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PRAIRIE MINING LTD. (1/2021) Prairie Mining Limited Report on the scope of compliance with the Best Practice

2021-10-14 03:06
publikacja
2021-10-14 03:06

Raport Bieżący nr 1/2021

Pursuant to Article 29.3 of the Rules of the Warsaw Stock Exchange, Prairie Mining Limited presents information on Best Practice 2021 compliance

Prairie Mining Limited (Prairie or Company) and the entities it controls believe corporate governance is important for the Company in conducting its business activities. \
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The Board has adopted a suite of charters and key corporate governance documents which articulate the policies and procedures followed by Prairie. \
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These documents are available in the Corporate Governance section of the Company’s website, www.pdz.com.au. These documents are reviewed at least annually to address any changes in governance practices and the law. \
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The Company also complies with the with the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations – 4th Edition’ (ASX Principles or Recommendations), world renown set of corporate governance policies following by some of the biggest mining companies in the World including BHP and Rio Tinto. \
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In addition to the ASX Principals and Recommendations, the Board has taken into account a number of important factors in determining its corporate governance policies and procedures; including the following:\
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• relatively simple operations of the Company, which is focused on developing its two coal properties activities; \
• cost verses benefit of additional corporate governance requirements or processes;\
• size of the Board;\
• Board’s experience in the relevant sector;\
• organisational reporting structure and number of reporting functions, operational divisions and employees;\
• relatively simple financial affairs with limited complexity and quantum;\
• relatively moderate market capitalisation and economic value of the entity; and\
• direct shareholder feedback.


DISCLOSURE POLICY, INVESTOR COMMUNICATIONS

1.1. Companies maintain efficient communications with capital market participants and provide fair information about matters that concern them. For that purpose, companies use diverse tools and forms of communication, including in particular the corporate website where they publish all information relevant for investors.
The principle is applied.

1.2. Companies make available their financial results compiled in periodic reports as soon as possible after the end of each reporting period; should that not be feasible for substantial reasons, companies publish at least preliminary financial estimates as soon as possible.
The principle is applied.

1.3. Companies integrate ESG factors in their business strategy, including in particular:

1.3.1. environmental factors, including measures and risks relating to climate change and sustainable development;
The Company does not apply this principle.
The Board has established a Code of Conduct for its Directors, executives and employees, a copy of which is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html. The Company is not of a size or nature to warrant ESG factors and instead will focus its minimal resources on other objectives.

1.3.2. social and employee factors, including among others actions taken and planned to ensure equal treatment of women and men, decent working conditions, respect for employees’ rights, dialogue with local communities, customer relations.
The Company does not apply this principle.
The Board has established a Code of Conduct for its Directors, executives and employees, a copy of which is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html. The Company is not of a size or nature to warrant ESG factors and instead will focus its minimal resources on other objectives.

1.4. To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strategy, measurable goals, including in particular long-term goals, planned activities and their status, defined by measures, both financial and non-financial. ESG information concerning the strategy should among others:
The Company does not apply this principle.
The Board has established a Code of Conduct for its Directors, executives and employees, a copy of which is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html. The Company is not of a size or nature to warrant ESG factors and instead will focus its minimal resources on other objectives.

1.4.1. explain how the decision-making processes of the company and its group members integrate climate change, including the resulting risks;
The Company does not apply this principle.
The Board has established a Code of Conduct for its Directors, executives and employees, a copy of which is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html. The Company is not of a size or nature to warrant ESG factors and instead will focus its minimal resources on other objectives.

1.4.2. present the equal pay index for employees, defined as the percentage difference between the average monthly pay (including bonuses, awards and other benefits) of women and men in the last year, and present information about actions taken to eliminate any pay gaps, including a presentation of related risks and the time horizon of the equality target.
The Company does not apply this principle.
The Board has established a Code of Conduct for its Directors, executives and employees, a copy of which is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html. The Company is not of a size or nature to warrant ESG factors and instead will focus its minimal resources on other objectives.

1.5. Companies disclose at least on an annual basis the amounts expensed by the company and its group in support of culture, sports, charities, the media, social organisations, trade unions, etc. If the company or its group pay such expenses in the reporting year, the disclosure presents a list of such expenses.
The Company does not apply this principle.
Due to the current size and nature of the Company, it does not make expenditure in relation to these items.

