The Board of Directors of Hellaby Holdings Limited (“Hellaby” or “the Company”) has the statutory responsibility for managing the business and affairs of the Company.

To facilitate day-to-day operations of the Company the Board has delegated specific management powers and responsibilities to the Chief Executive Officer (“CEO”) of Hellaby.  The Chief Executive Officer in carrying out these responsibilities will ensure that the activities are carried out in the best interests of shareholders, whilst respecting the rights of other stakeholders.

The Chief Executive Officer shall exercise delegation in accordance with the Delegations Authority as approved by the Board.

The delegation of the powers described in this framework are to the Chief Executive Officer and Managing Director of Hellaby Holdings Limited. These delegations of authority record the formal relationship between the Board and management of the Company, and identifies the Chief Executive Officer, as the sole executive director on the Board of the Company, as the formal primary point conduit to the Board by members of the senior management of the Company.

The delegations of the Chief Executive Officer will be:

• subject to any specific direction given by the Board at any time and from time to time;
• subject to amendment in whole or in part at any time, and from time to time, by the Board in its discretion; and
• revocable in whole or in part at any time, and from time to time, by the Board in its discretion.

The Board, as the ultimate accountable body, is exposed to a range of legislation.  In New Zealand the most definitive and visible is the Companies Act 1993.  Under section 128 of that Act the directors have a statutory obligation which states that:

“The business and affairs of a company must be managed by, or under the direction or supervision of, the Board of the company.”

The formulation and implementation of this obligation is through the delegation of its powers to the CEO by the authority of Section 130 of the Companies Act 1993, and the sub-delegation by him / her  to members of the Hellaby senior management team.

“Section 130(1) [Power to delegate] Subject to any restrictions in the constitution of the company, the Board of a company may delegate to a committee of directors, a director or employee of the company, or any other person, any one or more of its powers other than its powers under any of the sections of this Act set out in the Second Schedule to this Act.

Section 130(2) [Board’s responsibility] A Board that delegates a power under subsection (1) of this section is responsible for the exercise of the power by the delegate as if the power has been exercised by the Board, unless the Board:

The Board delegates to the CEO all the necessary powers and authority of the Board to manage the business of the Company subject to those specific matters matter specified in section 5 below, or such other matters as may be advised from time to time.

The CEO is required to report all material matters to the Board in a timely manner.

Notwithstanding the delegations below, the CEO is deemed to have power to formulate and set policies on all matters affecting the company including treasury, taxation, risk and insurance, human resources and employee relations, statutory and regulatory compliance, community and corporate affairs.

Any changes to the policies on the above matters will be contained in the CEO’s monthly report to the Board immediately following their introduction.

The Board delegates to the CEO the power to sub-delegate to the senior management of the Company the powers hereby delegated provided, however that sub-delegation cannot be greater than the delegation by the Board to the CEO.

This sub-delegation is subject to the condition that the sub-delegate will remain responsible for the exercise of any powers which he / she further delegates unless the person:

• believed on reasonable grounds at all times before the exercise of the power delegated that the delegate will exercise the power in conformity with the duties imposed on directors of the Company by the Companies Act 1933 and the Company’s Constitution; and
• has monitored, by reasonable methods properly used, the exercise of the power delegated.

The CEO is to ensure that where a sub-delegation of the powers expressly delegated by the Board to the CEO occurs, the monitoring and reporting procedures attaching to the original delegations will apply to the sub-delegations.

To assist the Board to discharge these roles it has resolved to delegate specific authorities to the CEO, which are subject to appropriate reporting and monitoring procedures. The specific delegations are stated below.

(a) Shareholder value / corporate strategy:

The CEO will have all necessary powers to formulate and bring to the Board for review and approval:

• an appropriate long range vision and portfolio composition for the Company; and:
• appropriate financial objectives, policies and plans.

The CEO will report annually to the Board on the long range visions in conjunction with the annual strategic planning review.

Any new, or changes in, financial standards and policies will be initially reviewed by the Audit and Risk Committee which will be responsible for recommending its acceptance to the full Board.

(b) Organisation planning:

The CEO will have all necessary powers to formulate an appropriate human resources strategy including a management succession plan, to ensure that the organisational strength and manpower planning is equal to the requirements of the long range vision.

