Announcement PDF Xref Limited ABN 34 122 404 666 2019 Corporate Governance Statement The Board of Directors of Xref Limited (Xref or the Company) is responsible for the corporate governance of Xref, and acknowledges the importance of the Corporate Governance Principles and Recommendations set by the Australian Securities Exchange (ASX) Corporate Governance Council in its ASX Principles and Recommendations. At its Board meetings held in May and June 2019, the Board discussed the Company’s transitioning process to the fourth edition of the ASX Corporate Governance Principles and Recommendations, which was released on 27 February 2019. The Board is aware that entities with a 30 June balance date will be required to measure their governance practices against the recommendations in the fourth edition commencing with the financial year beginning 1 July 2020 and ending 30 June 2021. As ASX is encouraging listed entities to adopt the fourth edition earlier, the Board has agreed that Xref will aim to progressively adopt the new Principles and Recommendations in the 2019-20 financial year. In the 2018-19 financial year, the Company followed the 3rd Edition of the ASX Principles and Recommendations, released on 27 March 2014. The Board has reviewed its corporate governance documentation and practices against these ASX Principles and Recommendations, and has adopted them, as far as it can, in view of Xref’s current size, resources and extent of the nature of its operations. The Board will continue to work towards full compliance with the Principles and Recommendations in line with the growth and development of the Company in the years ahead. Xref has noted in this Corporate Governance Statement where its framework is different to the ASX Principles and Recommendations, and the reasons why this is the case. Copies of the corporate governance policies and charters adopted by the Board are available in the Company’s Corporate Governance Manual located in the Investor Centre found under the About Us section of the landing page of Xref’s website at www.xref.com. The Company’s Corporate Governance Statement, prepared in accordance with ASX Listing Rules 4.7.4 and 4.10.3, which was approved by the Board on 29 August 2019 and reports on the period from 1 July 2018 to 30 June 2019 (i.e. the recent reporting period), is set out below and in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. Principle 1: Lay solid foundations for management and oversight The Company’s Board, during the recent reporting period, included Non-Executive Chairman Mr Brad Rosser, who was appointed on 18 August 2016, Executive Director and Chief Executive Officer (CEO) Mr Lee-Martin Seymour (appointed on 18 January 2016), Executive Director and Chief Technology Officer Mr Timothy Griffiths (appointed on 18 January 2016), and Non-Executive Directors Messrs Timothy Mahony (appointed on 18 January 2016) and Nigel Heap (appointed on 18 August 2016). Xref discloses the respective roles and responsibilities of its Board and management, and those matters expressly reserved to the Board and those delegated to management below. The primary roles and responsibilities of the Company’s Board include: Xref Limited 2019 Corporate Governance Statement      the approval of the annual and half-year financial reports, and quarterly report and cashflow statements; the establishment of the long-term goals of Xref and strategic plans to achieve those goals; the review and adoption of annual budgets for the financial performance of the Company, and monitoring the results on a regular basis; ensuring that Xref has implemented adequate internal controls together with appropriate monitoring of compliance activities; and ensuring that the Company is able to pay its debts as and when they fall due. Xref’s executive management comprises Messrs Seymour and Griffiths (as Executive Directors), and Chief Financial Officer (CFO) Mr James Solomons and Chief Operating Officer (COO) Ms Sharon Blesson, to whom the Board delegates responsibilities as outlined contractually, and as expected for these executive positions. The primary roles and responsibilities of the Company’s management include:     the operation and administration of Xref, as delegated by the Board; implementing the strategic objectives of the Company and operating within the risk appetite set by the Board; complying with all other aspects of the day-to-day running of Xref; and providing the Board with accurate, timely and clear financial and other information to enable the Board to perform its responsibilities. The Company, being a reference check business, undertakes careful and appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a Director; and provides security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a Director. These include checks as to the person’s character, experience, education, criminal record and bankruptcy history. The following information about a candidate standing for election or re-election as a Director is provided to security holders to enable them to make an informed decision on whether or not to elect or re-elect the candidate:      2|P a g e biographical details, including their relevant qualifications and experience, and the skills they bring to the Board; details of any other material directorships currently held by the candidate; in the case of a candidate standing for election as a Director for the first time:  any material adverse information revealed by the checks the Company has performed about the Director;  details of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect his or her capacity to bring an independent judgement to bear on issues before the Board, and to act in the best interests of Xref and its security