Board Charter THE NEW ZEALAND REFINING COMPANY LIMITED. Board of Directors Charter

Transcription

1 THE NEW ZEALAND REFINING COMPANY LIMITED Board of Directors Charter

2 TABLE OF CONTENTS 1. Introduction Purpose of the Company Role of the Board Responsibilities of the Board Fiduciary and other duties Health and Safety Relationship with Shareholders Relationship with other Stakeholders Board Procedures Board Committees Board Composition and Mix Induction of New Directors Directors Remuneration Shareholdings by Directors in the Company Provision of Business or Professional Services by Directors Other Board Appointments Independent Professional Advice Board and Director Evaluations Indemnities and Insurance The Secretary Board-Management Relationship... 13

3 1. Introduction 1.1 This Charter formalises and sets out the manner in which the Board s powers and responsibilities will be exercised and discharged, including the adoption of principles of good corporate governance and processes that accord with best practice and the applicable laws in the jurisdictions in which the Company operates. 2. Purpose of the Company 2.1 The Company operates a toll refinery in New Zealand and undertakes related activities (Business). The Company has four customers (Customers) pursuant to separate processing agreements who happen to be the four major shareholders in the Company (Major Shareholders). Each Major Shareholder has representation on the Board of Directors which also includes appointed Independent Directors who have no affiliation with the Customers. 2.2 The capital and resources of the company will be allocated to those assets and activities which will enable it to achieve the company goals in a manner which best serves the interests of the shareholders as a whole. 3. Role of the Board 3.1 The Board is ultimately responsible for setting the strategic direction of the Company and setting the tone which will determine the culture and permeate the Company s relationships with shareholders, investors, employees, customers, suppliers and the local and business communities. It will oversee the management of the Company and the Business, with the ultimate aim being to increase shareholder value while ensuring the obligations of the Company are properly met. The Board is accountable to shareholders for the performance of the Company. 4. Responsibilities of the Board 4.1 In carrying out its role, the Board s responsibilities include: a) Providing strategic direction for, and approving, the Company s business strategies and objectives, b) Adopting appropriate procedures to ensure compliance with all laws, governmental regulations, applicable codes and accounting standards, c) Ensuring that the Company s internal decision making and compliance policies and procedures are adhered to, to ensure that the business of the Company is conducted in an open and ethical manner, d) Ensuring that the Company s goals are clearly established, and that strategies are in place for achieving them (such strategies being expected to originate, in the first instance, from Management),

4 e) Establishing policies for strengthening the performance of the Company including ensuring that Management is proactively seeking to build the Business through innovation, initiative, technology, new products and the development of its business capital, f) Establishing performance criteria for the Company and monitoring the performance of the Chief Executive and Management against these, g) Appointing the Chief Executive, setting the terms of the Chief Executive s employment contract and, where necessary, terminating the Chief Executive s employment with the Company, h) Deciding on whatever steps are necessary to protect the Company s financial position and the ability to meet its debts and other obligations when they fall due, and ensuring that such steps are taken, i) Ensuring that the Company s financial statements are true and fair and otherwise conform with law, j) Ensuring that the Company has appropriate risk management/regulatory compliance policies in place and that these are monitored on a regular basis, including the health, safety and environmental obligations set out in clause 6 below. 4.2 In the normal course of events, day-to-day management of the Company will be delegated to Management as outlined in clause Fiduciary and other duties 5.1 Each Director will conduct himself or herself in accordance with his or her legal duties and other obligations, which include: a) Directors must act honestly and in good faith in what the director believes to be the best interests of the Company, b) Directors must carry out their duties in a lawful manner and use reasonable endeavours to ensure that the Company carries out its business in accordance with the law and with a high standard of commercial integrity, c) Directors must act in accordance with their fiduciary duties and exercise any powers for proper purposes. They should comply with the spirit as well as the letter of the law mindful that in addition to purely legal requirements the proper discharge of their duties as a director requires high ethical and moral standards of behaviour, d) A director who is nominated by, or has special allegiance to, a particular shareholder or group of shareholders or other stakeholders, may only disclose confidential information to the nominating shareholder or other stakeholder with the authority of the Board or with any procedures prescribed in law or the Company s constitution, e) Directors must avoid conflicts of interest wherever possible, and where these do arise, declare and manage them in accordance with legal requirements and the intent and content of this Charter. If a known conflict exists, the Chairperson will take all reasonable steps to avoid any relevant papers being circulated to the affected Director prior to any Board discussion taking place. The affected Director should excuse themselves from

