Asset Resolution : Corporate Governance Statement 2021

Corporate Governance Statement

Asset Resolution Limited and its subsidiary undertakings ("Company", "ARL", NSX Code: ASS) and the Board of Directors are responsible for the Corporate Governance of the Company and are committed to achieving the highest standard of Corporate Governance, business integrity and professionalism with due regard to the interests of all stakeholders. The Board guides and monitors the business and affairs of the Company on behalf of the security holders by whom they are elected and to whom they are accountable. The Company is listed on the NSX.

Company culture and values

Company values underpin the Board's desired culture to maximise shareholder value while nurturing the needs of the environment and community. The values at the core of the Company's ethos are:

• Transparency
• Honesty
• Integrity
• Resilience
• Quality
• Trust
• Accountability

As the Company evolves, so too do its values.

Purpose

The Company's purpose is to identify potential distressed assets and other investments to increase Company growth and shareholder value. In addition, the Company plans to realise the value on the existing distressed assets. Current Company investments are comprised of unlisted investments, a mortgage loan and a distressed asset,

Corporate Governance Principles

The Board has used its best endeavours to follow the Principles and Recommendations set out by the ASX Corporate Governance Council.

The ASX Corporate Governance Council released revised Corporate Governance Principles and Best Practice Recommendations 4th Edition on 27 February 2019 to take effect for the first full financial year commencing on or after 1 January 2020. Companies are encouraged to adopt the revised Principles and Recommendations earlier if they wish. The Company has adopted the revised Principles and Recommendations and accordingly this Statement complies with the 4th edition Principles and Recommendations, except where otherwise noted.

ARL's corporate governance practices were in place from 1 July 2019, except where noted; having considered the Company's size and nature it is considered that it complies as far as possible with the spirit and intentions of the ASX Corporate Governance Council's Principles and Recommendations, unless otherwise stated in this Statement. This statement was reviewed by the Board on 31 August 2021.

The Corporate Governance Statement and all corporate governance documents noted in this Statement are available on the Company's website www.arlimited.com.au

This Statement summarises the Company's primary corporate governance practices and its compliance with the ASX Corporate Governance Council's Principles and Recommendations as appropriate.

Summary of Compliance

3rdrd Edition Recommendations		Comply	Reference
1.1	Role of board and management		Yes	1.1
1.2 (a) Background checks on directors and		Yes	1.2
	(b) information to be given for election of directors
1.3	Written contracts of appointment		Yes	1.3
1.4	Company secretary		Yes	1.4
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Corporate Governance Statement

3rdrd Edition Recommendations	Comply	Reference
1.5	Diversity	Yes	1.5
1.6	Board reviews	Yes	1.6
1.7	Management reviews	Yes	1.7
2.1	Nomination committee	No	2.1
2.2	Board skills matrix	Yes	2.2
2.3 Disclose independence and length of service of directors	Yes	2.3
2.4	Majority of directors independent	Yes	2.4
2.5	Chair independent and not CEO	Yes	2.5
2.6	Induction and professional development	Yes	2.6
3.1	Statement of values	Yes	3.1
3.2	Code of conduct	Yes	3.2
3.3	Whistleblower policy	Yes	3.3
3.4	Anti-bribery and corruption policy	No	3.4
4.1	Audit and risk committee	Yes	4.1
4.2	Chair and CFO certification of financial statements	Yes	4.2
4.3	Chair and CFO certification of periodic corporate reports	Yes	4.3
4.3	External auditor available at AGM	Yes	4.3
5.1	Continuous Disclosure Policy	Yes	5.1
5.2	Substantive investor or analyst presentation	Yes	5.2
6.1	Information on website	Yes	6.1
6.2	Investor relations program	Yes	6.2
6.3	Facilitate participation at meetings of security holders	Yes	6.3
6.4	Substantive resolutions voted on a poll	Yes	6.4
6.5	Facilitate electronic communications	Yes	6.5
7.1	Risk committee (part of is Audit and Risk Committee, refer to 4.1 above)	Yes	7.1
7.2	Annual risk review	Yes	7.2
7.3	Internal audit	No	7.3
7.4	Material environmental or social risks disclosed	Yes	7.4
8.1	Remuneration committee	No	8.1
8.2	Disclosure of executive and non-executive director remuneration policy	Yes	8.2
8.3	Policy on hedging equity incentive schemes	Yes	8.3
9.1 to 9.3 Not applicable

ASX CORPORATE GOVERNANCE PRINCIPLES

The following is a summary of the 9 Corporate Governance Principles, including comments where applicable on the Recommendations, and extracts from the policies adopted by the Company which demonstrate how compliance has been achieved.

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Corporate Governance Statement

PRINCIPLE 1: Lay solid foundations for management and oversight

1.1 CHARTER FOR THE BOARD OF DIRECTORS

An important and basic corporate governance policy is the Charter for the Board of Directors, which is regularly reviewed. The Charter is a composite document which deals with all of the ASX principles of good corporate governance and is available on the Company's website.

The Charter, as supported by the Directors' Code of Conduct detailed at Principle 3, sets out the following requirements:

• The role of the Board;
• The responsibilities of the Board;
• The Board structure;
• The skills required on the Board; and
• The Directors' general roles.

The Board is responsible for the overall corporate governance of the Company including its strategic direction, establishing goals and responsibilities for management and monitoring the achievement of these goals.

The goals of the corporate governance processes are to:

1. maintain and increase shareholder value;
2. ensure a prudential and ethical basis for the Company's conduct and activities; and
3. ensure compliance with the Company's legal and regulatory objectives.

