FINBAR GROUP LIMITED — AGM Information 2013

Oct 6, 2013

FINBAR GROUP LIMITED ACN 009 113 473 NOTICE OF ANNUAL GENERAL MEETING

TIME : 12.00pm (midday) WST DATE : 6 November 2013 PLACE : Level 6, 181 Adelaide Terrace, East Perth.

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 8) 6211 3300.

CONTENTS PAGE

Business of the Meeting (setting out the proposed resolutions)	2
Explanatory Statement (explaining the proposed resolutions)	5
Schedule 1 – Summary of Employee Incentive Plan	16
Schedule 2 – Terms and Conditions of Incentive Options	20
Schedule 3 - Valuation of Incentive Options	23
Glossary	24
Proxy Form	(*)

IMPORTANT INFORMATION

TIME AND PLACE OF MEETING

Notice is given that the annual general meeting of the Shareholders to which this Notice of Meeting relates will be held at 12.00pm (WST) on 6 November 2013 at Level 6, 181 Adelaide Terrace, East Perth.

YOUR VOTE IS IMPORTANT

The business of the Annual General Meeting affects your shareholding and your vote is important.

VOTING ELIGIBILITY

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Annual General Meeting are those who are registered Shareholders at 4:00pm (WST) on 4 November 2013.

VOTING IN PERSON

To vote in person, attend the Annual General Meeting at the time, date and place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, members are advised that:

• each member has a right to appoint a proxy;

• the proxy need not be a member of the Company; and

• a member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

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BUSINESS OF THE MEETING

AGENDA

ORDINARY BUSINESS

Financial Statements and Reports

To receive and consider the annual financial report of the Company for the financial year ended 30 June 2013 together with the declaration of the directors, the directors’ report, the remuneration report and the auditor’s report.

1. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a non-binding resolution :

• “That, for the purpose of Section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Company’s annual financial report for the financial year ended 30 June 2013.”

Note: the vote on this Resolution is advisory only and does not bind the Directors or the Company.

Voting Prohibition Statement:

A vote on this Resolution must not be cast (in any capacity) by or on behalf of any of the following persons:

• (a) a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or

• (b) a Closely Related Party of such a member.

However, a person (the voter ) described above may cast a vote on this Resolution as a proxy if the vote is not cast on behalf of a person described above and either:

• (a) the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on the Resolution; or

• (b) the voter is the Chair and the appointment of the Chair as proxy:

• (i) does not specify the way the proxy is to vote on this Resolution; and

• (ii) expressly authorises the Chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, or if the Company is part of a consolidated entity, for the entity.

2. RESOLUTION 2 – RE-ELECTION OF DIRECTOR – JOHN BOON CHEAK

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of clause 13.2 of the Constitution, ASX Listing Rule 14.4 and for all other purposes, Mr John Boon Cheak, a Director, retires by rotation, and being eligible, is re-elected as a Director.”

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3. RESOLUTION 3 – ADOPTION OF EMPLOYEE INCENTIVE PLAN

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.2 (Exception 9(b)) and for all other purposes, approval is given for the Company to adopt an employee incentive scheme titled Employee Incentive Plan and for the issue of securities under that Plan, on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any Director, other than any Directors who are ineligible to participate in any employee incentive scheme in relation to the Company, and any associates of those Directors. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

4. RESOLUTION 4 – ISSUE OF DIRECTOR INCENTIVE OPTIONS TO RELATED PARTY

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, subject to the passing of Resolution 3, for the purposes of section 208 of the Corporations Act, ASX Listing Rule 10.14 and for all other purposes, approval is given for the Company to issue up to 250,000 Options as Director incentive remuneration to Darren John Pateman (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any Director, other than any Directors who are ineligible to participate in any employee incentive scheme in relation to the Company, and any associates of those Directors. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

5. RESOLUTION 5 – DIRECTOR’S REMUNERATION

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of clause 13.8 of the Constitution, ASX Listing Rule 10.17 and for all other purposes, Shareholders approve the maximum total aggregate fixed sum per annum to be paid to Directors be set at $360,000 (an increase of $10,000) to be paid in accordance with the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by a Director and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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Voting Prohibition Statement

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

• (i) a member of the Key Management Personnel; or

• (ii) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

• (a) the proxy is the Chair; and

• (b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

6. RESOLUTION 6 – REPLACEMENT OF CONSTITUTION

To consider and, if thought fit, to pass the following resolution as a special resolution :

“That, for the purposes of section 136(2) of the Corporations Act and for all other purposes, approval is given for the Company to repeal its existing Constitution and adopt a new constitution in its place in the form as signed by the chairman of the Meeting for identification purposes.

DATED: 2 OCTOBER 2013

BY ORDER OF THE BOARD

ANTHONY HEWETT COMPANY SECRETARY

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions which are the subject of the business of the Meeting.

