NAOS Listed Investment Companies
Corporate Governance

NAOS Listed Investment Companies Corporate Governance Overview
NAOS Emerging Opportunities Company Limited (ASX: NCC)
NAOS Absolute Opportunities Company Limited (ASX: NAC)

BOARD POLICY

Role of the Board

The Companies have a Board but no full-time employees.

Subject at all times to any written guidelines issued by the Board of Directors of NAOS Emerging Opportunities Company Ltd (NCC) and NAOS Absolute Opportunities Company Ltd (NAC), the day-to-day management and investment of funds is carried out by NAOS Asset Management Ltd (the Manager) pursuant to a management agreement.

The role of the Board is to set strategic direction, approve capital management initiatives and to be responsible for the overall corporate governance of the Company which includes:

  • To oversee and monitor the performance of the Manager’s compliance with the management agreement and to ensure that the Manager is monitoring the performance of other external service providers;
  • Ensuring adequate internal controls exist and are appropriately monitored for compliance;
  • Ensuring significant business risks are identified and appropriately managed;
  • Approving the interim and final financial statements and related reports and other communications to the ASX and shareholders; and
  • Setting appropriate business standards and code for ethical behaviour.

The Board aims to ensure that all Directors and the Manager act with the utmost integrity and objectivity and endeavour to enhance the reputation of the Companies. The Board should act in a manner designed to create and build sustainable value for shareholders.

Composition and Operation of the Board

The skills, experience and expertise relevant to the position of each Director who is in office at the date of the annual report and their term in office are detailed in the Directors’ Report of the Annual Report.

The Board has the following members:

David Rickards, Warwick Evans, Sebastian Evans

Board Policy

Board of Directors Charter

The Board operates in accordance with this Charter. In carrying out its responsibilities, the Board will at all times recognise its overriding responsibility to act honestly, fairly, diligently and in accordance with the duties and obligations imposed upon it by the Companies’ constitution and the law.

Role

The role of the Board is to ensure that:

  • NAOS Asset Management Ltd (the Investment Manager) and other external service providers are performing their duties in a skilful and diligent manner, and that they operate appropriate risk and compliance monitoring procedures;
  • the Companies operate in compliance with its regulatory environment which includes the Corporations Act, the Listing Rules of the ASX, and taxation legislation; and
  • good corporate governance practices are adopted.

Responsibilities

The Board has specific responsibilities to:

  • Oversee and monitor the Manager’s compliance with the management agreement and also to ensure that the Manager is monitoring the performance of other external service providers such as the custodian and the share registry;
  • monitor financial performance including approval of statutory financial reports and liaison with auditors;
  • ensure adequate internal controls exist and are appropriately monitored for compliance with the Corporations Act, ASX Listing Rules, taxation legislation, and the Manager’s Australian Financial Services Licence;
  • ensure significant business risks are identified and appropriately managed;
  • set appropriate business standards and a code for ethical behaviour; and
  • oversee communications and reporting to shareholders.

Composition

The Board will be comprised as follows:

The Board has been structured to ensure that it has the necessary skills and expertise for a company of this nature and it can effectively represent stakeholder interests.

Director Independence

A Director shall be regarded as independent if that Director is a non-executive Director and:

  • Is not a substantial shareholder of the Companies or an officer of, or otherwise associated directly with, a substantial shareholder of the Companies;
  • is not a material supplier to the Companies, or an officer of or otherwise associated directly or indirectly with a material supplier;
  • has no material contractual relationship with the Companies other than as a Director of the Companies;
  • and is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Companies or create a conflict of interest.

All Directors are to disclose to the Companies, as soon as possible, any information that may affect their independence.

