The Board of Directors mandate is to manage or supervise the management of the business and affairs of the Company and to act with a view to the best interests of the Company. The Board meets regularly to review financial and continuous disclosure matters as well as the Company's financial budget and business plan for the ensuing year and its overall strategic objectives. The Board also meets as required to deal with matters requiring decisions between regularly scheduled Board meetings.
Committees of the Board of Directors
At present, the Board of Directors of the Company has appointed two committees, being the Corporate Governance Committee and the Audit Committee. The Corporate Governance Committee is comprised of Gary Nordin and Andrew Muir, and is ultimately responsible for establishing policies and practices to monitor, on an ongoing basis, the activities of management and to ensure that the highest standard of ethical conduct is maintained.
The Audit Committee is comprised of Doug Willock, Gary Nordin and David Hottman, and is ultimately responsible for the policies and practices relating to integrity of financial and regulatory reporting of the Company, as well as internal controls to achieve the objectives of safeguarding the Company's assets; reliability of information; and compliance with policies and laws. The Audit Committee is committed to maintaining the highest standards of business conduct and ethics and is responsible for ensuring that a confidential and anonymous process exists whereby persons can report any Accounting Concerns relating to Orestone Mining Corp. and its subsidiaries.
The Board annually, and at such other times as it deems appropriate, reviews the performance and effectiveness of the Board, the directors and its committees to determine whether changes in size, personnel or responsibilities are warranted. To assist in its review, the Board conducts informal surveys of its directors, receives an annual report from the Corporate Governance Committee on its assessment of the functioning of the Board and reports from each committee respecting its own effectiveness. As part of the assessments, the Board or the individual committee may review their respective mandate or charter and conduct reviews of applicable corporate policies.
The Board determines new nominees to the Board through recommendations of the Corporate Governance Committee. The nominees may also be the result of recruitment efforts by other Board members, including both formal and informal discussions among Board members and the President and Chief Executive Officer. The Corporate Governance Committee monitors the performance of individual Board members or committee members or their contributions.
The Board expects management to operate the business of the Company in a manner that enhances shareholder value and is consistent with the highest level of integrity. Management is expected to execute the Company's business plan and to meet performance goals and objectives.
Corporate Governance Committee
The duties of the Corporate Governance include:
- selecting (or recommending that the Board select) the director nominees for the next annual meeting of shareholders;
- developing qualification criteria for Board members for recommendation to the Board in accordance with the Company's corporate governance guidelines;
- in conjunction with the Chairman, assigning Board members to the various committees of the Board;
- reviewing annually or more often if appropriate:
- committee members' qualifications and requirements;
- committee structure (including authority to delegate); and
- committee performance (including reporting to the Board). The committee is to make recommendations to the Board, as appropriate, based on its review;
- recommending to the Board compensation policies and guidelines for the Company and for implementing and overseeing compensation policies approved by the Board;
- developing and recommending to the Board corporate governance principles applicable to the Company;
- monitoring the Company's overall approach to corporate governance issues and administering a corporate governance system which is effective in the discharge of the Company's obligations to its shareholders;
- in conjunction with the Chairman, overseeing the evaluation of the Board and of the Company and making recommendations to the Board as appropriate;
- reviewing and reassessing at least annually the adequacy of the Company's corporate governance guidelines and the Corporate Governance Committee's terms of reference and recommending any proposed changes to the Board for approval. The Corporate Governance Committee must also annually review its own performance;
- monitoring and making recommendations to the Board in respect of total compensation paid by the Company to its senior executives; and
- reviewing the adequacy and form of compensation of directors and ensure that the compensation realistically reflects the responsibilities and risks involved in being a director.
The Audit Committee's primary functions are to assist the Board of Directors (the "Board") in fulfilling its financial oversight responsibilities with respect to financial reporting and disclosure requirements; ensure that an effective risk management and financial control framework has been implemented by management of the Company; and be responsible for external and internal audit processes.
The Committee shall be comprised of three directors as determined by the Board, the majority of whom shall be independent, financially literate and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. The Board may remove or replace a member of the Committee at any time and from time to time. The Company adopts:
- the meaning of independence described in Multilateral Instrument 52-110 Audit Committees (the "Instrument") for the purpose of determining whether a member of the Committee is independent; and
- the provisions of Sections 3.3 to 3.5, inclusive, of the Instrument relating to certain membership requirements.
The Board will appoint the Chairman of the Committee. The Secretary of the Company will act as the secretary at meetings of the Committee or, in his absence, the Chairman of the committee may appoint any member or any other person to act as secretary. The secretary will keep minutes of the proceedings at any meeting of the Committee setting out in reasonable detail the business conducted at such meeting. Minutes of the meetings of the Committee will be distributed by the Secretary to the members of the Committee and to the Board.