1. FINANCIAL STATEMENTS AND REPORTS

In accordance with the Constitution, the business of the Meeting will include receipt and consideration of the annual financial report of the Company for the financial year ended 30 June 2013 together with the declaration of the directors, the directors’ report, the remuneration report and the auditor’s report.

The Company will not provide a hard copy of the Company’s annual financial report to Shareholders unless specifically requested to do so. The Company’s annual financial report is available on its website at http://www.finbar.com.au/ and available at the Meeting.

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

2.1 General

The Corporations Act requires that at a listed company’s annual general meeting, a resolution that the remuneration report be adopted must be put to the shareholders. However, such a resolution is advisory only and does not bind the Directors or the Company.

The remuneration report sets out the Company’s remuneration arrangements for the Directors and senior management of the Company. The remuneration report is part of the Directors’ report contained in the annual financial report of the Company for the financial year ending 30 June 2013.

A reasonable opportunity will be provided for discussion of the remuneration report at the Annual General Meeting.

2.2

Voting consequences

Under recent changes to the Corporations Act which came into effect on 1 July 2011, if at least 25% of the votes cast on a remuneration report resolution are voted against adoption of the remuneration report in two consecutive annual general meetings, the Company will be required to put to Shareholders a resolution proposing the calling of an extraordinary general meeting to consider the appointment of directors of the Company ( Spill Resolution ) at the second annual general meeting.

If more than 50% of shareholders vote in favour of the Spill Resolution, the company must convene the extraordinary general meeting ( Spill Meeting ) within 90 days of the second annual general meeting.

All of the directors of the company who were in office when the directors' report (as included in the Company’s annual financial report for the financial year ended immediately before the second annual general meeting) was approved, other than the managing director of the company, will cease to hold office immediately before the end of the Spill Meeting but may stand for re-election at the Spill Meeting.

Following the Spill Meeting those persons whose election or re-election as directors of the company is approved will be the directors of the company.

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At the Company’s previous annual general meeting the votes cast against the remuneration report considered at that annual general meeting were less than 25%. Accordingly, the Spill Resolution is not relevant for this Annual General Meeting.

2.3 Proxy Restrictions

Shareholders appointing a proxy for Resolution 1 should note the following:

If you appoint a member of the Key Management Personnel as your proxy

If you elect to appoint a member of Key Management Personnel whose remuneration details are included in the Remuneration Report, or a Closely Related Party of that member, you must direct the proxy how they are to vote . Undirected proxies granted to these persons will not be included in any vote on Resolution 1.

If you appoint the Chair or any other person as your proxy

You do not need to direct your proxy how to vote, and you do not need to tick any further acknowledgement on the proxy form.

2.4 Definitions

Key Management Personnel has the same meaning as in the accounting standards and broadly includes those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company.

Closely Related Party of a member of the Key Management Personnel means:

• (a) a spouse or child of the member;

• (b) a child of the member’s spouse;

• (c) a dependent of the member or the member’s spouse;

• (d) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealing with the entity;

• (e) a company the member controls; or

• (f) a person prescribed by the Corporations Regulations 2001 (Cth

Remuneration Report means the remuneration report set out in the Director’s report section of the Company’s annual financial report for the year ended 30 June 2013.

3. RESOLUTION 2 – RE-ELECTION OF DIRECTOR – JOHN BOON CHEAK

ASX Listing Rule 14.4 provides that a director of an entity must not hold office (without re-election) past the third AGM following the director’s appointment or 3 years, whichever is the longer.

Clause 13.2 of the Constitution provides that:

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• (a) at every annual general meeting of the Company one-third of the Directors (other than alternate Directors and the Managing Director) for the time being, or, if their number is not a multiple of 3, then such number as is appropriate to ensure that no Director other than alternate Directors and the Managing Director holds office for more than 3 years, shall retire from Office;

• (b) the Directors to retire at an annual general meeting are those who have been longest in office since their last election, but, as between persons who became Directors on the same day, those to retire shall (unless they otherwise agree among themselves) to be determined by drawing lots; and

• (c) a retiring Director is eligible for re-election.

The Company currently has 5 Directors and accordingly 1 must retire.

Mr John Boon Cheak, the Director longest in office since his last election, retires by rotation and seeks re-election.

4. RESOLUTION 3 – APPROVAL OF EMPLOYEE INCENTIVE PLAN

Resolution 3 seeks Shareholder approval for the adoption of the employee incentive scheme titled Employee Incentive Plan ( Plan ) in accordance with ASX Listing Rule 7.2 (Exception 9(b)).

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period. ASX Listing Rule 7.2 (Exception 9(b)) sets out an exception to ASX Listing Rule 7.1 which provides that issues under an employee incentive scheme are exempt for a period of 3 years from the date on which shareholders approve the issue of securities under the scheme as an exception to ASX Listing Rule 7.1.

