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Corporate Governance
The Company is committed to promoting good corporate governance and ethical practices in its operations.
Constitution
Board
Nomination
Code of Conduct
Trading Policy
Audit Committee Charter
Shareholder Communications
Risk Management
Remuneration
AEC Constitution (PDF 871k)
Board Charter
The Board Charter sets out the role and responsibilities of the Board of Advanced Engine Components Limited (Advanced Engine Components) within the governance structure of Advanced Engine Components and its related bodies corporate (as defined in the Corporations Act) (the Group).
The conduct of the Board is governed by the constitution of Advanced Engine Components and the Corporations Act and common law. In broad terms, the Board is accountable to the shareholders and must ensure that Advanced Engine Components is properly managed to protect and enhance shareholders' wealth and other interests.
The following are regarded as the key responsibilities and functions of the Board:
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to develop, review and monitor the Group's long-term business strategies and provide strategic direction to management;
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to ensure policies and procedures are in place to safeguard the Group's assets and business and to enable the Group to act ethically and prudently;
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to develop and promote a system of corporate governance which ensures the Group is properly managed and controlled;
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to identify the Group's principal risks and ensure that it has in place appropriate systems of risk management, internal control, reporting and compliance and that management is taking appropriate action to minimise those risks;
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to review and approve the Group's financial statements;
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to monitor management's performance and the Group's financial results on a regular basis;
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to appoint, ratify, appraise and determine the remuneration and benefits of the Managing Director;
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to delegate powers to the Managing Director as necessary to enable the day-to-day business of the Group to be carried on, and to regularly review those delegations;
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to ensure that the Group has in place appropriate systems to comply with relevant legal and regulatory requirements that impact on its operations;
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to determine the appropriate capital management for the Group including share and loan capital and dividend payments; and
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to determine and regularly review an appropriate remuneration policy for employees of the Group.
The Board may not delegate its overall responsibility for the matters listed above.
The role of the senior management of the Company is to progress the strategic direction provided by the Board. The Group's senior management is responsible for supporting the Executive Directors in implementing the running of the general operations and financial business of the Group in accordance with the delegated authorities for expenditure levels and materiality thresholds in place.
Policy on Assessing the Independence of Directors
The Company has adopted a Policy on Assessing the Independence of Directors which is consistent with the guidelines detailed in the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations.
Nomination Committee Charter
Given the present size of the Company, the whole Board acts as the Nomination Committee, if required. The Board believes no efficiencies or other benefits could be gained by establishing a separate Nomination Committee. To assist the Board to fulfil its function as the Nomination Committee, the Board has adopted a Nomination Committee Charter.
The Nomination Committee's is to effectively examine the selection and appointment practices of the Company. It is noted that the Board retains ultimate responsibility for these practices.
The responsibilities of the Nomination Committee include to review the size and composition of the Board, the selection process for new Directors and the Company's succession plans. Furthermore, the Nomination Committee is responsible for the implementation and management of performance appraisals and reviews for the Board, Committees and individual Board members, if appropriate.
Re-election of Directors and Selection and Appointment of New Directors
Given the present size of the Company, the whole Board acts as the Nomination Committee, if required. To assist the Board to fulfil its function as the Nomination Committee, the Board has adopted a Nomination Committee Charter.
All directors (except the Managing Director) are required by the Constitution of Advanced Engine Components to submit themselves for re-election at regular intervals and at least every three years.
Pursuant to the Board Charter and subject to the Constitution of Advanced Engine Components, the Board shall decide on the recommendations of new directors.
In selecting new members for the Board, directors shall have regard to the appropriate range of qualifications and expertise needed by the Board as a whole. The directors shall endeavour to appoint individuals who will provide a mix of director characteristics and diverse experiences, perspectives and skills appropriate for Advanced Engine Components.
New directors are provided with a letter of appointment which sets out the key terms and conditions of their appointment and undergo an induction program.
The Company has a Code of Conduct that outlines how it expects directors and employees to behave and conduct business. The objective of the code is to:
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provide a benchmark for professional behaviour;
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support the Company's business reputation and corporate image; and
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make directors and employees aware of the consequences if they breach the code.
The code records the Company's commitment and responsibilities with respect to various stakeholders, in particular, employees, clients, shareholders, governments and surrounding communities.
It sets out the Company's expectations of its directors and employees with respect to a range of issues including compliance with the law, fair dealing, discrimination, financial inducements, occupational health and safety, confidentiality of information, conflicts of interest, use of Company assets and outside employment.
A breach of the code is subject to disciplinary action which may include termination of employment.
