PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Board of Directors
The Board is the principal governing body of Angas. Its role is to safeguard the interests of Angas and foster the creation of value for shareholders that is enduring. In doing so, the Board will have regard to the realistic interests of employees, fund investors, suppliers and other significant shareholders.
The principal duties of directors at law are:-
- To act in good faith and in the best interests of Angas
- To avoid conflicts of interest
- To not misuse the position of director
- To act with care and diligence
- To ensure that the financial records of Angas are properly maintained and approved
- To prevent insolvent trading
All directors are appointed subject to the provisions of the Constitution of Angas and the provisions of the Corporations Act 2001 (Cth). From its establishment, the Board comprised executives who were owners of the company’s shares. The first independent director was appointed in 2013. In 2019, the share register changed significantly leading to the dilution of executive shareholdings and an increase in independent directors.
The Board is responsible for the overall governance of Angas. The Board has adopted a formal Charter detailing its functions and responsibilities, which it reviews periodically. Matters specifically reserved to the Board are set out in its Charter.
The Board has overall control and management of Angas. In particular, the Board is responsible for the strategy of Angas and approving the appointment and remuneration of the CEO, the Company Secretary, the Chief Financial Officer and other senior executives who report directly to the CEO. The Board has delegated a range of its powers, duties and responsibilities to its committees and senior management. The Board aims to review each delegation at least every two years.
Each Board meeting agenda includes statutory matters, governance and management reports, which include management of strategic risks, strategic projects and operational items. The CEO is not a member of the board. The CEO provides a written report to each board meeting and attend the meetings in order to deliver the report. The CEO and other managers attend Board meetings at its discretion.
The Board and each Board Committee review its performance regularly. A peer and self-assessment review is undertaken periodically by all Directors and Board Committee members. All directors undergo Australian police checks before their appointment.
Management of Angas’s operations and the implementation of Angas’s strategy and policy are initiatives are the responsibility of the Executive Chairman, CEO and management. Monthly performance and status reports are prepared and signed by management.
In addition to chairing Shareholder and Board meetings, representing Angas and other duties concomitant with that position, the principle role of the Executive Chairman is to guide the strategic direction and development of Angas.
Chief Executive Officer
The CEO is appointed by the Board and operates subordinate to the Executive Chairman. The CEO is responsible for the management of Angas in accordance with the approved strategic direction of Angas, its policies and delegated authority framework. The CEO work with the Executive Chairman to ensure that the Board is provided with the relevant strategic options, policy and financial issues on which to deliberate, and with the necessary administrative support to enable the Board to work effectively.
All directors have access to the Company Secretary who is appointed by the Board. The Company Secretary is accountable to the Board, through the Executive Chairman on governance matters.
The Executive Chairman, CEO, the Company Secretary and all management and staff have written position descriptions. All senior executives have written employment agreements with Angas that set out the terms of their appointment and incorporate their position description. All staff and management including the senior executives of Angas are subject to periodic performance planning and reviews.
PRINCIPLE 2: STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE
The Constitution of Angas provides that the Board may consist of at least three (3) directors. There is no distinction in the Constitution between executive and non-executive directors. There is no requirement for the Board to include any independent directors. As a small to medium sized enterprise, Angas has always had at least one executive director since it was established. All Directors are required to disclose related party transactions on an ongoing basis in accordance with Angas’s Conflict of Interest policy.
Skills, Behaviours, Experience and Capabilities of Directors
Directors are selected on the basis of their skills, behaviours, experience and other relevant capabilities with due regard to the mix of skills, competencies and attributes considered to be appropriate by the Board. As a Funds Manager which raises money from the public for investment in secured commercial property loans, Angas seeks directors with expertise in law, banking and finance, commercial property and funds management. The Board will adopt an organisational Inclusion and Diversity Policy, a copy of which will then be available on the website.
Each Director should have a working knowledge of the major activities of Angas including:
- The funds management businesses.
- Risk assessment identification and management process.
- Delegation of authority by the Board to Management.
- Economic and business issues.
- Internal control systems.
- Long term strategy and planning.
- Short and long term financing arrangements.
As business is required to be addressed between scheduled meetings, non-executive directors are required to stay abreast of Board issues by electronic means of email and text. If a significant issue has been identified by the Executive Chairman, then daily monitoring of electronic devices by non-executive directors is required.
General activities of the Board
The Board’s general activities include:
- Strategy formulation;
- Policy making;
- Budgeting and planning;
- Monitoring and supervision of management; and
- Providing accountability to shareholders.