5 discussion and shall not vote on matters in which they have an interest. If a potential conflict situation exists the affected Director should offer to excuse themselves from any Board discussion, and the remaining Directors will determine whether an actual conflict exists or not, f) Directors will not take for themselves any opportunity discovered through the use of Company property, information or position or use Company property (including the Company s name), information or position for personal gain, g) Directors will not accept gifts or personal benefits of any value from external parties if it could be perceived that this could compromise or influence any decision by the Company, h) Directors will only trade in Company shares in accordance with the Company s Securities Trading Policy and Guidelines, i) Directors will maintain and protect the confidentiality of information of or entrusted to the Company about customers, work colleagues, suppliers, stakeholders and the Company s business and financial affairs, except where disclosure is allowed or required by law or a relevant regulatory body. 6. Health, Safety and Environment 6.1 The Board will maintain appropriate oversight over matters relating to health and safety, including both personal safety (occupational health) and process safety (major accident hazard risk exposure) and environment. 6.2 In carrying out its role, the Board s responsibilities include: a) Reviewing and approving the Company's health, safety and environment policies, b) Reviewing assessments of the effectiveness of Management's health, safety and environment programs, including but not limited to, periodic performance metrics and audits, c) Periodically reviewing with management its health, safety and environment activity with respect to significant legal matters, emerging or proposed laws or regulations that may have a material effect on the Company's financial or physical exposure, and d) Reviewing, at least annually, Management's report on contingency planning and emergency response activities. 7. Relationship with Shareholders 7.1 The Board will endeavour to familiarize itself with issues of concern to shareholders and ensure that shareholders are appropriately informed on the Company s operations and results through the delivery of timely and focused information. 7.2 The Board will periodically evaluate economic, political, social and legal issues and any other relevant external matters that may influence or affect the development of the Business or the interests of Shareholders.

6 8. Relationship with other Stakeholders 8.1 The Board will endeavour to familiarise itself with issues of concern to all relevant stakeholders. The Board recognises that the Company s long-term survival and prosperity are closely intertwined with the environments and markets within which it operates and the extent to which the Company is seen as a responsible corporate citizen. 9. Board Procedures 9.1 The Board endorses the principles set out in the Code of Practice for Directors, as approved and adopted, by the Institute of Directors in New Zealand (Inc). 9.2 The Board will be disciplined in carrying out its role, with the emphasis on strategic issues and policy. Directors will make proper use of their authority and will demonstrate appropriate decorum when representing the Company, always acting within any limitations imposed by the Board on its activities. 9.3 The Board s major policy emphasis will be on shareholder value and the limitation of risk. 9.4 Directors will use their best endeavours to attend Board meetings and to prepare thoroughly. Directors are expected to participate fully, frankly and constructively in Board discussions and other activities and to bring the benefit of their particular knowledge, skills and abilities to the Board table. Directors unable to attend a meeting will advise the Chairperson as soon as possible and will confirm in writing to the Secretary. 9.5 Board discussions will be open and constructive, recognizing that genuinely-held differences of opinion can, in such circumstances, bring greater clarity and lead to better decisions. The Chairperson will, nevertheless, seek a consensus in the Board but may, where considered necessary, call for a vote. All discussions and their record will remain confidential unless there is a specific direction from the Board to the contrary, or disclosure is required by law. Subject to legal or regulatory requirements the Board will decide the manner and timing of the publication of its decisions. 9.6 The Board has sole authority over its agenda and exercises this through the Chairperson. Any Director may, through the Chairperson, request the addition of an item to the agenda. Board meeting agendas will be based on an annual agenda or Board work plan developed by the Board at the commencement of the governing year. Meeting agendas will be set by the Chairperson in consultation with the Chief Executive and the Secretary based on the annual agenda/work plan. 9.7 The Board will hold at least six meetings each year and will hold additional meetings as the occasion requires. At each normal meeting the Company s interests register will be updated as necessary and the Board may consider: a) Reports from the Chief Executive focusing on Company performance including: Health, Safety, Environmental and Financial performance; identification and management of risks, and progress against strategic imperatives. b) Specific proposals for capital expenditure and acquisitions, and

