Governance Framework Document Name Governance Framework Version 1 Approval State Approved by the Board on 24 November 2017 Replaces Version Author/s New Document Tahlia Parrish This document is current as at 24 November 2017 This document must not be copied, distributed, or re-issued in another form, without consent of Equipsuper Pty Ltd ABN 64 006 964 049
Table of Contents 1. Introduction... 2 2. Corporate structure and governing documents... 2 2.1 Constituent documents... 2 2.2 Amendments to the Trust Deed... 2 3. About the Board... 3 3.1 The Board s key responsibilities... 3 3.2 Board Composition... 3 3.3 Board Appointment Process... 4 3.4 Board meetings... 4 3.5 Board voting practices... 4 4. Board and Director Performance Reviews... 5 4.1 Overview of the Board performance assessment process... 5 4.2 Fit and Proper assessments... 5 4.3 Board and Committee effectiveness assessments... 5 5. Director s protection arrangements... 5 6. Board Diversity... 6 7. Board Committees... 6 8. Governance Policies... 6 9. Risk Roles and Responsibilities... 7 9.1 Board of Equipsuper Pty Ltd... 7 9.2 Governance & Rewards Committee... 7 9.3 Executive Officer, Governance and Risk... 7 10. Review... 7 10.1 Timing and circumstances for review of the Governance Framework... 7 10.2 Matters to be addressed during annual review... 8 11. Equip Corporate Structure... 8 Appendix A: Equip Corporate Structure... 9 Appendix B: Board Committee Composition... 10 1.1 Appeals and Review Committee:... 10 1.2 Audit, Risk and Compliance Committee... 10 1 P a g e
1.3 Governance and Rewards Committee... 10 1.4 Investment Committee... 10 1.5 Growth and Development Committee... 11 1. Introduction The Governance Framework provides an overarching framework to ensure a consistent approach to the governance across the Equip group. The Board (the Board) of Equipsuper Pty Ltd (the Trustee Company) believes that corporate governance is fundamental to ensuring that Equipsuper Financial Holdings Pty Ltd ( Company ), the Trustee Company and the Equipsuper Superannuation Fund ( Fund ) are managed properly and deliver long-term financial security for Fund members. Togetherthe Trustee Company and the Fund are referred to in this statement as Equip. In developing this framework, the APRA Prudential Standard SPS 510 Governance (SPS 510) has been considered. 2. Corporate structure and governing documents 2.1 Constituent documents The Company is the holding company and the Trustee Company is trustee of the Fund. The Company and the Trustee Company are governed by Constitutions. The Trustee Company has a Registrable Superannuation Entity (RSE) Licence issued by the Australian Prudential Regulation Authority (APRA) and an Australian Financial Services Licence issued by the Australian Securities and Investments Commission (ASIC). The Trustee Company also has two MySuper authorisations under its RSE Licence. The Company and the Trustee Company must act in accordance with their Constitutions, and the Trustee Company must act in accordance with the terms and conditions of its RSE Licences and authorisations. The Fund is governed by a Trust Deed, which contains the Rules of the Fund. Pursuant to the Trust Deed, Equip also enters into Participation Agreements with Employers which contribute to the Fund on behalf of their employees. The Participation Agreements generally set out the terms of the Employer s participation in the Fund and the benefit design for that Employer s members in the Fund. The terms of each Participation Agreement form part of the Rules of the Fund for the relevant Members. 2.2 Amendments to the Trust Deed As circumstances change from time to time, the Rules of the Fund may need to be amended. The Trustee Company has the power to amend the provisions of the Rules. All amendments must comply with the amendment power in the Rules and also with any applicable legal requirements. There are mechanisms in the Fund Rules to protect Members interests that require the Fund s Actuary to certify that the proposed amendments to the Fund Rules do not materially diminish or substantially prejudice the benefits or rights of Members. 2 P a g e
