Sabina Corporation Limited - Investment Property Development Consultancy Australia

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Issued 21/03/11
Updated   --/--/--
Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied for the entire financial year ended 30th June 2009.

The Directors are responsible for the corporate governance practices of the Company. This Statement sets out the corporate governance practices that were in operation throughout the financial year; except where otherwise stated. The Board promotes a culture of accountability, integrity and transparency.

BOARD COMPOSITION
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 of office are detailed in the Directors’ Report. The names of the independent Directors of the Company are:

* Mr. J L Chard - Non-Executive Director
* Mr. R D Tilby - Non-Executive Director
* Mr. R X Yu - Non-Executive Director

Only Mr Peter Chen, the executive director and CEO is involved in the day to day management and control of the Company.

When determining whether a non-executive director is independent, the directors must not fail any of the following materiality thresholds:

• Less than 10% of Company shares are held by the director or director related entity.
• No sales are made to or purchases made from any entity directly or indirectly associated with the director.
• None of the directors income or the income of a directly or indirectly associated entity is derived from a contract with any member of Sabina Corporation Limited other than income derived as a director of the entity.

The independent directors have the right to seek independent professional advice in the conduct of their duties as directors at the Company’s expense. However, prior approval of the Chairman is required, which would not be unreasonably withheld. The terms and conditions of appointment and retirement of directors are set out in a
letter of appointment. A sample of the letter has been released to the ASX and is on the Company’s website.

Full details of the directors’ attendance at meetings are shown in the Directors’ Report.

ETHICAL STANDARDS
The Board subscribes to the Statement of Ethical Standards as published by the Australian Institute of Company Directors and this has been used as a basis for the adopted Code of Conduct. All directors of the Company are expected to act with the utmost integrity, honesty, and a high standard of performance to enhance the Company’s reputation.

The code of Conduct requires directors to:

• Act honestly and in good faith;
• Exercise due care and diligence in fulfilling the functions of office;
• Avoid conflicts and make full disclosure of any possible conflict of interest;
• Comply with the law;
• Encourage the reporting and investigation of unlawful and unethical behaviour; and
• Comply with the share trading policy outlined in the Code of Conduct.

BOARD ROLES AND RESPONSIBILITIES
The board is first and foremost accountable to provide value to its shareholders through delivery of timely and balanced disclosures.

The board is ultimately responsible for ensuring its actions are in accordance with key corporate governance principles. The board charter is publically available on the company’s website.

SHAREHOLDER RIGHTS
Shareholders are entitled to vote on significant matters impacting on the business, which include the election and remuneration of directors, changes to the constitution and receipt of annual and interim financial statements. Shareholders are encouraged to attend and participate in the Annual General Meeting, to lodge questions to be responded by the Board and/or the CEO, and are able to appoint proxies.

TRADING POLICY
The Company’s policy on trading in its securities restricts directors from acting on material information until it has been released to the market and adequate time has been for this to be reflected in the security’s price.

The Company has adopted a policy whereby a director should not purchase, sell, transfer, or otherwise deal with the securities of the Company five (5) working days before or after any market release made to the ASX in respect to the Company’s annual report, half-yearly financial report, the results of the annual general meeting,
and any other price sensitive announcements.

AUDIT COMMITTEE
The Board has not established a separate Audit Committee due to the small size of the Company and the fact that all accounting data input is carried out by an external qualified Accountant. The Board takes an active role in liaising with the external auditors and ensuring that the annual audit and half year review are carried out on
time. The Board reviews the performance of the external auditors on an annual basis.

PERFORMANCE EVALUATION
The Chairman reviews the performance of all directors annually. Due to the small size of the company director specific goals and performance criteria have not been agreed upon and a formal written performance evaluation was not prepared. However, Directors whose performance is unsatisfactory are asked to retire or not to stand
for re-election.

RISK MANAGEMENT
An annual assessment of the business risk profile is undertaken and discussed by the Board covering all aspects of the business from the operational level through to strategic level risk.

The Board has set up an “Advisory Board” to assist the Directors to assess and review various risks associated with property acquisition and project development approval. To further minimise the risk, the Board has also adopted a policy that any property purchased for development purpose is made subject to development approval by the local authority on terms and conditions solely satisfactory to the Company.

Other areas of risk relate to adequate coverage for asset insurance, building contract performance, and the adoption of mediation process in preference to litigation.

REMUNERATION POLICY
Due to the size of the Company, and the fact there are no employees, there is no formal Remuneration Committee. The remuneration policy is reviewed annually and the terms are voted upon at annual general meeting. All amounts paid to the directors were approved by shareholders.

