Corporate Governance Statement and Appendix 4G

26 April 2022

ASX/PNGX | Announcement

Corporate Governance Statement and Appendix 4G

Please see attached for release to the market, Kina Securities Limited's (ASX: KSL | PNGX: KSL) Corporate Governance Statement and Appendix 4G.

ENDS

For further information:

Samantha Miller

Executive General Manager Investor relations, Corporate Affairs and ESG Email:Samantha.miller@kinabank.com.pg

Phone: +61 0402 426 767

This Announcement was authorised for release by Kina Securities Limited's Board of Directors.

Kina Securities Limited Corporate Governance Statement

Introduction

Kina Securities Limited and its related entities (Kina, the Kina Group, the Group, or the Company) places great emphasis on the continued development of a strong corporate governance, risk management and compliance culture. In an emerging marketplace, Kina seeks to be innovative as well as provide a safe and secure environment for its customers and clients, which in turn brings value to shareholders.

The Board of Directors of Kina Securities Limited (the Board) is responsible for the overall corporate governance of the Kina Group, including adopting appropriate policies and procedures designed to ensure that Kina is properly managed to protect and enhance shareholder interests.

The Board monitors the operational and financial position and performance of Kina and oversees its business strategy, including approving the Company's strategic goals and considering and approving business plans, key governance, risk and operational policies and the annual budget.

Kina has a well-developed corporate governance framework and practices for the operation and management of Kina, which incorporates resilient internal controls, risk management processes and governance policies and practices. The Board monitors adherence to this framework which enables the Group to comply with relevant laws, regulations and standards set down by the Bank of Papua New Guinea (BPNG), the Australian Securities Exchange (ASX), PNG's National Stock Exchange (PNGX), the PNG Companies Act 1997 (Companies Act), PNG Securities Act and the Australian Corporations Act 2001 (Cth) (Corporations Act).

This Corporate Governance Statement (Statement) sets out the key features of Kina's current corporate governance framework and reports against the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (4th Edition) (ASX Principles and Recommendations). The Statement is current as at 26 April 2022 and has been approved by the Board.

The Board considers and applies the ASX Principles and Recommendations, considering the circumstances of Kina. Unless otherwise noted, the Company has followed during the reporting period, all of the best practice recommendations set out in the ASX Principles and Recommendations. Where Kina's practices depart from a Recommendation, this Statement identifies the area of divergence and reasons for it, or any alternative practices adopted by Kina.

Governance framework

The core of Kina's corporate governance framework is the Company's Constitution and the Charters and Policies (Governance Documents), which are referenced in this Statement, and copies of which are available on the Company's website at:https://investors.kinabank.com.pg/Investors/?page=corporate-governance.

The Governance Documents are reviewed regularly by the Board to ensure they comply with any updated laws or regulations, that they meet high governance standards and that they remain relevant to the Group and its operations.

Principle 1: Lay solid foundations for management and oversight

A listed entity should clearly delineate the respective roles and responsibilities of its board and management and regularly review their performance

Recommendation 1.1

A listed entity should have and disclose a board charter setting out:

• (a) the respective roles and responsibilities of its board and management; and

• (b) those matters expressly reserved to the board and those delegated to management.

Board of Directors

The Role of the Board

The Board is committed to maximising performance, generating shareholder value and financial returns, and sustaining the growth and success of Kina. In conducting Kina's business in accordance with these objectives, the Board seeks to ensure that Kina is properly managed to protect and enhance shareholders' interests, and that Kina, its directors, officers and employees operate in a well governed environment.

The Board has adopted aBoard Charter.The Board Charter sets out, amongst other things, the:

• ● role and responsibilities of the Board, including those matters specifically reserved to the Board;

• ● role and responsibilities of the Managing Director and Chief Executive Officer (MD&CEO), who is primarily responsible for the day-to-day management of Kina;

• ● procedures for management of potential and actual conflicts of interest; and

• ● guidance on Board performance evaluation, ethical standards and taking independent professional advice.

Board Responsibilities

The Board's first responsibility is to govern the Company in the interest of its shareholders - to protect and grow the value of its stakeholders' interests. The Board Charter establishes that the primary goal of the Board is to add value to the Company by:

• ● ensuring the long-term viability and sustainability of the Company;

• ● protecting the interests of shareholders by exercising effective control over the Company;

• ● providing strategic direction and leadership;

• ● bringing independent and informed judgment to bear on material decisions of the Company;

• ● setting the standards of behaviour and ethical values for the Company;

• ● establishing strong internal control and compliance systems;

• ● monitoring the effectiveness of the Company's overall risk management and control framework; and

• ● accounting to shareholders for the overall performance of the Company.

