> Share Trading Policy

> Diversity Policy

> Audit and Risk Committee Charter

> Nominations Committee Charter

> Remuneration Committee Charter

> Board Charter

> Executive Remuneration Policy

> Director Remuneration Policy

> Policy and Procedure for Selection and Appointment of Directors

> Directors Code of Conduct

> Executive Code of Conduct

> Report on Diversity

> BKI Continuous Disclosure & Shareholder Communications Policy

> Corporate Governance Statement

> Risk Management Policy

> Contact BKI IMA

 


Share Trading Policy

16 December 2010

The BKI Share Trading Policy regulates dealings by BKI Directors, Officers and Employees (Restricted Personnel) in shares, options and other securities issued by BKI.

The rationale for the Policy is to ensure that BKI’s Restricted Personnel are aware of the legal restrictions on trading BKI securities while a person is in possession of unpublished BKI price-sensitive information.

Additionally, the Policy is intended to minimise the chance that misunderstandings or suspicions arise that Restricted Personnel are trading while in possession of unpublished price-sensitive information.

Restrictions on Trading

Consistent with the legal prohibitions on insider trading, under the Policy, all Restricted Personnel are prohibited from trading in BKI shares, options or other securities issued by BKI while in possession of unpublished BKI price-sensitive information.

BKI price-sensitive information is information, which a reasonable person would expect to have a material effect on the price or value of BKI securities.

In addition, Restricted Personnel are only permitted to trade in BKI shares, options or other securities issued by BKI generally during the “Trading Window” period.

These rules also apply to trading through an entity or trust that is controlled by a Restricted Person.

Importantly, the Policy recognises it is illegal for a person to trade in BKI securities when they possess unpublished BKI price-sensitive information. This is regardless of whether the terms of the Policy have been complied with.

A person, whilst in possession of unpublished price-sensitive information, is subject to three restrictions:

1. they must not deal in securities affected by the information;
2. they must not cause or procure anyone else to deal in those securities; and
3. they must not communicate the information to any person if they know or ought to know that the other person will use the information, directly or indirectly, for dealings in securities.

Anyone who contravenes the prohibitions against insider trading is guilty of an offence under the Corporations Act and their employment or agreement will be immediately terminated.

BKI’s policy regarding allowable dealings by Restricted Personnel in BKI shares require each person to:
• never engage in short term trading of the Company’s securities;
• not deal in the Company’s securities while in possession of price sensitive information;
• notify the Company Secretary of any material intended transactions involving the Company’s securities; and
• restrict their buying and selling of the corporation’s securities to the following Trading Windows:-
o during the currency of a prospectus;
o for a new issue while rights are being traded;
o where shares are offered pursuant to an approved employee share scheme;
o to 14 days after the release of the company’s half yearly announcement;
o to 14 days after the release of the company’s annual results announcements;
o to 14 days after the annual general meeting; and
o to 14 days after release of an NTA announcement.

Any request to trade outside of a Trading Window will only be considered in Exceptional Circumstances and must be made in writing to the Company Secretary or Chairman. The written application is to include the nature of the intended form of trading and provide sufficient detail of the circumstances. The application also needs to state that the Restricted Person is not in possession of inside information.

Exceptional Circumstances include severe financial hardship where the Restricted Person has a compulsion to deal with securities by Court Order, or any other circumstances deemed exceptional by the Chairman.

Any such requests will be subject to approval by the Chairman (or by the Chairman of the Audit Committee in the case of the Chairman).

The restrictions on trading in BKI shares by Restricted Personnel do not apply in the following situations of passive dealing by Restricted Personnel in the Company’s securities:
a. the transfer of securities already held by the Restricted Person into a superannuation fund or similar scheme where the Restricted Person is a beneficiary;
b. the acceptance of a takeover offer;
c. trading under an offer or invitation made to all or most of the Company’s security holders, such as a rights issue, a security purchase plan, a dividend or distribution reinvestment plan and an equal access buy-back, where the plan that determines the timing and structure of the offer has been approved by the Board. This includes decisions relating to whether or not to take up the entitlements and the sale of entitlements required to provide for the take up of the balance of entitlements under a renounceable pro rata issue;
d. accepting an offer to participate in an employee securities plan; and
e. any such similar transaction determined by the Directors to be a passive dealing.

 

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DIVERSITY POLICY

Purpose:

This policy has been prepared to formalise the Company’s commitment to maintaining an inclusive culture that provides equal access to opportunities to all current and prospective employees and directors.

Diversity:

Diversity encompasses all characteristics that make individuals different from one another. It includes, but is not limited to race, religion, ethnicity, gender, sexual orientation, disability, age and cultural background. At BKI, we believe that a commitment to equality and treating all individuals
with respect are the cornerstones of achieving diversity.

Policy:

BKI understands that each employee brings unique skills and capabilities to their work, driven by the diverse blend of experiences and social and cultural background that has shaped them. We recognise that the success of our business is a reflection of the skills and quality of our people, both employees and at Board level. Getting an appropriate mix of skills, experience and perspective will better enable BKI to maximise returns to the Company’s shareholders, and optimise the experience of all other stakeholders when interacting with BKI.

The Company is therefore committed to creating a workplace environment and culture that:

‐ Is free of discrimination
‐ Is conducive to attracting and retaining people from a broad experience base
‐ Rewards performance
‐ Provides opportunities that allow individuals to reach their full potential irrespective of background or difference.
‐ Is understanding of each individual’s personal circumstances

When appointing individuals to the organisation, the most suitably qualified candidates will be selected.

When promoting individuals within the organisation, the most suitably qualified candidates will be
selected.

Gender Diversity ‐ Objectives, Measurement and Disclosure:

The Board will establish measurable objectives for addressing gender diversity that are consistent
with ensuring the long term success of the Company and wellbeing of its employees and other stakeholders.

Measurement of progress in achieving the objectives will be carried out on a regular basis (at least
annually) by the Remuneration and Nomination Committees, who will report their findings to the Board and make recommendations as appropriate.

The Board will annually assess the objectives as to whether they remain appropriate and adequate for the Company, and also annually assess the progress made toward achieving them. BKI will comply with its reporting obligations under the ASX Listing Rules and other legislation as appropriate from time to time.

 

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AUDIT AND RISK COMMITTEE CHARTER

1. Purpose

2. Powers of the Audit & Risk Committee

3. Function of Respective Parties

4. Duties of the Audit & Risk Committee

5. Eligibility

6. Meetings

1. Purpose

1.1 The Audit & Risk Committee is established by the Board of Directors. The purpose of the Audit & Risk Committee is to assist the Board of Directors in its review of:

(a) BKI’s financial reporting principles and policies, controls and procedures;

(b) the integrity of BKI’s financial statements and the independent audit thereof, and the Company’s compliance with legal and regulatory requirements in relation thereto; and

(c) and due diligence and prudential supervision procedures required by regulatory bodies.

1.2 The Audit & Risk Committee will report to the Board on each of the matters referred to in clause 1.1

1.3 The Audit & Risk Committee is also responsible for:

(a) the appointment, evaluation and oversight of the external auditor;

(b) compensation of external auditor; and

(c) where deemed appropriate, replacement of the external auditor.

2. Powers of the Audit & Risk Committee

2.1 The Committee is required to make recommendations to the Board and does not have any executive powers to commit the Board or management to the implementation of these recommendations, other than:

(a) where the Board has delegated authority to the Audit & Risk Committee; and

(b) for matters relating to the appointment, compensation, oversight and replacement of the external auditor.

2.2 The Committee has unrestricted access to executives of BKI, representatives of the Investment Manager and to the external auditors in order to fulfil its purpose and undertake its duties.

2.3. The Committee has the ability to direct any special investigations deemed necessary and to consult independent experts where considered necessary to carry out its duties. Costs of such consultations are borne by BKI.

3. Function of Respective Parties

3.1 Other than in relation to the work of the external auditor, the function of the Audit & Risk Committee is oversight. It is recognised that members of the Audit & Risk Committee are not full time employees of BKI.

3.2 Each member of the Audit & Risk Committee is entitled to rely on executives of BKI and the Investment Manager on matters within their responsibility, and on external professionals on matters within their areas of expertise, and may assume the accuracy of information provided by such persons, so long as he or she is not aware of any reasonable grounds upon which such reliance or assumption may be
inappropriate.

