X2M CONNECT LIMITED — Governance Information 2021

Sep 19, 2021

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CORPORATE GOVERANCE STATEMENT

X2M Connect Limited

X2M CONNECT LIMITED ACN 637 951 154 (Company)

CORPORATE GOVERNANCE STATEMENT

This Corporate Governance Statement is current as at 19 September 2021 and has been approved by the Board of the Company on that date.

This Corporate Governance Statement discloses the extent to which the Company will, as at the date it is admitted to the official list of the ASX, follow the recommendations set by the ASX Corporate Governance Council in its publication Corporate Governance Principles and Recommendations – 4[th] Edition ( Recommendations ). The Recommendations are not mandatory, however the Recommendations that will not be followed have been identified and reasons provided for not following them along with what (if any) alternative governance practices the Company intends to adopt in lieu of the recommendation.

The Company has adopted a Corporate Governance Plan which provides the written terms of reference for the Company’s corporate governance duties.

Other than the Audit and Risk Committee, due to the current size and nature of the existing Board and the magnitude of the Company’s operations, the Board does not consider that the Company will gain any benefit from individual Board committees and that its resources would be better utilised in other areas as the Board is of the strong view that at this stage the experience and skill set of the current Board is sufficient to perform these roles. Under the Company’s Board Charter, the duties that would ordinarily be assigned to individual committees other than the Audit and Risk Committee are currently carried out by the full Board under the written terms of reference for those committees.

The Company’s Corporate Governance Plan is available on the Company’s website at https://x2mconnect.com/investor-centre/.

RECOMMENDATIONS (4TH EDITION)	COMPLY	EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1	YES	The Company has adopted a Board Charter that sets out the specific roles and responsibilities of the Board, the Chair and management and includes a description of those matters expressly reserved to the Board and those delegated to management.

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• (a) A listed entity should have and disclose a board charter which sets out the respective roles and responsibilities of the Board, the Chair and management, and includes a description of those matters expressly reserved to the Board and those delegated to management.

Recommendation 1.2

A listed entity should:

• (a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a Director; and

• (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a Director.

COMPLY

YES

EXPLANATION

The Board Charter sets out the specific responsibilities of the Board, requirements as to the Board’s composition, the roles and responsibilities of the Chairman and Company Secretary, the establishment, operation and management of Board Committees, Directors’ access to Company records and information, details of the Board’s relationship with management, details of the Board’s performance review and details of the Board’s disclosure policy. A copy of the Company’s Board Charter, which is part of the Company’s Corporate Governance Plan, is available on the Company’s website.

• (a) The Company has guidelines for the appointment and selection of the Board and senior executives in its Corporate Governance Plan. The Company’s Nomination Committee Charter (in the Company’s Corporate Governance Plan) requires the Nomination Committee (or, in its absence, the Board) to ensure appropriate checks (including checks in respect of character, experience, education, criminal record and bankruptcy history (as appropriate)) are undertaken before appointing a person, or putting forward to security holders a candidate for election, as a Director. In the event of an unsatisfactory check, a Director is required to submit their resignation.

• (b) Under the Nomination Committee Charter, all material information relevant to a decision on whether or not to elect or re-elect a Director must be provided to security holders in the Notice of Meeting containing the resolution to elect or re-elect a Director.

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RECOMMENDATIONS (4[TH] EDITION)

Recommendation 1.3

A listed entity should have a written agreement with each Director and senior executive setting out the terms of their appointment.

COMPLY

YES

EXPLANATION

The Company’s Nomination Committee Charter requires the Nomination Committee (or, in its absence, the Board) to ensure that each Director and senior executive is personally a party to a written agreement with the Company which sets out the terms of that Director’s or senior executive’s appointment.

The Company has written agreements with each of its Directors and senior executives.

Recommendation 1.4

The Company Secretary of a listed entity should be YES accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board.

Recommendation 1.5

• A listed entity should: (a) have and disclose a diversity policy; YES (b) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and

• (c) disclose in relation to each reporting period:

• (i) the measurable objectives set for that period to achieve gender diversity;

• (ii) the entity’s progress towards achieving those objectives; and

• (iii) either:

The Board Charter outlines the roles, responsibility and accountability of the Company Secretary. In accordance with this, the Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board.

• (a) The Company has adopted a Diversity Policy which provides a framework for the Company to establish, achieve and measure diversity objectives, including in respect of gender diversity. The Diversity Policy is available, as part of the Corporate Governance Plan, on the Company’s website.