1.6. Companies participating in the WIG20, mWIG40 or sWIG80 index hold on a quarterly basis and other companies hold at least on an annual basis a meeting with investors to which they invite in particular shareholders, analysts, industry experts and the media. At such meetings, the management board of the company presents and comments on the strategy and its implementation, the financial results of the company and its group, and the key events impacting the business of the company and its group, their results and outlook. At such meetings, the management board of the company publicly provides answers and explanations to questions raised.
The principle is applied.

1.7. If an investor requests any information about a company, the company replies immediately and in any case no later than within 14 days.
The principle is applied.


MANAGEMENT BOARD, SUPERVISORY BOARD

2.1. Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%.
The Company does not apply this principle.
The Company has not adopted a Diversity Policy, nor has it established measurable objectives for achieving gender diversity for the 2021 year.

The Company recognises that a diverse and talented workforce is a competitive advantage and encourages a culture that embraces diversity. However, the Board considers that the Company is not currently of a size to warrant the time and cost of adopting a Diversity Policy and setting measurable objectives for achieving gender diversity. The Board will review its position and may adopt a Diversity Policy and develop measurable objectives when the Company’s operations increase.

 

2.2. Decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve the target minimum participation of the minority group of at least 30% according to the goals of the established diversity policy referred to in principle 2.1.
The Company does not apply this principle.
See response to principal 2.1 above

2.3. At least two members of the supervisory board meet the criteria of being independent referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision, and have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company.
The Company does not apply this principle.
A majority of Directors of the Company are not independent., Messrs Middlemas and Pearce are considered independent, however Ms Daniele and Mr Stoikovich are not considered as independent.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of the appointment of further independent non-executive Directors.

The Board believes that the individuals on the Board can make, and do make, quality and independent judgments in the best interests of the Company on all relevant issues.

Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic.



2.4. The supervisory board and the management board vote in an open ballot unless otherwise required by law.
The principle is applied.

2.5. Members of the supervisory board and members of the management board who vote against a resolution may have their dissenting vote recorded in the minutes.
The principle is applied.

2.6. Functions on the management board of a company are the main area of the professional activity of management board members. Management board members should not engage in additional professional activities if the time devoted to such activities prevents their proper performance in the company.
The principle is applied.

2.7. A company’s management board members may sit on corporate bodies of companies other than members of its group subject to the approval of the supervisory board.
The principle is applied.

2.8. Supervisory board members should be able to devote the time necessary to perform their duties.
The principle is applied.

2.9. The chair of the supervisory board should not combine this function with that of chair of the audit committee of the supervisory board.
The principle is applied.
Comments of the Company on the mode of application of the principle.
The Board has decided not to form a separate Audit Committee. The Board believes that no efficiencies or other benefits would be gained by establishing a separate Audit Committee. The Board has adopted an Audit Committee Charter, however the Board as a whole performs the function of the Audit Committee.

The Company: (a) currently only has 4 Directors of which 3 are non-executive Directors; (b) has relatively simple operations and currently only undertakes mineral development activities; (c) has relatively simple financial affairs with limited complexity and quantum; and (d) has a relatively moderate market capitalisation and economic value. As a result, the Board as a whole considers that it is more efficient and effective for the corporate reporting process to not have an Audit Committee at this stage. The Board monitors this position as the Company’s circumstances change.

The Board as whole determines when to seek the appointment or removal of the external auditor, and subject to any statutory requirements, the Board will also seek rotation of the audit partner on an as required basis.

Further details on the integrity measures implemented for the corporate reporting function are provided in the Audit Committee Charter which is available in the Corporate Governance section of the Company’s website at http://www.pdz.com.au/corporate-governance.html.



2.10. Companies allocate administrative and financial resources necessary to ensure efficient functioning of the supervisory board in a manner adequate to their size and financial standing.
The principle is applied.

2.11. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. Such report includes at least the following:

2.11.1. information about the members of the supervisory board and its committees, including indication of those supervisory board members who fulfil the criteria of being independent referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision and those supervisory board members who have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company, and information about the members of the supervisory board in the context of diversity;
The principle is applied.

2.11.2. summary of the activity of the supervisory board and its committees;
The principle is applied.

2.11.3. assessment of the company’s standing on a consolidated basis, including assessment of the internal control, risk management and compliance systems and the internal audit function, and information about measures taken by the supervisory board to perform such assessment; such assessment should cover all significant controls, in particular reporting and operational controls;
The principle is applied.

2.11.4. assessment of the company’s compliance with the corporate governance principles and the manner of compliance with the disclosure obligations concerning compliance with the corporate governance principles defined in the Exchange Rules and the regulations on current and periodic reports published by issuers of securities, and information about measures taken by the supervisory board to perform such assessment;
The principle is applied.