The CEO will report annually to the Board on organisation planning as an adjunct to the Company’s strategic plan.

(c) Capital allocation:

The CEO is empowered to present, in association with the strategic planning review and annual financial budgeting process, an aggregate capital expenditure budget and acquisitions plan for approval by the Board.

Power is delegated to the CEO to commit the Company and subsidiaries to capital expenditure, acquisitions and divestment initiatives, subject to gaining Board approval, for capital expenditure projects and acquisitions in excess of NZ$1.0 million.

Approvals for the disposition of assets and divestment of businesses are to be treated the same as for acquisitions.

Commitment to new lease obligations for property with a lease term of over ten years or with a total base rent to maturity of over $2.5 million will require Board approval.

(d) Finance / funding:

The CEO is delegated the authority to facilitate the financing of the company’s operations, subject to specific approval by the Board of:

• any borrowing from a third party in excess of NZ$5 million;
• to establish any borrowing facility agreement when borrowing, and repayments may be made within its terms. Once the facility is approved, individual draw downs and repayments can be made without further need for Board approval; and
• any renewal of any facility, counter party or counter party limits.

Capital Notes shall for the purposes of these delegations be treated as borrowed funds.

(e) Performance appraisals:

The CEO has the responsibility to report to the Board reviewing the financial results against the Company’s objectives and budgetary goals.

Monitoring will be achieved through a monthly review of results compared with the Company’s budgetary plans and against agreed key performance indicators and value drivers, and are to be included in the CEO’s reports to the Board.

(f) Compliance:

The Board delegates to the CEO responsibility for ensuring compliance under New Zealand legislation, and specifically the:

and similar legislation applying to directors in overseas jurisdictions in which Hellaby conducts its business.

The Board expects high standards of compliance with all legal and regulatory requirements and the CEO shall ensure that appropriate compliance programmes and monitoring and regulatory procedures relative to this delegation are formulated. In any event a formal review of the compliance procedures adopted will be given at least annually to the Board. Any breaches, or formal enquiries indicating the possibility of a breach of the relevant legislative requirement, are to be reported to the Board on a monthly basis or if potentially serious, immediately and progress on the matter noted in each month until it is ‘off the books’.

The CEO is expected to act within all specific authorities delegated by the Board.

In allocating the capital and resources of the Company the CEO is expected to adhere to the Company goals and not cause or permit any action without taking into account the health, safety, environmental, political, legal, financial and market consequences and their effect on long term shareholder value.

In financing the Company the CEO is expected not to cause or permit any action that is likely to result in the Company becoming unable to pay its debts in the normal course of business, or its liabilities (including contingent liabilities) becoming greater than the value of its assets.

The assets of the Company are expected to be adequately maintained and protected, and not unnecessarily placed at risk.  In particular, the Company must be operated with a comprehensive system of internal control, and assets or funds must not be received, processed or disbursed without controls that, at a minimum, are sufficient to meet standards that are acceptable to the Company’s external auditors.

The Company will adhere to the insurance policy framework approved from time to time by the Audit and Risk Committee.

The Board is required to monitor the performance of management.  To that end:

• The CEO is required to promptly report any material departure from Board decisions or policy, and any acts or omissions that may create material risk for the Company or an adverse perception among stakeholders or the public generally.
• Between Board meetings the Chairman will maintain an informal link between the Board and CEO and expects to be informed by the CEO on all important matters.
• The CEO will report monthly to the Board in a form agreed with the Board.
• Issues presented to the Board for decision / information will contain all necessary supporting material that is relevant to the issue.  Information will be clearly and concisely presented, with external advice as appropriate.
• The Board (including any Committee) shall have access to any employee if the Board or Committee thinks it necessary to do so.
• The Chief Financial Officer (“CFO”), Chief Operating Officer and Chief Investment Officer will be accessible to all directors and will provide information to non-conflicted directors on request.
• The CEO and the CFO will annually provide a letter of representation to the Board stating that the Company’s financial reports present a true and fair view, in all material respects of the Company’s financial condition and operational results and are in accordance with relevant accounting standards.
• The Chairman will conduct a formal performance review of the CEO annually, and the Board will review the performance informally on a more routine basis during the course of the Board’s other functions.
• The CEO will conduct formal performance reviews of the Chief Executive Officer’s direct reports annually and report to the Board on these performance reviews.