Further, a member of the Key Management Personnel and their Closely Related Parties who are appointed as a proxy will not vote on any of these Resolutions unless:
To consider, and if thought fit, to pass the following resolution as a special resolution:
'That the proportional takeover provisions contained in Schedule 5 of the Constitution be reinserted for a period of three years.'
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Introduction
This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at 2.00pm (EST) on Tuesday, 17 November 2015, at McCullough Robertson Lawyers, Level 11, 66 Eagle Street, Brisbane, Queensland.
This Explanatory Memorandum should be read in conjunction with and forms part of the accompanying Notice. The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions set out in the Notice.
This Explanatory Memorandum includes the following information to assist Shareholders in deciding how to vote on the Resolutions:
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Section 2:
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Action to be taken by Shareholders
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Section 3:
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Annual Report
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Section 4:
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Resolution 1 - Remuneration Report
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Section 5:
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Resolution 2 - Re-election of Director - Mr Damien Cronin
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Section 6:
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Resolution 3 - Re-election of Director - Mr Peter Dighton
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Section 7:
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Resolution 4
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Section 8:
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Resolution 5 - Renewal of Proportional Takeover Provisions
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Schedule 1:
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Definitions
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Annexure:
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Proposed Schedule 5 to the Constitution (Resolution 5)
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- Authority to issue Shares to Mr Peter Hill
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- Authority to issue shares to Mr John van der Welle
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- Authority to issue shares to Mr Damien Cronin
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- Authority to issue shares to Mr Peter Dighton
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- Authority to issue shares to Mr Peter Blakey
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- Authority to issue shares to Mr Peter Taylor
A Proxy Form is enclosed with the Notice.
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Action to be taken by Shareholders
Shareholders should read the Notice and this Explanatory Memorandum carefully before deciding how to vote on the Resolutions.
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Proxies and Corporate Representatives
A Proxy Form is enclosed with the Notice. This is to be used by Shareholders if they wish to appoint a representative (a 'proxy') to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, sign and return the Proxy Form to the Company in accordance with the instructions thereon. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person. Members that are corporations may appoint a corporate representative to attend and vote at the Meeting on their behalf.
Please note that:
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a member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy;
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a proxy need not be a member of the Company; and
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a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.
The enclosed Proxy Form provides further details on appointing proxies and lodging Proxy Forms.
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Voting Prohibition by Proxy Holders
In accordance with section 250R of the Corporations Act, a vote on Resolution 1 must not be cast (in any capacity) by, or on behalf of:
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a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report; or
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a Closely Related Party of such member.
However, a person described above may cast a vote on Resolution 1 if:
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the person does so as a proxy appointed by writing that specifies how the proxy is to vote on Resolution 1; and
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the vote is not cast on behalf of a person described in subparagraphs (a) or (b) above.
In accordance with section 250BD of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on Resolution 4(a), 4(b), 4(c), 4(d), 4(e) or 4(f) if:
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the proxy is either:
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a member of the Key Management Personnel; or
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a Closely Related Party of such member; and
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the appointment does not specify the way the proxy is to vote on the resolution. However, the prohibition does not apply if:
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the proxy is the Chair; and
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the appointment expressly authorises the Chair to exercise the proxy even if the resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel of the Company.
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Annual Report
There is no requirement for Shareholders to approve the Annual Report. Shareholders will be offered the opportunity to:
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discuss the Annual Report for the financial year ended 30 June 2015 which is online at http://www.globalpetroleum.com.au and click on the direct link;
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ask questions or make comment on the management of the Company; and
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ask the auditor questions about the conduct of the audit and the preparation and content of the auditor's report.
In addition to taking questions at the Meeting, written questions may be submitted to the Chairman about the management of the Company, or to the Company's auditor about:
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the preparation and content of the auditor's report;
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the conduct of the audit;
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accounting policies adopted by the Company in relation to the preparation of the financial statements; and
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the independence of the auditor in relation to the conduct of the audit,
no later than 5 business days before the Meeting to the Company Secretary at the Company's registered office.
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Resolution 1 - Remuneration Report
Section 250R(2) of the Corporations Act provides that the Company is required to put the Remuneration Report to the vote of Shareholders. The directors' report contains a Remuneration Report which sets out the remuneration policy for the Company and reports the remuneration arrangements in place for the executive and non-executive directors.
Section 250R(3) of the Corporations Act provides that Resolution 1 is advisory only and does not bind the Directors of the Company. Of itself, a failure of Shareholders to pass Resolution 1 will not require the Directors to alter any of the arrangements in the Remuneration Report.
However, the Corporations Act has been amended by the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act (Director and
Executive Remuneration Act) which received the Royal Assent on 27 June 2011 and came into effect on 1 July 2011.
