MESOBLAST LIMITED Corporate Governance Council Principles and Recommendations
Name of entity
Mesoblast Limited |
ABN/ARBN | Financial year ended: | |
109 431 870 | 30 June 2021 |
Our corporate governance statement1 for the period above can be found at:2
☐ | These pages of our annual report: | |
☒ | This URL on our website: | www.mesoblast.com/company/corporate-governance |
The Corporate Governance Statement is accurate and up to date as at 29 October 2021 and has been approved by the board.
The annexure includes a key to where our corporate governance disclosures can be located.3
Date: | 29 October 2021 |
Name of authorised officer authorising lodgement: | Silviu Itescu |
1 "Corporategovernancestatement"isdefinedinListingRule19.12tomeanthestatementreferredtoinListingRule4.10.3which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reportingperiod.
Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period.
UnderListingRule4.7.4,ifanentitychoosestoincludeitscorporategovernancestatementonitswebsiteratherthaninitsannual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX.Thecorporategovernancestatementmustbecurrentasattheeffectivedatespecifiedinthatstatementforthepurposesof Listing Rule4.10.3.
Under Listing Rule 4.7.3, an entity must also lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX. The Appendix 4G serves a dual purpose. It acts as a key designed to assist readers to locate the governance disclosures made by a listed entity under Listing Rule 4.10.3 and under the ASX Corporate Governance Council's recommendations.Italsoactsasaverificationtoolfor listedentitiestoconfirmthattheyhavemetthedisclosurerequirementsof Listing Rule4.10.3.
The Appendix 4G is not a substitute for, and is not to be confused with, the entity's corporate governance statement. They serve different purposes and an entity must produce each of them separately.
2 Tickwhicheveroptioniscorrectandthencompletethepagenumber(s)oftheannualreport,ortheURLofthewebpage,where your corporate governance statement can be found. You can, if you wish, delete the option which is notapplicable.
3 Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes "OR" at the end of the selection and you delete the other options, you can also, if you wish, delete the "OR" at the end of theselection.
See notes 4 and 5 below for further instructions on how to complete this form.
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 1 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ANNEXURE - KEY TO CORPORATE GOVERNANCE DISCLOSURES
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
PRINCIPLE 1 - LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT | |||
1.1 | A listed entity should have and disclose a board charter setting out: (a) the respective roles and responsibilities of its board and management;and (b) those matters expressly reserved to the board and those delegated tomanagement. | ☒ and we have disclosed a copy of our board charter at: https://www.mesoblast.com/company/corporate-governance/role-and-composition-of-the-board | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
1.2 | A listed entity should: (a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect adirector. | ☒ | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
1.3 | A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. | ☒ | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
1.4 | The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. | ☒ | ☐set out in our Corporate Governance Statement OR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
4 Tick the box in this column only if you have followed the relevant recommendation in full for the whole of the period above. Where the recommendation has a disclosure obligation attached, you must insert the location where that disclosure has been made, where indicated by the line with "insert location" underneath. If the disclosure in question has been made in your corporate governance statement, you need only insert "our corporate governance statement". If the disclosure has been made in your annual report, you should insert the page number(s) of your annual report (eg "pages 10-12 of our annual report"). If the disclosure has been made on your website, you should insert the URL of the web page where the disclosure has been made or can be accessed (eg "www.entityname.com.au/corporate governance/charters/").
5 If you have followed all of the Council's recommendations in full for the whole of the period above, you can, if you wish, delete this column from the form and re-format it.
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 2 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
1.5 | A listed entity should: (a) have and disclose a diversity policy; (b) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally;and (c) disclose in relation to each reportingperiod: (1) the measurable objectives set for that period to achieve genderdiversity; (2) the entity's progress towards achieving those objectives;and (3) either: (A) the respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined "senior executive" for these purposes);or (B) if the entity is a "relevant employer" under the Workplace Gender Equality Act, the entity's most recent "Gender Equality Indicators", as defined in and published under thatAct. If the entity was in the S&P / ASX 300 Index at the commencement of the reporting period, the measurable objective for achieving gender diversity in the composition of its board should be to have not less than 30% of its directors of each gender within a specified period. | ☐ and we have disclosed a copy of our diversity policy at: https://mesoblast.com/company/corporate-governance/key-policies. [insert location] and we have disclosed the information referred to in paragraph (c) at: …………………………………………………………………………….. [insert location] and if we were included in the S&P / ASX 300 Index at the commencement of the reporting period our measurable objective for achieving gender diversity in the composition of its board of not less than 30% of its directors of each gender within a specified period. | ☒set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
1.6 | A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors;and (b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of thatperiod. | ☒ and we have disclosed the evaluation process referred to in paragraph (a) at: https://www.mesoblast.com/company/corporate-governance/board-committees-and-charters and whether a performance evaluation was undertaken for the reporting period in accordance with that process at: 2021 Corporate Governance Statement | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 3 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
1.7 | A listed entity should: (a) have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and (b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of thatperiod. | ☒ and we have disclosed the evaluation process referred to in paragraph (a) at: A of the Form 20-F contained within Mesoblast's Annual Report 2021 and whether a performance evaluation was undertaken for the reporting period in accordance with that process at: 2021 Corporate Governance Statement | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 4 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
PRINCIPLE 2 - STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE | |||
2.1 | The board of a listed entity should: (a) have a nomination committeewhich: (1) has at least three members, a majority of whom are independent directors;and (2) is chaired by an independent director, anddisclose: (3) the charter of thecommittee; (4) the members of the committee;and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilitieseffectively. | ☒ and we have disclosed a copy of the charter of the committee at: www.mesoblast.com/company/corporate-governance/board-committees-and-charters and the information referred to in paragraphs (4) and (5) at: A of the Form 20-F contained within Mesoblast's Annual Report 2021 | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
2.2 | A listed entity should have and disclose a board skills matrix setting out the mix of skills that the board currently has or is looking to achieve in its membership. | ☒ and we have disclosed our board skills matrix at: 2021 Corporate Governance Statement | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
2.3 | A listed entity should disclose: (a) the names of the directors considered by the board to be independentdirectors; (b) if a director has an interest, position, affiliation or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position or relationship in question and an explanation of why the board is of that opinion;and (c) the length of service of eachdirector. | ☒ and we have disclosed the names of the directors considered by the board to be independent directors at: 2021 Corporate Governance Statement and, where applicable, the information referred to in paragraph (b) at: 2021 Corporate GovernanceStatement and the length of service of each director at: 2021 Corporate GovernanceStatement | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 5 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
2.4 | A majority of the board of a listed entity should be independent directors. | ☒ | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
2.5 | The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. | ☒ | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
2.6 | A listed entity should have a program for inducting new directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. | ☒ | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
PRINCIPLE 3 - INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY | |||
3.1 | A listed entity should articulate and disclose its values. | ☒ and we have disclosed our values at: https://mesoblast.com/company/corporate-governance/code-of-conduct-and-values | ☐set out in our Corporate GovernanceStatement |
3.2 | A listed entity should: (a) have and disclose a code of conduct for its directors, senior executives and employees;and (b) ensure that the board or a committee of the board is informed of any material breaches of thatcode. | ☒ and we have disclosed our code of conduct at: https://mesoblast.com/company/corporate-governance/code-of-conduct-and-values | ☐set out in our Corporate GovernanceStatement |
3.3 | A listed entity should: (a) have and disclose a whistleblower policy;and (b) ensure that the board or a committee of the board is informed of any material incidents reported under that policy. | ☒ and we have disclosed our whistleblower policy at: https://mesoblast.com/company/corporate-governance/key-policies | ☐set out in our Corporate GovernanceStatement |