Under the terms of its Charter, the Board will:

• ● approve the Company's strategy, business plans and policy;

• ● establish the risk appetite within which management will implement the strategic direction;

• ● monitor the implementation of strategic plans against pre-determined performance indicators;

• ● identify key business risks and ensure measures are taken to mitigate those risks;

• ● ensure that effective internal control systems are in place to safeguard the Company's assets;

• ● establish and monitor terms of reference and procedures of all Board Committees;

• ● ensure compliance with all relevant laws, regulations and standards;

• ● approve the external auditor's fees;

• ● approve and monitor the progress of material capital investment decisions, including new products and services;

• ● appoint the MD&CEO, set executive remuneration and establish performance objectives;

• ● appoint the Company Secretary;

• ● review the compensation of directors and recommend changes to the non-executive directors' fee pool to shareholders;

• ● ensure succession plans are in place for all key positions in the Company;

• ● adopt a comprehensive suite of prudential and administrative policies;

• ● verify independently that the prudential and administrative policies are operating effectively;

• ● maintain effective and timely communications with shareholders;

• ● ensure the annual financial statements of the Company and other published reports and announcements are prepared according to the relevant standard;

• ● resolve that the financial statements and other published reports and announcements (where relevant) accurately represent the financial position of the Company;

• ● approve the annual report including the financial statements, dividend proposals and notices to shareholders for consideration at the Annual General Meeting; and

• ● assess applications for new and increased loan exposures where the amount or nature of the lending requires referral to the Board as set out in the Group's Credit Risk Management Framework and the Delegated Lending Authority Framework.

KINA SECURITIES LIMITED

CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2021

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Delegations to Management

Day-to-day management and operations of the Company are delegated to Management. The MD&CEO has the authority to exercise all necessary powers, discretions and delegations authorised from time to time by the Board.

The Board has delegated to the MD&CEO responsibility for the following matters:

• ● selecting the senior management team;

• ● setting the terms and conditions of employment within Remuneration Policy parameters;

• ● evaluating the performance of management;

• ● implementing the strategic direction established by the Board;

• ● drafting the annual budget in consultation with the Audit and Risk Committee;

• ● managing the Group's day-to-day operations on time and within budget;

• ● maintaining effective internal risk controls; and

• ● managing the daily operations of the business in accordance with social, ethical and environmental policies set by the Board.

The MD&CEO's responsibilities are set out in the Board Charter. The MD&CEO is supported by the Group Executives, all of whom are listed on the Company's website at:https://investors.kinabank.com.pg/Investors/?page=board-management.

The Board Charter, Charters of each Board Committee, and the Constitution are available on the Company's website athttps://investors.kinabank.com.pg/Investors/?page=corporate-governance.

Recommendation 1.2

A listed entity should:

(a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a director; and

b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.

Director Appointment

As required by BPNG's Prudential Standards (Standards), Kina undertakes 'Fit and Proper' testing for candidates who will hold 'Responsible Person' positions on initial appointment, which includes directors and the Senior Executive Team.

This rigorous testing, in accordance with the Standards, is also carried out on an annual basis for all Responsible Persons including thorough background checks. When directors are proposed for election, or re-election at General Meetings of shareholders, the Notice of Meeting provides the following information about a candidate standing for election or re-election:

• ● biographical details;

• ● details of other directorships held by the candidate;

• ● a statement as to the independence of the candidate;

• ● details of any adverse information revealed as part of the checks performed about the director;

• ● details of any interest, position association or relationship that might impact on the ability of the director to be independent;

• ● the term of office currently served by the director; and

• ● a statement by the Board as to whether it supports the election or re-election of the candidate.

Prior to appointing a director, the Remuneration and Nomination Committee undertakes appropriate background checks on their qualifications, experience, education, character, bankruptcy history and criminal record.

Prior to appointment, candidates are required to provide the Chairman with details of other commitments and an indication of time involved, and to acknowledge that they will have adequate time to fulfil his or her responsibilities as a non-executive director of Kina.

Recommendation 1.3

A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

Written Agreements with Directors and Senior Executives

Each non-executive director is provided with a Letter of Appointment, which sets out:

• ● the term of appointment;

• ● the time commitment envisaged, including any expectations regarding involvement with Committee work and any other special duties attaching to the position;

• ● remuneration, including superannuation entitlements;

• ● the requirement to disclose the director's interests and any matters which may affect the director's independence;

• ● the requirement to comply with key corporate policies, including Kina'sCode of Ethics and Business Conduct and itsSecurities Trading Policy;

• ● the Company's policy on when directors may seek independent professional advice at the expense of the Company (which generally should be whenever directors, especially non-executive directors, judge such advice necessary for them to discharge their responsibilities as directors);

• ● the circumstances in which the director's office becomes vacant;

• ● indemnity and insurance arrangements;

• ● ongoing rights of access to corporate information; and

• ● ongoing confidentiality obligations.

The MD&CEO and each Senior Executive Team member are also provided with a Letter of Appointment which sets out the information above (to the extent applicable), as well as:

• ● a description of their position, duties and responsibilities;

• ● the person or body to whom they report;

• ● the circumstances in which their service may be terminated (with or without notice);

• ● any entitlements on termination; and

• ● any circumstances in which their remuneration may be clawed back.

Recommendation 1.4

The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

Company Secretary

The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board.

Mr. Chetan Chopra was appointed Company Secretary and Chief Financial Officer on 21 June 2016. Mr. Chopra holds a Bachelor of Science from Mumbai University and an MBA from Melbourne Business School, University of Melbourne. Chetan is a member of Certified Practising Accountants Australia, PNG and India.

Recommendation 1.5

A listed entity should:

• (a) have and disclose a diversity policy;

• (b) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and

• (c) disclose in relation to each reporting period:

  • (1) the measurable objectives set for that period to achieve gender diversity;

  • (2) the entity's progress towards achieving those objectives; and

  • (3) either:

    • (A) the respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined "senior executive" for these purposes); or

    • (B) if the entity is a "relevant employer" under the Workplace Gender Equality Act, the entity's most recent "Gender Equality Indicators", as defined in and published under that Act.

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