| CORPORATE GOVERNANCE |
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The Following is an extract from Citigold's 2009 Annual Report:
Good corporate governance does not just ensure the company is well managed and directed but it protects the rights and enhances the interests of shareholders
The Board reviews and put in place policies and practices to comply as far as is practicable with ASX Corporate Governance Council’s Principles and Recommendations. In the limited circumstances where the Company’s corporate governance practices do not correlate with the recommendations, the Company does not consider that the practices are appropriate for the Company due to the size of the Company or its Board. The Board has had a Board Charter in place since January 2008. Relevant principles are listed below.
A. Lay Solid Foundation for Management and Oversight
The Board of Directors primary role is to set corporate direction, governance, defining broad policy and governs the business in such a way that protects the rights and enhances the interests of shareholders.
As the Board acts on behalf of and is accountable to shareholders, the Board seeks to identify the expectations of shareholders, as well as other regulatory and ethical expectations and obligations. The Board Charter sets out the principal function and responsibility of the Board:
| Development and implementation of corporate strategies |
| Provide leadership in the development of appropriate culture and values for the company |
| Appointment and assessment of the performance of the Managing Director and Directors |
| Inputting and monitoring managerial goals |
| Ensuring the significant risks facing the consolidated entity have been identified and appropriate and adequate control, monitoring and reporting mechanisms are in place |
| Ensuring corporate accountability to shareholders |
The Board has delegated responsibility for the day to day operation and administration of the Company to the Managing Director and the executive management team.
B. Structure the Board to Add Value
The Board has several committees to facilitate the execution of its duties. Each committee has its own autonomy with authority delegated to it by the Board and the manner in which the committee is to operate.
Current committees of the Board are:
| the audit and finance committee |
| the remuneration committee |
| the health, safety and environment committee |
Audit and Finance Committee
The audit and finance committee comprises of the following Non-Executive Directors: T V Willsteed (Chairman) and JJ Foley. Since the board consists of only three Directors, one of them being an Executive Director (Managing Director), the company can only appoint two independent Directors instead of the recommended three independent members in the Audit and Finance Committee. Citigold believes that the current board and its committees are appropriately sized as it has adequate skills, expertise and experience to run the company. Moreover, keeping the current board size enables all directors to voice their opinions Effectively.
The main responsibilities of the audit and finance committee are to supervise the audit function, review the integrity of the company’s financial reporting and ensure compliance with financial reporting and related regulatory requirements. In addition, the committee oversees the company’s risk management system.
Remuneration Committee
The Remuneration committee consists of the following Non-Executive Directors: T V Willsteed (Chairman) and JJ Foley. Since the board consists of only three Directors, one of them being an Executive Director (Managing Director), the company can only appoint two independent Directors instead of the recommended three independent members in the Remuneration Committee. As noted previously, Citigold believes that the current board and its committees are appropriately sized as it has adequate skills, expertise and experience to run the company.
The Remuneration Committee’s key responsibilities are:
1) Assists and advises the Board on remuneration guidelines and practices.
2) Reviews and make recommendations on remuneration packages and other terms of employment for directors and senior executives.
3) Reviews the company’s recruitment, retention and termination guidelines and procedure for senior management.
Citigold Corporation Limited has not formed a nomination committee as there are only 3 Directors. The Board is able to efficiently address the issue of board competencies. The board ensures that all Directors bring relevant complementary skills and experience to the Board and Board performance is reviewed on an annual basis based upon each director’s contribution to specific Board objectives.
Health, Safety and Environment Committee
The health, safety and environment committee consists of the following executive and Non-Executive Directors: JJ Foley, TV Willsteed and MJ Lynch. The objectives of the committee are as follows:
| ensuring the Company adopts, maintains and applies appropriate health, safety and environment policies and procedures; |
| ensuring that the Company maintains effective health, safety and environment related internal control and risk management systems; and |
| providing a formal forum for communication between the Board and senior management in health, safety and environment matters, both Company specific and otherwise. |
Board Composition
The Board is comprised of three (3) Directors, being two (2) Non-Executive Directors and One Executive Director. A majority of the Board is Non-Executive Directors, including the Chairman.
The skills, experience and expertise relevant to the position of each Director who is in office at the date of the annual report, their meeting attendances and their term of office are detailed in the Directors’ Report. Each Director brings relevant complementary skills and experience to the Board covering the areas of legal, finance and operations.
