Corporate Governance Statement and Appendix 4G

31 August 2018



The Manager
ASX Market Announcements
Australian Securities Exchange
Exchange Centre
Level 4
20 Bridge Street
Sydney NSW 2000



Electronic Lodgement


Australian Foundation Investment Company Limited
Corporate Governance Statement and Appendix 4G


Dear Sir / Madam

Please find attached a copy of the Company’s Corporate Governance
Statement and Appendix 4G.


Yours faithfully


Matthew Rowe
Company Secretary

1
Rules 4. 7.3 and 4.10.3
1

Appendix 4G

Key to Disclosures
Corporate Governance Council Principles and Recommendations


ABN/ARBN Financial year ended
56 004 147 120 30 June 2018
Our corporate governance statement
2
for the above period above can be found at:
3

 these pages of our annual report: _____________________________________________
 this URL on our website: www.afi.com.au/Corporate-Governance.aspx

The Corporate Governance Statement is accurate and up to date as at 23 July 2018 and has been
approved by the board.

The annexure includes a key to where our corporate governance disclosures can be located.


Date here: 31 August 2018


Sign here:



Print name: Matthew Rowe


1
Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual
report with ASX.
Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report
either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website
where such a statement is located. The corporate governance statement must disclose the extent to which the entity has
followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has
not followed a recommendation for any part of the reporting period, its corporate governance statement must separately
identify that recommendation and the period during which it was not followed and state its reasons for not following the
recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that
period.
Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its
annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual
report with ASX. The corporate governance statement must be current as at the effective date specified in that statement
for the purposes of rule 4.10.3.
2
“Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3
which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance
Council during a particular reporting period.

3
Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web
page, where the entity’s corporate governance statement can be found.

Name of entity
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED

2
ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1
A listed entity should disclose:
(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.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and information about the respective roles and
responsibilities of our board and management (including
those matters expressly reserved to the board and those
delegated to management):
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

1.2
A listed entity should:
(a) undertake appropriate checks before appointing a
person, or putting forward to security holders a
candidate 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.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

1.3
A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

3
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
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.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

1.5
A listed entity should:
(a) have a diversity policy which includes
requirements for the board or a relevant
committee of the board to set measurable
objectives for achieving gender diversity and to
assess annually both the objectives and the
entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the
measurable objectives for achieving gender
diversity set by the board or a relevant committee
of the board
in accordance with the entity’s
diversity policy and its progress towards achieving
them and either:
(1) the respective proportions of men and women
on the board, in senior executive positions
and across the whole organisation (including
how the entity has defined “senior executive”
for these purposes); or
(2) 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.
... the fact that we have a diversity policy that complies
with paragraph (a):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and a copy of our diversity policy or a summary of it:
 at this location:
www.afi.com.au/Corporate-Governance.aspx
Insert location here

... the measurable objectives for achieving gender diversity
set by the board or a relevant committee of the board in
accordance with our diversity policy and our progress
towards achieving them:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and the information referred to in paragraphs (c)(1) or
(2):
 in our Corporate Governance Statement AND
 at this location:
www.afi.com.au/Reports-by-year.aspx
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

4
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
1.6
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
... the evaluation process referred to in paragraph (a):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and the information referred to in paragraph (b):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

1.7
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of its senior
executives; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
... the evaluation process referred to in paragraph (a):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and the information referred to in paragraph (b):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

5
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE
2.1
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have a nomination committee,
disclose that fact and the processes it employs to
address board succession issues and to ensure
that the board has the appropriate balance of
skills, knowledge, experience, independence and
diversity to enable it to discharge its duties and
responsibilities effectively.
[If the entity complies with paragraph (a):]
... the fact that we have a nomination committee that
complies with paragraphs (1) and (2):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and a copy of the charter of the committee:
 at this location:
www.afi.com.au/Corporate-Governance.aspx
Insert location here

... and the information referred to in paragraphs (4) and
(5):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

[If the entity complies with paragraph (b):]
... the fact that we do not have a nomination committee
and the processes we employ to address board succession
issues and to ensure that the board has the appropriate
balance of skills, knowledge, experience, independence
and diversity to enable it to discharge its duties and
responsibilities effectively:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

