Envestra

Envestra is committed to sound corporate governance and to this end the following policies and practices have been adopted and implemented by the Board.

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Each year a review of the Company’s corporate governance framework is carried out against the guidelines of the Australian Securities Exchange’s Corporate Governance Council.

The Company’s framework largely complies with these recommendations. Consistent with the Company’s approach to sound corporate governance, opportunities for improvement are regularly considered.

The Board delegates to the Managing Director and senior executives day-to-day management of the affairs of the Company and its controlled entities, and the implementation of the corporate strategies and policies.

Non-executive Directors meet, at least twice per year, without management present.

The Directors are responsible to shareholders for the performance of the Company and their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed.

The main processes that the Directors of the Company use in doing so are set out in this statement.

BOARD COMPOSITION

The Company’s Constitution requires that the minimum number of Directors is three and the maximum is 10. The Company has two major shareholders, Australian Pipeline Ltd (APA Group) and Cheung Kong Infrastructure Holdings (CKI).

Under Envestra’s Constitution, while CKI holds more than 15% of Envestra’s securities, they may appoint up to two non-executive Directors. If their holding is between 10 and 15%, they may appoint one Director.

The APA Group and CKI Directors are not regarded as being independent as both organisations each hold more than 15% of the Company’s issued capital. In addition, APA Group has a significant contractual relationship with Envestra under the Operating and Management Agreements related to the Company’s assets.
Membership of the Board comprises:
•    Four independent non-executive Directors.
•    Two non-executive Directors nominated by APA Group.
•    Two non-executive Directors appointed by CKI.
•    The Managing Director.

The Chairman must be an independent Director.

To comply with the ASX guidelines on independent Directors it would be necessary to appoint two additional Directors, which would require an amendment to the Constitution. However, given the balance between the existing major shareholders’ representatives on the Board, and the independent Directors, the existing Board structure is considered appropriate, particularly as under the Constitution the Chairman has a casting vote in the event of an equality of votes.

Directors are subject to retirement by rotation and election by shareholders at a general meeting.

No Director may remain on the Board for more than three years without re-election. Where a Director is appointed during the year that Director will hold office until the next Annual General Meeting, and then be
eligible for re-election.

When considering Board vacancies, Directors take into account the candidate’s capacity to enhance the mix of skills and experience of the Board and to contribute to the development of the Company. When a vacancy exists, the Board identifies candidates with the relevant experience and expertise, using external consultants when required.

The current Board has a broad range of expertise covering financial, legal, banking, commercial and operational backgrounds, with all members bringing the benefits of experience from other Boards and industries.

PERFORMANCE APPRAISAL

The Board has adopted a policy of undertaking self-assessments of its performance to initiate improvements and assist in determining the Board’s support for individual members offering themselves for re-election by
the shareholders. Assessments are conducted at regular intervals.

BOARD RESPONSIBILITIES

The most significant responsibilities of the Board include:The most signifi cant responsibilities of the Board include:
•    Setting strategic objectives, long-term business plans and annual budgets.
•    Regularly reviewing the operational and fi nancial performance of the Company.
•    Ensuring that the requirements are met of continuous disclosure to the investment market and security holders about the performance and activities of the Company.
•    Ensuring that appropriate risk management systems are in place and reports on performance are regularly reviewed.
•    Overseeing the Company’s commitment to the health and safety of employees and contractors, the environment and sustainable development.
•    Evaluating potential business development opportunities.
•    Appointing the Managing Director and other senior executives and evaluating their performance.
•    Appointing the Company’s external auditors.
•    Appointing the Company’s internal auditors as part of its general responsibility to ensure satisfactory internal controls are maintained over the Company’s key risk areas.
•    Ensuring the Company’s Code of Conduct and Ethics and other policies are adhered to.
•    Approving the annual and half-yearly fi nancial reports.
•    Overseeing the engagement of resources to conduct the business.