Rubicon Asset Management Limited (Rubicon) is committed to achieving and demonstrating the highest standards of accountability and transparency and sees the continued development of a cohesive set of corporate governance policies as fundamental to its successful growth. The Board of Rubicon (Board) is responsible for establishing and instituting a system of corporate governance that operates in the best interests of its stakeholders, including unitholders in unlisted funds and listed property trusts (Rubicon Funds) for which Rubicon acts as a responsible entity.

The ASX Corporate Governance Council has developed a set of guidelines entitled Corporate Governance Principles and Recommendations. These guidelines articulate eight core principles that the Council believes underlie good corporate governance.

The corporate governance practices of Rubicon and the Rubicon Funds comply with the Corporate Governance Principles and Recommendations with the exception of two recommendations. The reasons for the departures on two recommendations can be accessed by clicking here.

• Board Charter
• Board Committees
• Market Disclosure Policy
• Code of Conduct and Code of Professional Conduct (the Code of Conduct)
• Appointment of External Auditor and Audit Independence Policy

The Company substantially complies with the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations released in March 2003. It departs from two of these recommendations where it is in the Company’s best interests. Reasons for these departures are explained below.

Recommendation 2.2 of the ASX Corporate Governance Council states: The chairperson of the board should be an independent director.

Recommendation 2.3 of the ASX Corporate Governance Council states: The roles of chairperson and chief executive officer should not be exercised by the same individual.

The chairperson is an Executive Director of Rubicon rather than an independent director. However, the Board believes that its current composition is appropriate for the following reasons:

• the directors have extensive experience in and understanding of the industry in which the Rubicon Funds and Rubicon operate;
• appropriate conflict of interest policies are in place to ensure material personal interests are disclosed and dealt with;
• the ARMCC, which is comprised of 3 independent directors, is responsible for monitoring Rubicon’s compliance with all laws and regulations in its capacity as responsible entity of the Rubicon Funds; and
• any director is entitled to seek independent professional advice, at Rubicon’s expense, on any matter connected with the discharge of his responsibilities.

The Board has adopted a formal Board Charter which details the functions and responsibilities of the Board and distinguishes such functions and responsibilities from those which have been delegated to management. The management of the business of Rubicon is to be conducted under the supervision of the Executive Chairman and by other officers and employees to whom management function is properly delegated. The Board, together with the Executive Chairman, will develop and maintain a definition of the limits to management’s responsibilities. The Board Charter states that at least half of the Board is to be constituted with individuals who qualify as unrelated or independent directors. The Board is responsible for the management of the affairs of Rubicon Funds, including:

• providing strategic direction and deciding upon Rubicon Funds' business strategies and objectives;
• monitoring the operational and financial position and performance of RAT;
• identifying the principal risks faced by RAT and monitoring the effectiveness of systems designed to provide reasonable assurance that these risks are being managed; and
• overseeing and evaluating the performance of key personnel in the context of Rubicon Funds' strategies and objectives, approving other key executive appointments, and planning for executive succession.

The Board has established two committees to assist in the execution of its duties and to allow detailed consideration of complex issues:

• Audit Risk and Compliance Committee; and
• Related Party Committee.

The Board reviews the committee structure and membership on an annual basis. Minutes of committee meetings are tabled at the immediately subsequent Board meeting.

Audit, Risk and Compliance Committee (the ARMCC)

The Audit Risk and Compliance Committee comprises:

Ray Kellerman (Chairman);
David Simpson; and
Peter Barnes.

The ARMCC comprises the non-executive directors of Rubicon. The ARMCC members have appropriate financial expertise and all members have a working knowledge of the financial services industry in which Rubicon operates.

The responsibilities of the ARMCC pursuant to its Charter include reviewing the following matters relating to the Rubicon Funds:

• the scope and quality of the external audit;
• the financial reporting procedures, including accounting policies;
• financial management, including management of Rubicon Funds’ funding, hedging, liquidity and insurance coverage;
Rubicon Funds’ internal financial control systems, risk management policies and risk management systems;
• compliance with Rubicon Funds’ Compliance Plan obligations, Constitution and the Act; and
• business practices and policies.

