Acrux : Updated Board Charter

For personal use only

ACRUX LIMITED

BOARD CHARTER

For personal use only

BOARD CHARTER

1. OVERVIEW OF THE CHARTER

This Charter sets out the principles for the operation of the Board of Acrux Limited (the 'Company').

This Charter should be read in conjunction with the Company's Constitution and the Company's Statement of Corporate Governance Principles.

2. OBJECTIVES AND PURPOSES

2.1 Primary Responsibility

The Board has the primary responsibility for setting the strategic direction of the Company, aimed at creating value for shareholders. The Board will guide and monitor the company, including compliance with the Company's corporate governance objectives.

2.2 Duties

In giving effect to this Charter, each Director will, at all times, act honestly and fairly, and with skill and diligence, and in all respects in accordance with the law applicable to the Company.

2.3 Interests of Shareholders and Others

Each Director will, at all times, act in the interests of the Company as a whole and, subject to that, will have regard for the interests of shareholders, employees, customers and other stakeholders of the Company and the community and environment in which the Company operates.

2.4 Culture

The Board will seek to support and maintain a culture within the Company which embraces and establishes the principles set out in this Charter.

3. DUTIES, RESPONSIBILITIES AND POWERS

3.1 Duties and Responsibilities

The Board is responsible for the management, oversight and performance of the Company, including but not limited to the following matters:

Strategic and Financial Objectives

1. evaluating, approving and monitoring the strategic and financial plans and performance objectives for the Company;
2. evaluating, approving and monitoring the annual budgets and business plans;
3. evaluating, approving and monitoring major capital expenditure, capital management and all major corporate transactions including the issue of any securities of the Company;
4. evaluating and approving the annual and half year financial reports and associated announcements and disclosures;
5. monitoring other material reporting and external communications by the Company including financial projections and or statements as to future financial performance;
6. 1. approving the payment of dividends; and

1. appointing external auditors.

Board and Management

1. nomination and remuneration of Directors;
2. appointment of the Chair;
3. evaluation of Board and individual Director performance;
4. appointing, removing and managing the performance of, and the succession planning for, the

Page 2 of 9

For personal use only

Chief Executive Officer;

1. overseeing and ratifying the terms of appointment and, where appropriate, removal, of senior management (being those persons reporting directly to the Chief Executive Officer), including their remuneration;
2. monitoring senior management performance and their implementation of strategy and ensuring appropriate resources are available;
3. control of membership and Charters of Board Committees; and
4. corporate governance matters relating to the Board and senior management and matters of principle regarding corporate governance.

Risk and Compliance Management

1. monitoring the Company's performance in relation to best practice principles of corporate governance;
2. approving and monitoring the Company's risk management strategy, internal controls and accountability systems and their effectiveness;
3. approving and monitoring compliance with the Company's Code of Conduct and other Corporate Governance Policies; and
4. monitoring and reviewing the Company's operations in relation to, and compliance with, legal and regulatory requirements.

Secretarial and Other

1. convening of shareholder meetings;
2. issuing shares, equity instruments or other securities;
3. disclosure of Directors' interests;
4. major litigation;
5. continuous disclosure and shareholder communications;
6. related party transactions;
7. insider trading;

1. design of any short or long-term incentive plans to employees of the Company including, but not limited to employee share and option plans; and

(ab)	authorisation of expenditure in excess of Chief Executive Officer delegations.

3.2 Powers

The Board also has the power to:

1. initiate and adopt corporate plans, commitments and actions;
2. initiate and adopt changes in accounting principles and practices;
3. provide advice and counsel to the Chief Executive Officer;
4. instruct and review the actions of any Committee and of the Chief Executive Officer;
5. make recommendations to shareholders;
6. direct the management of the Company's business;
7. delegate to Board Committees, to a Director or to any other person authority to perform any of the Board functions and to exercise any of its powers;
8. meet from time to time without management present; and
9. act as to all other matters not requiring member approval.

