Corporate Governance

Pan Asia Metals Limited (PAM) is committed to implementing high standards of corporate governance, and has endorsed the ASX Corporate Governance (Council) Corporate Governance Principles and Recommendations (ASX Principles). PAM aims to follow the best practice recommendations for listed companies to the extent that it is practicable.

The ASX Corporate Governance Council has developed and released the ASX Principles for Australian listed entities in order to promote investor confidence and to assist companies to meet stakeholder expectations. The recommendations are not prescriptions, but guidelines. However, under ASX Listing Rules, PAM is required to provide a statement on its website disclosing the extent to which it has followed the recommendations in the reporting period and to complete Appendix 4G to the Listing Rules each year. Where PAM does not follow a recommendation, it must identify the recommendation that has not been followed and give reasons for not doing so. Where PAM’s corporate governance practices do not correlate with the practices recommended by the Council, or PAM does not consider it practicable or necessary to implement these principles due to the size and stage of development of its operations, the Board’s reasoning for any departure is explained hereunder.

Set out below are the fundamental corporate governance practices of PAM and the extent to which PAM complies with ASX Principles. The main policies and practices adopted by PAM, will take effect from listing on ASX. In addition, many governance elements are contained in the Constitution of PAM.

Principle 1: The Board lays solid foundations for management and oversight
Recommendation 1.1 – Board Charter
PAM has a board charter which is disclosed on its website and which details the respective roles and responsibilities of its Board and management and those matters which are expressly reserved to the Board and which are delegated to management therein.

Recommendation 1.2 – Verifying the Suitability and Qualifications of Prospective Directors and Senior Executives
PAM undertakes appropriate checks before appointing a director or senior executive or endorsing the election of any prospective director and provides security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director by providing biographical details of candidates including relevant qualifications, experience and skills and details of any other material directorships currently held by the candidate and in the case of a candidate standing for election as a director for the first time:

  1. confirmation that the entity has conducted appropriate checks into the candidate’s background and experience which have been satisfactory;
  2. and if the Board considers that the candidate will, if elected, qualify as in independent director, a statement to that effect.

Recommendation 1.3 – Directors’ Agreements
PAM has a written agreement with each director and senior executive setting out the terms of their appointment including a letter of appointment and a service contract (where appropriate) incorporating the duties and responsibilities of each director and executive.

Recommendation 1.4 – Company Secretary
The Company Secretary of PAM is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board and is employed under a letter of appointment. He or she is responsible for advising the Board and its committees on governance matters and monitoring that Board and Company policies and procedures are followed. The Company Secretary’s appointment is approved by the Board.

Recommendation 1.5 – Diversity Policy
PAM has a diversity policy which is disclosed on its website and which sets measurable objectives for achieving gender diversity in the composition of its Board, senior executives and workforce generally and discloses in relation to each reporting period:

  1. the measurable objectives set for that period to achieve gender diversity; and
  2. the entity’s progress towards achieving those objectives.

Recommendation 1.6 – Evaluation of Board and Executive Officer Performance
PAM has a process for periodically evaluating the performance of the Board, its committees and individual directors and discloses for each reporting period whether a performance evaluation has been undertaking in accordance with that process during or in respect of that period in its Annual Report for that period. A non-executive director is appointed to evaluate the performance of the Chairman. Other evaluations are conducted by the Nomination and Remuneration Committee.

Recommendation 1.7 – Evaluating the Performance of Senior Executives
PAM has a process for evaluating the performance of its senior executives at least once every year and discloses whether a performance evaluation has been undertaken in accordance with that process during or in respect of that year. This process is conducted by the Nomination and Remuneration Committee.

Principle 2: Structure the Board to be effective and add value
Recommendation 2.1 – Nomination and Remuneration Charter
PAM has a Nomination and Remuneration Committee which has three members, a majority of whom are independent directors or executives and which is chaired by an independent director. The charter is disclosed on the Company’s website. Because of the present size and structure of the Board not all members of the Committee are directors.

At the end of each year, the number of times the committee meets throughout the year and the individual attendances of the members of those meetings is disclosed in the Annual Report.

Recommendation 2.2 – Board Qualifications and Experience
PAM discloses the qualifications and experience of each Director and his/her period in office in its Annual Report each year. The Board monitors the qualifications and experience of the Board membership through the Nomination and Remuneration Committee.

Recommendation 2.3 – Independence of Directors
PAM discloses the names of the directors considered by the Board to be independent directors in its Annual Reports and on any information Memoranda or recommendations sent to shareholders.

A director is only characterised and described as an independent director if he or she is free of any interest, position or relationship that might influence, or reasonably be perceived to influence, in a material respect their capacity to bring an independent judgment to bear on issues before the Board and to act in the best interests of the Company as a whole.

Recommendation 2.4 – Board Membership
There are three independent directors out of a Board of six Directors but individual directors do not take part in discussions or vote upon Board resolutions in the outcome of which they have a personal interest other than an interest in common with all other shareholders of the Company.

Recommendation 2.5 – Independence of Chairman
The Chair of the Board of PAM at this time is not an independent director because of the size and nature of development of the Company to date and the extensive experience of the present Managing Director of the Company in its development. The Chairman of the Company is presently the CEO of PAM, however PAM has appointed an independent director as the “senior independent director” who fulfils the role whenever the Chair is conflicted. It is intended to review the appointment to the office of Chair of the Company within two years when the Company has further developed its mining assets and when a suitable independent appointee can be found.