Committees which report to the Board
Angas has five committees which meet regularly but only two of them report formally to the Board. Each committee which reports to the Board has a charter outlining its role and composition. The charters are reviewed periodically to ensure that the role and responsibilities of each committee are consistent with Angas’s strategic and operational objectives.
Armco is a committee established by the Board to assist in the effective discharge of its corporate governance and oversight responsibilities. Pursuant to its Charter, ARMCO reviews and reports to the Board on the following matters:
- Financial integrity;
- Regulatory reporting;
- Legal compliance, AFS Licence requirements;
- Management of risk; and
- Audit effectiveness.
The members of ARMCO are:
- Head of Compliance
- Executive Chairman
An independent member may be nominated by the Board. A quorum is two members.
The Compliance Officer is the Committee Secretary.
The principal role of ARMCO is to:
- Review the internal controls, policies, procedures and compliance systems of Angas;
- Review the financial information provided periodically and annually by Angas;
- Oversee financial and regulatory reporting to shareholders and ASIC;
- Oversee compliance with ASIC Regulatory Guidance. In the event that the Company chooses to list on an Exchange, oversee compliance with the listing conditions and ongoing disclosure requirements required by the Exchange;
- Review compliance with anti-money laundering/counter-terrorism financing program;
- Establish regulatory, reporting and compliance protocols for new business acquisitions and new business products including managed investment schemes;
- Monitor the effectiveness of internal financial controls and of the external auditors;
- Review the fundraising operations of Angas;
- Review adherence to the terms of AFS Licence No. 232479 issued to Angas;
- Review whether Angas has effective risk management systems in place to manage business, financial and operational risk; and
- Report to the Board on its work and make recommendations to the Board as appropriate.
Due Diligence Committee
The Board of Angas has established a Due Diligence Committee to review, assess and certify to it on the bona fides of legally binding documents issued in Angas’ name. The most frequent activity of the DDC is to review Product Disclosure Statements and Supplementary Product Disclosure Statements to be issued by Angas. Other documents which require review by the DDC could include offer documents such as prospectuses composed in relation to the issuance of shares by Angas.
DDC usually comprises a member of the Board as the internal “owner” of the product concerned, an officer representing the Compliance section, a finance officer and either the Company Secretary or an officer with appropriate background in law.
At present, the Angas DDC comprises:
- Director who also acts as chairman of the Committee
- Head of Compliance
- Chief Financial Officer
- Company Secretary
The role of the DDC is to review documents and certify to the Board of Angas that they are suitable for issuance. In order to reach the ability to make their certification, the DDC must ensure that the document being reviewed does not contain anything which is false, misleading or deceptive.
Each DDC member is responsible for confirming the accuracy of that the part of the document which relates to his or her particular executive function and expertise. Each DDC member must reach conclusions based on information which is known to him or her or could reasonably be found out by enquiry. In addition, it is expected that all members of the DDC will be familiar with the document as a whole and bring an “ordinary” reader’s perspective to content. Members are also expected to be familiar with appropriate provisions of the Law and Regulatory Guides as they affect the document to be reviewed.
The role of the Credit Committee is to approve or refuse loan applications and oversee the management of any settled loan including those that fall into default and those which require enforcement and recovery action. The Credit Committee does not report to the Board. All portfolio reporting is provided by the CEO.
The Credit Committee has the discretion to approve all transactions within the limits of the Angas lending Policy. Approval of any transaction requires the support of any two members of the Credit Committee and should be reported to its next meeting. The Credit Committee comprises any of:
- Executive Chairman
- Head of Credit
- Any Board appointed delegate
In the implementation of the Lending Policy, the Credit Committee will aim to give effect to the following broad principles:
- Angas must conduct its lending business with integrity.
- Angas must comply with the obligations of its AFS Licence.
- Over and above the regulatory requirements, lending must be done with due skill, care and diligence.
- Conflicts of interest must be managed fairly and in accordance with the Conflict of Interest Policy.
- Adequate protection for investors’ funds must be in place noting that all property lending carries a degree of risk.
In all cases the Credit Committee will bear in mind that the typical Angas borrower profile is one where their financial capacity is often directly linked to the asset being purchased or refinanced and the ability to leverage the value of the property through redevelopment or restructuring. As a result, traditional servicing analysis utilising recurrent income streams is often unsuitable in reaching a credit decision.
Casual defaults may arise during a loan term. Most commonly, this will be failure to pay interest when due but the default might also be failure to comply with a negotiated term of significance to a particular transaction. Should Angas resolve to carry a loan out of order with the approval of the Credit Committee, any agreement to do so shall be communicated in writing by Angas to the borrower with an express reservation of rights. When the Credit Committee considers that security enforcement or other recovery action is required then external service providers are used.
