Corporate Governance

1.1   1.1 Introduction
   

The Board of Directors of GME Resources Limited has adopted the following Corporate Governance Principles and is responsible for the adherence to these Principles. These Principles and Practices are reviewed regularly and upgraded or changed to reflect changes in law and what is regarded as best practice. A description of the Company's main Corporate Governance Principles and Practices is set out below.
 
1.2   Role of the Board
   

The Board has adopted the following Statement of Matters for which the Board will be responsible:
    (1)   Reviewing and determining the Company's strategic direction and operational policies;
    (2)   Review and approve business plans, budgets and forecasts and set goals for management;
    (3)   Appoint and remunerate Chief Executive Officer and Senior Staff;
    (4)   Review performance of Chief Executive Officer and Senior Staff;
    (5)   Review financial performance against Key Performance Indicators on a monthly basis;
    (6)   Approve acquisition and disposal of tenements;
    (7)   Approve exploration and mining programs;
    (8)   Approve capital, development and other large expenditures;
    (9)   Review risk management and compliance;
    (10)   Oversee the Company's control and accountability systems;
    (11)   Reporting to shareholders; and
    (12)   Ensure compliance with environmental, taxation, Corporations Act and other laws and regulations
 
1.3   Managing Director
    GME's most senior employee is the Managing Director who is appointed and subject to annual reviews by the Board. The Managing Director recommends policies, strategic direction and business plans for the Board's approval and is responsible for managing the Company's day-to-day business.
 
1.4   Board Independence
    Michael D Perrott
Chairman
62 years
Director since 1996
   James Noel Sullivan
Executive Director
47 years
Appointed 1st October
2004.
   Peter R Sullivan
Director
52 years
Director since 1996		   Geoffrey M Motteram
Independent Director
59 years
Director since 1997		   David J Varcoe
Managing Director
45 years
Appointed Feb 2008
   

Mr Motteram is the only director considered Independent on the Board according to the definitions by the Australian Stock Exchange Corporate Governance Council ("Council"). Mr Jamie Sullivan is an Executive Director and a substantial shareholder of the Company. Mr Peter Sullivan is also a substantial shareholder of the Company. The Chairman, Mr Perrott, is not considered "Independent" by the definitions of the Council, as he is a director of a substantial Mr Varcoe is an employee of the Company and therefore not independent.

As such, the Company does not comply with the Council's recommendation, Item 2.1, that the majority of the Company's directors should be Independent Directors. The Board has however adopted a series of safeguards to ensure that independent judgement is applied when considering the business of the Board:
    (1)   Directors are entitled to seek independent professional advice at the Company's expense. Prior written approval of the Chairman is required but this is not unreasonably withheld.
    (2)   Directors having a conflict of interest with an item for discussion by the Board must absent themselves from a board meeting where such item is being discussed before commencement of discussion on such topic.
    (3)   The Independent Director confers on a "needs" basis with the Chairman with such discussion if warranted and considered necessary by the Independent Director.
    (4)   The Board considers Non-executive Directors to be independent even if they have minor dealings with the Company provided they are not a substantial shareholder. Transactions with a value in excess of 5% of the Company's annual operating costs are considered material. A director will not be considered independent if he has transactions in excess of this materiality threshold.
 
1.5   Tenure of the Board
    The Directors are expected to review their membership of the Board from time to time taking into account the length of service on the Board, age, qualification and experience. In light of the needs of the Company and direction of the Company together with such other criteria considered desirable for composition of a balanced board and the overall interests of the Company.

A director is expected to resign if the remaining directors recommend that a director should not continue in office, but is not obliged to do so.
 
1.6   Chairman
    The current Chairman is Mr Michael D Perrott, who is not considered strictly independent in accordance with the principles recommended by the Council. Mr Perrott brings a wealth of business experience, connections and drive to the Board and the other Directors, including Mr Motteram who is independent, consider Mr Perrott to be the most suitable person to lead the Board.

The Chairman's role is separated from the role of the Managing Director.

