Current as at and approved by the Board on 27 June 2018
Thorney Opportunities Ltd (Thorney Opportunities, TOP or Company) is committed to developing and maintaining an effective system of corporate governance which is commensurate with the size and nature of the Company, its Board and the scope of its operations.
In the following statements we detail how the Company adheres to the 8 core principles and where there is non-adherence we disclose why it is necessary to take a different approach.
Principle 1: Lay solid foundations for management and oversight
The primary role of the Board is to ensure the long-term prosperity of Thorney Opportunities.
The Board is responsible for a broad range of matters and will act in the best interests of the Company to ensure that the business of the Company is properly managed. The Company has no employees and its day-to-day functions and investment activities are managed by Thorney Management Services Pty Ltd (Investment Manager) pursuant to an Investment Management Agreement (IMA) approved by shareholders.
The Board has adopted a Board Charter which stipulates those matters expressly reserved to the Board and which operational activities and what levels of authority have been delegated to the Investment Manager.
The Board may delegate any of these matters to individual Directors, Board Committees or the Investment Manager but any such delegation shall be in accordance with the law and the Company’s Constitution.
The Board meets at least quarterly. At these meetings senior managers of the Investment Manager are available to report on the Company’s operations.
Before being invited to join the Board and standing for election by shareholders, all non-executive Directors have appropriate background checks. All details of directors’ qualifications, skills and experience, other material directorships currently held and any related party disclosures are included in the meeting materials presented to shareholders.
Service arrangements have been agreed between the Company and the Directors with respect to their individual remuneration and other terms of employment. Each Director has entered into an agreement regarding insurance, access to records and disclosure of any trading in TOP securities as required under ASX Listing Rules and the Company’s Trading Policy.
The Company Secretary has a direct reporting line to each Director of TOP in regard to all matters to do with the proper functioning of the Board and the Committees.
As the Company has no employees the Board has determined that a Diversity Policy in compliance with ASX Recommendation 1.5 is not warranted at this time. However, the composition of the Board is periodically reviewed.
The TOP Board undertakes a formal annual performance self-assessment of the Board, the Audit and Risk Committee and the Investment Manager.
An evaluation of Board performance was undertaken during the financial year ended 30 June 2015 with no material changes proposed to the Board processes or individual director contributions.
The Independent directors meet at least once a year to review and evaluate the performance of the Investment Manager.
A satisfactory evaluation of the Investment Manager’s performance for the financial year ended 30 June 2015 was undertaken by the Independent directors.
The Investment Manager has an established induction process for all its employees with responsibilities under the IMA. As part of this induction process, new senior executives will receive briefings on the business of the Company and the Investment Manager and their policies and procedures. These briefings will focus on the key operational, regulatory, risk and compliance issues that are of relevance to the Company and the Investment Manager.
Principle 2: Structure the board to add value
Nomination and appointment of new Directors
ASX Recommendation 2.1 states that a board should establish a nomination committee and disclose a charter. Given the size and nature of the Company, the Board has determined that a Nomination Committee is not warranted.
The Board considers the issues that would otherwise be considered by a Nominations Committee.
Board skills matrix
The TOP Board must comprise directors with an appropriate range of skills, experience and expertise.
|Board skills and experience:||The Board skills matrix sets out the key skills and experience of the Directors and the extent to which they are represented on the current Board and its Committees. In addition to the skills and experience outlined in this table the Board considers that each Director has the appropriate attributes such as
|Executive leadership||All directors|
|Financial markets acumen||All directors|
|Public policy and Regulation||All directors|
|Shareholder engagement||All directors|
Background information on Directors in office at the date of this Annual Report is set out in the Directors’ Report.
The Company’s Constitution provides that there must be a minimum of 3 and a maximum of 10 directors.
Having regard to the size and the nature of its business, the Company has determined that a 4 member board is appropriate and sufficient to enable it to effectively discharge its responsibilities to the Company.
