Announcement PDF Corporate Governance Charter Lithium Consolidated Mineral Exploration Pty Ltd ACN 612 008 358 (Company) The Directors of Lithium Consolidated Mineral Exploration Pty Ltd resolved to approve this Corporate Governance Charter on 31 October 2016, effective from the date that the Company is admitted to the Official List of the ASX. Table of Contents Section 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 Section 2 2.1 2.2 2.3 2.4 2.5 2.6 Section 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 Section 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 Section 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Section 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 Principles of Corporate Governance ................................................................................ 3 Board of Directors .............................................................................................................3 Chairperson .......................................................................................................................5 Chief Executive Officer/Managing Director .......................................................................5 Company Secretary ...........................................................................................................6 Induction of New Directors and Ongoing Director Education ............................................6 Independent Advice ...........................................................................................................7 Corporate Ethics ................................................................................................................7 Corporate Code of Conduct ..............................................................................................7 Communications with investors .......................................................................................11 Selection of external auditor and rotation of audit engagement partner .........................11 Committees .....................................................................................................................12 Corporate Governance Committee Charter ................................................................... 13 Committee members .......................................................................................................13 Purpose ...........................................................................................................................13 Definition and objectives of Committee ...........................................................................13 Powers and authority of Committee ................................................................................14 Reporting .........................................................................................................................14 Application of Standing Rules .........................................................................................15 Audit and Risk Management Committee Charter ........................................................... 16 Committee members .......................................................................................................16 Purpose ...........................................................................................................................16 Definition and objectives of Committee ...........................................................................16 Reporting .........................................................................................................................18 Risk management policies ..............................................................................................19 Attendance at meetings ...................................................................................................19 Access .............................................................................................................................20 Application of Standing Rules .........................................................................................20 Remuneration Committee Charter ................................................................................. 21 Committee members .......................................................................................................21 Purpose ...........................................................................................................................21 Definition and objectives of Committee ...........................................................................21 Remuneration policies .....................................................................................................24 Approval ..........................................................................................................................24 Reporting .........................................................................................................................24 Meetings ..........................................................................................................................25 Attendance at meetings ...................................................................................................26 Access .............................................................................................................................26 Application of Standing Rules .........................................................................................26 Nominations Committee Charter .................................................................................... 27 Committee members .......................................................................................................27 Purpose ...........................................................................................................................27 Definition and objectives of Committee ...........................................................................27 Reporting .........................................................................................................................29 Attendance at meetings ...................................................................................................30 Access .............................................................................................................................30 Application of Standing Rules .........................................................................................30 Standing Rules of Committees ....................................................................................... 31 Application .......................................................................................................................31 Composition.....................................................................................................................31 Chairperson .....................................................................................................................31 Meetings ..........................................................................................................................31 Fees .................................................................................................................................32 Review of Charter ............................................................................................................32 Duties and responsibilities ...............................................................................................32 Lithium Consolidated Mineral Exploration Table of Contents Section 7 Corporate Ethics Policy .................................................................................................. 