The Chairman of the Board reviews the fixed fee payable to directors annually by reference to company performance, comparable information from competitors and independent advice. The policy is designed to attract quality directors and reward them for performance which results in long-term growth in shareholder value. The Chairman of Board can exercise discretion in relation to approving share options and issuing shares in lieu of cash payment of directors’ fees. The policy complies with the four key principles of IFSA Guidance Note 02-16. Any future changes to this policy must be justified by reference to measured performance criteria.

Details of amounts paid to the directors during the year are detailed in Note 5 to the Accounts. Apart from the Executive Chairman & CEO, there is no other employee as all of the required services are outsourced through consultants. The directors, other than the Executive Chairman, are subject to rotation in accordance with the Constitution of the Company.

The Executive Chairman receives a director’s fees and a management fee is also paid to a director related entity, G8 Management Pty Ltd, of a fixed fee sum under a 5-year Consultancy Agreement (expiring 30th June 2010) that has been previously approved by the shareholders.

There are no established employee share and option arrangements in which the directors could participate.

There are no schemes for retirement benefits for non-executive directors.

EXPLANATION FOR DEPARTURE FROM BEST PRACTICE RECOMMENDATIONS
The Board has adopted corporate governance practices that are commensurate with the size and scope of the Company and its activities. The Company has therefore adopted policies, procedures and structures which have been designed with the best interests of the Company and its shareholders in mind, and which are practical and efficient to implement, notwithstanding that these are not in all instances consistent with the specific recommendations of the ASX Corporate Governance Council. To the extent that the Company’s practises did not conform to the ASX Principles and Recommendations during the reporting period, and explanation for departure from the respective Principles and Recommendations is provided below:

No.

Departure from
Recommendation

Explanation for Departure

2.2

The Chairman is not an independent Director.

Given the size and scope of the Company’s operations and the financial position of the Company, the Board considers that there is no real benefit to be gained by appointing an independent chairman, when in fact by his vested interest as a substantial shareholder he is the driving force in the success of the Company.

2.3

The roles of the Chairman and the Chief Executive Officer should not be the same person.

Given the size and scope of the Company’s operations the Board considers that there is no real benefit to be gained by appointing a Chief Executive Officer in addition to the Chairman.

2.4

A separate Nomination Committee has not been formed.

The role of the Nomination Committee is carried out by the full Board. The Board considers that given its size, no efficiencies or other benefits would be gained by establishing a separate Nomination Committee.

4.1

The Chairman and the Chief Financial Officer to state in writing to the Board that the company’s financial reports presents a true and fair view, in all material respects, of the Company’s financial condition and operational results.

The role of Chief Financial Officer is performed by an external accountant, and the Statement is counter-signed by the Chairman for inclusion in the Financial Report for the year signed by two Directors. The Board considers that the procedure meets the requirement adequately in the current circumstances.

4.2

No formal Audit Committee has been established.

Given the fact that all the accounting input data is carried out by an outside independent Accountant and the small size of the Company’s current activities, the Board considers the present arrangement is fully capable of maintaining the independence and objectivity of the external auditors.

6.1

Design and disclose a communication strategy to promote effective communications with shareholders and encourage effective participation at general meetings.

The Board considers the detailed information provided to all shareholders and to the general public throughout the year in the form of ASX press releases and on the company website is sufficient communication for the current level of risk and operations.

Shareholders are invited to attend general meetings and given full explanations of resolutions to be put to vote.

7.1

The Board should establish policies on risk oversight and management.

The Board has appointed an “Advisory Board” made up of independent Members to assist the Board and review various risks associated with property acquisition and the obtaining of development approval.

7.2

The CEO & Chief Financial Officer to confirm existence of a sound system of risk management policies.

The principal policy adopted to minimize risk is that Company’s participation is limited to investment in unit trusts operated by other partners and providing services.

8.1

Performance evaluation of the Board and key executives.

Given the size of the Company and the Structure of the Board, the Chairman is fulfilling this role at the moment.  Should performance issues arise within the Board, an independent consultant would be engaged to arbitrate.

9.2

A Remuneration Committee has not been established.

Due to the size of the Company, there is no formal Remuneration Committee. The remuneration policy is reviewed annually and the terms are voted upon at annual general meeting.  All amounts paid to the directors were approved by shareholders.

10.1

There has been no disclosure of a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.

Although no formal code has been drawn up, the Board recognises the Principle and adopts business practices accordingly.



Other information

Further information relating the company’s corporate governance practices and policies has been made publicly available on the company’s website at www.sabina.com.au.

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