Corporate Governance System
At Sage Gold, corporate governance denotes the structure and process employed to oversee, direct and manage the business and affairs of the Corporation with the object of ensuring its financial viability and enhancing shareholder value. This structure and process defines the division of power between, and establishes mechanisms for achieving accountability by the Board of Directors and management. Ways and means of improving Board effectiveness are reviewed and modified on an ongoing basis.
The corporate governance system at Sage is documented under the following headings:
- Board Independence from Management
- Structure of Board
- Board Access to Information
- Composition of the Board
- Performance Assessment
The Board of Directors has a Governance, Nominating and Compensation Committee which oversees on behalf of the Board, corporate governance, nominating and compensation at Carina, including the methods and processes for Board effectiveness and performance evaluation. It also acts as a nominating committee by identifying and proposing suitable candidates for election or appointment to the Board. As well, the Committee serves as the Compensation Committee and recommends Directors' and senior officer compensation for Board approval. The Corporate Governance Committee oversees and reviews the Corporate Strategy of the Corporation and the Investment Policy of the Corporation.
Board of Directors Responsibilities
The Corporation is owned by the shareholders who delegate supervision of management to the Board, who in turn delegate management responsibility to the management of the Corporation. The objective of the Corporation is to conduct its business activities so as to enhance corporate profit and shareholder value.
The primary responsibility of the Board of Directors is to foster the long-term success of the Corporation consistent with its fiduciary responsibility to the shareholders to maximize shareholder value. The Sage Board is empowered by the Corporation's act of incorporation (the Business Corporation's Act (Ontario), by-laws and articles of continuance. The Corporation's by-laws gives the Board of Directors the power and sets out various procedures to accomplish that objective. It states that "The board shall manage the business and affairs of the Corporation."
The Board operates by delegating certain of its authorities, including spending authorizations, to management and by reserving certain powers to itself. Subject to the act of incorporation and by-laws or the articles of incorporation of the Corporation, the Board retains the responsibility for managing its own affairs, including planning its composition, selecting its Chairman, nominating candidates for election of the Board, appointing committees and determining Director and senior officer compensation.
A Director's responsibility is that of a fiduciary and individually and collectively is founded in legal imperatives. In its fiduciary capacity, the Board of Directors is responsible for the stewardship of the Corporation (preserving and enhancing shareholder value) and as such, is accountable for the success of the Corporation by taking responsibility for management. In summary, the Board serves as the fiduciary for the investment of the shareholders.
The Directors have determined that the Corporation is to be managed by its senior executives and that the role of the Board is to oversee their performance. In general, this role consists of selecting a qualified corporate management team, overseeing corporate strategy and performance, acting as a resource for management in matters of planning and policy, and ensuring effective shareholder communication.
For Sage Gold, the principal duties of the Board can be organized into six major categories as follows:
- I. Selection of Management
The Board has the responsibility for:
- A. the appointment and replacement of a Chief Executive Officer ("CEO"), for monitoring CEO performance, approving CEO compensation and providing advice and counsel to the CEO in the execution of his duties.
- B. approving the appointment, replacement and remuneration of all corporate officers upon the advice of the CEO, and the recommendation of the Compensation Committee;
- C. ensuring that plans have been made for management succession.
- II. Strategy Determination
The Board has the responsibility to:
- A. review with management and the Governance Committee the mission of the business, its objectives and goals;
- B. review and approve management's strategic and business plans and develop a depth of knowledge of the business, understand and question the assumptions upon which the plans are based, and reach an independent judgment as to whether the plans can be realized;
- C. review and approve the Corporation's financial objectives, plans and actions including significant capital allocations, expenditures, and the raising of capital.
- III. Monitoring and Acting
The Board has the responsibility for:
- A. monitoring corporate performance against strategic and business plans and overseeing the operating results to evaluate whether the business is being properly managed;
- B. approving any payment of dividends;
- C. ensuring the implementation and integrity of the Corporation's internal financial controls and management information systems;
- D. reviewing and approving material transactions not in the ordinary course of business;
- E. ensuring ethical corporate behavior and compliance with all laws and regulations, auditing and accounting procedures, and the Corporation's corporate governance processes;
- F. ensuring the fullest communications with the shareholders and approving all proposals to be submitted to the shareholders, including the nomination of Directors;
- G. ensuring implementation of the appropriate systems to identify and manage the principal risks of the Corporation's business;
- H. managing the Board's own affairs and assessing the Board's own effectiveness in fulfilling these and other Board responsibilities.
