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 six recommendations. The reasons for the departures on two recommendations can be accessed by clicking here.

• Board Charter
• Board Committees
• Continuous Disclosure Policy
• Risk Management 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 of these recommendations where it is in the Company’s best interests or where Rubicon is currently unable to comply. Reasons for these departures are explained below.

Recommendation 2.1 of the ASX Corporate Governance Council Principles states that: "A Majority of the board should be independent directors".

The Board of Rubicon currently comprises three directors with only one director (Mr David John Simpson) being independent. Mr David John Simpson does not provide any services to Rubicon and is assessed by the Board of Rubicon to be independent. Rubicon has not, as yet, been in a position to appoint additional independent directors to the Board.

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 1 independent director, 1 independent committee member and 1 executive director, is responsible for monitoring Rubicon’s compliance with all laws and regulations in its capacity as responsible entity of the Rubicon Funds; and
• director and independent committee members are entitled to seek independent professional advice, at Rubicon’s expense, on any matter connected with the discharge of his/her responsibilities.

Recommendation 2.4 of the ASX Corporate Governance Council Principles suggests that the Board should establish a Nominations Committee.

The Board has elected not to establish a Nominations Committee on the basis that it is only a relatively small Board and is able to efficiently carry out the functions which would otherwise be delegated to a Nomination Committee.

Board and Board Committees performance

Recommendation 2.5 of the ASX Corporate Governance Council Principles requires disclosure of the process for evaluating the performance of the Board, its committees and individual directors.

A Nomination Committee will generally be responsible for assessing competencies of Board members, reviewing Board succession plans, evaluating Board performance and making recommendations for the appointment and removal of directors. However, the ASX Corporate Governance Council recognises that efficiencies from having the Nomination Committee in the examination of selection and appointment practices may not be apparent to smaller boards.

It is Rubicon’s practice to allow its Executive Directors to accept appointments outside the company, with the prior approval of the Board. Prior to an appointment or being submitted for re-election, each Non-Executive Director is required to specifically acknowledge that they have, and will continue to have, the time available to discharge their responsibilities to Rubicon.

Recommendation 4.2 of the ASX Corporate Governance Council Principles suggests that the ARMCC:

• consists only of non-executive directors;
• consists of a majority of independent directors;
• is chaired by an independent chair who is not a chair of the board; and
• has at least 3 members.

The Rubicon’s ARMCC established by the Board currently consists of:

• Two independent members; and
• One Rubicon executive Director.

As noted above while the ARMCC is comprised of a majority of external members, they are not all directors and there is one Rubicon executive on the committee.

As the Trusts were a member of the S&P/ASX 300 at the beginning of its financial year, the Trusts were obliged to comply with the ASX Corporate Governance Council Principles regarding the composition, operation and responsibility of the audit committee. The Trusts ceased to comply with the ASX Corporate Governance Council Principles relating to the audit committee upon the resignation of its first independent director on 7 November 2008. As noted above, Rubicon has not, as yet, been in a position to appoint additional independent directors to the Board.

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 of Rubicon currently comprises three directors with only one director (Mr David John Simpson) being independent. Mr David John Simpson does not provide any services to Rubicon and is assessed by the Board of Rubicon to be independent. Rubicon has not, as yet, been in a position to appoint additional independent directors to the Board. The Board is responsible for the management of the affairs of Rubicon Funds, including:

• strategic direction and deciding upon Rubicon Funds' business strategies and objectives;
• monitoring the operational and financial position and performance of the Trusts;
• identifying the principal risks faced by the Trusts 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.

Procedure for selection and appointment of directors and re-election of incumbent directors:

At least half of the Board of Directors is to be constituted with individuals who qualify as unrelated or independent Directors and so ensure that the Board can bring, and be perceived to bring, quality judgments, free of bias, to all issues. Board Committees will be composed of at least a majority of independent Directors.