3.3 Delegation to Senior Management

The Board has delegated the day to day management of the Company to the Chief Executive Officer who in turn may delegate to senior management. This delegation includes:

1. developing business plans, budgets and company strategies for consideration by the Board and, to the extent approved by the Board, implementing those plans, budgets and strategies;
2. operating the business of the Company within the parameters determined by the Board and keeping the Board promptly informed of all developments material to the Company and its

Page 3 of 9

For personal use only

business;

1. where proposed transactions, commitments or arrangements to be undertaken by management exceed limits authorised by the Board, referring the matter to the Board for consideration and approval;
2. identifying and managing operational risks and formulating strategies for managing those risks for consideration by the Board;
3. managing the Company's financial and other reporting mechanisms and control and monitoring systems to ensure that they capture all relevant material information on a timely basis and are functioning effectively;
4. ensuring that the Board is provided with sufficient information on a timely basis in relation to the Company's business and, in particular, in relation to the Company's performance, financial condition, operating results, risks and prospects to enable the Board to discharge its duties;
5. implementing the policies, processes and codes of conduct approved by the Board.

4. COMPOSITION AND STRUCTURE OF THE BOARD

4.1 Number of Directors

The Constitution allows for up to a maximum of twelve Directors, with a minimum of three Directors.

4.2 Majority of Independent Directors

The Board should comprise a majority of independent Directors, with independence being determined by the Board in accordance with the criteria set out below (section 6). The Board will assess the independence of each Director at least annually.

4.3 Term of Office - Non-executive Directors

Non-executive Directors should be willing to serve for not less than that period of time determined by the Board at the time of the non-executive Director's appointment before retiring from the Board. Each non-executive Director will resign and may stand for re-election pursuant to ASX guidelines.

4.4 Contribution

No non-executive Director should consider that support for re-election is automatic. If the contribution of a non-executive Director is determined by the Board to be inadequate or harmful to the proper functioning of the Board then the Board may request such non-executive Director to resign. If he or she does not do so the Board may resolve to instruct the Company Secretary to inform shareholders that the Board does not support the re-election of the non-executive Director at the Annual General Meeting at which he or she is due to next offer himself or herself for re-election.

4.5 Term of Office - Executive Directors

Executive Directors must resign from the Board upon ceasing to hold an executive position with the Company. They may be eligible for re-appointment as a Director if they fulfil the criteria for non- executive Directors.

4.6 Terms of Appointment

Each Director will enter into a formal appointment document with the Company setting out the terms and conditions of the Director's appointment.

4.7 Notifications

Each Director must notify the Chair and the Human Capital and Nominations Committee before accepting any other position (whether executive or non-executive and paid or unpaid) which may affect, or could be perceived as affecting, his or her ability to perform the duties of a Director of the Company.

Page 4 of 9

For personal use only

4.8 Code of Conduct

Each Director is bound by the Code of Conduct of the Company.

4.9 Skills and capabilities of Board and Directors

The Board should adopt and regularly review a skills matrix that defines a set of skills appropriate for the Board to discharge its duties having regard to the current and future strategies and operational priorities of the Company.

Directors should be appointed having regard to meeting the skills required in the skills matrix and ensuring a diversity of skills, experience, backgrounds and gender.

5. CHAIRMAN'S RESPONSIBILITIES

5.1 Non-executive Chair

The Directors will appoint one of the non-executive Directors as Chair of the Board.

5.2 Responsibilities of the Chair

The Chair is responsible for the leadership of the Board, for ensuring that the Board functions effectively and for communicating the views of the Board to the public. The Chair's responsibilities include:

1. setting the agendas for Board meetings;
2. leadership and effective performance of the Board;
3. managing the conduct, frequency and length of Board meetings with a view to ensuring that the Board has an in-depth understanding of the Company's financial position and performance and

opportunities facing the Company;

1. facilitating open and constructive communications between Directors and encouraging their contribution as Directors;
2. facilitating open and constructive communications between the Board and the Chief Executive Officer;
3. establishing protocol to take effect on occasions when the Chairman is absent from Board meetings

6. INDEPENDENCE OF DIRECTORS

6.1 Test of Independence

In assessing whether a Director is independent, the Board will have regard to the independence criteria in ASX Corporate Governance Principle 2.

Should the Board propose to discuss any matter which gives rise or may give rise to a conflict or a possibility of a conflict of interest between the duties and obligations of the Director to the Company and to another Company or interest, the Director of the Company must not be present while the matter is being considered and must not vote on the matter.

A Director may request the meeting be postponed or temporarily adjourned to allow provision of legal advice on whether the Director can be present while the matter is being considered and vote on the matter in question. Where appropriate, the other Directors of the Board may pass a resolution that states the nature and extent of the conflict, or possible conflict, has been considered and the matter should not disqualify the Director of the Company from being present or voting.

The Board will assess independence upon appointment and will review their independence as appropriate.

Page 5 of 9