The Board has formally adopted a corporate governance policy. It encourages the Directors to focus their attention on accountability, risk management and ethical conduct. The Board monitors the business affairs of the Company on behalf of the Shareholders by whom it is elected and to whom it is accountable. It is Company policy that the Board constantly review and monitor its corporate governance policy performance. As part of that process, the Board may seek to appoint persons who, in the opinion of the Board, will provide specialist expertise required by the Board in order to adequately perform its role.
2 Corporate Governance Principles
To the extent that they are applicable, and given its circumstances, the Company will adopt the Ten Essential Corporate Governance Principles and Best Practice Recommendations ('Recommendations') published by the Corporate Governance Council of the ASX. As the Company's activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance structures will be afforded further consideration. The Board sets out below its 'If not, why not?' report in relation to matters of corporate governance in which the Company's practices depart from the Recommendations.
(a) Principle 1 Recommendation 1.1
Notification of Departure
Empire has not formally disclosed the functions reserved to the Board and those delegated to management. The appointment of non-executive Directors to the Board is not formalised in writing by way of a letter or other agreement.
(b) Explanation for Departure
The Board recognises the importance of distinguishing between the respective roles and responsibilities of the Board and management. The Board has established an informal framework for the management of the Company and the roles and responsibilities of the Board and management. Due to the small size of the Board and of the Company, the Board does not think it necessary to formally document the roles of Board and management as it believes that these roles are being carried out in practice and are clearly understood by all members of the Board and management. The Board is responsible for the strategic direction of the Company, establishing goals for management and monitoring the achievement of those goals, monitoring the overall corporate governance of the Company and ensuring that Shareholder value is increased. The Company has two executives, being the Managing Director and an executive Director. The Managing Director is responsible for ensuring that the Company achieves the goals established by the Board.
The appointments of non-executive Directors are formalised in accordance with the regulatory requirements and the Company's constitution.
(c) Principle 2 Recommendations 2.1 and 2.2
Notification of Departure
The Company does not have a majority of independent Directors, with only one of the three Board members being independent.
Explanation for Departure
The Board considers that the current composition of the Board is adequate for the Company's current size and operations and includes an appropriate mix of skills and expertise relevant to the Company's business. The Board structure presently consists of the non-executive chairman, the managing Director and one executive Director, only one of whom is independent. The Company considers that each of the Directors possesses skills and experience suitable for building the Company. The Board takes the responsibilities of best practice in corporate governance seriously. It is the Board's present intention to review its composition following ASX listing and appoint another independent Director.
(d) Principle 2 Recommendation 2.4 and Principle 4 Recommendations 4.2 and 4.3
Notification of Departure
Separate audit and nomination committees have not been formed.
Explanation for Departure
The Board considers that the Company is not currently of a size, nor its affairs of such complexity, that the formation of separate or special committees is justified at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company's activities and ensure that it adheres to appropriate ethical standards.
In particular, the Board as a whole considers those matters that would usually be the responsibility of an audit committee and a nomination committee. The Board considers that, at this stage, no efficiencies or other benefits would be gained by establishing a separate audit committee or a separate nomination committee.
(e) Principle 3 Recommendation 3.1
Notification of Departure
Empire has not established a formal code of conduct.
Explanation for Departure
The Board considers that its business practices, as determined by the Board and key executives, are the equivalent of a code of conduct.
(f) Principle 5 Recommendation 5.1
Notification of Departure
Empire has not established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability for compliance.
Explanation for Departure The Directors have a long history of involvement with public listed companies and are familiar with the disclosure requirements of the ASX Listing Rules.
The Company has in place informal procedures that it believes are sufficient for ensuring compliance with ASX Listing Rule disclosure requirements and accountability for compliance. The Board has nominated the non-executive chairman and company secretary as being responsible for all matters relating to disclosure.
(g) Principle 6 Recommendation 6.1
Notification of Departure
Empire has not established a formal Shareholder communication strategy.
Explanation for Departure
While the Company has not established a formal Shareholder communication strategy, it intends, once listed, to actively communicate with its Shareholders in order to identify their expectations and actively promote Shareholder involvement in the Company. It will achieve this by posting on its website copies of all information lodged with the ASX. Shareholders with internet access will also be encouraged to provide their email addresses in order to receive electronic copies of information distributed by the Company. Alternatively, hard copies of information distributed by the Company will be available on request.
(h) Principle 7 Recommendation 7.1
Notification of Departure
Empire has an informal risk oversight and management policy and internal compliance and control system.
Explanation for Departure
The Board does not currently have formal procedures in place but is aware of the various risks that affect the Company and its particular business. Section 8 provides a summary of the relevant risk factors that may affect the Company. As the Company develops, the Board will develop appropriate procedures to deal with risk oversight and management and internal compliance, taking into account the size of the Company and the stage of development of its projects.
(i) Principle 8 Recommendation 8.1
Notification of Departure
Empire does not have in place a formal process for evaluation of the Board, its committees, individual Directors and key executives.
Explanation for Departure
Evaluation of the Board is carried out on a continuing and informal basis as part of the Company's preparations for the initial public offering and proposed listing on the ASX. The Company will put in place a process for evaluating the Board, individual Directors and key executives once it has listed.
(j) Principle 9 Recommendations 9.1, 9.2, 9.3, 9.4
Explanation for Departure
Empire does not have a formal remuneration policy and has not established a separate remuneration committee. Non-executive Directors may receive options.
The current remuneration of the Directors is disclosed in Section 9. Non-executive Directors receive a fixed fee for their services and may also receive options. The issue of options to non-executive Directors is considered an appropriate method of providing sufficient incentive and reward while maintaining cash reserves.
Due to the Company's early stage of development and small size, it did not consider that a separate remuneration committee would add any efficiency to the process of determining the levels of remuneration for the Directors and key executives. The Board believes it is more appropriate to set aside time at specified Board meetings each year to specifically address matters that would ordinarily fall to a remuneration committee. In addition, all matters of remuneration will continue to be in accordance with regulatory requirements, especially in respect of related party transactions; that is, none of the Directors will participate in any deliberations regarding their own remuneration or related issues.