Principle 1 – Lay solid foundations for management and oversight

1. Lay Solid Foundations for Management and Oversight

1.1 Governance Roles to achieve the Vision

The skills, experience and expertise relevant to the position of director held by each director in office are included each year in the Company’s s Annual Report to shareholders.

The Board is accountable to the shareholders for the performance of the Company and has overall responsibility for its operations. Day to day management of the Company's affairs, and the implementation of corporate strategy and policy initiatives, has been formally delegated by the Board to the Chief Operating Officer(“CEO”). The Company Secretary is accountable to the Board, through the Chair, on all governance matters.

Key responsibilities of the Board include:

• Approving the strategic direction and related objectives of the Company, and monitoring management performance in the achievement of these objectives;

• Adopting budgets and monitoring the financial performance of the Company;

• Reviewing the performance of the CEO;

• Overseeing the establishment and maintenance of adequate internal controls and effective monitoring systems;

• Ensuring all major business risks are identified and effectively managed;

• Ensuring that the Company meets its legal and statutory obligations; and

• Having regard to the size of the Company and the nature of its operations, the full Board carries out the functions that would otherwise be delegated to a nominations committee.

1.2 Role of the Chairman

The role of the Chairman includes:

• Vision/Strategy:  Ensuring leadership of the Board in setting and reviewing the Company’s vision and strategy;

• Board meetings:  Setting the agenda with the CEO and Company Secretary, ensuring directors receive all relevant information, chairing meetings and resolving conflicts;

• Shareholder Meetings:  Chairing shareholder meetings and ensuring shareholders have an opportunity to speak on relevant matters and ensuring the attendance of the Auditor at the

• Annual General Meeting each year;

• External:  Acting as the Spokesperson, with the CEO, on Company matters;

• Managing Director:  Acting as the primary point of contact between the Board and the CEO ensuring the adequate flow of information between the two, chairing the performance of the CEO and providing mentoring;

• Board:  Reviewing Board and Committee performance, ensuring appropriate composition is maintained and that proper director induction plans are in place.


1.3 Role of the Chief Executive Officer

The role of the CEO includes:

• Vision/Strategy:  Formulating with the Board the vision and strategy of the Company.

• Management team and employees:  Providing leadership, appointing and negotiating terms of employment of senior executives (with Board approval where necessary), developing a succession plan and ensuring procedures are in place for education and training to ensure compliance with laws and policies.

• Board:  Responsibility for bringing all matters requiring review/approval to the Board, advising on changes in risk profile, providing certification of the half and full year financial statements together with the Chief Financial Officer and reporting to the Board on a monthly basis the performance of the Company.

1.4 Performance Evaluation

The Board will annually review the performance of the CEO having regard to performance measures set out at the commencement of each year. These will include financial measures, achievement of strategic objectives and other key performance indicators including compliance.  The CEO, in turn, evaluates the performance of other key executives in a similar manner and reports as appropriate to the Board on such reviews.

A performance evaluation for the CEO took place during the year in accordance with the process outline above.

Principle 2 – Structure the board to add value

2. Structure the Board to Add Value

2.1 Composition and Balance of Skills of Directors

The Directors consider the size and composition of the Board is appropriate given the

Company’s status and the nature of its operations however, Directors’ undertake regular

reviews and compliance practices to assist including: A periodic review either when a vacancy arises or if the Board considers it would benefit from an additional mix of skills and experience based on the strategic demands of the Company at that time.

2.2 Independence of Directors

The Board believes that the best interests of the Company will be served if a majority of the Directors are independent, as defined in the ASX Corporate Governance Principles and Recommendations. All of the directors are considered to be independent directors and free from any business or other relationship that could (or could reasonably be perceived to) materially interfere with the exercise of their unfettered and independent judgment.

The Board regularly reviews the status of each director. The skills, experience and expertise of each director is contained with the Company’s 2019 financial report. The structure of the Board complies with the ASX principle for a majority of the Board to be independent.

