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Corporate Governance Statement

Corporate governance is the system by which companies are directed and controlled. The framework of rules and practices by which a company ensures accountability, fairness, and transparency in its relationship with its stakeholders.

Each Director has a statutory requirement under Chapter 2D of the Corporations Act 2001 and other regulatory provisions.

The Australian Prudential Regulation Authority (APRA) has issued Consolidated Prudential Standard CPS 510 Governance, which sets out minimum foundations for good governance of regulated financial institutions, such as Australian Mutual Bank Ltd. This standard “aims to ensure that regulated institutions are managed in a sound and prudent manner by a competent Board of Directors, which is capable of making reasonable and impartial business judgements in the best interests of the regulated institution and which gives due consideration to the impact of its decisions on depositors”.

The Board of Directors has overall responsibility on behalf of the shareholders (Members) for the business of Australian Mutual Bank Ltd.

In governing the Bank, the Directors must act in the best interests of the Bank as a whole. To fulfill this role, the Board develops and approves strategic direction and financial objectives, and oversees Management’s progress against these plans and objectives.

To assist in this process the Board has adopted a Board Governance Charter and Policy.

The Board Charter is a written policy document that defines the respective roles, responsibilities and authorities of the Board, both individually and collectively, and of Management in setting the direction, management and control of the organisation. As such, it establishes the guidelines within which the Directors and Officers are to operate as they carry out their respective roles.

  Board Composition and Appointment

All Board members are independent non-executive Directors and are elected on rotation every three years.

Collectively, the Board must have the necessary skills, knowledge and experience to understand the risks of the Bank, including its legal and prudential obligations, and to ensure that the Bank is managed in an appropriate way taking into account these risks.

The Bank regularly reviews the need for various skills and experience against the current skills and experience represented on the Board. The process is formally overseen by the Board Executive and Corporate Governance Committees.

  Continuing Training and Development

In accordance with the Corporate Governance Charter, Australian Mutual Bank Ltd Directors actively participate in a professional education program that includes minimum levels of required structured and unstructured learning, a formal induction program and the provision of training by external experts in various disciplines

  Performance Evaluations

Directors are committed to regular and objective assessment of Director's individual and collective performance, the Board as a whole and Board Committee’s to ensure maximum effectiveness of the Board is maintained for the overall benefit of Australian Mutual Bank Ltd.

The Board formally reviews its performance on an annual basis and the results are assessed by the Board Executive Committee and reported to the full Board.

  Fit and Proper

Australian Mutual Bank Ltd maintains a robust framework to ensure that individuals appointed to responsible positions within the Bank have the appropriate fitness and propriety to fulfil their prudential responsibilities.

The framework set out in the Bank's Fit and Proper Policy addresses the requirements of APRA Consolidated Prudential Standard CPS 520 (Fit and Proper).

In addition, this process is supported by the Nominations Committee which assesses whether candidates nominating for Directorship possess the appropriate competencies commensurate with the responsibilities of a Director by reference to the Board Corporate Governance Charter and Policy and the Fit and Proper Policy.

  Board Processes

The Board has established a comprehensive framework of Board and Management Committees to assist with management of Australian Mutual Bank Ltd, with particular emphasis on compliance, internal control and business risk management. All Committees have written Charters / Terms of Reference.

The role of the Board is set out in the Corporate Governance Charter and Policy which is reviewed annually.

The Board has delegated specific duties to Board Committees. To this end the Board has established six Board committees with specific terms of reference. The structure, composition and terms of reference of each of these committees are reviewed at least annually.

The Board Committees are as follows:

  • Board Executive Committee

  • Audit & Compliance Committee

  • Risk Management Committee

  • Corporate Governance Committee

  • Remuneration Committee

  • Director Nominations Committee

The names and qualifications of those Directors appointed to the Board Committees and their attendance at meetings are detailed in the annual Directors’ Report.