Related Party Committee (RPC)

The Board has established the RPC. Pursuant to the RPC Charter, the RPC is responsible for reviewing contracts, transactions or other dealings between Rubicon Funds and any other related party to ensure that the terms of such transactions are no more favourable than would reasonably be expected of transactions negotiated on an arm's length basis and such transactions occur within a normal business relationship.

Any situation that arises which may give rise to a perceived or actual conflict of interest will be referred to the RPC.

As a result of the acquisition of Rubicon Holdings (Aust) Limited, the ultimate holding company of Rubicon became Allco Finance Group Limited ("Allco") from 19 December 2007. From this date all transactions involving related parties are considered by both the Rubicon RPC and the Allco Related Party Committee.

Membership of the Rubicon RPC is confined to independent directors of Rubicon. The Rubicon RPC comprises:

David Simpson (Chairman);
Peter Barnes; and
Ray Kellerman.

The members of the Allco RPC are independent directors of Allco.

To keep with continuous disclosure requirements pursuant to the Act and the Listing Rules, Rubicon has adopted a Market Disclosure Policy to ensure that all key stakeholders (including unitholders in Rubicon Funds) have equal and timely access to material information concerning the listed Rubicon Funds (unless it falls within the scope of the limited exemptions contained in Listing Rule 3.1A). Material information is assessed on the basis of both qualitative and quantitative criteria. Some matters may not appear to be quantitative material information, but if their omission or non-disclosure has the potential to adversely affect the decision of unitholders regarding their investments, they may still be assessed as quantitative material information.

All external communications are reviewed before issue with the aim of ensuring:

• factual accuracy;
• no omissions of material information; and
• they are timely and expressed in a clear and objective manner.

Rubicon does not release any information publicly that is required to be disclosed through the ASX until it has received formal confirmation of its release by the ASX.

At all times when interacting with external individuals, investors, stock broking analysts, the media and market participants, directors and employees must adhere to the principles set out in the policy.

The ARMCC is responsible for monitoring all company disclosure practices and for making recommendations to the Board on updating the Market Disclosure Policy in response to changes in company structure, legislation and technology developments.

The Code of Conduct clarifies and documents the principles that regulate Rubicon’s activities, as well as provides all staff members with a guide to compliance with legal and other obligations to its stakeholders, particularly unitholders in Rubicon Funds. The Code of Conduct has been designed to ensure that high standards of corporate and individual behaviour are observed by all staff members (employees, officers and directors including non-executive directors). The Code of Conduct requires all staff members, among other things to:

• act honestly and fairly in all business transactions and dealings with others;
• treat other employees, contractors, clients, competitors, and all other persons with utmost courtesy and respect;
• avoid conflicts of interest between their personal interests and those of the unitholders of Rubicon Funds and Rubicon;
• ensure that they do not take advantage of opportunities arising from their position for personal gain or in competition with Rubicon Funds or Rubicon;
• conduct their activities with the highest degree of integrity, professionalism and fair dealing and at all times act with due skill, care and diligence;
• adhere to a policy of equal employment opportunity regardless of beliefs, gender, age, sexual orientation, race or physical ability;
• ensure that they do not make improper use of any confidential information and set a high standard of fairness, diligence and competency;
• comply with regulatory environment, company policies including the Staff Products Dealing Policy; and
• report any actual or potential breach of the law, the Code of Conduct or other company policies.

Rubicon has appointed PricewaterhouseCoopers as the external auditor for the Rubicon Funds.

The external auditor has been appointed to audit Rubicon Funds’ financial accounts and compliance plans.

To promote independence, Rubicon has established an Audit Independence Policy which requires that

• the audit firm is prohibited from having a financial interest in any entity with a controlling interest in Rubicon or the Rubicon Funds;
• the audit firm engagement team in any given year cannot include a person who has been an officer of Rubicon during that year;
• the audit firm, its partners and its employees involved in the Rubicon Funds’ audit and their immediate family members are prohibited from having material indirect investments or a business relationship with Rubicon or the Rubicon Funds unless the relationship is clearly insignificant; and
• the external auditor attends all ARMCC meetings, at which the Rubicon Funds’ financial statements are reviewed and recommended to the Board for approval.

The performance of the external auditor is reviewed annually. It is the policy of the external auditor to provide to the Audit, Risk and Compliance Committee an annual declaration of its independence.