The Executive Chairman convenes a meeting of senior management every two to three weeks. There is no formal Charter. An updated Task List of matters completed or under consideration by management is reported monthly to the Board.
Angas has appointed a Compliance Committee comprising a minimum of three (3) members with a majority being independent. At present, the members of the Compliance Committee are:
- Kimley Lyons, Head of Compliance
- Nicholas Corbett, Independent Member
- Paul Teisseire, Independent Member
- Michael Britton, Independent Member
In respect of each Registered Management Investment Scheme of which Angas is the Responsible Entity, the Compliance Committee’s role is to monitor the extent to which Angas complies with the Compliance Plan, PDS, any subsequent PDS or disclosure document, the law and the Constitution of the Scheme.
The Constitution is the primary document governing the relationship between Investors and Angas as the Responsible Entity in any scheme. The Constitution contains extensive provision about the legal obligations of the parties and rights and powers of each. The Constitution can be amended by Angas where the change does not adversely affect the rights of Investors. Otherwise, a special resolution must be passed by Investors at a properly called meeting.
The Constitution deals with a number of important issues, including:
- the powers of Angas as the Responsible Entity;
- liability of Investors;
- retirement and removal of the Responsible Entity;
- the manner in which the Constitution may be varied;
The Compliance Plan outlines the principles and procedures Angas will follow to ensure it complies with its AFSL, the Corporations Act, the Scheme Constitution and ASIC regulations.
The Compliance Plan deals with a ride range of issues including, but not limited to:
- the establishment of a Compliance Committee;
- the appointment of an Auditor for the Scheme to audit the Scheme on behalf of Investors;
- the appointment of an Auditor for the Compliance Plan; and
- having a documented dispute resolution process in place, including being a member of an external
- dispute resolution service.
The Compliance Committee does not report to the Board.
No Direct Supervision of Staff or Management
Directors who are not executives have no right, role or responsibility to give personal instructions to individual staff members. Whilst maintaining affable personal relations with staff, Directors should direct any specific requests for information to the CEO.
Director Induction and Education
New Directors receive information outlining their duties and responsibilities. New directors attend a formal induction meeting with senior executives including the Executive Chairman and CEO. Directors also undertake the staff compliance training program to ensure a high-level understanding of the organisation’s key legal and compliance obligations.
Appointment of Directors
The number of Directors must be not less than three (3) nor more than eight (8). Directors are usually appointed by the Board but such appointment must be confirmed by the shareholders at the next General Meeting. Appointments are for three (3) years. Appointments are to be staggered so that at least one director should be elected or up for re-election at every Annual General Meeting. Re-election should be a rigorous process and should only be granted where the candidate has strongly performed, and weight should be given to the overall composition of the Board with emphasis on balancing the need for continuity and corporate knowledge with the need for continual refreshment of talent and thinking.
All Board meetings will be conducted in accordance with Constitution and the Corporations Act. The Board will meet formally at least ten times per annum and will also meet whenever necessary to deal with urgent matters which might arise between scheduled meetings. Directors have a duty to question and to raise any issues of concern to him or her. At Board meetings, matters are to be debated openly and constructively amongst the Directors.
Directors should be committed to collective decision making and shall endeavour to arrive at a consensus decision on all matters requiring Board approval. Where a consensus decision is unable to be made, the decision of the Board shall be determined by a majority of votes of the Directors present at the meeting and voting. Subject to the Corporations Act, each Director has one vote. In the case of an equality of votes, the Chairman has a casting vote in addition to his or her deliberative vote.
Directors must keep Board discussions and resolutions confidential, except where they are required by law to be disclosed. Directors are expected to attend, to be adequately prepared for, and to participate in each Board meeting. The Board may conduct meetings by telephone or videoconference.
PRINCIPLE 3: INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY
Requirement of Honesty and Integrity
Directors, management and staff of Angas are required to act in accordance with the highest standards of honesty and integrity. The Company’s Customer Service policy is required to be followed.
Code of Conduct
The Board has adopted a Charter which incorporates a Code of Conduct.
Inclusion and Diversity
Angas has always welcomed diversity across the company with regards to age, gender, ethnicity and the cultural background of its directors, management and staff noting at all times that such factors are subordinate to the skills, qualifications, character and personal characteristics of staff members. For further information relating to diversity, refer to the Organisational Inclusion and Diversity Policy once adopted.
