareholders to make enquire to the company via email or provide company contact information.
  • The company operates an email register for shareholders who wish to receive communications from the company via email of any announcements made to the ASX once released to the market.
  • All Notices of Meetings and Explanatory Notes are placed on the website once released to the ASX and sent to the shareholders.
  • All shareholders receive the full Annual Report in hard copy unless a request not to receive the document is sent by the Shareholder.  The report includes an annual review of operations of the group, changes in the state of affairs and details of future developments in addition to other disclosures required by the Corporations Act 2001 and ASX Listing Rules.
  • The half year report contains summarised financial information and a review of operations of the group, this report is lodged with ASX and posted on the company’s website.

ORH Limited regards its continuous disclosure obligations very seriously.  Any suspected breaches of these policies must be reported to the Chair immediately for reporting to the board.  Any breach of these policies may result in disciplinary action including verbal or written warnings.

BACKGROUND

In order to preserve the reputation and integrity of the company and senior management of ORH Limited (the Company), the directors’ of the Company have implemented this policy as a guide to dealing in the Company’s securities.

In summary this policy states that senior management or their associates should:

  • not trade in the Company’s securities while in possession of inside information;
  • notify the chairman of their trading in the Company’s securities; and
  • not trade in the Company’s securities during period’s set out as restricted.

CORPORATIONS ACT INSIDER TRADING PROVISIONS

A person may not deal in the securities of the Company when in possession of information the person knows, or ought reasonably to know:

  • is not generally available, including information the Company has not disclosed to the

market; and

  • might have a material effect on the price of those securities it if was generally available.

This prohibition extends to procuring another person to deal in those securities, extends to communicating the inside information to another person, if the person knows, or ought reasonably to know, that the other person would, or would be likely to deal in the securities of the Company or procure another person to deal in the securities of the Company.

The Corporations Act 2001 imposes sever penalties, both criminal and civil, on persons who conduct insider trading activities.

CONFIDENTIALITY AND INSIDE INFORMATION

A person in possession of inside information concerning the Company has a duty to keep the information confidential and must not communicate or disclose the information to any other person.

SENIOR MANAGEMENT

Senior Management of the Company for the purposes of this policy is:

  • The Board;
  • The Managing Director or any other senior executives;
  • The Company Secretary; and
  • The Group Accountants and their employees.

The senior management of the Company are subject to trading restrictions at certain times during the year.  This policy also applies to any employee who in the course of their employment may be exposed to inside information.

ASSOCIATED PARTIES

Each member of senior management is responsible for ensuring that their associates, being immediate family, including spouse, children, parents brothers and sisters, comply with the trading restrictions set out in this policy.

HEDGING POLICY

The non-executive Directors and senior executives who participate in equity-based remuneration schemes, they are prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.

TRADING RESTRICTIONS

In addition to the provision in this policy regarding trading while in possession of inside information senior management and their associates are restricted from trading by this policy at the following times during the year:

  • Two weeks prior to the release to the ASX of the preliminary financial report for the year end;
  • Two weeks prior to the release to the ASX of the half year financial report;
  • One week prior to the release to the ASX of the quarterly reports;
  • Two weeks prior to any general meeting of shareholders held by the Company and at no time after such meeting until the results of the meeting have been released to the ASX; and
  • A period of two business days following the release to the ASX of any announcement deemed by the ASX to be price sensitive.

BOARD DISCRETION

The board of the Company has the absolute discretion to place a trading restriction on the senior management and their associates of the company at any time during the year they deem necessary.  Reasons for any trading restriction where this discretion is exercised should be included in the minutes of the meeting at which it occurs.

EXEMPTION TO TRADING IN A RESTRICTED PERIOD

The board may in exceptional circumstances only, approve trading in a restricted period by a member of senior management or their associated parties.  An exemption may be granted in period of financial hardship or pressing financial commitments which cannot be satisfied by other means.  An application to the board for an exemption, detailing the reason for the application, should be included in the minutes of the meeting at which it is made.  Approval or rejection of the application should also be included in the minutes detailing reasons for acceptance or rejection.  Exemptions will not be granted by the board if it considers there is information not generally available which, if it were is likely to have a significantly material effect on the price of the Company’s securities.  Each application will be assessed on a case by case basis.

NOTIFICATION OF TRADING IN THE COMPANY’S SECURITIES

Senior management or their associates are required to notify the Chairman no more than one day after any dealings in the Company’s securities in writing by providing the following information:

  • name of security holder;
  • date of trade;
  • type of transaction and
  • number of securities involved
  • price per security

The chairman will then instruct the Company Secretary to complete the required disclosure to the ASX.

NON EXECUTIVE DIRECTORS

Non executive directors receive fees which are determined by the board within the aggregate limit set by the shareholders at a General Meeting.  The current limit is $250,000 per annum (set at the AGM held on 26 November 2006) and currently the chairman receives $120,000 pa and non executive directors receive $60,000 pa each and statutory superannuation where necessary.  All non executive Directors receive remuneration by way of fees and receive no retirement benefits excluding statutory superannuation, if applicable.

External professional advice is sought to determine the level of Directors fees to ensure they are appropriate.  The board determines the level of fees with reference to other comparable listed companies determined by size and nature of operations.

Director’s fees are set at a level to attract suitably qualified individuals to accept the responsibilities of a directorship.

EXECUTIVES

The executive’s remuneration is determined by the board with reference to current market rates and remuneration paid to executives in comparable listed companies determined by size and nature of operations.

SHARE AND OPTION BASED REMUNERATION

ORH Limited does not participate in share based remuneration for its executives but can issue share options to Directors, employees and consultants.  An Employee Share Option plan was adopted in August 2013 in this regard.  The terms of the share options to directors, employees and consultants are to be based on what similar sized companies in the mining industry are offering.  All share options to be issued to Directors require shareholder approval before being issued.

REMUNERATION COMMITTEE

The board is not of a size currently to allow for the formation of a Remuneration Committee.  All decisions regarding remuneration of Directors, executives and key employees are made by the full board.

The board will periodically review the company’s circumstances and a Remuneration Committee will be discussed and formed if deemed necessary by the Directors should the company experience a change in structure and board membership.

HEDGING POLICY

The non-executive Directors and senior executives who participate in equity-based remuneration schemes, they are prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.