If Resolution 3 is passed, the Company will be able to issue Shares or Options under the Plan to eligible participants over a period of 3 years without impacting on the Company’s ability to issue up to 15% of its total ordinary securities without Shareholder approval in any 12 month period. However, Shareholder approval will be required to issue Shares or Options under the Plan to eligible participants who are Directors.

Shareholders should note that no Shares or Options have previously been issued under the Plan.

The objective of the Plan is to attract, motivate and retain key employees and it is considered by the Company that the adoption of the Plan and the future issue of Shares or Options under the Plan will provide employees with the opportunity to participate in the future growth of the Company.

Any future issues of Shares or Options under the Plan to a related party or a person whose relation with the company or the related party is, in ASX’s opinion, such that approval should be obtained will require additional Shareholder approval under ASX Listing Rule 10.14 at the relevant time.

A summary of the key terms and conditions of the Plan is set out in Schedule 1. In addition, a copy of the Plan is available for review by Shareholders at the registered office of the Company until the date of the Meeting. A copy of the Plan can also be sent to Shareholders upon request to the Company Secretary

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(+618 6211 3300). Shareholders are invited to contact the Company if they have any queries or concerns.

5. RESOLUTION 4 – ISSUE OF DIRECTOR INCENTIVE OPTIONS TO RELATED PARTY

5.1 General

The Company has agreed, subject to obtaining Shareholder approval, to issue a total of 250,000 Options ( Incentive Options ) pursuant to the Employee Incentive Plan ( Plan ) to Mr Darren John Pateman ( Eligible Participant ) on the terms and conditions set out below.

Chapter 2E of the Corporations Act requires that for a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

• (a) obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and

• (b) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act.

In addition, ASX Listing Rule 10.14 also requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities under an employee incentive scheme to a director of the entity, an associate of the director, or a person whose relationship with the entity, director or associate of the director is, in ASX’s opinion, such that approval should be obtained.

It is the view of the Directors that the exceptions set out in sections 210 to 216 of the Corporations Act may not apply in the current circumstances. Accordingly, Shareholder approval is sought for the issue of Shares to the Eligible Participant.

5.2 Technical information required by Chapter 2E of the Corporations Act and ASX Listing Rule 10.14

Pursuant to and in accordance with the requirements of sections 219 of the Corporations Act and ASX Listing Rule 10.15, the following information is provided in relation to the proposed issue of Incentive Options to the Eligible Participant:

• (a) the related party is Darren John Pateman, a related party of the Company by virtue of being the Managing Director of the Company;

• (b) the maximum number of Incentive Options (the nature of the financial benefit being provided) to be issued to the Eligible Participant (or his nominee/s) is 250,000;

• (c) the exercise price of the Incentive Options will be equal to the market price of the Company’s Shares on the day prior to the date of issue of the Incentive Options plus $0.15. Accordingly, the exercise price will depend on the Company’s Share price on the date prior to the grant of the Incentive Options. The following table provides an indication of the exercise price and value of the Incentive Options (full details of the value of Incentive Options are set out in Schedule 3):

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Share Price	Exercise Price	Incentive Option Valuation	Total Fair Value (based on 250,000 Incentive Options granted)	Amount raised upon exercise
$1.30	$1.45	$0.1835	$45,875	$362,500
$1.40	$1.55	$0.2067	$51,675	$387,500
$1.49 (price at time of valuation)	$1.64	$0.2161	$54,025	$410,000
$1.50	$1.65	$0.2178	$54,450	$412,500
$1.60	$1.75	$0.2350	$58,750	$437,500
$1.70	$1.85	$0.2523	$63,075	$462,500

• (d) if all of the Incentive Options are exercised, the Company will raise the amounts set out in the table above. The Board will determine how funds received upon the exercise of Incentive Options are used by the Company based on the prevailing circumstances at the time of receipt;

• (e) the issue of Incentive Options pursuant to the Plan has not been previously approved. Accordingly, no Incentive Options have previously been issued under the Plan to a Director, an associate of the Director, or a person whose relationships with the Company, a Director or associate of the Director is, in ASX’s opinion, such that approval should be obtained;

• (f) all Executive Directors are entitled to participate in the Plan, however, at the current time the Company intends to only make an offer to Darren John Pateman;

• (g) the Incentive Options will be issued to the Eligible Participant no later than 12 months after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated all the Incentive Options will be issued on the one date;

• (h) the terms and conditions of the Incentive Options are set out in Schedule 2;

• (i) the indicative value of the Incentive Options and the pricing methodology is set out in Schedule 3;

• (j) the Incentive Options will be granted to the Eligible Participant (and/or his respective nominees) for nil cash consideration. Accordingly, no loans will be made in relation to, and no funds will be raised from the initial grant of Incentive Options;