3.4 | A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the board or committee of the board is informed of any material breaches of thatpolicy. | ☒ and we have disclosed our anti-bribery and corruption policy at: https://mesoblast.com/company/corporate-governance/key-policies. | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 6 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
PRINCIPLE 4 - SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS | |||
4.1 | The board of a listed entity should: | ☒ | ☐set out in our Corporate GovernanceStatement |
(a) have an audit committeewhich: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors;and (2) is chaired by an independent director, who is not the chair of theboard, and disclose: | and we have disclosed a copy of the charter of the committee at: www.mesoblast.com/company/corporate-governance/board-committees-and-charters and the information referred to in paragraphs (4) and (5) at: A of the Form 20-F contained within Mesoblast's Annual Report 2021 | ||
(3)the charter of thecommittee; | |||
(4)the relevant qualifications and experience of the members of the committee;and | |||
(5)in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings;or | |||
(b)if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagementpartner. | |||
4.2 | The board of a listed entity should, before it approves the entity's financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. | ☒ | ☐set out in our Corporate GovernanceStatement |
4.3 | A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. | ☒ | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 7 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
PRINCIPLE 5 - MAKE TIMELY AND BALANCED DISCLOSURE | |||
5.1 | A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under listing rule 3.1. | ☒ and we have disclosed our continuous disclosure compliance policy at: https://mesoblast.com/company/corporate-governance/key-policies | ☐set out in our Corporate GovernanceStatement |
5.2 | A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. | ☒ | ☐set out in our Corporate GovernanceStatement |
5.3 | A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. | ☒ | ☐set out in our Corporate GovernanceStatement |
PRINCIPLE 6 - RESPECT THE RIGHTS OF SECURITY HOLDERS | |||
6.1 | A listed entity should provide information about itself and its governance to investors via its website. | ☒ and we have disclosed information about us and our governance on our website at: www.mesoblast.com/company/corporate-governance | ☐set out in our Corporate GovernanceStatement |
6.2 | A listed entity should have an investor relations program that facilitates effective two-way communication with investors. | ☒ | ☐set out in our Corporate GovernanceStatement |
6.3 | A listed entity should disclose how it facilitates and encourages participation at meetings of security holders. | ☒ and we have disclosed how we facilitate and encourage participation at meetings of security holders at: 2021 Corporate Governance Statement | ☐set out in our Corporate GovernanceStatement |
6.4 | A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. | ☒ | ☐set out in our Corporate GovernanceStatement |
6.5 | A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. | ☒ | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 8 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
PRINCIPLE 7 - RECOGNISE AND MANAGE RISK | |||
7.1 | The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors;and (2) is chaired by an independent director, anddisclose: (3) the charter of thecommittee; (4) the members of the committee;and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity's risk management framework. | ☒ and we have disclosed a copy of the charter of the committee at: www.mesoblast.com/company/corporate-governance/board-committees-and-charters and the information referred to in paragraphs (4) and (5) at: A of the Form 20-F contained within Mesoblast's Annual Report 2021 | ☐set out in our Corporate GovernanceStatement |
7.2 | The board or a committee of the board should: (a) review the entity's risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risk appetite set by the board;and (b) disclose, in relation to each reporting period, whether such a review has takenplace. | ☒ and we have disclosed whether a review of the entity's risk management framework was undertaken during the reporting period at: 2021 Corporate Governance Statement | ☐set out in our Corporate GovernanceStatement |
7.3 | A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs;or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its governance, risk management and internal controlprocesses. | ☒ and we have disclosed the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes at: 2021 Corporate Governance Statement | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 9 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
7.4 | A listed entity should disclose whether it has any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks. | ☒ and we have disclosed whether we have any material exposure to environmental and social risks at: | ☐set out in our Corporate GovernanceStatement |
D of the Form 20-F contained within Mesoblast's Annual Report | |||
2021 | |||
and, if we do, how we manage or intend to manage those risks at: | |||
D of the Form 20-F contained within Mesoblast's Annual Report | |||
2021 |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 10 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
PRINCIPLE 8 - REMUNERATE FAIRLY AND RESPONSIBLY | |||
8.1 | The board of a listed entity should: (a) have a remuneration committeewhich: (1) has at least three members, a majority of whom are independent directors;and (2) is chaired by an independent director, anddisclose: (3) the charter of thecommittee; (4) the members of the committee;and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and notexcessive. | ☒ and we have disclosed a copy of the charter of the committee at: www.mesoblast.com/company/corporate-governance/board-committees-and-charters and the information referred to in paragraphs (4) and (5) at: A of the Form 20-F contained within Mesoblast's Annual Report 2021 | ☐set out in our Corporate Governance StatementOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
8.2 | A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. | ☒ and we have disclosed separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives at: A of the Form 20-F contained within Mesoblast's Annual Report 2021 | ☐set out in our Corporate Governance Statement OR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
8.3 | A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme;and (b) disclose that policy or a summary ofit. | ☒ and we have disclosed our policy on this issue or a summary of it at: https://mesoblast.com/company/corporate-governance/key-policies | ☐set out in our Corporate Governance StatementOR ☐we do not have an equity-based remuneration scheme and this recommendation is therefore not applicableOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 11 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
ADDITIONAL RECOMMENDATIONS THAT APPLY ONLY IN CERTAIN CASES | |||
9.1 | A listed entity with a director who does not speak the language in which board or security holder meetings are held or key corporate documents are written should disclose the processes it has in place to ensure the director understands and can contribute to the discussions at those meetings and understands and can discharge their obligations in relation to those documents. | ☐ and we have disclosed information about the processes in place at: ……………………………………………………………………… [insert location] | ☐set out in our Corporate Governance StatementOR ☒we do not have a director in this position and this recommendation is therefore not applicableOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
9.2 | A listed entity established outside Australia should ensure that meetings of security holders are held at a reasonable place and time. | ☐ | ☐set out in our Corporate Governance StatementOR ☒we are established in Australia and this recommendation is therefore not applicableOR ☐we are an externally managed entity and this recommendation is therefore notapplicable |
9.3 | A listed entity established outside Australia, and an externally managed listed entity that has an AGM, should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. | ☐ | ☐set out in our Corporate Governance StatementOR ☒we are established in Australia and not an externally managed listed entity and this recommendation is therefore notapplicable ☐we are an externally managed entity that does not hold an AGM and this recommendation is therefore not applicable |
ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES | |||
- | Alternative to Recommendation 1.1 for externally managed listed entities: The responsible entity of an externally managed listed entity shoulddisclose: (a) the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity; and (b) the role and responsibility of the board of the responsible entity for overseeing thosearrangements. | ☐ and we have disclosed the information referred to in paragraphs (a) and (b) at: …………………………………………………………………………….. [insert location] | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 12 |
Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
Corporate Governance Council recommendation | Where a box below is ticked,4we have followed the recommendation in full for the whole of the period above. We have disclosed this in our Corporate Governance Statement: | Where a box below is ticked, we have NOT followed the recommendation in full for the whole of the period above. Our reasons for not doing so are:5 | |
- | Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities: An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager. | ☐ and we have disclosed the terms governing our remuneration as manager of the entityat: …………………………………………………………………………….. [insertlocation] | ☐set out in our Corporate GovernanceStatement |
ASX Listing Rules Appendix 4G (current at 17/7/2020) | Page 13 |
CorporateGovernanceStatement
Mesoblast Limited (the Company or Mesoblast) and its Board of Directors(theBoard)arecommittedtoimplementingandachievingan effectivecorporategovernanceframeworktoensurethattheCompany ismanagedeffectivelyandinanhonestandethicalway.
