Corporate Governance Statement
30 June 2021
This Corporate Governance Statement of SportsHero Limited (the ‘company’) has been prepared in accordance with the 4th Edition of the Australian Securities Exchange’s (‘ASX’) Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council (‘ASX Principles and Recommendations’) and is included in the company’s website pursuant to ASX Listing Rule 4.10.3. This listing rule requires the company to disclose the extent to which it has followed the recommendations during the financial year, including reasons where the company has not followed a recommendation and any related alternative governance practice adopted.
The company’s ASX Appendix 4G, which is a checklist cross-referencing the ASX Principles and Recommendations to the relevant disclosures in either this statement, our website or Annual Report, is contained on our website at http://sportshero.live/
Both this Corporate Governance Statement and the ASX Appendix 4G have been lodged with the ASX. This statement has been approved by the company’s Board of Directors (‘Board’) and is current as at 30 September 2021.
The ASX Principles and Recommendations and the company’s response as to how and whether it follows those recommendations are set out below.
The company’s Board maintains the following roles and responsibilities:
The Board has delegated the day-to-day management of the company to the CEO and other senior executives (‘management’). The company’s management is responsible for the following:
Senior executives have their roles and responsibilities defined in specific position descriptions.
Recommendation 1.6 – A listed entity should:
Recommendation 1.7 – A listed entity should:
Principle 2: Structure the board to be effective and add value
Recommendation 2.1 – The board of a listed entity should:
(a) have a nomination committee which:
Given the level of activity of the company throughout the year, the Board assumed the duties and responsibilities typically delegated to an audit committee, risk committee, remuneration committee and nomination committee. As such, a nomination committee has not been established.
A description of the procedures for the selection and appointment of new directors and the re-election of incumbents is contained within the Board Charter which is maintained at the company’s website.
The roles and responsibilities of the Board include the following:
The Board’s skills matrix indicates the mix of skills, experience and expertise that are considered necessary at Board level for optimal performance of the Board. It is therefore used when recruiting new directors and assessing which skills need to be outsourced based on the attributes of the current Board members. The existence of each attribute is assessed by the Board as either, High, Medium or Low.
The Board believes that its membership adequately represents the required skills as set out in the matrix. External consultants may be brought it with specialist knowledge to address areas where this is an attribute deficiency in the Board.
In addition to the specific areas that are required at Board level identified in the matrix above, all members of the Board are assessed for the following attributes before they are considered an appropriate candidate.
Recommendation 2.3 – A listed entity should disclose:
The Board assesses annually the independence of each director to ensure that those designated as independent do not have any alliance to the interests of management, substantial shareholders or other relevant stakeholders. They must be free of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect, their capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the company and its security holders generally.
Details of the Board of directors, their appointment date, length of service and independence status is as follows:
The Board may determine that a director is independent notwithstanding the existence of an interest, position, association or relationship of the kind identified in the examples listed under Recommendation 2.3 of the ASX Principles and Recommendations.
There are no directors that the Board has declared are independent but which maintain an interest or relationship that could be perceived as impairing independence.
As part of its independence assessment, the Board considered the length of time that the director has been on the Board as a prolonged service period may also be seen as an impairment to their independence. The Board concludes that no non-executive director has been on the Board for a period which could be seen to compromise their independence. Such a period is generally considered to be in excess of 10 years. Being on the Board for a period in excess of 10 years does not however constitute an automatic deeming of non-independence.
Where it is determined that a non-executive director should no longer be considered independent, the company shall make an announcement to the market.
Recommendation 2.4 – A majority of the board of a listed entity should be independent directors.
Having regard to the response to Recommendation 2.3 above, 67% of the Board at the reporting date were independent.
Recommendation 2.5 – The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.
Mr Dougall is the chair of the Board and is considered to be an independent director of the company.
Recommendation 2.6 – A listed entity should have a program for inducting new directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively.
It is intended that new directors complete an induction program coordinated by the company secretary on behalf of the Board. The program would provide an explanation of company policies and procedures, governance frameworks, cultures and values, company history, director and executive profiles and other pertinent company information. The company has a procedure in place that enables directors to take independent professional advice and to undertake professional development at the expense of the company.
Principle 3: Instil a culture of acting lawfully, ethically and responsibly
Recommendation 3.1 – A listed entity should articulate and disclose its values
The company maintains a code of conduct for its directors, senior executives and employees that articulate the company’s values.
The company’s senior executive team has been charged with the responsibility of inculcating those values across the whole organisation.
Recommendation 3.2 – A listed entity should:
The company maintains a code of conduct for its directors, senior executives and employees. In summary, the code requires the following of each relevant person:
The company’s senior executive team is required to report to the Board any material breach of the code of conduct.