If amendments are made to the Fund s Rules, the Trustee Company will inform Members in writing of the nature, purpose and effect of an amendment, if and when required to do so by relevant law. 3. About the Board The Board oversees the operations and management and determines the strategic direction of all aspects of Equip s business and the ongoing development of the Fund for the benefit of members and beneficiaries. The Board is ultimately accountable to all Members of the Fund and to the Employers who contribute to the Fund on behalf of their employees. 3.1 The Board s key responsibilities The Board s key responsibilities include: (a) (b) (c) (i) (ii) (d) (e) (f) (g) (h) (i) (j) Making reasonable and informed decisions in a timely manner in the best interests of beneficiaries (and which consider the impact of its decision on beneficiaries); Approving the Risk Management Framework and determining the Company s risk appetite and tolerances; Within the approved Risk Management Framework and risk appetite, approving and regularly reviewing the strategic and financial objectives and direction of: The Equip business overall; and The Fund, to maximise the retirement benefits of its members; Approving, reviewing and monitoring the Business Plan, Strategic Plan and annual operating budget; Overseeing the proper investment of the Fund s assets; Overseeing the remuneration of Responsible Persons employed by Equip and the Equip employee budget; Appointing and reviewing the performance of the CEO, setting an appropriate remuneration package, key performance indicators and ensuring adequate succession planning; The selection and appointment of the Independent Directors; The appointment of Member Representative Directors; The appointment and replacement of the Company Secretary, the internal auditor, the external auditor, the Fund administrator, the Fund actuary and the Custodian which holds the assets of the Fund. In accordance with the provisions of the Trustee Company s Constitution, the Board has delegated responsibility for the day-to-day running of Equip to the CEO pursuant to a formal delegation. The respective roles and responsibilities of the Board are outlined further in the Board Charter. 3.2 Board Composition The Fund is an Employer-sponsored, public offer superannuation Fund for the purposes of the Superannuation Industry (Supervision) Act, 1993 (SIS). 3 P a g e
The Trustee Company has obtained an exemption from APRA and while it has an equal number of Employer Representative Directors (3), and Member Representative Directors (3), it also has an equal number of Independent Directors (3). In compliance with the Trustee Company s Constitution and SIS, the Board of Equip is, therefore, currently comprised as follows: (a) (b) (c) Three Independent Directors; Three Employer representative Directors; and Three Member representative Directors. The Independent Directors are selected and appointed by the Employer representative and Member representative Directors on the Board. The Company s Constitution provides that the Chair of the Board will be an Independent Director. 3.3 Board Appointment Process One of the key features of Equip s current governance model is that the Employer Representative Directors are nominated and elected by the Employers who contribute to the Fund, one Employer Representative Director is nominated by the Rio Tinto Services Limited, and Member Representative Directors are nominated by the Members of the Fund and appointed by the Directors of the Board. As a general principle, Directors are appointed for three year terms. Equip s Fit and Proper Policy specifies minimum levels of education, skill or experience which all Directors must attain prior to appointment, and any person who wishes to be considered for appointment as a Director is required to refer to this Policy. Board members are required to ensure they maintain an appropriate development plan in relation to continuing education. A copy of the Policy (as amended from time to time) will be provided to interested persons as part of any Director appointment process. Further information on the Board Appointment Process is contained in the Appointment and Renewal Policy. 3.4 Board meetings The Board has quarterly Board meetings, and additional special purpose meetings each year as required for the proper conduct of the Company s business. A Board Strategy Day is also held each year, at which the Company s strategic direction is reviewed in detail and repositioned, if required. 3.5 Board voting practices All Board members present at a Board meeting (either in person or with electronic means) have one deliberative vote per voting item. This is subject to any abstaining votes due to a conflict of interest or duty. Further details are contained in the Appointment and Renewal Policy. The decisions of the Board require a two thirds majority vote. 4 P a g e