A description of the Company and its controlled entities'(together,theGroup)corporategovernance practicesaresetoutbelow.Allofthesepractices, unlessotherwisestated,wereinpracticeforthefinancial year ended 30 June 2021 and comply with the ASX Corporate Governance Council's (Council) Corporate Governance Principles and Recommendations, fourth edition (theASXCGPR).
The information in this statement is current as at 29 October 2021 and has been approved by the Board.
This statement includes cross references to the Company's charters, policies and codes, relevant copies or summaries of which are available in the Corporate Governance section of the Company's website,www.mesoblast.com.Further,thisstatement should be read in conjunction with the Directors' Report, the Remuneration Report and the Financial Reportforthefinancialyearended30June2021as thesereportsalsocontaininformationrequiredtobe includedbytheASXCGPR.TheDirectors'Reportcanbe found at Part 1 on the Form 20-F contained within our Annual Report (principally Item 4.B and Item 5.A), the RemunerationReportcanbefoundatItem6oftheForm 20-F contained within the 2021 Annual Report, and the Financial Report can be found at Item 18 of Form 20-F contained within the 2021 AnnualReport.
PRINCIPLE 1.
LAY SOLID FOUNDATIONS FORMANAGEMENT AND OVERSIGHT
ROLE OF THE BOARD
The Board is primarily responsible for setting the strategic direction and corporate governance of the Group, and for overseeing the management and operations of the Group. In particular, the principal roles and responsibilities of the Board are to:
• | facilitateaccountabilitytotheGroupandits shareholders; |
• | ensure timely reporting toshareholders; |
• | provide strategic guidance to management, includingcontributingtothedevelopmentand review of corporatestrategy; |
• | oversee management of the Group and ensure thereareeffectivemanagementprocessesinplace; |
• | appoint,remove(ifnecessary)andmonitorthe performance of the ChiefExecutive; |
• | reviewtheperformanceoftheBoard,individual DirectorsandthecommitteesoftheBoard; |
• | monitor: |
- | organizationalperformanceandtheachievement oftheGroup'sstrategicgoalsandobjectives; |
- | financialperformanceincludingapprovalofthe annual,half-yearandquarterlyfinancialreports, and liaison with the Company'sauditors; |
- | progressofmajorcapitalexpenditureandother significant corporate projects including any acquisitions ordivestments; |
- | compliancewiththeGroup'scorporategovernance policies and procedures;and |
- | progress in relation to the Group's diversity objectivesandcompliancewithitsdiversitypolicy; |
• | review and approve business plans, the annual budget and financial plans (including available resourcesandmajorcapitalraisingorexpenditure initiatives); |
• | approve major corporateinitiatives; |
• | enhance and protect the reputation of the Group includingthroughtheGroup'sstatementofvalues and code ofconduct, |
• | overseetheoperationoftheGroup'ssystemfor compliance and risk management;and |
• | ensureappropriateresourcesareavailableto seniormanagement. |
The Board operates in accordance with the broad principles set out in its charter, which provides a framework for the Board's effective operation.
The charter specifically addresses the following:
• | role,authorityandresponsibilitiesoftheBoard; |
• | Boardcommittees; |
• | Board composition and election of theChair; |
• | Directors' rights andduties; |
• | responsibilitiesofanddelegationstomanagement; |
Mesoblast Limited Corporate Governance Statement 2021 | 1 |
• | performance of the Board;and |
• | role of a CompanySecretary. |
Asummaryofthecharterisavailableat www.mesoblast.com.
BOARD COMMITTEES
TheBoardhasdelegatedspecificauthoritytotwo committees. These committeesare:
• | theNominationandRemunerationCommittee;and |
• | the Audit and RiskCommittee. |
The respective roles and responsibilities of these committees are set out in each Board Committee CharterandsummarizedinPrinciple2andPrinciple4 of this statement,respectively.
ROLE OF MANAGEMENT
Day to day management of the Group's operations and the implementation of the corporate strategy and policy initiatives are delegated by the Board to the Chief Executive and the executive team.
Specific limits of authority delegated to the Chief Executiveandseniorexecutiveteamareoutlinedina formaldelegationofauthoritypolicy,whichhasbeen approved by theBoard.
DIRECTOR SELECTION AND APPOINTMENT
The Company conducts appropriate checks before itappointsapersonorputsforwardtoshareholdersa newcandidateforelectionasaDirector.Theseinclude checks as to the person's character, experience, education,criminalrecord,bankruptcyhistory,probity and any other relevantmatters.
The Company also provides shareholders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a Director in the notice of meeting provided to shareholders. This includes information relevant for shareholders to be able to assess each Director's skills and competencies, industry experience, time commitments,currentdirectorships,andotherrelevant information in their consideration of that election, including any other interest, position or relationship that might influence on their ability to bear on issues beforetheBoardandtoactinthebestinterestsofthe Companyasawholeratherthanintheinterestsofan individual shareholder or otherparty.
