For a printer friendly version of this document, please click here
Charter

Introduction

The Board has adopted this Board Charter to set out details of the functions and responsibilities of the Board and those matters which are delegated to management.

The Charter:

• enables the Board to provide strategic guidance for the Company and to effectively oversee management;
• clarifies the respective roles and responsibilities of directors and management in order to facilitate Board and management accountability; and
• ensures a balance of authority so that no single individual has unfettered powers.
  

This Charter is divided into 9 sections:

1. Role of the Board;
2. Board membership;
3. Meetings;
4. Powers and responsibilities;
5. Board committees;
6. Remuneration;
7. Directors professional development;
8. Performance evaluation;
9. Indemnity and Directors and Officers' Insurance
   
   

In carrying out its responsibilities and powers, the Board will at all times act honestly, fairly, diligently and in accordance with the law in serving the interests of Ruralco's shareholders and other stakeholders such as employees, customers, suppliers, financiers and creditors. The Board will work to promote and maintain an environment within Ruralco that establishes these principles as basic guidelines for all of its directors, employees and representatives at all times.

1. Role of the Board

The Board is accountable to shareholders and other stakeholders for the performance of the Company. It is responsible for the overall corporate governance of Ruralco including its strategic direction, establishing goals for management and monitoring the achievement of these goals. Day to day management of the Company is delegated to the managing director and Ruralco's senior management team.

In performing its responsibilities, the Board will act in accordance with the Directors' Code of Conduct:

a. in the best interests of Ruralco;
b. honestly, fairly and diligently;
c. in a manner which balances the interests of trading members and enhances sustainable value for shareholders; and
d. in accordance with the duties and obligations imposed upon it by Ruralco's constitution and the law.

2. Membership

1. The Board determines its size within the limits provided in the Company's constitution, which provides for a minimum of 3 directors and a maximum of 9 directors. The size of the Board is reviewed annually.
2. The Board will be structured to ensure that it consists of directors who have a proper understanding of the business and who can add value in the context of Ruralco's business. The Board should include an appropriate number of directors who satisfy the criteria for independence set out in Ruralco's Policy on Independence of Directors. This Policy is attached to this Charter.
3. The Board should comprise a majority of non-executive directors.
4. Although the shareholders appoint directors, the Board will seek to ensure that the directors have a broad range of experience and commercial expertise or appropriate professional qualifications. Board members must have (or develop) a thorough understanding of the business conducted by Ruralco and be able to bring value to the Board's deliberations.
5. The Board will appoint as its chairperson, one of the non-executive directors who satisfies the criteria for independence set in Ruralco's Policy on Independence of Directors.
   

3. Meetings

1. Board meetings will be conducted in accordance with Ruralco's constitution and will be held at least 6 times each year;
2. The non-executive directors are to meet at least twice each year to privately discuss management issues. These meetings are not required to be formal or minuted;
3. The quorum for Board meetings will be two thirds of Board members and must include an independent director unless unforseen circumstances do not permit; and
   
   

4. Powers and responsibilities

4.1 Powers

In addition to matters expressly required by law to be approved by the Board, the powers reserved for the Board are as follows:

1. appointing the managing director and determining his or her terms and conditions of service;
2. approving the appointment of executives who report directly to the managing director;
3. any changes to the delegations by the Board;
4. any matters in excess of the discretion that it delegates to the managing director and senior management in relation to business transactions, credit transactions, risk limits and expenditure;
5. the issue of any shares, options, equity instruments or other securities in Ruralco;
6. establishment of any incentive plan for Company officers and employees; and
7. approving each of the following:
   1. memberships for any of the Company's trading groups, although this may be delegated to the Member Council;
   2. any action in relation to terminating Ruralco's membership of any trading group;
   3. the budget and strategic plan - at least annually;
   4. the remuneration and conditions of service including financial incentives for the executives who report directly to the managing director as recommended by the Nomination & Remuneration Committee- at least every second year;
   5. significant changes to organisational structure and the appointment of senior officers as the Board may determine;
   6. the acquisition, establishment, disposal or cessation of any significant business of Ruralco;
   7. alterations to conditions of membership of trading groups;
   8. the Charter of the Member Council;
   9. any public statement which reflect significant issues in relation to Ruralco's policy or strategy; and
   10. compliance policies.
       