holders generally; and  if the Board considers that the candidate will, if elected, qualify as an independent Director, a statement to that effect; in the case of a candidate standing for re-election as a Director:  the term of office currently served by the Director; and  if the Board considers the Director to be an independent director, a statement to that effect; and a statement by the Board as to whether or not it supports the election or re-election of the candidate. Xref Limited 2019 Corporate Governance Statement A candidate for appointment or election as a Non-Executive Director must provide the Board with the information above and a consent for Xref to conduct any background or other checks the Company would ordinarily conduct. The candidate also provides details of his or her other commitments and an indication of time involved, and should specifically acknowledge to Xref that he or she will have sufficient time to fulfil his or her responsibilities as a Director. The skills, experience and expertise relevant to the position of Director is disclosed within the Directors’ Report of Xref’s Annual Report and in the Investor Section located under the About Us section of the landing page of Xref’s website at www.xref.com. The term of office held by each Director is disclosed above and in the Notice of Annual General Meeting for Directors seeking reelection. A Director may be elected for a term of a maximum of three years. To ensure a gradual and controlled movement of Directors, the longest serving one-third of all Directors retires at each Annual General Meeting (AGM), but shall be eligible for re-election. Xref has a written agreement with each Director and senior executive setting out the terms of their appointment. The Directors and senior executives have a clear understanding of their roles and responsibilities, and of the Company’s expectations of them, and this has been reduced to a written agreement. This agreement takes the form of a letter of appointment in the case of a Non-Executive Director and a service contract in the case of an Executive Director or other senior executive. Purchases or sales in Xref’s shares by Directors, employees and key consultants are to be carried out in the “window”, being the period commencing two days and ending 30 days following the date of announcement of the Company’s annual results in its Annual Report or half-yearly results, or a major announcement leading, in the opinion of the Board, to an informed market. Trading outside a trading window by Directors, employees and key consultants must only occur after consultation with the Chairman of the Board or the CEO. Directors, employees and key consultants are prohibited from buying or selling Xref shares at any time if they are aware of any price-sensitive information that has not been made public. These Company rules in regards to Xref’s securities trading and trading windows can also be found in the Company’s Corporate Governance Manual, and in its Securities Trading Policy (which was released to ASX on 5 February 2016), both of which are located in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. The Company Secretary of Xref is accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board, and plays an important role in supporting the effectiveness of the Board and its Committees. The role of the Company Secretary includes: advising the Board and its Committees on governance matters; monitoring that Board and Committee policy and procedures are followed; ensuring that the business at Board and Committee meetings is accurately captured in the minutes; and helping to organise and facilitate the induction and professional development of Directors. Each Director is able to communicate directly with the Company Secretary and vice versa. A decision to appoint or remove the Company Secretary is made by the Board. The Company has a Diversity Policy, which includes requirements for the Board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and Xref’s progress in achieving them. This Diversity Policy can be found in the Company’s Corporate Governance Manual in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. The Diversity Policy addresses equal opportunities in the hiring, training and career advancement of Directors, officers and employees. It outlines the 3|P a g e Xref Limited 2019 Corporate Governance Statement process by which the Board will set measurable objectives to achieve the aims of its Diversity Policy, with particular focus on gender diversity, within the Company. The Board remains conscious of the requirement to establish reasonable objectives for achieving gender diversity. As at the end of the recent reporting period, the measurable objectives for achieving gender diversity set by the Board in accordance with Xref’s Diversity Policy and its progress towards achieving them include attempts to achieve a greater gender diversity providing that directorship positions and senior executive positions that become open from time-to-time are filled by people who offer extreme value to clients, staff and ultimately shareholders. Progress is evidenced by the increase in females employed in the organisation since the previous reporting period as noted below (43% in the previous reporting period compared to 48% in this recent reporting period). The respective proportions of men and women on the Board at the end of the recent reporting period are five men and no women, in senior executive positions are four men and two women, and across the whole organisation are 47 men and 43 women, of which 11 women hold global management positions within the Company and three women hold regional management positions. Xref defines “senior executive” for these