Directors Dealing in Company Securities
Directors and their related identities are forbidden from creating a false market in the Company’s Securities. Furthermore, directors may not pledge their securities to support borrowings without the prior consent of the Board.
PRINCIPLE 4: SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS
Role of ARMCO in relation to Financial Reporting
ARMCO monitors the integrity of the Company’s financial and non-financial reporting. Before the Full Year and any Half Year financial statements are approved, management provides a representation letter to both the Board and the external auditor expressing an opinion as to whether the financial reports give a true and fair view in accordance with the Australian Accounting Standards and the Corporations Act.
ARMCO meets the auditor each reporting period and addresses the relevant financial statements prepared under the supervision of the CEO, asks questions of the external auditor and forms its own view before making a recommendation to the Board as the whether the financial statements should be adopted.
The Board makes recommendations to shareholders for the appointment and removal of the external auditor and to make any appointment itself on an interim basis should a vacancy arise.
External auditors Perks were appointed as external auditor in 2019. The performance of the external auditor is reviewed annually by the Board with advice from ARMCO and can be the subject of internal performance review with the consent of Angas. The external auditor provides an annual declaration of its independence to ARMCO. The auditor does not generally attend the Annual General Meeting.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
The Board has committed to making timely and balanced disclosure and communication to provide transparency to shareholders and investors in the Managed Investment Scheme that it manages. Matters for disclosure are those that a reasonable person would consider might have a material effect on the value of his or her securities or investments.
The Board makes disclosure as follows:-
- all material information is included on the website;
- investors are able to find material information easily and determine its significance for them;
- any new material information is included on the website as soon as practicable; and
- information is kept on the website for as long as it is relevant and appropriate records are kept.
The Board is satisfied that most of its investors are likely to look for information of this kind on the Company’s website. The Board notifies new investors that it makes disclosure in this way.
PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITYHOLDERS
Angas provides its securityholders with timely access to information about its activities and changes in legislation that may affect its licensed activities as a fund manager. Its principal communication channels with securityholders are the Financial Statements, Chairman’s Report to the Annual General Meeting and website.
The Notice of Annual General Meeting is provided to all members via their preferred method of communication. This process is managed externally by Computershare. Shareholders may elect to receive information from, and send information to Angas electronically. In addition, shareholders are able to contact Investor Relations staff in their local office.
Information about Angas, its governance principles and the Board and some committees is available on the Angas website.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
Risk management is a key aspect of the governance arrangements of Angas. The object of the risk management processes and structures is to maximise opportunities to achieve its objectives and goals without exposing the company to unnecessary risk. The Board has overall responsibility for the oversight of risk management including determining the risk appetite for Angas, and the approval of the risk management framework and related policies.
The Board has established ARMCO to assist in providing oversight of the approved risk management framework and related policies, to ensure risks are being actively managed within the Company’s risk appetite and to ensure that compliance obligations are met.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Formerly, each Director was entitled to an annual review of remuneration. This review would require an independent assessment from an industry expert who would determine whether the Director’s remuneration was at a market level for their particular role. The Board would then review the independent expert’s assessment and confirm whether it accepted the recommended rate. This was solely at the Board’s discretion and the relevant Director had to abstain from voting with regard to his or her particular recommendation.
The last independent industry expert report for the Directors was obtained early in the 2015 financial year. Since then, the remuneration of Directors has been reduced significantly. The Directors are now paid Directors’ fees of $3,500 per month.
The Executive Chairman and other key management personnel are paid a commercial salary in line with the current market conditions which is designed to attract and retain high calibre executives and align their interests with the creation of the value for the Company. Remuneration for management has not been linked to performance, with no automatic annual remuneration increase made.
There are no cash incentives or bonus payments available for management.
Employee share option plan
There are no share option plans.
Other share based compensation
There is no other share based compensation.
Key terms of employment contracts
The CEO, Company Secretary and Chief Financial Offer are employed under a standard salary based employment contract. Under the terms of the contract either party can terminate the contract with 4 weeks written notice.
The employment contract sets each key employee’s salary for a fixed annual amount plus statutory superannuation. Annual salary reviews are not mandatory.
Loans to key management personnel prohibited
Angas shall not provide any key management personnel with any loans.