2.11.5. assessment of the rationality of expenses referred to in principle 1.5;
The Company does not apply this principle.
Refer to response at principal 1.5

2.11.6. information regarding the degree of implementation of the diversity policy applicable to the management board and the supervisory board, including the achievement of goals referred to in principle 2.1.
The Company does not apply this principle.
Refer to response at principal 1.5


INTERNAL SYSTEMS AND FUNCTIONS

3.1. Listed companies maintain efficient internal control, risk management and compliance systems and an efficient internal audit function adequate to the size of the company and the type and scale of its activity; the management board is responsible for their functioning.
The principle is applied.

3.2. Companies’ organisation includes units responsible for the tasks of individual systems and functions unless it is not reasonable due to the size of the company or the type of its activity.
The principle not applicable.
Due to the current size and nature of the Company, this principal is not applicable.

3.3. Companies participating in the WIG20, mWIG40 or sWIG80 index appoint an internal auditor to head the internal audit function in compliance with generally accepted international standards for the professional practice of internal auditing. In other companies which do not appoint an internal auditor who meets such requirements, the audit committee (or the supervisory board if it performs the functions of the audit committee) assesses on an annual basis whether such person should be appointed.
The principle is applied.
Comments of the Company on the mode of application of the principle.
The Company is not WIG20, mWIG40 or sWIG80 company and the Board has not established an internal audit function at this time. The Board as a whole oversees the effectiveness of risk management and internal control processes.

Refer to the Company’s Risk Management Policy for responsibilities of the Board, the Chief Executive Officer, the Chief Risk Officer, and other management in the evaluation and continual improvement of the Company’s risk management and internal control processes.

A copy of the Risk Management Policy is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html.



3.4. The remuneration of persons responsible for risk and compliance management and of the head of internal audit should depend on the performance of delegated tasks rather than short-term results of the company.
The Company does not apply this principle.
The Company is not of the size or nature to currently employ a person in this position

3.5. Persons responsible for risk and compliance management report directly to the president or other member of the management board.
The Company does not apply this principle.
The Company is not of the size or nature to currently employ a person in this position

3.6. The head of internal audit reports organisationally to the president of the management board and functionally to the chair of the audit committee or the chair of the supervisory board if the supervisory board performs the functions of the audit committee.
The Company does not apply this principle.
The Company is not of the size or nature to currently employ a person in this position

3.7. Principles 3.4 to 3.6 apply also to members of the company’s group which are material to its activity if they appoint persons to perform such tasks.
The Company does not apply this principle.
The Company is not of the size or nature to currently employ a person in this position

3.8. The person responsible for internal audit or the management board if such function is not performed separately in the company reports to the supervisory board at least once per year with their assessment of the efficiency of the systems and functions referred to in principle 3.1 and tables a relevant report.
The principle is applied.
Comments of the Company on the mode of application of the principle.
The Board has not established an internal audit function at this time. The Board as a whole oversees the effectiveness of risk management and internal control processes.

Refer to the Company’s Risk Management Policy for responsibilities of the Board, the Chief Executive Officer, the Chief Risk Officer, and other management in the evaluation and continual improvement of the Company’s risk management and internal control processes.

A copy of the Risk Management Policy is available in the Corporate Governance section of the Company’s website, http://www.pdz.com.au/corporate-governance.html.



3.9. The supervisory board monitors the efficiency of the systems and functions referred to in principle 3.1 among others on the basis of reports provided periodically by the persons responsible for the functions and the company’s management board, and makes annual assessment of the efficiency of such systems and functions according to principle 2.11.3. Where the company has an audit committee, the audit committee monitors the efficiency of the systems and functions referred to in principle 3.1, which however does not release the supervisory board from the annual assessment of the efficiency of such systems and functions.
The principle is applied.

3.10. Companies participating in the WIG20, mWIG40 or sWIG80 index have the internal audit function reviewed at least once every five years by an independent auditor appointed with the participation of the audit committee.
The principle not applicable.
The Company is not WIG20, mWIG40 or sWIG80 company so this princpal is not applicable


GENERAL MEETING, SHAREHOLDER RELATIONS

4.1. Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed.
The principle is applied.
Comments of the Company on the mode of application of the principle.
The Board encourages participation of Shareholders at its meetings of shareholders and Shareholders are provided with all notices of meeting prior to meetings, which are set at times and places to promote maximum attendance by Shareholders.

