Corporate Governance

 

The Eiffel Technologies Board is committed to maintaining the highest ethical standards and best practice in the area of corporate governance within the framework of the Australian Stock Exchange Governance Council Principles of Good Corporate Governance and Best Practice Recommendations (ASX Guidelines) to ensure the Company’s business is conducted in the best interest of all stakeholders.

Lay solid foundation for management and oversight

The Board is responsible to shareholders for the performance of the Company and for the overall corporate governance of Eiffel Technologies. This role encompasses the determination of Eiffel’s goals and strategic direction and ensures timely and accurate communications to shareholders. The Board has established policies in respect of Board responsibilities and delegations of authority for the appropriate management of the Company’s operations.

The Board has also adopted management policies and procedures addressing statutory financial reporting, Board and management financial reporting and controls, information technology security, contract management, management and staff performance reviews and remuneration, internal controls for business risk management, ethical standards and occupational health and safety practices. The Board is responsible for appointing the Chief Executive Officer and reviewing her performance. The Chief Executive Officer is responsible for the overall implementation and management of the policies and strategies established by the Board.

Structure the Board to add value

Board Composition
 

The Board is currently composed of Four Non-executive Directors. Eiffel’s Constitution specifies that the number of Directors shall not be less than three. At present the Board consists of:

• Mr Thomas Hartigan, Chairman, appointed May 1995

• Dr Ross Macdonald, Non-executive Director, appointed February 2003

• Mr Bruce Hundertmark, Non-executive Director, appointed February 2005

• Mr Michael Hoy, Non-executive Director, appointed December 2005

• Mr Neill Colledge, Non-executive Director, appointed April 2007

• Mr Lawrence Gozlan, Non-executive Director, appointed April 2007

Jagen Pty Ltd, the Company’s largest shareholder has the right to nominate two persons for election to the Board.

Eiffel’s policy governing Board composition requires the Chairman and a majority of the Board to be independent Non-executive Directors. In assessing independence, the Board has regard to the ASX Guidelines and the independence of each Director is monitored by the Board on an ongoing basis in light of disclosed interests.

At present the Board has determined that all Eiffel Directors are independent.

The Board strives to ensure its composition includes an appropriate mix of expertise and experience relevant to Eiffel’s business activities conducive to making expedient decisions in the best interests of the Company. The relevant skills, experience and expertise of each Board member is set out in our most recent Annual Report.

At every Annual General Meeting (AGM) one third of the Board of Directors retires and may seek re-election to the Board. New Directors appointed by the Board must stand for election at the Company’s next AGM.

The Board recognises the importance of each Director bringing independent judgement to bear in the Board decision making process. Accordingly, all Directors have access to independent professional advice at the Company’s expense with the approval of the Chairman. Directors are also indemnified under the Company’s Constitution, and in accordance with deeds of indemnity and insurance subject to limitations imposed by the Corporations Law.

Board Audit Committee
 

The Committee provides a direct link between the Board and external audit functions of the Company. Audit Committee meetings are generally attended by the Company Secretary/Chief Financial Executive, and other invited parties.

The Committee is responsible for reviewing and reporting to the Board that:

• The systems of control that management have established effectively safeguard the group’s assets;

• Accounting records are properly maintained in accordance with statutory requirements;

• Financial information provided to shareholders and the Board is accurate and reliable;

• External audit functions are effective and are appropriately resourced.

To fulfil these duties the Committee meets with and receives reports from the external auditors, dealing with any matters which have arisen during the course of their audit.

The current members of this Committee are:

• Mr Thomas Hartigan (Chair)

• Dr Ross Macdonald

[See Board Audit Committee Charter - 30KB PDF File]

Having regard to the size of the Board and the individual skills of each Director, the Board has determined that given his financial background, Mr Thomas Hartigan is the most appropriate person to Chair the Board Audit Committee.

Other Committees
 

Additional sub-committees may be established by the Board on an as needs basis from time to time to monitor specific Company transactions and projects.

The full Board is responsible for establishing criteria for Board membership, reviewing Board membership and identifying and nominating Directors and accordingly a separate nomination committee has not been established.

Promote ethical and responsible decision making

Eiffel prescribes ethical standards for employees for professional conduct, dealings with the business community, the public and with other employees.

The Company is currently drafting an employee handbook, that when completed will provide policies and guidelines in the context of both the applicable legislation and accepted community standards.

The employee handbook outlines the Company’s requirements for standards of conduct dealing with relevant issues including confidentiality, conflicts of interest, employee discrimination and harassment, and trading in Company securities.

Trading in the Company’s securities
 

The Board considers that if Directors, employees and their associates acquire shares in Eiffel, these shares should be held for longer term investment and not for speculative or trading purposes. Company policy as set out in the employee handbook prohibits the trading of Company securities by Directors and employees whilst in possession of price sensitive information.

Directors are restricted to trading in Eiffel Technology Limited shares in the 14 day window after the yearly and half yearly financial results and other material announcements. Directors are to discuss share trading with the Chairman prior to commencement of trading. The Board minutes will reflect, on an ongoing basis, details of share trading discussions.

