The following contains explanatory information on the items of Ordinary Business
to be considered at the AGM


EXPLANATORY INFORMATION - ORDINARY BUSINESS

1. Annual financial statements, the Directors’ Report and the Auditor’s Report for the financial year ended 30 June 2020 (together, the Financial Report)

The AFIA Constitution provides for Members to consider the Financial Report at the AGM. 

The Financial Report will also be available for download at the virtual AGM. 

During this item of business there will be a reasonable opportunity for Members to comment, and ask questions, on the Financial Report. There will also be an opportunity to ask questions of AFIA’s auditor, Pitcher Partners.

If you prefer, you may send your questions in advance to companysecretary@afia.asn.au.

No resolution is required for this item of ordinary business.

2. To receive and consider the Board’s recommendation to appoint and fix the remuneration of the auditors for the financial year ending
30 June 2019

As reported to Members at the 2020 AGM, Pitcher Partners Sydney were appointed as AFIA’s auditor in August 2020 and have conducted the AFIA external audit for the financial year ended 30 June 2020. Pitcher Partners’ engagement as auditor is ongoing, subject to agreement of their audit fee each year.  

In accordance with Pitcher Partners’ standard practice, the audit fee proposal for the FY21 audit will be provided closer to the year-end date. Provided there are no unusual transactions or significant changes within AFIA, Pitcher Partners have indicated that their FY21 audit fee will be around $17,500.   

Subject to Member endorsement, the Board has approved a delegation to the Financial Management and Audit Committee to approve the audit fee of Pitcher Partners Sydney for FY21 in due course.  

Members will be asked to vote on the following ordinary resolution at the AGM: 

“That the members of AFIA approve the appointment of Pitcher Partners Sydney as AFIA’s auditor for the FY21 financial year, with the Board being authorised to approve the audit fee in due course, such authority being delegable by the Board in its discretion.” 

3. To approve the updated AFIA Constitution 2020

In 2017, following the amalgamation of AFC, DIFA, AELA and AFLA, into AFIA, the prior Memorandum and Articles of Association for each organisation were replaced with the current AFIA Constitution.

With the change to our governance structure to align with our strategic goal, ensuring we represent our diverse membership by creating a future-focused and unified industry voice, we are introducing new thematic based membership groups to complement our sector-specific membership groups.

Additionally, it is recommended we conduct regular reviews of our Constitution to stay up-to-date with changes to the Corporations Act 2001 (Cth) and other legislation as well as to embed best practice governance standards. There have been some changes over the past few years that we need to include in our Constitution to make sure it meets member expectations and reflects our legal and operational model.

The key principles guiding the revision of the AFIA Constitution are:

  • Retain the Board as the primary decision-making authority and provide clearer authority.
  • Maintain representation on our Board and other membership groups, while promoting knowledge, skills and expertise.
  • Introduce best practice governance for the Board, including appointment, tenure and risk oversight.
  • Simplify and shorten our Constitution by removing unnecessarily complicated clauses and terms.
  • Foster our membership as a finance community led by the most passionate Board in financial services.

The review included an assessment of best practice governance standards and a comparison against key provisions within constitutions, including of other industry associations, domestically and globally, for confirmation the AFIA Constitution is meeting best practice standards.

Summary of Amendments
The refreshed AFIA Constitution now:

  1. Better articulates the role of AFIA and how we work together as a membership body.
  2. Retains the Board as the primary decision-making authority and provides clarity on Board functions and accountability, including nomination and resignation, capacity to delegate authority to support efficient and inclusive decision making, and tenure, being a 2-year term with a maximum of 6-years.
  3. Introduces a new membership class, called affiliate members, to promote collaboration and partnership in the interests of our membership, and gives the Board the flexibility in the future to determine other membership classes without diminishing the rights of the existing membership classes.
  4. Embeds the values of integrity, transparency and fairness in how we operate, including through the rights and obligations of our membership, voting rights and representation, induction, revocation or suspension and cessation of membership, and complaint and dispute handling procedures.
  5. Aligns with e-governance principles for Board meetings, delegated committee meetings, and annual general meetings.
  6. Streamlines and removes unnecessary clauses to create a more simplified document, including replace ‘Chairperson’ with ‘Chair’ and introduce a new definition of Member Elected Director to avoid confusion with the commonly understood definition of Independent Director.