       

4.2 Responsibilities

In addition to the matters expressly required by law, the Board has a specific responsibility to/for:

1. establishing the Company's vision, mission, values and ethical standards;
2. approving and overseeing policies, strategies and financial objectives;
3. monitor and assess management's performance in achieving any strategies and budgets approved by the Board;
4. monitoring the financial performance of the Ruralco Group;
5. appointing the managing director; \
6. set criteria for, and evaluate at least annually, the performance of the managing director;
7. reviewing on a regular and continuing basis:
   1. succession planning for directors and the managing director; and
   2. professional development activities for directors and the managing director.
8. delegating an appropriate level of authority to management and in particular the managing director;
9. appointing the members of the Audit, Risk & Corporate Governance Committee, the Capital Review Committee and Nomination & Remuneration Committee;
10. recommending auditors for consideration by shareholders;
11. developing and implementing best practice corporate governance standards;
12. appointing principal legal advisers and other principal financial and corporate advisers.
13. monitoring compliance with regulatory requirements and ethical standards;
14. recommending appointments and reviewing the performance of directors;
15. overseeing the risk management strategy and monitoring business risks; \
16. ensuring effective internal control systems;
17. effective communication on the Ruralco Group's financial position, trading performance and prospects to all stakeholders, in particular shareholders, trading members, suppliers and employees; and
18. approving annual accounts, and reports and other public documents.
    

The Board may rely in good faith and after making an independent assessment, on the information provided by committees, information and advice received from employees of the Company and advice from external professional advisors or experts within such persons area of professional or expert competence.

5. Board Committees

The Board may from time to time establish committees to assist it in carrying out its responsibilities. For each of those committees, the Board will adopt charters setting out matters relevant to the composition, responsibilities and administration, and other matters that the Board may consider appropriate.

The Board has established an Audit, Risk & Corporate Governance Committee, a Nomination & Remuneration Committee and Capital Review Committee and has adopted charters setting out matters relevant to the composition, responsibilities and administration of those committees.

6. Remuneration

As provided for in the Ruralco's Constitution Shareholders in General Meeting will determine the aggregate remuneration to be paid to the Company's non executive directors, and the directors will determine how this aggregate is divided among individual directors.

The remuneration received by individual directors encompasses payment for responsibilities on any Board committees or boards of subsidiary companies.

7. Professional Development
The Board provides an induction process for new directors and an ongoing professional development program for all directors.

8. Performance Evaluation

8.1 Each year, the Board will evaluate itself and individual directors with assistance of Nomination & Remuneration Committee. The evaluation will:

1. compare the Board's performance with the requirements of this Charter;
2. sets the goals and objectives of the Board for the upcoming year; and
3. provides any improvements to the Board Charter that are necessary or desirable.
   

8.2 The performance evaluation is conducted as the Board decides is appropriate.

8.3 The Board has approved a process for performance evaluation of its members and key executives. That performance evaluation process is attached.

9. Indemnity and Directors and Officers' Insurance

The Company's Constitution requires the Company to indemnify a director, to the extent permitted by law, from liability which arises from the position of a director. The Constitution also provides that the Company may pay a premium in respect of a contract insuring a person who is or has been a Director, Secretary or other officer of the Company (or a subsidiary), other than for a liability arising out of a wilful breach of duty in relation to the Company or misuse of a Company position or information.

The Company maintains Directors and Officers Insurance which provides cover to the Company to enable it to meet its obligations to indemnify directors under the Constitution. The policy also provides cover for directors individually. The Company has also entered into a Deed of Indemnity & Access with each director.

*         *        *        *

Updated as at 15 April 2008.