3.3 The Board may rely upon information provided by the Committee and its members, in relation to matters within the Committee’s responsibility under the terms of this charter, provided that is has evaluated all the information and is not aware of any reasonable basis upon which to question its accuracy.

3.4 Management of BKI is responsible for the preparation, presentation and integrity of the Group’s financial statements. Management is responsible for implementing and maintaining appropriate accounting and financial reporting principles and policies and procedures on internal controls designed to assure compliance with accounting standards, applicable laws and other regulations.

3.5 The external auditors are responsible for planning and carrying out each audit and review, in accordance with applicable auditing standards. The external auditors are accountable to shareholders through the Audit & Risk Committee.

4. Duties of the Audit & Risk Committee

4.1 The following duties are structured in accordance with the Committee’s purposes:

(a) With respect to the external auditors:

(i) select, evaluate and replace as necessary the external auditor;

(ii) review and agree the annual audit engagement letter;

(iii) approve the fees charged for audit and review services;

(iv) determine categories of non-audit services that may be provided by the external auditor;

(v) provide approval of all non-audit services that are to be undertaken by the external auditor;

(vii) review and provide oversight of audit reports prepared and issued by the external auditors on Group financial statements and activities;

(viii) consider and review reports prepared by the external auditor on critical accounting policies, all alternative treatments of financial information permitted under Australian Equivalents to International Financial Reporting Standards, and all other written communication between the external auditor and management;

(ix) resolve any disagreements between the external auditor and management regarding BKI’s financial reporting;

(x) discuss with the external auditors any relationship that may impact their objectivity and independence;

(xi) ensure that the external auditors prepare and deliver an annual statement as to their independence which includes details of all relationships with BKI;

(xii) annually review the effectiveness of the external auditor; and

(xiii) and ensure the external audit engagement partner and review partner be rotated every five years.

(b) With respect to financial reporting:

(i) receive from management and the external auditors a timely analysis of significant financial reporting issues and practices and review such analyses;

(ii) review the full-year and half-year audited financial statements, earning press releases, other financial information being made public, any significant matters arising from the audit, management judgements and accounting estimates, and significant changes to BKI’s auditing and accounting principles, policies, controls, procedures and practices with management and external auditors;

(iii) discuss the critical accounting policies with external auditors and management;

(iv) review the certification provided by the Chief Executive Officer and the Chief Financial Officer (or equivalents) on annual and half yearly reports and review the processes that were used to reach the opinion provided in the certification;

(v) ensure the financial statements include disclosure covering governance issues in accordance with the requirements of regulators; and

(vi) review the form of opinion that the external auditors propose to render.

(e) With respect to due diligence procedures:

(i) discuss any reports prepared in relation to issues of shares, debt securities, or other instruments requiring the issue of a prospectus, where the prospectus is issued by the BKI Group;

(ii) discuss reports on the BKI Group prepared for prudential supervisors or other regulators; and

(iii) consider any reports prepared by external auditors in relation to the above due diligence procedures.

(f) With respect to corporate governance:
(i) develop and promulgate rules on the employment by BKI of members of the external audit firm; and
(ii) ensure that BKI has received an executed Code of Conduct from the Chief Executive Officer and the Chief Financial Officer (or equivalents) and the Investment Manager.

(g) With respect to reporting:

(i) review the Audit & Risk Committee Charter annually, and recommend any changes to the Board of Directors;

(ii) provide a self-assessment of the effectiveness of the Audit & Risk Committee at least annually;

(iii) ensure the Audit & Risk Committee Charter is available on the BKI web site, and that all shareholders are informed at least annually of the location of the Audit & Risk Committee Charter; and

(iv) report to the Board on the activities of the Audit & Risk Committee.

(h) With respect to internal controls:

(i) review the effectiveness and efficiency of operations;

(ii) assess the reliability of financial reporting;

(iii) ensure compliance with applicable laws and regulations; and

(iv) review in a general manner the Company’s policies with respect to risk assessment and risk management.

5. Eligibility

5.1 The Audit & Risk Committee shall appoint one of its members, other than the Chairman of the Board, to serve as its chairman.

5.2 The majority of the Audit & Risk Committee members must be independent nonexecutive directors.

5.3 The independence criteria set out in the Board Charter will apply to determining eligibility of Audit & Risk Committee members.

5.4 Each member of the Audit & Risk Committee must be appropriately financially literate (as such qualification is interpreted by the Board in its business judgement) and have a strong understanding of the industry in which the Company operates.

5.5 The Chairman of the Audit & Risk Committee will be a ‘financial expert’. A financial expert is a person who, as a result of education and experience as a public accountant or auditor or as the principal financial officer, controller or principal accounting officer of a Company, has an understanding of financial statements, and Australian Equivalents to International Financial Reporting Standards, and experience in preparing or auditing financial statements of companies comparable to BKI, in the application of GAAP to accounting for estimated, accruals and reserves, in internal accounting controls and in the functioning of audit committees.

6. Meetings

6.1 The Audit & Risk Committee will meet at least two times annually, and more frequently if it deems necessary.

6.2 Representatives of management and of the external auditors will be invited to attend part or all of any meeting of the Audit & Risk Committee. The Committee may request certain parties to withdraw from any part of the meeting, and may request any officer or employee of the Company or the external auditors to attend a meeting.

6.3 The Audit & Risk Committee will meet at least once annually with the external auditors, in the absence of management. The Audit & Risk Committee will request the external auditor to advise it whether any officer of BKI or the Investment Manager has taken any action to improperly influence, coerce, manipulate or mislead any member of the external audit team for the purpose of rendering the financial statements materially misleading.

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NOMINATIONS COMMITTEE CHARTER

Contents

1. Purpose
2. Powers of the Nominations Committee
3. Duties of the Nominations Committee
4. Meetings
5. Delegation to Subcommittee
6. Board Composition

1. Purpose

The Nominations Committee is established by the Board of Directors. The purpose of the Nominations Committee is to:
 

(a) assess the membership of the Board having regard to present and future needs of the Company

(b) assess the independence of directors to ensure the majority of the Board are independent directors

(c) propose candidates for Board vacancies in consideration of qualifications, experience and domicile

(d) oversee Board succession

(d) evaluating Board performance

2. Powers of the Nomination Committee

The Nominations Committee has the ability to direct any special investigation deemed necessary and to consult independent experts where considered necessary to carry out its duties. Costs of such consultations are borne by BKI.

3. Duties of the Nominations Committee

The following duties are structured in accordance with the Nominations Committee’s purposes:

(a) To make recommendations to the Board from time to time as to changes that the Committee believes to be desirable to the size of the Board.

(b) To identify individuals believed to be qualified to become Board members and to recommend such candidates to the Board. In nominating candidates, the Committee shall take into consideration such factors as it deems appropriate. These factors may include judgement, skill, diversity, experience with business and other organisations of comparable size, the interplay of the candidate’s experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board.

(c) To identify Board members qualified to fill vacancies on any committee of the Board (including the Committee) and to recommend that the Board appoint the identified member or members to the respective committee. In nominating a candidate for committee membership, the Committee shall take into consideration the factors set forth in the charter of the committee, if any, as well as any other factors it deems appropriate, including without limitation the consistency of the candidate’s experience with the goals of the committee and the interplay of the candidate’s experience with the experience of other committee members.

(d) Establish procedures for the Committee to exercise oversight of the evaluation of the Board and management.

(e) Recommend to the Chairman of the Board the appropriate process for evaluation of the performance of each director.

(f) Any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the nomination of Board and committee members.

(g) Oversee Board succession.

4. Meetings

The Nominations Committee will meet at least once annually, and more frequently if it deems necessary.

5. Delegation to Subcommittee

The Nominations Committee, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.

6. Guidance to Board Composition

6.1 The majority of the Board must be independent directors

6.2 BKI is to maintain a mix of directors on the Board from different backgrounds with complementary skills and experience

6.3 The Nominations Committee must seek to ensure:

(a) membership represents an appropriate balance between directors with experience and knowledge of BKI and directors with an external perspective; and

(b) the size of the Board is conducive to effective discussions and efficient decision making.