Majority of independent directors
The Board currently comprises 2 independent, non-executive directors (Ashok Jacob and Dr Gary Weiss) and 2 non-independent non-executive directors (Alex Waislitz and Henry Lanzer). The Board regularly assesses the independence of each non-executive director.
|Alex Waislitz||Chairman||Non-independent||21 November 2013||24 November 2017|
|Henry Lanzer||Director||Non-independent||21 November 2013||24 November 2015|
|Ashok Jacob||Director||Independent||21 November 2013||25 November 2016|
|Dr Gary Weiss||Director||Independent||21 November 2013||25 November 2016|
Thorney Opportunities notes that the current Board does not comply with ASX Recommendation 2.4 with respect to a majority of independent directors. The Board considers that all Directors of TOP bring significant expertise and investment experience to the Company and that the current structure is appropriate for the Company at this time.
Directors are elected by shareholders and in accordance with the provisions of the Constitution, no director holds office for a period longer than 3 years without standing for re-election by the shareholders.
Chairman and independence
Thorney Opportunities notes that ASX Recommendation 2.5 states that the chair should be independent and, in particular, should not be the same person as the CEO of the entity.
The Board takes the view that it is in the best interests of shareholders that Mr Waislitz be the Chairman of Thorney Opportunities and we make the following observations:
- Mr Waislitz, as the long-term chairman and CEO of the private Thorney Investment Group, has a demonstrated track record of successful investment performance over 2 decades.
- In November 2013, shareholders voted in favour of all Thorney Investment Group proposals, including the appointment of Mr Waislitz as a director, on the expectation he be appointed Chairman of the Company.
- There are well-credentialed independent directors serving on the Board.
- Delegation of certain responsibilities to Board committees.
- The appointment of Dr Gary Weiss as Lead independent director.
The Company has a program for inducting new directors and encourages all its directors to maintain the skills and knowledge required to effectively perform their role.
Each Director may obtain independent professional advice at the expense of the Company on matters arising in the course of their Board duties. The payment for the cost of the advice by the Company is subject to the approval of the Chairman, which will not be unreasonably withheld.
Principle 3: Act ethically and responsibly
Code of Conduct and Conflicts of Interest
The Company has established a Code of Conduct that provides guidance to Directors and employees of the Investment Manager. Under these principles Directors will:
- conduct business in good faith and in a manner that will maintain confidence in the Company’s integrity;
- perform their duties to high standards of honest, ethical and law-abiding behaviour;
- treat others with dignity and respect; and
- not engage in conduct likely to adversely affect the reputation of Thorney Opportunities.
The Code of Conduct also sets out details of how conflicts of interest should be avoided. Directors must disclose to the Company any material personal interest they or their associates may have in a matter that relates to the affairs of the Company, and inform the Board, via the Company Secretary, of any changes. Where conflicts of interest arise, the Code sets out appropriate arrangements that must be followed.
A copy of the Code of Conduct is available on the Company’s website.
Principle 4: Safeguard integrity in corporate reporting
Thorney Opportunities has established an Audit and Risk Committee and adopted an Audit and Risk Committee Charter. Henry Lanzer (Committee Chairman) and Alex Waislitz have been formally appointed to the Committee but all Directors are invited and encouraged to attend each meeting. The Company notes that its Committee composition and Charter do not conform to ASX Recommendation 4.1, however the Board believes that given the size and nature of the Company and the Board, the committee structure is sufficiently appropriate to independently verify and safeguard the integrity of the financial reporting.
A table of attendance at committee meetings by Directors is included in the directors’ report.
Thorney Opportunities does not employ its own CEO or CFO. However for the purposes of section 295A of the Corporations Act and ASX Recommendation 4.2, the Chairman and Company Secretary provide the required assurances and declarations each half-year.
The Thorney Opportunities Board has received assurance from the Chairman and Company Secretary that, in their opinion:
- the financial records of the Company have been properly maintained;
- the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company; and
- the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
The Audit and Risk Committee Charter includes information on the procedures for selection and appointment of the external auditor of Thorney Opportunities and for the rotation of the external audit engagement partner. In 2013 shareholders appointed Ernst & Young as the Company’s auditor and this marks Year 5 under the partner rotation policy.
TOP ensures that the external auditor attends the AGM and is available to answer questions relevant to the audit from shareholders.