Shareholders are always given the opportunity to ask questions of Directors and management, either during or after meetings. In addition, the Company's auditor is also made available for questions at the Company’s AGM of Shareholders.

Further, the Board is closely monitoring the rapidly changing coronavirus (COVID-19) pandemic. The health of the Company’s Shareholders, employees and other stakeholders is of paramount importance.

While the Board would like to host all Shareholders in person, in order to minimise the risk to Shareholders and to the Company and its ongoing operations, the Company suggests that shareholders currently do not attend a general meeting in person.

Accordingly, the Directors strongly encourage all Shareholders to lodge Proxy Forms prior to a general meeting. The Company advises that a poll will be conducted for each of resolutions at a general meeting.

4.2. Companies set the place and date and the form of a general meeting so as to enable the participation of the highest possible number of shareholders. For that purpose, companies strive to ensure that the cancellation of a general meeting, change of its date or break in its proceedings take place only if justified and do not prevent or limit the exercising of the shareholders’ rights to participate in the general meeting.
The principle is applied.

4.3. Companies provide a public real-life broadcast of the general meeting.
The Company does not apply this principle.
Given the size and nature of the Company, general meetings are procedural in nature and do not warrant a real-time broadcast.

4.4. Presence of representatives of the media is allowed at general meetings.
The principle is applied.
Comments of the Company on the mode of application of the principle.
All Company shareholders and guests are generally allowed to attend the Company’s general meetings.

4.5. If the management board becomes aware a general meeting being convened pursuant to Article 399 § 2 – 4 of the Commercial Companies Code, the management board immediately takes steps which it is required to take in order to organise and conduct the general meeting. The foregoing applies also where a general meeting is convened under authority granted by the registration court according to Article 400 § 3 of the Commercial Companies Code.
The principle is applied.

4.6. To help shareholders participating in a general meeting to vote on resolutions with adequate understanding, draft resolutions of the general meeting concerning matters and decisions other than points of order should contain a justification, unless it follows from documentation tabled to the general meeting. If a matter is put on the agenda of the general meeting at the request of a shareholder or shareholders, the management board requests presentation of the justification of the proposed resolution, unless previously presented by such shareholder or shareholders.
The principle is applied.

4.7. The supervisory board issues opinions on draft resolutions put by the management board on the agenda of the general meeting.
The principle is applied.

4.8. Draft resolutions of the general meeting on matters put on the agenda of the general meeting should be tabled by shareholders no later than three days before the general meeting.
The principle is applied.
Comments of the Company on the mode of application of the principle.
Under applicable corporation law, the Company is required to send out a notice of meeting no less than 28 days prior to the general meeting taking place.

4.9. If the general meeting is to appoint members of the supervisory board or members of the supervisory board for a new term of office:

4.9.1. candidates for members of the supervisory board should be nominated with a notice necessary for shareholders present at the general meeting to make an informed decision and in any case no later than three days before the general meeting; the names of candidates and all related documents should be immediately published on the company’s website;
The principle is applied.

4.9.2. candidates for members of the supervisory board make a declaration concerning fulfilment of the requirements for members of the audit committee referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision and having actual and material relations with any shareholder who holds at least 5% of the total vote in the company.
The principle is applied.

4.10. Any exercise of the rights of shareholders or the way in which they exercise their rights must not hinder the proper functioning of the governing bodies of the company.
The principle is applied.

4.11. Members of the management board and members of the supervisory board participate in a general meeting, at the location of the meeting or via means of bilateral real-time electronic communication, as necessary to speak on matters discussed by the general meeting and answer questions asked at the general meeting. The management board presents to participants of an annual general meeting the financial results of the company and other relevant information, including non-financial information, contained in the financial statements to be approved by the general meeting. The management board presents key events of the last financial year, compares presented data with previous years, and presents the degree of implementation of the plans for the last year.
The principle is applied.

4.12. Resolutions of the general meeting concerning an issue of shares with subscription rights should specify the issue price or the mechanism of setting the price or authorise the competent body to set the price prior to the subscription right record date within a timeframe necessary for investors to make decisions.
The principle is applied.