 

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REMUNERATION COMMITTEE CHARTER

Contents

1. Purpose

2. Powers of the Remuneration Committee

3. Duties of the Remuneration Committee

4. Meetings

5. Delegation to Subcommittee

 

1. Purpose

1.1 The Remuneration Committee is established by the Board of Directors. The purpose of the Remuneration Committee is to:

(a) review and
recommend to the board for approval policies for remuneration programs
appropriate for BKI;

(b) review and make
recommendations to the Board in respect of the administration of BKI’s remuneration programs;

(c) review and make recommendations to the Board in respect of the remuneration of senior executive officers and non-executive directors; and

(d) prepare for approval by the Board any report on executive remuneration that may be:

(i) required by any listing rule, legislation, regulatory body, or other regulatory requirement; or

(ii) proposed for inclusion in BKI’s annual report,

and to report regularly to the Board on each of the above matters.

 

2. Powers of the Remuneration Committee

2.1 The Remuneration Committee has the ability to direct any special investigations deemed necessary and to consult independent experts where considered necessary to carry out its duties. Costs of such consultations are borne by BKI.

 

3. Duties of the Remuneration Committee

3.1 The following duties are structured in accordance with the Remuneration Committee’s purposes:

(a) In consultation with senior management, review and recommend to the Board for approval BKI’s general approach to remuneration, and oversee the development and implementation of remuneration
programs.

(b) Review and recommend to the Board for approval corporate goals and objectives relevant to the remuneration of the Chief Executive Officer, evaluate the performance of the Chief Executive Officer in light of those goals and objectives, and recommend to the Board the Chief Executive Officer’s remuneration level based on this evaluation. In determining the long-term incentive component of Chief Executive Officer remuneration, the Remuneration Committee shall consider, among other factors, BKI’s performance and relative shareholder return, the value of similar incentive awards to Chief Executive Officers at comparable companies, the awards given to the Chief Executive Officer in past years, and any other factors that the committee determines is appropriate.

(c) Oversee and review remuneration packages and other terms of employment for other executive management.

(d) Approve any statement on BKI’s remuneration policy and executive remuneration disclosures that may be:

(i) required by
any listing rule, legislation, regulatory body, or other regulatory requirement; or

(ii) proposed for inclusion in BKI’s annual report.

(e) Review the remuneration of non-executive directors annually.

(f) Review any transaction between the organisation and the directors, or any interest associated with the directors, to ensure the structure and terms of transaction are in compliance with the Corporations Act 2001 and are appropriately disclosed.

4. Meetings

4.1 The Remuneration Committee will meet at least once annually, and more frequently if it deems necessary.

4.2 Representatives of management may be invited to attend part or all of any meeting of the Remuneration Committee. The Remuneration Committee may request certain parties to withdraw form any part of the meeting. No employee, including the Chief Executive Officer, should attend any meeting where his or per performance or remuneration are discussed, unless specifically invited by the Remuneration Committee.

5. Delegation to Subcommittee

5.1 The Remuneration Committee may, in its discretion, delegate any of its duties and responsibilities to a subcommittee of the Committee.

 

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BOARD CHARTER

Contents

1. Introduction

2. Purpose and Role

3. Powers

4. Specific Responsibilities

5. Board Membership

6. Independence

7. Meetings

8. Board Committees

9. Self Assessment

10. Procedures for Handling a Conflict of Interest

1. Introduction

1.1 In carrying out its responsibilities and powers as set out in this Charter, the Board will at all times recognise its overriding responsibility to act honestly, fairly, diligently and in accordance with the law in serving the interests of BKI’s shareholders, as well as its employees, clients, and the community. It will work to promote and maintain an environment within BKI that establishes these principles as basic guidelines for all of its employees and representatives at all times.

2. Purpose and Role

2 .1 The Board is responsible for:

(a) charting the direction, strategies and financial objectives for BKI and monitoring the implementation of those policies, strategies and financial objectives;

(b) monitoring compliance with regulatory requirements and ethical standards; and
(c) appointing and reviewing the performance of the Chief Executive Officer.
(d) appointing and administering the contractual performance of the Investment Manager.
2.2 In performing the responsibilities set out above the Board should act at all times:

(a) in a manner designed to create and continue to build sustainable value for shareholders; and

(b) in accordance with the duties and obligations imposed upon them by the Constitution and by law.

 

3. Powers

3.1 In addition to matters expressly required by law to be approved by the Board, powers specifically reserved for the Board are as follows:

(a) appointment of the Chief Executive Officer and determination of his or her terms and conditions (including remuneration);

(b) appointment of an Investment Manager, and determination of the terms and conditions of the Investment Management Agreement governing the appointment, including remuneration;

(c) approval of any matters in excess of discretions that it may have delegated to a Chief Executive Officer, Investment Manager and/or other Company executives in relation to credit transactions, market risk limits and expenditure; and

(d) Approvals of each of the following:

(i) the strategic plan, at least annually;

(ii) the budget, at least annually;

(iii) the remuneration and conditions of service including financial incentives for any executive directors and the Company Secretary, at least annually;

(iv) significant changes to organisational structure and the appointment of such senior officers or external advisors and managers as the Board may determine;

(v) the acquisition, establishment, disposal or cessation of any significant business of BKI;

(vi) the issue of any shares, options, equity instruments or other securities in BKI;

(vii) any public statements which reflect significant issues of BKI policy or strategy; and

(viii) any changes to the discretions delegated from the Board.

4. Specific Responsibilities

4.1 The Board has a specific responsibility for:

(a) contributing to the development of and approving the corporate strategy

(b) reviewing and approving business results, business plans, the annual budget and financial plans

(c) authorising and monitoring major investment and strategic commitments

(d) ensuring the maintenance of credit quality

(e) ensuring regulatory compliance

(f) reviewing internal controls

(g) monitoring and influencing the culture, reputation and ethical standards of the Company

(h) ensuring adequate risk management processes

(i) monitoring the Board composition, director selection and Board processes and performance

(j) overseeing and monitoring:

  • Organisational performance and the achievement of the Company’s strategic goals and objectives
  • Compliance with the Company’s code of conduct
  • Progress of significant corporate projects

(k) monitoring financial performance including approval of the annual report and half-year financial reports

(l) contributing to the performance assessment for the members of the senior executive team including the Chief Executive Officer and other senior management

(m) appointing, managing and assessing the performance of any Investment Manager

(n) ensuring there are effective management processes in place and approving major corporate initiatives

(o) enhancing and protecting the reputation of the Company

(p) reporting to shareholders

4.2 Responsibilities specifically delegated to Company Executives and/or the Investment Manager include:

(a) organisation and monitoring of the investment portfolio

(b) managing organisational performance and the achievement of the Group’s strategic goals and objectives

(c) management of financial performance

(d) management of internal controls

(e) appointment, management and assessing the performance assessment of other staff

5. Board Membership
5.1 The Board should comprise a majority of non-executive directors who satisfy the criteria for independence as stated in Section 6 below.
5.2 The directors shall appoint a chairperson of the Board.
6. Independence

6.1 In accordance with Corporate Governance Principles and Recommendations (3rd Edition) released by the Australian Stock Exchange Corporate Governance Council, the examples of interests, positions, associations, and relationships that might cause doubts about the independence of a director include if the director:

(a) is, or has been, employed in an executive capacity by the entity or any of its child entities and there has not been a period of at least three years between ceasing such employment and serving on the board;

(b) is, or has been within the last three years, a partner, director or senior employee of a provider of material professional services to the entity

(c) is,or has been within the last three years, in a material business relationship (eg as a supplier or customer) with the entity, or an officer of, or otherwise associated with, someone with such a relationship

(d) is a substantial security holder of the entity or an officer of, or otherwise associated directly with, a substantial shareholder of the company. In accordance with Section 9 of the Corporations Act, a substantial shareholder holds greater than 5% of BKI’s issued capital.

(e) Has a material contractual relationship with the entity other than as a director

(f) Has close family ties with any person who falls within any of the categories described above; or

(g) has been a director of the entity for such a period that his or her independence may have been compromised.

6.2 In each case, the materiality of interest, position, association or relationship needs to be assessed to determine whether it might interfere, or might reasonably be seen to interfere, with the director’s capacity to bring an independent judgement to bear on issues before the board and to act in the best interest of the entity and its security holders generally.

6.3 Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the Company is considered material. In addition, a transaction of any amount or a relationship is deemed material if knowledge of it impacts the shareholders’ understanding of the director’s performance.

7. Meetings
7.1 Board and Committee papers should where possible be provided to directors at least four days prior to the relevant meeting.
7.2 The non-executive directors should meet at least once each year for private discussion of management issues.
7.3 The Board should meet formally at least 6 times per year. In additional the Board will meet whenever necessary to deal with specific matters needing attention between the scheduled meetings.

