Carsales com : FY22 Corporate Governance Report

Corporate Governance Statement 2022

Introduction

The Board of carsales.com Ltd (the Company) is responsible for the governance of the Company and its controlled entities (the Group).

The Board is committed to achieving and demonstrating the highest standards of corporate governance and transparency, and ensuring that good corporate governance is a fundamental part of the culture and business practice of the Group.

The Board also continually reviews the governance framework and practices of the Company to ensure that they meet the interests of all stakeholders.

A description of the Group's main corporate governance practices are set out in this report.

All of these practices, unless otherwise stated, were in place for the entire year and comply with the ASX Corporate Governance Principles and Recommendations (Fourth Edition).

Principle 1 - Lay solid foundations for management and oversight

Recommendation 1.1

Board charter and responsibilities

The Board adopted a formal charter in July 2012 (updated in July 2022) which details its functions and responsibilities.

A copy of the Board Charter is available in the Investor Centre of the Company website at https://shareholder.carsales.com.au/charters/.

The Board's responsibilities, as detailed in the Board Charter include:

• protecting and enhancing the value of the assets of the Company (which incorporate the assets of the Group);
• setting the strategic direction of the Company and monitoring and reviewing strategic objectives;
• reviewing and ratifying internal controls, codes of conduct and legal compliance;
• reviewing the Company's accounts;
• reviewing and approving the operating budget and strategic plan for the Company;
• evaluating performance and determining the remuneration of the Managing Director;
• ensuring the significant risks facing the Company have been identified and adequate control monitoring and reporting mechanisms are in place;
• approval of transactions relating to acquisitions, divestments and capital expenditure above delegated authority limits;
• approval of financial and dividend policy; and
• appointment of the Managing Director.

Matters specifically reserved for the Board

The Board has reserved for itself the following matters, which are in addition to any matters expressly required by law or other regulation to be approved by the directors:

• setting the corporate objective of the Company and approving business strategies and plans of the Company designed to meet that objective;
• reviewing the composition of the Board and Board Committees, the independence of directors, the Board's performance and carrying out succession planning for the Chair and other non-executive directors;
• reviewing the performance of management and the Company, including in relation to corporate governance, risk management, internal controls and compliance frameworks, systems, policies and processes adopted by the Company including in relation to the safety, health and wellbeing of all employees;
• appointing and removing the Managing Director and carrying out succession planning for the Managing Director as applicable;
• reviewing the performance of the Managing Director, his/her remuneration and contractual arrangements;
• appointing and removing Senior Executives on the recommendation of the Managing Director;
• reviewing the remuneration of Senior Executives on the review and recommendation of the Managing Director;
• appointing and removing the Company Secretary;
• dealing with any matters in excess of any specific delegations that the Board may from time to time delegate to the Managing Director and Senior Executives; and
• approving the communication to shareholders and to the public of the half-year and full-year results and generally any public statements which reflect issues of the Company's policy or strategy that the Board deems material.

Relationship between directors and management

Subject to the Company's constitution and matters specifically reserved for the directors, the directors delegate responsibility for day-to-day management of the Company to the Managing Director. The non-executive directors do not participate in the day-to-day affairs or management of the Company.

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Role of the Chair

The role of the Chair is set out in the Board Charter and includes being responsible for managing the Board effectively, providing leadership to the Board and being the interface with the Managing Director.

The Chair has the authority to act and speak for the Board and liaise with the Company's stakeholders between meetings, subject to any agreed consultation processes.

The performance of the Chair is assessed by the Board annually.

Role of the Managing Director

The Managing Director has responsibility for the day-to-day management of the Company, providing leadership and managing and overseeing the interfaces between the Company and the public and acts as the principal representative for the Company.

Recommendation 1.2

Appointment & re-election of Board members

The Company has developed a 'Procedure for the selection and appointment of directors' which is made publicly available in the Investor Centre of the Company website at https://shareholder.carsales.com.au/charters/.