The Company’s Constitution specifies that a third of the Directors (with the exception of the Managing Director) must, by rotation, retire from office at each Annual General Meeting (AGM) such that at least one Director stands for election at each AGM. Where eligible, a Director may stand for re-election. All Board appointments are subject to shareholder approval.
Independence
In accordance with the Board Charter and ASX Recommendations, the majority of the Board comprises of non-executive directors, including the Chairman. All Non-Executive Directors are regarded as independent and free of any relationship that may conflict with the interest of the company.
Directors must disclose to the Board actual or potential conflicts that may or might reasonably be thought to exist between the interest of the director and the interest of the company. Directors are required to adhere strictly to constraints on their participation and voting in relation to any matter in which they may have a conflict of interest.
Entities connected with Mr J J Foley had business dealings with the consolidated entity during the year. Mr J J Foley declared his interests in those dealings to the Company and took no part in decisions relating to them. These dealings were not considered to be of an amount or nature that would affect Mr Foley’s independent judgement.
Entities connected with Mr M J Lynch had business dealings with entities in the consolidated entity during the year. Mr M J Lynch declared his interests in those dealings to the Company and took no part in decisions relating to them.
C. Promote Ethical Decision Making
All directors, executives and staff of the consolidated entity are required to abide by all legal requirements, the Listing Rules of the Australian Securities Exchange, the Corporations Act with the regard to trading in the Company’s securities and appropriate standards of ethical conduct with regard to the operation of the consolidated entity.
Code of Conduct
A Code of Conduct (the Code) as adopted by the Board sets out ethical standards expected of all directors, executives and employees. The Code is reviewed and updated as necessary to generally reflect industry standards of integrity and professionalism. The Code covers:
| professional conduct | | customer and supplier relations |
| other employees | | compliance with laws and regulations |
| conflicts of interest | | confidential information |
Trading in Citigold’s shares
Employees, officers and directors who have access to, or knowledge of, material inside information from or about the company are prohibited from buying, selling or otherwise trading in the company's stock or other securities until the release of this information to the public through the ASX. "Insider" information includes any information concerning the company’s financial position, strategy or operations which, if made public, would be likely to have a material effect on the price or value of the securities of the company and the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the securities.
D. Safeguard Integrity in Financial Reporting
As part of Citigold’s commitment to a transparent system for auditing and reporting of company’s financial performance, the company has established the Audit and Finance Committee. The audit and finance committee supervise the audit function including the appointment of the external auditor, the preparation of financial statements and assesses the adequacies of internal control, and financial risk system. In fulfilling its responsibilities, the audit and finance committee regularly provide a forum for communication between the board, management and the external auditors. A formal charter for audit and finance committee is adopted since September 2005.
The Audit and Finance Committee has adopted and complies with a formal charter.
The Chief Executive Officer and Chief Financial Officer have declared in writing that the financial statements for the year ended 30 June 2009 represent a true and fair view of Citigold’s financial position and performance and that the reports conform to relevant accounting standards.
E. Make Timely and Balanced Disclosure
All Directors, executives and staff of the consolidated entity are made aware of the ASX’s continuous disclosure requirements and operate in an environment where emphasis is placed on full, timely and honest disclosure to the market.
The board adopts a Continuous Disclosure Policy to ensure that information considered material by the company is immediately lodged with ASX. Moreover, Citigold’s website contains recent and historical information, including ASX announcements, financial reports and presentations.
F. Respect the Rights of Shareholders
Citigold is committed in providing shareholders with timely, detailed and factual company information.
Information is communicated to shareholders through:
| The annual report which is accessible by all shareholders |
| The half-yearly report which is made available by way of an ASX release |
| The Annual General Meeting |
| ASX releases in accordance with the consolidated entity’s continuous disclosure obligations |
| Information available on the Company’s website at www.citigold.com |
Shareholders are invited to advise the Company of their email addresses. ASX announcements, once released, are then able to be emailed directly to the shareholder.
In addition, all shareholders are encouraged to attend the AGM and use the opportunity to ask questions.
The company’s external auditor attends the company’s annual general meeting and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditors report.
F. Recognise and Manage Risk
Due to the size of the Board, a separate risk management committee has not been established. The Board believes that it is important for all Board members to take a proactive role to the company’s risk management and internal compliance and control procedures. The Board monitors the financial and operational aspects of the company’s activities and considers the advice of other external advisors.