WRITTEN AGREEMENTS WITH DIRECTORSAND SENIOR EXECUTIVES
TheCompanyhasawrittenagreementwitheach Directorandseniorexecutivesettingouttheterms of theirappointment.
Therolesandresponsibilitiesofeachnon-executive Director is set out in their letter of appointment, whichtheDirectorreceivesandcommitstoontheir appointment. The letter of appointment specifies thetimecommitment,expectationsinrelationto committee work or any other special duties attaching totheDirector'sposition,reportinglines,remuneration arrangements,disclosureobligationsinrelationto
personal interests, confidentiality obligations, insurance and indemnity entitlements and details of the Company's key governance policies. A copy of the governance policies are available at www.mesoblast.com.
Each executive Director and senior executive has enteredintoaservicecontractthatsetsoutthematerial termsofemployment,includingadescriptionofposition andduties,reportinglines,remunerationarrangements and termination rights and entitlements. Further details onarrangementswhichapplytoeachexecutiveDirector and those senior executives who are designated key managementpersonnelcanbefoundinItem6of Form 20-F contained within our Annual Report.
COMPANY SECRETARY
The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the properfunctioningoftheBoard.TheCompanySecretary assists the Board in its effectiveness by monitoring that Board policies and procedures are followed and by coordinating the timely completion and dispatch of the Board agenda and supporting papers. The Directors have direct access to the Company Secretary who regularlycommunicateswiththemthroughemail, by telephone and in in-person meetings.
DIVERSITY
The Group values diversity and recognizes the benefits that diversity can bring to the organization's ability to achieve its goals. Diversity can lead to a competitive advantage through broadening the talent pool for recruitment of high quality employees, by encouraging innovation and improving a corporation's professionalismandreputation.Accordingly,theGroup is committed to promoting diversity within the Group and has adopted a formal policy outlining the Group's diversityobjectives.
Acopyofthediversitypolicyisavailableat www.mesoblast.com.
Withrespecttogenderdiversity,theGrouphasset the followingobjectives:
1) | aimtoincreasethenumberofwomenonthe |
Board as vacancies arise and circumstances permit;
2) | aimtoincreasethenumberofwomenwhohold senior executive positions as vacancies arise and circumstances permit;and |
3) | ensure the opportunity exists for equal gender participationinalllevelsofprofessionaldevelopment programs. |
The Group is committed to developing a workplace that promotes diversity by acting in fairness and without prejudice. The Group's policy is to recruit and manage on the basis of competence and performance regardless of age, nationality, race, gender, religious beliefs,sexuality,physicalabilityorculturalbackground. Accordingly,theGrouphasnotestablishedmeasurable objectives or number targets for achieving gender diversity.
2 | Mesoblast Limited Corporate Governance Statement 2021 |
The following table reports the Group's progress towardsachievingitsgenderdiversityobjectivesfor points one and two above. In regard to point three, theGroupensuredthatanequalopportunityexisted for gender participation in all levels of professional developmentprogramsduringthefinancialyear.
Forcompleteness,asat30June2021,theGroup had83employees,ofwhich45(54%)werefemale.
Category | Number of women as at 30 June 2021 | Number of women as at 30 June 2020 | Increase/ (Decrease) | |||
Board of Directors | 1 | 1 | - | |||
Senior executive positions* | 2 | 4 | (2) |
*Aseniorexecutivepositionisoneheldbyanexecutivewho reportsdirectlytotheChiefExecutive.Approximately30%of seniorexecutivepositionsareheldbywomen.Thereduction in numbers of female senior executives is due (in part) to changesinreportinglines,resultinginCEOdirectreports being reduced from fifteen to seven.
TheBoardisconsciousofthegenderimbalanceatboard level(withonlyoneofthesevennon-executivedirectors being female) and has an objective to increase this numberasvacanciesariseandcircumstancespermit.
TheBoardhasdelegatedtheresponsibilityforreviewing andreportingondiversity,specificallygenderdiversity, totheNominationandRemunerationCommittee.
BOARD PERFORMANCE EVALUATION
The performance of the Board, its committees, individual Directors and senior management is reviewed periodically. A copy of the Group's performance evaluation process is available at www.mesoblast.com. A performance evaluation wasundertakeninaccordancewiththatprocessthis financialyear.Thisreviewencompassesfeedbackon the Chair and individual non-executive Directors as wellasconsiderationofBoardsuccessionplanning, diversity, and the breadth and sufficiency of skills represented on the Board. The results of the review were discussed by the Board, for the purpose of confirmingthattheBoardcontinuestofunctionin an appropriate manner.
The Board also carries out informal performance monitoringsessionsateachin-personmeetingofthe Board(ortheircurrentvirtualequivalents).Inaddition, Directors are encouraged to raise any issues or concern regarding the performance of the Board, Board committees or individual Directors with the Chair,oriftheconcernrelatestotheChair,withthe Chair of the Audit and Risk Committee.
SENIOR EXECUTIVE PERFORMANCE EVALUATION
The process for assessing performance of the Chief Executiveandtheseniorexecutiveteamisdescribed intheRemunerationReport.Aperformanceevaluation forseniorexecutives,whichaccordswiththeprocess described in the Remuneration Report, was undertakenwithrespecttothefinancialyearended 30 June2021.
PRINCIPLE 2.
STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE
NOMINATION AND REMUNERATION COMMITTEE
The Board has established a Nomination and RemunerationCommitteetoassistitinthedischarge of its responsibilities, and in particular to ensure that appointments to the Board are subject to formal, rigorousandtransparentproceduresinordertocreate anenvironmentwheretheBoardcancarryouteffective and responsible decision making and oversight. The main responsibilities of the committee areto:
• | conduct reviews of the membership of the Board having regard to present and future needs of the CompanyandtomakerecommendationsonBoard composition, appointments andreappointments; |
• | conductreviewsanddeterminetheindependence of eachDirector; |
• | propose candidates for Boardvacancies; |
• | overseeannualexecutiveperformanceevaluations, includingrecommendationsforlongandshortterm incentivegrantsaswellaspayreviews; |
• | oversee Board succession, including the succession oftheChair,andreviewwhethersuccessionplansare inplacetomaintainanappropriatelybalancedmixof skills,experienceanddiversityontheBoard; |
• | managetheprocessesinrelationtomeetingBoard diversityobjectives; |
• | overseeseniormanagementsuccessionplans;and |
• | assesstheeffectivenessoftheBoardinduction process. |
The Nomination and Remuneration Committee operatesinaccordancewithitscharterwhichsetsout its roles and responsibilities, composition, structure and membership requirements. A summary of the NominationandRemunerationCommitteecharter is available at www.mesoblast.com.
