Commonwealth Property Office Fund

Principle 2: Structure the board to add value
Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.

• Composition
• Board independence
• Independent professional advice
• Appointment
• Board performance
• Compliance Committee performance
--------------------------------------------------------------------------------

Composition 

There are currently five Directors of CMIL, three of whom are independent Directors. Details of their experience, qualifications and committee membership are set out below.

Richard Haddock – Chairman, Independent non-executive Director, Commonwealth Managed Investments Limited
Director since 1 January 2009
Term in office – 2 years 7 months as at 16th August 20111
	Mr Richard Haddock has had a long career in financial services and was Deputy General Manager, Australia at BNP Paribas, Sydney from 1988-2001. Mr Haddock is a fellow of the Australian Institute of Management, the Financial Services Institute of Australia and the Australian Institute of Company Directors plus a member of the Law Society of NSW and the Commercial Law Association. Mr Haddock is currently a Director and Chairman of the Audit Committee of Tishman Speyer Australia Ltd, a Director of Retirement Villages Group Fund, the Honorary Treasurer and a National Director of Caritas Australia, the Chairman of Catholic Care, the Chairman Director of the Catholic Superannuation and Retirement Fund and a Director of Catholic Church Insurances Ltd.  Mr Haddock was previously the Chairman of MacarthurCook Ltd.

James Frederick Kropp – Independent non-executive Director, Commonwealth Managed Investments Limited
Director since 22 December 2003
Term in office – 7 years 7 months as at 16th August 20111
Mr Kropp was a senior audit and risk management consulting partner in the Sydney office of PricewaterhouseCoopers for over 18 years, retiring from the practice in December 1999. Mr Kropp is a Fellow of CPA Australia and was National President in 1995-96. Mr Kropp is Chairman of CMIL’s Audit Committee. Other positions that Mr Kropp currently holds include: a director of the Royal Institute for Deaf and Blind Children a director of Colonial First State Capital Management Pty Limited and a director of Colonial First State Loan Note Issuer Pty Limited.

Annabel Spring – Executive Director, Commonwealth Managed Investments Limited
Director since 14 October 2011
Ms Annabel Spring is the Group Executive for the Wealth Management division of the Bank. Annabel was appointed to this role in October 2011. Previously she was Group Executive for Group Head of Strategy and Communications. As Group Executive Wealth Management, Ms Spring is responsible for Colonial First State, Colonial First State Global Asset Management and CommInsure and the divisions which support these businesses. Prior to this, Annabel was a Managing Director at Morgan Stanley. In her capacity as Head of Global Firm Strategy and Execution, Annabel was responsible for global strategy and the execution of all Firm transactions. Previous to that she held various positions in the Leveraged Finance, Mergers and Acquisitions and Corporate Finance departments. Annabel began her career at Morgan Stanley as an Analyst, and has worked in New York, Asia and Australia. Annabel is a member of the Advisory Board for the Salvation Army Australian Eastern Territories. Annabel has a Bachelor of Law and a Bachelor of Economics, both with honours, from the University of Sydney and a Masters of Business Administration from Harvard Business School, where she graduated as a George F. Baker Scholar.

Michael John Venter – Executive Director, Commonwealth Managed Investments Limited
Director since 13 November 2006 (Non-Executive from November 2006 - May 2011; Executive from May 2011)
Term in office – 4 years 9 months as at 16th August 20111
	Mr Venter was appointed the to the role of Chief Financial Officer of the Commonwealth Bank's Wealth Management business unit in May 2011. Mr Venter was previously the Executive General Manager of Group Finance for the Bank. Mr Venter has been with the Bank since January 2004. After Mr Venter's transfer to his new role in the Commonwealth Bank's Wealth Management Business Unit he is now considered to be an Executive Director as he will be involved in the management of the Trust. Mr Venter holds post graduate accounting qualifications and is a member of the Institute of Chartered Accountants.