6
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
2.2
A listed entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the board currently has or is looking to achieve in its
membership.
... our board skills matrix:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

2.3
A listed entity should disclose:
(a) the names of the directors considered by the
board to be independent directors;
(b) if a director has an interest, position, association
or relationship of the type described in Box 2.3
but the board is of the opinion that it does not
compromise the independence of the director,
the nature of the interest, position, association or
relationship in question and an explanation of
why the board is of that opinion; and
(c) the length of service of each director.
... the names of the directors considered by the board to be
independent directors:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... where applicable, the information referred to in
paragraph (b):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
... the length of service of each director:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

2.4
A majority of the board of a listed entity should be
independent directors.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

7
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
2.5
The chair of the board of a listed entity should be an
independent director and, in particular, should not
be the same person as the CEO of the entity.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

2.6
A listed entity should have a program for inducting
new directors and provide
appropriate professional
development opportunities for directors to develop
and maintain the skills and knowledge needed to
perform their role as directors effectively.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY
3.1
A listed entity should:
(a) have a code of conduct for its directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
... our code of conduct or a summary of it:
 in our Corporate Governance Statement AND
 at this location:
www.afi.com.au/Corporate-Governance.aspx
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING
4.1
The board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all of whom are
non-
executive directors and a majority of
whom are independent directors; and
(2) is chaired by an independent director, who is
not the chair of the board,
and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of
the members of the committee; and
(5) in relation to each reporting period, the
[If the entity complies with paragraph (a):]
... the fact that we have an audit committee that complies
with paragraphs (1) and (2):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
... and a copy of the charter of the committee:
 at this location:
www.afi.com.au/Corporate-Governance.aspx
 an explanation why that is so in our Corporate
Governance Statement

8
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity
of its corporate reporting, including the processes
for the appointment and removal of the external
auditor and the rotation of the audit engagement
partner.
Insert location here

... and the information referred to in paragraphs (4) and
(5):
 (5) in our Corporate Governance Statement AND
 (4) at these locations:
www.afi.com.au/Reports-by-year.aspx and
www.afi.com.au/Board.aspx
_____________________________________________
Insert location here

[If the entity complies with paragraph (b):]
... the fact that we do not have an audit committee and the
processes we employ that independently verify and
safeguard the integrity of our corporate reporting,
including the processes for the appointment and removal
of the external auditor and the rotation of the audit
engagement partner:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
4.2
The board of a listed entity should, before it approves
the entity’s financial statements for a financial period,
receive from its CEO and CFO a declaration that, in
their opinion, the financial records of the entity have
been properly maintained and that the financial
statements comply with the appropriate accounting
standards and give a true and fair view of the
financial position and performance of the entity and
that the opinion has been formed on the basis of a
sound system of risk management and internal
control which is operating effectively.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

9
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
4.3
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to
answer questions from security holders relevant to
the audit.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity that does not
hold an annual general meeting and this
recommendation is therefore not applicable

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
5.1
A listed entity should:
(a) have a written policy for complying with its
continuous disclosure obligations under the
Listing Rules; and
(b) disclose that policy or a summary of it.
... our continuous disclosure compliance policy or a
summary of it:
 in our Corporate Governance Statement AND
 at this location:
www.afi.com.au/Corporate-Governance.aspx
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
6.1
A listed entity should provide information about
itself and its governance to investors via its website.
... information about us and our governance on our
website:
 at this location:
www.afi.com.au/Corporate-Governance.aspx
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

6.2
A listed entity should design and implement an
investor relations program to facilitate effective two-
way communication with investors.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

10
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
6.3
A listed entity should disclose the policies and
processes it has in place to facilitate and encourage
participation at meetings of security holders.
... our policies and processes for facilitating and
encouraging participation at meetings of security holders:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity that does not
hold periodic meetings of security holders and this
recommendation is therefore not applicable

6.4
A listed entity should give security holders the option
to receive communications from, and send
communications to, the entity and its security
registry electronically.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
7.1
The board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s
risk management framework.
[If the entity complies with paragraph (a):]
... the fact that we have a committee or committees to
oversee risk that comply with paragraphs (1) and (2):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and a copy of the charter of the committee:
 at this location:
www.afi.com.au/Corporate-Governance.aspx
Insert location here