4. Board and Director Performance Reviews 4.1 Overview of the Board performance assessment process There are two types of assessment processes that involve Equip s Directors: (a) (b) Fit and Proper assessments for the APRA designated Responsible Persons ; and Board and Committee effectiveness assessments, including individual Director performance assessments. 4.2 Fit and Proper assessments Responsible Persons at Equip are defined in the Fit and Proper Policy contained in the Appointment and Renewal Policy. The Board, together with other Responsible Persons within Equip, must have certain individual and collective skills and knowledge in relation to the Trustee Company, the Fund and the regulatory environment. Responsible Persons must also meet certain propriety requirements, including being of good fame and character, and being financially solvent. A formal Fit and Proper assessment is conducted at appointment and annually in accordance with APRA s requirements and the Equip s Fit and Proper Policy and any necessary actions arising from those assessments are implemented. 4.3 Board and Committee effectiveness assessments In addition to an informal review conducted at the conclusion of each Board meeting, the Board has annual effectiveness assessments which are conducted on an individual and collective basis. Each Board Committee also reviews its performance, having regard to the purpose of that Committee. The review process typically involves all Directors completing a detailed questionnaire regarding the Board s performance as a whole, the performance of individual Directors and the performance of each Committee. Personal interviews are then conducted with each Director, and a report containing the findings from the survey and interviews is generated for discussion by the Board as a whole. Information gained from the surveys and interviews that was relevant to the Board Committees is collated and discussed by each Committee. Every three years an independent assessment of the performance of the Board and Board Members is undertaken. Details of the assessment processes are contained in the Appointment and Renewal Policy. 5. Director s protection arrangements Directors are provided with insurance cover and indemnification under a Deed of Indemnity and Access, which provides them with protection to the extent permitted by law, and access to Company documents, for seven years after they cease to hold office. Directors will not be indemnified for certain matters, including liability arising from fraud or dishonesty, or for any penalties that may be levied against them personally. 5 P a g e
6. Board Diversity The Directors are committed to encouraging diversity at Equip, and recognise the importance of the perspective brought to the Board by Directors who come from a range of personal and professional or occupational backgrounds, as well as different ages, gender and ethnicity. There is currently three females on the Equip Board. The Board is committed to achieving greater diversity amongst Directors and steps are being taken to encourage people from diverse backgrounds to consider standing for election and nominators to consider diversity issues when proposing candidates for election. The Board recognises, however, that in the appointment of Directors it must have regard to the requirements of applicable law and the Company s processes that are contained in the Company s Constitution. 7. Board Committees Equip has the following five Board Committees: (a) (b) (c) (d) (e) Appeals and Review Committee; Audit, Risk and Compliance Committee; Governance and Rewards Committee; Investment Committee; and, Growth and Development Committee Each Board Committee has a Charter that sets out the Committee s powers, functions and, if relevant, specific delegated authority from the Board. The full text of the Committee Charters can be found on the Equip website. The Board may establish ad hoc Committees or working groups comprising representatives of the Board and Management as needed from time to time. The composition of Board Committees is reviewed at least annually. Each Committee is structured to ensure it has the correct skill set to effectively perform the functions of that Committee. Under each Committee s Charter, where necessary to meet quorum requirements for Committee meetings, Director positions may be filled if necessary by the by another Director. This means Committees on which there may be a vacancy for a Director, or where a Director may be unable to attend, a meeting may still function with the attendance of another Director. The composition and role of each of the Equip Board Committees as at 1 January 2018 is outlined in Appendix B, which will be updated as required. 8. Governance Policies Equip s key Governance Policies include: Board Charter; Board Appointment and Renewal Policy; Code of Conduct; Fit and Proper Policy; Governance Framework Conflict Management Framework; 6 P a g e