ThefollowingindependentDirectorsarethemembers of the Nomination and Remuneration Committee as at 30 June2021:
Name | Position held during the year | |
Donal O'Dwyer | Independent chair | |
William Burns | Independent member | |
Michael Spooner | Independent member | |
Shawn Tomasello | Independent member |
The details of the meetings attended by each member oftheNominationandRemunerationCommitteeduring thefinancialyearended30June2021aresetoutinA of Form 20-F contained within our Annual Report.
Mesoblast Limited Corporate Governance Statement 2021 | 3 |
BOARD SKILLS MATRIX
TheCompanyhasdevelopedaskillsmatrixsettingout the mix of skills and diversity that the Board currently has or is looking to achieve in its membership. The skillsmatrixhelpstoidentifyanygapsinthecollective skillsoftheBoardthatcanthenbeaddressedthrough professional development initiatives for Directors and inBoardsuccessionplanning.TheNominationand RemunerationCommitteeregularlyreviewsitsskillmatrix to make sure it covers the skills needed to address existing and emerging business andgovernance issues relevant to the Company.
The skills and experience that the Board has, and continuestoaddtoitsmembership,areintheareas of, but not limitedto:
• | Industry experience: pharmaceutical/ biotechnology productdevelopment-substantialexperienceinthe druginvestigation,testinganddevelopmentprocess; |
• | Industry experience: pharmaceutical/biotechnology commercialization and regulatory - substantial experience in the drug commercialization process including clinical trials and path to regulatory and pricingapproval; |
• | Industry experience: pharmaceutical/biotechnology manufacturing and supply - substantial experience in the global manufacturing, quality control and supply of approved pharmaceutical products; |
• | Executivemanagementandleadership:substantial experienceinmanagingandleadingorganizations at senior executive and boardlevels; |
• | Globalbusiness/commercialexperience:substantial experienceinseniorexecutiverolesforbusinesses operating across multiple globallocations; |
• | Strategy:substantialexperienceinthedevelopment andimplementationofstrategicdirectionandplans to deliver investor returns overtime; |
• | Corporate financing, mergers and acquisitions: substantialexperienceincapitalraisings,mergers andacquisitionsofcompaniesandcomplementary technologies; |
• | Financialandriskmanagement:expertiseand experience in audit, financial accounting and reporting,internalcontrols,financialdisclosure and industrytaxation; |
• | Human resources: substantial experience in stakeholdermanagement,oversightofremuneration, incentives, equity programs, benefits, employment contracts and workplace health andsafety; |
• | Corporate governance: substantial experience in publicentitydisclosure,managementoversightand inquiry, listing rules and compliance;and |
• | Medical/healthcareleadership:substantialleadership experience in healthcare organizations and/or integrated healthcaredelivery. |
Each of these skills is well represented on the Board.
INDEPENDENT DIRECTORS
WiththeexceptionofourChiefExecutive,theBoard iscomprisedofindependentDirectors,namely:
• | Mr WilliamBurns; |
• | Mr DonalO'Dwyer; |
• | Dr EricRose; |
• | Mr MichaelSpooner; |
• | Mr Joseph R.Swedish; |
• | Ms Shawn Cline Tomasello;and |
• | Mr Philip J.Facchina. |
A Director is considered independent if they are a non-executive Director and are free of any interest, position, association or relationship that might influence,orreasonablybeperceivedtoinfluence,ina materialrespecttheircapacitytobringanindependent judgementtobearonissuesbeforetheBoard.The BoardconsidersthefactorssetoutintheASXCGPRand outlined below when assessing the independence of eachnon-executiveDirector,beingwhethertheDirector:
• | is,orhasbeen,employedinanexecutivecapacityby theGroupandtherehasnotbeenaperiodofatleast three years between ceasing such employment and serving on theBoard; |
• | receivesperformancebasedremuneration(including optionsorperformancerights)from,orparticipatesin anemployeeincentiveschemeof,theentity; |
• | is,orhaswithinthelastthreeyearsbeen,apartner, director,senioremployeeorconsultantofaprovider ofmaterialprofessionalservicestotheGroup; |
• | is,orhasbeenwithinthelastthreeyears,inamaterial business relationship (eg, as a supplier, professional advisor, consultant or customer) with the Group, or is anofficerof,orotherwiseassociatedwith,someonein such arelationship; |
• | is,represents,orisorhasbeenwithinthelastthree years an officer or employee of, or professional adviserto,asubstantialsecurityholderoftheGroup; |
• | hasamaterialcontractualrelationshipwiththeGroup other than as aDirector; |
• | has close personal ties, which may be based onfamily,friendship,orothersocialorbusiness |
connections,withanypersonwhofallswithinanyof the categories described above;or
• | hasbeenaDirectoroftheCompanyforsuchaperiod that their independence from management and substantialholdersmayhavebeencompromised. |
TheBoardatleastannuallyassessestheindependence ofitsnon-executiveDirectors.Toenablethisassessment ofindependence,theCompanymaintainsaconflicts ofinterestregister,andtheDirectorsmustprovideall informationthatmayberelevanttotheassessment.
4 | Mesoblast Limited Corporate Governance Statement 2021 |
As part of its annual assessment of independence forthefinancialyearended30June2021,theBoard gave specific considerationto:
• | thefactthatournon-executiveDirectorshavereceived options under our employee incentivescheme; |
• | the independence of Mr Spooner, who performed the roleofExecutiveChairfromAugust2005toNovember 2007, at which time he resigned but remained a Director, and also due to Mr Spooner having a tenure of 16 years and 9 months as at 30 June 2021 (with 13 years and 7 months as a non-executive Director); |
• | the independence of Mr O'Dwyer with a tenure on the Board of 16 years and 9 months as at 30 June 2021; and |
• | the independence of Mr Facchina, who is Chief Strategy Officer of SurgCenter Development. SurgCenter Development is not a security holder in Mesoblast.However,someofitsprincipalswerelead investors in Mesoblast's successful US$110 million privateplacementcompletedinMarchthisyear. |
Withrespecttotheoptionspreviouslygrantedtonon- executive Directors, it is the Board's view that these options will not interfere with the Director's capacity tobringanindependentjudgementtobearonissues beforetheBoardandtoactinthebestinterestsofthe Group as a whole. It is noted that the options granted tonon-executiveDirectors,unlikeotheroptionsgranted to employees, are not subject to any performance or service conditions orhurdles.
With respect to Mr Spooner's former role as Executive Chair and his continuation on the Board, the Board maintainstheviewthatheremainsanindependent DirectoronthebasisthattheGrouphassignificantly expandeditsoperationssinceheheldanexecutive role more than ten yearsago.