8. Board Committees
8.1 The Board may from time to time establish Committees to assist it in carrying out its responsibilities, and shall adopt Charters setting out matters relevant to the composition, responsibilities and administration of such committees, and other matters that the Board may consider appropriate.
8.2 The Board shall as a minimum establish the following Committees (with discretion as to whether some committees are joint committees), and shall adopt Charters setting out all matters relevant to the composition, responsibilities and administration of those Committees:

 

(a) Audit Committee;

(b) Investment Committee;

(c) Remuneration Committee; and

(d) Nominations Committee.

9. Self Assessment

9.1 The Board and committees shall undertake an annual performance evaluation of itself that:

(a) compares the performance of the Board with the requirements of it’s Charter;

(b) sets forth the goals and objectives of the Board for the upcoming year; and

(c) effects any improvements to the Board charter deemed necessary or desirable.

 

9.2 The performance evaluation shall be conducted in such manner as the Board deems appropriate.

 

9.3 The Chairman must annually assess the performance of each director and meet privately with each director to discuss this assessment.

 

9.4 The Chairman’s performance is reviewed by the Board.

10. Procedures for Handling a Conflict of Interest

10.1 A Director who has:

(a) a material personal interest in a matter which relates to the affairs of the company; or

(b) any other interest which the Director believes is appropriate to disclose in order to avoid an actual conflict of interest or the perception of a conflict of interest,

may not be present at a meeting when the matter is being considered, and may not vote on the matter.

The minutes of the meeting should record the decision taken by the Directors who do not have an interest in the matter.

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DIRECTOR REMUNERATION POLICY

TABLE OF CONTENTS
1. Introduction and purpose
2. Policy
3. Procedure
4. Compensation structure
5. Exclusions

 

1. Introduction and purpose

The adopted BKI Investment Company Pty Limited (“BKI”) Remuneration Committee Charter continues unchanged. This document outlines the policy and procedure the Company will follow in the determination of remuneration for its non-executive directors including director fees; committee chair fees; committee membership fees, and special exertion fees to be paid for services provided to the Company over and above their duties as non-executive directors (“special exertion fees”).

 

2. Policy

As a publicly listed Company, the Board of BKI has an ongoing requirement to recruit and retain a suitable number of adequately qualified and experienced non-executive directors to deliver the commercial expectations of its shareholders, to achieve the governance and oversight required of it and to do so at reasonable cost.

The Remuneration Committee is responsible for recommending to the Board the appropriate remuneration for directors.

The Company’s policy is to pay its directors at or below the median market rate of fees paid by similar sized companies, in similar or related industries to itself, cognisant of the frequency and duration of meetings also being comparable.

The Company adopts a similar policy with respect to Chair fees, committee membership fees and special exertion fees.
The Company does not pay performance related incentives to its non- executive directors.

 

3. Procedure

On an annual basis the Remuneration Committee will establish the current market ranges for non-executive director remuneration and any changes in current best practice. To assist it in this process the Committee may procure commercially available data, appoint and retain expert advisers, or utilise information in the business press and/or the knowledge of its members.

Non-executive directors’ fees will be benchmarked whenever it is deemed appropriate.

At least once a year the Remuneration Committee will recommend to the Board whether any change in the quantum or the packaging of remuneration is needed to meet the Company’s policy objectives.

Whenever there is a recommended change in the overall quantum of remuneration paid to the non-executive director group as a whole, the Remuneration Committee will also confirm to the Board that the remuneration intended to be paid to non-executive directors falls within the fee cap approved by shareholders. Whenever necessary, the Remuneration Committee will recommend to the Board the extent to which the cap should be increased at a subsequent meeting of shareholders to facilitate the Company’s policy objectives in the medium term.

 

4. Compensation structure

The Company favours a fixed cash fee basis for the payment of non- executive directors. Those members who serve as Chairs of Committees may receive an additional fee if determined by the Remuneration Committee.

The Company will not offer to non-executive directors any of the following:

performance related incentive payments, or

performance related incentive plan participation, or

retirement benefits other than statutory superannuation payments

 

5. Exclusions

This policy does not cover the determination of remuneration for executive directors. Remuneration for executive directors is covered by a separate policy “BKI Executive Remuneration Policy”.

 

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POLICY AND PROCEDURE FOR SELECTION AND APPOINTMENT OF DIRECTORS

TABLE OF CONTENTS

1.0 INTRODUCTION AND PURPOSE
2.0 POLICY
3.0 PROCEDURE
3.1 Regular review of Board composition
3.2 Requirements of potential directors
3.3 Selecting a candidate
3.4 Appointment of director
3.5 Requirements after director is appointed
3.6 Letter of appointment

 

4.0 Board skills matrix

 

1.0 INTRODUCTION AND PURPOSE

This document outlines the policy and procedure BKI Investment Company Limited
(“BKI”, “the Company”) will follow in appointing a new director.
The Board should have sufficient Directors to discharge its obligations but no more than 10. The majority of the Board should be independent, or be able to bring independent judgement to bear in the execution of their duties.

 

2.0 POLICY

To ensure the Board of BKI consists of members with the range of skills and qualities to meet its primary responsibility for promoting the success of BKI and its subsidiaries (“the Group”) in a way that ensures the interests of shareholders and stakeholders are promoted and protected.
Retiring directors are not automatically re-appointed. Directors are appointed for a period of no more than three years and are subject to the selection and appointment procedures outlined below.
Board renewal is assured through a policy of regular Board skills matrix review (3.1.1. and 4.0) and special requirements for nomination after a director has served 9 years and/or three terms of office.
The Remuneration Committee is responsible for recommending to the Board the appointment or re-appointment of all directors.

 

3.0 PROCEDURE

Directors should ensure the Company is properly managed to protect and enhance shareholder value, to meet the Company’s obligations to all stakeholders including shareholders, and to comply with all the Company’s legal obligations including compliance with the Corporations Act and ASX Listing Rules. In carrying out this duty, the Board should always be mindful of the need for establishing a Board that enhances the efficient and effective running of the Group. The following procedure is to be followed in selecting and appointing a new director to the Board of BKI:

 

3.1 Regular review of Board composition

The Remuneration Committee will regularly (at least annually) review the size and composition of the Board. This review should consider:

3.1.1 The Board’s current skills and qualities compared to the desired skills matrix outlined in Section 4; and

3.1.2 The needs of the Company for the current business structure as well as considering the future; and

3.1.3 The balance of independence.

 

3.2 Requirements of potential directors

Potential Board candidates should:

3.2.1 Complement the current board composition – i.e. is there an appropriate mix of directors with financial expertise and relevant industry experience?

3.2.2 Have the required skills, knowledge and expertise to add value to the Board.

3.2.3 Provide the Board with further competencies and be able to provide independent and objective advice.

3.2.4 Have no material conflicts of interest with the Company.

3.2.5 Have a reputable standing in the business community.

3.2.6 Be able to commit the necessary time to their position. In general, the maximum number of directorships or equivalent positions for an individual should not exceed five, unless the director can clearly demonstrate that they have the time to commit to additional appointments. Each non-executive director should specifically acknowledge to the Company prior to appointment or being submitted for election that they will have sufficient time to meet what is expected of them.

 

3.3 Selecting a candidate

3.3.1 The Remuneration Committee will generate a list of potential candidates. This list can be developed using the Remuneration Committee members’ networks or by using the services of an independent executive search firm.
3.3.2 The Remuneration Committee will review the list of candidates to ensure they meet the requirements of the selection criteria and reflect the Board policy with respect to diversity. If no clear candidate stands out then a short list will be prepared and Remuneration Committee members will interview each short- listed candidate. The Remuneration Committee will then recommend to the Board the preferred candidate to become a director of the Company.
3.3.3 Where there is a choice to be made between candidates, the Board has a responsibility to shareholders to enable a fair and professional comparative assessment of the candidates’ skills and experience in light of identified Board needs and to advise shareholders about the outcome of that assessment, with the objective that the election will result in the Board having the best mix of available skills to deal with the circumstances facing the Company. As such, the Board will, in a Notice of Meeting, recommend to shareholders eligible to vote any candidate/s it considers will best fit the current identified needs of the Board. If there are “open” proxy votes, the chairperson of the meeting will exercise those votes in favour of the Board’s recommended candidate/s.
3.3.4 Once the Board has agreed on the preferred candidate to become a director, that person should be approached by the Chairman of the Company and/or the Chairman of the Remuneration Committee, as most appropriate in the particular circumstance, to provide a signed consent to act as a director of the Company.

