Vivid Technology
 

Corporate

 

Corporate Governance

Securities Trading Policy

Employee Option Plan

Code of Conduct

 

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Vivid Technology Limited ("VIV" or "the Company") are responsible for ensuring an effective governance environment to safeguard the interests of the Company, its shareholders and other stakeholders. The Board is committed to achieving and maintaining the highest standards of accountability and transparency in the management and conduct of its business. The Board guides and monitors the business on behalf of the shareholders to whom they are accountable.

ASX Listing Rule 4.10.3 requires the Company to disclose the extent to which it has followed the recommendations of the ASX Corporate Governance Council ('Council') during the financial year. The Company's corporate governance principles and policies are structured with reference to the Corporate Governance Council's best practice recommendations as outlined in the ASX Corporate Governance Principles and Recommendations (third edition), issued in 2014. There are 8 principles reported on below. Each principle includes one or more recommendations as well as a guide to reporting.

The Board considers that it generally complies with these principles and recommendations, and notes that where the Company does not comply, this is due to the current relative size of the Company, scale and nature of its current operations.

PRINCIPLE 1 LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Recommendation 1.1: A listed entity should disclose:
(a) the respective roles and responsibilities of its board and management; and
(b) those matters expressly reserved to the board and those delegated to management.

The Vivid Technology Limited board retains responsibility for the following items:
- Setting and monitoring objectives, goals and strategic direction for management with a view to maximising shareholder wealth
- Approving an annual budget and the monitoring of financial performance
- Ensuring adequate internal controls exist and are appropriately monitored for compliance
- Ensuring significant business risks are identified and appropriately managed
- Approving acquisitions
- Ensuring compliance with statutory requirements
- Selecting and appointing new Directors
- Maintaining sound business standards and promoting an ethical business culture.

The board has delegated authority within the following areas to the Executive team:
- Monitoring performance of the business
- Ensuring that the business processes in relation to risk management and assurance are met
- Approving capital expenditure (except acquisitions) within delegated authority levels.

Recommendation 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
(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.

Prior to appointing a new Director, appropriate checks are conducted to ensure the candidate brings a diverse range of experience, expertise, skills and independence relevant to the Company and its business.

Re-election of Directors is managed in accordance with the Listing Rules and the company's Constitution. Upon election or reelection of Directors, relevant information is provided to security holders in order to inform their decision.

Recommendation 1.3: A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

Written agreements are entered into with all new Directors, setting out roles and responsibilities along with other relevant matters.

Written agreements are entered into with all new executives, and all arrangements with current executives are formalised with written service agreements.

Recommendation 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 to the Board, through the Chairman, for the Company's compliance in respect of all corporate governance matters, communications and lodgements with regulators and the administration of the Board and all Committees meetings.

Recommendation 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;
(b) disclose that policy or a summary of it;
(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) respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has de€ned "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 de€ned in and published under that Act.

The company strives to provide the best possible opportunities for current and prospective employees of all backgrounds, and is in the process of formalising a Diversity Policy. This will enable ongoing reporting of performance and progress against measurable objectives.

At 30 June 2016 there was one female on the Board out of a total of six directors. Ms Leslie Butterfield joined the Company on 1 May 2016. There is no representation in senior executive positions, and women represented approximately 24% of employees across the whole organisation, up from 17% last reporting date. (For this purpose, "senior executive position" is considered to be equivalent to the definition of "Key Management Personnel" for the purposes of the company's annual remuneration report within its financial report). Further details of all the Company's Directors is contained within the Director's Report of the Company's 2016 Financial report.

Recommendation 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
(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The Board currently does not have a process for evaluating the performance of the Board, its committees and individual Directors. The Board intends to move to a regular performance evaluation commencing in the current financial year.

Recommendation 1.7: A listed entity should:
(c) have and disclose a process for periodically evaluating the performance of its senior executives; and
(d) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The process for evaluating performance of key executives is via annual performance reviews with reference to appropriate Key Performance Indicators (KPIs), along with interim discussions throughout the year as required.