- IV. Policies and Procedures
The Board has the responsibility to:
- A. approve and ensure there is monitoring of compliance with all significant policies and procedures by which the Corporation is operated;
- B. ensure that policies and procedures are in place so that the Corporation operates at all times within applicable laws and regulations, and to the highest ethical and moral standards.
- C. approve and ensure that the internal levels of financial control are in place to allow for the timely certification of financial statements as set out in MultiLateral Instrument 52-
109 – Certification of Disclosure in Issuer's Annual and Interim Filings as published by the Canadian Securities Administrators.
- V. Reporting
The Board, with the assistance of its Audit Committee has the responsibility to:
- A. ensure that the financial performance of the Corporation is adequately reported to shareholders, other security holders and regulators on a timely and regular basis;
- B. ensure that the financial results are reported fairly and in accordance with generally accepted accounting principles;
- C. ensure the timely reporting of any other developments that have a significant and material impact on the value of the Corporation;
- D. report annually to shareholders on its stewardship for the preceding year;
- E. ensure the Corporation has systems in place which accommodate feedback from shareholders, customers, employees and the community.
- VI. Legal Requirements
- A. The Board is responsible for ensuring that policies and procedures are in place and that legal requirements have been met, and documents and records have been properly prepared, approved and maintained.
- B. Canadian law identifies the following legal requirements for the Board:
- to manage the business and affairs of the Corporation;
- to act honestly and in good faith with a view to the best interests of the
- to exercise the care, diligence and skill that reasonable prudent people would exercise in comparable circumstances;
- to act in accordance with its obligations contained in applicable securities legislation of each province and territory of Canada, other relevant legislation and regulations, and the Corporation's act of incorporation and by-laws or articles of incorporation;
- in particular, it should be noted that the following matters must be considered by the Board as a whole and may not be delegated to a committee:
- any submission to the shareholders of a question or matter requiring the approval of the shareholders;
- the filling of a vacancy among the Directors or in the office of the external auditor;
- the manner and the term for the issuance of securities;
- the declaration of dividends;
- the purchase, redemption or any other form of acquisition of shares issued by the Corporation;
- the payment of a commission to any person in consideration of the purchase or agreement to purchase shares of the Corporation from the Corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares;
- the approval of management proxy circulars;
- the approval of any take-over bid circular or Directors' circular;
- the approval of the interim and annual financial statements and management's discussion and analysis of the financial condition and results of operations ("MD&A") of the Corporation;
- the adoption, amendment or repeal of by-laws of the Corporation.
Individual Director Responsibilities
There are general duties and responsibilities of Directors in common law and in the Business
Corporations Act (Ontario) (the "OBCA"), as well as the Corporation's by-laws.
The relationship of the director to the Corporation is a fiduciary one. A fiduciary is defined as a person who in law, by his or her position, is able to affect the legal rights of others and has some power of control over the property of others.
The Corporation directors are "trustees" in the sense that in performance of their duties, they stand in a fiduciary relationship to the Corporation and are bound by all the rules of fairness,morality and honesty in purpose that the law imposes. From this fiduciary role comes the stewardship responsibility to preserve and enhance shareholder value and as such the Board of Directors serve as trustees for the investment of the shareholders.
As a group, the Board of Directors' role is to oversee the performance of executive management. In summary, this consists of selecting a successful management team, overseeing corporate strategy and performance, acting as a resource for management and ensuring effective shareholder communication. Individual Directors share this responsibility collectively with the other members of the Board of Directors.
Also individually, Directors must, in connection with the powers and duties of their office, exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Part of this care and diligence requires that all Directors to attend and participate in Board discussion either in person or by telephone.
The duties of a Director as established by the OBCA and as interpreted by the Courts may be summarized as follows:
- Duty of Honesty - In their dealings with fellow Directors, Directors must tell the whole truth and in good faith. Secret profits are forbidden to Directors.
- Duty of Loyalty - A Director is required to give individual loyalty to the Corporation.
Each Director must exercise his or her powers honestly and for the benefit of the corporation as a whole.
- Duty of Care - A Director is required to exercise prudence and diligence. The duty of care requires prudence based on common sense.
- Dutyof Diligence– Thestatutory requirement of diligence involves making those inquiries, which a person of ordinary care in their position or in managing their own affairs would make.
- Duty of Skill - Originally in common law a Director was required to exercise no greater degree of skill than could be reasonably expected from a person with their knowledge and experience. The OBCA now requires every Director to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
- Duty of Prudence – The duty of prudence requires Directors to use common sense.
Acting prudently is acting carefully, deliberately, cautiously, trying to foresee consequences.