WithrespecttoMrSpoonerandMrO'Dwyer'stenureon theBoard,theBoardconsiderseachoftheseDirectors to be independent Directors on the basis that each continues to bring valuable expertise, independent judgement and has not formed associations with management or others that might compromise their abilitytofulfiltheirroleasanindependentDirector.
With respect to Mr Facchina, the Board considers that MrFacchinabringsindependentjudgement,experience andexpertisetotheBoardonbehalfofallshareholders and that he does not represent the interests of any particularshareholderorgroupofshareholders.
CHAIR
TheChairisresponsibleforleadingtheBoardandfor theefficientorganizationandconductoftheBoard.
The role of the Chair more specifically is to ensure Directors are properly briefed in all matters relevant to their role and responsibilities, to facilitate Board discussions and to manage the Board's relationship with the Chief Executive and executive team. In accepting the position, the Chair has acknowledged thattherolewillrequireasignificanttimecommitment and has confirmed that other positions held will not hinder his effective performance in the role of Chair. The Chair, Mr Joseph R. Swedish, is considered an independentDirector.
TERM OF OFFICE
TheCompany'sconstitutionspecifiesthatnoDirector, excepttheChiefExecutive,mayholdofficeforaperiod in excess of three years, or beyond the third Annual General Meeting following the Director's election, whicheveristhelonger,withoutsubmittingthemselves forre-election.
TheterminofficeheldbyeachDirectorinofficeas at 30 June 2021 is asfollows:
Director | Term as director | Position held at 30 June 2021 | ||
Joseph Swedish | 3 years 4 months | Independent Chair | ||
William Burns | 7 years 7 months | Independent vice-Chair | ||
Silviu Itescu | 17 years 4 months | Executive Director | ||
Donal O'Dwyer | 17 years 1 month | Independent Director | ||
Michael Spooner | 17 years 1 month | Independent Director | ||
Eric Rose | 8 years 6 months | Independent Director | ||
Shawn Tomasello | 3 years 3 months | Independent Director | ||
Philip Facchina | 7 months | Independent Director |
BOARD INDUCTION AND PROFESSIONAL DEVELOPMENT
AllnewDirectorsparticipateinaninformalinduction program which covers the operation of the Board anditscommittees,andanoverviewoftheGroup's coreprograms,keystrategy,financialandrelevant operationaldocuments.Theinductionalsoincludes meetingswithexistingDirectorsandseniorexecutivesto ensureallrelevantandmaterialinformationisexplained thoroughly. The induction provided to new Directors enables them to actively participate in Board decision- making as soon aspossible.
TheBoardencouragesDirectorstoidentifyopportunities for, and to participate in, continuing education. The Board actively assesses relevant conferences and presentations that are appropriate for them to attend, particularly in the field of regenerative medicine, to heighten their understanding of the Group's core technologies andindustry.
In addition, presentations from management and externaladvisorsareincludedintheagendaforBoard meetingsthroughouttheyeartoassistwithkeepingthe Directors updated and informed on key developments in laws and the regulatoryenvironment.
Mesoblast Limited Corporate Governance Statement 2021 | 5 |
PRINCIPLE 3.
INSTIL A CULTURE OF ACTING LAWFULLY,ETHICALLY AND RESPONSIBLY
CODE OF CONDUCT AND VALUES
As part of its commitment to recognizing the legitimate interests of stakeholders, the Group has established a codeofconduct(Code),statementofvaluesandasuite of policies and procedures to guide all Directors and employeesinrespectofethicalandcompliantbehaviour expected by the Group. In summary, the Code requires that at all times all Company personnel act with the utmost integrity, objectivity and in compliance with the law and Company policies. More specifically, the Code covers thefollowing:
• | conflicts ofinterest; |
• | confidentiality; |
• | fairdealing; |
• | protection ofassets; |
• | compliance with laws andregulations; |
• | reporting violations of theCode; |
• | security trading;and |
• | commitments tostakeholders. |
AcopyoftheCodeandstatementofvaluescanbe found atwww.mesoblast.com.
OTHER POLICIES
Among its suite of policies and procedures, the CompanyhasanAnti-BriberyandAnti-CorruptionPolicy andprovidesassociatedtraininginrespectofthepolicy as well as the Code. In addition, the Company has a Disclosure of Complaints and Concerns Policy which addresses, among other things, breaches under the Company's Code, Anti-Bribery and Anti-Corruption Policy, or other Company policies. A copy of these policies can be found at www.mesoblast.com. The CompanyhasaprocessinplacetoinformtheBoard or a committee of the Board of any material breaches oftheAnti-BriberyandAnti-CorruptionPolicy,theCode and material incidents reported under the Disclosure of Complaints and ConcernsPolicy.
PRINCIPLE 4.
SAFEGUARDINTEGRITYOFCORPORATEREPORTS
AUDIT AND RISK COMMITTEE
TheBoardhasestablishedanAuditandRiskCommittee to which it has delegated the responsibility for ensuring thataneffectiveinternalcontrolframeworkexistswithin the Group. The main responsibilities of the Audit and RiskCommitteewithrespecttofinancialreportingareto:
• | review and assess the annual financial report, the half-year financial report, the Company's quarterly accountsandallotherfinancialinformationpublished bytheCompanyorreleasedtothemarket; |
• | recommend to the Board the appointment, removal andremunerationoftheexternalauditors,andreview thetermsoftheirengagement,thescopeandquality of the audit and assessperformance; |
• | considertheindependenceandcompetenceofthe external auditor on an ongoingbasis; |
• | review and approve the level of non-audit services providedbytheexternalauditorsandensureitdoes notadverselyimpactonauditorindependence; |
• | review and monitor related partytransactions; |
• | overseetheeffectiveoperationoftherisk managementframework; |
• | overseeandreviewtheCompany'scompliancewith the Disclosure of Complaints and Concerns policy by Mesoblastpersonnel; |
• | assisttheBoardinreviewingtheeffectivenessofthe organization'sinternalcontrolenvironmentcovering: |
- | effectivenessandefficiencyofoperationsand businessprocesses; |
- | safeguarding ofassets; |
- | reliabilityoffinancialreportingandmaintaining proper accounting records;and |
- | compliancewithapplicablelawsandregulations; and |
• | reporttotheBoardonmattersrelevanttothe committee's role andresponsibilities. |
Infulfillingitsresponsibilities,theAuditandRisk Committee:
• | receivesregularreportsfrommanagementand the externalauditors; |
• | meetswiththeexternalauditorsatleastfourtimes a year, or more frequently ifnecessary; |
• | reviews the processes which the Chief Executive andChiefFinancialOfficerhaveinplacetosupport their certifications to theBoard; |
• | reviewsanysignificantdisagreementsbetweenthe auditorsandmanagement,irrespectiveofwhether they have been resolved;and |
• | provides the external auditors with a clear line of directcommunicationatanytimetoeithertheChair oftheAuditandRiskCommitteeortheChairofthe Board.TheAuditandRiskCommitteehasauthority, within the scope of its responsibilities, to seek any information it requires from any employee or externalparty. |
TheAuditandRiskCommitteeoperatesundera formalcharterapprovedbytheBoardwhichsets outthecommittee'sroleandresponsibilities, composition, structure and membership requirements andtheproceduresforinvitingnon-committeemembers toattendmeetings.AfullcopyoftheAuditand Risk Committee charter can be found at www.mesoblast.com.