purposes as the Company’s Executive Directors, CFO and Company Secretary (key management personnel), and very senior staff reporting directly to the Executive Directors. Further information can be found in the Remuneration Report section of the Annual Report. The Company has and discloses a process for periodically evaluating the performance of the Board, its Committees and individual Directors using evaluation questionnaires. The next evaluation process by the Board has commenced and will be completed over the coming two Board meetings. Their performance is reviewed as part of the ordinary course of meetings of the Directors, and is considered by Shareholders through the approval of Directors’ appointments at the AGM. Given the limited number of senior executives, their performance is (and will in the short term continue to be) reviewed annually by the Board, and the Remuneration and Nomination Committee, and as part of the ordinary course of meetings of the Directors. In relation to the recent reporting period, such performance evaluations were undertaken in this period in accordance with these processes. Principle 2: Structure the Board to add value On 28 August 2018 the Board resolved to expand the function of its Remuneration Committee to encompass the nomination function and, accordingly, from this date the Company now has a joint Remuneration and Nomination Committee. This Committee has three members, Messrs Rosser (Committee Chairman), Mahony and Seymour, a majority of whom are independent Directors, and is chaired by an independent Director. The Nomination Committee Charter can be found in the Company’s Corporate Governance Manual in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. In relation to the recent reporting period, the Remuneration and Nomination Committee did not meet, but met subsequent to the end of this period. The Directors consider that the current structure and composition of the Board is appropriate to the size and nature of operations of the Company. The processes Xref employs to address Board succession issues, and to ensure that the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively include reviewing Board performance, size and capacity (with appropriatelyexperienced Directors). The Board periodically reviews the time required from a Non-Executive Director and whether or not Directors are meeting that requirement. Non-Executive Directors must inform the Chairman before accepting any new appointment as a director of another listed entity, any other material directorship or any other position with a significant time commitment attached. 4|P a g e Xref Limited 2019 Corporate Governance Statement The Company has and discloses a Board Skills Matrix (see Appendix A below) setting out the mix of skills and diversity that the Board currently has in its membership. Xref views this as a useful tool that can help identify any gaps in the collective skills of the Board that should be addressed as part of its professional development initiatives for Directors and in its Board succession planning. The Board is conscious of the need for the independence of its Directors and ensures that, where a conflict of interest may arise, the relevant Director(s) leave the meeting to ensure a full and frank discussion of the matter(s) under consideration by the rest of the Board. The names of the Company’s Directors considered by the Board to be independent Directors are Messrs Rosser, Mahony and Heap. Messrs Seymour and Griffiths are Executive Directors, and therefore not independent. The length of service of each of the current Directors is as follows: Messrs Seymour, Griffiths and Mahony – three years and eight months and, Messrs Rosser and Heap – three years. A majority of the Board of Xref is made up of Independent Directors. It is the view of the Directors that the Board is of an appropriate size and composition, with suitable skills and commitment, to enable it to discharge its duties effectively. The Chairman of the Board of the Company is an independent Director and, in particular, is not the same person as the CEO of Xref. The Company has a programme for inducting new Directors and provides appropriate professional development opportunities for Directors to develop and maintain the skills and knowledge needed to perform their role as Directors effectively. Each Director of the Company has the right to seek independent professional advice at the expense of the Company. Prior approval from the Chairman is required, but this will not be unreasonably withheld. Principle 3: Act ethically and responsibly Xref strives to act ethically and responsibly at all times, and has a formal Code of Conduct for its Directors, senior executives and employees, reflecting the Company’s size and the close interaction of individuals throughout the organisation. Xref’s Code of Conduct requires that Directors and management conduct themselves with the highest ethical standards. All Directors and employees are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. Xref follows safe work practices, conducts its activities honestly and ethically, and treats people with respect and dignity. The Company values the community and environment in which it operates, and holds in high regard innovation and reliability from all employees. The Code of Conduct reflects Xref’s core values, and documents the ethical standards and conduct by which the Company and its employees will undertake business dealings. The Code of Conduct, including the Company’s mission and objective, and its policies, standards and guidelines, can be found in Xref’s Corporate Governance Manual in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. Principle 4: Safeguard integrity in corporate