... and the information referred to in paragraphs (4) and
(5):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
 an explanation why that is so in our Corporate
Governance Statement

11
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
Insert location here

[If the entity complies with paragraph (b):]
... the fact that we do not have a ri sk committee or
committees that satisfy (a) and the processes we employ
for overseeing our risk management framework:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
7.2
The board or a committee of the board should:
(a) review the entity’s risk management framework at
least annually to satisfy itself that it continues to
be sound; and
(b) disclose, in relation to each reporting period,
whether such a review has taken place.
... the fact that we follow this recommendation:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

7.3
A listed entity should disclose:
(a) if it has an internal audit function, how the
function is structured and what role it performs;
OR
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of its
risk management and internal control processes.
[If the entity complies with paragraph (a):]
... how our internal audit function is structured and what
role it performs:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

[If the entity complies with paragraph (b):]
... the fact that we do not have an internal audit function
and the processes we employ for evaluating and
continually improving the effectiveness of our risk
management and internal control processes:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

12
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
7.4
A listed entity should disclose whether it has any
material exposure to economic, environmental and
social sustainability risks and, if it does, how it
manages or intends to manage those risks.
... whether we have any material exposure to economic,
environmental and social sustainability risks and, if we do,
how we manage or intend to manage those risks:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
8.1
The board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; OR
(b) if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for directors and senior executives and ensuring
that such remuneration is appropriate and not
excessive.
[If the entity complies with paragraph (a):]
... the fact that we have a remuneration committee that
complies with paragraphs (1) and (2):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

... and a copy of the charter of the committee:
 at this location:
www.afi.com.au/Corporate-Governance.aspx Insert
location here

... and the information referred to in paragraphs (4) and
(5):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here

[If the entity complies with paragraph (b):]
... the fact that we do not have a remuneration committee
and the processes we employ for setting the level and
composition of remuneration for directors and senior
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

13
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
executives and ensuring that such remuneration is
appropriate and not excessive:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
8.2
A listed entity should separately disclose its policies
and practices regarding the remuneration of non-
executive directors and the remuneration of
executive directors and other senior executives.
... separately our remuneration policies and practices
regarding the remuneration of non-executive directors and
the remuneration of executive directors and other senior
executives:
 in our Corporate Governance Statement OR
 at this location:
www.afi.com.au/Reports-by-year.aspx
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we are an externally managed entity and this
recommendation is therefore not applicable

8. 3
A listed entity which has an equity-based
remuneration scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
(b) disclose that policy or a summary of it.
... our policy on this issue or a summary of it:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement OR

 we do not have an equity-based remuneration
scheme and this recommendation is therefore not
applicable OR
 we are an externally managed entity and this
recommendation is therefore not applicable

14
Corporate Governance Council recommendation We have followed the recommendation in full for the
whole of the period above. We have disclosed ...
We have NOT followed the recommendation in full
for the whole of the period above. We have disclosed
...
ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES
-
Alternative to Recommendation 1.1 for externally
managed listed entities:
The responsible entity of an externally managed
listed entity should disclose:
(a) the arrangements between the responsible entity
and the listed entity for managing the affairs of
the listed entity;
(b) the role and responsibility of the board of the
responsible entity for overseeing those
arrangements.
... the information referred to in paragraphs (a) and (b):
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

-
Alternative to Recommendations 8.1, 8.2 and 8.3 for
externally managed listed entities:
An externally managed listed entity should clearly
disclose the terms governing the remuneration of the
manager.

... the terms governing our remuneration as manager of
the entity:
 in our Corporate Governance Statement OR
 at this location:
_____________________________________________
Insert location here
 an explanation why that is so in our Corporate
Governance Statement