Risk Management Framework; Compliance Framework; Reserves Policy; and. Outsourcing Policy. 9. Risk Roles and Responsibilities 9.1 Board of Equipsuper Pty Ltd The Board is responsible for approving the Governance Framework. 9.2 Governance & Rewards Committee The Governance and Rewards Committee (GRC) is responsible for reviewing the Governance Framework and recommending changes for the Board to endorse and approve. 9.3 Executive Officer, Governance and Risk The Executive Officer, Governance and Risk is responsible for reviewing the Governance Framework and recommending changes for GRC to review. They are also responsible for monitoring compliance with the Framework. 10. Review 10.1 Timing and circumstances for review of the Governance Framework The Governance Framework will be reviewed and submitted for approval annually. The Board recognises that governance is a continuous process. This Framework and the supporting policies are continuously reviewed and assessed by management, the GRC and the Board. Any proposed changes to this Framework will be presented to the GRC for consideration and recommended to the Board for discussion and approval. In addition to the annual and the ongoing review, this Framework will be reviewed: a) At any time when there is a significant change in the business or in any significant part of it; b) At any time when there is a significant change in legislation or regulatory requirements affecting the business or in any significant part of it; and c) At any other time determined by the GRC or Board. 7 P a g e
10.2 Matters to be addressed during annual review The annual review of the Governance Framework will include a comprehensive review of the appropriateness, effectiveness and adequacy of the framework having regard to the size, business mix, and complexity of the business. This review will include consideration of: a) Whether the current framework remains appropriate; b) The adequacy of resources in place to manage the framework; c) The Risk Appetite and Tolerance for Governance Risk; and d) The effectiveness of governance related policies and procedures. 11. Equip Corporate Structure The Corporate structure of the Equip group is set out in Appendix A. The issued shares in the Company are held by the Chair on trust for the employers who contribute to the Fund in respect of their employees. A formal declaration of trust governs this arrangement. These arrangements are designed to ensure that the Trustee Company s Board consists of persons with the necessary skills and experience to manage the Fund in accordance with its governing rules, relevant law, and in the best interests of the members of the Fund. 8 P a g e
Appendix A: Equip Corporate Structure Shareholder Chairman (on trust for Employers) Equipsuper Financial Holdings Pty Ltd Equipsuper Pty Ltd (Licence permitting multiple funds) Equipsuper Financial Planning Pty Ltd Equipsuper Asset Management Pty Ltd 9 P a g e
Appendix B: Board Committee Composition 1.1 Appeals and Review Committee: Committee members Directors: J Azaris(Chair), J Simon, M Clinch, M Cerche Consultant: R Jervis-Read Management: N Vamvakas The role of the Appeals and Review Committee is to exercise the Board s discretion on the payment of certain death, total and permanent disablement or total and temporary disablement benefits. The Committee reviews cases where, there is a dispute about the payment of claim benefits. The Committee also considers certain complaints made by Members or Employers. 1.2 Audit, Risk and Compliance Committee Committee members Directors: J Dekker (Chair), P Leary, A Fairley, J Hickey. Management: Nil The role of the Audit, Risk and Compliance Committee is to oversee the audit, financial, compliance and risk management activities of the Company and the Fund. In line with the requirements for ASX listed companies, this Committee is comprised only of non-executive Directors, all of whom are independent of management of Equip, is chaired by a Director who is not the Chair of the Board, and has four members. 1.3 Governance and Rewards Committee Committee members Directors: M Cerche (Chair), A Fairley, M Clinch, J Azaris, P Leary Management: Nil The role of the Governance and Rewards Committee is to oversee the governance functions at Equip, and to recommend the remuneration and Key Performance Indicators of the CEO to the Board for approval. The Committee also reviews the remuneration of the Responsible Persons employed by Equip as determined by the CEO and may act as a Nomination Committee for the appointment of the Independent Chair. 1.4 Investment Committee Committee members Directors: J Simon (Chair J Hickey, J Dekker, W Walker Management: Nil Consultant to the Committee: A Cooke The role of the Investment Committee is to oversee the investment of the Fund s assets, with delegated authority from the Board to make decisions in relation to a range of investmentrelated matters. 10 P a g e
1.5 Growth and Development Committee Committee members Directors: W Walker (Chair), M Cerche and A Fairley Management: N Vamvakas (CEO), J Farrington (Executive Officer Corporate Development and Growth), N Alford (Executive Officer Governance and Risk; Company Secretary) The role of the Growth and Development Committee is to assist the Board in the growing the size of the Fund to increase net benefits to members through increased scale and increased security with diversity of membership. 11 P a g e