33 7.1 Introduction ......................................................................................................................33 7.2 Directors' powers and duties ...........................................................................................33 7.3 General ............................................................................................................................33 7.4 General duties of Directors ..............................................................................................34 7.5 Avoiding conflicts .............................................................................................................35 7.6 Confidentiality ..................................................................................................................36 7.7 Independence ..................................................................................................................37 7.8 Dealings by Directors in Securities of Company .............................................................37 7.9 Notification to ASX of Directors’ interests .......................................................................37 7.10 Company’s obligation of disclosure .................................................................................40 Section 8 Trading Policy ................................................................................................................. 53 8.1 Purpose of this policy ......................................................................................................53 8.2 Who this policy applies to ................................................................................................53 8.3 Dealing by Restricted Persons ........................................................................................53 8.4 Clearance to Deal ............................................................................................................53 8.5 Circumstances for refusal ................................................................................................55 8.6 Dealing in exceptional circumstances .............................................................................55 8.7 Prohibition on Insider Trading .........................................................................................55 8.8 Communicating Inside Information ..................................................................................55 8.9 Dealing by persons and entities associated with Restricted Persons .............................56 8.10 Disclosure of Dealings by Directors and substantial shareholders .................................56 8.11 Dealings in Securities of other companies ......................................................................56 8.12 Penalties ..........................................................................................................................57 8.13 Policy on Margin Loan Arrangements .............................................................................57 8.14 Policy on Short-term trading ............................................................................................58 8.15 Policy on Short Selling ....................................................................................................58 8.16 Hedging Transactions .....................................................................................................58 8.17 What is Inside Information? .............................................................................................58 8.18 When is Information Generally Available? ......................................................................58 8.19 What is a Material Effect? ...............................................................................................58 8.20 What is Dealing in Securities?.........................................................................................59 8.21 Definitions ........................................................................................................................59 Section 9 Related Party Policy ....................................................................................................... 65 9.1 Purpose of this Policy ......................................................................................................65 9.2 Policy ...............................................................................................................................65 9.3 Related Party Transactions .............................................................................................65 9.4 The Exceptions ................................................................................................................66 9.5 Dealing with Related Party Transactions ........................................................................67 9.6 Listing Rule 10.11 ............................................................................................................69 Listing Rule 10.11 provides that a listed company shall not without shareholder approval issue securities to a related party. ............................................................................................69 A number of exceptions to this Rule are contained in Listing Rule 10.12. ...............................69 However, unless one of these exceptions applies, shareholder approval must be obtained for the issue of securities to a related party. .........................................................................69 9.7 Miscellaneous ..................................................................................................................69 9.8 Definitions ........................................................................................................................69 Lithium Consolidated Mineral Exploration Corporate Governance Charter Definitions Annual Report means the annual report of the Company. ASIC means the Australian Securities and Investments Commission. ASX means the ASX Limited ABN 98 008 624 691. ASX Listing Rules or Listing Rules means the Official Listing Rules of the ASX as amended or replaced from time to time. Audit and Risk Management Committee means the Committee charged with determining, implementing and assessing controls for financial management, financial reporting and risk management generally for the Company. Board means board of Directors of the Company. Chairperson means the chairperson of the Board. Charter means the charter adopted from time to time with respect to each Committee, as applicable to that Committee. Chief Executive Officer means the person (if any) engaged by the Company in the role of the chief executive officer of the Company. Chief Financial Officer means the person (if any) engaged the Company in the role of the chief financial officer of the Company. Committee means a committee created by the Board under this Corporate Governance Charter including without