• (b) The Diversity Policy allows the Board to set measurable gender diversity objectives, if considered appropriate, and to continually monitor both the objectives if any have been set and the Company’s progress in achieving them.

• (c) The measurable diversity objectives for each financial year (if any), and the Company’s progress in achieving them, will be detailed in the Company’s Annual Report.

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RECOMMENDATIONS (4TH EDITION)	COMPLY	EXPLANATION
(A) the respective proportions of men and women on the Board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or (B) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in the Workplace Gender Equality Act. If the entity was in the S&P / ASX 300 Index at the commencement of the reporting period, the measurable objective for achieving gender diversity in the composition of its board should be to have not less than 30% of its directors of each gender within a specified period.		(i) the Board does not anticipate there will be a need to appoint any new Directors or senior executives due to the Board’s view that the existing Directors and senior executives have sufficient skill and experience to carry out the Company’s plans; (ii) if it becomes necessary to appoint any new Directors or senior executives, the Board will consider the application of the measurable diversity objectives and determined whether, given the small size of the Company and the Board, requIring specified objectectives to be met will unduly limit the Company from applying the Diversity Policy as a whole and the Company’s policy of appointing the best person for the job; and (iii) the respective proportions of men and women on the Board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes) for each financial year will be disclosed in the Company’s Annual Report.
Recommendation 1.6 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the Board, its committees and individual Directors; and (b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period.	YES	The Company’s Board Charter requires an annual Board assessment and review of its performance, its Committees, and Directors. Given the timing of the Board’s appointment in 2020/21, a review was not undertaken but will occur next year.

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• RECOMMENDATIONS (4[TH] EDITION) COMPLY EXPLANATION Recommendation 1.7 (a) The Company’s Board Charter provides that the A listed entity should: YES Board is responsible for monitoring the performance of the Executive Team. The performance of the CEO

• (a) have and disclose a process for evaluating the and Senior Executives is assessed annually with

• performance of its senior executives at least once reference to agreed milestones. Performance

• every reporting period; and reviews were undertaken during the reporting

• (b) disclose for each reporting period whether a period. Details of the remuneration of the Executive

• performance evaluation has been undertaken in Team considered by the Company to be Key

• accordance with that process during or in respect Management Personnel is set out in the of that period. Remuneration Report section of the Annual Report.

• (b) The Board is responsible for agreeing the remuneration arrangements and terms of employment for the CEO and Executive Team. The Board is also responsible for: (i) any equity-based remuneration plans for the Executive Team and other employees.

• (ii) for reviewing and approving the design and (iii) total proposed payments from any Executive Team incentive plan; and

• (iv) the proposed award to each member of the Executive Team under the rules of any Executive Team incentive plan.

Principle 2: Structure the Board to be effective and add value

Recommendation 2.1	Recommendation 2.1		(a)	The Company does not have a Nomination
The (a)	Board of a listed entity should: have a nomination committee which: (i) has at least three members, a majority of whom are independent Directors; and	NO		Committee. The Company’s Nomination Committee Charter provides for the creation of a Nomination Committee (if it is considered it will benefit the Company), with at least three members, a majority of whom are independent Directors, and which must
	(ii) is chaired by an independent Director,			be chaired by an independent Director.
	and disclose:
	(iii) the charter of the committee;

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COMPLY

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• (iv) the members of the committee; and (v) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

• (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address Board succession issues and to ensure that the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.

Recommendation 2.2

A listed entity should have and disclose a Board skills matrix YES setting out the mix of skills that the Board currently has or is looking to achieve in its membership.

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YES
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Recommendation 2.3 A listed entity should disclose: YES

• (a) the names of the Directors considered by the Board to be independent Directors;

EXPLANATION

• (b) The Company does not have a Nomination Committee as the Board considers that the Company will not currently benefit from its establishment. In accordance with the Company’s Board Charter, the Board carries out the duties that would ordinarily be carried out by the Nomination Committee under the Nomination Committee Charter, including the following processes to address succession issues and to ensure the Board has the appropriate balance of skills, experience, independence and knowledge of the entity to enable it to discharge its duties and responsibilities effectively:

• (i) devoting time at least annually to discuss Board succession issues and updating the Company’s Board skills matrix; and

• (ii) all Board members being involved in the Company’s nomination process, to the maximum extent permitted under the Corporations Act and ASX Listing Rules.

