Corporate governance statement

The Company and the Board are committed to achieving compliance with all the best practice recommendations released by the Australian Securities Exchange Corporate Governance Council. This statement outlines the main corporate governance practices in place throughout the financial year, with specific references made to any departures from the best practice recommendations.

Role of the Board

The role of Engenco Limited’s Board of Directors is to protect and promote the interests of the Company and to represent its shareholders whilst considering the interests of other stakeholders including employees, customers, suppliers, wider communities and the environment. It does this according to the principles of good corporate governance intending to fulfil the Company’s responsibilities as a corporate citizen.

The Board operates under a Board Charter; which describes the processes used by the Board to:

• appoint and review the performance of the CEO;
• approve key strategic decisions including, but not limited to, acquisitions and divestments;
• approve annual revenue, operating expenditure, and capital budgets;
• approve significant changes in organisational structure;
• determine and approve the remuneration of the CEO;
• approve the remuneration of executive management; and
• formally adopt any communication to regulators and shareholders as may be required by the Company constitution, statute, or other regulation.

The Board may change by resolution any power reserved to itself.

Executive Delegation

Other than those matters reserved by the Board to itself, the Board delegates to the CEO all authority to achieve the Company’s objectives consistent with this governance charter, the Company constitution, statute or other regulation.

The CEO prepares a one year operational and financial plan for approval by the Board.

Board Structure

The skills, experience and expertise relevant to the position of each director who is in office is detailed elsewhere on this web site.

The names of the independent directors of the Company are:

D Hector

R Dunning

When determining whether a non-executive director is independent the director must not fail any of the following materiality thresholds:

• less than 10% of Company shares are held by the director and any other entity or individual directly or indirectly associated with the director;
• no sales are made to, or purchases made from, any entity or individual directly or indirectly associated with the director; and
• none of the director’s income or the income of an individual or entity directly or indirectly associated with the director is derived from a contract with any member of the economic entity other than income derived as a director of the entity.

The Board reviews the independence of its directors in light of the information provided to it.

Independent directors have the right to seek independent professional advice in the furtherance of their duties as directors at the Company’s expense. Written approval must be obtained from the Board prior to incurring any expense on behalf of the Company.

Meetings of the Board

The Board meets formally at least four times per year and on other occasions as required. On the invitation of the Board, members of senior management attend and make presentations at Board meetings. In addition to the formal meetings the Board regularly meets to consider important issues affecting the Company.

Board Membership

Appointment

Board members are nominated by the Board and their appointment confirmed by a vote of shareholders. The Board will have a minimum of two non-executive directors who will be free of material relationships with the Company and who would be reasonably considered by shareholders to be independent. The expectation of directors is that they will be of unquestioned integrity and honesty; will understand and behave to the highest standards of corporate governance and will be prepared to question, challenge, and critique matters of strategy.

Directors will be appointed according to the contribution they can make in meeting strategic skill requirements of the Company. Remuneration of directors will be transparent and reported in its entirety to shareholders.

Directors are expected to continue to develop their skills through ongoing education and training.

Retirement and Re-election

The constitution of the Company requires one third of the directors, other than the CEO, to retire from office at each annual general meeting. Directors who have been appointed by the Board are required to retire from office at the next following annual general meeting and are not taken into account in determining the number of directors to retire at that annual general meeting.

Directors cannot hold office for a period in excess of three years beyond the third annual general meeting following their appointment without submitting themselves for re-election. Retiring directors are eligible for re-election by shareholders.

Board Access to Information and Independent Advice

All directors have unrestricted access to employees of the Group and, subject to the law, access to all Company records and information held by Group employees and external advisors. Each director may obtain independent professional advice to assist the director in the proper exercise of powers and discharge of duties as a director or as a member of a Board committee. In such cases, the Chairman and Company Secretary must be advised and a copy of the advice made available to all directors.

Conflicts of Interest

Directors are required to notify the Board of any real or perceived conflicts of interest that may occur from time to time. The Board has adopted the use of formal standing notices in which they disclose any material personal interests they have and the relationship with the affairs of the Company. Directors are required to provide an updated notice if they acquire any new material personal interests or if there is any change to the nature and extent of their previously disclosed interest.

Performance Evaluation

To date a formal assessment of Board performance has not taken place due to recent significant changes in the composition of the Board.

Reward and Remuneration

Reward and remuneration of directors and executives will be objectively linked to the achievement of Company goals and consistent with the financial performance of the Company.

There will be transparency to shareholders regarding reward and remuneration of Board members and senior executive management.

Committees

Currently the Board of Engenco Limited has formed a separate Audit Committee to assist it in exercising its responsibilities. Given the size and stage of development of the Company the Board has not formed a Nomination or Remuneration Committee which is a departure from ASX Best Practice Recommendation 2.4 and 8.2.

The Audit Committee monitors internal control policies and procedures designed to safeguard Company assets and to maintain the integrity of financial reporting. The specific responsibilities set out in its charter include:

• in conjunction with the internal and external auditors, assure the integrity of financial statements;
• recommend to the Board appointment of and review the performance of the external auditor;
• determine the remuneration of the external auditor;
• oversee the integrity of the internal and external audit process, and
• ensure there is a process to identify the likelihood and impact of financial risk and that this process is actively managed.

Audit Committee

The members of the Audit Committee are:

D Hector

R Dunning

Senior staff and any other persons considered appropriate, attend meetings of the Audit Committee by invitation. The Board has established a Terms of Reference to guide the activities of the committee. The Board recognise that the current composition of the audit committee does not meet ASX Best Practice Recommendation 4.3 and plans to review the composition of the Committee in FY2011.

Click here for Audit Committee Charter

Financial Reporting

Consistent with ASX Best Practice Recommendation 4.1, and in accordance with section 295A of the Corporations Act 2001, the Company’s financial report preparation and approval process involves both the Managing Director and Chief Financial Officer providing a written statement to the Board that, in their opinion:

• the Company’s financial report presents a true and fair view of the Company’s financial condition and operating results and is in accordance with applicable accounting standards, and
• the Company’s financial records for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001.

Audit Governance and Independence

External Auditors

Performance of the external auditor is reviewed annually by the Audit Committee. Company policy dictates that no non-audit services are provided by the external auditor to ensure independence is maintained.

Independence Declaration

The Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (“CLERP 9”) amendments to the Corporations Act 2001 require external auditors to make an annual independence declaration, addressed to the Board, declaring that the auditors have maintained their independence in accordance with CLERP 9 amendments and the rules of the professional accounting bodies.

Attendance of External Auditors at Annual General Meetings

In accordance with ASX Best Practice Recommendation 6.2 and Corporations Act 2001 the Company requires that the appointed auditors attend the Company’s annual general meeting and are available to answer questions about the conduct of the audit and the preparation and content of the audit report. Shareholders are asked to submit written questions to the Company Secretary at least 5 days prior to the annual general meeting.

Risk Identification and Management

Engenco Limited is in the process of implementing policies regarding risk identification and management which are consistent with ASX Principle 7.

Share Trading Policy

Click here for Securities Trading Policy

Continuous Disclosure

Click here for Continuous Disclosure Policy

Communications with Shareholders

The Board is committed to completely discharge its obligation to represent the interests of shareholders.

The Board will ensure that information is regularly communicated to shareholders, in particular, paying regard to the continuous disclosure requirements of the ASX. Shareholders are entitled to vote on significant matters impacting on the business, which include the election and remuneration of directors, changes to the constitution and receipt of the annual and interim financial statements. Shareholders are encouraged to attend and participate in the Annual General Meeting, to lodge questions to be responded by the Board, and are able to appoint proxies.