limitation, the Audit and Risk Management Committee, the Remuneration Committee, the Corporate Governance Committee and the Nominations Committee (as applicable to the relevant section of this Corporate Governance Charter and as established from time to time). Company means Lithium Consolidated Mineral Exploration Pty Ltd ACN 612 008 358. Company Secretary means a person appointed by the Company to be the company secretary. Constitution means the constitution of the Company. Corporate Ethics Policy means the policy set out in Section 7 setting out directors’ duties given their position with the Company, obligations with respect to trading in securities and general disclosure obligations. Corporate Governance Charter means the policies, procedures and Charters set out in this document. Corporate Governance Committee means the Committee charged with reviewing compliance by the Board with, among other matters, the provisions of this document. Corporate Governance Principles and Recommendations means the Corporate Governance Principles and Recommendations Third Edition issued by the ASX Corporate Governance Council in 2014 as amended or replaced from time to time. Corporate Governance Statement means the statement referred to in Listing Rule 4.10.3 which discloses the extent to which the Company has followed the Corporate Governance Principles and Recommendations. Corporations Act means the Corporations Act 2001 (Cth) as amended or replaced from time to time. Lithium Consolidated Mineral Exploration Page 1 of 69 Corporate Governance Charter Director means a director of the Company. Diversity includes, but is not limited to, matters of gender, age, disability, ethnicity, marital or family status, sexual orientation, gender identity and religious or cultural background. Guidance Note means the Guidance Notes published by the ASX as amended or replaced from time to time. Independent Director means a Director who has a sufficient level of independence to the Company, determined in accordance with subclause 1.1(c) of this document. Listing Rules Official Listing Rules of the ASX as amended or replaced from time to time. Management means the executive Directors and senior management of the Company. Managing Director means the Director (if any) engaged by the Company in the role of the managing director of the Company. Nominations Committee means the Committee for assisting the Board in relation to, among other things, the appointment of members to the Board and of senior management and in assessing the performance of such individuals. Non-Independent Director means a Director who is not an Independent Director. Related Party Policy means the policy set out in Section 7 setting out the policy, procedures and protocols with respect to related party transactions. Remuneration Committee means the Committee charged with, among other things, reviewing remuneration levels for Directors and senior management. Securities has the meaning given in section 92 of the Corporations Act. Standing Rules means the general and procedural rules of each Committee set out in Section 6 of this Corporate Governance Policy. Trading Policy means the policy set out in Section 8 developed from time to time by the Board setting out the procedure for trading in Securities of the Company by Directors, managerial staff, employees and any other persons who may be associated with the Company. Lithium Consolidated Mineral Exploration Page 2 of 69 Corporate Governance Charter Section 1 1.1 Principles of Corporate Governance Board of Directors (a) General This document sets out the main principles adopted by the Board of Directors of the Company to implement and maintain a culture of good corporate governance both internally and in its dealings with outsiders. The Board of the Company is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. The matters set out in this document are subject to the Corporations Act, the Constitution and the ASX Listing Rules. The purpose of preparing and disclosing the matters set out in this document is to: (1) formalise procedures to ensure the Company and the Board act in a transparent and appropriate manner in their respective internal and external dealings; (2) ensure that appropriate checks, balances and procedures are in place to monitor the operations of the Company and those charged with its management; and (3) provide shareholders with a transparent method to evaluate the performance of the Company from a corporate governance perspective. In preparing and implementing these strategies, the Company and the Board are mindful of the Corporate Governance Principles and Recommendations. (b) Functions, powers and responsibilities of Board Generally, the powers and obligations of the Board are governed by the Corporations Act and the general law. Without limiting those matters, the Board expressly considers itself responsible for the following: (1) ensuring compliance with the Corporations Act, ASX Listing Rules (where appropriate) and all other relevant laws; (2) providing leadership and developing, implementing and monitoring strategic operational and financial objectives for the Company and the overall performance of the Company; (3) appointing appropriate staff, consultants and experts to assist in the Company's operations; (4) ensuring appropriate financial and risk management controls are implemented; (5) setting, monitoring and ensuring appropriate accountability and a framework for remuneration of Directors and executive officers; Lithium Consolidated Mineral Exploration Page 3 of 69 Corporate Governance Charter (c) (6) establishing and overseeing the Company’s process for making timely and balanced disclosure of all material information in accordance with the ASX Listing Rules; (7) implementing appropriate strategies to monitor performance of the Board in implementing its functions and powers; (8) implementing and overseeing the Company’s risk management framework to enable risk to be identified, assessed and managed and to set the risk appetite the Board expects Management to operate within; (9) appointing the Chairperson; (10) appointing and removing the Chief Executive Officer and Company Secretary; (11) approving the appointment and, where appropriate, removal of members of Management; (12) contributing to and approving Management's development of corporate strategy and performance objectives; (13) monitoring Management's implementation of strategy and performance generally, and ensuring appropriate resources are available to Management; (14) monitoring the effectiveness of the Company’s governance practices; (15) approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures; (16) approving the annual budget; (17) liaising with the Company's external auditors; (18) approving and monitoring financial and other reporting systems of the Company (including external audit) and the integrity of these systems; and (19) appointing and overseeing Committees where appropriate to assist in the above functions and powers. Structure of Board The structure of the Board is determined in accordance with the following principles: (1) to aim for, so far as is practicable given the size and the nature of the operations of the Company, a majority of the Board being Independent Directors; (2) to aim for, so far as is practicable given the size and the nature of the