The Board Charter requires the disclosure of each Board member’s qualifications and expertise. Full details as to each Director and senior executive’s relevant skills and experience are available in the Company’s Annual Report. The Board Skills Matrix is included in the Annual Report.

• (a) The Board Charter requires the disclosure of the names of Directors considered by the Board to be independent. The Company will disclose those Directors it considers to be independent in its Annual Report

• (b) There are no independent Directors who fall into this category.

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COMPLY

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• (b) if a Director has an interest, position or relationship of the type described in Box 2.3 of the ASX Corporate Governance Principles and Recommendations (4th Edition), but the Board is of the opinion that it does not compromise the independence of the Director, the nature of the interest, position or relationship in question and an explanation of why the Board is of that opinion; and

• (c) the length of service of each Director

Recommendation 2.4

A majority of the Board of a listed entity should be independent Directors.

YES

Recommendation 2.5

The Chair of the Board of a listed entity should be an YES independent Director and, in particular, should not be the same person as the CEO of the entity.

Recommendation 2.6

NO

A listed entity should have a program for inducting new Directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as Directors effectively.

EXPLANATION

• (c) The Company’s Annual Report will disclose the length of service of each Director, as at the end of each financial year.

The Company’s Board Charter requires that, where practical, the majority of the Board should be independent.

The Board currently comprises a total of four directors, of whom four are considered to be independent. As such, independent directors currently comprise the majority of the Board.

The Board Charter provides that, where practical, the Chair of the Board should be an independent Director and should not be the CEO/Managing Director.

The Chair of the Company is an independent Director and is not the CEO/Managing Director.

A formal Non-Executive Director Induction and Professional Development Policy will be developed in 2021/22.

The Company Secretary is responsible for arranging for new Directors to undertake an induction program to enable them to gain an understanding of the Company’s:

• (a) operations

• (b) the industry,

• (c) the culture and values of the Company

• (d) the Company’s financial, strategic, operational and risk management position; and

• (e) the rights, duties, and responsibilities, of the new Director.

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RECOMMENDATIONS (4TH EDITION)	COMPLY	EXPLANATION
		The policy will also consider annual requirements for the Directors to undergo regular professional development.
Principle 3: Instil a culture of acting lawfully, ethically and responsibly
Recommendation 3.1 A listed entity should articulate and disclose its values.	YES	(a) The Company and its subsidiary companies (if any) are committed to conducting all of its business activities fairly, honestly with a high level of integrity, and in compliance with all applicable laws, rules and regulations. The Board, management and employees are dedicated to high ethical standards and recognise and support the Company’s commitment to compliance with these standards. (b) The Company’s values are set out in its Code of Conduct (which forms part of the Corporate Governance Plan) and are available on the Company’s website.
Recommendation 3.2 A listed entity should: (a) have and disclose a code of conduct for its Directors, senior executives and employees; and (b) ensure that the Board or a committee of the Board is informed of any material breaches of that code.	YES	(a) The Company’s Corporate Code of Conduct applies to the Company’s Directors, senior executives and employees. (b) The Company’s Corporate Code of Conduct (which forms part of the Company’s Corporate Governance Plan) is available on the Company’s website. Any material breaches of the Code of Conduct are reported to the Board or a committee of the Board.
Recommendation 3.3 A listed entity should: (a) have and disclose a whistleblower policy; and (a) ensure that the Board or a committee of the Board is informed of any material incidents reported under that policy.	YES	The Company’s Whistleblower Protection Policy (which forms part of the Corporate Governance Plan) is available on the Company’s website. Any material breaches of the Whistleblower Protection Policy are to be reported to the Board or a committee of the Board.

