CONTINUOUS DISCLOSURE POLICY
This Board charter (“Board charter”) sets out the principles for the operation of the Board of directors (“Board”) of Horizon Oil Limited (“Horizon Oil”) and describes the functions of the Board and those functions delegated to management of Horizon Oil.
The Board has a primary responsibility to the shareholders for the welfare of Horizon Oil by guiding and monitoring the business and affairs of Horizon Oil. Horizon Oil recognises the importance of the Board in providing a sound base for good corporate governance in the operations of Horizon Oil. The Board must at all times act honestly, fairly and diligently in all respects in accordance with the law applicable to Horizon Oil. Furthermore, the Board will at all times act in accordance with all relevant Horizon Oil policies.
Each of the directors, when representing Horizon Oil, must act in the best interests of the shareholders of Horizon Oil and in the best interests of the company as a whole.
This charter and the various complementary charters adopted by the Board and the various committees have been prepared and adopted on the basis that there is a contribution that good governance can make to the performance of Horizon Oil.
One of the key ways the Board can add value to Horizon Oil is by selecting the right chief executive officer for Horizon Oil. Beyond this, the Board will ensure that management has in place appropriate processes for risk assessment, management and internal control, and monitoring performance against agreed benchmarks. The Board will work with senior management as collaborators in advancing the interests of Horizon Oil.
This charter delegates authority and recognises that once delegated, management needs to be free to manage. The Board will not be too accepting of management’s views and will test and question management’s assertions, monitor progress, evaluate management’s performance and will, where warranted, take corrective action.
Identification |
Clarify Horizon Oil’s core values for the organisation and identify these clearly. |
Analysis |
Examine the core values and develop a model for identifying events within the organisation that could adversely impact on the core values. |
Assessment |
Allocate priorities to the risk rated items and integrate these items within the existing (and/or contemplated) operational plans and structures. |
Treatment |
Develop a scheme for integrating the outcomes within the organisational structure and delegations of authority to ensure responsibilities are matched with the necessary authority and appreciation of the core values. This involves the development of training programs to foster the core values throughout Horizon Oil. This means for instance that every person dealing with the investment community appreciates the importance of ensuring that material or price sensitive information is not disclosed to investors if it is not publicly available. |
Ongoing monitoring |
This is an essential element of Horizon Oil’s program and includes an active program of continuous improvement, including keeping up to date on best practice, fostering a compliance culture, training and recognition. |
The Board is to comprise a majority of non-executive directors who are considered by the Board to be independent, in accordance with the criteria in section 6.1.1, and will be of such size and competence necessary to understand properly and deal with the current and emerging issues of the business of Horizon Oil.
The directors will appoint as chairman of the Board, one of the non-executive directors who is independent.
Each director is bound by all Horizon Oil’s charters, policies, and codes of conduct, including without limitation:
The Board and/or the Committees have delegated carriage of the operation and management of Horizon Oil’s business to the chief executive officer and, through the chief executive officer, to appropriate members of the senior management group.
This charter is designed to facilitate a mature and constructive relationship with Horizon Oil’s management – one that is grounded in a mutual understanding of their respective roles and the ability of the Board to act independently in fulfilling its responsibilities.
The Board will approve and monitor delegations of authority from the chief executive officer to senior management.
Consistent with its commitment to best practice corporate governance, Horizon Oil recognises the importance of the office of chairman and the office of chief executive officer of Horizon Oil.
Horizon Oil recognises that it is important that the chairman and the chief executive officer have defined roles in the organisation and function in accordance with clear functional lines.
In accordance with clause 11.6.2 of the constitution, the Board has resolved to appoint a chairman and determine the period for which he or she holds office.
The chairman will be selected on the basis of relevant experience, skill and leadership abilities that the Board recognises from time to time. The Board at the first board meeting following the annual general meeting will consider the position of chairman.
The chairman will:
The chief executive officer has primary responsibility to the Board for the affairs of Horizon Oil.
The Board appoints the chief executive officer to manage the business on its behalf (and shareholders) and must delegate sufficient powers to allow him or her to manage effectively. The chief executive officer must carry out the objectives of the Board in accordance with its instructions, and report to the Board all matters the chief executive officer considers to be material to the affairs of Horizon Oil.
The chief executive officer will:
The delegation of authority to the chief executive officer is subject to the limits determined by the Board.
The chief executive officer is formally delegated by the Board to authorise all expenditure as approved in the budget, provided that capital expenditure in excess of $1,000,000 must be approved by the Board and all payments to the chief executive officer, outside of normal agreed monthly remuneration, must be authorised by the chairman and subsequently ratified by the Board.
The chief financial officer will:
New standards of independence are emerging in Australia and overseas that will impact on the perception of who can be characterised as an independent non-executive director. The issue of "independence" is fluid and emerging relatively quickly. The following questions have been adopted by Horizon Oil to assist in defining independence. However, Horizon Oil is not proposing to adopt hard and fast "set and forget" rules.
At the time of a director’s appointment the Board will consider independence having regard to the answers to the following questions and resolve whether to consider the relevant director independent.
Materiality
The Board will from time to time determine relevant materiality thresholds for the purposes of independence. The general threshold for materiality is, in the case of service providers or similar, more than $250,000 per annum and the relevant director does not receive any remuneration directly related to the Horizon Oil's use of the firm, for example "finder fees" etc.
Each independent director of Horizon Oil must regularly provide the Board of Horizon Oil all information regarding his or her interests that is relevant to his or her independence having regard to the standard discussed in section 6.1.1. Where the independent status of a director is lost, this must be immediately disclosed to the market.