Guidelines for Dealing in Securities
The Guidelines for Dealing in Securities Policy adopted by the Board requires that:
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Trading in Shares by directors, senior executives and employees is limited to specific periods, following the release of an annual report and half year results. Outside of these "window" periods, all directors, senior executives and employees, must follow the Guidelines for Dealing in Securities Policy and receive clearance for any proposed dealing in Advanced Engine Components' shares on the ASX prior to undertaking a transaction.
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A director must receive clearance from the Chairman before he may buy or sell Shares. If the Chairman wishes to buy or sell Shares he must first obtain clearance from the Managing Director.
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Senior executives and employees must receive clearance from the Managing Director before he may buy or sell Shares.
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Directors, senior executives and employees must be aware of and observe their obligations under the Corporations Act not to buy or sell Shares if in possession of price sensitive non-public information and that they do not communicate price-sensitive non-public information to any person who is likely to buy or sell Shares or communicate such information to another party.
Information Policy
The Company is a "disclosing entity" for the purposes of Part 1.2A of the Corporations Act. As such, the Company has an Information Policy. The purpose of this Information Policy is to set out the procedure for:
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protecting confidential information from unauthorised disclosure;
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identifying material price sensitive information and reporting it to the Company Secretary for review;
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ensuring the Group achieves best practice in complying with its continuous disclosure obligations under the Corporations Act and ASX Listing Rules; and
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ensuring the Group and individual officers do not contravene the Corporations Act or ASX Listing Rules.
The Group has obligations under the Corporations Act and ASX Listing Rules to keep the market fully informed of information which may have a material effect on the price or value of Advanced Engine Components's securities and to correct any material mistake or misinformation in the market. Advanced Engine Components discharges these obligations by releasing information to the ASX in the form of an ASX release or disclosure in other relevant documents (eg. the Annual Report).
The Group recognises that the maintenance of confidentiality is also of paramount importance to the Company both to protect its trade secrets and to prevent any false market for the Company's shares from developing.
All relevant information provided to ASX in compliance with the continuous disclosure requirements of the Corporations Act and ASX listing rules is promptly posted on the Company's web site under ASX Releases
AEC Audit Committee Charter (PDF 24k)
Shareholder Communications Policy
The Company has a Shareholder Communications Policy that promotes effective communication with shareholders and encourages presentation of information to shareholders in a clear, concise and effective manner. The Board aims to ensure that Shareholders are informed of all major developments affecting the Company's state of affairs. Information will be communicated to Shareholders through its annual report, annual general meeting, half-yearly results and quarterly activities and cash flow announcements and through the Company's website.
Risk Management Policy
The Audit Committee is responsible for the oversight of the Group's risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Group with the Managing Director having ultimate responsibility to the Board for the risk management and control framework.
The Company's approach to managing risk is set out in the Risk Management Policy. In managing risk, the Company seeks to capitalise on potential opportunities whilst managing possible adverse effects.
The Managing Director is required to report on the management of risk as a standing agenda item at each Board meeting. This involves that tabling of a Risk Register which is actively monitored and updated by management. The Board also requires management to report to it confirming that those risks are being managed effectively. The Board receives assurance from management that the Company's management of its material business risks are effective at least annually.
At the end of each financial year, the Company's Managing Director and the Financial Controller (or equivalent) provide a declaration in accordance with section 295A of the Corporations Act in writing to the Board that:
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the consolidated financial statements of the Company and its controlled entities for each half and full year present a true and fair view, in all material aspects, of the Company's financial condition and operational results and are in accordance with accounting standards;
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the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
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the Company's risk management and internal compliance and control framework is operating efficiently and effectively in all material respects.
Remuneration Committee Charter
Given the present size of the Company, the whole Board acts as the Remuneration Committee, if required. The Board believes no efficiencies or other benefits could be gained by establishing a separate Remuneration Committee. To assist the Board to fulfil its function as the Remuneration Committee, the Board has adopted a Remuneration Committee Charter.
The primary role of the Remuneration Committee is to consider and review the Company's remuneration arrangement of it Directors and senior executives.
The responsibilities of the Remuneration Committee include review of the Company's Remuneration Policy, review of remuneration and incentives of Directors and senior executives, review of superannuation arrangements and review of incentive and benefits programs.
Remuneration Policy
The Company has a Remuneration Policy adopted by the Board. Remuneration of directors and senior management is determined with regard to payments made by other companies of similar size and industry and in accordance with the skills and experience of the particular person. Details of remuneration of directors and Key Management Personnel are disclosed in the Remuneration Report in the Company's Annual Report.
Executives are prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.
There are no termination or retirement benefits in place for non-executive directors (other than for superannuation).