Directors Code of Conduct (including Share Trading Policy)

The Board has adopted the Ruralco Directors' Code of Conduct to set high ethical standards for the directors of Ruralco Holdings Limited subsidiaries and associated companies. Directors will act in accordance with this Code of Conduct and will pursue the highest standards of ethical conduct in the interests of shareholders and all other stakeholders.

The following principles govern directors' conduct.

1. Fairness, Honesty and Integrity

• Directors will act with fairness, honesty and integrity in all of their dealings on behalf of the Company.
• Directors will not discriminate on the grounds of people's race, religion, gender, marital status, or disability.
• Directors will not make promises or commitments that Ruralco does not intend, or is unable, to honour.
• Directors will not act in an unconscionable manner in their dealings on behalf of the Company.
• Directors will not directly or indirectly mislead, make false statements, or mislead by omission.
• Directors will treat all employees, shareholders, trading members and other customers, suppliers and competitors with courtesy and respect.
• Directors will require that all employees of the Company act in accordance with these principles of fairness, honesty and integrity.
  

2. Personal Transactions

• Directors will keep their personal or other business dealings separate from their dealings as a director of Ruralco.
• Directors will not use the name of Ruralco to further any personal or other business purpose.
• Directors will use goods, services and facilities provided to them by Ruralco for legitimate business purposes and strictly in accordance with the terms on which they are provided.
  

3. Confidentiality of Information

• Directors will ensure that confidential information relating to Ruralco's business, trading members, customers, suppliers and employees is not disclosed to third parties without the consent of Ruralco.
• Directors will not use information obtained by them as a director of Ruralco for personal financial gain or for the financial benefit of any other person or business.
• Directors will respect the privacy of others and will comply with the Privacy Policy adopted by the Company.
  

4. Disclosure of Interests

• Directors must fully and promptly disclose to the Company any private or other business interests and other matters which may lead to potential or actual conflicts of interest. They must do that in accordance with such policies that the Board may adopt from time to time.
• Directors must fully disclose all relationships they have with Ruralco in accordance with the Ruralco Policy on Independence of Directors.
• Directors dealings with Ruralco will always be at arm's length to avoid the possibility of actual or perceived conflicts of interest.
  

5. Share Trading

• Ruralco has adopted a Share Trading Policy which regulates the dealing by directors in shares issued by the Company. This Policy ensures that directors act in accordance with the Corporations Act and do not undertake any "insider trading". The Ruralco Share Trading policy is attached.
• Directors must comply with this policy at all times.
  

6. Disclosure Compliance

• Ruralco has adopted a Disclosure Compliance Policy which ensures that all directors and others within the Company in possession of information which might be price sensitive provide this information to the Disclosure Committee to enable disclosure to the ASX in accordance with the ASX Listing Rules.
• The Compliance Policy provides that only authorised spokespersons are able to communicate with shareholders and the market. The authorised spokespersons are the Chairman, the Managing Director, and the Company Secretary in relation to ASX disclosures approved by the Disclosure Compliance Committee.
• Other Directors should refrain from commenting to any party unless specifically authorised to do so by the Board, the Chairman or the Managing Director.
• The Directors must comply with this policy at all times.
  

7. Abiding by the Law

• Directors will abide by the law at all times.
• Directors will comply with all policies adopted by the Company from time to time including policies relating to corporate governance, share trading, continuous disclosure, privacy, occupational health & safety, employment and travel.
  

8. Payments, Gifts, Entertainment and Travel

• Directors will not use their status as a director to seek personal gain from those doing or seeking to do, business with Ruralco.
• Directors must not accept any material personal gain arising from their position as a director, from those doing, or seeking to do business with Ruralco without referring the matter to the Managing Director or the Chairman. Materiality attaching to a personal gain will be considered on a case by case basis. However, as a guide, any personal benefit in excess of $500 should be considered to determine whether it is material.
• Directors must table information concerning any material personal gain arising from the position as a director at the first available Board meeting.
  

9. Raising Concerns - Whistle Blowing

• Directors will report to the Board, and encourage employees to report to the Managing Director or the Company Secretary, any instances of unlawful and unethical behaviour by Company officers and employees.
• Employees are able to do so on an anonymous basis by informing the Company Secretary in an anonymous letter or memorandum.
  

