NCS Governance Statement

The Boards of Directors of each group member (NCS) are responsible for the corporate governance of their respective company. This statement generally describes the practices and processes NCS has adopted to ensure sound management of NCS within the legal framework under which it operates. The key principles are accountability, disclosure and independence.

Role of the Board

The Board‘s primary role is to protect and enhance long-term business value. To fulfill this role, the Board is responsible for providing strategic guidance to NCS and its related bodies corporate (the “NCS Group”); monitoring and providing effective oversight of NCS management; overseeing NCS’s risk management systems; and acting as an interface between NCS and its customers.

The Board has delegated responsibility for the operation and administration of NCS to the Chief Executive Officer (CEO) and executive management team.

The role and responsibility of the NCS Board is set out in detail in NCS’ Board Action Requirements.

Board processes

The Board holds regular scheduled meetings each year, as well as strategic planning meetings and any other meetings that may be required from time to time.

To assist in the execution of its responsibilities, the Board has established a number of key committees, each with its own responsibilities that are reviewed annually. Details of the various Board committees are outlined below.

Composition of the Board

NCS currently has two directors and a Board of Advisors of an additional 3 persons per company.  The two bodies work closely together in providing guidance to the business.

The Board comprises 1 executive director and 1 independent director.  All members of the advisory board are independent.  The Board does not consider that the length of service on the Board has impacted any individual director’s ability to act independently and in the best interest of members.

Conflict of interest

In accordance with sound governance principles, directors and advisors must keep the Board advised of any interest that could potentially conflict with the interests of NCS. The Board has developed guidelines to assist directors and advisors in disclosing potential conflicts of interest. Directors’ disclosures are formally updated annually as part of NCS’ Fit and Proper process. Transactions between non-executive directors and NCS are subject to the same terms and conditions that apply to members.

Board performance assessment

The Board is committed to continual improvement and has in place an annual evaluation process for assessing the Boards of Directors and Advisors and individual directors and advisors.

Independent professional advice and access to information

Each director has the right of access to all relevant information and to NCS’s management. Where there is a legal issue that may affect a director’s ability to exercise his or her duty as a director and/or a potential or actual conflict of interest, subject to prior consultation with and approval of the Chair, a director may seek independent professional advice from a suitably qualified adviser in the field, at the expense of NCS.

Ethics

To maintain stakeholder confidence in the integrity of the company, NCS directors have adopted and adhere to a directors’ code of conduct, which is based on the code developed by World Council of Credit Unions.

The principles established here guide NCS’ behavior and interaction with customers, other financial institutions, staff and the broader community.

NCS is also committed to the privacy of customer information.

Risk management

NCS manages a diverse range of significant risks. To this end, the Board of NCS is committed to identifying and managing these risks throughout NCS. The Board, through the CEO, has established a risk management system for assessing, monitoring and managing these risks.

The Board Risk Committee receives and reviews regular risk management reports.

Remuneration policies for directors

In determining director remuneration, the Board obtains independent advice on the appropriateness of remuneration given trends in comparable companies. Remuneration levels are designed to attract and retain appropriately qualified and experienced non-executive directors and advisors. Non-executive directors or advisors do not receive any performance-related remuneration. Directors’ remuneration covers all NCS Board activities, membership of committees and includes any superannuation contributions paid on behalf of a director. Subject to meeting specific criteria, directors retiring from the Board may receive a termination payment of up to three years directors’ fees.

Non-executive directors or advisors may maintain loans and credit facilities from NCS at normal rates of interest and therefore no additional remuneration is obtained by way of a benefit.

Board committees

To assist in the execution of its responsibilities, the Board has established a number of committees, each with its own guidelines that are reviewed annually. Details of the Committees currently in place are outlined below.

Board Remuneration Committee

This committee assists the Board by reviewing the significant remuneration related policies and practices of NCS. The key responsibilities of the committee include:

• Conducting regular reviews of, and making recommendations to, the Board on the remuneration policy
• Making annual recommendations to the Board on the remuneration of the CEO
• Considering and approving recommendations in relation to remuneration for direct reports of the CEO and other persons whose activities may, in the committee’s opinion, affect the financial soundness of the institution
• Considering and approving recommendations to the Board regarding remuneration of other categories of persons covered by the remuneration policy
• Having free and unfettered access to risk and financial control personnel and other parties (internal and external) in carrying out its duties
• Having the power to engage third-party experts, if it chooses to do so, in a manner that ensures their engagement, including any advice received, is independent
• Considering and approving people-related strategies aimed at moving NCS towards being recognised as an employer of indigenous persons and an employer of choice
• Reviewing targets set and schemes designed to drive performance of NCS employees
• Reviewing the financial performance of the Company against the Variable Short and Long term Incentive scheme targets set by the Committee;
• Reviewing of major policies, guidelines and relevant initiatives associated with the management and development of Company employees;
• Reviewing of major structural changes of the Company affecting Company employees;
• Endorsing enterprise agreements or similar documents relating to remuneration and conditions of employment.
• Facilitating the appointment of the CEO;
• Approving appointments to the Executive Management Team as recommended by the CEO.

The committee is required to have at least two members and all members of the committee must be non-executive directors. A majority of members must be independent.

The committee meets as and when required.

Board Audit Committee

The Board Audit Committee is established by the Board of Directors of NCS to assist the Board in:

• reviewing the effectiveness of the NCS Group financial reporting and professional accounting requirements and approving NCS’s annual financial statements;
• overseeing the internal and external audit function; and
• monitoring compliance with statutory reporting, other legislative requirements and internal company policy.

The committee is required to have at least three members and all members of the committee must be non-executive directors. A majority of members must be independent. The Chair of the NCS Board may not be the Chair of the BAC.

Board Risk Committee

The Board Risk Committee is established by the Board of Directors of NCS to assist the Board in:

• overseeing and monitoring the management and alignment of risks of NCS;
• ensuring that NCS meets prudential and statutory requirements in relation to risk;
• ensuring that NCS has in place a risk management framework and management practices which limit the company’s risks to prudent levels; and
• providing an objective view on the effectiveness of, and assurance over, the internal control environment (including the risk management framework and financial and statutory reporting controls) of NCS.

The committee is required to have at least three members and all members of the committee must be non-executive directors. A majority of members must be independent.

Board Strategy Consultative Committee

This committee assists the Board and supports management in progressing major strategic issues and opportunities as required between Board meetings.

The duties and responsibilities of the committee include:

• Providing support and advice to NCS management in progressing strategic objectives and initiatives that:
• Are consistent with the NCS Business Plan as approved or varied by the Board; or
• May need to be considered for commercial and strategic enhancement of NCS.
• Assessing and making recommendations to the NCS Board, as necessary, regarding any strategic issue and in respect of any major proposals from third parties relating to the operations of and/or future ownership of NCS.
• Approving the appointment of and scope of work undertaken by specialised advisors or experts as required by the committee in support of strategic engagements.
• Ensuring appropriate advice is made available to all directors of the NCS Board in respect of strategic matters including, where appropriate, from external advisors, always subject to managing conflicts of interest and any regulatory and legal constraints.

The committee is required to have at least three members, with the majority of members being independent non-executive directors. One of these directors is required to chair the committee. The CEO is also required to be a member of the committee.