• (k) the relevant interests of the Eligible Participant in securities of the Company as at the date of this Notice are set out below:

Related Party	Shares	Options (Listed)	Options (Unlisted)
Darren John Pateman	2,326,669	Nil	Nil

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(l) the amounts paid from the Company to the Eligible Participant and his associates for the previous two financial years are set out below:

Related Party	2012	2013
Darren John Pateman	$736,9111	$951,3682

Notes:

1. This figure comprises $40,341 (Directors Fees); $350,000 (Salary) and $346,570 (STI Cash Bonus).

2. This figure comprises $60,661 (Directors Fees); $363,657 (Salary) and $527,050 (STI Cash Bonus).

3. (m) if the maximum number of Incentive Options are issued to the Eligible Participant, a total of 250,000 Incentive Options would be issued. This will increase the number of Shares on issue from 220,847,184 to 221,097,184 (assuming that no other Options are exercised and no other Incentive Options and Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 0.11% comprising 0.11% for the Eligible Participant;

(n) the trading history of the Shares on ASX in the 12 months before the date of this Notice is set out below:

	Price (cents)	Date
Highest	$1.70	15 May 2013
Lowest	$1.01	1 October 2012
Last	$1.43	27 September 2013

(o) the primary purpose of the issue of the Incentive Options to the Eligible Participant is to provide a performance linked incentive component to the Eligible Participant’s remuneration package, to motivate and reward the Eligible Participant in his role as Managing Director;

• (p) Mr John Chan, who does not have a material personal interest in the outcome of Resolution 4 recommends that Shareholders vote in favour of Resolution 4 for the following reasons:

• (i) The issue of the Incentive Options is:

  • (A) reasonable and appropriate as it will align the interests of the Eligible Participant with those of Shareholders; and

  • (B) a cost effective remuneration practice as the non-cash form of the financial benefit being given to the Eligible Participant will allow the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Eligible Participant; and

• (ii) It is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing the Incentive Options upon the proposed terms.

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• (q) Mr John Cheak recommends that Shareholders vote in favour of Resolution 4 for the reasons set out in paragraph (p)(i) and (p)(ii);

• (r) Mr Kee Kong Loh recommends that Shareholders vote in favour of Resolution 4 for the reasons set out in paragraph (p)(i) and (p)(ii);

• (s) Mr Lee Verios recommends that Shareholders vote in favour of Resolution 4 for the reasons set out in paragraph (p)(i) and (p)(ii);

• (t) Mr Darren John Pateman declines to make a recommendation to Shareholders in relation to Resolution 4 due to his material personal interest in the outcome of the Resolution;

• (u) in forming their recommendations, each Director considered the experience of the Eligible Participant, the existing and proposed contribution of the Eligible Participant to the Company, the current market practices when determining the quality of securities to be issued under the employee incentive schemes as well as the terms and vesting conditions of the Incentive Options;

• (v) the Board is not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 4;

• (w) details of any Incentive Options issued under the Plan will be published in each annual report of the Company relating to a period in which the Incentive Options have been issued, and that approval for the issue of Incentive Options was obtained under Listing Rule 10.14; and

• (x) any additional persons who become entitled to participate in the Plan after this Resolution 4 was approved and who were not named in the Notice will not participate until approval is obtained under Listing rule 10.14.

6. RESOLUTION 5 – DIRECTORS’ REMUNERATION

Clause 13.8 of the Constitution requires that the total aggregate fixed sum per annum to be paid to the Directors (excluding salaries of executive Directors) from time to time will not exceed the sum determined by the Shareholders in general meeting and the total aggregate fixed sum will be divided between the Directors as the Directors shall determine and, in default of agreement between them, then in equal shares.

ASX Listing Rule 10.17 provides that if a non-executive director is paid, he or she must be paid a fixed sum.

The total aggregate fixed sum per annum to be paid to the non-executive Directors is currently set at $350,000. Resolution 5 seeks Shareholder approval to increase the total aggregate fixed sum per annum to be paid to the nonexecutive Directors by $10,000 to $360,000.

The total amount of Directors’ fees payable includes superannuation contributions made by the Company for the benefit of non-executive directors and any fees which a non-executive Director agrees to sacrifice on a pre-tax basis.

The total aggregate fixed sum per annum has been determined after reviewing similar companies listed on ASX and the Directors believe that this level of remuneration is in line with corporate remuneration of similar companies.

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7. RESOLUTION 6 – REPLACEMENT OF CONSTITUTION

7.1 General

A company may modify or repeal its constitution or a provision of its constitution by special resolution of Shareholders.