 

3.4 Appointment of director

3.4.1 The appointment of directors is to include the determination of the terms, conditions, responsibilities and expectations of the position such that any potential candidate can fit the criteria which satisfy the objective of the appointment.
3.4.2 Non-executive directors should be appointed subject to the Company’s constitution, ASX Listing Rules and Corporations Act provisions.
3.4.3 The ultimate decision about who is elected to the Board is to be made by the shareholders.
3.4.4 Candidates’ qualifications, professional experience and assertions will be verified prior to appointment, including but not limited to:

• Professional qualifications directly with the issuing institutions

• All current board, executive and other relevant positions and assertions directly with the chair and/or most senior manager as appropriate

• Professional assertions with referees, including at least one director/manager to whom the candidate reported. Referee profiles and contact details are retained.

3.4.5 The Remuneration Committee must provide shareholders with all material information in the Company’s possession relevant to a decision whether to elect or not to elect a director.

 

3.5 Requirements after director is appointed

3.5.1 Upon a candidate/s accepting nomination or appointment, the Remuneration Committee is responsible for ensuring that all nomination and appointment procedures comply with the Company’s constitution and the Corporations Act. The Remuneration Committee is to forward any recommendation for appointment or removal of a director to the Board for consideration and further action.

3.5.2 The CEO is responsible for ensuring that the new director is inducted and that they have every opportunity to increase their knowledge about the Company to ensure that they can participate in an effective manner in Board deliberations. This process is to be monitored by the Remuneration Committee.

3.5.3 The chairperson of the Remuneration Committee is responsible for ensuring that all appropriate documentation in relation to the appointment is finalised. This includes such items as minutes, voting and contract documentation.

3.5.4 If the appointment is made between general meetings, the agreed candidate is to be appointed to fill a casual vacancy or as an addition to the Board. In accordance with the constitution of BKI, the director then holds office until the next annual general meeting and is eligible for election at that meeting.

3.5.5 ASIC must be notified within 28 days of the appointment of a director to the Board.

3.5.6 Under Listing Rule 3.16.1, the ASX must be notified immediately when there has been a change of Chairperson or appointment/resignation of a Director.

 

3.6 Letter of appointment

Once a candidate has given their formal consent and the Board has resolved to appoint them as a director, the Company will send out a letter of appointment. This appointment letter should include the following:

• The term of the appointment, including period, commencement date, the need to retire at the next annual general meeting (if applicable) and then by rotation, at least every three years.

• Board’s expectations of the Director.

• Expected time commitment.

• Special duties relating to the Director’s special knowledge and experience.

• Induction process

• Procedure regarding conflict of interest

• Remuneration

• Superannuation arrangements

• Insurance arrangements

 

4.0 Board skills matrix

The Board has determined that the following skills are required for an effective Board. Maintaining this skills matrix, which will be reviewed from time to time by Remuneration, is considered desirable in the selection of Directors:

• Experience in chairing boards, particularly for ASX-Listed entities

• Accounting experience

• Sufficient experience to enable them to act as chair of the audit committee

• Experience in determining remuneration, with sufficient experience to enable them able to act as chair of the remuneration committee

• Knowledge of the investment industry

• Knowledge and experience in managing investment funds for third parties

• Experience of doing business across a wide variety of Australian industries

• Network of contacts across a broad range of Australian businesses and industry groups

• Broad knowledge of and insight into Australian and international economic conditions and trends

 

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DIRECTORS CODE OF CONDUCT

This Code of Conduct sets ethical standards for the directors of BKI Investment Company Limited. Directors will pursue the highest standards of ethical conduct in the interests of shareholders and all other stakeholders.
The following six principles govern their conduct.

 

Honesty and Integrity

Directors shall act honestly and with integrity in all of their dealings for the company.
Directors will not discriminate on the grounds of people’s race, religion, gender, marital status or disability.
Directors will not make promises or commitments that BKI does not intend, or would be unable, to honour.
Director’s conduct, at all times will be such that their honesty is beyond question. Directors shall adhere to the truth, and not mislead directly or indirectly nor make false
statements, nor mislead by omission.

 

Personal Transactions

Directors personal or other business dealings will be kept separate from their dealings as a director of BKI.
Directors shall not use the name of BKI to further any personal or other business transaction. Directors shall use goods, services and facilities provided to them by BKI, strictly in
accordance with the terms on which they are provided.

 

Confidentiality of Information

Directors will ensure that confidential information relating to customers, BKI staff and BKI’s operations is not given either inadvertently or deliberately to third parties without the consent of BKI.
Directors will not use information obtained by them as a Director of BKI for personal financial gain, nor will that information be used to obtain financial benefit for any other person or business.
Directors shall respect the privacy of others.

 

Disclosure of Interests

Directors shall fully disclose active private or other business interests promptly and any other matters which may lead to potential or actual conflicts of interest in accordance with such policies that the Directors may adopt from time to time.
Directors shall fully disclose all relationships they have with BKI in accordance with policies on independence that Directors may adopt from time to time.
Directors dealing with BKI will always be at arm’s length to avoid the possibility of actual or perceived conflicts of interest.

 

Abiding by the Law

Directors shall abide by the law at all times.

 

Payments, Gifts, Entertainment and Travel

Directors shall not use their status as a director to seek personal gain from those doing business or seeking to do business with BKI.

Directors shall not accept any personal gain of any material significance if offered.

 

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EMPLOYEE CODE OF CONDUCT

BKI’s Code of Conduct sets ethical standards for BKI employees to embrace and advocate. This ethical framework delivers an environment in which we, as BKI employees, can excel regardless of race, religion, age, disability or gender. The following six principles govern our conduct, wherever BKI operates.

 

1. Honesty
I will not make statements, promises or commitments that I do not believe to be true or which I or BKI do not intend, or are unable, to honour.

My conduct will be such that my honesty is beyond question.

In all communications, I will adhere to the truth, and will not knowingly make false statements, nor mislead directly, indirectly or by omission.

I will at all times deal fairly and in good faith with BKI clients, suppliers and competitors, as well as with work colleagues and other parties.

I will treat all people with respect and will undertake my duties with care and diligence, and will uphold BKI’s Values.

I will protect BKI’s reputation and assets.

 

2. Personal Transactions and Gain
My personal dealing will be kept separate from my business dealings.

I will not use the name of BKI, nor any information obtained in the course of my employment or as a result of my position with BKI, to further any personal transaction or gain.

I will use goods, services and facilities provided to me by BKI strictly in accordance with the terms on which they are provided, and will ensure that such goods and facilities are properly protected.

 

3. Confidentiality of Information
I will respect the privacy of others.

I will take care to ensure that confidential information relating to clients, work colleagues, suppliers and BKI’s operations is properly protected and not disclosed to third parties, unless allowed or required under relevant law or regulation.

I will not use information obtained in the course of my employment or as a result of my position with BKI for personal financial gain, nor allow that information be used to obtain financial benefit for any other person or company.

 

4. Conflict of Interest
My primary business loyalty is to BKI.

I will immediately and fully disclose to my supervisor or line manager any personal matters that may lead to actual or perceived conflicts of interest.

My dealings with clients, suppliers and other parties will always be at arm’s length to avoid the possibility of actual or perceived conflicts of interest.

 

5. Abiding by the Law and this Code
I will abide by the law and this Code.

I will not take any action, nor allow any omission, that will breach any law or regulation (including insider trading laws) of the country in which I work.

I will immediately report knowledge of any actual or potential breaches of the law or this Code to my supervisor, line manager or business unit compliance manager so that appropriate action can be taken.

I understand that if I breach any law or provision of this Code, the breach will be investigated, which could result in disciplinary action, including termination of my employment with BKI.

I will comply with all statutory and internal disclosure requirements on a timely basis and if applicable to me, will ensure the full, fair, accurate and understandable, disclosure of matters in financial reports.

 

6. Payments, Gifts or Entertainment
I will not accept or provide any gift or entertainment in breach of this Code.

I will not use my employment status at BKI to seek personal gain form those doing business or seeking to do business with BKI, or from any other person or company.

I will not accept any cash payments, however may accept gifts, provided that such gifts are not given in return for any consideration.

