AVITA MEDICAL LIMITED (“COMPANY”).
Audit Committee Charter
1. Composition of the Audit Committee
The committee is to include at least three (3) members.
At least one member is to have significant, recent and relevant financial experience.
2. Role of the Audit Committee
The role of the Audit Committee is to:
monitor the integrity of the financial statements of the Company, reviewing significant financial reporting judgments; review the Company’s internal financial control system and, unless expressly addressed by a separate risk committee or by the Board itself, risk management systems; monitor and review the effectiveness of the Company’s internal audit function (if any);
monitor and review the external audit function including matters concerning appointment and remuneration, independence and non-audit services.
perform such other functions as assigned by law, the Company’s constitution, or the Board.
The committee meets at least half yearly, with further meetings on an as required basis.
Minutes of all meetings of the committee are to be kept and the minutes and a report of actions taken or recommended to be given at each subsequent meeting of the full Board.
Committee meetings will be governed by the same rules, as set out in the Company constitution as they apply to the meetings of the Board.
Relevant members of management and the external auditor may be invited to attend meetings.
The committee shall meet with the external auditor without management present, as required.
4. Authority and Resources
The Company is to provide the committee with sufficient resources to undertake its duties, including provision of educational information on accounting policies and other financial topics relevant to the Company, and such other relevant materials requested by the committee.
The committee will have the power to conduct or authorize investigations into any matters within the committee’s scope of responsibilities. The committee will have the authority, as it deems necessary or appropriate, to retain independent legal, accounting or other advisors.
5. Reporting to the Shareholders
The directors’ reports are to contain a separate section that describes the role of the committee and what action it has taken.
The chairperson of the audit committee is to be present at the annual general meeting to answer questions, through the chairperson of the Board.
Annual responsibilities of the committee are as set out in the Audit Committee Action Points (attached).
AUDIT COMMITTEE CHARTER ANNUAL ACTION POINTS
Financial Reporting and Internal Controls
- Review half-year and annual financial statements
- Consider management’s selection of accounting policies and principles
- Consider the external audit of the financial statements and the external auditor’s report thereon
- Consider internal controls including the Company’s policies and procedures to assess, monitor and manage financial risks (and other business risks if authorized)
Annual meeting with External Auditor
- Discuss the Company’s choice of accounting policies and methods, and any recommended changes
- Discuss the adequacy and effectiveness of the Company’s internal controls
- Discuss any significant findings and recommendations of the external auditor and management’s response thereto
- Discuss any difficulties or disputes with management encountered during the course of the audit including any restrictions or access to required information
External Auditor Engagement
- Establish/review criteria for the selection, appointment and rotation of external auditor
- Recommend to the Board to appoint and replace the external auditor and approve the terms on which the external auditor is engaged
- Establish/review permissible services that the external auditor may perform for the company and pre-approve all audit/non-audit services
- Confirm the independence of the external auditor, including reviewing the external auditor’s non-audit services and related fees
- Ensure that the external auditor is requested to attend the AGM of the Company and is available to answer questions from shareholders
Internal Communications and Reporting
- Provide an annual report that includes the committee’s review and discussion of matters with management and the external auditor
- Regularly update the Board about committee activities and make appropriate recommendations
- Ensure the Board is fully aware of matters which may significantly impact the financial conditions or affairs of the business
- Verify the membership of the committee is in accordance with the Audit Committee Charter
- Review the independence of each committee member based on ASX Corporate Governance Guidelines
- Review and update the Audit Committee Charter and Action Points
- Develop and oversee procedures for treating complaints or employee concerns received by the Company regarding accounting, internal accounting controls and auditing matter
Remuneration Committee Charter
The Remuneration Committee shall comprise a minimum of three (3) members. The committee shall be chaired by an independent director.
The function of the committee is to assist the Board in fulfilling its corporate governance responsibilities with respect to remuneration by reviewing and making appropriate recommendations on:
- remuneration packages of executive directors, non-executive directors and senior executives; and
- employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.
The committee shall meet at least once a year and otherwise as required. Minutes of all meetings of the committee are to be kept and a report of actions taken to be given at each subsequent meeting of the full Board. Committee meetings will be governed by the same rules as set out in the Company’s constitution, as they apply to meetings of the Board.