Meetings

Meetings of the Board will be conducted as follows:

The Board will meet as and when necessary, to efficiently discharge its duties. The Board has determined that given the current nature of the business, quarterly Board meetings are appropriate, supplemented with monthly information updates. A Director may at any time convene a Board meeting. However reasonable notice must be given to all members of the Board. A quorum necessary for the Directors to conduct the business of the Companies is two Directors, unless altered. Where a Board meeting is held and the Chairman is not present, the Directors present shall elect one of them to be Chairman of the meeting. Matters arising at a Board meeting shall be decided by the majority of votes of Directors present and voting, and any such decision is taken to be a decision of all Directors. In the case of equality of votes, the Chairman of the meeting shall have a second or casting vote (except where the meeting consists of less than three Directors or less than three Directors that are entitled to vote).

Remuneration

The Directors shall be paid out of the funds of the Companies by way of remuneration for their services such sums as may from time to time be determined by the Companies in the general meeting and allocated between the Directors as the Board deems appropriate.

No Director receives equity remuneration from the Companies.

Having regard to the Companies’ size and Board responsibilities in respect of remuneration, a formal remuneration committee is not considered necessary.

Independent Professional Advice and Access to Company Information

Each Director has the right to access all relevant information and, subject to prior consultation with the Chairman, may seek independent professional advice at the entities expense. A copy of advice received by the Director is made available to all other members of the Board.

Board Committees

The Board may establish committees to assist it in carrying out its responsibilities, consisting of such members as they may think fit. The Board shall adopt Charters setting out matters relevant to the composition, responsibilities and administration of such committees, and other matters that the Board may consider appropriate.

Conflicts of Interest

In accordance with the Corporations Act 2001, the Directors must keep the Board advised, on an ongoing basis, of any interests that could potentially conflict with those of the Companies. Where the Board believes that a significant conflict exists, the Director concerned does not receive the relevant Board papers and is not present at the meeting whilst the item is considered.

Directors’ Code of Conduct

The Companies recognise that the success of the business and the maintenance of the Companies integrity requires that its Directors and external service providers pursue the highest standards of ethical conduct at all times.

The Board will act in accordance with the following principles:

Honesty and Integrity
We will act honestly, in good faith and in the best interests of the Companies as a whole and will not engage in conduct likely to bring discredit upon the Companies.

Fair Dealing
We will deal fairly with our external service providers, colleagues, suppliers, competitors and shareholders and will maintain a high standard of responsibility and awareness as a corporate citizen.

Diligence
We will use due care and diligence in fulfilling the functions of office and in exercising the powers attached to that office.

Independence
We will be independent in our judgement and actions, and take all responsible steps to be satisfied as to the soundness of all decisions taken by the Board of Directors.

Avoid Conflicts of Interest
We acknowledge that there may be times when our personal or other interests conflict with those of the Companies. In these circumstances, we will take action to remove or manage the conflict, so as to avoid detriment to the Companies or any perception of conflict of interest.

Personal Transactions
We will not use the name of the Companies for personal gain. We will not use any information gained from our dealings with the Companies for personal gain, nor allow any such information to be used for the personal gain of others. Any services or facilities made available to us by the Companies will only be used for properly authorised purposes.

Maintain Confidentiality
We will take care to ensure that confidential information about the business, shareholders, suppliers, and external service providers is properly protected and not disclosed, except for proper purposes or where required by law.

Compliance with the Law and Company Policies
We will abide by the law and relevant Companies policies at all times, including best practice recommendations established in the revised ASX Corporate Governance Principles and Recommendations.

Reporting of Breaches Encouraged
Any breaches of the law or unethical behaviour which become known to Directors must be reported to the Chairperson or the Board as a whole. Any breaches reported will be properly investigated, and appropriate action taken. Persons who report suspected breaches in good faith shall be protected from victimisation.

Directors Code of Conduct

Continuous Disclosure Policy

The Company has established a continuous disclosure policy to ensure compliance with the continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001. The policy aims to ensure all investors have full and timely access to material information concerning the Company and that Company announcements are factual and presented in a clear and balanced way.

Continuous Disclosure Policy