Corporate Governance

Adelaide Managed Funds Limited Corporate Governance Statement

Introduction

The Company is committed to maintaining high standards of corporate governance. The Company's Board will continue to review and improve the Company's corporate governance practices, and in doing so will monitor developments in this field. Our website will be updated from time to time as the relevant practices change.

The corporate governance practices described in this statement apply to the Company as responsible entity of various managed investment schemes ("schemes"). Specific details of the schemes may be viewed at www.adelaidemanagedfunds.com.au

The corporate governance practices have been developed having regard to the Corporate Governance Principles and Recommendations published by the ASX Corporate Governance Council. Those recommendations may be viewed at http://www.asx.com.au/governance/corporate-governance.htm

The Roles and Responsibilities of the Board and Management*

The Board is responsible for the overall corporate governance of the Company. Although responsibility for the operations of the Company is delegated by the Board to the Group Managing Director, the Board remains responsible for:

  • approving Management's recommended strategy for the schemes and monitoring achievement of objectives;
  • approving budgets and monitoring financial performance of the schemes;
  • appointing and removing the Chief Executive Officer;
  • monitoring the performance of key service providers to the schemes against their contractual obligations;
  • approving the Executive structure of the Company;
  • monitoring the exercise of powers delegated to management;
  • approving expenditure beyond authority limits delegated to management;
  • approving and monitoring the investments of the schemes exercised through delegated authority of the Board Investment Committee;
  • monitoring systems of internal control and the management of risk exercised through delegated authority of the Board Audit and Risk Management Committee;
  • ensuring that transactions with related parties are undertaken on terms that would be reasonable had the parties been at arm's length. This responsibility is exercised through delegated authority of the Board Related Party Transactions Committee; and
  • appointing the Company's external and internal audit service providers.
  • ensuring appropriate resources are available to management.

* References to management refer to the senior management team, being those who may materially influence the integrity, strategy and operation of the schemes and their financial performance.

The above division of responsibilities has been adopted by the Board.

The governance of the schemes includes a variety of Board policies, many of which are referred to in this statement. All Board policies are subject to annual review.

The Structure of the Board

Short biographies of the Directors of the Company are set out in the Board of Directors section of this site. The biographies contain details of the relevant skills, experience and expertise of each Director.

Independence

The Board applies the criteria recommended by the ASX Corporate Governance Council to assess any relationship which may affect the ability of a Director to exercise independent judgement. A majority of the Board is made up of non-Executive Directors. Two of the Directors are independent Directors.

The Board undertakes a large amount of its governance responsibilities through Board Committees. These Committees comprise a majority of independent directors. Refer below for further information about the Committees.

The Role of the Chair

The Chair is selected by the Board from the non-Executive Directors. Accordingly the same person does not exercise the roles of Chief Executive Officer and Chair.

The role of the Chair includes:

  • leading the Board;
  • ensuring the Board receives such information as Directors may require to discharge their duties;
  • representing the Board in public;
  • conducting Board meetings; and
  • reviewing the performance of the Board and individual Directors.

Retirement and Re-election of Directors

There is no obligation under the Company's Constitution that a Director must retire from office after a certain period of time unless:

  • the Director has been appointed for a nominated term; or
  • the Holding Company, being Bendigo and Adelaide Bank Limited, gives written notice to the Company that a Director must be removed from office.

Selection and Appointment of New Directors

The nomination and appointment of Directors will take place in accordance with the Company's Constitution and the Corporations Act. The Constitution allows the Holding Company, Bendigo and Adelaide Bank Limited, to appoint new Directors.

The Board's policy for the nomination and appointment of Directors is to ensure that the Board and its Committees have an appropriate mix of expertise and experience given the nature of the business of the Company and schemes and the markets in which they operate. The Board reviews its composition and that of its Committees from time to time in order to ensure the requirements of its policy are met. This process may be undertaken with the support and assistance of the Governance and HR Committee of the Company's parent, Bendigo and Adelaide Bank Limited.