I will not accept or provide any entertainment that could reasonably be seen to be excessive or abnormal.

I will not offer, promise or provide a bribe, in any form, from any person, either directly or indirectly, and I will not accept a bribe from any person.

 

 

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REPORT ON DIVERSITY

For the period ended 30 June 2019

Overview:

The Board of BKI Investment Company Limited (BKI) is committed to appointing employees, Directors and other Officers based on merit, free from positive or negative bias on any ground including gender.

BKI currently has four Non‐executive Directors, and two Company Officers (Company Secretaries) appointed on a contract basis through Corporate & Administrative Services Pty Limited (CAS). BKI has appointed an external asset manager, Contact Asset Management Pty Limited (Contact), to manage its investment portfolio. This minimalist organisational structure, combined with low Director and Executive turnover, has been a significant driver in the successful establishment of a business model that continues to deliver solid shareholder returns combined with low investment risk while maintaining a competitive cost structure.

The Board has previously determined that, given the current organisation structure, the most appropriate short‐term objectives for addressing gender diversity are not numerical gender targets, but rather the implementation of workplace policies and practices that facilitate workplace diversity.

The company believes it has in place a suite of policies and practices in place that will ensure that when new employees or Board members are required, the Company will recruit from a diverse pool of potential employees or Directors, all of whom have skill sets appropriate for the role in question. The Company is also confident that both Contact and CAS, the two entities effectively providing management services to BKI, have in place a similar suite of policies and practices.

The company will continue to monitor and update these policies and procedures where it identifies areas of potential improvement.

Proportion of women employees in the whole organisation, women in senior executive positions and women on the Board

Role Female Total Male Total Female % Male %
Director Nil 4 0% 100%
Executive Employees Nil Nil N/A N/A
Other Employees Nil Nil N/A N/A
Other Officers (Contracted*) 1 1 50% 50%
Total Employees and Officers 1 5 20% 80%

* through Corporate & Administrative Services Pty Limited

 

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BKI INVESTMENT COMPANY LIMITED (BKI) CONTINUOUS DISCLOSURE & SHAREHOLDER COMMUNICATIONS POLICY

The BKI Market Disclosure Policy is designed to ensure that:

There is full and timely disclosure of BKI’s activities to shareholders and the market, in accordance with BKI’s legal and regulatory obligations; and

All stakeholders (including shareholders, the market and other interested parties) have an equal opportunity to receive and obtain externally available information issued by BKI.

The Policy reflects BKI’s obligation to comply with the disclosure requirements of the listing rules of the Australian Stock Exchange (“ASX”) as well as relevant Corporations Legislation.

The Policy is reviewed regularly to ensure that the Policy reflects any legislative or regulatory requirements or “best practice” developments.

 

Disclosure Principle

BKI will immediately notify the market of any “price-sensitive” information concerning BKI in accordance with legislative and regulatory disclosure requirements.

Information will be “price-sensitive” if a reasonable person would expect that information to have a material effect on the price or value of BKI’s securities.

A reasonable person would be taken to expect information to have a material effect on the price of BKI’s securities, if the information would, or would be likely to, influence investors in deciding whether to buy, hold or sell BKI securities.

Events which are judged to have a possible material effect on the price or value of BKI
shares, include:

financial performance and material changes in financial performance or projected financial performance

changes in Board directors and senior executives

mergers, acquisitions/divestments or material changes in assets

significant developments with regard to new projects or ventures

material changes in BKI’s shares or debt securities

major new contacts

material changes in service lines

media or market speculation

industry issues which have, or which may have, a material impact on BKI

Where there’s doubt over whether an issue might materially affect the price or value of BKI’s shares, The Board of directors will assess the situation with senior executives, and where needed, seek external advice.
Price-sensitive information will be disclosed to the Australian Stock Exchange. Disclosures to the market will then be placed on BKI’s web site within 24 hours of the announcement.
All shareholders must receive a copy of BKI’s full annual report. Shareholders must also be updated with the Company’s operations via regular newsletters and other disclosure information.

 

Exceptions to the Disclosure Principle

In accordance with the Australian Stock Exchange Listing Rule 3.1, BKI is not required to disclose price-sensitive information concerning BKI if:

a reasonable person would not expect the information to be disclosed; and

the information is confidential; and

the information is of a kind exempted by Listing Rule 3.1A.3 (eg. Where the information is insufficiently definitive to warrant disclosure; concerns an incomplete negotiation or proposal; is generated for internal management purposes; or its disclosure would breach a law).

 

Disclosure responsibilities and procedures

BKI has designated the Chairman, Chief Executive Officer and the Company Secretary as the
“Disclosure Officers”.

The Disclosure Officers have the responsibility for reviewing proposed disclosures and making decisions in relation to what information can or should be disclosed to the market.

All BKI staff are required to inform the Disclosure Officers of any potentially “price-sensitive’ information concerning BKI as soon as they become aware of it. Staff may speak to the Disclosure Officers if they are in doubt as to whether information is potentially “price- sensitive”.

No employee or associated party are permitted to comment publicly on matters confidential to BKI. Any information which is not public should be treated as confidential until publicly released.

 

Market speculation

The Policy provides that, in general, BKI will not respond to market speculation and rumours unless required to do so by law or the ASX.

 

External communications

Under the Policy, the Chairman or Chief Executive Officer must approve all communication on behalf of BKI to the media, analysts and investors.

BKI will not disclose price-sensitive information to any investor or analyst before formally disclosing the information to the market.

Because of BKI’s obligation to notify the ASX before giving information to any other party, the Policy recognises that BKI will not release price-sensitive information under an embargo arrangement.

 

Trading halts

BKI may request a trading halt from the ASX in order to prevent trading in BKI’s securities by an inefficient and ununiformed market. Such circumstances may include:

if confidential price sensitive information is prematurely or inadvertently made public (for instance during a merger or take over) and where immediate release cannot be made which would fully inform the market, it may be necessary to consider a trading halt to enable BKI to make a complete announcement to the market.

The Disclosure Officers are authorised to determine whether a trading halt will be requested.

 

Participation at general meetings

The Company will encourage participation by investors at the Annual General Meeting to ensure a high level of accountability and to ensure that investors remain informed about the Group’s performance and goals.

The Company will ensure that a Notice of Meeting is issued to investors within the required time frame, and containing sufficient information to make appropriate enquiries of the Company and come to an informed decision when voting at the Annual General Meeting.

The Company will ensure that sufficient time is set aside during the Annual General Meeting to provide investors with sufficient opportunity to question the Board and management on matters affecting the operation, management and oversight of the Company.

 

Facilitating Investor Feedback

The Company will encourage ongoing two-way communication with investors by providing sufficient contact information on the Company’s website and all formal disclosures made on the ASX. The Company will respond to all communications received from shareholders in a timely manner.

 

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CORPORATE GOVERNANCE STATEMENT

The Board of BKI Investment Company Limited (the Company) are committed to achieving and demonstrating the highest standards of corporate governance, and corporate governance arrangements for the Company are set by the Board having regard to the Corporate Governance Principles and Recommendations 3rd Edition set by the ASX Corporate Governance Council (‘the ASX Principles and Recommendations”). Unless otherwise stated, the company complies with the ASX Principles and Recommendations.

The information in this statement is current as at 17 July 2019 and has been approved by the Board.

Principle 1 – Lay solid foundations for management and oversight

A listed entity should establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated.

Recommendation Status
1.1 A listed entity should disclose:

(a) the respective roles and responsibilities of its board and management; and

This is disclosed in the Board Charter, which is available at:

https://bkilimited.com.au/about-us/corporate-governance/#board

1.1 (b) those matters expressly reserved to the board and those delegated to management. This is disclosed in the Board Charter, which is available at

https://bkilimited.com.au/about-us/corporate-governance/#board

1.2 A listed entity should:

(a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and

This is required by the Policy & Procedure for Selection and Appointment of Directors, which is available at:

https://bkilimited.com.au/about-us/corporate-governance/#selection

1.2 (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. The Company has complied with this requirement each year since listing in the information included in the Notice of Meeting issued to shareholders.
1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Contracts confirming Appointment are now in place for each director.
1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board The company secretary is accountable directly to the Board.
1.5 A listed entity should:

(a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;

The company’s Diversity Policy satisfies these requirements.
Recommendation Status
(b) disclose that policy or a summary of it; and The company’s Diversity Policy is available at:

https://bkilimited.com.au/about- us/corporate-governance/#diversity

(c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them, and either:

(1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes);
or

(2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.16

The Company has a Report on Diversity disclosing each of these requirements. The Report on Diversity is available at:

https://bkilimited.com.au/about- us/corporate-governance/#diversityreport

1.6 A listed entity should:

(a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and

The Board Charter contains provisions that govern the annual performance evaluation of the Board
1.6 (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period A performance evaluation was undertaken during 2019FY
1.7 A listed entity should:

(a) have and disclose a process for periodically evaluating the performance of its senior executives; and

The process for evaluating the performance of Key Management Personnel is outlined in the Remuneration Report included in the Annual Report
1.7 (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. A performance evaluation for Key Management Personnel was undertaken during 2019FY in accordance with that process
Principle 2 – Structure the board to add value

A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively.

