COMMS GROUP LTD — Governance Information 2020

Aug 25, 2020

COMMSCHOICE GROUP LIMITED A.C.N. 619 196 539

Commschoice Group Limited (ACN 619 196 539) Corporate Governance Statement Year Ended 30 June 2020

This statement has been approved by the Board of CommsChoice Group Limited and is current as at 25 August 2020.

CommsChoice Group Limited’s approach to Corporate Governance

This Corporate Governance Statement addresses the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations’ – 4th Edition released in 2019 (referred to as ‘ASX Principles or Recommendations’).

CommsChoice Group Limited (‘CommsChoice’ or the ‘Company’) has adopted a program to review and improve its charters, policies and procedures periodically as required to ensure its corporate governance framework remains current and compliant with best corporate practice. CommsChoice has monitored and updated the Company’s risk management framework including the review and identification of requisite Board skills to ensure that the Company is in a strong and sustainable financial position to achieve its strategic goals.

CommsChoice has provided the Appendix 4G (Key to Disclosures – Corporate Governance Council Principles and Recommendations) which has been lodged with ASX together with this Corporate Governance Statement and the Company’s 2020 Financial Report. Further to the information contained in the Appendix 4G, which can be found on the Company’s website at https://www.commschoice.com/about/investors/corporate-governance, details of the Company’s ongoing adherence to the ASX Corporate Governance Council Principles and Recommendations are outlined below.

CommsChoice has adopted the following eight central principles and has implemented the specific recommendations intended to give effect to these principles where possible. Lay solid foundations for management and oversight

1. Structure the Board to be effective and add value

2. Instil a culture of acting lawfully, ethically and responsibly

3. Safeguard the integrity of corporate reports

4. Make timely and balanced disclosure

5. Respect the rights of security holders

6. Recognise and manage risk

7. Remunerate fairly and responsibly

This Corporate Governance Statement reports in detail the Company’s progress in adopting, implementing and adhering to the specifics of the ASX Principles and Recommendations.

The Independent and Non-Executive Directors and Executive Director currently in office and their qualifications and experience are stated in the Company’s latest Annual Report.

CommsChoice Limited 2020 Corporate Governance Statement: 25 August 2020

2020 CommsChoice Corporate Governance Statement

Principle 1 Lay Solid Foundations for Management and Oversight

1.1 Roles and Responsibilities

CommsChoice’ Board Function and Board Charter (Board Charter) was adopted in July 2015 and is reviewed periodically as required. The Board Charter is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporategovernance. The document clearly outlines the various roles and responsibilities of the Board and management including those items expressly reserved to the Board and those delegated to management.

1.2 Director Selection

During the 2020 reporting period, Ms Claire Bibby, an independent non-executive Director was appointed to the CommsChoice Board (appointed October 2020).

When appointing a Director, the Company conducts appropriate pre-appointment checks and security holders have the opportunity of reviewing relevant information prior to voting on the appointment at the Annual General Meeting (AGM) usually held in November each year. Ms Bibby’s appointment was ratified at the November 2019 AGM.

1.3 Terms of Appointment

New Directors receive letters of appointment stating the effective commencement date of their Directorships with CommsChoice Limited together with their remuneration details. Directors are also provided with extensive induction material and given the opportunity to consult with the Chairman and other Directors to deepen their overall understanding of the Company and its operations.

Senior Executive employment contracts clearly state the terms of appointment and the expectations of the Company regarding performance including any performance-based incentives.

1.4 Company Secretary

Company Secretarial services are managed by Mr Andrew Metcalfe, an experienced independent Company secretary and governance consultant. Mr Metcalfe was appointed to the position in October 2017.

Mr Metcalfe is well qualified for the position having been a Company secretary and governance advisor to ASX listed companies for over 20 years.

The Company Secretary has a direct reporting relationship to the Chairman of the Board.

1.5 Diversity Policy

CommsChoice’ Diversity Policy is available in the Corporate Governance section of the Company’s website, at https://www.commschoice.com/about/investors/corporate-governance. The policy states CommsChoice’ general principles in relation to diversity within the organisation. CommsChoice is an inclusive workplace that values diversity which encompasses nationality, age, religious beliefs, sexual orientation as well as gender diversity. CommsChoice is an equal opportunity employer.