7 c) Standard items and action items arising from previous meetings. 9.8 In addition, based on a predetermined schedule, the Board may: a) Review and approve the Company s goals, Business Plan including the annual profit targets and capital investment programmes, b) Approve the annual and half-yearly financial statements, c) Consider and, if appropriate, declare or recommend the payment of dividends, d) Review the Board composition, structure and succession planning, e) Review Directors remuneration, f) Review the Chief Executive s performance and remuneration, g) Review the remuneration of Senior Executives (direct reports to the Chief Executive), h) Review remuneration policies and practices in general including superannuation and incentive schemes, i) Review risk assessment policies and controls including health, safety and environment, insurance covers and compliance with legal and regulatory requirements, j) Review the Company s code of conduct and ethical standards, and k) Settle the following year s Board work plan. 9.9 Directors are entitled to have access, at all reasonable times, to all relevant Company information and to Management. Access to Management should, under normal circumstances, be via the Chief Executive. In interacting with operational managers, directors should take care not to undermine the Chief Executive s authority or his/her primacy in regard to the Boardmanagement link Directors will only create, and only retain, information and communications required for the needs of the Business or the Company or to meet legal obligations.

8 10. Chairperson 10.1 Each year, the Board will appoint a Chairperson from among the Directors. The Chairperson will be an Independent Director as defined in the NZSX Listing Rules The Chairperson is responsible for representing the Board to Shareholders and the public generally. The Chairperson is also responsible for ensuring the integrity and effectiveness of the governance process of the Board and: a) Maintaining regular dialogue with the Chief Executive over operational matters and the appointment of senior executives as these relate to the Board s governance concerns and duties and will consult with the remainder of the Board promptly over any matter that gives him or her cause for major concern. b) Ensuring the efficient organisation and appropriate conduct of the Board. c) Chairing Board meetings to ensure that no Director, whether executive or non-executive, dominates discussion, that appropriate discussion takes place and that relevant opinion among Directors is forthcoming. The Chairperson will ensure that discussions result in agreed, logical and understandable outcomes and that these are recorded. 11. Board Committees 11.1 Board committees will be formed only when it is efficient or necessary to facilitate efficient decision-making on matters within the Board s concerns and duties. Board committees will only speak or act for the Board when so authorised. Board committees will not impinge upon matters delegated to the Chief Executive. Board committees will observe the same rules of conduct and procedure as the Board unless the Board determines otherwise. The Chairperson will determine the membership of Board Committees, and appoint the Committee Chairperson on an annual basis The Board has three standing committees; the Audit, Risk and Finance Committee, the Nominations and Remuneration Committee and the Independent Directors Committee. Other committees are formed for specific purposes and disbanded as their work is completed. The purposes and directorship of the standing committees are as follows: The Audit, Risk and Finance Committee consists of not less than three and no more than five Directors of the Company. The functions of the Committee are to oversee: Financial Reporting Review all proposed external financial reporting, ensuring compliance with all regulatory requirements, to enable the Committee to recommend the financial statements to the full Board for approval. Treasury Function Review of Treasury Policy, financing arrangements (including compliance with bank covenants) and the treatment of financial transactions that are significant, unusual or require substantial judgment.

