Idp Education : Corporate Governance Statement Opens in a new Window

IDP Education Limited

Corporate Governance Statement June 2017

The Board of IDP Education Limited ("IDP Education" or "the Company") is committed to maximising performance, generating appropriate levels of shareholder value and financial return, and sustaining the growth and success of IDP Education. In conducting the business with these objectives, the Board seeks to ensure that IDP Education is properly managed to protect and enhance Shareholder interests, and that IDP Education and its directors, officers and employees operate in an appropriate environment of corporate governance. Accordingly, the Board has created a framework for managing IDP Education, including adopting relevant internal controls, risk management processes and practices which it believes are appropriate for IDP Education's business and which are designed to promote the responsible management and conduct of IDP Education.

During the year the Company has had in place policies and practices which comply, except as noted, with the recommendations in the third edition of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations.

The key aspects of IDP Education's corporate governance framework and primary corporate governance practices are outlined below.

The Board has responsibility for setting and maintaining corporate integrity, behaviours and accountability. The Board operates in accordance with the IDP Education Board Charter, which is available on the IDP Education website. The Board Charter sets out the functions reserved to the Board. The Board reviews and approves the Board Charter on an annual basis to ensure it remains consistent with the Board's objectives and responsibilities.

The responsibilities of the Board, as set out in the Board Charter, include:

1. Strategy - reviewing strategic direction and approving corporate strategic initiatives developed by management;

2. Financial performance - reviewing the Company's budget, monitoring management and financial performance;

3. Risk management - together with the Audit and Risk Committee, overseeing the effectiveness of risk management and compliance in the organisation, including the Code of Conduct and legal compliance;

4. Financial and other reporting - including considering and approving the Company's half-yearly and annual financial statements - and monitoring and reviewing management processes aimed at ensuring the integrity of financial and other reporting;

5. Board performance and composition - together with the Nomination Committee, evaluating the performance of the Board, and determining its size and composition;

6. Leadership selection - evaluating the performance of, selecting and (where appropriate) removing, the CEO, the CFO and the Company Secretary;

7. Succession and remuneration planning - together with the Nomination Committee and the Remuneration Committee, planning for Board, CEO and senior executive succession and remuneration, and settling non- executive director remuneration within shareholder approved limits;

8. Social responsibility - considering the social, ethical and environmental impact of the Company's activities and operations and setting standards and monitoring compliance with the Company's social responsibilities and practices;

9. Major expenditure and capital initiatives in excess of authority levels delegated to management - approving major capital expenditure, acquisitions and divestitures, and monitoring capital management;

10. Corporate governance - reviewing and monitoring the Company's corporate governance policies and practices;

11. External auditor - together with the Audit and Risk Committee, selecting and recommending to shareholders the appointment of the external auditor; and

12. Performing such other functions as are prescribed by law or are assigned to the Board.

The Board has delegated authority over the day to day management of the Company and its operations to the CEO and the senior executive team. This delegation of authority includes responsibility for:

1. developing business plans, budgets and strategies for the Board's consideration and, to the extent approved by the Board, implementing these plans, budgets and strategies;

2. operating the Company's businesses within the parameters set by the Board from time to time and keeping the Board informed of all material developments relating to the businesses;

3. where proposed transactions, commitments or arrangements exceed the parameters set by the Board, referring the matter to the Board for its consideration and approval;

4. identifying and managing operational and other risks and, where those risks could have a material impact on the Company's businesses, formulating strategies for managing these risks for consideration by the Board;

5. managing the Company's current financial and other reporting mechanisms to ensure that these mechanisms are functioning effectively to capture all relevant material information on a timely basis;

6. implementing the Company's internal controls and procedures for monitoring these controls and ensuring that these controls and procedures are appropriate and effective;

7. taking all reasonable steps to ensure that the Board is provided with accurate and sufficient information regarding the Company's operations on a timely basis and, in particular, that the Board is made aware of all relevant matters relating to the Company's performance (including future performance), financial condition, operating results and prospects and potential material risks so that the Board is in an appropriate position to fulfil its corporate governance responsibilities; and

8. implementing all policies, processes and codes of conduct approved by the Board.

The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary is responsible for coordination of all Board business, including agendas, board papers, minutes, communication with regulatory bodies and ASX, and all statutory and other filings. The roles and responsibilities of the Company Secretary are set out in the Board Charter.

All directors have an opportunity to communicate directly with the Company Secretary.

The size of the Board is determined by the Board, with the support of the Nomination Committee and subject to the limits contained in the Company's Constitution, and shareholders. The minimum number of directors is three and the maximum is fixed by the Board but may not be more than eight unless a shareholders resolution is passed.

The Board comprises the following directors at the date of this report:

• David Battersby, Belinda Robinson and Greg West are directors of the Company's major shareholder, Education Australia Limited and as such cannot be considered independent directors for purposes of the Constitution.

  ** Chris Leptos retired as a partner of KPMG (a material professional advisor to the Company) in February 2014. As a partner of a provider of material professional services, Chris Leptos was unable to be an independent director for

  purposes of the Constitution for a period of 3 years. Chris Leptos qualified as an independent director for purposes of the Constitution upon expiry of the three year term (1 March 2017).