Directors have not adopted specific gender targets or measurable objectives for the Board, senior executives or for employees generally. Directors are of the view that specific targets are not necessary given the Company’s size and current stage of development.

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2020 CommsChoice Corporate Governance Statement

The table below shows the proportion of women in the whole organisation, women in senior executive positions and women on the Board. The Company defines “senior executive” as those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year. To provide an accurate reflection of the proportion of women across the whole organisation, the Company has opted to include contractors in the below percentages, which show the proportion of women in the organisation as at the date of this Statement:

• Board: 25%

• Senior Executive/Management: 25%

• Employees/Contractors: 33%

1.6 Periodic Board, Committee and Director Evaluation

CommsChoice has an evaluation process for the Board, committees and Directors which is stated in the Board Charter available on the Company’s website. An evaluation of the Board, the People & Culture Committee and Audit, Risk and Compliance Committee was conducted in September 2019 following which Ms Claire Bibby was appointed to the Board and board sub-committees.

1.7 Senior Executive Performance Evaluation

CommsChoice sets key performance indicators for its senior executives and performance is evaluated against these targets annually. During the 2020 reporting period, annual reviews against these targets were conducted.

Principle 2 Structure the Board to Add Value

2.1 People & Culture Committee

CommsChoice Limited has a People & Culture Committee, which is chaired by independent NonExecutive Director, Ms Claire Bibby, who has taken on the chairmanship of this committee in line with ASX recommendations for an independent chair.

Other members of the People & Culture Committee are Mr John Mackay, a non-independent NonExecutive Director and Mr Peter McGrath, the Executive Director. Two of the three current Committee members are independent.

The People & Culture Committee Charter is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporate-governance.

During the 2020 reporting period the People & Culture Committee met three times with all members attending.

2.2 Skills of Directors

The Board is structured to provide a broad mix of skills and experience in the information and communication technology (ICT) business (representing its main undertaking), business, law, governance and accounting. Board members also have specific skills and experience pertaining to other key aspects of the Company’s business including business strategy, corporate finance, capital raising, sales & marketing and investor relations. Directors have access to executive staff to provide specialised information as required.

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2020 CommsChoice Corporate Governance Statement

A Board Skills Analysis was undertaken during the 2020 reporting period and the following table sets out the mix of skills the Board currently has while providing guidance for expanding the skills base of Directors for the future needs of the Company .

Director background & experience	Director’s Name
Accounting & Corporate Finance	Ben Jennings
Capital Markets	Peter McGrath
Management & Leadership	John Mackay, Peter McGrath, Ben Jennings, Claire Bibby
Legal	Claire Bibby, and external advisers to the Company
Industry	Peter McGrath, Ben Jennings, Claire Bibby, John Mackay
Risk, Management and Board Governance	John Mackay, Peter McGrath, Ben Jennings, Claire Bibby

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2020 CommsChoice Corporate Governance Statement

2.3 Independence of Directors

As at 30 June 2020, the Company had two independent Directors, Mr John Mackay and Ms Claire Bibby, of a Board of four Directors. Mr Ben Jennings is a substantial shareholder and therefore not considered independent; Mr Peter McGrath is the Executive Director of CommsChoice and also a substantial shareholder and is not considered independent.

The Board assesses the independence of each of the Non-Executive Directors based on the interests and associations disclosed by the Directors and in-line with the ASX Principles and Recommendations.

A table setting out the length of service of each of the current Directors and their status on the Board is below:

Director	Date Appointed	Executive or Non- Executive	Independent	Next due for re-election
Mr John Mackay	11 October 2017	Non-Executive	Yes	2020
Mr Peter McGrath	11 October 2017	Executive	No	N/A
Mr Ben Jennings	11 October 2017	Non-Executive	No	2021
Ms Claire Bibby	3 October 2019	Non-Executive	Yes	2022

2.4 Majority should be Independent Directors

Due to the size and stage of development of CommsChoice, the Company has not been able to follow the ASX recommendation that a majority of Board members should be independent. Mr Ben Jennings is not considered independent as he is a substantial shareholder; Mr Peter McGrath is also a substantial shareholder and performs a pivotal role in his executive leadership position within CommsChoice. Mr John Mackay and Ms Claire Bibby are both independent Directors, and with a ratio of two non-independent Directors to two independent Directors, the Company considers that it has made significant progress towards meeting the ASX recommendation that the majority of Board members be independent. All Directors bring a diverse skill base and are well qualified to represent the Company and its security holders at the present time.