Corporate Governance
Statement 2018
90
YEARS OF INVESTMENT
EXPERIENCE

CORPORATE GOVERNANCE STATEMENT
Introduction
The Board of the Company is committed
to having the highest standards of ethical
behaviour and an effective system of
corporate governance for the Group, that is,
the Company and its subsidiary Australian
Investment Company Services Limited
(AICS), commensurate with the size of the
Company and the scope of its business
operations.
In accordance with ASX Listing Rule
4.10.3, set out below are the applicable
ASX Corporate Governance Council’s
eight principles of corporate governance
(ASX Governance Principles) and outlined
accordingly is how the Board has applied
each principle and the recommendations
set out within them for the financial year
ended 30 June 2018.
The Company is fully supportive of the
‘if not, why not’ disclosure-based approach
to governance adopted by the ASX
Governance Principles and the recognition
within them that there is no single model
of corporate governance and that good
corporate governance practice is not
restricted to adopting the recommendations
contained in the ASX Governance
Principles.
In addition to having its shares listed on
the Australian Securities Exchange (ASX),
the Company also has shares listed on the
New Zealand Stock Exchange (NZX). As
an overseas listed issuer on the NZX, the
Company is generally deemed to comply
with the NZX Listing Rules provided that
the Company remains listed on the ASX,
complies with the ASX Listing Rules and
provides the NZX with all the information
and notices that it provides to the ASX.
The ASX Governance Principles differ
from the NZX’s corporate governance
rules and the principles contained in the
NZX Corporate Governance Code. More
information about the corporate governance
rules and principles of the ASX can be
found at www.asx.com.au and, in respect of
the NZX, at www.nzx.com
Principle 1: Laying Solid
Foundations For Management
and Oversight
This Principle requires the Company to
establish and disclose the respective roles
and responsibilities of both the Board and
management and how their performance is
monitored and evaluated.
The Company’s Corporate Objective, as
determined by the Board, is to provide
shareholders with attractive investment
returns through access to a growing stream
of fully franked dividends and growth in
capital invested.
In this regard, the Company’s primary
goals are:
• to pay dividends which, over time,
grow faster than the rate of inflation; and
• to provide attractive total returns over
the medium to long term.
The role of the Board underpins and
supports the Corporate Objective of
the Company. The Board generally sets
objectives and goals for the operation of
the Company, oversees the Company’s
management, regularly reviews the
Company’s performance and monitors its
affairs in the best interests of the Company.
For these responsibilities, the Board is
accountable to its shareholders as owners
of the Company.
The Board operates under a Board charter,
available on the Company’s website, which
documents the role of the Board outlined
above and the matters that the Board has
reserved to itself. Those matters include:
• setting the Corporate Objective of the
Company and approving business
strategies and plans of the Company
designed to meet that objective;
• approving the expense budget at least
annually;
• approving changes to the Company’s
capital structure and dividend policy;
• appointing and removing the Managing
Director and carrying out succession
planning for the Managing Director as
applicable;
• reviewing the performance of the
Managing Director, his/her remuneration
and contractual arrangements;
• appointing and removing Senior
Executives on the recommendation
of the Managing Director;
• reviewing the performance and
remuneration of Senior Executives
on the review and recommendation
of the Managing Director;
• reviewing the composition of the
Board and Board Committees, the
independence of Directors, the Board’s
performance and carrying out succession
planning for the Chairman and other
Non-Executive Directors;
• determining the risk appetite of the
organisation;
• reviewing the performance of
management and the Company,
including in relation to the risk
management, internal controls and
compliance systems adopted by the
Company and the monitoring and review
of the performance of AICS in relation
to the services that AICS provides the
Company;
• dealing with any matters in excess
of any specific delegations that the
Board may from time to time delegate
to the Managing Director and Senior
Executives;
• approving the communication to
shareholders and to the public of the
half-year and full-year results and
generally any public statements which
reflect issues of the Company’s policy
or strategy that the Board deems
material; and
• causing processes to be put in place
for the investment team to implement (in
consultation with the Chairman/Managing
Director) the decisions of the Investment
Committee in buying/selling options or
securities.
The Directors meet formally as a Board,
normally monthly with an annual strategy
session. The Non-Executive Directors meet
regularly in the absence of the Managing
Director and other Senior Executives.
2
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