The code is available on the company’s website.
Recommendation 3.3 – A listed entity should:
The company has a whistle-blower policy that has been circulated to all staff and is available on the company’s website.
All material incidences reported under the company’s whistleblower policy are to be reported to the Board or a committee of the Board.
Recommendation 3.4 – A listed entity should:
The company has an anti-bribery and anti-corruption policy that has been circulated to all staff and is available on the company’s website.
All material incidences reported under the company’s anti-bribery and anti-corruption policy are to be reported to the Board or a committee of the Board.
Principle 4: Safeguard the integrity of corporate reports
Recommendation 4.1 – The board of a listed entity should:
Given the size of the company and level of activity, the Board has assumed the duties and responsibilities typically delegated to an audit committee.
Each Board member has free and open access to the external auditor, the company secretary, accounting personnel and the external advisors engaged by the company.
The removal of the external auditor and the appointment of a new auditor requires the approval of members.
The majority of the Board are independent and details of their qualifications and experience are set out in the Directors’ report.
The Board has all necessary powers to undertake the role of the audit committee, and in conjunction with the Company Secretary achieves this objective by ensuring the following functions are undertaken:
Recommendation 4.2 – The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity 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 the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
In relation to the financial statements for the financial year ended 30 June 2021 and the half-year ended 31 December 2020, the company’s CEO and company secretary have provided the Board with declarations, that in their opinion:
Recommendation 4.3 – A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor.
All periodic corporate reports are drafted and/or vetted, in detail, by the company secretary. Should legal or any other professional opinion be required in relation to the periodic corporate report, then the company secretary will obtain such opinion which will be incorporated into the periodic corporate report. All periodic corporate reports are then circulated to all Board members for their approval prior to release.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1 – A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under Listing Rule 3.1.
Listing Rule 3.1 requires a listed entity, subject to certain exceptions, to disclose to ASX immediately any information concerning it that a reasonable person would expect to have a material effect on the price or value of its securities. The company is committed to providing the market with complete and timely information about disclosure events in compliance with its continuous disclosure obligations and the Corporations Act 2001.
The company maintains a written policy that outlines the responsibilities relating to the directors, officers and employees in complying with the company’s disclosure obligations. Where any such person is of any doubt as to whether they possess information that could be classified as market sensitive, they are required to notify the company secretary immediately, in the first instance, so that appropriate analysis and internal consultation can be conducted. Legal advice may also be sought from the company’s external counsel.
The company secretary is required to consult with the CEO in relation to matters brought to his attention for potential announcement. Where the matter is urgent and the CEO is not contactable, the chair is contacted. Where the chair is not contactable, the company secretary may decide whether an announcement is made, or whether a trading halt is warranted.
Generally, the CEO is ultimately responsible for decisions relating to the making of market announcements. The company secretary is responsible for ensuring that the Board is aware of items of business that could result in an announcement. The Board is required to authorise announcements of significance to the company such as significant acquisitions, disposals and closures, dividend declarations and buybacks, and any other transaction flagged by the CEO as being fundamentally significant.
The company secretary is responsible for advising when announcements are not required due to either circumstances such as where the information relates to matters of supposition or is insufficiently definite, it concerns an incomplete proposal or negotiation, the information is confidential or would represent a breach of law if disclosed, and where a reasonable person would not expect the disclosure of the information.
No member of the company shall disclose market sensitive information to any person unless they have received acknowledgement from the ASX that the information has been released to the market.
Recommendation 5.2 – A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made.
The company secretary is responsible for ensuring that, at the time of the announcement, each director receives a copy of every market announcement.
Recommendation 5.3 – A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation.
All investor presentations and accompanying presentation materials (if any) are released by the company to the ASX Market Announcements Platform ahead of the presentation.
Principle 6: Respect the rights of security holders
Recommendation 6.1 – A listed entity should provide information about itself and its governance to investors via its website.
The company maintains information in relation to governance documents, directors and senior executives, Board and committee charters, annual reports, ASX announcements and contact details on the company’s website.
Recommendations 6.2 and 6.3
A listed entity should have an investor relations program that facilitates effective two-way communication with investors (6.2).
A listed entity should disclose how it facilitates and encourages participation at meetings of security holders (6.3).
In order for the investors to gain a greater understanding of the company’s business, governance practices, financial performance and future prospects, the company will schedule interactions where it engages with institutional and private investors, analysts and the financial media.
Meetings and discussions with analysts must be approved by the CEO and are generally conducted by the CEO. The discussions are restricted to explanations of information already within the market or which deal with non-price sensitive information.