2.5 Chair should be Independent and not CEO

During the 2020 reporting period, the Chair was an independent director and not the CEO of the Company and therefore CommsChoice followed the ASX recommendation.

CommsChoice acknowledges that a separation of roles between the chairperson and CEO is best practice corporate governance to minimise the possibility of a lack of transparency and promote constructive debate at Board level.

2.6 Induction Program for New Directors

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2020 CommsChoice Corporate Governance Statement

Directors are provided with substantial information about CommsChoice when commencing their Directorships. CommsChoice supports additional professional education to assist a Director in their role.

Principle 3 Instil a Culture of Acting Lawfully, Ethically and Responsibly

3.1 Company Values

The Company’s core values and commitments are:

• a) Integrity – We act honestly, fairly and with integrity in all our dealings, both internally and externally. We deal honestly and fairly with suppliers and customers. We commit to only dealing with business partners who demonstrate similar ethical and responsible business practices.

• b) Respect – We respect the human rights of all people, their ideas and cultures and our words and actions must reflect this respect, treating fellow directors, senior executives and employees with respect and not engage in bullying, harassment or discrimination

• c) Safety – We are committed to providing and maintaining a safe and non- discriminatory working environment to safeguard the health and safety of our employees, consultants, contractors, customers, suppliers and other persons who visit our workplace, or who we work with, as required by law.

• d) Community Standards – We act in a manner that aims to preserve and protect the Company’s reputation consistent with reasonable expectations of our investors and the broader community in which we operate, acting ethically and responsibly and complying with all laws and regulations that apply to the entity and its operations.

• e) Environment – We are committed to act responsibly towards the environment and comply with legislation in respect of licenses held as part of the Company’s operations.

3.2 Code of Conduct

CommsChoice’ Code of Conduct policy is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporate-governance.

The Code of Conduct provides a framework for decisions and actions and the Company’s minimum standards of conduct and integrity to be observed by all staff members. The Code’s focus is to ensure that all Directors, executives, and employees act with the utmost integrity and fair dealing. This involves acting ethically, sustainably and responsibly in conducting the Company’s business affairs, as well as displaying and exercising a duty of care to all employees, clients and stakeholders carrying out their duties and responsibilities while striving at all times to enhance the reputation and performance of the Company. The ethical and responsible conduct of the affairs of the Company ultimately depend upon the understanding and judgment of its staff, having regard to their sense of honesty, fairness and decency.

This code applies to anyone who works for the Company including all directors of the Board, senior executives and employees, joint venture partners as well as temporary and contract staff (including subcontractors). Any material breaches of the Code of Conduct by a Director or member

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2020 CommsChoice Corporate Governance Statement

of management or any material breaches of the code that call into question the culture of the organisation will be brought to the attention of the Board.

Training sessions for staff also emphasise the expectations of the Company regarding conduct of staff and executives in maintaining ethical standards.

3.3 Whistleblower Protection Policy

CommsChoice has a Whistleblower Protection Policy which is published on the Company’s website. The Board will be advised of any material incidents reported under the policy.

The Whistleblower Protection Policy is underpinned by a strong commitment to building a culture in CommsChoice that reflects sound governance and promotes ethical behaviour in the detection and management of fraudulent, corrupt or improper conduct.

CommsChoice values ethical behaviour, integrity and respect. CommsChoice considers that working with integrity, honesty and respect includes encouraging employees and stakeholders to speak up in relation to conduct that does not align with this code of conduct or with the law and taking steps to protect the identity of that person when they do.

CommsChoice encourages Employees and Stakeholders to speak up without fear of intimidation or reprisal in relation to conduct that does not align with the Company’s corporate policies or the law and CommsChoice will protect disclosers when they do.

The Whistleblower Protection Policy complies with the amendments to the Corporations Act 2001 (Cth) and the Taxation Administration Act 1953 (Cth) that are effective from 1 July 2019.

A copy of the Whistleblower Protection Policy is available on CommsChoice website and is intended to be accessed by anyone.

3.4 Anti-bribery and Corruption Policy

Australia has strict laws against bribery and corruption. The anti-bribery laws of some countries including Australia, the United States and United Kingdom can apply to actions carried out in other countries (i.e. wide-reaching extra-territorial effect). You must comply with and uphold all

laws against bribery, corruption and related conduct applying to the Company in all the jurisdictions where the Company operates.