 

Recommendation Status
2.1 The board of a listed entity should:

(a) have a nomination committee which:

(1) has at least three members, a majority of whom are independent directors; and

(2) is chaired by an independent director,

and disclose:

(3) the charter of the committee;

(4) the members of the committee; and

(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings.

(1) The Company has a nomination committee. All directors not scheduled for re-election at the next AGM are members of the committee, and as such the number of members varies between two and three.

(2) The Committee Chairman is not independent

(3) The Committee Charter is located at https://bkilimited.com.au/about-us/corporate-governance/#nominations

(4) & (5) The committee members and details of meetings held are included in the 2019 Annual Report

2.1 (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.
2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. The skills matrix is detailed in the Policy & Procedure for Selection and Appointment of Directors, which is located at :

https://bkilimited.com.au/about-us/corporate-governance/#selection

2.3 A listed entity should disclose:

(a) the names of the directors considered by the board to be independent directors;

Refer following disclosure on independence
2.3 (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and Refer following disclosure on independence
2.3 (c) the length of service of each director. Disclosed in the 2019 Annual Report
2.4 A majority of the board of a listed entity should be independent directors. The Company has not followed this recommendation – refer following disclosure on independence
2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. The Chairman is not the CEO of the entity, but is not an independent director – refer following disclosure on independence
Recommendation Status
2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. The program for induction is outlined in the Policy & Procedure for Selection and Appointment of Directors, which is located at :

https://bkilimited.com.au/about-us/corporate-governance/#selection

The Company does not have a formal professional development program for directors. The Nomination Committee considers the Board Skills Matrix at least annually to ensure the board as a whole and individual directors possess skills required by the Company, and the entire Board discusses developments in accounting and compliance requirements on an ongoing basis.

Director Independence

The Board currently comprises two independent Non-Executive Directors and two Non-Executive Directors, and the Chair is not an Independent Director.

Of the members of the Board, Mr Hall and Mr Huntley are considered independent, despite both having been BKI directors for over ten years. During the period of their appointment, neither Mr Hall nor Mr Huntley have ever been engaged in an executive capacity, nor have they partaken in any management activities of the company, and their interaction with current BKI management has always been at a governance level. Both Mr Hall and Mr Huntley are shareholders in the Company, but as each controls less than 5% of issued capital, these holdings are not considered substantial and are not considered to adversely affect their independence.

Mr Millner, although meeting other criteria and bringing independent judgement to bear on his role, is not defined as independent, primarily due to the fact that he is an officer of Washington H. Soul Pattinson and Company Limited, which is a substantial shareholder of the Company.

Mr Payne although meeting other criteria, and bringing independent judgement to bear on his role, is not defined as independent, primarily due to the fact that he was Chief Financial Officer of Brickworks Limited for 13 years until September 2016. Brickworks Limited is an associated entity of Washington H. Soul Pattinson and Company Limited, a substantial shareholder of the Company.

In relation to Director independence, materiality is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the Group is considered material. In addition, a transaction of any amount or a relationship is deemed material if knowledge of it impacts the shareholders’ understanding of the Director’s performance.

Recommendations 2.4 and 2.5 have not been followed because the Board believes that all Directors exercise and bring to bear an unfettered and independent judgement towards their duties. BKI listed on the Australian Stock exchange on 12 December 2003 to take over the investment portfolio of Brickworks Limited and, given their long standing association with the BKI Portfolio, the Board is satisfied that Mr Millner and Mr Payne play an important role in the continued success and performance of the Group.

In accordance with the Corporations Act 2001, any member of the Board who has an interest that could conflict with those of the Company must inform the Board. Where the Board considers that a significant conflict exists, the Board will exercise its discretion as to whether the Director concerned should remain in the meeting but be required to refrain both from participating in the relevant discussion and voting on any matter relating to the conflict, or whether the Director concerned should remove themself from the meeting while the matter is considered.

Mr Millner and Mr Payne do not meet the criteria for independence in accordance with the ASX Corporate Governance Principles and Recommendations, however, for the reasons stated above they can be considered to be acting independently and in the best interest of the Group in the execution of their duties.

Principle 3: Act ethically and responsibly

A listed entity should act ethically and responsibly.

Recommendation Status
3.1 A listed entity should:

(a) have a code of conduct for its directors, senior executives and employees; and

The Company has a Directors’ Code of Conduct and an Employee Code of Conduct
3.1 (b) disclose that code or a summary of it. The Directors’ Code of Conduct is available at: https://bkilimited.com.au/about-us/corporate-governance/#directorconduct

The Employee Code of Conduct is available at https://bkilimited.com.au/about-us/corporate-governance/#executiveconduct

Principle 4: Safeguard integrity in corporate reporting

A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting.

 

Recommendation Status
4.1 The board of a listed entity should: (1) The Company has an audit committee with three members, the majority of whom are independent directors.

(2) The Committee Chairman is independent

(3) The Committee Charter is located at https://bkilimited.com.au/about-us/corporate-governance/#audit

(4) the qualifications and experience of all directors are included in the Directors’ Report

(5) Details of meetings held are included in the 2019 Annual Report

4.1 (a) have an audit committee which:

(1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and

(2) is chaired by an independent director, who is not the chair of the board, and disclose:

(3) the charter of the committee;

(4) the relevant qualifications and experience of the members of the committee; and

(5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(1) The Company has an audit committee with three members, the majority of whom are independent directors.

(2) The Committee Chairman is independent

(3) The Committee Charter is located at https://bkilimited.com.au/about-us/corporate-governance/#audit

(4) the qualifications and experience of all directors are included in the Directors’ Report

(5) Details of meetings held are included in the 2019 Annual Report

4.1 (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.
4.2 A listed entity should:

The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

The Company complies with this recommendation. The Company does not have a CEO or CFO, but a representative of the investment Manager and the Company Secretary provide the required declaration on the basis that they perform the functions of CEO and CFO respectively for the purposes of this governance procedure.
4.3 A listed entity should:

A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

The Company complies with this recommendation.
Principle 5: Make timely and balanced disclosure

A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities.

Recommendation Status
5.1 A listed entity should:

(a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

The Company has a Continuous Disclosure & Shareholder Communications Policy.
5.1 (b) disclose that policy or a summary of it. This policy is available at:

https://bkilimited.com.au/about-us/corporate-governance/#continuous

Principle 6: Respect the rights of security holders

A listed entity should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively.

Recommendation Status
6.1 A listed entity should:

provide information about itself and its governance to investors via its website.

The Company complies with this recommendation.
6.2 A listed entity should:

design and implement an investor relations program to facilitate effective two-way communication with investors.

This information is included in the Company’s Continuous Disclosure & Shareholder Communications Policy, which is available at:
https://bkilimited.com.au/about-us/corporate-governance/#continuous
6.3 A listed entity should:

disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

This information is included in the Company’s Continuous Disclosure & Shareholder Communications Policy which is available at:
https://bkilimited.com.au/about-us/corporate-governance/#continuous
6.4 A listed entity should:

give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically..

The Company complies with this recommendation.
Principle 7: Recognise and manage risk

A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework.

Recommendation Status
7.1 The board of a listed entity should:

(a) have a committee or committees to oversee risk, each of which:

(1) has at least three members, a majority of whom are independent directors; and

(2) is chaired by an independent director,

and disclose:

(3) the charter of the committee;

(4) the members of the committee; and

(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

The Company has an Audit committee, which has been delegated responsibility for overseeing the Company’s Risk Management Framework. The Company also has an Investment Committee which has delegated authority to manage investment risk, which the Board has assessed is the Company’s primary risk.