  Board Executive Committee

The primary objective of this committee is to assist the Board in fulfilling its governance responsibilities providing for the efficient and effective operation of the Board, its Committees, and the Bank generally.

Its duty and responsibility is to monitor and review Board performance and where necessary recommend improvements in the corporate governance systems and practices of the Bank.

The Board Executive Committee’s specific responsibilities include:

  • Strategy

  • Industrial Relations

  • Board Remuneration

  • Financial / Budgetary Consideration

  • Superannuation

  • Director Appraisal

  • Sales, Marketing and Growth

  • Remuneration Policy

  • Corporate Governance

  • Policy Reviews

  • Committee members:

  • Chair

  • Deputy Chair

  • Chair, Board Audit & Compliance Committee

  • Chair, Risk Management Committee

  • Chair, Corporate Governance Committee

  Audit and Compliance Committee

The primary objective of this committee is to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of the Bank.

The primary purpose of the Audit & Compliance Committee shall be to assist the Board of Directors in the discharge of its responsibilities by way of monitoring the compliance with prudential and statutory requirements to which the Bank is obliged to comply.

  Risk Management Committee

The primary objective of the Committee is to assist the Board in the discharge of its responsibilities by way of monitoring the compliance with prudential and statutory requirements and overall risk management practices of the Bank. The Risk Management Committee provides objective non-executive oversight of the implementation and ongoing operation of the risk management framework.

The committee's duty and responsibility is to:

  • Develop and monitor risk management policies and systems to ensure compliance, and support risk minimisation

  • Oversee the adequacy of the risk management systems and risk minimisation

  Corporate Governance Committee

The primary objective of this committee is to assist the Board in fulfilling its governance responsibilities providing for the efficient and effective operation of the Board, its Committees, and the Bank generally.

Its specific duty and objectives are to:

  • Ensure the continuous improvement of the Board and Management policy setting and decision making process.

  • Ensure the continuous improvement and development of the Board

  • Develop the expertise of the Board

  • Ensure that a Succession Plan is in place for Management & Board

  • Provide the Board of Australian Mutual Bank Ltd with a program to review the performance of the Chair of the Board, individual Directors, Board Committees and the Board as a whole

  • To ensure Corporate Governance Policies are reviewed annually

The Board Executive Committee undertakes the functions of the “Corporate Governance Committee” as per the Corporate Governance Committee Charter. The Corporate Governance Chair shall not be occupied by the Chair of the Board Executive Committee.

 
Remuneration Committee

The objectives of the committee are is to recommend to the Board annually on the appropriate remuneration package in accordance with accepted benchmark reviews available

The duties and responsibilities of the Committee are to:

  • Conduct regular reviews of the Remuneration Policy for directors, including an assessment of its application, effectiveness and compliance with the requirements of APS 510 and make recommendations to the Board

  • Review and make recommendations to the Board on the remuneration of those responsible persons, as that term is defined in APS 520, excluding responsible auditors and non-executive directors

The Board Executive Committee undertakes the functions of the “Board Remuneration Committee” as per the Corporate Governance Committee Charter.

  Director Nominations Committee

The purpose of the Directors Nomination Committee shall be to assist the Board of Directors in assessing the fitness and propriety of a candidate including a Director standing for re-election or any person otherwise being considered for appointment as a Director. The duties and responsibilities of the Committee are to:

  • Assess the necessary and desirable competencies of Board Members

  • Review and make recommendation to the Board on appointment and removal of Directors

  • Assess whether a candidate including a Director standing for re-election or any person otherwise being considered for appointment as a Director has skills that allow him or her to make an effective contribution to Board deliberations and processes and is a “fit and proper person” to be and act as a Director

  Internal Control and Business Risk Framework

The Board acknowledges its responsibilities for the oversight of internal controls and the overall risk management system, and to assist in discharging this responsibility, the Board has instigated a control framework through the formation of a number of Risk Management Committees.