Corrupt conduct involves the dishonest or partial use of power or position which results in one person/group being advantaged over another. Corruption can take many forms including, but not limited to:

• a) official misconduct;

• b) bribery and blackmail;

• c) unauthorised use of confidential information;

• d) fraud; and

• e) theft.

Accordingly, the Company has a strict policy not to offer or receive secret commissions or bribes to further its business interests.

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2020 CommsChoice Corporate Governance Statement

CommsChoice is committed to adopting effective systems to counter bribery and related improper conduct and to monitor and enforce these systems.

Principle 4 Safeguard Integrity of Corporate Reports

4.1 Audit, Risk and Compliance Committee

CommsChoice has an Audit, Risk and Compliance Committee which oversees the audit functions of the Company and ensures risks are identified and managed. One of the key responsibilities of the Audit, Risk and Compliance Committee is to oversee the Company’s relationship with the external auditor and the external audit function generally.

Mr Ben Jennings, a Non-Executive Director, chaired the Committee during the reporting period. Mr Jennings is not an independent chair as per ASX recommendations, however his qualifications and experience in business and finance, as reported in the company’s annual report, qualify him to chair the committee.

Other members of the Audit, Risk and Compliance Committee are Mr John Mackay and Ms Claire Bibby, both independent Non-Executive Directors, and Mr Peter McGrath, the Executive Director.

Due to the size and stage of development of CommsChoice, the Company has been unable to follow the ASX recommendation that all members of the Audit, Risk and Compliance Committee be independent. Two of the four Committee members are not independent. However, during the 2020 reporting period each of the committee members, because of their experience in business and finance, was able to significantly contribute to the work of the committee.

The Charter is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporate-governance.

The Audit, Risk and Compliance Committee met three times during the 2020 reporting period with all committee members attending.

4.2 Financial Statement Confirmation

Before the Board approves the Company’s financial statements for a financial period, it receives a declaration from the CEO and CFO that, in their opinion, the financial records of CommsChoice have been properly maintained, that its financial statements comply with the appropriate accounting standards and give a true and fair view of the Company’s financial position and performance and that the Company’s system of risk management and internal control is operating effectively in relation to financial reporting.

4.3 Integrity of Corporate Reports

CommsChoice’ auditors review the Company’s Half Year Report and Annual Report prior to publication. Apart from these documents, there are no other periodic Company reports.

Principle 5 Make timely and Balanced Disclosure

5.1 Continuous Disclosure

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2020 CommsChoice Corporate Governance Statement

CommsChoice has a Continuous Disclosure Policy and Communication Strategy which describes the Company’s continuous disclosure obligations and how they are managed. The policy states that:

“ The Board recognises its duty to ensure that shareholders are informed of all major developments affecting the state of affairs of CommsChoice Group Limited”.

“In accordance with legal, statutory and ASX listing requirements (particularly Listing Rule 3.1), CommsChoice Group Limited will disclose all information concerning it, of which it is or becomes aware, that a reasonable person would expect to have a material effect on the price or value of its securities.”

A copy of the policy can be viewed in the Corporate Governance section of the website at https://www.commschoice.com/about/investors/corporate-governance.

5.2 Market Announcements

The Board automatically receives a copy of market announcements immediately after they have been made.

5.3 Investor Presentations

CommsChoice releases a copy of any substantive investor presentation on the ASX Market Announcements Platform ahead of the presentation.

Principle 6 Respect the Rights of Security Holders

6.1 Information to Investors via Website

Information on CommsChoice, as well as its governance policies and procedures, is available to - investors on the Company’s website at https://www.commschoice.com/about/investors/corporate governance.

6.2 Investor Relations

CommsChoice has an Investor Relations page on the Company’s website, https://www.commschoice.com/about/investors/corporate-governance, with links to the various documents and announcements the Company issues to the ASX. Contact details are also provided on the website for investors wishing to contact the Company’s Share Registry or CommsChoice directly.

6.3 Participation at Meetings

Security holders are encouraged to participate in meetings via announcements issued to the ASX, information on the Company’s website and by mailouts to all security holders prior to meeting of shareholders.

6.4 Substantive resolutions by Poll, not show of hands

CommsChoice security holders are given the opportunity to vote on all substantive resolutions at the Company’s AGM or at a General Meeting. Notices of meeting are sent out in advance of the meeting with voting sheets attached.