The Director and Executive Remuneration Act introduced new sections 250U and 250Y, among others, into the Corporations Act, giving Shareholders the opportunity to remove the Board if the Remuneration Report receives a 'no' vote of 25% or more at two consecutive annual general meetings (Two Strikes Rule).
Under the Two Strikes Rule, where a resolution on the Remuneration Report receives a 'no' vote of 25% or more at two consecutive annual general meetings, the Company will be required to put to Shareholders at the second annual general meeting a resolution on whether another meeting should be held (within 90 days) at which all Directors (other than the managing director) who were in office at the date of approval of the applicable Directors' Report must stand for re-election.
In summary, if the Remuneration Report receives a 'no' vote of 25% or more at this Meeting, Shareholders should be aware that if there is a 'no' vote of 25% or more at the next annual general meeting the consequences are that it may result in the re-election of the Board.
The Chairman will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on, the Remuneration Report.
The Chairman will cast all available proxies in favour of Resolution 1.
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Resolution 2 - Re-election of Director - Mr Damien Cronin
Article 6.3(c) of the Constitution requires that one third of all Directors must retire at each annual general meeting (rounded down to the nearest whole number).
Article 6.3(f) of the Constitution states that a Director who retires is eligible for election. Pursuant to the Constitution, Mr Cronin will retire by rotation and seek election.
Mr Cronin is a solicitor who has over 25 years' experience in the oil and gas and resources sectors and has held senior legal and commercial roles with Rio Tinto, Shell, Duke Energy and Incitec Pivot. He has previously served as Company Secretary to a number of listed public companies in the oil and gas sector including Sunshine Gas Limited, Blue Energy Limited and as secretary to the operating committee of a number of mining joint ventures, including that for the Sonoma Coal Mine.
Mr Cronin was appointed a Director and Company Secretary of the Company on 31 December 2011.
The Board unanimously supports Mr Cronin's re-election.
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Resolution 3 - Re-election of Director - Mr Peter Dighton
Article 6.3(c) of the Constitution requires that one third of all Directors must retire at each annual general meeting (rounded down to the nearest whole number).
Article 6.3(f) of the Constitution states that a Director who retires is eligible for election.
Pursuant to the Constitution, Mr Dighton will retire by rotation and seek election.
Mr Dighton is a lawyer who specialises in upstream petroleum and LNG projects. He was previously a Non-Executive Director of Global from 2003-2008 and has also served on the board of the listed entities Falklands Oil and Gas Limited (Dec 2004 - Nov 2009) and Texon Petroleum Limited (May 2006 - Dec 2009).
Mr Dighton was appointed a Director of the Company on 31 December 2011. The Board unanimously supports Mr Dighton's re-election.
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Resolutions 4(a), 4(b), 4(c), 4(d), 4(e) and 4(f)- Authority to Issue Shares to Directors - Mr Peter Hill, Mr John van der Welle, Mr Damien Cronin, Mr Peter Dighton, Mr Peter Blakey and Mr Peter Taylor
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General
The Board has reviewed the Company's cost base in response to the current low oil price environment, and the challenging economic and market conditions prevailing generally, and has instigated a number of initiatives to reduce costs. As a consequence the Board has resolved and each Director has agreed to reduce the cash component of remuneration for the Managing Director, the Chairman and the four Non-Executive Directors, Mr Damien Cronin, Mr Peter Dighton, Mr Peter Blakey and Mr Peter Taylor by 25% with effect from 1 August 2015 until further notice.
The Board has also resolved and each Director has agreed, subject to receiving a waiver from ASX, (which was obtained on 15 October 2015), and Shareholder approval, that the reduction in those Directors' remuneration may, if the Board decides at the relevant time, be replaced by periodically issuing Shares to those Directors up to a maximum value of the reduction in each Director's cash remuneration. Any such share award made to a Director will be subject to that Director being a Director of the Company on the date of award, and in making an award, the Board will take account of the Director's performance. Share awards to UK Directors will be subject to UK Income Tax and National Insurance deduction under Pay As You Earn (PAYE).
The number of Shares in any award will be calculated using average share prices over an appropriate period, as further detailed below.
If Shares are issued to Directors, they will only be issued during an Open Period. It is proposed that, if the Board decides to issue the Shares, the first issue of Shares would occur in November 2015 following the AGM and would be for the reduction in cash remuneration applicable to the period between 1 August 2015 and 31 October 2015 (inclusive).
Mr Peter Hill - Resolution 4(a)
Mr Hill previously received, as Managing Director, an annual base salary of £250,000. Accordingly, his annual salary was reduced by £62,500 and it is proposed he may, if the Board decides, be issued Shares to a maximum value of £5,208 (being approximately one twelfth of £62,500) for each month's service between 1 August 2015 and 31 October 2016 and in respect of each relevant period below. A summary of the proposed issues of Shares (over the period to the date of the next AGM in November 2016) for which approval is sought, is set out below. The proposed dates for issue are timed to co-incide with likely Open Periods in which Shares can be issued to Directors and will
be on or before the last day of the then current, or the next, Open Period following the relevant period below.
