Bendigo and Adelaide Bank Board Charter

The responsibilities of the Board are set out in this charter.

Except in relation to any matters reserved to the Board under this charter, responsibility for the day to day management of the company and its operations is delegated to the Managing Director. The Managing Director may delegate any of the powers of management to executive management but remains accountable to the Board for all delegated authorities.

Approve Bendigo and Adelaide Bank Group (the Group) strategy and financial objectives and monitor the implementation of those strategies and objectives. This includes the following.

• On at least an annual basis, reviewing the assumptions and rationale underlying the budget and reviewing approving the strategic priorities.
  
• Making sure there are adequate resources available to achieve the Group’s strategy and objectives.
  
• Monitoring management performance and progress against the strategies and objectives of the Group, including assessing the Group’s financial position and performance.
  
• Monitoring budgetary control and any corrective action required.
  
• Setting the Group’s risk appetite.
  

Decide the expenditure authorisation limits to be delegated to management and approve expenditure above those levels, and decide any other delegations to management.

Approve any significant changes in the organisational structure of the Group.

Make sure that Group policies and functions give appropriate regard to the regulated institution’s business and its specific requirements.

Approve investments and strategic commitments that may have a material effect on the assets, profits or operations of Bendigo and Adelaide Bank (including the acquisition or disposal of any significant business in the Group) and any material change in the nature of the business of the Group.

Monitor compliance with prudential regulations and standards.

Decide the capital structure of Bendigo and Adelaide Bank, including any issue of shares, options or other securities, any share buy-back, and any change in capital structure of the company.

Decide dividend policy and declare dividends to be paid to shareholders.

In addition to the policies specifically identified in this charter for approval or ratification, receive and consider any other new or revised policy of a nature that, in the opinion of the Managing Director, it should receive Board consideration.

Decide the standing Committees of the Board and any ad hoc Committees, which will assist the Board in discharging its responsibilities
Note: At the date of this charter, the following are the standing Committees of the Board.

• Audit Committee
  
• Risk Committee
  
• Credit Committee
  
• Governance and HR Committee
  
• IT Governance Committee

Decide the Charters and Procedural Rules for the standing Committees and terms of reference for any ad hoc Committees.

Decide the membership of the Committees.

On an annual basis, do each of the following.

• Review the Charters and Procedural Rules of each standing Committee, and make any amendments it considers necessary or desirable.
  
• Assess the performance of each standing Committee against its Charter and goals and objectives set the previous year.
  
• Approve the goals and objectives of each Committee for the coming year.
  
• Consider the overview from each Committee of changes to policies during the preceding year under delegated authority.
  

Receive and consider the minutes from each Committee at the next Board meeting following a Committee meeting.

Decide on the appointment and removal of the Managing Director.

Decide on the appointment and removal of the Company Secretary.

Decide on the appointment and removal of directors of subsidiary companies.

Elect the Chairman of the Board and the Deputy Chairman of the Board, at the first Board meeting after each annual general meeting.

Conduct an annual assessment of itself and individual directors in a manner the Board decides is appropriate (taking into account the recommendations of the Governance and HR Committee). The assessment is to compare the performance of the Board with the requirements of this charter and goals and objectives set the previous year. As part of the assessment, the Board is to set the goals and objectives of the Board for the coming year and to make any amendments it considers necessary or desirable to this charter.

Conduct an annual assessment of the independence of each non-executive director.

Review the assessments and recommendations of the Governance and HR Committee in relation to nomination matters and make decisions in relation to those recommendations.
Note: At the date of this charter, this encompasses recommendations in relation to the following.

• The appropriate size and composition of the Board, to make sure that the Board has the appropriate mix of skills, knowledge and experience.
  
• Board succession planning.
  
• A procedure for the selection of new directors to the Board.
  
• Criteria for the selection of Board candidates.
  
• Candidates for appointment to the Board, including in the case of a casual vacancy.
  
• The re-election of directors retiring by rotation.
  
• The removal of directors.
  
• A plan for identifying, assessing and enhancing director competencies on a continuing basis.
  

An annual assessment and recommendations in relation to the following.

• The skills, knowledge and experience currently represented on the Board to assess whether those current skills meet the requirements identified
  
• The time commitment required from non-executive directors and whether directors of the Board are meeting this requirement.
  
• Procedures to oversee the process for the assessment of individual director performance, Committee performance and Board performance, by the Board.
  

Review on a regular and continuing basis succession planning for the Board.

Review on an ongoing basis succession planning for the Managing Director and monitor succession planning for members of the Executive.

Review the recommendations of the Governance and HR Committee in relation to remuneration matters and make decisions in relation to those recommendations.
Note: At the date of this charter, this encompasses recommendations in relation to the following.

• The remuneration policy and the exercise of the Board’s discretion under the remuneration policy.
• The remuneration of the CEO, direct reports of the CEO, additional management personnel as identified in the Governance and HR Committee charter, and any other person specified by APRA..
  
• The remuneration of categories of persons covered by the remuneration policy not addressed on an individual basis.
  
• Equity schemes for executives and for employees.
  