reporting On 28 August 2018 the Board resolved to expand its Audit Committee to encompass the risk function and, accordingly, since this date, the Company has had a joint Audit and Risk Committee, which has three members, Messrs Mahony (Committee Chairman), Rosser and Heap. All of the Committee members are Non-Executive, independent Directors. The Audit and Risk Committee is chaired by an independent Director, who is not the Chairman of the Board. The Charter can be found in the Company’s Corporate Governance Manual, which is located in the Investor Centre 5|P a g e Xref Limited 2019 Corporate Governance Statement under the About Us section of the landing page at the top of Xref’s website at www.xref.com. The Directors on this Committee have the applicable expertise and skills for an Audit Committee, and the relevant qualifications and experience of the members of the Audit and Risk Committee can be found under the Investor Centre section of the Company’s website, which is located under the About Us section of the landing page at the top of Xref’s website at www.xref.com, and in the Company’s Annual Report. The Audit and Risk Committee reports to the Board after each of its meetings. In conjunction with the full Board, the Committee reviews the performance of the external Auditor (including the scope and quality of the audit). In relation to the recent reporting period, the Committee met twice throughout the period, once as an Audit Committee and once as an Audit and Risk Committee, and all members attended both of these meetings. Xref has formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting. The Board of the Company, before it approves Xref’s financial statements for a financial period, receives from its CEO and CFO a declaration that, in their opinion, the financial records of the Company have been properly maintained, and that the financial statements comply with the appropriate accounting standards, and give a true and fair view of the financial position and performance of Xref, and that the opinion has been formed on the basis of a sound system of risk management and internal control that is operating effectively. The Company ensures that its external Auditor attends its AGMs and is available at these meetings to answer any questions from security holders relevant to the audit. Principle 5: Make timely and balanced disclosure Xref has a written policy for complying with its continuous disclosure obligations under the ASX Listing Rules and this Continuous Disclosure Policy can be found in the Company’s Corporate Governance Manual in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. The Company complies with the Continuous Disclosure requirements of the ASX Listing Rules and, accordingly, the market is kept fully up-to-date and currently informed about all material matters that might affect trading in Xref’s securities. The Company makes timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities. Procedures have also been established for reviewing whether or not any price-sensitive information has been inadvertently disclosed and, if so, this information is also immediately released to the market. Xref, its Directors and staff are very aware of the ASX’s continuous disclosure requirements, and operate in an environment where strong emphasis is placed on full and appropriate disclosure to the market. Principle 6: Respect the rights of security holders The Company provides information about itself and its governance to investors via its website at www.xref.com, with a link to the Investor Centre located under the About Us section of the landing page at the top of Xref’s website to all relevant corporate governance information, including the Corporate Governance Manual (which contains Xref’s policies and charters) and the Corporate Governance Statement. The Investor Centre also includes a CEO Letter, Share Registry information, financial reports, notices of meetings, the current share price, investor releases, photos and information on Xref’s Board members, featured case studies and an enquiry section). The Company also provides an About Us section, as well as sections on Customers, Integrations, Solutions, and Why Xref?. Xref respects the rights of its security holders by providing them with appropriate information and facilities to allow them to 6|P a g e Xref Limited 2019 Corporate Governance Statement exercise those rights effectively. When analysts are briefed on aspects of Xref’s operations, the material used in the presentation is released to the ASX and posted on the Company’s website. Xref has designed and implemented an investor relations programme to facilitate effective two-way communication with investors, which has been tailored to the individual circumstances of the Company. Having regard to its size and the nature of its business, this includes actively engaging with its security holders at the AGM, meeting with them upon request, responding to any enquiries they may make from time-to-time and holding quarterly results investor calls. Xref discloses the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. Security holders can provide questions or comments ahead of these meetings. The Company views its meetings of security holders as an important forum for two-way communication between Xref and its security holders. They provide an opportunity for the Company to impart to security holders a greater understanding of its business, governance, financial performance and prospects, as well as to discuss areas of concern or interest to the Board and management. These meetings also provide an opportunity for security holders to express their views to Xref’s Board and management about any areas of concern or interest for them. The