Directors must also keep the following guidelines in mind in the exercise of their individual responsibilities:
- to exercise powers properly for the purpose for which they are conferred;
- to be sensitive to any sort of conflict of interest whether real or perceived. Where conflict cannot be avoided, declare the conflict and, based on the specifics of the conflict either refrain from voting and/or be excused from the meeting. (See Appendix C for more detailed guidelines);
- not to misuse information or position;
- to ensure that appropriate records are kept and maintained and that proper distributions or payments are made;
- with regard to Corporation goals and objectives, to fulfill legal requirements and obligations of a Director, represent the interest of all shareholders in the governance of the Corporation, participate in review of Corporate policies and strategies and monitor their progress;
- with regard to Board activity, to exercise good judgment and act with integrity, use abilities and experience and influence constructively, be an available resource to management and Board, respect confidentiality, govern rather than manage, be aware of potential conflict areas, evaluate the CEO and corporation performance, assist in maximizing shareholder value;
- with regard to preparation and attendance, to read mail-out materials, maintain good attendance record, acquire adequate information for decision making;
- with regard to communication, to participate fully and frankly in meetings, encourage free and open discussion, ask probing questions;
- with regard to independence, demonstrate interest in long-term success of the
Corporation, speak and act independently;
- establish an effective, independent and respected presence and a collegial relationship with other Board members;
- with regard to committee work, become knowledgeable about the purpose and goals of the committee, understand the process and the role of management and staff supporting the committee;
- with regard to business and industry knowledge, remain knowledgeable of the Corporation's affairs and industry, understand the Corporation's role in the community, understand regulatory, legislative, business, social and political environments of the Corporation, become acquainted with the corporate officers. Be an effective ambassador of the Corporation.
This is a very brief summary of the duties of a Director. Further information can be found in "GuidelinesforCorporate Directorsin Canada" published bythe Institute of Corporate Directors.
Chairman of the Board Responsibilities
- Provide leadership to the Board;
- Ensure the Board can function independently of management;
- working with the Governance Committee establish procedures to govern the Board's work;
- Ensure the Board's full discharge of its duties;
- Working with management, schedule meetings of the full Board and work with committee Chairs to coordinate the schedule of meetings for committees;
- Ensure the appropriate agenda for regular or special Board meetings based on input from Directors and the CEO;
- Ensure proper flow of information to the Board, reviewing adequacy and timing of documented material in support of management's proposals;
- Ensure adequate lead time for effective study and discussion of business under consideration;
- Oversee the preparation and distribution of proxy material to shareholders, customers, employees and the community;
- Help the Board fulfill the goals set by assigning specific tasks to members of the Board where necessary;
- Act as liaison between the Board and management;
- In support of the CEO, and when requested by the CEO or the Board, represent the
Corporation to external groups as required;
- Working with the Governance Committee, ensure proper committee structure, including assignments of members and committee Chairs;
- Chair regular and special meetings of the Board of Directors; and
- Carry out other duties as required by the CEO and the Board as a whole, depending on need and circumstances.
Chief Executive Officer Responsibilities
The Sage by-laws define the duties of the CEO as exercising general control of and supervision over the Corporation's affairs. More specifically, the following are the responsibilities of the CEO:
- Fosters a corporate culture that promotes ethical practices, encourages individual integrity and fulfills social responsibility;
- Maintains a positive and ethical work climate that is conducive to attracting, retaining and motivating a diverse group of top-quality employees at all levels;
- Develops and recommends to the Board, a long-term strategy and vision for the
Corporation that leads to the creation of shareholder value;
- Develops and recommends to the Board, annual business plans and budgets that support the Corporation's long term strategy;
- Determines the appropriate use of technology;
- Develops and recommends to the Board, the allocation of capital necessary to achieve the Corporation's business plan;
- Ensures that the day-to-day business affairs of the Corporation are appropriately managedincluding evaluationof the Corporation'soperating performanceand initiating appropriate action where required;
- Consistently strives to achieve the Corporation's financial and operating goals and objectives;
- Ensures fair presentation of the financial condition of the Corporation in continuous disclosure documents, and oversight and assessment of internal and disclosure controls of the Corporation;
- Ensures that the Corporation builds and maintains a strong positive relationship with its investors;
- Ensures that the Corporation achieves and maintains a competitive position within the industry;
- Ensures that the Corporation builds and maintains a strong positive relationship with its employees;
- Ensures that the Corporation has an effective management team below the level of
CEO and has an active plan for their development and succession;
- Formulates and oversees the implementation of major corporate policies;
- Ensures compliance with the Corporation's Disclosure Policy;
- Builds and maintains strong relationships with the corporate and public community;
- Ensures management support for Board Committees.