Performance related discussions were held with senior executives during the year, and from the current period annual evaluations against KPIs will be documented for each senior executive.

PRINCIPLE 2 STRUCTURE THE BOARD TO ADD VALUE

Recommendation 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; or
(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.

This role is retained by the full Board. New Directors are recruited according to the company's needs, based on the required mix of skills, knowledge, experience, independence and diversity.

Re-election of Directors is managed in accordance with the Listing Rules and the Company's Constitution.

Recommendation 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, experience and expertise relevant to the position each Director held is detailed in the Directors Report within the Annual Report.

Recommendation 2.3 A listed entity should disclose:
(a) the names of the directors considered by the board to be independent directors;
(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
(c) the length of service of each director.

The Board of Directors of the Company comprises:

Name                        Considered to be an independent Director*                Length of Service

Charles Macek        Yes                                                                                         Since 3 December 2015
Robert Annells         Yes (since 20 May 2016)^                                                 Since 13 July 2006
Leslie Butterfield     Yes                                                                                         Since 1 May 2016
John Kopcheff          Yes                                                                                         Since 13 July 2006
Samuel Marks          No                                                                                          Since 1 July 2012
Philip Zajac               No                                                                                          Since 4 September 2014

* Free from any business or any other relationship that could materially interfere with, or reasonably be perceived to interfere with the independent exercise of the Director's judgement and each is able to fulfil the role of an independent Director.

 ^ Robert Annells ceased to be a Director of Lakes Oil NL on 20 May 2016.

The Board confirms that in its view, the independent Directors identified above in each case met the criterion during the relevant portion of the financial year of being independent of management and free from outside influences which could materially interfere with the independence and objective judgement of the Director.

The qualifications and experience of Board members are provided in the Directors Report. 

Recommendation 2.4 A majority of the board of a listed entity should be independent directors.

As at the date of this report, a majority of the Company's Directors are considered independent. Up until the 1st of May 2016 there was not a majority of independent Directors on the Board. Details on the Company's Directors is provided above in recommendation 2.3.

Recommendation 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.

Mr Charles Macek is the current Chairman of the Board and is considered to be an independent Director, and Mr Samuel Marks carried out the role of Managing Director or Chief Executive Officer (CEO) during the financial year. Up until the 1st of May 2016 Mr. Robert Annells was the Chairman of the Board and was not considered an independent Director.

Recommendation 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 entity has a formal program for inducting new Directors. Reviews of Board skills and professional development requirements are undertaken as required. Briefings are provided from time to time on ongoing developments in matters relevant to the role of the Board.

PRINCIPLE 3 ACT ETHICALLY AND RESPONSIBLY

Recommendation 3.1 A listed entity should:
(a) have a code of conduct for its directors, senior executives and employees; and
(b) disclose that code or a summary of it.

Directors, senior executives and employees are expected to act ethically and responsibly and in accordance with the company's Code of Conduct, a copy of which can be viewed at the company's website.

Whenever necessary, individual members of the Board may seek independent professional advice at the expense of the Company in relation to fulfilling their duties as Directors.

PRINCIPLE 4 SAFEGUARD INTEGRITY IN CORPORATE REPORTING

Recommendation 4.1 The board of a listed entity should:
(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 quali€cations 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
(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.

The Audit Committee was established in September 2007. The company listed in February 2008. The primary objective of the Audit Committee is to assist the Board in fulfilling the Board's responsibilities relating to accounting and reporting practices of the Company and its controlled entities.

The main functions of the Audit Committee are:
- To act as a committee of the Board of Directors in discharging the Board's responsibilities as they relate to accounting and financial reporting policies, practices and internal controls
- To provide through meetings a forum for communication between the Board, senior financial management and external auditors.

The responsibilities of the Audit Committee include monitoring compliance with requirements of the Corporations Act 2001, Stock Exchange Listing Rules, Australian Securities Commission, taxation legislation and other laws as they apply to the subject matter of the Audit Committee's functions.