The Board seeks to identify the expectations of the security holders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to discharge its responsibilities, it has established guidelines for the nomination and selection of directors and for the operation of the Board. To assist in the execution of its responsibilities, the Board has established an Audit and Risk Committee. The Company currently has three committee members, all are non-executive directors and two are independent directors.

The responsibility for the operation and administration of the Company is delegated, by the Board, to the Managing Director ("MD") (where appointed) and executive management team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the MD and the executive management team, which will be undertaken annually.

Whilst there is ongoing interaction between the Board and management, the Board functions independently of management to establish the policy framework of the Company from which management works to perform the daily functions of the business.

The Board is responsible for ensuring that management's objectives and activities are aligned with the expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved including:

The Board's roles and responsibilities

The primary responsibilities of the Board include:

• Demonstrating leadership;
• Approving strategic objectives designed to meet stakeholders' needs and manage business risk;
• Defining the Company's purpose and setting the strategic objectives and approving initiatives and strategies designed to ensure the continued growth and success of the entity;
• Approving the Company's statement of values and code of conduct to underpin the desired culture within the Company;
• Overseeing management develop strategic and business plans to achieve those strategic objectives, instilling the Company's values and performance generally;
• Implementing budgets by management and monitoring progress against budget - via the establishment and reporting of both financial and non-financial key performance indicators;

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Corporate Governance Statement

• Appointing the Chair of the Board;
• Appointing and reviewing the performance, remuneration of, and succession plans of the Executive/Managing Director (if appointed) and Company Secretary;
• Setting the criteria for Board membership, continuity, succession plans and reviewing the composition of the Board;
• Conducting an annual review of the Board Charter;
• Establishing the long-term goals of the Company, and working with management to implement strategic and business plans to achieve those goals;
• Monitoring implementation of the Company's strategic and business plans and its financial performance;
• Appointing, and reviewing the performance and remuneration of, the senior management team, ensuring a clear relationship between performance and remuneration policies;
• Ensuring remuneration policies are aligned with the Company's purpose, values, strategic objectives and risk appetite;
• Satisfying itself that an appropriate framework exists for relevant information to be reported by management to the Board;
• Whenever required, challenging management and holding it to account;
• Approving major corporate initiatives;
• Enhancing and protecting the reputation of the organisation;
• Approving the annual and interim financial reports;
• Approving the operational budget, including major capital expenditure, acquisitions and divestitures;
• Monitoring the progress of capital management, acquisitions and divestitures;
• Setting the risk appetite within which the Board expects management to operate;
• Ensuring that any significant business financial and non-financial risks that arise are identified, assessed, appropriately managed and monitored;
• Overseeing the Company's process for making timely and balanced disclosures of all material information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company's securities;
• Overseeing the Company's relationship and communications with security holders;
• Establishing and monitoring the Company's capital management strategy, including any dividend payments;
• Overseeing the integrity of the Company's accounting and corporate reporting systems, including appointing or removing the Company's external auditor;
• Approving and monitoring the effectiveness of the Company's system of corporate governance;
• Assessing the Company's funding requirements; and
• Monitoring borrowings from financial institutions.

At all times the Board retains full responsibility for guiding and monitoring the Company. Due to the size of the Board and Company, apart from an Audit and Risk committee, there are no other separate committees of the Board; the Board maintains full responsibility on matters of finance and treasury with assistance from the CFO.

Board Meetings

The Board holds 8 to 12 formal meetings a year. Additional meetings are held as required. A meeting is held each year to review and approve the strategy and financial plan for the next financial year.

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Corporate Governance Statement

Senior Management Team's Responsibilities

The senior management team is responsible for providing the Board with accurate, timely and clear information on the Company's operations to enable the board to perform its responsibilities. This is not limited to information on the financial performance of the Company, but also its compliance with material legal and regulatory requirements and any conduct that is materially inconsistent with the values or code of conduct of the Company.

Due to the Company's size and nature there is currently no Executive Director. The Board will review the need for an Executive Director annually. The Chief Financial Officer "CFO" and Key Executives (if appointed) ("senior management team") are responsible for running the affairs of the Company under delegated authority from the Board and for implementing the policies and strategy set by the Board. In carrying out their responsibilities, the senior management team must report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company's financial position and operational results. Clear lines of communication between the Chair and the senior management team are established and both consult with the Chair, in the first place, on matters which are sensitive, extraordinary or of a strategic nature.

The role of the senior management team is to implement the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board. The senior management team is responsible for the implementation of the Company's strategic and business plans, and instilling and reinforcing its values, all the while operating within the values, code of conduct, budget and risk appetite set by the board. The senior management team are not involved in the setting of the Company's strategic and business plans.

Independent professional advice

In fulfilling their duties, the Directors may obtain independent professional advice at the Company's expense.

1.2 APPOINTMENT OF DIRECTORS

The full Board is responsible for establishing criteria for Board membership, reviewing Board membership and identifying and nominating directors. Board membership is reviewed annually to ensure the Board has an appropriate mix of qualifications, skills and experience. External advisors may be used to assist in this process.

The Company undertakes appropriate checks before appointing a person or putting forward to shareholders a candidate for election as a director of the Company. The Company endeavours to provide the following information on a potential director to shareholders to enable the shareholders to make an informed decision as to the candidate's character, experience, education, criminal record and bankruptcy history:

• 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 thecandidate;
• 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 undertaken on the candidate;
  • 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 act in the best interests of the Company and its shareholders; 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 it supports the election or re-election of the candidate.

The Company has also developed an informal induction program suitable for new directors and senior management.

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