Bell Financial : 22/02/2017 2016 Corporate Governance Statement and Appendix 4G

ASX RELEASE.‌

22 February 2017

ASX Market Announcements Office ASX Limited

20 Bridge Street

Sydney NSW 2000

Via ASX Online

2016 CORPORATE GOVERNANCE STATEMENT AND APPENDIX 4G

In accordance with the Listing Rules, please find attached for immediate release:

1. 2016 Corporate Governance Statement; and

2. Appendix 4G.

Cindy-Jane Lee

General Counsel & Company Secretary

2016 CORPORATE GOVERNANCE STATEMENT.

Dated: 22 February 2017

CORPORATE GOVERNANCE STATEMENT

for the year ended 31 December 2016

Bell Financial Group Limited (ASX:BFG) (Bell Financial) recognises the importance of good corporate governance. The ASX Corporate Governance Council (Council) Principles and Recommendations (ASX Recommendations) set out recommended corporate government practices for listed entities. While the ASX Recommendations are designed to achieve good corporate governance outcomes, the Council recognises that different entities may legitimately adopt different corporate governance practices based on a range of factors, including their size and complexity. The ASX Recommendations are therefore not mandatory, however where the Board of a listed entity does not follow a particular recommendation, it must explain why - the "if not, why not" approach.

Bell Financial has adopted the majority of the ASX Recommendations. Having regard to the structure, size and nature of the operations of Bell Financial, the Board considers that three recommendations are not appropriate to its particular circumstances and has identified these below.

As required under the ASX listing rules, a copy of this Corporate Governance Statement has been lodged with the ASX.

BOARD OF DIRECTORS Composition of the Board

The skills, experience and expertise of each Director is described in the Directors' Report section of the Annual Report. Each Director possesses significant financial acumen and has extensive experience in financial markets and financial services. The following table summarises the key skills and experience of the Directors:

Skills and experience	No. of Directors
Retail and institutional broking	6
Investment banking / equity capital markets	6
Financial acumen	6
Other financial services	6
Held CEO or similar position in financial organisation	6
Experience as a Non-Executive Director of at least 2 other listed entities	3

Chairman

The Chairman of the Board is not an independent Director. Colin Bell serves as the Executive Chairman. This represents a departure from the ASX Recommendations. The Board considers that this is in the best interests of Bell Financial given his experience, expertise and understanding of the business. Alastair Provan, Managing Director, has the primary responsibility for discharging the chief executive function including the day-to-day management of Bell Financial. In this way, the Executive Chairman is not distracted in performing the role of Chairman effectively.

Directors' independence

A Director is considered independent if their interests are not allied with the interests of management, they are not a substantial shareholder and they are free of any business or other relationship that could materially influence, or reasonably be perceived to materially influence, the independent exercise of their judgement. The Board Charter contains the principles used by the Board in assessing independence and is located at www.bellfg.com.au/corporategovernance.

During 2016, there were four Non-Executive Directors on the Board - Craig Coleman, Graham Cubbin, Brian Wilson and Brenda Shanahan. Mr Cubbin, Mr Wilson, and Ms Shanahan are independent Non-Executive Directors. The Board did not consider that Mr Coleman was an independent Director in 2016 as he provided consultancy services to Bell Financial in 2013.

CORPORATE GOVERNANCE STATEMENT

for the year ended 31 December 2016

The independent status of Directors may change over time and this will be disclosed to the market in a timely manner. As at the date of this document, the Board has an equal number of independent Directors and non- independent Directors, and a majority of Non-Executive Directors. The Board considers that it has the appropriate balance of experience, expertise and independence to enable it to discharge its functions effectively.

Independent professional advice

Directors are, after consultation with the Chairman, able to seek independent professional advice at Bell Financial's expense. Where appropriate, that advice will be made available to the Board.

Director education

Bell Financial has a formal process to educate new Directors about the nature of the business, current issues, corporate strategy and the expectations of Bell Financial concerning the performance of Directors. Directors also have the opportunity to meet with management to gain a better understanding of Bell Financial's business and operations. Directors are given access to continuing education opportunities to update and enhance their skills and knowledge.

BOARD RESPONSIBILITIES

The Board is responsible for the overall corporate governance of Bell Financial, which includes effective oversight of management. The Board has adopted a Board Charter which contains a description of the specific responsibilities reserved to the Board, which can be found at: www.bellfg.com.au/corporategovernance.

The Board Charter also describes the nature of matters delegated to senior executives, and includes a description of the respective roles of the Executive Chairman and the Managing Director. This description is designed to clearly identify the division of responsibility at the senior executive level of Bell Financial. The Managing Director has authority to sub-delegate to the senior executive team. Whilst the appointment of an Executive Chairman represents a departure from the ASX Recommendations, the Board is satisfied that the division of responsibility is clearly articulated and ensures appropriate accountability.

The Board is responsible for monitoring the senior executive team's performance. As part of the delegation of authority to manage the day-to-day affairs of Bell Financial, the Managing Director carries out a performance evaluation for senior executives regularly, against appropriate performance objectives and indicators. A performance evaluation for senior executives was carried out by the Managing Director in 2016.

BOARD COMMITTEES

The Board Charter contemplates that the Board may delegate certain functions to Board Committees to assist the Board in the discharge of its oversight role. These Committees are required to consider particular issues in detail and then report back to and advise the Board. The Board has established two standing Committees, the functions of which are discussed below. A copy of each Board Committee charter is located at www.bellfg.com.au/corporategovernance.

Group Risk and Audit Committee

The Group Risk and Audit Committee (GRAC) assists the Board to carry out its oversight role in relation to risk management, accounting, auditing and financial reporting. The core responsibilities of the GRAC include reviewing and where required providing recommendations to the Board on:

• the effectiveness of Bell Financial's risk management and internal control systems

• external financial reporting and financial statements

• the discharge of the internal audit function

• matters relating to the appointment, independence and performance of the external auditor, and the rotation of the external auditor.

The GRAC Charter stipulates that the Chair of the Committee must be an independent Non-Executive Director, who is not the Chairman of the Board. The Charter also stipulates that the Committee must be comprised of only Non-Executive Directors, a majority of independent Directors and have at least three members. During 2016, the members of the GRAC were Mr Cubbin (Chairman, independent Non-Executive Director), Ms Shanahan