The Board must ensure that each annual report of Horizon Oil meets the disclosure requirements of the Listing Rules.
As a general principle each director must bring an enquiring, open and independent mind to board meetings, listen to the debate on each issue raised, consider the arguments for and against each motion and reach a decision that he or she believes, to be in the best interests of Horizon Oil as a whole free of any actual or possible conflict of interest and consistent with the Directors’ code of conduct.
If the Board determines that a director might be in a position where there is a reasonable possibility of conflict between his or her personal or business interests, the interests of any associated person, or his or her duties to any other company, on the one hand, and the interests of Horizon Oil or his or her duties to Horizon Oil, on the other hand, the Board will require that the director:
If the Board resolves to permit a director to have any involvement in a matter involving possible circumstances of conflicting interests, the Board must minute full details of the basis of the determination and the nature of the conflict, including a formal resolution concerning the matter.
If a director believes that he or she may have a conflict of interest or duty in relation to a particular matter, the director should immediately consult with the chairman.
The company secretary will maintain a register of all possible conflict of interest situations.
Directors should ordinarily receive board papers and related material not later than five days prior to the relevant meeting.
The chairman of the meeting should ensure the availability and, if necessary, the attendance at the relevant meeting, of any member of executive management responsible for a matter included as an agenda item at the relevant meeting.
The non-executive directors will meet from time to time to conduct a non-executive discussion of baord and management issues. These meetings are to be used to provide feedback about board processes, including the adequacy and timeliness of information being provided to the Board. At times these meetings may focus on substantive issues that some board members may prefer to discuss without management present. These meetings may also discuss areas where the performance of independent directors could be strengthened.
Any issues arising from these meetings that bear on the relationship between the Board and management will be communicated quickly and directly to the chief executive officer by the chairman.
An agenda will be prepared for each board and committee meeting. The Board meeting will generally follow the format outlined below.
1. Review of previous minutes for meetings of directors |
2. Business arising |
3. Executed contracts register |
4. Corporate calendar |
5. Management report |
6. Oil & Gas Production report |
7. Financial Report |
8. Company announcements |
9. Any other business |
Each meeting should allow for informal discussions between board members.
Circulating Resolutions
Urgent matters that cannot wait until the next board meeting can be dealt with by a circulating resolution. A circulating resolution should be approved by the chairman before being circulated and should normally be preceded by a telephone meeting if practical.
A circulating resolution must be signed by all directors approving the action and will be entered in the Board minute book. If all directors approving the action do not sign the resolution, the item is deferred to the next board meeting.
The Corporations Act 2001 (Cth) allows the directors to delegate their powers regarding financial matters to the Audit Committee. This charter relies on those delegation powers as specific authority for the rest of the Board to rely reasonably on information or advice provided to the Board by its various committees, to assist the Board in the discharge of its responsibilities (either in whole, or in conjunction with the Board). The Board has established the following committees:
Audit Committee;
Remuneration Committee;
Nomination Committee;
Risk Management Committee;
Disclosure Committee
These committees are designed to consider specific matters and make recommendations to the Board. However, it is not intended that these committees restrict the ability of the Board to make an independent assessment of the recommendations, having regard to the Board’s knowledge of Horizon Oil and the complexity of the structures and operations of Horizon Oil. The Board will consider the materials and recommendations presented to them and bring their own mind to bear on the issue using the skill and judgment they possess.
The Board will consider and approve the charters of the various committees.
The Board will receive copies of committee papers / minutes / agendas in respect of each committee and all non-executive directors may attend meetings of committees of which they are not members.
Each of the committees has the discretion to invite members of management to the committee meetings and may delegate tasks to management where appropriate.
Any director may communicate directly with employees of Horizon Oil but such communications are to be made having regard to the efficient operation of Horizon Oil and the need to preserve and maintain an effective chain of command and the confidentiality of the Board’s deliberations.
Where individual directors wish to communicate with executive management or with other employees or representatives of Horizon Oil in relation to company business, all communications can be direct. All communications of a material or sensitive nature must be facilitated by the chairman.
A director of Horizon Oil is entitled to seek independent professional advice (including but not limited to legal, accounting and financial advice) at Horizon Oil’s expense on any matter connected with the discharge of his or her responsibilities, in accordance with the procedures and subject to the conditions set out below:
Subject to the relevant provisions in Horizon Oil’s Constitution, the level of non-executive director and chief executive officer remuneration will be set by the Remuneration Committee so as to attract the best candidates for the Board while maintaining a level commensurate with boards of similar size and type.
In line with Horizon Oil’s desire to maintain director independence, each director is permitted to deal in personal securities of Horizon Oil in accordance with the Securities trading policy.
The Board believes that regular assessment of the Board's effectiveness and the contribution of individual directors is essential to improve governance of Horizon Oil.
At least once in each financial year, the Board must complete/facilitate the completion of a performance evaluation.
The focus of the evaluation will be on how performance can be made more meaningful in setting and achieving goals that add value. The results will be internal to the Board, but disclosure will be made in the annual report and Horizon Oil’s website that such evaluations are undertaken.
The Board will determine the manner and form of the performance evaluation.
This charter will be available, upon request, to each director of Horizon Oil, the senior management group, external auditors and shareholders.
This charter will be available to other interested parties upon request, and upon the approval of the chairman.
The Board will, at least once in each financial year, review this charter, and the charter of each of the Committees, and make any amendments it determines are necessary or desirable.
[1] Substantial shareholder is defined for this purpose as holding 5% or more of the issued shares.