When a vacancy exists or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board will seek and consider appropriate candidates for appointment.

Board Meetings

The Board's business is largely conducted by a program of monthly meetings, together with such additional meetings as may be required from time to time.

Board Committee Meetings, Membership and Functions

A substantial part of the Board's business is conducted by Committees of the Board. Each of the Board Committees has a majority of independent members. The independence of Committee members is regularly assessed.

The Board currently has three standing Board Committees, with the role of each being described as follows:

  • Audit and Risk Management Committee

    Audit
    The Audit and Risk Management Committee shall provide assistance to the Board in fulfilling its corporate governance and oversight responsibilities in relation to financial reporting, internal control structure, risk management systems and the internal and external audit functions. The Committee operates under a Charter.

    Risk
    The Audit and Risk Management Committee shall establish and review policies regarding operational risks and compliance. In doing so the Committee shall provide assistance to the Board in fulfilling the risk management component of its corporate governance responsibilities. The Company's ability to identify, measure, monitor and report about risk and compliance is fundamental to its performance.

    In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books and records of the Company and schemes. The members of the Committee have free and unfettered access to senior management, the internal auditor, compliance plan auditor, the head of all risk management functions and external auditor at all times, and vice versa. Each of the internal auditor, external auditor and compliance plan auditor may raise matters with the Committee without reference to other Directors or senior management.

  • Investment Committee

    The Investment Committee shall provide assistance to the Board in fulfilling the investment strategy and performance component of its corporate governance responsibilities.

    In discharging its role, the Committee is responsible for establishing and maintaining investment strategy and policies, reviewing proposed investments, monitoring investment performance and establishing and maintaining policies in relation to credit, liquidity and market risks. The Committee operates under a Charter.

  • Related Party Transactions Committee

    The Related Party Transactions Committee shall provide assistance to the Board in fulfilling its corporate governance responsibilities in relation to related party transactions undertaken by the Company in its role as responsible entity of the schemes.

    In discharging its role, the Committee is responsible for establishing and maintaining policies in respect of related party transactions and for reviewing proposed related party transactions to ensure that they are undertaken as allowed under law. The Committee operates under a Charter.

Any of the Committees may engage independent advisors as it determines necessary to assist it in carrying out its duties.

The minutes of each Committee meeting are circulated to all Directors and the agenda and papers for each meeting are available to all Directors. The Chair of each Committee provides a verbal report about the business of each Committee meeting to the next meeting of the Board.

Executives and other senior managers are required to attend and present at Board and Committee meetings and to answer questions from Directors. The Chair of each Committee also meets separately with relevant Executives, particularly in preparation for Committee meetings.

Ethical and Responsible Decision-making

The Board expects the Company through its Directors, senior management and other employees to act in accordance with the Company's legal obligations, to act ethically and to consider the reasonable expectations of stakeholders.

The Board has adopted a Code of Conduct for Directors and Executives. The Code reflects the Company's attitude to the behaviour expected of its senior people and establishes the standards.

The Board has a procedure to require Directors to disclose to the Board any interest they have which relate to the affairs of a scheme.

In providing services to the schemes, each Executive, manager and employee is required to act in accordance with the standards set out in a Code of Conduct for all employees. The requirement to comply with these ethical standards is communicated to these parties. The Code deals with standards of conduct for the Company's relationship with its unitholders, staff and the community at large.

The Code of Conduct for all employees refers to encouraging employee loyalty and commitment and to standards of behaviour which will ensure:

  • the business of the schemes is conducted in a way to comply with relevant laws and ethical standards;
  • employees behave as professionals; and
  • employees do not disclose (without appropriate consent) confidential information.

In relation to the community at large, the Code refers to the Company's obligation to contribute to the well being of the community to demonstrate social responsibility, to be honest in business dealings, to exercise prudent financial management and to engage in activities which are not detrimental to the environment.