Resolution 6 is a special resolution which will enable the Company to repeal its existing Constitution and adopt a new constitution ( Proposed Constitution ) which is of the type required for a listed public company limited by shares updated to ensure it reflects the current provisions of the Corporations Act and ASX Listing Rules.

This will incorporate amendments to the Corporations Act and ASX Listing Rules since the current Constitution was adopted in 2006.

The Directors believe that it is preferable in the circumstances to replace the existing Constitution with the Proposed Constitution rather than to amend a multitude of specific provisions.

The Proposed Constitution is broadly consistent with the provisions of the existing Constitution. Many of the proposed changes are administrative or minor in nature including but not limited to:

• (a) updating the name of the Company to that adopted in 2006;

• (b) updating references to bodies or legislation which have been renamed (e.g. references to the Australian Settlement and Transfer Corporation Pty Ltd, ASTC Settlement Rules and ASTC Transfer); and

• (c) expressly providing for statutory rights by mirroring these rights in provisions of the Proposed Constitution. The Directors believe these amendments are not material nor will they have any significant impact on Shareholders. It is not practicable to list all of the changes to the Constitution in detail in this Explanatory Statement, however, a summary of the proposed material changes is set out below.

A copy of the Proposed Constitution is available for review by Shareholders at the Company’s website www.finbar.com.au and at the office of the Company. A copy of the Proposed Constitution can also be sent to Shareholders upon request to the Company Secretary (+61 8 6211 3300). Shareholders are invited to contact the Company if they have any queries or concerns.

7.2 Summary of material proposed changes

Minimum Shareholding (clause 3)

Clause 3 of the Constitution outlines how the Company can manage shareholdings which represent an “unmarketable parcel” of shares, being a shareholding that is less than $500 based on the closing price of the Company’s Shares on ASX as at the relevant time.

The Proposed Constitution is in line with the requirements for dealing with “unmarketable parcels” outlined in the Corporations Act such that where the Company elects to undertake a sale of unmarketable parcels, the Company is only required to give one notice to holders of an unmarketable parcel to elect to retain their shareholding before the unmarketable parcel can be dealt with by the Company, saving time and administrative costs incurred by otherwise having to send out additional notices.

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Clause 3 of the Proposed Constitution continues to outline in detail the process that the Company must follow for dealing with unmarketable parcels.

Fee for registration of off market transfers (clause 8.4(c))

On 24 January 2011, ASX amended ASX Listing Rule 8.14 with the effect that the Company may now charge a “reasonable fee” for registering paper-based transfers, sometimes referred to “off-market transfers”.

Clause 8.4 of the Proposed Constitution is being made to enable the Company to charge a reasonable fee when it is required to register off-market transfers from Shareholders. The fee is intended to represent the cost incurred by the Company in upgrading its fraud detection practices specific to off-market transfers.

Before charging any fee, the Company is required to notify ASX of the fee to be charged and provide sufficient information to enable ASX to assess the reasonableness of the proposed amount.

Dividends (clause 21)

Section 254T of the Corporations Act was amended effective 28 June 2010.

There is now a three-tiered test that a company will need to satisfy before paying a dividend replacing the previous test that dividends may only be paid out of profits.

The amended requirements provide that a company must not a pay a dividend unless:

• (a) the company’s assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend;

• (b) the payment of the dividend is fair and reasonable to the company’s shareholders as a whole; and

• (c) the payment of the dividend does not materially prejudice the company’s ability to pay its creditors.

The existing Constitution reflects the former profits test and restricts the dividends to be paid only out of the profits of the Company. The Proposed Constitution is updated to reflect the new requirements of the Corporations Act. The Directors consider it appropriate to update the Constitution for this amendment to allow more flexibility in the payment of dividends in the future should the Company be in a position to pay dividends.

Partial (proportional) takeover provisions (new clause 35)

A proportional takeover bid is a takeover bid where the offer made to each shareholder is only for a proportion of that shareholder’s shares.

Pursuant to section 648G of the Corporations Act, the Company has included in the Proposed Constitution a provision whereby a proportional takeover bid for Shares may only proceed after the bid has been approved by a meeting of Shareholders held in accordance with the terms set out in the Corporations Act.

This clause of the Proposed Constitution will cease to have effect on the third anniversary of the date of the adoption of last renewal of the clause.

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Information required by section 648G of the Corporations Act

Effect of proposed proportional takeover provisions

Where offers have been made under a proportional off-market bid in respect of a class of securities in a company, the registration of a transfer giving effect to a contract resulting from the acceptance of an offer made under such a proportional off-market bid is prohibited unless and until a resolution to approve the proportional off-market bid is passed.

Reasons for proportional takeover provisions

A proportional takeover bid may result in control of the Company changing without Shareholders having the opportunity to dispose of all their Shares. By making a partial bid, a bidder can obtain practical control of the Company by acquiring less than a majority interest. Shareholders are exposed to the risk of being left as a minority in the Company and the risk of the bidder being able to acquire control of the Company without payment of an adequate control premium. These amended provisions allow Shareholders to decide whether a proportional takeover bid is acceptable in principle, and assist in ensuring that any partial bid is appropriately priced.