• Any material changes to superannuation arrangements.
  
• The remuneration report to be contained in the annual report.
  
• The remuneration policy and remuneration of non-executive directors.
  
• The employment contract for the CEO and the pro forma terms of employment for executive committee members.

On an annual basis, set criteria for and review the performance of the Managing Director.

Review the recommendations of the Governance and HR Committee in relation to general governance matters and make decisions in relation to those recommendations.
Note: At the date of this charter, this encompasses recommendations in relation to the following.

• Changes to the governance practices of the Bendigo and Adelaide Bank that the Committee regards as necessary or desirable, having regard to developments in corporate governance.
  
• The corporate governance statement to be contained in the annual report.
  

Monitor the following.

• Compliance with the Bendigo and Adelaide Bank’s continuous disclosure policy. (refer Continuous Disclosure Policy)
  
• Trading in securities by directors. (refer Staff Trading Policy)
  
• Declarations of interest by directors.
  

Set corporate values and standards of conduct to promote ethical corporate and individual behaviour in the conduct of the business of Bendigo and Adelaide Bank.

Review the recommendations of the Governance and HR Committee in relation to human resources matters.
Note: At the date of this charter, this encompasses recommendations in relation to the following.

• Recruitment, retention and termination policies and procedures for executives, as developed by management.
  
• Other Human Resources policies brought forward to the Committee at the discretion of the Managing Director.
  
• Monitor reporting in relation to the Group’s OHS performance.
  
• Monitor developments in OHS and make recommendations to the Board on any changes to the OHS practices of the Bendigo and Adelaide Bank that the Committee regards as necessary or desirable.

Review the recommendations of the Audit Committee and make decisions in relation to those recommendations.
Note: At the date of this charter, this encompasses the following.

External audit

• Procedures, to apply across Bendigo and Adelaide Bank Group entities, for engagement of an external auditor and parameters for the engagement terms and remuneration.
  
• The appointment or removal of the Bendigo and Adelaide Bank auditor.
  
• Annual review of rotation of the Bendigo and Adelaide Bank audit engagement partner.
  
• Annual assessment of the performance of the Bendigo and Adelaide Bank auditor.
  
• Policy on auditor independence, rotation and provision of non-audit services.
  
• The independence of the Bendigo and Adelaide Bank external auditor
  
• The closing report by the Bendigo and Adelaide Bank external auditor in connection with the half-year and full year financial statements.

Internal audit

• Annual assessment of the performance, adequacy and independence of the internal audit function.
  
• The appointment and removal of the head of internal audit.

Statutory financial reporting

• Annual assessment of whether external reporting is consistent with Audit Committee members’ information and knowledge and is adequate for shareholder needs.
  
• Annual assessment of the management processes supporting external reporting.
  
• The half-year and full year financial statements for adoption.
  
• The CEO and CFO written statements on the financial statements and risk management.
  
• Any change in Group accounting policies.

Internal control

• Annual review of risk management and internal compliance and control systems in the Group.
  

Responsibilities – prudential and APRA

• Annual audit report on compliance with prudential requirements and prudential statistical returns for APRA.

Oversee the establishment, implementation, review and monitoring of risk management systems and policies for balance sheet and off-balance sheet risk, and for operational risk (including regulatory compliance and business continuity).

Oversee regulatory compliance.

Approve market risk limits over discretions delegated to the Risk Committee and management.

Receive any new or revised risk policies approved by the Risk Committee for approval.

Receive and consider any recommendations by the Risk Committee for changes to the Group “Risk Management Principles and Systems Description”.

Receive and consider reports from the Risk Committee.

Oversee the establishment, implementation, review and monitoring of credit risk management systems and policies.

Approve credit transactions or limits over discretions delegated to the Credit Committee and management.

Receive and consider reports from the Credit Committee.

Review the recommendations of the Committee and make decisions in relation to those recommendations.
Note: At the date of this charter, this encompasses recommendations in relation to the following

• Overall architecture direction.
  
• Investments over time and the risk and performance implications related to the level of investment.
  
• Plans to deliver agreed architecture direction.
  
• Risk assessments associated with future delivery and ongoing operations.

The constitution provides that the number of directors is as determined by the Board, being no less than three and no more than twelve directors. The Board has determined the number of directors at eleven.

Note: Under APRA Prudential Standards APS 510.15 the Board may not decide the number of directors to be less than five.

The Board has decided that a majority of directors are to be independent.

Independence is assessed by reference to the Bendigo and Adelaide Group Independence Policy

The Board is to assess the independence of each non-executive director annually.

The constitution requires the maximum period a person is a director before re-election is until the third annual general meeting after appointment. The constitution also provides for one-third of directors to retire at every annual general meeting. A retiring director is eligible for re-appointment.

The Board has adopted a board renewal policy.

The Board has decided the following.

• The Chairman and Deputy Chairman (if appointed) are to be independent directors.
  
• There is to be a separation between the role of Managing Director and Chairman.
  
• There is to be a gap of at least 3 years from when a person ceased to be a CEO, before the person can become the Chairman.