The Chairman's role includes:
    (1) Providing effective leadership on formulating the Board's strategy;
    (2)   Representing the views of the Board to the public;
    (3)   Ensuring that that the Board meets at regular intervals throughout the year and that minutes of meeting accurately record decisions taken and where appropriate the views of individual directors;
    (4)   Guiding the agenda, information flow and conduct of all board meetings;
    (5)   Reviewing the performance of the board of directors; and
    (6)   Monitoring the performance of the management of the Company.
 
1.7   Committees
    Due to the small size of the Company and the number of board members, the Board does not have a formal nomination committee structure. Any new directors will be selected according to the needs of the Company at that particular time, the composition and the balance of experience on the Board as well as the strategic direction of the Company.

Should the need arise to consider a new board member, some or all of the Directors would form the committee to consider the selection process and appointment of a new director.

At each annual general meeting the following directors retire:
    (1) One third of directors (excluding the Managing Director);
    (2)   Directors appointed by the Board to fill casual vacancies or otherwise;
    (3)   Directors who have held office for more than three years since the last general meeting at which they were elected.
 
1.8   Details on Current Directors
    Details on current directors including their skills and experience are included in the Directors’ Report.
 
1.9   Ethical and Responsible Decision-making
    In making decisions, the Directors of the Company, its officers and employees, take into account the needs of all stakeholders:
    (1) Shareholders;
    (2)   Employees;
    (3)   Community;
    (4)   Creditors;
    (5)   Contractors; and
    (6)   Government (Federal, State and Local).
 
    The Directors, officers and employees of the Company are expected to:
    (1)   Comply with the laws and regulations both by the letter and in spirit;
    (2)   Act honestly and with integrity;
    (3)   Avoid conflicts of interest by not placing themselves in situations which result in divided loyalties;
    (4)   Use the Company's assets responsibly and in the interests of the Company, not take advantage of property, information or position for personal gain or to compete with the Company;
    (5)   To keep non-public information confidential except where disclosure is authorised or legally mandated; and
    (6)   Responsible and accountable for their actions and report any unethical behaviour.
 
1.10   Trading in Company Securities
    The Directors, officers and employees of the Company must not acquire or dispose of securities in the Company whilst in possession of price sensitive information not yet released to the market. Subject to this condition and the trading prohibition applying to periods prior to major announcements, including announcement of drilling results, announcement of half-yearly and full year results and the holding of a general meeting, trading can occur at any time.

Directors must advise the Company which in turn advises the Australian Stock Exchange of any transactions conducted by them in the Company's securities within five business days after the transaction occurs.
 
1.11   Integrity of Financial Reporting
    GME's Managing Director and Company Secretary report in writing to the Board:
    (1) That the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company and Group; and
    (2)   That the above statement is founded on a sound system of internal control and risk management which implements the policies adopted by the Board and that the Company's risk management and internal controls are operating efficiently in all material respects.
 
1.12   Audit Committee
    The Company does not have a formal audit committee as, in the opinion of the directors, the scope and size of the Company’s operations do not warrant it. As such the Company is not in strict compliance of the Council’s Recommendation 4.2 that the Board should establish an audit committee. It should be noted however that when the Council’s Recommendation was made it was emphasised that it was more relevant for large companies.

The Board regularly reviews the scope of audits, the level of audit fees and the performance of auditors.

The Board also is continually assessing to ensure the independence of the external auditor is maintained. The company will and does, if necessary, use other consultants to avoid any potential independence issues.
 
1.13   Timely and Balanced Disclosure to Australian Stock Exchange
    The Company has procedures in place to identify matters that are likely to have a material effect on the price of the Company's securities and to ensure those matters are notified to the Australian Stock Exchange in accordance with its listing rule disclosure requirements.

Information to the market and media is handled by the Chairman, the Managing Director or the Company Secretary. In particular, the Company Secretary has been nominated as the person responsible for communications with Australian Stock Exchange. This role includes responsibility for compliance with the continuous disclosure requirements of the Australian Stock Exchange Listing Rules and overseeing and coordinating information disclosures to Australian Stock Exchange, analysts, brokers, shareholders the media and the public.

All disclosures to Australian Stock Exchange are posted on the Company's website soon after clearance has been received from Australian Stock Exchange.