4.13. Resolutions concerning a new issue of shares with the exclusion of subscription rights which grant pre-emptive rights for new issue shares to selected shareholders or other entities may pass subject at least to the following three criteria:
a)   the company has a rational, economically justified need to urgently raise capital or the share issue is related to rational, economically justified transactions, among others such as a merger with or the take-over of another company, or the shares are to be taken up under an incentive scheme established by the company;
b)   the persons granted the pre-emptive right are to be selected according to objective general criteria;
c)   the purchase price of the shares is in a rational relation with the current share price of the company or is to be determined in book-building on the market.
The principle is applied.

4.14. Companies should strive to distribute their profits by paying out dividends. Companies may retain all their earnings subject to any of the following criteria:
a)   the earnings are minimal and consequently the dividend would be immaterial in relation to the value of the shares;
b)   the company reports uncovered losses from previous years and the earnings are used to reduce such losses;
c)   the company can demonstrate that investment of the earnings will generate tangible benefits for the shareholders;
d)   the company generates insufficient cash flows to pay out dividends;
e)   a dividend payment would substantially increase the risk to covenants under the company’s binding credit facilities or terms of bond issue;
f)   retention of the company’s earnings follows recommendations of the authority which supervises the company by virtue of its business activity.
The Company does not apply this principle.
No dividends on the ordinary shares have recently been paid by the Company. The Company anticipates that for the foreseeable future it will retain future earnings and other cash resources for the operation of its business. Payment of any future dividends will be at the discretion of the Company’s board of Directors after taking into account many factors, including the Company’s financial condition and current and anticipated cash needs.

The Directors do not intend to declare or pay a dividend in the short to medium term and if any dividend is to be paid it will be, subject to the Directors being satisfied, on reasonable grounds, that immediately after the payment of a dividend, the value of the Company’s assets will exceed its liabilities and the Issuer will be able to pay its debts as and when they fall due.


CONFLICT OF INTEREST, RELATED PARTY TRANSACTIONS

5.1. Members of the management board and members of the supervisory board notify the management board or the supervisory board, respectively, of any conflict of interest which has arisen or may arise, and refrain from discussions on the issue which may give rise to such a conflict of interest in their case.
The principle is applied.

5.2. Where a member of the management board or a member of the supervisory board concludes that a decision of the management board or the supervisory board, respectively, is in conflict with the interest of the company, he or she should request that the minutes of the management board or supervisory board meeting show his or her dissenting opinion.
The principle is applied.

5.3. No shareholder should have preference over other shareholders in related party transactions. The foregoing also concerns transactions concluded by the company’s shareholders with members of the company’s group.
The principle is applied.

5.4. Companies may buy back their own shares only in a procedure which respects the rights of all shareholders.
The principle is applied.

5.5. If a transaction concluded by a company with its related party requires the consent of the supervisory board, before giving its consent the supervisory board assesses whether to ask a prior opinion of a third party which can provide valuation of the transaction and review its economic impact.
The principle is applied.

5.6. If a related party transaction requires the consent of the general meeting, the supervisory board issues an opinion on the rationale of such transaction. In that case, the supervisory board assesses whether to ask a prior opinion of a third party referred to in principle 5.5.
The principle is applied.

5.7. If a decision concerning the company’s significant transaction with a related party is made by the general meeting, the company should give all shareholders access to information necessary to assess the impact of the transaction on the interest of the company before the decision is made, including an opinion of the supervisory board referred to in principle 5.6.
The principle is applied.


REMUNERATION

6.1. The remuneration of members of the management board and members of the supervisory board and key managers should be sufficient to attract, retain and motivate persons with skills necessary for proper management and supervision of the company. The level of remuneration should be adequate to the tasks and responsibilities delegated to individuals and their resulting accountability.
The principle is applied.

6.2. Incentive schemes should be constructed in a way necessary among others to tie the level of remuneration of members of the company’s management board and key managers to the actual long-term standing of the company measured by its financial and non-financial results as well as long-term shareholder value creation, sustainable development and the company’s stability.
The principle is applied.

6.3. If companies’ incentive schemes include a stock option programme for managers, the implementation of the stock option programme should depend on the beneficiaries’ achievement, over a period of at least three years, of pre-defined, realistic financial and non-financial targets and sustainable development goals adequate to the company, and the share price or option exercise price for the beneficiaries cannot differ from the value of the shares at the time when such programme was approved.
The principle is applied.

6.4. As the supervisory board performs its responsibilities on a continuous basis, the remuneration of supervisory board members cannot depend on the number of meetings held. The remuneration of members of committees, in particular the audit committee, should take into account additional workload on the committee.
The principle is applied.

6.5. The level of remuneration of supervisory board members should not depend on the company’s short-term results.
The principle is applied.


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