Corporate Governance
These fundamental principles are:
social acceptability
economic viability; and
environmental responsibility.
Lakes Oil N.L. is committed to meeting these objectives, to monitoring the meeting of these objectives and to amending its approach if it proves to be inadequate in complying with its stated intentions and plans. In addition, Lakes Oil N.L. is committed to the public dissemination of this information.
The Board continues to review for best practice and is aware that it has not yet formalised a Diversity Policy, however the Company strives to provide the best possible opportunities for current and prospective employees of all backgrounds.
At 30 June 2012 the Company had three women employees out of a total of seven employees and contractors, with two of these women in senior executive positions. There are no women on the Board.
4. Safeguard Integrity in Financial Reporting
Recommendation 4.1 requires the CEO and CFO to sign a certificate regarding the financial reports giving a true and fair view and are in accordance with accounting standards. The Executive Chairman Mr. Robert Annells and the Chief Financial Officer Mr. Leslie Smith have certified that the financial reports give a true and fair view and are in accordance with accounting standards.
The Board has established an Audit and Compliance Committee consisting of Mr Peter B Lawrence BCom, MBA, FCPA (Chairman), Mr Barney I Berold BCom MBA , Mr William R Stubbs LLB and Mr James H Y Syme LLB, all of whom are non-executive Directors. The number of meetings attended by each member is set out in the Directors’ Report. The Audit Committee works under an Audit Committee Charter which can be viewed on the company’s website.
It is the Board’s responsibility to ensure that an effective internal control framework exists to examine the effectiveness and efficiency of significant business processes such as the safeguarding of assets, the maintenance of proper accounting records and the integrity of financial information, the implementation of quality assurance practices and procedures and ensuring compliance with environmental regulations. The Board continues to hold the responsibility for the establishment and maintenance of a framework of internal control mechanisms for the management of the Company.
At regular occasions the Board conducts:
the review of accounting policies;
the detailed review of the Company’s annual, half yearly and quarterly financial reports;
the effectiveness of accounting and internal control systems;
addressing the findings of the external auditors;
the assessment of the scope, quality and cost of the external audit;
identifying areas of operation, regulatory and legal risk and procedures to ensure those risks are effectively managed; and
ensuring that the auditors retain their independence and that the audit partner is changed periodically. ensuring that conflicts of interest do not arise from services provided by the Company’s external advisors.
5. Make Timely and Balanced Disclosure
The Board and Senior Management are aware of the Continuous Disclosure requirements of the ASX and have procedures in place to disclose any information concerning the Company that a reasonable person would expect to have a material effect on the price of the Company’s securities. These procedures are contained in the company’s Disclosure Policy.
Lakes Oil N.L. recognises that it has a legal and moral obligation to immediately disclose to the market any information that a reasonable person would expect to have a material effect on the price or value of the Company’s securities.
The directors and senior management personnel of Lakes Oil N.L. acknowledge that they each have an obligation to identify and immediately disclose information that may be regarded as material to the price or value of the Company’s securities.
The Chairman is authorised to make statements and representations on Lakes Oil N.L.’s behalf. The Company Secretary is responsible for overseeing and coordinating the disclosure of information to the ASX, analysts, stockbrokers, shareholders, the media and the public. The Secretary must inform the Directors, senior management and employees of Lakes Oil N.L.’s continuous disclosure obligations on a quarterly basis.
The Directors and senior management personnel must ensure that the Secretary is aware of all information to be presented at briefings with analysts, stockbrokers, the media and the public. Prior to being presented, information that has not already been the subject of disclosure to the market and is not generally available to the market must be the subject of disclosure to the ASX. Only when confirmation of receipt of the disclosure and release to the market by the ASX is received and after the information is posted on the Company’s website may the information be presented.
If information that would otherwise be disclosed comprises matters of supposition or is insufficiently definite to warrant disclosure, or if the effect of a disclosure on the value or price of the Company’s securities is unknown, Lakes Oil N.L. may request that the ASX grant a trading halt or suspend it’s securities from quotation. Management of Lakes Oil N.L. may consult the Company’s external professional advisers and the ASX in relation to whether a trading halt or suspension is required.
6. Respect the Rights of Shareholders
The Board aims to ensure in accordance with the Recommendation
6.1 that all shareholders are informed of major developments affecting the affairs of the Company. Information is communicated to the shareholders through the annual, half year, quarterly reports, disclosures made to the ASX, notices of meetings and occasional letters to shareholders where appropriate.