Membership and Procedures
Meetings of the Committee will be held at such times and places as the Chairman may determine, but in any event not less than four times per year. Twenty-four (24) hours notice of each meeting will be given orally, by electronic transmission or by facsimile to all members of the Committee and to the external auditors of the Company and such notice will set out in reasonable detail the business proposed to be conducted at the meeting. Notice of a meeting may be waived if all members of the Committee are present at a meeting and waive notice or if a member who is not present waives notice before or after such meeting. A resolution signed by all members of the Committee shall have the same force and effect as a resolution passed at a meeting of the Committee duly called and regularly constituted for the transaction of business.
A majority of members of the Committee will constitute a quorum and decisions of the Committee will be by an affirmative vote of the majority with the Chairman having a deciding vote in the event of a tie.
At the request of the external auditors of the Company, the Chief Executive Officer or the Chief Financial Officer of the Company or any member of the Committee, the Chairman will convene a meeting of the Committee. Any such request will set out in reasonable detail the business proposed to be conducted at the meeting so requested.
The Committee has the authority to:
- engage independent counsel and other advisors as it determines necessary or desirable to carry out its duties;
- set and pay the compensation for any advisors engaged by the Committee; and
- communicate directly with internal and external auditors.
Responsibilities and Duties
The responsibilities of the Committee are as follows:
Financial Reporting and Disclosure
- Review and recommend to the Board for approval, the quarterly financial statements, management discussion and analysis, financial reports and any public release of financial information through press release or otherwise.
- Review and recommend to the Board for approval, the audited annual financial statements, including the auditors' report thereon, management discussion and analysis and financial reports.
- Review and recommend to the Board for approval, where appropriate, financial information contained in any prospectuses, annual information forms, material change disclosures of a financial nature and similar disclosure documents.
- Review with management of the Company and with external auditors significant accounting principles and disclosure issues and alternative treatments under Canadian generally accepted accounting principles ("GAAP") all with a view to gaining reasonable assurance that financial statements are accurate, complete and present fairly the Company's financial position and the results of its operations in accordance with Canadian GAAP.
- Review with management of the Company the progress of transitioning to International Financial Reporting Standards ("IFRS").
- Review the performance of the external auditors who are accountable to the Committee and the Board as representatives of the shareholders, including the lead partner of the independent auditors team and recommend to the Board the external auditors to be nominated for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company and the compensation of the external auditors.
- Oversee the work of the external auditors appointed by the shareholders of the Company with respect to preparing and issuing an audit report or performing other audit, review or attest services for the Company, including the resolution of issues between management of the Company and the external auditors regarding financial disclosure.
- Review the results of the external audit and the report thereon including, without limitation, a discussion with the external auditors as to the quality of accounting principles used, any alternative treatments of financial information that have been discussed with management of the Company, the ramifications of their use as well as any other material changes. Review a report describing all material written communication between management and the auditors such as management letters and schedule of unadjusted differences.
- Discuss with the external auditors their perception of the Company's financial and accounting personnel, records and systems, the cooperation which the external auditors received during their course of their review and availability of records, data and other requested information and any recommendations with respect thereto.
- Review the reasons for any proposed change in the external auditors which is not initiated by the Committee or Board and any other significant issues related to the change, including the response of the incumbent auditors, and enquire as to the qualifications of the proposed auditors before making its recommendations to the Board.
- Review the independence of the external auditors, including a written report from the external auditors respecting their independence and consideration of applicable auditor independence standards.
- Review annually a report from the external auditors in respect of their internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review of the external auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the external auditors, and any steps taken to deal with any such issues.
Internal Controls and Audit
- Review and assess the adequacy and effectiveness of the Company's system of internal control and management information systems through discussions with management and the external auditor to ensure that the Company maintains:
From time to time the Committee will assess whether a formal internal audit department is necessary or desirable having regard to the size and stage of development of the Company at any particular time.
- the necessary books, records and accounts in sufficient detail to accurately and fairly reflect the Company's transactions;
- effective internal control systems; and
- adequate processes for assessing the risk of material misstatement of the financial statement and for detecting control weaknesses or fraud.
- Satisfy itself that adequate procedures are in place for the review of the Company's disclosure of financial information extracted or derived from the Company's financial statements.
- Periodically assess the adequacy of such systems and procedures to ensure compliance with all regulatory requirements and recommendations.
- Review and discuss the Company's major financial risk exposures and the steps taken to monitor and control such exposures, including the use of any financial derivatives and hedging activities.
- Review annually insurance programs relating to the Company and its investments.
- Pre-approve all non-audit services to be provided to the Company or any subsidiary entities by its external auditors or by the external auditors of such subsidiary entities. The Committee may delegate to one or more of its members the authority to pre-approve non-audit services but pre-approval by such member or members so delegated shall be presented to the full audit committee at its first scheduled meeting following such pre-approval.
- Review and assess the adequacy of the Company's risk management policies and procedures with regard to identification of the Company's principal risks and implementation of appropriate systems to manage such risks including an assessment of the adequacy of insurance coverage maintained by the Company.