9 Risk assessments and Assurance activities Review the annual assurance programme prepared by Management which encompasses activities undertaken by the internal auditors, the operational auditors and external providers in respect of which assurance is required by the Company. The Nominations and Remuneration Committee consists of four Directors, at least two being Independent Directors. The objectives of the Committee are to: Remuneration and performance matters Assist the Board in the establishment of remuneration and performance policies and practices for remuneration setting and review of the remuneration of the Chief Executive, senior executives and Directors, Nomination Matters Planning the Board s composition, evaluating competencies, identifying prospective Directors and making recommendations to the Board accordingly, Appointment of the Chief Executive Evaluating the competencies required, identifying and interviewing potential candidates and making recommendations to the Board accordingly. People Strategy Reviewing the Company s People Strategy including organisational structure, capability development strategy, succession planning processes and diversity and inclusiveness initiatives. The Independent Directors Committee consists of those Directors who do not represent or are not otherwise associated with the Major Shareholders/Customers. The members will meet the definition of an Independent Director for the purposes of the NZSX Listing Rules. The Independent Directors have two roles special to them: To act in effect as the Board in relation to those matters to be decided by the Board in which all of the other Directors have an interest which disqualifies them from performing part of the quorum and voting, and To act as a Committee to the Board to deal with matters delegated or referred to it by the Board or management, including ensuring that issues concerning the Customers and in particular any conflicts of interest, including related party transactions, are dealt with in a transparent manner for the benefit of the Company as a whole. 12. Board Composition and Mix 12.1 The composition of the Board will reflect the duties and responsibilities to be discharged and performed in the interests of the shareholders as a whole, and in setting the Company s strategy and ensuring that it is implemented.

10 12.2 In establishing the composition of the Board, Directors and shareholders should take all reasonable steps to ensure that there is the right balance between new thinking and corporate memory and shall take advice from the Nominations and Remuneration Committee Generally, the qualifications for Board Directorship are the ability and intelligence to make sensible business decisions and recommendations, an entrepreneurial talent for contributing to the creation of shareholder value, the ability to think strategically and see the wider picture, financial literacy, the ability to ask leading questions, preferably some experience in the industry sector, high ethical standards, sound common sense, and a total commitment to furthering the interests of shareholders and the achievement of the Company goals Directors may undertake actions and appropriate enquiries in order to understand and relate to the strategies of the Company and to make a meaningful contribution to the Board s deliberations. They will be independent of Management and free from any business or other relationship which could materially interfere with the exercise of their independent judgment The Company Constitution provides that the Board must comprise between eight and twelve Directors with at least two Directors being ordinarily resident in New Zealand The size of the Board, subject to Clause 8.2 of the Company Constitution, will be such that the common purpose, involvement, participation, harmony and sense of responsibility of the Directors are not jeopardised. It must be large enough to ensure a range of knowledge, views and experience but small enough to facilitate effective and efficient dialogue and decisionmaking Subject to any limitations imposed by shareholders, it is anticipated that Directors will hold office initially for three years following their first appointment (or, if appointed by the Board between annual meetings, from the date of the meeting next following the appointment), subject to any obligation to retire by rotation in accordance with the Company s Constitution. 13. Induction of New Directors 13.1 Potential Directors are encouraged to carry out due diligence on the Company before accepting an appointment to the Board On their first appointment, Directors will have the benefit of an induction programme aimed at deepening their understanding of the Company and the Business and the environment and markets in which the Company operates. The Chairperson will oversee the design and implementation of the induction programme. As part of the programme Directors will receive a folder of essential Board and Company information and will meet key Management Directors are expected to keep themselves abreast of changes and trends in the Business and the Company s environment and markets and to keep abreast of changes and trends in the economic, political, social and legal climate generally.