The Audit Committee has three members, the majority of whom are independent directors. Further information on the Audit Committee has been provided against Recommendation 4.1

The investment committee does not have a majority of members who are independent directors, and the Chairman is the Chairman of the Board, who is not considered to be independent.

The Investment Committee does not have a Charter.

The members of the Investment Committee are listed in the following disclosure on risk management. Attendance by Non-Executive directors at meetings of the Investment Committee is summarized in the 2019 Annual Report

7.1 (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. The Company has a Risk Management Policy that provides guidance for the full Board in discharging its responsibilities in risk management, which is considered appropriate given the size of the Board. The policy is available at: https://bkilimited.com.au/about-us/corporate-governance/#riskmanagement

Refer following disclosure on risk management.

7.2 The board or a committee of the board should:

(a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and

The Company complies with this recommendation.
7.2 (b) disclose, in relation to each reporting period, whether such a review has taken place. A review was conducted during 2019FY
7.3 A listed entity should disclose:

(a) if it has an internal audit function, how the function is structured and what role it performs; or

The Company does not have an internal audit function.
7.3 (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. The Board reviews the implementation of the Risk Management Policy and the entity’s risk management framework on an annual basis.
7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. The Company does not have any material exposure to economic, environmental and social sustainability risks.

The Board operates to minimise exposure to investment risk, in part, by implementing stringent processes and procedures to effectively manage investment risk. Management of investment risk is fundamental to the business of the Group being an investor in Australian listed securities.

BKI has an Investment Committee that performs, among other roles, investment risk mitigation. Below is a current list of members of the Investment Committee.

RD Millner (Chairman)
AJ Payne
IT Huntley
TCD Millner (Portfolio Manager, Contact Asset Management)
W Culbert (Portfolio Manager, Contact Asset Management)

The main responsibilities of the Committee are to:

• assess the information and recommendations received from the Investment Manager regarding the present and future investment needs of the Group

• assess the performance of the Portfolio Managers

• evaluate investment performance.

The Board is committed to the identification and quantification of risk throughout the Group’s operations.

Considerable importance is placed on maintaining a strong control environment. The Board has approved a Risk Management Policy governing the effective discharge of the responsibilities of the Board, the Company Secretary, and the external Investment Manager for the management of business, market, credit, operational liquidity and reputational risk. There is an organisational structure with clearly drawn lines of accountability. Adherence to the code of conduct is required at all times and the Board actively promotes a culture of quality and integrity. The Audit Committee has been given primary responsibility for overseeing certain aspects of the Company’s broader risk management framework.

Principle 8: Remunerate fairly and responsibly

A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders.

 

Recommendation Status
8.1 The board of a listed entity should:

(a) have a remuneration committee which:

(1) has at least three members, a majority of whom are independent directors; and

(2) is chaired by an independent director,

and disclose:

(3) the charter of the committee;

(4) the members of the committee; and

(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(1) The Company has a remuneration committee with four members, of whom two are independent. – refer below commentary on committee membership.

(2) The current Chair of the committee, Mr AJ Payne is not independent – refer below commentary on committee Chairman’s role.

(3) The Remuneration Committee Charter is available at:

https://bkilimited.com.au/about-us/corporate-governance/#remuneration

(4) & (5) The committee members and details of meetings held are included in the 2019 Annual Report

8.1 (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.
8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. The Director Remuneration Policy is available at:

https://bkilimited.com.au/about-us/corporate-governance/#director

The Executive Remuneration Policy is available at:

https://bkilimited.com.au/about-us/corporate-governance/#executive

The Company does not directly employ any senior executives. BKI has appointed Contact Asset Management P/L as the Company’s Investment Manager – management fees payable for services rendered are governed by an Investment Management Agreement.

8.3 A listed entity which has an equity-based remuneration scheme should:

(a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

This is covered by the Executive Remuneration Policy
8.3 (b) disclose that policy or a summary of it. This is available at:

https://bkilimited.com.au/about-us/corporate-governance/#executive

Independence of Remuneration Committee

The Group has established a Remuneration Committee consisting of the following members:

AJ Payne (Chairman)
DC Hall
RD Millner
IT Huntley

As noted on page 4 of the Corporate Governance Statement, neither Mr RD Millner nor Mr AJ Payne is considered to be independent.

The Directors of the Company agree that, given the size of the Board and the nature of the Company’s activities, it is appropriate for all directors to be members of the remuneration committee, notwithstanding that the Company therefore does not comply with Recommendation 8.1(a)(1). The Directors also agree that Mr Payne, while not classified as independent, brings independent judgment to bear on his role, and is an appropriate committee chairman given the scope of his executive responsibilities as former Group CFO of Brickworks Limited.

Trading Policy

A copy of the Company’s Share Trading Policy, which has been fully endorsed by the Board and applies to all Directors and employees, is available at https://bkilimited.com.au/about-us/corporate-governance/#share

 

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RISK MANAGEMENT POLICY

Contents

1. Purpose
2. Role of the Board & Management
3. Duties of the Board & Management

 

1. Purpose

1.1 Provide guidance in the effective discharge of the responsibilities of the Board of Directors’ and Management for business, market, credit, operational, liquidity and reputable risk management.

 

2. Role of the Board and Management

2.1 The Board is ultimately responsible for deciding the nature and extent of the risks the Company is prepared to take to meet its business objectives.

2.2 The Board may do all things necessary to perform its duties and fulfil its purpose, including powers to:

approve principles, policies, strategies, processes and control frameworks for the management of risk;

approve investments, divestments and credit transactions beyond the approval discretion of executive management and/or the Investment Manager;

sub-delegate it powers and discretions to executives of the Company and/or the Investment Manager, with or without power to delegate further.

2.2 The Board has unrestricted access to executives of the Company and to any Investment Manager appointed by BKI.

2.3 The Board has power to direct any special investigations deemed necessary and to engage and consult independent experts where considered necessary or desirable to carry out its duties and rely on the advice of such experts.

2.4 Each member of the Board is entitled to rely on information and advice provided by executives of the company and by an Investment Manager, on matters within their responsibility, and on external professionals on matters within their areas of expertise, and may assume the accuracy of information provided by such persons, unless it would be unreasonable in the circumstances to do so.

 

3. Duties of the Board

3.1 The duties of the Board are to:

(a) set the risk appetite for the Company;

(b) receive updates and assurances from the Company’s Executives and any Investment Manager concerning BKI’s risk management principles and policies, strategies, processes and controls including the discretions conferred on executive management and any Investment Manager, in order to oversee the effectiveness of them and, if thought fit, approve or vary them;

(c) receive reports from Company executives and the Investment Manager concerning credit, including the Annual Risk Assessment, in order to oversee these risks;

(d) receive reports from Company executives and the Investment Manager concerning credit transactions beyond the approval discretion of Company executives and the Investment Manager, in order to consider and, if thought fit, approve them;

(e) oversee risk associated with credit transactions, individual high risk and nonaccrual accounts (and associated provisioning), trading risk limit approvals and discretions framework;

(f) receive reports from Company executives and the Investment Manager concerning the risk implications of new and emerging risks, organisational change and major initiatives, in order to monitor them;

(g) receive reports from Company executives and the Investment Manager concerning resolution of significant risk exposures and risk events, in order to monitor them and, if thought fit, approve them;

(h) oversee compliance by the Company with applicable laws relating to the operation of its business;

(i) receive reports from Company executives and the Investment Manager concerning the Company’s insurance strategy, including the coverage and limits of the insurance policies managed at a Company level, in order to monitor them and, if thought fit, approve or vary them.

4. Duties of Management

4.1 Company executives and the Investment Manager are responsible for:

(a) the preparation, presentation and integrity of information and all matters about which the Board should be informed;

(b) the design, implementation and maintenance of an appropriate risk management framework; and

(c) ensuring the entity operates within the risk appetite set by the Board.

4.2 The risk management framework implemented by management should incorporate appropriate principles and policies, internal controls and processes designed to identify and address unacceptable risk, as approved by the Board from time to time.
This should include, but is not limited to:

(a) ensuring the external auditors appointed by the Board perform adequate testing to confirm the Company maintains ownership of all investments recorded as assets within the financial statements, and that such assets are
valued appropriately, and

(b) ensuring the external auditors appointed by the Board provide adequate testing to confirm that the Company does not maintain any derivative products or hold any other positions or obligations that are not sanctioned by the Board

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