A number of clauses require specific protocols to operationalise them, including Appeals Protocol, Board Protocol, Internal Disputes Protocol, and Nominations Protocol, to ensure clarity of procedures and to meet member expectations. Additionally, a new Member Protocol will also be created to replace the Membership Conditions. Under our Constitution these Protocols will be approved by the Board.

We will review our Constitution to ensure continuous improvement and consistent with best practice governance standards, including those published from time to time by the Australian Institute of Company Directors and the Governance Institute.

Approval
At least 75% of members entitled to vote who are present at the meeting (in person or by proxy) must vote in favour of the proposed changes to our Constitution.

During this item of business there will be a reasonable opportunity for Members to comment, and ask questions, on the AFIA Constitution.

The updated AFIA Constitution can be reviewed here.

If you prefer, you may send your questions in advance to companysecretary@afia.asn.au.

Members will be asked to vote on the following ordinary resolution at the AGM:

“That the members of AFIA approve the adoption of the updated Constitution” 

4. To elect the Members of the Board

Background
Under the AFIA Constitution, Directors hold office for a term commencing on the date of their appointment until the conclusion of the next Annual General Meeting. Accordingly, those Directors elected by Members at AFIA’s 2019 Annual General Meeting held on 30 October 2019 will retire at the conclusion of the 2020 Annual General Meeting to be held on 28 October 2020.  Existing Directors are eligible for re-election.

A key function of the AFIA Board of Directors is the governance and oversight of AFIA together with setting the broader strategic direction. It is important that Directors have the necessary skills, knowledge, expertise and background in the industry and with AFIA to be able to fulfil their role and valuably contribute to achieving AFIA’s objectives and strategic priorities.

The AFIA Constitution provides an opportunity for the Board composition to be regularly refreshed by the election and/or appointment of new Directors while re-electing and/or retaining some of the existing Directors to ensure a diverse and inclusive membership with a level of stability and retention of corporate knowledge to deliver on AFIA’s objectives and strategic priorities.

The AFIA Constitution provides that the AFIA Board will consist of not less than five and not more than 10 persons (or such number as is determined by the Board from time to time). Board positions may be filled either by the election of eligible Full Member nominees from AFIA membership or appointment by the Board.

Review of nominations by the Board Nomination & Remuneration Committee
The AFIA Board Nomination & Remuneration Committee assists the Board with the nomination process and to ensure that nominees meet requisite criteria for an appointment as a Director of AFIA.

The Board can appoint up to three Independent Directors (i.e. persons with relevant skills and competencies but not an AFIA member representative). No Independent Directors have been appointed to date.

Appointment of the CEO as a Director
The AFIA Constitution provides that the Board may appoint the CEO to the Board, to hold office until the next AGM following the date of his/her appointment. The Board size automatically increases to 11 to accommodate such appointment. At the conclusion of each term the Board assesses (typically, each November) whether or not to appoint the CEO as a Director for an additional term.

Casual Vacancy on Board
In the event of a casual vacancy (e.g. arising from a Director’s resignation), the Board may fill the vacancy by appointing a representative from AFIA’s membership or an Independent Director.

Remuneration of Directors
Member Elected Non-Executive Directors are not remunerated or reimbursed for expenses incurred in travelling to or from, or attending, meetings of the Board, without the unanimous approval of the Board. 

Independent Directors may, with Board approval, be remunerated and have their travel or attendance expenses met.

Members of the Board
AFIA’s current board consists of ten elected non-executive Directors and the CEO. Seven board members have indicated they are seeking re-election and three board members have advised that they will not stand for re-election. The AFIA Board would like to thank Keith Rodwell, 255 Finance, Ed Stanistreet, Toyota Finance Australia and Phil Waugh, Westpac for their contribution to our industry and AFIA, over many years, and particularly through the appointment of our new CEO last year and the COVID-19 crisis through this year. Their leadership and stewardship has been very much appreciated.

Nominations to fill the vacant board positions were sought, subject to these nominees being confirmed as suitable by the Nomination and Remuneration Committee, as per Article 14.6 of AFIA’s Constitution as the number of nominations received equals the vacancies to be filled, the persons nominated are taken to be elected.

Accordingly at the AGM the Chairman will declare the ten candidates as elected to the Board of AFIA and will provide members with the details of the elected members.

Due to the operation of Article 14.6, no resolution is required for this item of ordinary business.