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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 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 with 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, codes of conduct and legal performance, monitoring major capital expenditure and approving 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 by 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 directions from 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.

Board Composition

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 normally retire from office at each annual general meeting. A Director must normally 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 the due date.

The Board periodically considers succession planning of Directors and the CEO. In conjunction with the CEO, the Board considers succession planning for the senior executives.

Conflicts of Interest

In accordance with the good 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 Secretary 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 authorized 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 Secretary and other key employees.

Board Performance Review

Consistent with Corporate Governance Statement, FinCorp has a process for periodically evaluating the performance of the Board, its Committees and individual Directors.

The Remuneration Committee reviews the processes by which the Board regularly assesses its own performance in meeting its responsibilities. It is intended to expand the assessment of the Board as a whole to include an assessment of the contribution of each individual Director.

The Board is cognisant of the need to continually identify areas for improvement, to ensure that it meets the highest standards of corporate governance and for the Board and each Director to make an appropriate contribution to FinCorp’s objective of providing value to all its stakeholders. The performance review is conducted annually and may involve assistance from external consultants.

Board Processes

The Board currently holds four scheduled meetings each year plus any other additional meetings that may be required from time to time.

Board Committees

To assist in the execution of its responsibilities the Board has established the following committees:

 Audit Committee
 Risk and Compliance Committee
 Remuneration Committee
 Transformation 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 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.

Continuing Education

All Directors are encouraged and assisted by FinCorp 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 behavior whenever they are engaged in FinCorp business. In this regard, the Directors have assigned the FinCorp Code of Conduct, which outlines the principles and standards with which all employees and Directors are required to comply with in the performance of their respective duties.

Annual General Meeting

The 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, Ernst & Young, will be requested to attend the Board Meeting and should 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.

Website

Information about the Board and senior executives can be found on FinCorp’s website under the heading “About Us”.

Risk Management

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 9001-2015 Quality Management System. FinCorp has appointed Chief Risk Officer and is compliant with BPNG Prudential Standards

Internal Audit

An effective Internal Audit function provides an independent assurance function. FinCorp’s internal audit plan is approved by the Audit Committee. The Manager Internal Audit reports to the Committee and to the CEO for day-to-day operations.

External Auditor

The current external auditor is Ernst & Young. The key partner representatives are refreshed periodically in accordance with BPNG’s prudential standards. The external auditor has access to the Audit 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 statements, the CEO and the Chief Financial Officer are required to state in writing FinCorp’s financial statements 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.

Privacy

FinCorp is committed to the protection of personal information and FinCorp’s Code of Conduct ensure information security and privacy.

FinCorp