The status of each director is as follows:

Director:   Appointed Resigned

R Tayeh Independent 23-Mar-09  

N J Aston Independent 15-Jul-13  

C F Hunting Independent  10-Feb-15  

2.3 Appointment of Directors

If the Board determines that there is a need to appoint another director the Board will determine the appropriate skills, experience and qualifications required, having regard to those of the existing directors and implement a system of recruitment aimed at locating the most appropriate person to meet the Board's needs. In appointing directors, appropriate background checks will be conducted before the Company appoints a person, or puts forward a candidate for election as a director. Each director receives a formal letter of appointment setting out the key terms, conditions and responsibilities of their appointment.  

The Notice of Meeting will provide security holders with all material information relevant to a decision to elect or re-elect a director.

2.4 Performance Evaluation

The Board, through the Chairman, will carry out an evaluation, at least every three

years, to:

• Review the role of the Board;

• Assess the performance of the Board with a view to assisting the Board to better perform its duties;

• Review the type and timing of information provided to directors; and

• Review the performance and contribution of each of the non-executive directors.

The Board may, from time to time, use an independent adviser to assist in the reviews. The most recent review of the Board and its Committees were conducted in 2017 with significant changes made to the Board at that time. These processes were conducted in accordance with the Company’s evaluation processes.

As stated above, the Company does not have a separate Nomination Committee and those functions are undertaken by the Board.

2.5 Access to Independent Advice

Directors may obtain independent experts advice to enable them to fulfil their obligations, at the expense of the Company, after obtaining approval from the Chairman. Deeds of access indemnity and insurance will be entered into with the directors to the extent permitted by law.

Principle 3 – Act ethically and responsibly

3.1 Code of Conduct of Directors

The Directors are expected to use their skills commensurate with their knowledge and experience to increase the value of the Company.

To meet this obligation Directors must act honestly and should:

• Execute due care and diligence including confidentiality;

• Not misuse information or their position for their own gain;

• Avoid and fully disclose potential conflicts;

• Ensure that the market is fully informed of all matters that require disclosure;

• Be aware and abide by insider trading laws and strictly adhere to the Company's policies in this respect; and

• Actively promote the reputation of the company.

In accordance with the Corporations Act and the Company's constitution, the Directors must keep the Board advised, on an ongoing basis, of any circumstance(s) that have the potential to conflict with those of the Company. Where the Board believes that a conflict exists, the Director concerned will not receive the relevant Board papers, will not be present at the meeting whilst the item is considered and will take no part in any decision.

Directors are to ensure that the financial statements are prepared in compliance with Australian Corporations Law and all relevant Australian and International Accounting Standards.

Directors must also be aware of environmental impacts of the Company's business and ensure the health, safety and wellbeing of their employees.

3.2 Trading in Securities

The Company's policy on trading in its securities only permits trading by directors and management within one month after the day of the Annual General Meeting, and within one month after the day of the release to the ASX of the Company's full year and half-year results, and only after receiving the permission of the Chairman and Company Secretary. Trading is prohibited at anytime while the person is in possession of price sensitive information not disclosed to the market.

All such transactions will be reported to the Board.

This policy relates to Directors' and executives' spouses and other parties over whom they have significant influence.

3.3 Contracts and Transactions between the Consolidated Entity and its Officers

Any proposed contract between an officer (including associates of the officer) and the Company must be approved by the Board prior to its execution. If the contract involves a director or an associate of a director then the director must abstain from any discussion and vote on the matter.

3.4 Interaction with the Media

To ensure clear, consistent and accurate messages are conveyed to the general public via the ASX and the media, unless specifically approved otherwise, the Chairman and the MD are the only authorised spokespersons of the Company.

3.5 Diversity

The Board is responsible for developing policies in relation to a corporate culture that supports diversity and the implementation of measureable diversity objectives.

The Company’s strategies may include:

• Recruiting from a diverse range of candidates for all positions including senior executive roles and Board positions

• Ensuring succession planning considers diversity

• Mentoring and professional development programs

• Networking opportunities

• Pay equity to ensure equal pay for equal work across our workforce

• Mentoring and support networks for women who return from maternity leave

• Training and awareness programs to foster a corporate culture that embraces and values diversity

Due to the current size, nature and scale of the Company’s activities the Board has not yet developed objectives regarding gender diversity. As the size and scale of the Company grows the board will set and aim to achieve gender diversity objectives as director and senior executive positions become vacant and appropriately qualified candidates become available.