11 14. Directors Remuneration 14.1 Director remuneration is paid in the form of Directors fees. Remuneration will be agreed annually by the Board, after taking advice from the Nominations and Remuneration Committee. The total fees payable are to be within the amount authorised by shareholders in General Meeting Directors will be paid a basic fee as ordinary remuneration and will be paid, as additional remuneration, an extra fee as Directors of Board committees, and an extra fee for any special service as a Director. The Chairperson will be paid a level of fees appropriate to the office The year for the calculation of Directors fees and Committee fees shall be from 1 st May to 30 th April. 15. Shareholdings by Directors in the Company 15.1 Directors are encouraged to hold shares in the Company, recognizing that this has the capacity, in many cases, to increase the focus of Directors on Company performance and share value and therefore be in the interests of all shareholders When buying or selling shares Directors must strictly observe the provisions of the Company s Constitution, the Company s own internal rules and all relevant legislative or regulatory procedures. 16. Provision of Business or Professional Services by Directors 16.1 Because a conflict of interest (actual or perceived) may be created, Directors should not, generally, provide business or professional services to the Company Notwithstanding the general rule, the Company is at liberty to: a) for the purpose of a special assignment, engage the services of any Director having special expertise in the particular field; or b) engage the services of another member of a Director s organization; as long as the terms of engagement are competitive, are clearly recorded and all legal requirements for disclosure of the engagement are properly observed. 17. Other Board Appointments 17.1 Any Director is, while holding office, at liberty to accept other Board appointments so long as the appointment is not in conflict with the Company s business and does not detrimentally affect the Director s performance as a Director. All other appointments must first be discussed with the Chairperson before being accepted.

12 18. Independent Professional Advice 18.1 Any Director is entitled to obtain independent professional advice relating to the affairs of the Company or to his or her other responsibilities as a Director If a Director considers such advice is necessary the Director shall first discuss it with the Chairperson and, having done so, shall be free to proceed. The Chairperson may direct that any advice obtained will be made available to the other Directors Subject to the prior approval of the Chairperson, the cost of the advice will be reimbursed by the Company but the Director will ensure, so far as is practicable, that the cost is reasonable. 19. Board and Director Evaluations 19.1 The Board will periodically evaluate its own performance, and its own processes and procedures to ensure that they are not unduly complex and assist the Board in effectively fulfilling its role and meeting its duties. Ideally this will be carried out with the assistance of an independent, suitably experienced, third party Individual Directors may undertake a peer and self assessment based on a methodology agreed by the Board. The responses will be collected and collated by a suitably experienced independent person or the Chairperson who then discusses the results with each Director. The Chairperson may also undertake a self and peer assessment, the results of which will be discussed with the rest of the Board. 20. Indemnities and Insurance 20.1 Subject to the Company s Constitution the Company will provide Directors with, and will pay the premiums for, indemnity and insurance cover while acting in their capacities as Directors, to the fullest extent permitted by New Zealand legislation. 21. The Secretary 21.1 The appointment of the Secretary is made on the recommendation of the Chief Executive and must be approved by the Board The Secretary is responsible for ensuring that Board procedures are followed, that the applicable rules and regulations for the conduct of the affairs of the Board are complied with and for all matters associated with the maintenance of the Board or otherwise required for its efficient operation All Directors, particularly the Chairperson, have access to the advice and services of the Secretary for the purposes of the Board s affairs and the Business The Secretary will be responsible for recording the minutes of meetings and distributing these and agendas to Directors in a timely manner.