The company encourages shareholders to attend the company’s AGM and to send in questions prior to the AGM so that they may be responded to during the meeting. It also encourages ad hoc enquiry via email which are responded to.
Recommendation 6.4 – A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands.
All resolutions considered at a meeting of security holders will be decided by a poll.
Recommendation 6.5 – A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.
The company engages its share registry to manage the majority of communications with shareholders. Shareholders are encouraged to receive correspondence from the company electronically, thereby facilitating a more effective, efficient and environmentally friendly communication mechanism with shareholders. Shareholders not already receiving information electronically can elect to do so through the share registry, Advanced Share Registry Limited at www.advancedshare.com.au.
Principle 7: Recognise and manage risk
Recommendations 7.1 and 7.2
The board of a listed entity should:
The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risk appetite set by the board; and (b) disclose, in relation to each reporting period, whether such a review has taken place (7.2).
Given the current status of the company and level of activity, the Board has assumed the duties and responsibilities typically delegated to a risk committee.
The Board’s responsibilities include procedures for general risk oversight and monitoring, internal control and risk management, risk transfer and insurance and other responsibilities.
The Board determines policy and the monitoring of corporate activity in order to understand risks which may:
The Board’s responsibilities include review of the following elements:
The Board reviews the company’s risk management framework at least annually to ensure that it is still suitable to the company’s operations and objectives and that the company is operating within the risk parameters agreed by the Board. As a consequence of the last review undertaken for the year ended 30 June 2021, there were no significant recommendations made.
Given the size and level of activity, the company does not maintain a separate internal audit function. The company secretary does however oversee the accounting and reporting process (along with the imbedded systems and controls) and reports to the Board, which determines the adequacy of these systems and approves any recommendations for implementation. The company secretary also works closely with the external independent accounting personnel, approves recommendations for implementation and is given unrestricted access to the books and records of the company. This overview function is operated completely independently of the external audit.
The management of the company and the execution of its operational strategies are subject to a number of risks which could adversely affect the company’s future development. The following is not an exhaustive list or explanation of all risks and uncertainties associated with the company (and its subsidiaries), but those considered by management to be the principal material risks:
Refer to commentary at Recommendations 7.1 and 7.2 for information on the company’s risk management framework.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1 – The board of a listed entity should:
Given the size of the company and current level of activity, the Board has assumed the duties and responsibilities typically delegated to a remuneration committee.
The Board oversees remuneration policy and monitors remuneration outcomes to promote the interests of shareholders by rewarding, motivating and retaining employees.
The Board monitors and determines the following matters:
When considered necessary, the Board can obtain external advice from independent consultants in determining the company’s remuneration practices including remuneration levels.
Shareholders determine the maximum quantum of remuneration payable to non-executive directors.
Recommendation 8.2 – A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.
Non-executive directors are remunerated by way of cash fees. The level of remuneration reflects the anticipated time commitments and responsibilities of the position.
Performance based incentives are generally not available to non-executive directors as it could be perceived to impair their independence in decision making. For the same reason, equity based remuneration has been limited to non-performance based instruments such as shares.
In order to secure the services of the company’s Chairman (who was appointed on 30 October 2019) and to reduce cash outflows, the company agreed (subject to the receipt of shareholder approval) to pay 50% of Mr Dougall’s cash remuneration in shares and to grant Mr Dougall 4,000,000 performance rights. The milestone to trigger the conversion of the 4,000,000 performance rights into 4,000,000 shares is upon the company achieving breakeven operating cash flow (or better) for any six-month period up to and including the six months ended 31 December 2022. Any shares issued on conversion of the performance rights will be subject to a voluntary 12 month escrow from their date of issue.
In addition, on 15 January 2021, shareholders approved the granting of 12,000,000 Director Performance Rights as follows:
The performance hurdles for the Director Performance Rights are as follows:
Executive directors (if any) and other senior executives are remunerated using combinations of fixed and performance based remuneration. Fees and salaries are set at levels reflecting market rates having regard to the individual’s performance and responsibilities. Performance based remuneration (if applicable) is linked directly to specific performance targets that are aligned to both short and long term objectives. Share options and rights are aligned to longer term performance hurdles. Termination payments are detailed in individual contracts and payable on early termination with the exclusion of termination in the event of misconduct.
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report, within the Directors’ report.
Recommendation 8.3 – A listed entity which has an equity-based remuneration scheme should:
Where a director or other senior executive uses derivatives or other hedging arrangements over securities of the company, this must be disclosed to the CEO or company secretary.
Click here for Appendix 4G
Click here to view the Anti-Bribery & Anti-Corruption Policy
Click here to view the Whistleblower Policy