Corporate Governance

The Board of Directors of AgriBank has ultimate responsibility for good corporate governance. The Board strongly believes that directors, management and employees should commit to adopt internationally recognized standards of good practice. The directors expect AgriBank to endorse and be in compliance with the Code of Principles of Good Corporate Governance issued by the Malta Financial Services Authority (MFSA) and published as an Appendix to the Listing Rules notwithstanding that such Principles are not per se legally binding and are not applicable to non-listed entities.

Roles and Responsibilities

The board is responsible for the overall direction of AgriBank, for setting its strategy and policies and for ensuring that these are pursued through good management practices. The board discharges its responsibilities by:

1. Setting business objectives, financial plans and general parameters within which the board , its committees and management are to function;
2. Ensuring that systems and procedures are in place to identify and manage significant business risks and exposures;
3. Ensuring that adequate and effective systems of internal control are in place, and that compliance therewith is monitored on a regular basis;
4. Setting appropriate business standards and codes of corporate governance and ethical behavior for all directors and employees, and monitoring their performance;
5. Appointing the CEO who is responsible for the day-to-day management and operations, together with other members of management.

The Board has created a framework through which it can effectively perform its functions. The Board has also established terms of reference and charters for the various committees and the conduct of their meetings.

 Board members bring a variety of backgrounds, experiences and expertise ranging from business to financial services. The proposal for an individual to become a director is assessed by the MFSA, which reviews, inter alia, the individual’s competence to serve as director against established ‘fit and proper’ criteria.

The Board is expected to play a full and constructive role in the Bank’s affairs.

Board Composition and Appointment of Directors

The Articles of Association of AgriBank contain detailed provisions as to the manner of appointment and retirement of directors. Directors of the bank are as follows:

Proceedings of Directors

The proceedings of directors are regulated by the Articles of Association of AgriBank, the Companies Act, 1995 and the Banking Act, 1994. Board meetings are held every six weeks. An agenda and necessary documentation is distributed prior to meeting in order to inform the directors of anything required to discharge their roles and responsibilities. Meetings also include presentations by management. Members of senior management attend all board meetings. The board might also request that meetings be attended by other employees or by professional advisors, as and when necessary.

All board members have access to the company secretary and are entitled to take independent professional advice on any matter relating to their duties.

Potential conflicts of interest are specifically regulated in the Articles of Association. Whenever a conflict of interest situation arises, whether real or potential, the interest has to be declared. The minutes of all board meetings and committees shall include a suitable record of any action taken. Similar arrangements apply to management in the course of the conduct of their duties at board committees. Where directors and management have related party involvements, the Audit Committee has the responsibility to exercise oversight on such related party transactions.

The Articles of Association provide that the Directors may delegate certain powers and authorities to any person and/or Committee appointed by them. The composition of such committees is decided upon by the board. All such board committees include at least one director.

The board has established the following committees:

• Audit Committee

The Audit Committee

The Audit Committee assists the board in fulfilling its supervisory and monitoring responsibilities, as outlined in the Audit Committee Charter and which reflect current best practices and recommendations of good corporate governance. The terms of reference of the Audit Committee include:

1. monitoring of the financial reporting process, including auditing of the annual accounts;
2. monitoring of the effectiveness of the bank’s internal controls, internal audit, compliance and risk management systems;
3. maintenance of communication between the Board, Management, the external Auditors and the internal Auditors on the above-mentioned matters;
4. monitoring and reviewing the external Auditor’s independence;
5. monitoring and reviewing of proposed transactions by the Bank with related parties; and
6. monitoring the performance of the Bank’s Internal Audit function.

The Audit Committee also considers the arm’s length nature of related party transactions that the bank carries out. Both the Audit Committee and the Head of Internal Audit stipulate the need for independence from other Board Committees and management.

The members of the Audit Committee are:

• Mr. Stephen Muscat – Chairman
• Mr. Victor Rizzo Giusti – Audit Committee Member
• Mr. Patrik Heininger – Audit Committee Member

Additionally, Ms. Analise Domancich acts as Secretary to the Audit Committee.

The Audit Committee may request members of management to attend its meetings.

The Audit Committee meets on a quarterly basis. However any issues requiring the committee’s immediate consideration may be acted upon between meetings and decided by the members through electronic circulation and correspondence.

Internal Control

The board is ultimately responsible for the identification and evaluation of key risks applicable to the business of the Bank and for ensuring that proper systems of internal control are in place. The board has delegated management with the task of creating an effective control environment. To this end the board receives regular reports from Management providing detailed and comprehensive analysis of financial and operational performance, including variance analysis between budgeted and actual figures, activities and prospects.

The internal audit function performs periodic audits to test compliance with policies, standards and procedures and the effectiveness of internal control measures within the Bank. To ensure effectiveness of internal controls, Internal Audit reviews and tests such systems independently from management adopting a risk-based approach. The Internal Auditor reports to the Audit Committee however the Chairman of the Board of Directors is also copied with all internal audit reports issued.

Commitment to Shareholders

The Board ensures that information regarding the Bank’s progress, activities and financial performance is regularly disseminated to Shareholders in a transparent and accountable manner during annual general meetings. The Board also complies with the provisions of the Bank’s Memorandum and Articles, as well as all applicable legislation, rules and regulations protecting the interests of shareholders.

Terms and Remuneration

The remuneration of directors is determined during the annual general meeting as provided in the Bank’s Articles of Association.

The Board considers that the terms and remuneration of members of Management should reflect responsibilities whilst also taking into account industry and market benchmarks. The review, approval and monitoring of the overall remuneration policy is delegated by the Board to executive management.

Corporate Social Responsibility

The Board of Directors encourages that sound principles of corporate social responsibility are adhered to by the management of the Bank. Therefore, from time to time, the Bank will support initiatives at national and community level aimed at contributing to economic and social development as well as supporting charitable, sports related and philanthropic initiatives.