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RECOMMENDATIONS (4TH EDITION)	COMPLY	EXPLANATION
Recommendation 3.4 A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the Board or committee of the Board is informed of any material breaches of that policy.	YES	The Company’s Anti-Bribery and Anti-Corruption Policy (which forms part of the Corporate Governance Plan) is available on the Company’s website. Any material breaches of the Anti-Bribery and Anti-Corruption Policy are to be reported to the Board or a committee of the Board.
Principle 4: Safeguard the integrity of corporate reports
Recommendation 4.1 The Board of a listed entity should: (a) have an audit committee which: (i) has at least three members, all of whom are non-executive Directors and a majority of whom are independent Directors; and (ii) is chaired by an independent Director, who is not the Chair of the Board, and disclose: (iii) the charter of the committee; (iv) the relevant qualifications and experience of the members of the committee; and (v) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.	YES	The Company has an Audit and Risk Committee. The Company’s Corporate Governance Plan contains an Audit and Risk Committee Charter that provides for the creation of an Audit and Risk Committee with at least three members, all of whom must be non-executive Directors, and majority of the Committee must be independent Directors. The Committee must be chaired by an independent Director who is not the Chair. The members of the Audit and Risk Committee, their relevant qualification and experience, the number of times the committee meets during each financial year, and the individual attendances of the members, are disclosed in the Annual Report.

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RECOMMENDATIONS (4[TH] EDITION)

Recommendation 4.2

The Board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

COMPLY

YES

EXPLANATION

The Company’s Audit and Risk Committee Charter requires the CEO and CFO (or, if none, the person(s) fulfilling those functions) to provide a sign off on these terms.

The Company intends to obtain a sign off on these terms for each of its financial statements in each financial year.

Recommendation 4.3

A listed entity should disclose its process to verify the integrity YES of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor.

Principle 5: Make timely and balanced disclosure

Recommendation 5.1

A listed entity should have and disclose a written policy for YES complying with its continuous disclosure obligations under listing rule 3.1.

Recommendation 5.2

YES

A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made.

Recommendation 5.3

YES

A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation.

Periodic reports that are not audited are prepared by management and reviewed by the Board prior to being released to ASX. Where necessary, periodic reports are reviewed by the auditor for errors or omissions. (a) The Company’s Corporate Governance Plan details the Company’s Continuous Disclosure policy.

• (b) The Corporate Governance Plan, which incorporates the Continuous Disclosure policy, is available on the Company’s website.

Under the Company’s Continuous Disclosure Policy (which forms part of the Corporate Governance Plan), all members of the Board will receive material market announcements promptly after they have been made.

All substantive investor or analyst presentations will be released on the ASX Markets Announcement Platform ahead of such presentations.

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COMPLY

EXPLANATION

Principle 6: Respect the rights of security holders

Recommendation 6.1

A listed entity should provide information about itself and its YES governance to investors via its website.

Recommendation 6.2

A listed entity should have an investor relations program that YES facilitates effective two-way communication with investors.

Recommendation 6.3

A listed entity should disclose how it facilitates and YES encourages participation at meetings of security holders.

Information about the Company and its governance is available in the Corporate Governance Plan which can be found on the Company’s website.

Relationships with investors are very important to the Company. The Company has a page on its website for investors which includes a dedicated email address for investor enquiries.

Shareholders are encouraged to participate at all general meetings and AGMs of the Company. Notice of Meetings and explanatory materials are written in a clear and concise manner to ensure that shareholders comprehend the resolutions to be put to the meeting.

The external auditor is required to attend the AGM of the Company and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.

Shareholders are able to communicate with the Company electronically and ask questions via the Company’s website or by email. Investors are also able to communicate with the Company’s share registry electronically, by emailing the share registry or via the share registry’s website.

Recommendation 6.4

A listed entity should ensure that all substantive resolutions YES at a meeting of security holders are decided by a poll rather than by a show of hands.

Recommendation 6.5

YES

A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

All substantive resolutions at securityholder meetings will be decided by a poll rather than a show of hands.

The Company share registry provides the ability for security holders to register to receive communications electronically.

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COMPLY

EXPLANATION

Principle 7: Recognise and manage risk

Recommendation 7.1

The Board of a listed entity should:

• (a) have a committee or committees to oversee risk, each of which:

• (i) has at least three members, a majority of whom are independent Directors; and

• (ii) is chaired by an independent Director, and disclose:

• (iii) the charter of the committee;

• (iv) the members of the committee; and

• (v) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

YES

The Company has an Audit and Risk Committee. The Company’s Corporate Governance Plan contains an Audit and Risk Committee Charter that provides for the creation of an Audit and Risk Committee with at least three members, all of whom must be non-executive Directors, and majority of the Committee must be independent Directors. The Committee must be chaired by an independent Director who is not the Chair.

A copy of the Corporate Governance Plan is available on the Company’s website. The members of the Audit and Risk Committee, the number of times the committee meets during each financial year, and the individual attendances of the members, are disclosed in the Annual Report.