Peter John Taylor – Alternate Director, Commonwealth Managed Investments Limited (Alternate for Ms A Spring)
Director since 7 November 2011
Mr Peter Taylor has been appointed as an Alternate Director of Commonwealth Managed Investments Limited (Alternate for Ms Annabel Spring). Mr Taylor joined the Commonwealth Bank as a result of the acquisition by the Bank of the BankWest Group in late 2008. Peter has 24 years of experience, gained both in Australia and internationally, predominantly in financial services. Mr Taylor was recently appointed as Chief Risk Officer of the Commonwealth Bank’s Wealth Management business unit.

 ¹Date of annual report 

^{--------------------------------------------------------------------------------} 

Board independence 

All the current Directors who are not senior executives of the Bank have been assessed as Independent Directors.

In reaching that determination, the Board has taken into account:

• the specific disclosures, made in accordance with the Act, by each such Director in respect of any material contract or relationship
• where applicable, the related party dealings referable to each such Director, noting that those dealings are not material under accounting standards. Full details of related party dealings are set out in the notes to the Fund’s financial statements as required by law
• that no such non-executive Director is, or is associated directly with, a substantial unitholder of the Fund or substantial shareholder of the Bank
• that no such non-executive Director has ever been employed by the Bank or any of its subsidiaries
• that no such non-executive Director is, or is associated with, a supplier, professional adviser, consultant to or customer of CMIL or the Bank which is material under accounting standards, and
• that no such non-executive Director personally carries on any other role for CMIL or the Bank which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act as a Director of CMIL and in the best interests of unitholders.

Under the accounting standards, a matter is considered to be material if it is equal to or greater than 10% of the appropriate base amount.

--------------------------------------------------------------------------------

Independent professional advice 

Procedures, agreed by the Board, are in place, whereby the Directors may seek independent professional advice, at the expense of the Responsible Entity, to assist them in carrying out their duties as Directors.

--------------------------------------------------------------------------------

Appointment 

The appointment of independent Directors to the Board of CMIL is made by the Board Performance and Renewal Committee of the Bank, CMIL’s parent entity.

Details of the Bank's Board Performance and Renewal Committee can be found at the Corporate Governance section of the Bank’s website. 

These appointments are made upon the recommendation of the Bank’s Chief Executive Officer, having regard to a range of criteria, the skills and experience of the nominee and the business of the company.

A formal letter of appointment is issued to the successful nominee. Remuneration is agreed by the Bank, in consultation with the successful nominee. The Bank pays the remuneration of the independent Directors.

The renewal of an appointment is considered by the Bank’s Board Performance and Renewal Committee.

The senior executives of the Bank serving as CMIL Directors are appointed by the Bank having regard to their level of skill, experience and knowledge. They are not remunerated for their duties as Directors of CMIL.

--------------------------------------------------------------------------------

Board performance 

The composition of all major wholly owned subsidiary companies of the Bank, including CMIL, is reviewed annually by the Board Performance and Renewal Committee of the Bank. The Committee operates in accordance with a Charter and comprises three independent Directors of the Bank.

This Committee is responsible for critically reviewing, at least annually, the composition and effectiveness of the CMIL Board, both individually and as a whole, and seeks to identify where improvement might be made and to assess the quality and effectiveness of information that is provided to the CMIL Directors.

As a wholly owned subsidiary of the Bank, CMIL does not have its own Board Performance and Renewal Committee.

To facilitate optimal performance, the CMIL Board participates in professional development programs, including those facilitated by the Bank and those arranged directly for it. All Directors receive a detailed information pack and training in the requirements of the Act as it pertains to Directors, and the program is updated to capture specific issues of relevance from time to time.

The CMIL Board also undertakes an annual self assessment of the performance of the Board and individual Directors, facilitated by Secretariat. The review is conducted in-house by questionnaire and includes confidential discussions with individual Directors. The results of these discussions are reviewed by the CMIL Board, and the last assessment undertaken was conducted in accordance with this process during the 2009-10 financial year.

--------------------------------------------------------------------------------

Compliance Committee performance 

At least annually, the CMIL Board considers the performance of the Compliance Committee, with a view to identifying areas for improvement and to assess the quality and effectiveness of information it is receiving. The Board undertakes this review at both an individual level and the Committee as a whole.