Unit Ownership and Trading Policy

The Board has adopted an Insider Trading policy in relation to trading in securities, by Directors and staff. The key features of the policy, aimed at ensuring appropriate practice by Directors and staff, are:

  • a Director or employee must not subscribe for or trade in units in a scheme when to do so would breach the law concerning insider trading;
  • subject to that overriding requirement, Executives and Directors may subscribe or trade in the period of six weeks commencing the business day after the public release of interim or full year financial results for a listed scheme, or after first obtaining appropriate authority, in the case of Executives that authority is required from the Group Managing Director and in the case of Directors, after first obtaining the authority of the Board, or at any time in securities issued by the Company that are unlisted;
  • all trades by an Executive or Director are to be notified to the Company Secretary and, in the case of Directors, are recorded in the minutes of the next Board meeting;
  • the Company Secretary is required to provide Directors and Executives with up to date guidelines in relation to the law on insider trading; and
  • the policy extends to options and financial products created over or in respect of such units in the schemes.

Each dealing by a Director in units in a listed scheme must be reported to the Company's Board and notified by the Company to ASX, whilst each dealing by an Executive or Director must be reported to the Company Secretary.

Access to Information and Independent Advice

The Board has adopted a procedure whereby Directors are entitled to take independent professional advice at the expense of the Company. In addition, the Board has full access to Company records.

Integrity in Financial Reporting

The Company is committed to integrity and quality in its financial reporting.

As mentioned above, the Board has established an Audit and Risk Management Committee with one of its roles being review of the integrity of the schemes' financial reporting. The Committee reviews the financial statements of the schemes. The Committee consists of three members a majority of whom are independent, non-Executive Directors. The Charter of the Committee specifies a number of duties for the Committee, including:

  • to assess the appropriateness of the schemes' accounting policies and principles and disclosures and any changes to them;
  • to ensure that management has in place an effective internal control system over financial reporting;
  • to review the effectiveness of the schemes' financial reporting;
  • to discuss with management and the external auditor the financial report;
  • to assess whether the financial report represents a true and fair view of a scheme's financial position and performance and complies with regulatory requirements;
  • to review and approve the scope of the external audit plan and work program;
  • to oversee the Company's compliance with statutory requirements and professional accounting requirements; and
  • to ensure the external auditor is not engaged to provide services that may impair or appear to impair judgement or independence.

Timely and Balanced Disclosure

In recognition of the Company's obligations to make ongoing disclosures to ASX and ASIC as a responsible entity of both listed and unlisted schemes, the Company has developed a Continuous Disclosure Compliance System which consists of a Board policy and a set of procedures to be followed by Directors and Executives to ensure compliance with ASX Listing Rule and Corporations Act requirements and accountability for compliance at senior management level.

The Board policy includes a commitment to compliance with the spirit, intention, purpose and substance of the continuous disclosure obligations imposed by the Listing Rules and the Corporations Act. The Company's procedures have been adopted by the Board as part of its compliance system and all Directors and Executives are required to observe the requirements of the system.

The procedures:

  • provide definition as to the type of information which is required to be disclosed;
  • set out a process for and allocate responsibility for determining whether information is required to be disclosed;
  • provide for obtaining external advice where appropriate and allocate responsibility for final decisions about disclosure;
  • include a requirement for regular communications concerning the requirements of the Listing Rules and Corporations Act to Directors and Executives and a requirement that the issue be a standing agenda item for Executive Committee and Board meetings;
  • include a requirement for posting announcements on the Company's website;
  • include a process for managing the issue of market speculation and media comment; and
  • address the issue of the confidentiality of corporate information where appropriate.

Communications with Unitholders of Listed Scheme

The Board encourages communications between the Company and the holders of units in listed schemes. The Board acknowledges the importance of unitholders receiving accurate and timely information about such schemes. The Board's strategy to promote effective communication with unitholders consists of the following elements:

  • regular announcements are made to the market;
  • all relevant announcements made to the market and all related information (such as information provided to analysts or media during briefings) are accessible from the Company's website after they have been released to ASX; and
  • the full text of all notices of meeting and explanatory material are placed on the Company's website.
  • investor briefings are considered an effective forum in which to provide information to unitholders and such briefings will be conducted from time to time.