*         *        *        *

Updated as at 15 February 2007.

Policy on Independence of Directors

1. Introduction

Ruralco Holdings Limited is committed to adopting the highest standards of corporate governance. Those standards require that the Board be structured so that it:

• has a proper understanding of the Company's business;
• is competent to deal with the range of issues facing the business;
• can effectively review the performance of management; and
• exercises independent judgment.
  

An important consideration in the structure of the Board is the independence of directors (including the chairman) and similarly the independence of members of the Audit & Corporate Governance Committee and Nomination & Remuneration Committee.

The Board is conscious of the need to have independent directors but must also ensure that Board members can add value in the context of Ruralco's business. Therefore, the Board will seek to ensure that there are directors who have a strong understanding of Ruralco's core business.

The Ruralco Policy on Independence of Directors has been developed by the Board after carefully considering recent corporate governance developments in Australia. In doing so, the Board has adopted the criteria for independence recommended by the Australian Stock Exchange Corporate Governance Council.

The Board will assess the independence of directors of Ruralco pursuant to this Policy.

2. Purpose

The purpose of this Policy is to establish the process for considering the independence of directors. The Policy will:

• provide the materiality test which the Board will use to assess the independence of each director;
• identify the information that the Company will collect from directors to enable the Board to assess the independence of directors; and
• provide the basis of disclosure to shareholders of the assessment of the independence of directors.
  

3. Test of independence

The test that will be used by the Board of Ruralco to determine the independence of directors is:

Is the director independent of management and free of any business or other relationship with Ruralco that could materially interfere, or could reasonably be perceived to materially interfere, with the exercise of objective, unfettered and independent judgment of directors?

This test has been adopted from the recommendations of the Australian Stock Exchange Corporate Governance Council.

4. Information collected by the Board to assess independence

In determining the independence of individual directors the Board will consider all relevant information, facts and circumstances. It is not possible for this Policy to provide for all circumstances that will indicate a conflict of interest or a material relationship that might, or might be perceived to materially interfere with the exercise of objective, unfettered and independent judgment. However, a director will normally be considered to be independent if he or she satisfies the criteria set out in part 5.

A director may still be considered by the Board to be independent if the director does not meet one or more of the criteria specified in paragraph 5. The Board reserves its right to make an appropriate assessment and to disclose it as described in part 7 of this Policy.

Directors have provided the Board with all information in relation to their interests or relationships relevant to independence. The directors are required to inform the Board of any change in their position. The Board will assess the independence of directors annually and will re-assess determinations of independence when any new interests or relationships are disclosed by a director.

5. Independence criteria and materiality thresholds

The criteria adopted by the Board which would indicate that a director is not independent are:

Officer or substantial shareholder

1. the director is an executive of Ruralco;
2. the director is a substantial shareholder in Ruralco or an officer of or otherwise associated, directly or indirectly, with a substantial shareholder in Ruralco.
   

   For the purpose of this policy, a person is a substantial shareholder if they hold more than 5% of the shares entitled to vote in an entity (Corporations Act 2001 (Cth)).

   An officer is defined by the Corporations Act. Significantly, it includes:

   1. a director or secretary of the Company;
   2. a person who makes or participates in making decisions that affect the whole or substantial part of the business of the Company or who has the capacity to affect significantly the Company's financial standing; and
   3. a liquidator, receiver and administrator of the Company;
      
      

3. the director has been employed by a Company in the Ruralco Group within the last 3 years.

Adviser

4. the director has been a principal or material employee of a material professional adviser or consultant to a member of the Ruralco Group within the last 3 years. A professional advisor will typically be material if the adviser's fees account for more than 0.1% of Ruralco's consolidated gross revenue or if Ruralco accounts for more than 5% of the advisers consolidated gross revenue. Ruralco's auditor, principal financial and legal advisers are regarded as material advisers.
5. the director currently receives consulting, advisory or other fees other than in the capacity as a director. This includes payments to a family member or an entity in which the director is a partner, member or officer if the entity provides legal, financial, consulting or other similar services to Ruralco.
   