  Director Independence

  The Company's Constitution requires that the Chair will be an independent non-executive director. Mr Peter Polson is an independent non-executive director. The roles of Chair and CEO are not exercised by the same individual.

  The Company's Constitution requires that a majority of the Board is to be comprised of "A Class" directors. "A Class" directors includes Education Australia Limited affiliated directors as well as independent directors

  Recommendation 2.4 of the third edition of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations states that "a majority of the board of a listed entity should be independent directors". An independent director is a non-executive director who is not a member of management and is free of any business or other relationship or circumstance that could materially interfere with the exercise of objective, unfettered or independent judgment, having regard to the best interests of the company as a whole.

  The Board does not comprise a majority of independent directors and as such does not comply with Recommendation 2.4.

  Notwithstanding that a majority of the Board is not compromised of independent directors, the Board considers that, collectively, the directors bring an objective and independent judgement to its decision-making processes and that each of the directors make a valuable contribution to the Company. Furthermore, the directors believe that they are able to objectively analyse the issues before them in the best interests of all Shareholders and in accordance with their duties as directors.

  Directors are able to access members of senior management to request relevant information in their role as a non- executive director.

  Directors are entitled to seek independent professional advice at the Company's expense relating to their role as a director, subject to the prior consultation with the Chair.

  Board Skills and Experience

  It is the Board's policy that the non-executive directors, with the executive directors, comprise an appropriate mix of skills to provide the necessary breadth and depth of knowledge and experience to meet the Board's responsibilities and objectives. It is intended that the Board will be made up of directors with a broad range of skills, expertise and experience, and from a diverse range of backgrounds, including gender. For further information on the directors, please refer to the Directors' Report in the 30 June 2017 Annual Report.

  The skills matrix below sets out the Board's current mix of skills and experience. Its structure reflects the areas relevant to the business of the Company. Each area is adequately represented by the Board. Directors are encouraged to continue with ongoing professional development to maintain the skills and knowledge to perform their roles effectively.

  Skills, Experience and Expertise Matrix
  Strategic Areas	Skills
  Leadership and strategy
  Corporate Governance
  Financial Acumen

  • Outside directorships

  • Senior management positions

  • Appropriately represents the organisation

  • Sets and instils an appropriate Board and organisational culture

  • Makes and takes responsibility for decisions and actions

  • Experience in the governance of organisations

  • Public company corporate governance literacy

  • Ability to assess the effectiveness of management

  • Membership of governance industry bodies or organisations

  • Financial reporting literacy

  • Experience in managing financial risks and controls

  • Exposure to accounting standard requirements

  • Analyses key financial statements to critically assess financial viability and performance

  • Contributes to the strategic financial planning and budget process

  • Accounting or finance qualification

    Risk and Compliance  Relevant risk and compliance management experience

  • Ability to identify risk, monitor risks and provide guidance on mitigation strategies

  • Provide guidance on the development and implementation of organisational policies to ensure governance

  • Regulatory awareness

• Experience in the International Education sector

  International business experience  Senior management experience leading international business

  divisions

  People and Remuneration  Remuneration regulation and structuring

  • Human capital management experience

It is the role of the Nomination Committee to identify suitable candidates to complement the existing Board and to make recommendations to the Board on their appointment. The identification of potential director candidates may be assisted by the use of external search organisations as appropriate.

The Company's Constitution also allows for nominations for candidates to be submitted at least 45 business days before any general meeting or at least 30 business days before a general meeting requested by shareholders.

Where a candidate is recommended by the Nomination Committee or nominated prior to a general meeting, the Board will assess that candidate against a range of criteria including, but not limited to:

1. the skills, experience, expertise and personal qualities and attributes that will best complement Board effectiveness;

2. the diversity of Board composition;

3. the capability of the candidate to devote the necessary time and commitment to the role; and

4. potential conflicts of interest, and independence.

Before appointing a director, the Company undertakes comprehensive checks including directorships, identifying conflicts of interest, character reference, criminal history, bankruptcy and disqualified company director checks.

An offer of a Board appointment must be made by the Chair only after having consulted all directors, with any recommendations from the Committee having been circulated to all directors.

If all criteria are met and the Board appoints the candidate as a director, that director must have their appointment confirmed at the next Annual General Meeting. Details of directors being elected, or re-elected, are set out in the explanatory notes to the Notice of Annual General Meeting, as well as in the Directors' Report in the Annual Report.

New directors are provided with a formal letter of appointment which sets out the terms of their appointment, including their obligations and responsibilities, required time commitment, requirement to disclose any interests that conflict or other interests and matters affecting independence.

The Nomination Committee is responsible for the induction of all new directors. The IDP Director Induction framework has been established to ensure that new Board members are suitably prepared to fulfil the requirements of their role and contribute appropriately to the operation of the Board. The framework covers aspects relating to the Company's vision and strategy, financial performance, and operational and risk management positions. In addition, comprehensive briefings with the Chair, CEO, senior executives and management are provided to assist them in understanding the business, its values and culture and the industry it operates in.

Appropriate professional development opportunities for directors are also provided in order to allow directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. On an ongoing basis, directors are provided with presentations and briefings on key developments affecting the Company and the industry and environment in which it operates.