Knowledge of any acquisition proposals

As at the date of this Notice of Meeting, no Director is aware of any proposal by any person to acquire, or to increase the extent of, a substantial interest in the Company.

Potential advantages and disadvantages of proportional takeover provisions

The Directors consider that the proportional takeover provisions have no potential advantages or disadvantages for them and that they remain free to make a recommendation on whether an offer under a proportional takeover bid should be accepted.

The potential advantages of the proportional takeover provisions for Shareholders include:

• (a) the right to decide by majority vote whether an offer under a proportional takeover bid should proceed;

• (b) assisting in preventing Shareholders from being locked in as a minority;

• (c) increasing the bargaining power of Shareholders which may assist in ensuring that any proportional takeover bid is adequately priced; and

• (d) each individual Shareholder may better assess the likely outcome of the proportional takeover bid by knowing the view of the majority of Shareholders which may assist in deciding whether to accept or reject an offer under the takeover bid.

The potential disadvantages of the proportional takeover provisions for Shareholders include:

• (a) proportional takeover bids may be discouraged;

• (b) lost opportunity to sell a portion of their Shares at a premium; and

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(c) the likelihood of a proportional takeover bid succeeding may be reduced.

Recommendation of the Board

The Directors do not believe the potential disadvantages outweigh the potential advantages of adopting the proportional takeover provisions and as a result consider that the proportional takeover provision in the Proposed Constitution is in the interest of Shareholders and unanimously recommend that Shareholders vote in favour of Resolution 6.

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SCHEDULE 1 – SUMMARY OF EMPLOYEE INCENTIVE PLAN

The full terms of the Employee Incentive Plan ( Plan ) may be inspected at the registered office of the Company during normal business hours. A summary of the terms of the Plan is set out below. Please note that capitalised terms have the same meaning as set out in the Plan:

• (a) Subject to any necessary approvals from the Company’s shareholders or as required by the Corporations Act or Listing Rules, the Board may, from time to time, in its absolute discretion grant Shares and/or Options to Eligible Participants (as defined at clause (c), below) with effect from the date determined by the Board, upon the terms set out in the Plan and upon such additional terms and vesting conditions as the Board determines.

• (b) Vesting Conditions are defined within the Plan to mean any time based criteria, requirements or conditions (as specified in the Invitation Letter and determined by the Board in its sole and absolute discretion) which must be met prior to Options vesting in an Eligible Participant, which the Board may throughout the course of the period between the grant of an Option and its vesting waive or accelerate as the Board considers reasonably appropriate ( Vesting Conditions ).

• (c) Participants in the Plan may be Executive Directors of the Company or any of its related bodies corporate, or full-time and part-time employees of the Company or any of its related bodies corporate, or any other person permitted to participate in the Plan without requiring compliance with Chapters 6D.2, 6D.3 (except section 736) and 7.9 of the Corporations Act ( Eligible Participants ).

• (d) The Board is responsible for the operation of the Plan and has a broad discretion to determine which Eligible Participants will be offered Shares or Options under the Plan. The number of Shares or Options (if any) to be offered to an Eligible Participant from time to time will be determined by the Board in its discretion and in accordance with the rules of the Plan ( Rules ) and applicable law and the Listing Rules.

• (e) An offer of Shares or Options under the Plan ( Offer ) is personal and is not assignable, subject to the following rules on renunciation.

• (f) Upon receipt of an Offer, an Eligible Participant may, by notice in writing to the Board, nominate an Associate of that Eligible Participant ( Nominee ) in whose favour the Eligible Participant wishes to renounce the Offer. The Board may, in its discretion, resolve not to allow a renunciation of an Offer in favour of a Nominee without giving any reason for that decision. If the Board resolves to allow a renunciation of an Offer in favour of a Nominee, the Eligible Participant will procure that the permitted Nominee accepts the Offer made to that Eligible Participant and that both the Eligible Participant and the Nominee agree to be bound by the Rules.

• (g) The Board may terminate the Plan at any time. Termination shall not affect the rights or obligations of an Eligible Participant or the Company which have arisen under the Plan before the date of termination and the provisions of the Plan relating to the Eligible Participant’s Shares or shares issued upon the exercise of Options ( Plan Shares ) shall survive termination of the Plan until fully satisfied and discharged.

• (h) Each Option will, subject to the satisfaction of any Vesting Conditions or Exercise Conditions, entitle the holder to subscribe for one fully paid ordinary Share in the capital of the Company.

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• (i) Options will only vest if applicable Vesting Conditions have been satisfied, waived by the Board, or are deemed to have been satisfied under the Plan.