Staff for whom it is known or would be expected to be known are in possession of market sensitive information are restricted to trading in Eiffel Technology Limited shares in the 14 day window after the yearly and half yearly financial results and other material announcements. Other staff must discuss share trading with the Chief Executive Officer prior to commencement of trading.

Details of share trading discussions are to be presented to the Board as and when they occur.

Safeguard integrity in financial reporting

In addition to the established function of the Board Audit Committee described above, the Board has implemented management financial reporting requirements. The Board requires the provision of written assurances in respect of the accuracy and compliance of Company finance reports by the Chief Executive Officer and the Chief Financial Executive as part of the management sign-off process for the half year and full year Company financial statements.

Make timely and balanced disclosures

As a public listed company, Eiffel is required to comply with ASX Listing Rules continuous disclosure obligations, as complemented by the Corporations Act disclosure requirements. Eiffel has a policy relating to continuous disclosure to ensure compliance with its disclosure obligations.

[See Continuous Disclosure Policy - 15KB PDF File]

Respect the rights of shareholders

The Board of Directors aims to ensure that all shareholders are informed of all major developments consistent with ASX disclosure requirements affecting the Company and seeks to maintain a strong and participatory framework for shareholder relations.

The principal method of communicating to shareholders is through the Company’s Annual Report, issued to all shareholders and posted on the Company’s website. All ASX announcements are also posted on the Company’s website.

In addition, through the Company’s AGM, shareholders receive reports by the Board on Eiffel’s activities for consideration and can participate by attending the meeting.

The Company’s website is regularly reviewed and updated, having regard to the ASX Guidelines to promote communications with shareholders.

HLB Mann Judd (NSW) is Eiffel’s external auditor. HLB Mann Judd’s policy is to rotate audit partners every seven years.

HLB Mann Judd meets with the Board Audit Committee and is given the opportunity to meet with Eiffel Directors without management in attendance. A representative from HLB Mann Judd attends Eiffel’s AGM.

Recognise and manage risk

The risks associated with Eiffel’s business are wide ranging and include the following:

• Reliance on key personnel

• Economic conditions of North America and Western Europe

• Technology development

• Complexity and cost of technology transfer

• Increased competition

• Timeframes to produce revenues

• Litigation by generic manufacturers

• Regulatory approvals overseas

• Technology intellectual property rights

• Market acceptance

• Additional capital requirements

• Managing future growth

• Reliance on research and development team

• International markets

Shareholder value analysis is considered by the Board to be integral to the management of Eiffel’s business and its related risks, with the objective of maximising shareholder returns over time.

The consideration and approval by the Board each year of the Company strategy, business plans and financial budgets involve identification of significant risks and the implementation of appropriate strategies to deal with them.

The Board also requires rigorous management reporting against projected results.

The Board receives monthly detailed reports and briefings by management on the Company’s financial performance, R&D programs and business development activities. Details of occupational health and safety and environmental compliance are also submitted in the R&D report by management and monitored by the Board on a regular basis.

[See Risk Management and Internal Systems Policy - 36KB PDF File]

Encourage enhanced performance

The Board has committed to future annual reviews of its performance, both individually and collectively, as well as annual reviews of key Company management against both measurable and qualitative indicators. The performance evaluations will be conducted by external independent advisors.

[See Board Performance Evaluation Policy - 30KB PDF File]

The individual objectives for all employees have been developed to directly align to achieving the Company’s business objectives.

Remunerate fairly and responsibly

Having regard to the size of the Board and the nature and extent of the Company’s requirements in relation to remuneration issues, the Board has determined that an additional Board remuneration committee is not currently warranted. The Board is responsible for the remuneration review of the Managing Director and Chief Executive Officer, who in turn is responsible for the management of all other Executive remuneration. The Chief Executive Officer does not participate in discussions held in relation to her remuneration.

Remuneration for Company employees, including management, is determined by reference to market rates and includes performance-based incentives. Remuneration packages are set at levels that are intended to attract and retain Executives of sufficient calibre to facilitate the efficient and effective management of the Company’s operations. Remuneration and other terms of employment for Senior Executives are formalised in employment agreements.

Remuneration includes base salary, superannuation, motor vehicles, performance based bonuses, share options, fringe benefits and termination entitlements. At this stage of the Company’s development, with no established cash flow, the Directors believe that the granting of options over unissued shares, and the issue of shares to satisfy the payment of bonuses, are appropriate performance based remuneration mechanisms.

Remuneration of Non-executive Directors is determined in aggregate by shareholders in general meeting. The Board of Directors determines individual fees within the aggregate level, having regard to the number of Directors and their respective roles and responsibilities. This is currently set at $100,000 per annum.

Recognise the legitimate interest of stakeholders

The Board is committed to delivering maximum share value to the Company’s shareholders while maintaining high standards of employment, full compliance with relevant legislation, actively contributing to the betterment of the community, and meeting the Company’s responsibilities to all stakeholders. The Board and management recognise the importance of acting promptly to correct any deficiencies that may be identified before such deficiencies adversely impact upon the performance of the Company.

Page updated April 24, 2007