The Audit Committee during the financial year comprised Mr John Kopcheff (Chairman) and Mr Robert Annells. As at the date of this report both Directors are considered independent under the Council's definition.

The Company Secretary acts as the Committee secretary assisting members. The Company's external auditors are invited to attend the Committee's meetings. In addition, the Committee is able to seek and obtain input from external consultants as required.

The Audit Committee Charter was adopted in September 2007. A copy of the Charter is publicly available on request.

The number of meetings held by the Audit Committee is disclosed in the Directors' Report within the Annual Report, along with the relevant qualifications of each member of the Committee.

Recommendation 4.2 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.

This recommendation was compiled with for this financial year.

Recommendation 4.3 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 auditor attends the company's AGM each year and is available to answer questions from security holders relevant to the preparation and content of the auditor's report, the conduct of the audit, or the accounting policies adopted by the company.

PRINCIPLE 5 MAKE TIMELY AND BALANCED DISCLOSURE

Recommendation 5.1 A listed entity should:
(a) a written policy for complying with its continuous disclosure obligations under the Listing Rules; and
(b) disclose that policy or a summary of it.

The Company has a policy to immediately disclose to the market any information that a reasonable person would expect to have a material effect on the price or value of the Company's securities. Directors and senior management acknowledge that they each have an obligation to adhere to this requirement.

The Chairman and Managing Director are authorised to make statements and representations on the Company's behalf. The Company Secretary is responsible for overseeing and coordinating the disclosure of information to the ASX, analysts, stockbrokers, shareholders, the media and the public.

The Directors and senior management personnel must ensure that the Company Secretary is aware of all information to be presented at briefings with analysts, stockbrokers, the media and the public.

Prior to such briefings or presentations, any material or price-sensitive information within that has not previously been disclosed to the market is lodged with the ASX. Company announcements are also placed on the company's website.

If information that would otherwise be disclosed comprises matters of supposition or is insufficiently definite to warrant disclosure, or if the effect of a disclosure on the value or price of the Company's securities is unknown, the Company may request that the ASX grant a trading halt or suspend its securities from quotation. Management may consult the Company's external professional advisers and the ASX in relation to whether a trading halt or suspension is required.

PRINCIPLE 6 RESPECT THE RIGHTS OF SECURITY HOLDERS

Recommendation 6.1 A listed entity should provide information about itself and its governance to investors via its website.

The Company's website (www.vividtechnology.com.au) is regularly updated and provides details of information on Directors and senior executives, corporate governance information, annual reports, announcements by the Company to the ASX, and general information on the company and its business.

Recommendation 6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

Communications to shareholders are on a timely basis both printed and electronic as required.

Investors and other stakeholders are also able to contact the company to express their views on matters of concern or interest to them.

Recommendation 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.

The Board encourages participation by shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company's strategy and goals. The company invites its external auditors to attend the meeting for the purpose of answering shareholders' questions.

Recommendation 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 annual report is printed and distributed to shareholders free of charge to all shareholders. An electronic company is also placed on the company's website. The company's arrangements with its share registry include the option to receive some communications electronically.

Shareholders and other interested parties are also encouraged to subscribe to the company's email update service, to receive company announcements and updates electronically.

Communications are formatted to be easily readable on a computer screen or other electronic device, or printed and retained if the reader so chooses.

PRINCIPLE 7 RECOGNISE AND MANAGE RISK

Recommendation 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
(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 Board has responsibility for managing risk and internal control and acknowledges that risk management is a core principle of sound Corporate Governance.

The company's risk management approach encompasses Operational Risk, Financial Risk, Insurance and Internal Control. The Company has not appointed a Risk Management Committee. Due to the importance the Board places on risk management, this responsibility is retained by the full Board.

Operational risk
New initiatives are approved only after extensive review by a highly qualified technical staff and consultants and by submissions to the Board through the Managing Director. Environmental considerations are factors in the consideration of new initiatives and are fully evaluated and reported before approval by the Board.