• (j) Vested Options will only be exercisable when any applicable Exercise Conditions have been satisfied, waived by the Board, or are deemed to have been satisfied under the Plan.

• (k) The Board will advise each Eligible Participant of the following minimum information regarding the Shares(s) and/or Options(s):

• (i) the number and type of Options(s) which are capable of becoming exercisable if the Vesting Conditions (if any) and/or Exercise Conditions (if any) are met;

• (ii) the Vesting Conditions (if any) and/or Exercise Conditions (if any);

• (iii) in the case of an Option, any amount (if any) that will be payable upon exercise ( Exercise Price ) and the period during which a vested Option may be exercised ( Exercise Period );

• (iv) the dates and times when Options lapse (if any) ( Expiry Date );

• (v) any disposal or other restriction on Plan Shares;

• (vi) any rights attaching to the Shares(s), Options(s) and/or Plan Shares; and

• (vii) any other relevant term and conditions to be attached to the Share(s), Option(s) and/or Plan Share(s).

• (l) The Company must take reasonable steps to ensure that the number of Shares issued upon acceptance of Shares or upon the exercise of Options offered under the Plan when aggregated with:

• (i) the number of Shares that would be issued if each outstanding offer for Shares, units of Shares or Options under an employee share scheme were to be exercised or accepted; and

• (ii) the number of Shares or Plan Shares issued during the previous 5 years under the Plan (or any other employee share scheme as identified by the Corporations Act) extended only to Eligible Participants,

does not exceed 5% of the total number of Shares on issue at the time of an Offer (but disregarding any offer of Shares or Plan Shares that can be disregarded in accordance with the Class Order) ( Plan Limit ).

• (m) Where an Eligible Participant ceases to be eligible to participate, any unvested Options will lapse (subject to certain good leaver exceptions).

• (n) Subject to compliance with applicable securities law, in circumstances where an Eligible Participant becomes ineligible to participate in the Plan (for example where the Eligible Participant becomes a Bad Leaver), the Company may buyback Shares for an amount agreed in writing with the Eligible Participant at any time.

• (o) Unless determined by the Board in its sole and absolute discretion, Options granted under the Plan will not be quoted on any stock exchange.

• (p) If Shares or Plan Shares of the same class as those issued under the Plan are quoted on the ASX, the Company must, subject to the ASX Listing Rules, apply to the ASX within 10 Business Days of Shares or Plan Shares being issued for those Shares or Plan Shares to be quoted on ASX.

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• (q) To ensure that Shares and Plan Shares are freely tradeable on ASX from the date of issue, the Company must comply with any requirement under the Corporations Act at the time the Shares or Plan Shares are issued.

• (r) Any Shares or Plan Shares issued by the Company to an Eligible Participant will rank equally with all existing Shares on and from the date of issue or transfer.

• (s) The Board may, in its sole and absolute discretion, determine prior to an Invitation being made to an Eligible Participant, whether there will be any restriction on the disposal of, or dealing with in any way, Shares or Plan Shares held by Eligible Participants.

• (t) There are no participating rights or entitlements inherent in the Options and holders of Options will not be entitled to participate in new issues of Shares offered to Shareholders.

• (u) A holder of a Share or Plan Share will have a vested and indefeasible entitlement to dividends declared and distributed by the Company on Shares or Plan Shares (subject to entitlement at the date for determining dividends).

• (v) An Eligible Participant may participate in a dividend reinvestment plan operated by the Company in respect of the Shares or Plan Shares held by the Eligible Participant, and such participation must be in respect of all Shares or Plan Shares held by the Eligible Participant.

• (w) An Eligible Participant may be eligible for a tax free issue of Shares up to a total value of A$1,000 provided they meet the eligibility requirements of the Income Tax Assessment Act 1997 (Cth) including (but not limited to):

• (i) the shares are ordinary shares in the Company which is the current employer (or the holding company of the current employer);

• (ii) the predominant business of the Company is not the acquisition and holding of securities or, if it is, the employee is not employed by the Company and a related company;

• (iii) the scheme is offered on a non-discriminatory basis to at least 75% of Australian resident employees of the relevant employer who have at least 3 years of service with the employer;

• (iv) there is no real risk under the Plan that the Eligible Participant will forfeit the Shares or Plan Shares;

• (v) the scheme is operated to not permit disposal of the Shares or Plan Shares before the earlier of 3 years and cessation of the relevant employment;

• (vi) immediately after the employee share scheme interest is acquired the Eligible Participant does not hold a beneficial interest in more than 5% of the Shares in the Company and is not in a position to cast or control the casting of more than 5% of the maximum number of votes that may be cast at a general meeting of the Company; and

• (vii) the Eligible Participant has 'adjusted' income of not more than $180,000.