  Asset and Liability Committee

This Asset and Liability Committee (ALCo), reports to the Board Risk Committee, and monitors and manages the balance sheet, liquidity, interest rate, pricing, market and capital adequacy risks, controls, policies, systems, procedures and limits as set by the Board and in accordance with Regulatory requirements. The Committee is responsible for the monitoring and management of the liquidity portfolio, treasury management and capital adequacy requirements of the Bank, and ensures that strategies undertaken are consistent with the strategic direction set by the Board.

  Internal Audit

Internal Audit is an independent and objective review function with the responsibility of evaluating, testing and reporting on the adequacy and effectiveness of Management’s control of operational risk and compliance with Regulatory and Legislative requirements. Internal Audit reports directly to the Board Audit & Compliance Committee and has access to all areas within Australian Mutual Bank Ltd. Audits are planned and conducted following a risk based approach with reports provided to the Board Audit & Compliance Committee and Management.

  Risk Management

Risk Management is an independent and objective review function with the responsibility of identifying, analysing and mitigating internal and external events that could threaten Australian Mutual Bank Ltd. Risk Management is responsible for ensuring Australian Mutual Bank Ltd is compliant with Regulatory and Legislative requirements.

Risk reports directly to the Assets and Liabilities Committee and Board Risk Management Committee and has access to all areas within Australian Mutual Bank Ltd.

  Strategic Development

The Board and Board Executive Management Team undertake a comprehensive review of the Bank's strategic direction on an annual basis, including the development of Strategy Plan and key performance indicators. The Board receives regular updates from the Chief Executive Officer on strategic planning progress and other strategic matters at Board Meetings.

  Ethical Standards

The Directors acknowledge the need for and continued maintenance of the highest standards of ethical conduct by all Directors and employees of Australian Mutual Bank Ltd. Australian Mutual Bank Ltd subscribes to the Customer Owned Banking Code of Practice, containing a comprehensive overview of Ethical behaviour and expectations.

  Conflicts of Interest

In accordance with APRA Prudential Standards, ASIC licensee requirements, the Corporations Act 2001 and the Credit Union’s Constitution, Directors keep the Board advised of any interest that could potentially conflict with those of the company. Directors do not vote on any issue where a conflict of interest may arise, and can seek external professional advice, at Australian Mutual Bank's expense, with the approval of the Board.

Prior to their election on a Board Committee, Directors are asked to consider an independence declaration, attesting that they are free from conflict of interest. Prior to the commencement of each Board and Board Committee meeting, Directors are asked to consider an independence declaration, attesting that they are free from any conflict of interest. Management are required to provide written disclosure of actual or potential conflicts of interest on appointment and to update the disclosures annually. In addition, all Directors, Managers and Staff are required to disclose any actual or potential conflicts of interest as soon as they become aware of such a conflict.

  Communication to Shareholders (Members)

The Board aims to ensure that the shareholders (Members) are informed of all major developments arising out of the business of Australian Mutual Bank Ltd and it's divisions Sydney Mutual Bank and Endeavour Mutual Bank. Information is communicated to shareholders (Members) in the following manner:

  • An Annual Report is sent to all recipient registered shareholders (Members) which includes relevant information about the operations of Australian Mutual Bank Ltd during the year; changes in the state of affairs of the Bank and other disclosures required by the Corporations Act 2001.

  • The Chairman’s and CEO’s address to the Annual General Meeting and a review of trading results for the 12 months to 30 June.

  • Notices of all meetings of shareholders.

  • A newsletter is forwarded to all eligible shareholders periodically during the year.

  • A copy of the current Annual Report, Regulatory Disclosure Documents, Newsletters and information on the Bank's products and services are made available on Australian Mutual Bank's Internet site www.australianmutual.bank or that of its divisions Sydney Mutual bank at www.sydneymutual.bank or Endeavour Mutual Bank at www.endeavour.bank.