6.5 Communicating Electronically

The Investor Relations page on the Company’s website provides contact details for security holders to communicate with either the Company’s Share Registry or CommsChoice directly. Security holders

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2020 CommsChoice Corporate Governance Statement

are offered the option of receiving information electronically from CommsChoice via the Share Registry.

Principle 7 Recognise and Manage Risk

7.1 Risk management

As well as overseeing the audit functions of CommsChoice, the Audit, Risk and Compliance Committee ensures potential risks are identified and managed. During the 2020 reporting period the committee met three times chaired by Non-Executive Director, Mr Ben Jennings.

Other members of the Audit, Risk and Compliance Committee are Mr John Mackay and Ms Claire Bibby, both independent Non-Executive Directors, and Mr Peter McGrath, the Executive Director. Two of the four Committee members are independent.

The Charter is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporate-governance.

7.2 Risk Management Framework

CommsChoice manages risk through its Audit, Risk and Compliance Committee and the CommsChoice Board. The Company’s risk register provides a framework for risk identification and monitoring and the register was reviewed regularly and updated during the 2020 reporting period. The Risk Matrix is also reviewed regularly and updated to ensure immediate identification and reporting of risk.

Management and sales & marketing team meetings also provide forums for discussing and monitoring risk. Any suggested mitigation strategies are considered at the Audit, Risk and Compliance Committee and by the CommsChoice Board as appropriate.

7.3 Internal Audit

CommsChoice management has implemented risk and internal control systems for assessing, monitoring and managing strategic, operational, financial reporting and compliance risks for the Company. The systems are based upon policies, guidelines, delegations and reporting as well as the selection and training of qualified personnel. The internal processes are reviewed by the Company’s external auditors during their regular audits.

The Board believes the control framework of formal audits and Company policies and procedures is well suited to the current size, operations and stage of development of the business.

7.4 Risk Exposure

CommsChoice manages risk through its Audit, Risk and Compliance Committee and the CommsChoice Board. Risk is also discussed and monitored in management and research & development team meetings where mitigation strategies are devised as appropriate.

During the 2020 reporting period, the main exposure to economic risk for CommsChoice was the impact of the Covid-19 pandemic on the Company. The Board and the Audit, Risk and Compliance Committee continually monitor the Company’s cash flow position and adopt the appropriate strategy to maintain solvency in the face of any economic risk.

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2020 CommsChoice Corporate Governance Statement

During the reporting period the Company was engaged solely as an information and communication technology (ICT) business, providing a comprehensive range of telco and IT related managed services and it does not have any notable social sustainability risks or environmental risks.

Principle 8 Remunerate Fairly and Responsibly

8.1 Remuneration Committee

CommsChoice Group Limited has a People & Culture Committee, which is chaired by independent Non-Executive Director, Ms Claire Bibby who has taken on the chairmanship of this committee in line with ASX recommendations for an independent chair.

Other members of the People & Culture Committee are Mr John Mackay, an independent NonExecutive Director, and Mr Peter McGrath, the Executive Director. Two of the three Committee members are independent.

The People & Culture Committee Charter is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporate-governance.

During the 2020 reporting period the People & Culture Committee met three times with all members attending.

8.2 Remuneration Policy

CommsChoice has a Remuneration Policy for non-executive directors, senior executive and professional staff which is published in the Corporate Governance section of the Company’s website at https://www.commschoice.com/about/investors/corporate-governance. Fees for non-executive directors are reviewed annually by the People & Culture Committee and subsequently approved by the Board. For senior executive and professional staff, the Remuneration Policy aligns the Company’s business objectives with individual key performance indicators (KPIs), the company’s performance and its market position. The policy is underpinned by a number of principles designed to promote and further develop the interests of the company, its shareholders and employees by adopting good corporate governance practice in line with the recommendations of the ASX.

8.3 Equity Based Remuneration Scheme

CommsChoice has an Equity Based Remuneration Scheme in the form of a Performance Rights Plan which was approved by shareholders at the July 2019 General Meeting. A copy of the Performance Rights Plan is available upon request by CommsChoice employees. Rights were issued to the executive director and senior executive and professional staff in July 2019. A Participant must not enter into any arrangement that may otherwise affect the economic exposure to their Rights.

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