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• (x) An Eligible Participant may exercise any voting rights attaching to Shares or Plan Shares registered in the Eligible Participant’s name.

• (y) If, at any time, there are variations to the share capital of the Company, including a variation or rights issue, sub-division, consolidation, reduction, return or cancellation of the share capital, a demerger (in whatever form) or other distribution in specie, all rights of an Eligible Participant are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules.

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SCHEDULE 2 – TERMS AND CONDITIONS OF INCENTIVE OPTIONS

(a) Entitlement

Subject to paragraph (m), each Incentive Option entitles the holder to subscribe for one Share upon exercise of the Incentive Option.

(b) Exercise Price

Subject to paragraphs (j) and (l), the exercise price of the Incentive Options will be equal to the market price of the Company’s Shares on the day prior to the date of issue of the Incentive Options plus $0.15.

(c) Vesting and Expiry Date

Each Incentive Option will vest at 5.00pm (WST) on a date that is 12 months after the date that the Incentive Options are granted and are exercisable three (3) years from the date of issue ( Expiry Date ). An Incentive Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) Exercise Period

The Incentive Options are exercisable at any time on or prior to the Expiry Date ( Exercise Period ).

(e) Notice of Exercise

The Incentive Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Incentive Option certificate ( Notice of Exercise ) and payment of the Exercise Price for each Incentive Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

(f) Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Incentive Option being exercised in cleared funds ( Exercise Date ).

(g) Timing of issue of Shares on exercise

Within 15 Business Days after the later of the following:

• (i) the Exercise Date; and

• (ii) when excluded information in respect to the Company (as defined in section 708A(7) of the Corporations Act) (if any) ceases to be excluded information,

but in any case no later than 20 Business Days after the Exercise Date, the Company will:

• (iii) allot and issue the number of Shares required under these terms and conditions in respect of the number of Incentive Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;

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• (iv) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and

• (v) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Incentive Options.

If a notice delivered under (g)(iv) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

(h)

Shares issued on exercise

Shares issued on exercise of the Incentive Options rank equally with the then issued shares of the Company.

(i) Quotation of Shares issued on exercise

If admitted to the official list of ASX at the time, application will be made by the Company to ASX for quotation of the Shares issued upon the exercise of the Incentive Options.

(j) Reconstruction of capital

If at any time the issued capital of the Company is reconstructed, all rights of an Incentive Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

(k) Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options.

(l) Adjustment for rights issue

In the event the Company proceeds with a pro rata issue (except a bonus issue) of securities to Shareholders after the date of issue of the Incentive Options, the Exercise Price may be reduced in accordance with the formula set out in ASX Listing Rule 6.22.2.

(m) Adjustment for bonus issues of Shares

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment):

• (i) the number of Shares which must be issued on the exercise of an Incentive Option will be increased by the number of Shares which the Optionholder would have received if the Incentive Optionholder had

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exercised the Incentive Option before the record date for the bonus issue; and

• (ii) no change will be made to the Exercise Price.

(n) Unquoted

The Company will not apply for quotation of the Incentive Options on ASX.

(o) Transferability

Subject to the Incentive Options having vested in accordance with clause (c), the Incentive Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws.

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SCHEDULE 3 – VALUATION OF INCENTIVE OPTIONS

Using the Bermudan Option Pricing Model and based on the assumptions set out below, the Incentive Options were ascribed the following value range:

Assumptions:
Valuation date	24 September 2013
Market price of Shares	As set out below
Exercise price	Share price at grant date + 15 cents
Expiry date (length of time from issue)	3 years from grant date
Risk free interest rate	2.80% (as at 24 September 2013)
Volatility	33.71% (based on historical 3 year share price volatilities)
Dividend Yield	6.420% (based on dividend history)
Share Price	Exercise Price	Incentive Option Valuation	Total Fair Value (based on 250,000 Incentive Options granted)
$1.30	$1.45	$0.1835	$45,875
$1.40	$1.55	$0.2067	$51,675
$1.49 (Price at time of valuation)	$1.64	$0.2161	$54,025
$1.50	$1.65	$0.2178	$54,450
$1.60	$1.75	$0.2350	$58,750
$1.70	$1.85	$0.2523	$63,075

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GLOSSARY

$ means Australian dollars.

Annual General Meeting or Meeting means the meeting convened by the Notice.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Company means Finbar Group Limited (ACN 009 113 473).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice.

General Meeting or Meeting means the meeting convened by this Notice.

Notice or Notice of Meeting or Notice of Annual General Meeting means this notice of annual general meeting including the Explanatory Statement and the Proxy Form.

Proxy Form means the proxy form accompanying the Notice.

Resolutions means the resolutions set out in the Notice of Meeting, or any one of them, as the context requires.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

WST means Western Standard Time as observed in Perth, Western Australia.

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