Principle 4 – Safeguard integrity in corporate reporting

4.1 Audit Committee

The Audit Committee, in accordance with its formal charter, monitors the independence, objectivity, effectiveness and scope of the external audit, and reviews the external auditor's findings and recommendations. The committee oversees management's approach in identifying key financial risk areas, and ensures programs are in place to manage identified risks. The committee also reviews the processes governing any non-audit work undertaken by the external auditor to ensure the independence of the external auditor is not affected by conflicts. The Audit Committee is comprised of Riad Tayeh (Chairman) and Mr Nick Aston (Member). Due to the small size of the Board the Board believes it is not beneficial to have an Audit Committee comprising three members, as recommended by the ASX Corporate Governance Council. Both members are independent. The committee meets as required and, in conjunction with the external auditor, to ensure they are satisfied that the reporting systems in place provide an accurate representation of the Consolidated Entity's activities and position. Two meetings of the Audit Committee were held in the 2014/2015 financial year, and an additional meeting held post close of the full year audit, these meetings were attended by both members.

The Company has for a number of years, ensured that its external Auditor attends the Annual General Meeting.

Principle 5 – Make timely and balanced disclosure

5.1 Continuous Disclosure

It is the Company's policy that all shareholders and investors have equal access to material information. The Chairman, the MD and the Company Secretary ensure that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act and the ASX Listing Rules. The Company Secretary has primary responsibility for all communications with the ASX. The Company maintains a website which is regularly updated to provide the wider community with all information that is released.

Principle 6 – Respect the rights of shareholders

6.1 Communication Policy

The aim of the Board is to ensure that shareholders are informed of all major developments affecting the Company and can communicate with the Company on these matters. Shareholders can access all announcements made by the Company to the ASX on the Company’s website.

Information is communicated in the following manner:

• the Company's website, www.kollakorn.com;

• The Annual Report is distributed to all shareholders who have elected to receive a copy and is made available on the Company’s website;

• The half-yearly report contains summarised financial information and a review of the operations of the Company during the relevant period;

• The ASX quarterly cash reports will contain summarised financial information for the relevant period;

• Regular shareholder updates and other disclosures lodged with the ASX;

• Shareholders can access all announcements made by the Company to the ASX on the Company’s website.

• Notices and explanatory memorandum for all meetings of the Company shareholders

Principle 7 – Recognise and manage risk

7.1 Risk Management and Internal Compliance and Control

The Board, in consultation with the CEO and the Company's Auditors, determines the Consolidated Entity's risk profile and is responsible for overseeing and approving risk management strategy and policy.

The Company does not, at this stage, have an Internal Audit function. The need for such a function was considered during the year with the Board finding that the current process of internal reviews and in consideration of the Company’s size and scale did not currently support an internal audit function,

The Company does not consider that it has any material exposure to economic, environmental and social sustainability risks.

This includes:

• Establishing and monitoring the Consolidated Entity's strategies, goals and objectives;

• Identifying and measuring risks that have the potential to impact upon the achievement of those strategies, goals

• and objectives;

• Formulating risk management strategies to manage the identified risks; and

• Monitoring and improving the effectiveness of risks and internal compliance controls.

7.2 Certificate from CEO and CFO

Each year, the Chief Executive Officer and the Chief Financial officer certify to the Board in writing that:

• The integrity of the financial statements is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and

• The Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

Principle 8 – Remunerate fairly and responsibly

8.1 Remuneration Committee

The Board has a separate Remuneration Committee which ensures the implementation and effectiveness of the Company's Remuneration policies.

8.2 Remuneration Policies

a) Non-Executive Directors

Fees including statutory superannuation paid to non-executive directors will be at or around the market average for a Company such as Kollakorn and are disclosed each year in the Company's annual report. Directors are not entitled to retirement benefits.

b) Senior Executives

Remuneration packages will generally be set to be competitive to both retain executives and attract executives to the Company. Further information regarding remuneration policies can be found in the Remuneration Report included in the Directors' Report at the end of each financial year.