Under the constitution, if the Chairman and Deputy Chairman are absent from a meeting, the members present are to choose one of the members to chair that meeting.

The Chairman is to be available to meet with APRA on request. The request is to be made through the Company Secretary.

Each director is required to disclose to the Board promptly the holding of any office or the possession of property in respect of which the director has, or may have, an interest or duty that may create (directly or indirectly) a conflict with the director’s duties as a director of the Bendigo and Adelaide Bank.

The disclosure must include full details of the nature, character and extent of the conflict or potential conflict and be made as soon as the director becomes aware of the conflict or potential conflict.

In addition, each director must comply with the requirements in the Corporations Act in relation to the disclosing of a material personal interest.

A director who has a material personal interest in a matter being considered at a directors’ meeting may not be present at that meeting while the matter is being considered and may not vote on that matter, unless the directors present at the meeting (who are not affected by a material personal interest at that time) resolve that the interest should not disqualify the director from being present or from voting or the director would otherwise be entitled to be present and to vote under the Corporations Act. The reasons for a resolution allowing the interested director to be present and vote are to be included in the minutes.

Note: The Board has adopted protocols for dealings with directors, for example for the engagement of Grant Samuel, having regard to the relationship between the Chairman (Mr Johanson) and Grant Samuel.

The Board must meet at least monthly.

The non-executive directors must meet at least two times each year for a private discussion of management issues.

Under the constitution, matters are to be decided by a majority of the votes of the directors present and voting.

In the case of equality of votes, the Chairman of the meeting has a casting vote in addition to the Chairman’s deliberative vote (except when only two directors are present or competent to vote).

Under the constitution, the Chairman must call a meeting of the Board on request by any director.

The Company Secretary is responsible for advising the dates, times and venues for meetings, and distributing papers.

Notice of a meeting may be given by mail (electronic or otherwise), personal delivery or facsimile transmission to the usual place of business or residence of the director or any other address given to the Company Secretary by the director.

Under the constitution, for the purposes of the Corporations Act each director consents to the use of the following technologies for the holding of a directors’ meeting.

• video;
  
• telephone;
  
• electronic mail;
  
• any other technology which permits each director to communicate with every other director; or
  
• any combination of these technologies.
  

Directors may withdraw their consent in accordance with the Corporations Act.

Where directors are holding a meeting using technology, the directors are taken to be assembled together and present in a meeting at the location determined by the Chairman, and all proceedings of the directors are as valid and effective as if conducted at a meeting at which all of them were physically present in one location.

Under the constitution, a resolution in writing signed or consented to by all directors or a resolution in writing of which notice has been given to all directors and which is signed by a majority of directors entitled to vote on the resolution (not being less than the number required for a quorum at a meeting of the Board) is a valid resolution of the Board. “All directors”, for these purposes, does not include a director who would not be entitled to vote on the resolution, a director who disqualifies himself or herself from considering the resolution, or a director on leave of absence approved by the Board.

The resolution may consist of several documents in the same form signed by one or more of directors. A facsimile transmission or other document produced by mechanical or electronic means under the name of a director with the director’s authority is considered to be a document in writing signed by the director.

A statement sent electronically by a director to an agreed electronic address stating that the director is in favour of a specified resolution shall be taken to be a document containing that statement and duly signed by the director.

A director may consent to a resolution by telephoning the Company Secretary and signifying assent to the resolution and clearly identifying its terms.

Minutes of all meetings must be kept (section 251A(1) Corporations Act).

The minutes must be signed within a reasonable time after the meeting by either the Chairman of the meeting or the Chairman of the next meeting (section 251A(2) Corporations Act).

The minutes must be included in the papers for the next meeting of the Board, together with a schedule of matters outstanding.

The Board is entitled to seek any information it requires from any Bendigo and Adelaide Bank Group employee or from any other source. It is entitled to meet with employees and third parties without the presence of management.

The Board may, by invitation, request employees and third parties to attend Board meetings.

The external auditor may request to meet with the Board. The request is to be made through the Company Secretary.

Each director is entitled to access to Board papers for seven years after the director’s appointment ends.

A director is entitled to rely on information, or professional or expert advice given or prepared by an employee whom the director believes on reasonable grounds to be reliable and competent in relation to matters concerned or a professional adviser or expert in relation to matters that the director believes on reasonable grounds to be within the person’s professional or expert competence provided both the following requirements are met.

• The reliance was made in good faith.
  
• The reliance was made after making an independent assessment of the information or advice, having regard to the director’s knowledge of the Bendigo and Adelaide Bank and the complexity and structure and operations of Bendigo and Adelaide Bank.

The Chairman of the Board is responsible for making sure that matters arising that require the commitment of funds or the commitment of management or external resources are co-ordinated through the Managing Director.

However, this does not limit the right of a director to obtain information from employees or third parties without the presence of management (see 2.12 above) or to engage professional advisers and experts (see 2.13 above).

The Board is to review the following each financial year.

• The performance of the Board against the requirements of this Charter.
• The goals and objectives of the Board in the coming year.
• Any changes to the Charter to make sure it remains consistent with the Board’s purpose and responsibilities.