The risk management approach that the Board employs includes a) assessing internal policies and processes for determining and managing key risk areas such as non compliance with laws regulations standards and best practice guidelines, litigation and claims and other relevant business risk b) having a sound risk management system, policies and internal control c) Meeting of key stakeholders to understand and discuss company’s control environment.
Citigold currently operates on a NOSA Five Star Integrated Risk Management System. This is a commercial product originally produced by the National Occupational Safety Association, operated by Citigold, with the results audited annually by external consultants. This system identifies aspects of risks of the operation, particularly those related to safety, health, environment and social impact. Citigold’s operations are subject to regulation and regular inspection and monitoring by the Queensland State Government Department of Mines and Energy and the Environmental Protection Authority.
The Managing Director and CFO have not given a written statement to the board in accordance with best practice recommendation 7.2 of the ASX Corporate Governance Council’s Principles and Recommendations because the board considers that its direct management and oversight of risk ensures a sound system of risk management and internal compliance and control that is operating efficiently and effectively in all material respects.
G. Encouraging Enhanced Performance
Review of Directors and Board Performance
Citigold considers the evaluation of directors and senior executive performance as important in establishing a culture of performance and accountability.
The Board and Director’s performance is reviewed on an annual basis. The goals of review are based upon each director’s contribution to specific Board objectives and the objectives of board committees in which the director participates. The Chairman provides each director with confidential feedback on performance and it is used to develop a development plan for each director. The remuneration and nomination committee also carries out performance reviews of the Managing Director/CEO and the Executive Management Team on a yearly basis.
At the AGM, the shareholders will have the opportunity to voice their opinion on the performance of the Board. Furthermore at every second year of AGM, the shareholders can exercise their right to remove the Non-Executive Director from office if the shareholders deem that the non executive director’s performance is not up to standard.
Director Education
Citigold Corporation Limited has a policy to educate new Directors about the nature of the business and current issues, strategic direction and expectations of Citigold in regards to the performance of Directors. New Directors undergo an induction process in which they will be given a full briefing on the company. This includes meeting with key executives, tour of mining operation, an induction package and presentation. Directors and the senior executives are also given access to continuing education opportunities to develop their skills and knowledge in the area of governance processes and in the company’s industry.
Independent Professional Advice and Access to Company’s Information
Subject to annual limit or Board approval, Directors and Board committees have the right, in connection with their duties and responsibilities, to seek independent, professional advice at the Company’s expense. Directors also have the right of access to all relevant information that may help them in exercising their duties subjected to protocol set out in the Board Charter.
H. Remunerate Fairly and Responsibly
Board Remuneration
Non-Executive Directors’ remuneration may not exceed the limit approved by shareholders which is currently at a combined total of A$150,000. Non-Executive Directors may participate in equity schemes of the company subject to the shareholders approval, such as option schemes, that are designed to encourage enhanced performance of the participant.
Executive Remuneration
The Remuneration Committee, consisting of two Non-Executive Directors, advises the Board on remuneration policies and practices. The Committee can make recommendations on remuneration packages and other terms of employment for executive directors and senior executives. Executive remuneration and other terms of employment are reviewed by the Committee when necessary having regard to performance, market conditions and relevant comparative information and independent expert advice.
Citigold’s senior executives participate in a share option plan linking Citigold’s performance to their remuneration designed to encourage enhanced performance of the participant. The senior executive share option plan was not approved by shareholders because the options were granted on the same terms and conditions as the option plan previously approved by shareholders for the Directors.
Further details in relation to Director and Executive remuneration can be found in the director’s report.
I. Recognises the importance of Environmental and Occupational Health and Safety Issues
Citigold Corporation Limited recognises the importance of environmental and occupational health and safety (OHS) issues and is committed to the highest levels of performance. To help meet this objective an Environmental, Health and Safety Management System (EHSMS) has been established by mine management. The EHSMS is a tool that allows the systematic identification of environmental and OHS issues and assists their managed in a structured manner.
Through the EHSMS, the consolidated entity aims to:
| comply with all relevant legislation |
| continually assess and improve the impact of its operations on the environment |
| encourage employees to actively participate in the management of environmental and OHS issues, and |
| use energy and other resources efficiently |
Information on compliance with significant environmental regulations is set out in the Directors’ Report.
(Updated January 2010)
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