The company maintains a website on which is placed company announcements, the Annual Report and company policies.
The auditor is invited to the Annual General Meeting for the purpose of answering shareholders’ questions.
7. Recognise and Manage Risk
The Board has responsibility for managing risk and internal control and acknowledges that risk management is a core principle of sound Corporate Governance. The financial viability, reputation and future of the company are materially dependent on the manner in which risk is managed.
The Board’s strategy covers the areas of Financial Risk, Operational Risk, Insurance and Internal Control. The company has not appointed a Risk Management Committee due to the importance the Board places on risk mitigation.
In addition, the small size of the Board makes it appropriate for the full board to manage this area.
Financial Risk
The Board receives regular financial reports which measure performance and trends against budget. The reports are discussed at Board Meetings and the Chief Financial Officer answers questions posed by the Directors. Any variations from budget are highlighted, explained and evaluated. This scrutiny is appropriate to a company of the size of Lakes Oil NL. In addition to monthly financial reporting, the company has in place policies to manage credit, foreign exchange and other business risks. Non-executive Directors meet at appropriate times with the external auditor in order to fulfil the Audit Committee Charter. This Charter may be viewed on the company’s website.
Operational Reporting
Projects are approved only after extensive review by a highly qualified technical staff and detailed submissions to the Board through the Chairman. The operations of the company consist of a search for oil and gas and projects are only considered after a review and evaluation of all technical data on record. Outside consultants are engaged as required to enhance the chances of success. Environmental considerations are factors in the consideration of every new project and are fully evaluated and reported before approval by the Board.
Insurance as a Risk Mitigation Strategy
The Board recognises the value of insurance as a risk mitigation strategy and works with a leading insurance broker to ensure that appropriate insurance cover is in place at all times. Contracts with contractors are drawn up or reviewed by solicitors prior to the company entering into any commitment.
Internal Control and Audit
In a small company, an extensive internal control system is not possible, however there is a natural control as a consequence of being small. The Board works very closely with the staff and, because the transactional volume is small, the Directors have a detailed knowledge of the working of the company. It is considered that an internal audit function is therefore not appropriate at this time. The Directors believe the system of internal control is appropriate to the size of the company and to its level of potential risk.
Declaration by the Chairman and Chief Financial Officer
Both the Chairman and Chief Financial Officer sign the following declaration in the presence of the Board prior to the Board accepting the Financial Results each year:
in accordance with the Corporations Act 2001 section 295A, we declare that to the best of our knowledge and belief:
the financial records of the disclosing entity for the financial year have been properly maintained in accordance with section 286; and the financial statements, and the notes for the financial year comply with the accounting standards;
and the financial statements and notes for the financial year give a true and fair view; and any other matters that are prescribed by the regulations for the purposes of this declaration in relation to the financial statements and the notes for the financial year are also satisfied.
Also in accordance with the ASX Corporate Governance Council Best Practice Recommendations 4.1 and 7.2, to the
best of our knowledge and belief, and in our opinion:
social acceptability
economic viability; and
environmental responsibility.
Lakes Oil N.L. is committed to meeting these objectives, to monitoring the meeting of these objectives and to amending its approach if it proves to be inadequate in complying with its stated intentions and plans. In addition, Lakes Oil N.L. is committed to the public dissemination of this information.
The Board continues to review for best practice and is aware that it has not yet formalised a Diversity Policy, however the Company strives to provide the best possible opportunities for current and prospective employees of all backgrounds.
At 30 June 2012 the Company had three women employees out of a total of seven employees and contractors, with two of these women in senior executive positions. There are no women on the Board.
4. Safeguard Integrity in Financial Reporting
Recommendation 4.1 requires the CEO and CFO to sign a certificate regarding the financial reports giving a true and fair view and are in accordance with accounting standards. The Executive Chairman Mr. Robert Annells and the Chief Financial Officer Mr. Leslie Smith have certified that the financial reports give a true and fair view and are in accordance with accounting standards.