Supplier, customer or material contractual relationship

6. the director, or a direct family member, is a material supplier or customer of a member of the Ruralco Group or is an officer, substantial shareholder of, or otherwise associated directly or indirectly with a material supplier or customer. A supplier or customer will typically be material if the value of purchases or sales accounts for more than 3% of Ruralco's consolidated gross revenue, or more than 5% of the consolidated gross revenue of the customer or 1% of the consolidated gross revenue of a supplier.
7. the director, or a direct family member, has a material contractual relationship with a member of the Ruralco Group or is an officer, substantial shareholder of or otherwise associated directly or indirectly with an entity which has a material contractual relationship with a member of the Ruralco Group. A contractual relationship will typically be material if: the value of the contract is more than 5% of Ruralco's consolidated gross revenue; or, if the contract is for more than five years; or, the contract is for the supply of essential goods or services where there is a choice.
   

Long-term director of Ruralco

8. the director has served on a Board of Ruralco (or a predecessor Company) for a period which could, or could reasonably be perceived to, materially interfere with the director's ability to act in the best interests of Ruralco. The Board does not consider that a specific time frame should be provided but notes that four consecutive terms of three years or equivalent as a director, or in the case of chairman, three consecutive terms of three years, or equivalent, might be considered to be a period that could be perceived to materially interfere with a director's ability to act in the best interests of the Company. The test will be applied on a case by case basis considering all relevant circumstances.

Business relationship

9. the director has had a material business relationship with Ruralco either directly, or as a partner, shareholder or director of an entity that has had such a relationship with a member of the Ruralco Group within the last 3 years. A business relationship will typically be material if the value of the business relationship is in excess of 5% of Ruralco's or the director's (or related entity's) consolidated gross revenue.

Board's discretion

10. the Board determines that the director is not otherwise independent in character and judgment.

These criteria are guidelines for the Board to use in determining the independence of directors. The test of whether a relationship or business is "material" will be based on the nature, circumstances and activities of the director having regard to these guidelines. Materiality will be considered from the perspective of both Ruralco and the director and will be determined on a case by case basis.

6. Access to information and independent professional advice

Directors need high quality information and advice on which to base their decisions and considerations. All directors have unrestricted access to Company records and information. They regularly receive detailed reports. Management prepare and present to directors detailed financial and operating reports monthly. Directors may request other reports from management at any time.

Each director has the right to seek advice and clarification from the Company's auditors, financial and legal advisers on any matter relating to the Company or Board performance at Ruralco's expense.

It is also important that directors can obtain independent advice. Directors therefore have the right to seek independent professional advice to help them carry out their responsibilities at Ruralco's expense. Before this expense can be incurred on behalf of the Company, the approval of the chairman is necessary or in the absence of that approval, Board approval.

7. Disclosure

The Board will make appropriate disclosure to shareholders in Ruralco's Annual Report including:

• identifying the skills, experience and relevant expertise of each director;
• identifying the independence and non-independence of directors and the basis of the assessment of independence;
• explaining the assessment of independence for any director who does not meet the independence criteria;
• setting out material relationships, associates and other relevant business relationship of each director and the period of office held by each director. This will include details of any relationships or circumstances which the Board believes does not affect independence but which could be perceived as influencing the director's judgment, objectivity or ability to act in the best interests of Ruralco;
• explaining any departure from the best practice recommendations set out in the Australian Stock Exchange Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations;
• setting out the procedure agreed by the Board to enable directors to obtain independent professional advice at the expense of the Company; and
• developing and reviewing thresholds Ruralco adopts to help assess and determine independence.
  

8. Further information and queries

If you have any queries or would like further information relating to this policy and the independence of directors, please contact the Company Secretary.

*         *        *        *

Updated as at 15 February 2007.

© Ruralco Holdings Limited | ABN#: 40 009 660 879| 2 Collins Street, Hobart, Tasmania 7000
Phone (03) 62 351444 Fax (03) 62 341023 Privacy Policy