Corporate Governance Statement
FinCorp’s Board and Senior executives are committed to managing FinCorp’s business ethically and maintaining the highest standards of corporate governance, applied in a manner that is appropriate to FinCorp’s particular circumstances.
This Corporate Governance Statement generally describes the practices and processes adopted by FinCorp to ensure sound management of FinCorp in the regulatory environment in which it operates.
FinCorp is an authorised deposit-taking institution supervised by the Bank of Papua New Guinea (BPNG) under the Banking and Financial Institutions Act 2000.
Board of Directors
Role of the Board
The Board has adopted a formal Board Charter setting out the roles and responsibilities of the Board. The Board’s primary role is to ensure that FinCorp provides customers with appropriate financial services on the most beneficial terms available and to protect and enhance long-term customer value. In fulfilling this role, the Board is responsible for the overall governance of FinCorp including its strategic direction, risk management, establishing and monitoring the performance of FinCorp against its plans, ensuring the integrity of internal control and management information systems, ensuring regulatory compliance, approving and monitoring financial and other reporting, appointing, appraising and removing the Chief Executive Officer (CEO), monitoring the risk management systems, internal controls, codes of conduct and legal performance, and approving and monitoring major capital expenditure and acquisitions and divestitures.
Relationship with Management
The Board has delegated responsibility for the operation and management of FinCorp to the CEO subject to the overall supervision of the Board. The CEO is responsible for managing the day-to-day operations of FinCorp. The CEO provides input and recommendations on strategic direction and has authority for implementing the approved strategic plan of FinCorp in accordance with the decisions of the Board.
The CEO leads the senior executives, who meet regularly to review and report on FinCorp’s business activities including operations, financial performance and general strategic direction.
The Constitution of FinCorp specifies that the number of directors shall be between five and ten. Currently the Board is comprised of six directors. There will be no employee director after 31 December 2018. One-third of the elected directors must retire from office at each FINCOR annual general meeting. A director must retire from office no later than the third annual general meeting after the director was last elected.
In assessing the independence of each director, the Board considers whether he or she has any relationships that would materially affect the director’s ability to exercise unfettered and independent judgment in the interests of FinCorp and its customers. In this regard, and more broadly, FinCorp will comply with BPNG Prudential Standard series 300 Corporate Governance by due date.
The Board periodically considers succession planning of directors and the CEO and in conjunction with the CEO considers succession planning for the senior executives.
Conflicts of Interest
In accordance with the Corporate Governance and FinCorp’s Constitution, directors must keep the Board advised of any interest that could potentially conflict with the interests of FinCorp. The Board has a policy to assist directors in disclosing material conflicts of interests. Transactions between non-executive directors and FinCorp are subject to the same terms and conditions that apply to customers. Senior executives, company secretaries and other key employees are also required to declare any material interests that could potentially conflict with the interest of FinCorp.
Board Performance Assessment
The Board is committed to continuous improvement and is subject to ongoing assessment and an annual internal formal evaluation process of the Board, Board Committees and the individual directors.
FinCorp complies with BPNG Prudential Standard BPS 310 Fit and Proper which requires that those responsible (Responsible Persons) for the management and oversight of an authorised deposit-taking institution have the appropriate skills, experience and knowledge and that they act with honesty and integrity. The fitness and propriety of Responsible Persons must generally be assessed prior to their initial appointment and then re-assessed bi-annually. Responsible Persons include all directors, senior executives, company secretaries and other key employees.
The Board currently holds four scheduled meetings each year plus any other meetings that may be required from time to time.
To assist in the execution of its responsibilities the Board has established the following committees:
- Audit and Risk Committee
- Credit Committee
- Remuneration Committee
Each Committee operates under its own charter that is reviewed regularly.
The Board may establish other committees or change the committee structure from time to time as the circumstances require.
All Board Committee Charters allow them to have access to advice from external advisers, with or without management present, as required. Further information in relation to the remuneration of the Board, the CEO and senior executives
Access to Information and Independent Professional Advice
Each director has the right of access under a Deed of Indemnity, Access and Insurance to relevant FinCorp information and, subject to prior consultation with and approval of the Chairman of the Board, may seek independent professional advice from a suitably qualified adviser in the area, to assist in the discharge of their duties as directors.
All directors are encouraged and assisted to attend educational courses that serve to enhance their performance as directors. Membership of the Papua New Guinea Institute of Directors (PNGID) is paid for by FinCorp and directors are actively encouraged to participate in courses offered by the PNGID and other providers.
Ethical and Responsible Decision Making
Code of Conduct
All directors, senior executives and other employees are expected to conduct themselves with the highest ethical standards of corporate behaviour whenever they are engaged in FinCorp business. In this regard, the directors have adopted a Code of Conduct, which outlines the principles and standards with which all employees are required to comply in the performance of their respective duties.
Annual General Meeting
Shareholder has the opportunity to raise matters with the Board at the Annual General Meeting, generally held in April each year. FinCorp’s current external auditor, KPMG, can be available to attend the Annual General Meeting and should available to answer questions regarding the conduct of the audit and the contents of the auditor’s report, the auditor’s independence and any accounting practices employed by FinCorp in respect of the preparation of the financial statements.
Information about the Board and senior executives can be found on FinCorp’s website under the heading “About Us”.
Risk Management Approach
FinCorp is committed to implementing appropriate strategies and processes that identify, analyse and manage the risks associated with its activities as a means of realising opportunities and minimising the impact of undesired and unexpected events on its business activities. FinCorp has adopted an integrated approach to risk management, which meets the international standard IS0 9001-2008 Quality Management System. FinCorp has an appointed Chief Risk Officer and is compliant with BPNG Prudential Standards
An effective Internal Audit function provides an independent assurance function. FinCorp’s internal audit plan is approved by the Audit and Risk Committee. The Manager Internal Audit reports to the Committee and to the CEO for day-to-day operational issues as appropriate.
The current external auditor is KPMG. The key partner representatives are refreshed periodically in accordance with BPNG’s prudential standards. The external auditor has access to the Audit and Risk Committee and the Board through the Chairman of the Board. The External Auditors comply with Bank of Papua New Guinea Prudential Standards.
Statement by CEO and CFO
Prior to the Board approving the annual financial report, the CEO and the Chief Financial Officer are required to state in writing FinCorp’s financial report presents a true and fair view, in all material respects, of FinCorp’s financial position and operating results and is compliant with the relevant accounting standards.
FinCorp is committed to the protection of personal information and FinCorp’s Code of Conduct ensure information security and privacy.
Staff Employment Policy
Finance Corporation Limited is an equal opportunity employer and does not discriminate on the basis of sex, race, color or sexuality. A Code of Conduct and a comprehensive policy and procedure manual is available for all staff and the company will not tolerate any violation to the code or policies.
The Executives Team is the principal policy decision-making body in the company and is under the chairmanship of the CEO.
Asset and Liability Committee (ALCO) meets on a fortnightly basis and manages the liquidity and interest risks as well as all aspects of the balance sheet.