Code of Conduct for Directors
Scope
To ensure directors have a clear understanding of the company’s expectations of their conduct.
Detailed Policy
The Director as a Fiduciary
All directors have a fiduciary relationship with the shareholders of the company. A director occupies a unique position of trust vis-à-vis the shareholders which makes it unlawful for a director to improperly use his/her position to gain advantage for himself or herself.
The director is expected to exercise skills commensurate with his/her level of knowledge and experience to increase the value of the company (ie. the value of the shareholders’ assets).
All facets of a director’s role are bound up inextricably with the fiduciary relationship with the shareholders. Because of the fiduciary relationship, a director’s membership of the board should be the subject of continual personal evaluation.
A director who believes that a course of action proposed by or already undertaken by the board of management is against the best interest of the company and its shareholders, must be prepared to oppose that course of action and insist that his/her objection be fully documented and noted.
Similar steps should be taken by any director who believes the board is failing to take action to remedy irregular practices within the company.
Duties of a Director
Each director must endeavour to ensure that the company is properly managed so as to protect and enhance the shareholders’ interests.
To meet this obligation directors must act honestly and should:
- at all times exercise due care in their duties;
- be diligent, attend board meetings and make themselves knowledgeable about the business of the company and the physical and social environment in which it operates;
- ensure that the shareholders and the stock market are informed of all material matters which require disclosure;
- avoid or fully disclose conflicts of interest; and
- be impartial in their judgements and actions.
Directors should ensure they can give sufficient time and attention to detail so as to properly fulfil the duties of directors.
Conflict of Interest
At all times a director must be able to act in the interests of the company. Where the interests of associates, personal interest of the director or the director’s family may conflict with those of the company, then the director must immediately disclose such conflict and either:
- eliminate the conflict, or
- abstain from participation in any discussion or decision-making process in relation to the subject matter of the conflict, or
- in exceptional circumstances he/she may have to consider resignation.
Associates of a director means –
- spouse
- dependent children
- trustee of a trust in which the director or an associate has or may have a beneficial interest
- a company in which the director or an associate has a significant interest
- any other person over whose judgement the director could be expected to have beneficial influence.
Executive directors must always be alert to the potential for conflict of interest between management interests and their fiduciary duty as directors.
Directors should refrain from voting their shares at any general meeting on any matter in the outcome of which they or their associates have a special beneficial interest.
Directors’ Benefits
Directors will comply with the provisions of the Australian Corporations Act relating to disclosure of directors’ benefits.
Directors’ Needs
To enable all directors, but particularly non-executive directors, to be fully effective, they must have full access to all relevant information. In the case of matters to be considered by the board, directors must insist that full details are made available to them in sufficient time to allow proper consideration.
Directors must ensure that when expert advice is sought it comes from suitably qualified sources. Auditors and other experts must not be subjected to pressure to produce results deemed appropriate by management of the board.
Confidentiality
All directors acquire information not generally known to the public or other businesses such as trade secrets, processes, methods, advertising or promotional programs, sales and all statistics affecting financial results. This information is the property of the company and it is improper, whether deliberately or carelessly, to disclose it to any other person unless the disclosure has first been authorised by the company.
Insider Trading
Fiduciary duty requires that directors do not improperly utilise their position for personal gain or for the gain of associates.
Therefore information concerning the activities or proposed activities of the company, which is not public and which could materially affect the price of the company’s shares, must not be used for any purpose other than valid company requirements.
Each director is required to ensure that information in his or her possession and which would affect the price of the company’s shares, notes, etc. is transmitted only to those with a need to know for the proper discharge of their duties on behalf of the company. Such information includes, but is not limited, to:
- financial results;
- profit forecasts;
- proposed share issue;
- borrowings;
- impending takeovers, acquisitions, mergers, reconstructions, litigation;
- significant changes in operations;
- new products and new discoveries;
- liquidity;
- major purchases or sales of assets; and
- management restructuring.
Accounts
The accounts are drawn up in accordance with the Australian Corporations Act and approved accounting standards.
Other Obligations of Directors
The director should make reasonable endeavours to ensure that the company gives proper consideration to:
- the impact on the environment of the company’s activities and proposed activities and that the company observes its obligations in respect of environmental practices;
- matters affecting the health, safety and general well-being of the employees;
- products.
While directors cannot be expected to possess the technical knowledge to evaluate for themselves the utility and safety of products, it is their responsibility to endeavour to ensure that the company develops policies to ensure that products manufactured and sold by the company are safe for consumers.
Deed of Access, Indemnity and Insurance
Each director and Company Secretary of the parent company will enter into a deed of indemnity, insurance and access to documents. The indemnity provided under the deed will be in accordance with the Corporations Act.
Dealing Rules
The Dealing Rules regulates dealings by Legend employees in shares, options and other securities issued by Legend.
In order to preserve the reputation and integrity of Legend, it is vital that when people associated with Legend deal in the company’s securities those dealings are not only fair, but are seen to be fair. When directors and employees deal in securities of Legend they must be sure that it does not reflect badly on them or Legend.
The rationale is to ensure that company employees are aware of the legal restrictions on trading Legend securities while a person is in possession of unpublished Legend price-sensitive information.
Standards
All directors and employees should ensure that all transactions in company shares or other securities comply with:
- The Corporations Act 2001 and regulations (particularly the insider trading provisions in s1002G)
- The Australian Stock Exchange Ltd listing rules (particularly the continuous disclosure requirements in rule 3.1).
The company’s securities include ordinary shares, options and any other instrument issued or granted by Legend.
General Restrictions on Trading
Directors and any employee:
- Must not engage in short term trading of any Legend securities;
- Must not trade in any Legend security while that person is in possession of unpublished price-sensitive information (ie. inside information).
Legend price-sensitive information is information which a reasonable person would expect to have a material effect on the price or value of Legend securities.
Closed Periods
Under the Policy, the following periods are ‘black-out periods’:
- 1st January until midday Australian Eastern Standard Time (AEST) on the next business day after the day on which the half-year results are released; and
- 1st July until midday AEST on the next business day after the day on which the full-year results are released.
Exemption
In exceptional circumstances clearance may be given for the director or relevant employee to sell (but not to purchase) securities when he/she would otherwise be prohibited from doing so but not while there exists any matter which constitutes unpublished price-sensitive information in relation to the company’s securities.
Disclosure of Directors Interests
Under listing rule 3.19A Legend is required to advise the ASX of the notifiable interests of a director, within 5 business days:
- Of the directors appointment
- Of any change in notifiable interest
- Of the director ceasing to be a director.
Under listing rule 3.19B Directors must enter into agreement with the company to supply the information necessary for the company to comply with listing rule 3.19A.
Policy Responsibility
Each director and employee is responsible for Legend ethical standard for trading in company securities.
The Company Secretary has responsibility for maintaining the policy.
Insider Trading
The requirements imposed by the Policy are separate from and additional to, the legal prohibitions in the Corporations Act on insider trading.