Principle 5: Make timely and balanced disclosure
Thorney Opportunities has adopted a Disclosure Policy which has procedures designed to ensure compliance with ASX Listing Rules and Corporations Act disclosure requirements and to ensure accountability of Directors and senior management of the Investment Manager for that compliance.
The policy, which is available on the Company’s website, has procedures designed to ensure that material information is communicated to the Chairman and Company Secretary and for the assessment of information for the disclosure of material information to the market.
The Board acknowledges the importance of promoting timely and balanced disclosure of all material matters concerning Thorney Opportunities and believes it is fully compliant with Principle 5 and its recommendations.
Principle 6: Respect the rights of shareholders
Thorney Opportunities has a Communications Policy which seeks to promote effective communication with our shareholders. The Company communicates in several ways including via its Annual Report and Half-yearly accounts, monthly net tangible asset backing announcements, regular shareholder updates from the Chairman and other ASX announcements regarding material investments and other developments.
Thorney Opportunities Ltd maintains a website at: www.thorneyopportunities.com.au.
Annual General Meeting
TOP’s AGM will be held in November 2018 at a time, date and venue to be announced.
The Chairman of the meeting will ensure that shareholders are given the opportunity to participate at the AGM
TOP encourages shareholders to contact the Share Registry and opt in to receive and send all communications to and from the Company electronically.
Principle 7: Recognise and manage risk
The Board, through the Audit and Risk Committee, is responsible for setting policies for oversight of risk and identification and management of material business risks. Thorney Opportunities has an approved Audit and Risk Committee Charter (see Principle 4 above) and in conjunction with the Investment Manager has adopted a Risk Management Policy.
The Investment Manager has implemented a risk management and compliance framework which enables the identification of risks, the execution of appropriate responses, the monitoring of risks and the controls applied to mitigate risks.
The main areas of risk that have been identified are market risk and operational risk. As a listed investment company Thorney Opportunities will always bear market risk as it invests its capital in assets that are not risk free. Operational risks can include legal, regulatory, disaster recovery, systems, process and human resource risks. Our risk management framework has been designed to monitor, review and continually improve risk management throughout the Company.
For the year ended 30 June 2018 the Audit and Risk Committee reviewed TOP’s risk management framework and the Board was satisfied that it continues to be sound.
The Board believes that commensurate with the size and nature of the business that an internal audit function is not warranted at this time. TOP utilises highly effective internal control processes and systems, developed over 2 decades by the Investment Manager to manage the multifaceted investment activities of the private Thorney Group. The Investment Manager employs staff and consultants who are responsible for evaluating and continually improving the effectiveness of the risk management and internal control systems. These systems are subject to an annual external audit.
The Company does have a material exposure to the Australian stock market. A large fall or correction to the overall market is likely to adversely affect the TOP NTA. The Investment Manager seeks to reduce this risk through careful stock selection, diversification and management of the relative weightings of individual securities.
Principle 8: Remunerate fairly and responsibly
ASX Recommendation 8.1 states that a board should establish a remuneration committee. Given the size and nature of the Company and the fact the Company does not employ executives, the Board has determined that a Remuneration Committee is not warranted, nor does it have a Remuneration Policy to disclose.
Non-executive Directors are remunerated by a fixed director’s fee including superannuation or as a fixed consulting fee plus GST, as permitted by the Company’s Constitution.
The maximum remuneration of Non-executive Directors is determined by Shareholders at a General Meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. At present the maximum aggregate remuneration of Non-executive Directors is $400,000 per annum. The apportionment of non-executive Director Remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-executive Director. The Board may award additional remuneration to Non-executive Directors called upon to perform extra duties or services on behalf of the Company.
The Non-executive Chairman is employed by the private Thorney Investment Group and does not receive any salary, benefits or incentives for his role as a Director of TOP.
The amount of remuneration for all directors, including all monetary and non-monetary components, are detailed in the directors’ report under 2018 Remuneration Report (audited).
The Investment Manager has specified authority and responsibility in regard to management of the Thorney Opportunities investment portfolio. The Investment Manager is entitled to a base fee and a performance fee in accordance with the IMA.
Persons involved in investment management are employees of the private Thorney Investment Group and are not remunerated by the Company.
Further details on the fees paid to the Investment Manager are included in the financial statements.
 Lead Independent Director