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Relevant period
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Share price averaging period
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1 August 2015 to 31 October 2015
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1 August 2015 to 31 October 2015
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1 November 2015 to 31 January 2016
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1 November 2015 to 31 January 2016
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1 February 2016 to 31 April 2016
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1 February 2016 to 31 April 2016
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1 May 2016 to 31 July 2016
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1 May 2016 to 31 July 2016
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1 August 2016 to 31 October 2016
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1 August 2016 to 31 October 2016
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In each case:
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if Mr Hill ceases to be the Managing Director during a relevant period, the value of Shares that may be issued will be reduced on a pro-rata basis depending on the time elapsed between the beginning of the relevant period and his cessation; and
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the price used to calculate the number of shares will be the average daily closing market price of Shares, as quoted on AIM, for each trading day in the averaging period (as described above).
Mr John van der Welle - Resolution 4(b)
Mr van der Welle previously received, as Non-Executive Chairman, annual Directors' fees of £32,500. Accordingly, his annual Directors' fees were reduced by £8,125 and it is proposed he may, if the Board decides, be issued Shares to a maximum value of
£677 (being approximately one twelfth of £8,125) for each month's service between 1 August 2015 and 31 October 2016 and in respect of each relevant period below. A summary of the proposed issues of Shares (over the period to the date of the next AGM in November 2016) for which approval is sought is set out below. The proposed dates for issue are timed to co-incide with likely Open Periods in which Shares can be issued to Directors and will be on or before the last day of the then current, or the next, Open Period following the relevant period below.
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Relevant period
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Share price averaging period
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1 August 2015 to 31 October 2015
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1 August 2015 to 31 October 2015
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1 November 2015 to 31 January 2016
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1 November 2015 to 31 January 2016
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1 February 2016 to 31 April 2016
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1 February 2016 to 31 April 2016
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1 May 2016 to 31 July 2016
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1 May 2016 to 31 July 2016
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1 August 2016 to 31 October 2016
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1 August 2016 to 31 October 2016
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In each case:
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if Mr van der Welle ceases to be a Non-executive Director during a relevant period, the value of Shares to be issued will be reduced on a pro-rata basis
depending on the time elapsed between the beginning of the relevant period and his cessation; and
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the price used to calculate the number of shares will be the average daily closing market price of Shares, as quoted on AIM, for each trading day in the averaging period (as described above).
Mr Damien Cronin - Resolution 4(c)
Mr Cronin previously received, as a Non-Executive Director and Company Secretary, annual Directors' and Company Secretary's fees of A$66,000. Accordingly, his annual Directors' and Company Secretary's fees were reduced by A$16,500 and it is proposed he may, if the Board decides, be issued Shares to a maximum value of A$1,375 (that is one twelfth of A$16,500) for each month's service between 1 August 2015 and 31 October 2016 and in respect of each relevant period below. A summary of the proposed issues of Shares (over the period to the date of the next AGM in November 2016) for which approval is sought is set out below. The proposed dates for issue are timed to co-incide with likely Open Periods in which Shares can be issued to Directors and will be on or before the last day of the then current, or the next, Open Period following the relevant period below.
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Relevant period
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Share price averaging period
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1 August 2015 to 31 October 2015
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1 August 2015 to 31 October 2015
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1 November 2015 to 31 January 2016
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1 November 2015 to 31 January 2016
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1 February 2016 to 31 April 2016
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1 February 2016 to 31 April 2016
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1 May 2016 to 31 July 2016
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1 May 2016 to 31 July 2016
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1 August 2016 to 31 October 2016
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1 August 2016 to 31 October 2016
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In each case:
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if Mr Cronin ceases to be a Non-Executive Director and Company Secretary during a relevant period, the value of Shares that may be issued will be reduced on a pro-rata basis depending on the time elapsed between the beginning of the relevant period and his cessation; and
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the price used to calculate the number of shares will be the average daily closing market price of Shares, as quoted on ASX, for each trading day in the averaging period (as described above).
Mr Peter Dighton - Resolution 4(d)
Mr Dighton previously received, as a Non-Executive Director, annual Directors' fees of A$30,000. Accordingly, his annual Directors' fees were reduced by A$7,500 and it is proposed he may, if the Board decides, be issued Shares to a maximum value of A$625 (that is one twelfth of A$7,500.00) for each month of service between 1 August 2015 and 31 October 2016 and in respect of each relevant period below. A summary of the proposed issues of Shares (over the period to the date of the next AGM in November 2016) for which approval is sought is set out below. The proposed dates for issue are timed to co-incide with likely Open Periods in which Shares can be issued to Directors and will be made on or before the last day of the then current, or the next, Open Period following the relevant period below.