In addition to the specific skills, knowledge and experience deemed necessary for a suitable candidate, consideration is given to:

• the extent to which the candidate is likely to contribute to the overall effectiveness of the Board and work constructively with the existing directors;
• the integrity of the candidate;
• whether the candidate would be prepared to question, challenge and offer critiques;
• whether the candidate has a proven track record of creating value for shareholders;
• a commitment by the candidate to the highest standards of governance;
• the nature of existing positions held by the candidate including directorships or other relationships and the impact that each may have on the candidate's ability to exercise independent judgment; and
• whether the candidate will bring an independent point of view to the Board's decision-making process.

The People and Culture Committee ensures that appropriate checks are undertaken prior to appointing a director. These checks may include references and police checks.

Fulsome details of each director put forward by the Company to shareholders for election or reelection are contained in the relevant Notice of Annual General Meeting of Shareholders.

Recommendation 1.3

Terms of appointment

The appointment of any new director is made by, and in accordance with, a formal letter of appointment which details the key terms and conditions relative to that appointment, including:

• term of appointment, and the requirement to stand for election at the next Annual General Meeting following appointment, and at least every three years thereafter;
• time commitment expected;
• duties and responsibilities;
• remuneration;
• disclosure obligations; and
• confidentiality.

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On appointment, all Senior Executives of the Company sign formal employment contracts setting out the terms of their employment and notice period. A summary of the terms of employment for Senior Executives who are key management personnel of the Company is included in the Remuneration Report in the 2022 Annual Report available in the Investor Centre of the Company website at https://shareholder.carsales.com.au/financial/accounts-and-reports/.

Management of conflicts and declaration of interests

The Company has and follows strict procedures for the management of any real or potential conflicts of interests involving directors. These procedures comply with Corporations Act requirements and are designed to ensure that conflicted directors do not take part in the discussion or decision-making process on potential conflict-causing issues. On this basis, it is believed that a director who may be conflicted on a particular matter is able to maintain his or her independence on all other issues.

Directors are required to take all reasonable steps to avoid actual, potential or perceived conflicts of interests. The Corporations Act and the Company's constitution require directors to disclose any conflicts of interest and, in certain circumstances, to abstain from participating in any discussion or voting on matters in which they have a material personal interest.

It is expected that directors will be sensitive to actual and perceived conflicts of interest that may arise and it is something to which they are expected to give ongoing consideration in view of the dynamic and rapidly changing nature of the Company's business.

The Board has developed procedures which must be followed:

• by a director who believes he or she may have a conflict of interest or material personal interest;
• for the holding of or the continuation of a meeting where it is proposed that a meeting will discuss any matter which gives rise or may give rise to a conflict or a real sensible possibility of a conflict of interest; and
• for the monitoring and reporting of a director's interest to ensure that the company complies with the obligations pursuant to the Corporations Act and the ASX Listing Rules.

The Company maintains a register of director's interests that all directors are required to keep up to date with any related parties to themselves and other interests that may be relevant to the Company.

Entities connected with the directors that had material business dealings with the Group during the year are described in the 2022 Annual Report which is available in the Investor Centre of the Company website at https://shareholder.carsales.com.au/financial/accounts-and-reports/.In accordance with the Board Charter, the directors concerned declared their interests in those dealings to the Company and took no part in decisions relating to them or the preceding discussions. In addition, those directors did not receive any papers from the Company pertaining to those dealings.

Access to independent professional advice

The Board and each Board committee has authority to retain, at the Company's expense, such legal, accounting or other advisers, consultants or experts as it considers necessary from time to time in the performance of its duties.

An individual director may engage separate independent counsel or advisors at the expense of the Company in appropriate circumstances, in consultation with the Chair or by resolution of the Board.

Recommendation 1.4

Company Secretary accountability

The Company Secretary, Ms Nicole Birman, is directly accountable to the Board and reports to the Chair in respect of all matters of Board operation. All directors are able to communicate directly with the Company Secretary and vice versa.

The role of the Company Secretary includes:

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