The Chairman, the Managing Director and Company Secretary are monitoring information in the marketplace to ensure that a false market does not emerge in the Company's securities
 
1.14   Communication with Shareholders
    It is the Company's communication policy to communicate with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company.

The information is communicated to the shareholders through:
    (1) Continuous disclosure announcements made to the Australian Stock Exchange;
    (2)   Distribution of the annual report to shareholders together with a notice of meeting;
    (3)   Posting of half-yearly results and all Australian Stock Exchange announcements on the Company's website;
    (4)   Posting of all major drilling results;
    (5)   Posting of all media announcements on the Company's website; and
    (6)   Calling of annual general meetings and other meetings of shareholders to obtain approval for board action as appropriate.
 
    On the Company's website, information about the Company's projects are shown.

The Company has always invited the Company's auditor to attend to annual General Meeting and will continue to do so and allow sufficient time for the shareholders to ask questions of the Company's auditor relating to the audit of the Company.

At annual general meetings and other general meetings of shareholders, shareholders are encouraged to ask questions of the Board of Directors relating to the operation of the Company.
 
1.15   Risk Management
    Due to its size of operation and size of the board, there is no formal board committee to identify, assess and monitor and manage risk. Responsibility for day-to-day control and risk management lies with the Managing Director and Company Secretary (financial risk) with reporting responsibility to the Board. The Board participate and monitor risks including but not limited to compliance with development and environmental approvals, tendering, contracting and development, pricing of products, quality, safety, strategic issues, financial risk, joint venture, accounting and insurance. Any changes in the risk profile for the Company are communicated to its stakeholders via an announcement to Australian Stock Exchange.
 
1.16   Performance
    The Board has adopted a self-evaluation process to measure its own performance. The Chairman evaluates the performance of each director and the Board evaluates the performance of the Chairman. Performance of senior executives is evaluated by the Managing Director in cooperation with the Chairman. All performance evaluations are measured against budget, goals and objectives set.

All directors of the board have access to the Company Secretary who is appointed by the Board. The Company Secretary reports to the Chairman, in particular to matters relating to corporate governance.

Once a month an information package on the Company's performance is presented to Board Members for their review and to assist them in their decision-making.

All board members have access to professional independent advice at the Company's expense provided they first have obtained the Chairman's approval, which will not be unreasonably withheld.
 
1.17   Remuneration
    (1) Managing Director and Non-executive Directors

The directors are remunerated for the services they render the Company and such services are normally carried out under normal commercial terms and conditions. Remuneration is also determined having regard to how directors are remunerated for other similar companies, the time spent on the Company’s matters and the performance of the Company. Engagement and payment for such services are approved by the other directors with no interest in the engagement of services.

The Board has no retirement or termination benefits. Payments to all directors are set out in the Director's Report.
    (2)   Senior Executives

The remuneration of senior executives is discussed and determined by the Board upon receiving advice from the Managing Director. The remuneration packages are set at levels intended to attract and retain the executives capable of managing the Company's operations.

The remuneration of senior executives is set out in the Directors’ Report.
    (3)   General

Due to the staff size and the close involvement of the Board in the operations of the Company, the Company does not operate a formal remuneration committee. All remuneration paid to the Chairman, Non-executive Directors, Executive Director and Senior Executives are all reviewed and discussed by the Board.

The Company does not operate an employee share option plan and there are no options outstanding issued to directors, employees or former employees.
 
1.18   Interests of Stakeholders
    It is the Company's objective to create wealth for its shareholders and provide a safe and challenging environment for employees and for the Company to be a valuable member of the community as a whole.

The Company's ethical and responsible behaviour is set out under the heading "Ethical and Responsible Decision-making" (see 4.9).

The Company's core values are summarised as follows:
    (1) Provide value to its shareholders through growth in its market capitalisation;
    (2)   Act with integrity and fairness;
    (3)   Create a safe and challenging workplace;
    (4)   Be participative and recognise the needs of the community;
    (5)   Protect the environment;
    (6)   Be commercially competitive; and
    (7)   Strive for high quality performance and development.