The Board has established an Audit and Compliance Committee consisting of Mr Peter B Lawrence BCom, MBA, FCPA (Chairman), Mr Barney I Berold BCom MBA , Mr William R Stubbs LLB and Mr James H Y Syme LLB, all of whom are non-executive Directors. The number of meetings attended by each member is set out in the Directors’ Report. The Audit Committee works under an Audit Committee Charter which can be viewed on the company’s website.
It is the Board’s responsibility to ensure that an effective internal control framework exists to examine the effectiveness and efficiency of significant business processes such as the safeguarding of assets, the maintenance of proper accounting records and the integrity of financial information, the implementation of quality assurance practices and procedures and ensuring compliance with environmental regulations. The Board continues to hold the responsibility for the establishment and maintenance of a framework of internal control mechanisms for the management of the Company.
At regular occasions the Board conducts:
the review of accounting policies;
the detailed review of the Company’s annual, half yearly and quarterly financial reports;
the effectiveness of accounting and internal control systems;
addressing the findings of the external auditors;
the assessment of the scope, quality and cost of the external audit;
identifying areas of operation, regulatory and legal risk and procedures to ensure those risks are effectively managed; and
ensuring that the auditors retain their independence and that the audit partner is changed periodically. ensuring that conflicts of interest do not arise from services provided by the Company’s external advisors.
5. Make Timely and Balanced Disclosure
The Board and Senior Management are aware of the Continuous Disclosure requirements of the ASX and have procedures in place to disclose any information concerning the Company that a reasonable person would expect to have a material effect on the price of the Company’s securities. These procedures are contained in the company’s Disclosure Policy.
Lakes Oil N.L. recognises that it has a legal and moral obligation to immediately disclose to the market any information that a reasonable person would expect to have a material effect on the price or value of the Company’s securities.
The directors and senior management personnel of Lakes Oil N.L. acknowledge that they each have an obligation to identify and immediately disclose information that may be regarded as material to the price or value of the Company’s securities.
The Chairman is authorised to make statements and representations on Lakes Oil N.L.’s behalf. The Company Secretary is responsible for overseeing and coordinating the disclosure of information to the ASX, analysts, stockbrokers, shareholders, the media and the public. The Secretary must inform the Directors, senior management and employees of Lakes Oil N.L.’s continuous disclosure obligations on a quarterly basis.
The Directors and senior management personnel must ensure that the Secretary is aware of all information to be presented at briefings with analysts, stockbrokers, the media and the public. Prior to being presented, information that has not already been the subject of disclosure to the market and is not generally available to the market must be the subject of disclosure to the ASX. Only when confirmation of receipt of the disclosure and release to the market by the ASX is received and after the information is posted on the Company’s website may the information be presented.
If information that would otherwise be disclosed comprises matters of supposition or is insufficiently definite to warrant disclosure, or if the effect of a disclosure on the value or price of the Company’s securities is unknown, Lakes Oil N.L. may request that the ASX grant a trading halt or suspend it’s securities from quotation. Management of Lakes Oil N.L. may consult the Company’s external professional advisers and the ASX in relation to whether a trading halt or suspension is required.
6. Respect the Rights of Shareholders
The Board aims to ensure in accordance with the Recommendation
6.1 that all shareholders are informed of major developments affecting the affairs of the Company. Information is communicated to the shareholders through the annual, half year, quarterly reports, disclosures made to the ASX, notices of meetings and occasional letters to shareholders where appropriate.
The company maintains a website on which is placed company announcements, the Annual Report and company policies.
The auditor is invited to the Annual General Meeting for the purpose of answering shareholders’ questions.
7. Recognise and Manage Risk
The Board has responsibility for managing risk and internal control and acknowledges that risk management is a core principle of sound Corporate Governance. The financial viability, reputation and future of the company are materially dependent on the manner in which risk is managed.
The Board’s strategy covers the areas of Financial Risk, Operational Risk, Insurance and Internal Control. The company has not appointed a Risk Management Committee due to the importance the Board places on risk mitigation.
In addition, the small size of the Board makes it appropriate for the full board to manage this area.
Financial Risk
The Board receives regular financial reports which measure performance and trends against budget. The reports are discussed at Board Meetings and the Chief Financial Officer answers questions posed by the Directors. Any variations from budget are highlighted, explained and evaluated. This scrutiny is appropriate to a company of the size of Lakes Oil NL. In addition to monthly financial reporting, the company has in place policies to manage credit, foreign exchange and other business risks. Non-executive Directors meet at appropriate times with the external auditor in order to fulfil the Audit Committee Charter. This Charter may be viewed on the company’s website.