Company gives security holders the option to receive communications from, and send communications to, Xref and its security registry electronically. The Investor Centre section of the Company’s website (located under the About Us section of the landing page at the top of Xref’s website at www.xref.com) enables security holders to electronically submit to Xref any questions or general enquiries they may have. Also on the Investor Centre section of the Company’s website there is a Share Registry link providing contact information on Xref’s Share Registry, Computershare, including links to its Investor Centre and its email address for any shareholder queries. Principle 7: Recognise and manage risk On 28 August 2018 the Board expanded its Audit Committee to now also oversee risk and, accordingly, since this date the Company has had a joint Audit and Risk Committee, which has three members, Messrs Mahony (Committee Chairman), Rosser and Heap. All of the Committee members are Non-Executive, independent Directors. The Audit and Risk Committee is chaired by an independent Director. The Charter of the Committee can be found on the Company’s website in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. In relation to the recent reporting period, the Committee met twice throughout the period, once as an Audit Committee and once as an Audit and Risk Committee, and all members attended both of these meetings. Xref holds regular senior executive meetings to identify any potential risks to Xref and to determine steps to take, if any, to mitigate the risk. The senior executives have a review process whereby any risk management framework modifications that may be required are put as an Agenda item for the next Board meeting. The CEO is also in frequent contact with the Chairman of the Board and the Non-Executive Directors to discuss matters that arise, as the responsibility for risk management of the Company rests with the Board of Directors and senior management collectively, which is now overseen by the Audit and Risk Committee. Risk Factors are a standing agenda item at Board meetings. The Company has a risk management framework, which the Board reviews at least annually to satisfy itself that it continues to be sound, and confirms that, in relation to the recent reporting period, such a review has taken place. The Executive Director responsible for Risk makes a report to Audit and Risk Committee meetings. 7|P a g e Xref Limited 2019 Corporate Governance Statement The Board believes that the Company’s risk management, internal compliance and control procedures are operating efficiently and effectively in all material aspects appropriate for a company of Xref’s size and nature. The Company does not have an internal audit function, but the processes it employs for evaluating and continually improving the effectiveness of its internal control and risk management processes are: adopting an approach that integrates regular internal reviews of each division and function, combined with encouraging feedback from its external Auditor and other external expert advisers, and updating frameworks where it is seen that improvements can be made that benefit Xref and its stakeholders. The Company had its Auditor carry out an external review of controls relating to certain of its information technology functions during the 2018-19 financial year. The Company does not consider that it has any material exposure to economic, environmental and social sustainability risks. Xref believes that, in the long term, it has the ability to continue operating at a particular level of economic activity, in a manner that does not compromise the health of the ecosystems in which it operates, and that meets accepted social norms and needs. In particular, by being a business that utilises cloud-based computer technology, as the Company scales and grows, its environmental footprint will not substantially increase. Xref is not subject to any significant environmental regulation under Australian Commonwealth or State law, or under such laws in the United Kingdom, Canada or Scandinavia. Principle 8: Remunerate fairly and responsibly On 28 August 2018 the Board resolved to expand the function of its Remuneration Committee to encompass the nomination function and, accordingly, from this date, the Company now has a joint Remuneration and Nomination Committee. This Committee has three members, Messrs Rosser (Committee Chairman), Mahony and Seymour, a majority of whom are independent Directors, and is chaired by an independent Director. The Remuneration Committee Charter can be found in the Company’s Corporate Governance Manual in the Investor Centre located under the About Us section of the landing page at the top of Xref’s website at www.xref.com. In relation to the recent reporting period, the Remuneration and Nomination Committee did not meet, but met subsequent to the end of this period. The Company separately discloses its policies and practices regarding the remuneration of NonExecutive Directors, and the remuneration of Executive Directors and other senior executives in the Remuneration Report section of its Annual Report. Xref pays Director remuneration that is sufficient to attract and retain high quality Directors, and has designed its executive remuneration to attract, retain and motivate high quality senior executives, and to align their interests with the creation of value for shareholders. The Directors believe that the size of the Company makes individual salary and contractor negotiation more appropriate than formal remuneration policies. The Directors work closely with management, and have full access to all Xref’s files and records. The Remuneration and Nomination Committee seeks indepen