6 | Mesoblast Limited Corporate Governance Statement 2021 |
ThefollowingindependentDirectorsarethemembers oftheAuditandRiskCommitteeasat30June2021:
Name | Position held during the year | |
Michael Spooner | Independent chair | |
Donal O'Dwyer | Independent member | |
Joseph Swedish | Independent member |
AlloftheDirectorsarefinanciallyliterateandMichael Spooner has accountingqualifications.
Additionally,alltheDirectorshavevaluableandrelevant industry experience having served in the healthcare industryinseniorpositionsforanumberofyears.
Thedetailsofthemeetingsattendedbyeachmember of the Audit and Risk Committee during the financial year ended 30 June 2021 are set out in Item 6.A of Form20-FcontainedwithinourAnnualReport.
CHIEF EXECUTIVE AND CHIEF FINANCIALOFFICER DECLARATION
The integrity of the Company's financial reporting depends upon the existence of a sound system of riskoversightandmanagementandinternalcontrol.
Managementaccountabilityforthisisenhancedby theassurancesitisrequiredtogivetotheBoard.
TheChiefExecutiveandtheChiefFinancialOfficer provided assurance to the Board prior to release of theCompany'sfinancialstatementsinrespectofthe financialyearended30June2021that,intheiropinion:
• | thefinancialrecordsoftheCompanyforthefinancial year have been properly maintained in accordance withtheCorporationsAct2001(Cth);and |
• | the financial statements and notes for the relevant financialperiodcomplywiththeaccountingstandards and give a true and fair view of the financial position and performance of theGroup. |
The opinions of the Chief Executive and the Chief FinancialOfficerwereformedonthebasisofasound systemofriskmanagementandinternalcontrolwhich is operatingeffectively.
INTEGRITY OF PERIODIC CORPORATE REPORTS
TheCompanyhasapolicyandproceduresinplace to ensure that periodic corporate reports comply withrelevantdisclosureobligationsunderapplicable laws.AcopyoftheCompany'smarketdisclosureand shareholder communications policy can be found at www.mesoblast.com.
PRINCIPLE5.
MAKE TIMELY ANDBALANCED DISCLOSURE
CONTINUOUS DISCLOSURE
TheCompanyhasapolicyandproceduresinplaceto ensurethatitidentifiesanddisclosesanyinformation concerningtheGroupthatareasonablepersonwould expecttohaveamaterialeffectonthepriceofthe Company's securities (price sensitive information) in accordancewiththecontinuousdisclosurerequirements underASXListingRule3.1.TheCompany'spolicy in relation to market disclosure and shareholder communications can be found at www.mesoblast.com.
The Company has established an internal review committeewhichreviewsallmarketannouncements (otherthanroutineadministrativeannouncements)to ensuretheyarefactual,complywithlegalobligations, do not omit material information, provide a balanced view,andarepresentedinaclearandconciseway.
The Board receives copies of all material market announcementseitherpriortoorpromptlyafterthey have beenmade.
All price sensitive information disclosed to the ASX is posted on the Mesoblast website as soon as possible after it is disclosed to the ASX.
Where the Company holds a substantive investor or analystpresentation,includingforourquarterlyfinancial results,oronewhichcontainsmaterialnewinformation, the material used in the presentation is released concurrentlytotheASXandpostedonthe Mesoblast website.
PRINCIPLE 6.
RESPECT THE RIGHTS OF SECURITY HOLDERS
COMPANY WEBSITE
TheCompanyprovidesinformationaboutitselfandits governanceonitswebsiteatwww.mesoblast.com.
INVESTOR RELATIONS
Mesoblast's investor relations program involves scheduled and ad hoc interactions with institutional investors,privateinvestorsandsell-sideandbuy-side analysts to facilitate understanding of the Group's business, corporate strategy, governance, financial and operational performance andprospects.
Further,shareholderscancontactusatanytimethrough theGroup'sInvestorRelationsteam.Thecontact details are available on www.mesoblast.com. The BoardreceivesregularreportsfromourChiefExecutive and Chief Financial Officer regarding feedback from shareholders and analysts. This ensures Directors are aware of concerns being raised giving them a good understandingofcurrentmarketandshareholderviews.
Where possible, the Company arranges for advance notification of significant group briefings (including, but not limited to, financial results announcements) and makes them widely accessible. Webcasts of analysts' calls are generally available on our website at www.mesoblast.com.
SHAREHOLDER MEETINGS
TheBoardencouragesfullparticipationbyshareholders attheAnnualGeneralMeetingtoensureahighlevelof Directoraccountabilitytoshareholdersandtoenhance shareholders'identificationwiththeGroup'sstrategy and goals. The shareholders are requested to vote onmatterssuchastheadoptionoftheRemuneration Report, the granting of securities to Directors and changes to the Constitution. Importantly, Mesoblast facilitatesandencouragesshareholderparticipation attheAnnualGeneralMeetingbyprovidingaquestion forumatthemeetingtoaddressindividualshareholder queries.TheCompanydeterminedallresolutionsat its2020AnnualGeneralMeetingbypoll.TheBoard is
Mesoblast Limited Corporate Governance Statement 2021 | 7 |
committed to monitoring ongoing developments thatmayenhancecommunicationwithshareholders, includingtechnologydevelopments,andtheCompany held its first virtual AGM in 2020 as a result of the ongoing COVID-19restrictions.
COMMUNICATIONS
Mesoblast gives shareholders the option to receive communications from, and send communications to, Mesoblast and its security registry electronically.
PRINCIPLE 7.