Operational Reporting
Projects are approved only after extensive review by a highly qualified technical staff and detailed submissions to the Board through the Chairman. The operations of the company consist of a search for oil and gas and projects are only considered after a review and evaluation of all technical data on record. Outside consultants are engaged as required to enhance the chances of success. Environmental considerations are factors in the consideration of every new project and are fully evaluated and reported before approval by the Board.
Insurance as a Risk Mitigation Strategy
The Board recognises the value of insurance as a risk mitigation strategy and works with a leading insurance broker to ensure that appropriate insurance cover is in place at all times. Contracts with contractors are drawn up or reviewed by solicitors prior to the company entering into any commitment.
Internal Control and Audit
In a small company, an extensive internal control system is not possible, however there is a natural control as a consequence of being small. The Board works very closely with the staff and, because the transactional volume is small, the Directors have a detailed knowledge of the working of the company. It is considered that an internal audit function is therefore not appropriate at this time. The Directors believe the system of internal control is appropriate to the size of the company and to its level of potential risk.
Declaration by the Chairman and Chief Financial Officer
Both the Chairman and Chief Financial Officer sign the following declaration in the presence of the Board prior to the Board accepting the Financial Results each year:
in accordance with the Corporations Act 2001 section 295A, we declare that to the best of our knowledge and belief:
the financial records of the disclosing entity for the financial year have been properly maintained in accordance with section 286; and the financial statements, and the notes for the financial year comply with the accounting standards;
and the financial statements and notes for the financial year give a true and fair view; and any other matters that are prescribed by the regulations for the purposes of this declaration in relation to the financial statements and the notes for the financial year are also satisfied.
Also in accordance with the ASX Corporate Governance Council Best Practice Recommendations 4.1 and 7.2, to the
best of our knowledge and belief, and in our opinion:
i. the financial reports present a true and fair view, in all material respects, of the company’s financial condition
and operational results and are in accordance with relevant accounting standards; and
ii. the statement in (i) above concerning the integrity of financial statements is founded on a sound system of risk
management and internal compliance and control, which implements the policies adopted by the board; and
iii. the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.
and operational results and are in accordance with relevant accounting standards; and
ii. the statement in (i) above concerning the integrity of financial statements is founded on a sound system of risk
management and internal compliance and control, which implements the policies adopted by the board; and
iii. the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.
Signed by the Chairman and Chief Financial Officer.
The Board has procedures in place to recognise and manage risk in accordance with Recommendation
7.1. Regular reporting of financial performance is in place as are policies to manage credit, foreign exchange and other business risks.
The Board has delegated to the Chairman and Chief Financial Officer such matters as the Company’s liquidity, currency, interest rate and credit policies and exposures.
8. Remunerate fairly and responsibly.
The Company has not established a Remuneration and Benefits Committee or a Governance Committee.
The Board is responsible for determining and reviewing the remuneration of the directors, the Executive Chairman, Executive Officers and other employees of the company. This process requires consideration of the levels and form of remuneration appropriate to securing, motivating and retaining employees with the skills to manage the Company’s operations.
The Board reviews the remuneration of officers and employees of the Company. In order to retain and attract executives of sufficient calibre to facilitate the efficient and effective management of the Company’s operations, the Board seeks the advice of external advisers in connection with the structure of remuneration packages.
The Board also reviews the levels and form of remuneration for non executive directors with reference to performance, relevant comparative remuneration and independent expert advice. The total sum of remuneration payable to non executive directors shall not exceed the sum fixed by members of the Company in general meeting.
The Board reviews the composition of the Board on a regular basis to ensure that the Board has the appropriate mix of expertise and experience.
It is the Company’s objective to provide maximum shareholder benefit from the retention of high quality Board members and Executives. Directors and Executives are remunerated with reference to market rates for comparable positions.
Details of the remuneration of specified directors and executives are contained in the Directors’ report.
Termination payments are not agreed in advance. In the event of a termination, the company complies with all appropriate legal requirements and company policy precludes any payment in the event of removal for misconduct.
No formal evaluation of the performance of the Board is conducted. The Board, being a small active Board is in a position to view its performance on a constant basis. Similarly, key executives are well known to the Board and constant contact with them forms a constant performance review.