operations of the Company, the appointment of a Chairperson who is an Independent Director; (3) to aim for, so far as is practicable given the size and the nature of the operations of the Company, a Chairperson who is not the chief executive officer; (4) to aim for, so far as is practicable given the size and the nature of the operations of the Company, a Board comprising members with diverse backgrounds; and Lithium Consolidated Mineral Exploration Page 4 of 69 Corporate Governance Charter (5) to have a minimum of three Directors. In assessing the independence of Directors, the Company has regard to Principle 2 of the Corporate Governance Principles and Recommendations and regards an Independent Director as a non-executive Director (that is, not a member of management) who: (1) is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company; (2) within the last three years has not been employed in an executive capacity by the Company or another group member; (3) within the last three years has not been a partner, director or senior employee of a provider of material professional services to the Company or another group member; (4) within the last three years has not been in a material business relationship (by example, as a supplier or customer) with the Company or other group member, or an officer of, or otherwise associated with, someone in such a relationship; (5) has no material contractual relationship with the Company or another group member other than as a Director; (6) does not have close family ties with any person who falls within any of categories (1) - (5) described above; and (7) has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company or otherwise compromise their independence. When considering whether a Director is an Independent Director, the materiality of such interest, position, association or relationship must be assessed to determine whether it might influence, or might reasonably be perceived to influence, in a material respect, the Director’s capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the Company and its shareholders. A Director must advise the Chairperson (or, in the case of the Chairperson, another member of the Nominations Committee) if there is a change in his or her interests, positions, associations or relationships that could bear on his or her independence at the earliest opportunity. In an effort to ensure that the Board comprises members with a broad range of experience, expertise and skills relevant to the Company, the Board may establish a Nominations Committee or will otherwise consider the guidelines set out under the Nominations Committee Charter in Section 5. 1.2 Chairperson The Chairperson is responsible for leadership of the Board, for efficient organisation and conduct of the Board's function and the briefing of all Directors in relation to issues arising at Board meetings. The Chairperson is also responsible for shareholder communication and arranging Board performance evaluation. 1.3 Chief Executive Officer/Managing Director The Chief Executive Officer or Managing Director (if any) is responsible for running the day to day affairs of the Company under delegated authority from the Board and to implement the Lithium Consolidated Mineral Exploration Page 5 of 69 Corporate Governance Charter policies and strategies set by the Board, within the risk appetite determined by the Board. In carrying out his or her responsibilities, the Chief Executive Officer or Managing Director must report to the Board in a timely manner and ensure that all reports to the Board are clear and accurate and present a true and fair view of the Company's financial position and operating results. The Chief Executive Officer or Managing Director (if any) (together with the Chief Financial Officer, if there is one) will be required to state in writing to the Board that the financial records of the Company have been properly maintained and that the financial reports of the Company comply with relevant accounting standards and represent a true and fair view, in all material respects, of the Company’s financial position and performance. 1.4 Company Secretary The role of the Company Secretary is to support the effectiveness of the Board and the Committees. In carrying out his or her responsibilities, the Company Secretary is accountable directly to the Board in the performance of this role which includes, without limitation: 1.5 (a) advising the Board and the Committees of governance matters; (b) monitoring compliance with Board and Committee policy and procedures; (c) coordinating the timely completion and despatch of Board and Committee papers; (d) ensuring that the business at Board and Committee meetings is accurately recorded in the minutes; and (e) helping to organise and facilitate the induction and professional development of Directors. Induction of New Directors and Ongoing Director Education On their first appointment, Directors will have the benefit of an induction program aimed at deepening their understanding of the Company, its activities and the business, environment and markets in which the Company operates. As part of the program Directors will receive a manual of essential Board and Company information and will be given briefings by Management. As part of the induction process new Directors may complete a self assessment of their capabilities and competencies to determine areas where further development will be beneficial in contributing to the Board’s performance. Development in these areas will then be considered and discussed with the new Director by the Nomination Committee (if established) or the Chairperson. The Company will provide an ongoing education and development program for Directors which includes both formal and informal sessions. The program is intended to cover overall competencies required of any Director and also specific knowledge relevant to the Company’s business. It is desirable for all Directors to complete the Australian Institute of Company Directors Course (or equivalent) and related formal assessment. Directors are also expected to keep themselves abreast of changes and trends in the Company’s business, environment and markets and to keep abreast of changes and trends in the economic, political, social and legal climate generally. Directors are expected to have an appropriate base level of understanding on accounting matters. Additional development and training in this area can be discussed with the Nomination Committee (if established) or the Chairperson by a Director. The Company will also provide briefings on developments in accounting standards. Lithium Consolidated Mineral Exploration Page 6 of 69 Corporate Governance Charter 1.6 Independent Advice A Director may seek independent advice, including legal advice, where he or she believes it is necessary to properly discharge his or her duties as a Director. The Company will pay for the reasonable cost of this advice provided that the Director has obtained the prior written approval of the Chairperson (including for the cost of the advice). If the Chairperson wishes to seek independent advice and wishes for the Company to pay for the reasonable costs of that advice, the Chairperson must obtain the prior written approval (including for the cost of the advice) of the chairperson of the Corporate Governance Committee or other