Recommendation 2.6 – Rotation of Directors and new Board Members
PAM has both provisions in its constitution and a Nomination and Remuneration Committee appointed to ensure that proper consideration is given to rotation and regeneration of Board membership.

Principle 3: Culture of Acting Lawfully, Ethically and Responsibly
Recommendation 3.1 – Values of the Company
PAM’s standard of values are as set out in its Code of Conduct which is disclosed on the Company’s website.

Recommendation 3.2 – Code of Conduct
PAM has a code of conduct which is disclosed on its website and the Secretary is tasked with bringing any breach thereof to the attention of the Board.

Recommendation 3.3 – Whistleblower Policy
PAM incorporates its whistleblower policy in its Code of Conduct. The Company Secretary is required to ensure that the Board or a committee of the Board is informed of any material incidents reported under that policy.

Recommendation 3.4 – Anti-Bribery and Corruption Policy
PAM incorporates its anti-bribery and corruption policy in its Code of Conduct. The Company Secretary is required to ensure that the Board or a Committee of the Board is informed of any material breaches of that policy.

Principle 4: Safeguard the Integrity of Corporate Reports
Recommendation 4.1 – Audit and Risk Committee
PAM has an audit and risk committee which has at least three members, two of whom are non-executive and independent directors. The Audit Committee is chaired by an independent director, who is not the chair of the Board. The Charter of the Audit and Risk Committee is disclosed on the website of the Company and the relevant qualifications and experience of the members of the committee and, in relation to each year, the number of times the committee meets throughout the year and the individual attendances of the members at those meetings are included in the Annual Report.

Recommendation 4.2 – Approval of Financial Statements
The Board of PAM, before it approves the entity’s financial statements for a financial period, receives 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 opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively as required by Section295A of the Corporations Act. This requirement also extends to the financial statements for any financial period, not only for the financial year.

Recommendation 4.3 – Verification of Integrity of Financial Reports
PAM’s audit committee meets prior to the release of any financial reports to ASX with the auditor to discuss the contents thereof and refers the results of its deliberations thereon to the Board.

Principle 5: Make Timely and Balanced Disclosure
Recommendation 5.1 – Continuous Disclosure Policy
PAM has a continuous disclosure policy which is included on its website. The Company complies with ASX Listing Rule 3.1.

Recommendation 5.2 – Market Announcements
PAM ensures that its directors receive copies of all material market announcements promptly before they have been made.

Recommendation 5.3 – Investor Presentations
PAM releases any substantive investor or analyst presentation on the ASX Market Announcements Platform ahead of the presentation.

Principle 6: Respect the Rights of Shareholders.
Recommendation 6.1 – Maintenance of Website
PAM provides information about itself and its governance to investors via its website and complies with Listing Rule 3.1 in relation to publication of all relevant documents and reports. PAM also has a Shareholder Communication Policy which is displayed on its website.

Recommendation 6.2 – Investor Relations Program
PAM has in investor relations program that facilitates effective two-way communication with investors which is incorporated in its Shareholder Communication Policy.

Recommendation 6.3 – Shareholder Participation
PAM discloses how it facilitates and encourages participation at meetings of shareholders in its Shareholder Communication Policy.

Recommendation 6.4 – Resolutions at Meetings
PAM has provision in its Constitution which allow for all substantive resolutions to be determined by a poll if shareholders request it. The number of votes for or against a resolution is both reported in the Company Minutes and announced to ASX in accordance with the provisions of the ASX Listing Rules.

Principle 7: Recognise and Manage Risk
Recommendation 7.1 – Risk
PAM has an Audit and Risk Committee, the charter and composition of which is displayed on the Company’s website.

Recommendation 7.2 – Review of Risk
The Audit and Risk Committee of PAM is charged with the review of PAM’s risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risks as determined by the Board and such review is disclosed in relation to each reporting period.

Recommendation 7.3 – Internal Audit Function
PAM has an internal audit function which is carried out by the Audit and Risk Committee and is as set out in the charter of that Committee.

Recommendation 7.4 – Environment Risks
PAM has an Occupational Health Safety and Environment Policy the terms of which are displayed on its website.

Principle 8: Remunerate Fairly and Responsibly
Recommendation 8.1 – Remuneration Committee
PAM has a Remuneration Committee which is part of its Nomination and Remuneration Committee, the composition and duties of which are displayed on the policy document displayed on the Company’s website.

Recommendation 8.2 – Non-Executive Director’s Fees
PAM’s constitution provides the method of payment for fees payable to non-executive directors of the Company (Article 88) and also in the Remuneration Committee’s Charter.

Recommendation 8.3 – Equity Based Remuneration
PAM does not at present have a policy for payment of equity based remuneration to its Directors or Officers and for that policy to be altered would require approval by shareholders at a General Meeting.

Principle 9: Overseas Stakeholders
Recommendation 9.1 – Provisions to Asset Participation by Overseas Stakeholders in Company Affairs
PAM is established outside Australia and ensures the meetings of shareholders are held at a reasonable place and time and that all stakeholders and shareholders have the opportunity to receive and consider all public publications, policies and reports of the Company in due time to make comment or enquiries thereon. PAM enforces its Shareholder Communication Policy and ensures that its external auditor or his/her representative attends all general meetings of the Company and is available to answer questions from shareholders on audit and financial matters.