Risk Management

The schemes are exposed to a wide variety of risks and accordingly the Company's ability to identify, manage and report on those risks is a key component of each scheme's success. The principal risks can be described as:

  • Credit risk - the risk of loss from a counterparty defaulting in meeting its contractual obligations
  • Operational risk - the risk of loss from failed internal processes, people and systems, or from external events
  • Liquidity risk - the risk that a scheme will have insufficient funds to meet its obligations in an orderly fashion
  • Market risk - the risk that changes in market interest rates or other variables will negatively affect a scheme's earnings.

Policies

  • In setting the risk strategy of the schemes the Board adopts appropriate policies in relation to the identification, assessment, management and monitoring of the above risks. All Board policies, including those concerning risk management, are subject to annual review, thereby ensuring the same remain appropriate for the risks applicable to the schemes.
  • Executives of the Company have been allocated responsibility for the management of those risks, by implementing procedures and processes for the schemes. Whilst there are central policy units charged with responsibility for ensuring the Company has appropriate infrastructure for identification and assessment of risk, day to day risk management clearly rests with line managers.
  • The Board's Audit and Risk Management Committee and Investment Committee assist the Board in fulfilling its responsibilities in relation to risk management.
  • Relevant Executives provide detailed reporting to the Board Committees regarding risk management.
  • The Audit and Risk Management Committee Charter includes the oversight of the Company's internal control systems.
  • The Board has engaged an internal audit service provider to review internal controls. The internal audit service provider is independent of the external auditor. The internal audit service provider has full access to the records of risk and control assessments, particularly for the purpose of internal audit planning and the conduct of internal audit reviews.
  • The internal audit service provider reports to each of the Board and Management, and has full access to Management and the right to seek information and explanations about issues identified during their reviews.

Board and Management Performance

The Company recognises that the success of the schemes depends in part upon the performance of the Board and senior management team.

The Company's process for enhancing Board and Management performance includes the following elements.

  • The Company has a comprehensive induction program for new Directors and Executives. The program for Directors includes meetings with Executives and Senior Managers.
  • Through the office of the Chair, Directors are able to take independent professional advice at the Company's expense. The Company may be entitled to be reimbursed for such expenditure from the assets of the relevant scheme.
  • A performance evaluation for the Board and its members will be conducted on a periodic basis. The evaluation takes the form of a series of statements concerning the performance of the Board, its members, its committees and the Executives of the Company. Each Director is required to complete the evaluation and discuss the same individually with the Chair of the Board. The results of the evaluation are subsequently reviewed and discussed at a Board meeting. The evaluation questions are reviewed to ensure they remain current.
  • The performance of key Executives is evaluated in two ways. Each key Executive is set key performance indicators and performance is formally reviewed on an annual basis. In addition, key Executives regularly attend meetings of the Board and its Committees which enables the Board to evaluate their performance.
  • The Company has a commitment to providing continuing information to its Directors in relation to industry issues and trends, as well as to continuing development of its Executives.
  • As Executives and other staff are made available to the Company by Bendigo and Adelaide Bank Limited to provide services under agreements between the Company and Bendigo and Adelaide Bank Limited, the Board of the Company monitors the performance of Bendigo and Adelaide Bank Limited against the relevant contractual obligations.

Remuneration

Directors and Executives are not remunerated out of scheme property. Further information on amounts paid to the Company out of scheme property is disclosed in the particular Product Disclosure Statement and financial report for each scheme.

Application to Bendigo and Adelaide Bank Limited

Many services to the schemes are provided by staff of Bendigo and Adelaide Bank Limited under service agreements with the Company. References in the Company's frameworks and policies to:

  • the responsibilities of Executives, management, staff or employees; and
  • the practices of the Company in respect of Executives, management, staff or employees;

apply to these individuals when providing services in respect of the schemes notwithstanding they are also employees of Bendigo and Adelaide Bank Limited.