An unrelated or independent Director is one who is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act with a view to the best interests of Rubicon and, in particular, is one who:

• is not a member of management;
• is not a substantial shareholder of Rubicon or an officer of or otherwise associated directly or indirectly with a substantial shareholder of Rubicon ;
• has not within the last three years been employed in an executive capacity by Rubicon or another group member or been a director after ceasing to hold any such employment;
• is not a principle of a professional adviser to Rubicon or another group member;
• is not a significant customer of Rubicon or another group member other than as a director of Rubicon; or
• is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of Rubicon.

A specially designated committee will annually review the Board’s required mix of skills, experience and other qualities. The Board will annually review the allocation of work of Rubicon between the Board and executives of Rubicon.

Policy for nomination and appointment of directors:

Before accepting appointment, non-executive directors will be formally advised of the reasons why they have been asked to join the Board and given an outline of what the Board expects of them. They will also be advised of their rights as a director, including their access to Rubicon and employees of Rubicon and access to information and resources. They will also be advised of their entitlement to obtain independent professional advice or other advice at the cost of the company.

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:

David John Simpson (Chairman);
Fiona Dixon (Independent Committee Member); and
Mathew Cooper (Executive Director).

The ARMCC consists of two independent members and one Rubicon executive Director. The ARMCC members have appropriate financial expertise and all members have a working knowledge of the financial services industry in which Rubicon operates.

The Committee’s prime objectives under its charter are:

• Overseeing accounting, tax and compliance policies, practices and disclosures;
• The integrity of financial statements and reports;
• The scope, quality and independence of external audit arrangements;
• Monitoring compliance with the risk management framework;
• The adequacy of Rubicon’s insurance cover;
• Overseeing compliance of managed investments, investment schemes, other funds and areas, including the Trust; and
• Monitoring compliance with licensing requirements and legal obligations and exchange listing rules.

Related Party Committee (RPC)

The RPC had, up until recently, comprised the three independent directors. Following the resignation of two independent directors, the RPC currently comprises one independent director, Mr David John Simpson. Rubicon is currently reviewing the composition of this committee as to whether additional members could be sourced and appointed. The role of the RPC is to review contracts, transactions and other dealings between Ru and any related party to ensure that the terms are at arms length, consistent with a normal business relationship, and comply with regulatory requirements in relation to related party dealings.

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.

Rubicon’s Board has ultimate responsibility for risk management. To assist the Board in discharging its corporate governance obligations in respect of overall risk management and control, the Board has established an Audit Risk Management and Compliance Committee.

The Audit Risk Management and Compliance Committee oversee and report to the Board on the operation of Rubicon’s Managed Investment Schemes (Schemes). The Committee meets on a quarterly basis in order to monitor compliance and risk management systems with the Schemes’ compliance plans and to report on their findings to Rubicon Asset Management Limited (Responsible Entity).

The Risk Management Policy is approved by the Board of Rubicon to govern the management of risk in Rubicon and its controlled entities. Risks are managed through the risk management framework in place and include:

• Strategic risk
• Operational risk
• Legal and regulatory compliance risk
• Reputation risk
• Credit risk
• Market risk
• Equity risk
• Financial risk
• liquidity risk

The Board and Management are committed to the following risk management principles:

• A culture and set of processes that appropriately balance risk and reward;
• Risk will be managed on a proactive rather than reactive basis;
• Rubicon will carefully identify, quantify and assess all material risks faced by the business;
• Prudential limits will be set and respected;

Continuous review of key risks will be undertaken and adverse developments promptly reported to the Board;

The Board has approved a Transactional Risk Management Policy (TRMP). The TRMP documents a rigorous set of guidelines and procedures for the analysis of transactional risks and clearly defines responsibilities for managing transactional and portfolio risks.

Rubicon’s Risk Management Policy and underlying procedures and practices are reviewed annually by the Audit Risk Management and Compliance Committee the Audit Risk Management and Compliance Committee reports to the Board on the continued application and relevance of the Risk Management Framework. The Executive Director also meets with the Executive Managers to review the implementation and effectiveness of this policy on an annual basis.

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.