Executive Remuneration and Incentive Policies
The committee is to make recommendations to the Board with respect to appropriate remuneration and incentive policies for executive directors and senior executives which:
- motivates executive directors and senior executives to pursue long term growth and success of the Company within an appropriate control framework;
- demonstrates a clear correlation between key performance and remuneration; and
- aligns the interests of key leadership with the long-term interests of the Company’s shareholders.
Executive Remuneration Packages
The committee is to ensure that:
- executive remuneration packages involve a balance between fixed and incentive pay, reflecting short and long term performance objectives appropriate to the Company’s circumstances and objectives;
- a proportion of executives’ remuneration is structured in a manner designed to link reward to corporate and individual performances; and
- recommendations are made to the Board with respect to the quantum of bonuses to be paid to executives.
- To the extent that the Company adopts a different remuneration structure for its non-executive directors, the committee shall document its reasons for the purpose of disclosure to stakeholders.
The committee is to ensure that:
- fees paid to non-executive directors are within the aggregate amount approved by shareholders and make recommendations to the Board with respect to the need for increases to this aggregate amount at the Company’s annual general meeting;
- non-executive directors are remunerated by way of fees (in the form of cash and/or superannuation benefits);
- non-executive directors are not provided with retirement benefits other than statutory superannuation entitlements; and
- non-executive directors are not entitled to participate in equity-based remuneration schemes designed for executives without due consideration and appropriate disclosure to the Company’s shareholders.
To the extent that the Company adopts a different remuneration structure for its non-executive directors, the committee shall document its reasons for the purpose of disclosure to stakeholders.
Incentive Plans and Benefits Programs
The committee is to:
- review and make recommendations concerning long-term incentive compensation plans, including the use of share options and other equity-based plans. Except as otherwise delegated by the Board, the committee will act on behalf of the Board to administer equity-based and employee benefit plans, and as such will discharge any responsibilities under those plans, including making and authorising grants, in accordance with the terms of those plans; and
- ensure that incentive plans are designed around appropriate and realistic performance targets that measure relative performance and provide rewards when they are achieved; and
- continually review and if necessary improve any existing benefit programs established for employees.
Contracts Committee Charter
The Contracts Committee shall comprise a minimum of three (3) members.
The function of the committee is to assist the Board in fulfilling its responsibilities by:
- determining the materiality of contracts; and
- reviewing contracts to determine whether approval should be given to enter into contracts.
The Chairperson has the power to call meetings of the Committee as and when required. Committee meetings will be governed by the same rules as set out in the Company’s constitution, as they apply to meetings of the Board
Nominations Committee Charter
The Nomination Committee shall comprise a minimum of three (3) members.
The role of the Nomination Committee is to nominate size and composition of the Board, identify and recommend individuals for nomination as members to the Board, and review the performance of the Board and ensure director competencies are met.
The committee shall meet at least once a year in its capacity of the full Board and otherwise as required.
Size and Composition of the Board
To ensure that the Board has the appropriate blend of directors with the necessary financial expertise and relevant industry experience, the committee shall:
- regularly review the size and composition of the Board, and make recommendations to the Board on any appropriate changes;
- develop and plan for identifying, assessing and enhancing director competences and provide advice on the competency levels of directors;
- make recommendations on the appointment and removal of directors; and
- make recommendations on whether any directors whose term of office is due to expire should be nominated for re-election.
Selection Process of new Directors
- The committee shall develop criteria for the selection of the candidates to the Board in the context of the Board’s existing composition and structure.
- The committee is empowered to engage external consultants in its search for a new director.
- The initial appointment of a new director is made by the Board, who will be required to stand for re-election at the Company’s next Annual General Meeting.
Performance Appraisal Competency
The committee shall:
- establish evaluation methods of rating the performance of Board members;
- implement ways of enhancing the competency levels of directors;
- consider and articulate the time required by Board members in discharging their duties efficiently;
- undertake continual assessment of directors as to whether they have devoted sufficient time in fulfilling their duties as directors;
- provide new directors with an induction into the Company; and
- provide all directors with access to ongoing education relevant to their position in the Company