13 22. Board-Management Relationship 22.1 Position of Chief Executive a) The Chief Executive will be the primary point of accountability and link between the Board and operational management functions, b) All Board authority conferred on Management is delegated through the Chief Executive so that the authority and accountability of Management is considered to be the authority and accountability of the Chief Executive so far as the Board is concerned, c) The Board will agree with the Chief Executive on achieving specific results directed towards the Company s goals. This will usually take the form of an annual performance contract under which the Chief Executive is authorized to make any decision and take any action directed at achieving the Company s goals within the Management Limitations as set out in clause 22.3, d) The Board will systematically and rigorously monitor the Chief Executive s performance against the criteria established in the performance contract, the Company s goals and the provisions of the Management Limitations, e) Between Board meetings the Chairperson will maintain an informal link between the Board and the Chief Executive. He or she should be kept informed by the Chief Executive on all important matters, and is available to the Chief Executive to provide counsel and advice where appropriate. The Chairperson, however, will not use this link to personally manage the Chief Executive and will not impede the flow of information to the Board necessary for sound governance, f) Only decisions of the Board acting as a body are binding on the Chief Executive. Decisions or instructions of individual Directors, officers or committees should not be given to the Chief Executive and are not binding in any event except in those instances where specific authorisation is given by the Board, 22.2 Accountability of Chief Executive to Board a) The Chief Executive is accountable to the Board for the achievement of the Company s goals and for the observance of the Management Limitations. b) At each of its normal meetings the Board should expect to receive from or through the Chief Executive: The operational and other reports and proposals; and Such assurances as the Board considers necessary to confirm that the Chief Executive is not acting outside of delegated authority. Please refer to clause 22.3 for restrictions to delegated authority and other limitations imposed upon Management.

14 22.3 Management Limitations a) The Chief Executive must not act beyond specific authorities delegated to him or her by the Board, b) The Chief Executive shall not cause or permit any practice, activity, decision or Company circumstance that is unlawful, unethical or contrary to commonly accepted good business practice or professional ethics or generally accepted accounting principles, c) When allocating the capital and resources of the Company within delegated authority the Chief Executive shall not fail to adhere to the Company goals, d) The Chief Executive shall not cause or permit any action or decision without taking into account the health, safety, environmental and political consequences and their effect on long-term shareholder value, e) The Chief Executive shall not cause or permit any financial activity or conditions that are likely to result in harm to the Company or cause financial embarrassment, f) The Chief Executive shall not allow Company assets to be inadequately maintained and protected or unnecessarily placed at risk. In particular, the Company must be operated with a comprehensive system of internal control, and assets or funds must not be received, processed or disbursed without controls that, as a minimum, are sufficient to meet standards acceptable to the Company s external auditors. In managing the risks of the Company, the Chief Executive is expected to not cause or permit anyone to substitute their own risk preferences for those of the shareholders as a whole (for example, as expressed through a Board approved risk management plan), g) The Chief Executive shall not allow senior management to trade in Company shares under a less stringent code of integrity than the Board has adopted for itself, h) The Chief Executive shall not allow the Board to be uninformed or unsupported in its work. In particular the Chief Executive shall not allow the Board to be unaware of relevant trends, compliance with continuous reporting requirements, anticipated adverse media coverage, threatened or pending lawsuits, backgrounds of all key management personnel, significant issues with major business partners and material external and internal changes, particularly the assumptions on which the Board s policies and plan have been established, i) The Chief Executive s relationship with shareholders shall neither violate the highest standards of transparency nor impede the Board s role as shareholder representative. j) The Chief Executive shall not permit employees and other parties working for the Company to be subjected to treatment or conditions that are undignified, inequitable, unfair or unsafe Delegation of Responsibilities to Management a) The Board delegates management of the day-to-day affairs and management responsibilities of the Company to the Chief Executive and the senior executives to deliver the strategic direction and goals determined by the Board. This delegation includes: Operating the Business within the parameters set by the Board from time to time and, where a proposed transaction, commitment or arrangement exceeds these parameters, referring the matter to the Board for its consideration and approval,

15 Developing business plans, budgets and company strategies for the Board s consideration and, to the extent that they are approved by the Board, implementing these plans, budgets and strategies, Identifying and managing business and health, safety and environmental risks, and if those risks could materially affect the Company or its business, formulating strategies to manage those risks, Managing the Company s current financial and other reporting mechanisms to ensure that they are functioning effectively to capture all relevant material information on a timely basis, Implementing the Company s internal controls, policies and procedures and monitoring these controls, policies and procedures and ensuring that they are appropriate and effective, and Managing the Company s people assets 23. Review of the Charter The Board will review this charter annually and will post a copy on the Company s website. Approval of Charter The signature below signifies approval of this Charter by the Board of Directors. Signature: Date: 15 th May 2014 Chairperson of the Board of Directors