RECOGNIZE AND MANAGE RISK
AUDIT AND RISK COMMITTEE
TheBoardisresponsibleforsatisfyingitselfannually, or more frequently as required, that management hasdevelopedandimplementedasoundsystem of risk management and internal control. Detailed work on this task is delegated to the Audit and Risk CommitteeandreviewedbythefullBoard.TheAudit andRiskCommitteeisresponsibleforensuringthere areadequatepoliciesinrelationtoriskmanagement, compliance and internal control systems. They monitortheGroup'sriskmanagementbyoverseeing management'sactionsintheevaluation,management, monitoring and reporting of material operational, financial, compliance and strategic risks. In providing this oversight of the Company's risk management systems and practices, thecommittee:
• | reviews the framework and methodology for risk identification, the degree of risk the Company is willingtoaccept,themanagementofriskandthe processesforauditingandevaluatingtheGroup's risk managementsystem; |
• | reviewsGroup-wideobjectivesinthecontextofthe abovementioned categories of corporaterisk; |
• | reviewsand,wherenecessary,approvesguidelines andpoliciesgoverningtheidentification,assessment andmanagementoftheGroup'sexposuretorisk; |
• | reviewsandapprovesthedelegationsoffinancial authorities and addresses any need to update theseauthoritiesonanannualbasis;and |
• | reviews compliance with agreedpolicies. |
The committee recommends any actions it deems appropriate to the Board for its consideration. Details of the committee's charter, composition, structure, membership and attendance of meetings by members can be found under Principle 4 of this statement.
RISK MANAGEMENT FRAMEWORK
The Group's internal risk management group, headedbytheChiefFinancialOfficer,isresponsiblefor designing, implementing, monitoring and reporting on the Group's management of material business risks, andtheeffectivenessoftheGroup'sriskmanagement and internal control system. The risk management groupreportsintotheAuditandRiskCommittee.
Riskandtheriskmanagementframeworkarereviewed atleastannuallybytheAuditandRiskCommittee.
Thisyear,theGroup'sriskmanagementframework wasassessedandenhancedinpartnershipwithan external risk managementexpert.
Furtherdetailonriskscanbefoundinthe'RiskFactors' section (Item 3.D) on the Form 20-F contained within our AnnualReport.
INTERNAL AUDIT FUNCTION
In light of the size and nature of the Company's operations and activities, the Company has not established a formal separate internal audit function. The Company does have, however, a Quality Management Department with appropriate controls in place for monitoring and compliance of clinical and non-clinicalstudiesaswellasmanufacturingoperations. The Company also has a compliance function which establishes the controls for and monitors compliance with the Company's Code, policies, and applicable healthcare-related laws andregulations.
AspartofourNasdaqlisting,wearerequiredtocomply with rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to section 302oftheSarbanes-OxleyActof2002.
To meet these requirements, the Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's management conducted an assessment of the effectiveness of its internal control over financial reporting as at 30 June 2021 and has concludedthatitsinternalcontroloverfinancialreporting was effective as at thatdate.
ENVIRONMENTAL AND SOCIAL RISKS
TheGroupmonitorsitsexposuretorisks,including environmental and socialrisks.
Mesoblast has previously undertaken an analysis to identify environmental and social issues which arematerialfromtheperspectiveoftheGroupand ourstakeholders.Theanalysiswasundertakenwith the help of an external consultant and drawing on theSustainabilityAccountingStandardsBoard's (SASB) Biotechnology Accounting Standard, and the Global Reporting Initiative's (GRI) G4 Guidelines for Sustainability Reporting. A range of potential issues were identified from these guidelines: Mesoblast's internal and external communications; the disclosures ofothercompaniesinthesector;themedia;andonline research.Theseissueswereprioritizedbasedontheir impactontheGroup'sbusinessandkeystakeholders.
8 | Mesoblast Limited Corporate Governance Statement 2021 |
Manyoftheissuesareassociateddirectlyorindirectly with risks reported in the 'Risk Factors' section (Item 3.D) on the Form 20-F contained within our Annual Report.AtthisstagetheBoarddoesnotconsider that the Group has any material exposure to any environmentalorsocialriskswhichisnotdisclosed through the 'Risk Factors'section.
TheCompanyisundertakingareviewofitspolicies andpracticesrelatingtoenvironmental,social,and governance factors relevant to theGroup.
PRINCIPLE 8.
REMUNERATEFAIRLYANDRESPONSIBLY
NOMINATION AND REMUNERATION COMMITTEE
As mentioned above at Principle 2, the Board has establishedacombinedNominationandRemuneration Committee. The Nomination and Remuneration Committee advises the Board on remuneration and incentive policies and practices generally and makes specific recommendations on remuneration packages andothertermsofemploymentforexecutiveDirectors, otherseniorexecutivesandnon-executiveDirectors.
Committeemembersreceiveregularbriefingsfroman externalremunerationexpertonrecentdevelopments onremunerationandrelatedmatters.Detailsof the committee's charter, role and responsibilities, composition, structure, membership and attendance of meetings by members can be found under Principle 2 of this statement.
NON-EXECUTIVEDIRECTORREMUNERATIONPOLICY
Non-executive Director remuneration consists of Director fees. In addition, certain non-executive Directorsweregrantedoptionsfollowingauthorization from shareholders at our 2018 and 2019 Annual GeneralMeetings.Theseoptionswerenotsubject toanyperformanceorservicehurdlesorconditions. Further, non-executive Director remuneration does notincludeanyperformance-basedremunerationor bonuses.Theissueofoptionstothenon-executive Directorsisnotintendedtobeanannualorregular event.
Further information on non-executive Directors' remunerationforthefinancialyearended30June2021, includingprinciplesusedtodetermineremuneration, is set out in the Remuneration Report.
EXECUTIVEDIRECTORANDSENIOREXECUTIVES' REMUNERATIONPOLICY
Executive remuneration consists of fixed pay, performance-based remuneration and equity-based remuneration, and is closely aligned to the success oftheGroup.Furtherinformationontheremuneration oftheExecutiveDirectorandseniorexecutivesforthe financialyearended30June2021,includingprinciples used to determine remuneration, is set out in the RemunerationReport.
SHARE TRADING POLICY
The Company has developed a share trading policy which governs the trading of the Company's shares by Directors, employees and key consultants of the Company-whocollectivelyareknownas'Mesoblast Personnel'.MesoblastPersonnelarenotpermittedto trade in the Company's securities during the period starting a week prior to the last business day of the month prior to the release of our quarterly financial results,andendingonedayafterthereleaseofthose financialresults.TheBoardmayalsoimposeblackout periods during other periods as advised bythe Board from time to time.
Inaddition,nopersonisabletotradeintheCompany's shares whilst in the possession of material inside information,andnoraretheyabletoinfluenceanyother personwithregardtotradingintheCompany'sshares.
ThesharetradingpolicyprohibitsMesoblastPersonnel from trading in the Company's derivatives. This prohibition is in place to prevent such personnel from limiting their economic exposure to risk arising out of an element of remuneration which has not vested, or whichhasvestedbutremainsthesubjectofadisposal restriction.
A copy of the Company's share trading policy can be found at www.mesoblast.com.
Mesoblast Limited Corporate Governance Statement 2021 | 9 |
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Mesoblast Limited published this content on 09 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 November 2021 11:22:06 UTC.