• (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the process it employs for overseeing the entity’s risk management framework.

Recommendation 7.2

The Board or a committee of the Board should:

• (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risk appetite set by the Board; and

• (b) disclose in relation to each reporting period, whether such a review has taken place.

YES

• (a) The Audit and Risk Committee Charter requires that the Audit and Risk Committee (or, in its absence, the Board) should, at least annually, satisfy itself that the Company’s risk management framework continues to be sound and that the Company is operating with due regard to the risk appetite set by the Board.

• (b) During Financial Year 2021, management identified the material business risks of the Company. In Financial Year 2022, the risk management processes of the Company will develop further as the Company matures.

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RECOMMENDATIONS (4[TH] EDITION) Recommendation 7.3

A listed entity should disclose:

• (a) if it has an internal audit function, how the function is structured and what role it performs; or

• (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its governance, risk management and internal control processes.

COMPLY EXPLANATION (a) YES

• (a) Prior to listing on the ASX, the Company did not appoint an Internal Auditor as the size and scale of the operations did not warrant the function.

• (b) Moving forward, the Audit and Risk Committee will review the need for an Internal Auditor who will assist with the oversight and validation of key elements of the Company’s governance, risk management and internal control processes. In the interim, until an Internal Auditor function is established, the Audit and Risk Committee conducts reviews of the business and reports to the Board regarding the Company’s internal processes for managing risks.

Recommendation 7.4

A listed entity should disclose whether it has any material YES exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks

The Audit and Risk Committee Charter requires the Audit and Risk Committee (or, in its absence, the Board) to assist management to determine whether the Company has any potential or apparent exposure to environmental or social risks and, if it does, put in place management systems, practices and procedures to manage those risks.

The Company’s Corporate Governance Plan requires the Company to disclose whether it has any potential or apparent exposure to environmental or social risks and, if it does, put in place management systems, practices and procedures to manage those risk.

Where the Company does not have material exposure to environmental or social risks, report the basis for that determination to the Board, and where appropriate benchmark the Company’s environmental or social risk profile against its peers.

The Company will disclose this information in its Annual Report to the extent relevant.

Principle 8: Remunerate fairly and responsibly

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RECOMMENDATIONS (4TH EDITION)	COMPLY	EXPLANATION
Recommendation 8.1 The Board of a listed entity should: (a) have a remuneration committee which: (i) has at least three members, a majority of whom are independent Directors; and (ii) is chaired by an independent Director, and disclose: (iii) the charter of the committee; (iv) the members of the committee; and (v) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	YES	(a) The Company does not have a Remuneration Committee. The Company’s Corporate Governance Plan contains a Remuneration Committee Charter that provides for the creation of a Remuneration Committee (if it is considered it will benefit the Company), with at least three members, a majority of whom are be independent Directors, and which must be chaired by an independent Director. (b) The Company does not have a Remuneration Committee as the Board considers the Company will not currently benefit from its establishment. In accordance with the Company’s Board Charter, the Board carries out the duties that would ordinarily be carried out by the Remuneration Committee under the Remuneration Committee Charter including the following processes to set the level and composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and not excessive: (i) At Board meetings the Board sets aside time for determining and reviewing compensation arrangements for the Directors and the Managing Director, and direct reports to the CEO.
Recommendation 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive Directors and the remuneration of executive Directors and other senior executives.	YES	The Company’s Corporate Governance Plan requires the Board to disclose its policies and practices regarding the remuneration of Directors and senior executives, which is disclosed in the remuneration report contained in the Company’s Annual Report.

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RECOMMENDATIONS (4[TH] EDITION)

COMPLY

Recommendation 8.3

A listed entity which has an equity-based remuneration YES scheme should:

(a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b) disclose that policy or a summary of it.

EXPLANATION

In 2020/21 an Employee Share Scheme was implemented pre-listing aimed at aligning key personnel with the goals and objectives of the Company, as well as the goals and objectives of shareholders. Further work will be undertaken in 2021/22 to streamline both long and short term incentives to ensure they apply consistently across the group.

In 2020/21, the Company offered equity based remuneration through its STI and LTI schemes. The Incentive Plan rules and the Company’s Security Trading Policy prohibit employees from hedging the value of restricted shares and unvested securities. Breaches of this prohibition will result in awards being forfeited by the relevant employee.

The Company’s Security Trading Policy is located on the Company’s website.

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