Financial risk
The Board receives regular financial reports from the Chief Financial Officer, which measure performance and trends against internal forecasts. The reports are discussed at Board Meetings. Any variations from internal forecasts are highlighted, explained and evaluated. In addition to monthly financial reporting, the Company has in place procedures to manage credit, foreign exchange and other business risks.

Insurance
The Board recognises the value of insurance as a risk mitigation strategy and ensures that appropriate insurance cover is in place at all times.

Internal control
Appropriate internal controls are in place to address key risks. Regular monitoring of the effectiveness of the design and operation of internal controls is not carried out by an internal audit function, due to the size and nature of the business. However, the Directors believe the system of internal control is appropriate to the size of the company and its current activities.

Recommendation 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
(b) disclose, in relation to each reporting period, whether such a review has taken place.

The Company is in the process of updating and formalising its risk management framework. The Board did not review the framework during the reporting period, but expects to do so annually commencing in the current financial year.

Recommendation 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
(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 Company does not currently have a separate internal audit function, due to the size and nature of the business. However, the Directors believe the system of internal control is appropriate to the size of the company and its current activities, which includes oversight and monitoring of key risks by the full Board.

Recommendation 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 holds interests in geothermal exploration permits and licenses in Victoria. All of these permits and licenses impose regulations regarding environmental issues. Similarly, a number of our renewable technology projects are subject to planning regulations and approvals which incorporate appropriate environmental regulations. Economic, environmental and social sustainability risks are identified and managed as part of the company's overall risk management process, as overseen by the Board.

PRINCIPLE 8 REMUNERATE FAIRLY AND RESPONSIBLY

Recommendation 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
(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.

The primary objective of the Remuneration Committee is to assist the Board in fulfilling the Board's responsibilities relating to the compensation, bonuses, incentives and remuneration issues of Key Management Personnel. The Remuneration Committee makes recommendations to the Board in respect of remuneration arrangements.

The main functions of the Remuneration Committee are:

- To act as a committee of the Board of Directors in discharging the Board's responsibilities as they relate to remuneration issues of the Key Management Personnel
- To ensure that the company's remuneration and incentive policies, practices and performance indicators are aligned to the Board's vision, values and overall business objectives and are appropriately designed to:
> motivate the Managing Director and employees to pursue the long term growth and success of the company and
> demonstrate a clear relationship between the achievement of the company objectives and performance and
remuneration.

The Remuneration Committee during the financial year comprised Mr John Kopcheff (Chairman) and Mr Philip Zajac. Mr Kopcheff is considered to be independent under the Council's definition. The Remuneration Committee comprises only two members, not both of whom are considered to be independent; therefore the Committee does not currently have a majority of independent directors.

The Company Secretary acts as the Committee secretary assisting members. The Committee is able to seek and obtain input from external consultants as required.

The Remuneration Committee Charter is publicly available on request.

The number of meetings held by the Remuneration Committee is disclosed in the Directors' Report within the Annual Report, along with the relevant qualifications of each member of the Committee.

Recommendation 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.

Non-executive Directors are remunerated for their services from the maximum aggregate amount approved by shareholders for that purpose. Their compensation is reviewed by the Remuneration Committee. There are no termination benefits for nonexecutive Directors appointed since listing.

Contracts with executives detail their remuneration arrangements. They may be entitled to termination benefits as stipulated in their employment contracts and in accordance with relevant state laws governing long service leave and superannuation. Generally, executives have an element of their remuneration at risk. Performance against Key Performance Indicators (KPIs), which are set annually, determines access to the at-risk portion of remuneration.

Further information about the company's remuneration policies can be found in the Remuneration Report which forms part of the annual report.

Recommendation 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
(b) disclose that policy or a summary of it.

For scheme participants who are key management personnel, hedging of any unvested portions of at-risk remuneration is prohibited by law.