PRINCIPLE 9: PROTECTION FOR DIRECTORS ACTING PROPERLY
Each Director is entitled to be indemnified out of the funds of Angas (to the extent that the Director is not otherwise indemnified) against a liability to another person (other than Angas or a related body-corporate) incurred by the Director as a director of Angas, unless the liability:-
- arises out of conduct involving lack of good faith
- arises from the commission of a criminal offence
- comprises a pecuniary penalty or compensation order under the Corporations Act
- comprises a pecuniary penalty for a contravention of the restrictive practice provisions contained in the Competition and Consumer Act
- in circumstances where the provision of such an indemnity would be contrary to the provisions of the Corporations Act, the Competition and Consumer Act or any other law in force from time to time.
Costs and Expenses Incurred by Directors
Angas shall indemnify each Director in respect of a liability for costs and expenses incurred by the Director as a director of Angas in defending proceedings, whether civil or criminal, unless the director is found in those proceedings to have acted other than in good faith or to have committed a criminal offence or is found to be liable under the Competition and Consumer Act and in connection with an application in relation to such proceedings, in which the Court grants relief to the Director under the Corporations Act.
Protection to Continue Post Retirement
The indemnity may be enforced by the Director whether or not he or she has incurred expense or made any payment at that date. It shall be irrevocable and will continue notwithstanding any claim made by the Director under that clause. The indemnity continues in full force and effect in relation to any act omission, matter or event occurring while the Director is a director of Angas and not withstanding that the Director has ceased to be a director of Angas before any claim is made under the indemnity.
D & O Policy
Angas will use its best endeavours to ensure that the Director is insured under a directors’ and officers’ liability insurance policy (“D&O Policy”) against liability incurred by the Director as a director of Angas or any of its subsidiaries including all liability incurred as a result of appointment or nomination by Angas or any of its subsidiaries as a trustee or as an officer of another corporation. The D&O Policy shall be issued by a reputable and solvent underwriter of policies of that kind.
Cover shall extend in respect of claims made during the period in which the Director remains a director of Angas or any of its subsidiaries, or holds office as trustee or as an officer of another corporation as a result of appointment or nomination by Angas or any of its subsidiaries, and for the period of seven years after the Director ceases to be a director of Angas and any of its subsidiaries and to hold any such office.
Angas shall pay the premiums in respect of the D&O Policy except to the extent prohibited by the Corporations Act. Angas must ensure that a D&O Policy remains in force for a long as is necessary to ensure that the Director is a beneficiary of the D&O Policy for the period specified. Angas provides each Director with a copy of the D&O Policy on each occasion that it is renewed. This obligation continues for the period of seven years after the retirement of the Director should the Director having retired requests a copy of the D&O Policy.
Access to Board Papers
Angas shall ensure that a complete file of all Board Papers is maintained by Angas provided that this obligation does not extend to any document which has been a Board Paper for more than seven years unless there are reasonable grounds to believe that the document may be relevant to any present or contemplated litigation.
Angas shall promptly upon request make available to each Director for inspection and copying (at no cost to the Director) such of the Board Papers or otherwise held as relate to the Director’s period in office as a director of Angas, whether or not the Director still holds such office. If Angas reasonably believes that Angas (but not the Director) is entitled to legal professional privilege in respect of a particular Board Paper, Angas shall be obliged to make that Board Paper available only if there is a reasonable prospect that the Director will be a party to or required to give evidence in some legal proceeding, or involved in some official enquiry or investigation, which relates to an act or omission of the Director as a director of Angas).
Access to Independent Professional Advice
If, in furtherance of the Director’s duties to Angas, the Director obtains independent professional advice, Angas will meet the reasonable costs of such advice provided that the liability for those costs of such advice provided that the liability for those costs is a liability in respect of which the Director is entitled to be indemnified and the Executive Chairman gave prior approval to the obtaining of the advice. If the Executive Chairman refuses to give such approval, the Board of Angas must give prior approval to the obtaining of the advice.
- “Angas” means Angas Securities Limited
- “ARMCO” means the Audit, Risk Management and Compliance Committee
- “Board” means the Board of Directors of Angas
- “Board Papers” means all existing and future written communications provided by Angas to the Directors including monthly Board papers, submissions, minutes, letters, memoranda, board sub-committee papers and copies of other documents made available to the Directors or which are relevant to or support any decisions or actions of the board, a sub-committee of the board or the Director.
- “CEO” means Chief Executive Officer
- “Competition and Consumer Act” means the Competition and Consumer Act 2010 as from time to time in force or any statute consolidating or replacing the same as from time to time in force.
- “Corporations Act” means the Corporations Act 2001 as from time to time in force or any stature consolidating or replacing that Act, as from time to time in force; and
- “DDC” means Due Diligence Committee
- “D & O” Policy means a directors’ and officers’ liability insurance policy
- “PDS” means Product Disclosure Statement