Term of Appointment as a Director The constitution of the Company provides that a director, other than the Managing Director, may not retain office for more than three calendar years or beyond the third annual general meeting following his or her election, whichever is longer, without submitting for re-election. One third of the directors must retire each year and are eligible for re-election. The directors who retire by rotation at each Annual General Meeting are those with the longest length of time in office since their appointment or last election. Risk Management and internal compliance and controls Audit and Financial Risk Committee The board has established an Audit and Financial Risk Committee. All directors are members of the Committee, with a Non-Executive Director that is not the Chairman of the Board being the Chairman of the Committee. Given the size of the Company and the nature of its activities, it is considered important that all directors participate in matters relating to audit and financial risk. The Committee members are: Mr Stephen Stroud (Chairman), Mr Graham Ascough, and Mr Malcolm Norris The Committee’s responsibilities include: – providing the Board with advice and recommendations regarding the ongoing development of financial risk oversight and management policies (covering oversight, risk profile, risk management, compliance and control) that set out the roles and respective accountabilities of the Board, the Audit Committee and management; – receiving and reviewing management’s recommendations and providing the Board with advice and recommendations regarding the establishment of a financial risk management system and financial risk profile; – regularly reviewing the Company’s financial risk profile (provided by management) having regard to key financial risk, legal and regulatory risk and disclosure reporting; – reviewing internal controls and their effectiveness, in the absence of a formal internal audit function; – reviewing financial statements provided by management for accuracy, adequacy and clarity to ensure they give a true and fair view of the Company’s financial position and adhere to accounting standards and policies and legislative requirements; – with respect to the external auditor, approving and recommending policies and procedures for appointing or removing an external auditor and terms of engagement; – regularly reviewing and assessing the compliance of the external auditor with policies and procedures, the effectiveness, and independence of the external auditor; and – monitoring the relationship between management and the auditor. The Audit and Financial Risk Committee has met twice during the financial year. The CEO & Managing Director and the Chief Financial Officer & Company Secretary are invited to attend the Committee meetings. Where appropriate, the Board and the Audit and Financial Risk Committee engage independent experts or professional advisors to assist with the identification and/or management of any key risk areas identified. To ensure that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified, the Board has also adopted a Risk Management Policy to: – ensure the Company’s risk management policies and procedures are adequate; – monitor compliance with the Company’s risk management policies and procedures; – keep itself appraised of the latest developments, policies, trends in relation to financial matters, rules, regulations, to the extent that they may affect the Company or the markets in which the Company operates; – review the Company’s internal financial control mechanisms and risk management policies; – compile a risk profile of the material risks facing the Company; – review major non-financial regulatory matters covering areas of exposure including the environment, safety and health, asset protection (including insurance), discrimination and harassment, conflict of interest and ethical standards. The Company does not believe it has any material exposure to economic, environmental or social sustainability risks due to its size and nature of activities. 29 Sunstone Metals Limited Annual Report 2022 SUNSTONE METALS LIMITED ANNUAL REPORT 2022
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