CORPORATE GOVERNANCE STATEMENT
Delegation to Board Committees
The Board has established the following
principal Board Committees to assist the
Board in exercising its authority over the
matters outlined above:
• Investment Committee;
• Audit Committee;
• Nomination Committee; and
• Remuneration Committee.
Each Board Committee operates under
a formal charter that is made publicly
available on the Company’s website,
www.afi.com.au
A chart showing the number of Board and
Board Committee meetings held during
the year and attendance by Directors is
set out below.
The role and work of the Nomination
Committee is outlined under Principle 2;
the Audit Committee is outlined under
Principles 4 and 7; and the Remuneration
Committee is outlined below under this
Principle and under Principle 8.
Investment Committee
The general role of the Investment
Committee is to manage the Company’s
investments and provide oversight of
the investment process to support the
Company’s Corporate Objective.
In doing this, the Committee:
• approves all purchases and sales and
other investment decisions to maintain
the investment and trading portfolios
at subsequent meetings;
• makes decisions in relation to how other
portfolio-related activities are carried out,
including regarding voting instructions
and lodgement of proxies in respect of
general meetings of companies in which
the Company has invested;
• receives reports on portfolio matters,
including portfolio performance,
transaction reports, portfolio position
reports and performance attribution
analysis; and
• receives reports and recommendations
in relation to the review and analysis
of companies/securities in which the
Company is able to invest, or has
invested in.
The Committee’s membership currently
comprises TA Campbell AO (Chairman),
M Freeman (CEO), RE Barker, JC Hey,
J Paterson, CM Walter AM and PJ Williams.
Other Directors attend Committee meetings
when available.
Further details of the role of the Investment
Committee in respect of the oversight
of investment risk can be found under
Principle 7.
Relationship with AICS
The Company has entered into an
agreement with Australian Investment
Company Services Limited (AICS) for
AICS to provide on a non-exclusive basis
a comprehensive range of services to
the Company under the leadership of the
Managing Director of AICS.
The Managing Director of AICS has been
appointed Managing Director of the
Company, and the AICS services provided
include the day-to-day maintenance of the
portfolios and associated research.
AICS is 25 per cent owned by Djerriwarrh
Investments Ltd and 75 per cent owned by
the Company.
The Managing Director is responsible
to the Company for the performance of
those services and the Board acts in close
consultation and cooperation with AICS in
relation to the provision of services by AICS
to the Company. AICS is paid a fee based
on its costs in providing these services.
The Senior Executives of AICS have also
been appointed as officers of the Company
and their details are set out in the 2018
Annual Report.
Pre-appointment Checks
and AGMs
Prior to their appointment of a Non-
Executive Director to the Board, the
Nomination Committee will determine
what pre-appointment checks are
appropriate to be undertaken in the
circumstances. No new Director was
appointed to the Board during the year.
Relevant details in respect of each Director
standing for election or re-election by
shareholders are contained within the
explanatory notes of the Notice of Annual
General Meeting.
Agreements
All of the Directors have entered into an
agreement with the Company in respect
of their appointment, including access to
documents, Director’s indemnity against
liability, Directors’ and Officers’ insurance,
conflicts of interests, taking independent
professional advice and dealing in the
Company’s securities.
Meetings of Directors
BoardInvestmentAuditRemunerationNomination
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
TA Campbell13112119-2
#
2211
M Freeman
2
66109-2
#
-2
#
-1
#
RE Barker13122118-2
#
-2
#
--
JC Hey 13132119-1
#
--11
GR Liebelt 1313-15
#
--22--
J Paterson13132119442211
DA Peever 1313-16
#
44----
CM Walter131321214422--
PJ Williams1313212144-1
#
11
# Attended meetings by invitation.
2. M Freeman appointed Managing Director on 1 January 2018.
3
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

Company Secretary
The Company Secretary’s details and
experience appears in the 2018 Annual
Report. While the Company Secretary is an
employee by AICS, he is accountable to the
Company’s Board, through the Chairman,
on all matters to do with the proper
functioning of the Board.
Board Diversity Policy
The Board recognises that having a diverse
Board will assist it in effectively carrying
out its role. The Board has established a
Diversity Policy under the oversight of the
Nomination Committee.
The Board views diversity as including,
but not being limited to, skills, qualifications,
experience, gender, age, disability, race,
ethnicity and cultural background.
The Company has a number of
characteristics that have an important
influence on how the Board deals with
Board and organisational diversity:
• As the Company is a long term
shareholder, it is beneficial to have
Directors who serve for a long period of
time, experiencing different economic
and business cycles.
• The Company has no employees as
all management, financial, business
development/marketing and securities/
stock market services are provided by
its subsidiary, AICS.
• Senior Executives of the Company
are the Senior Executives of AICS
and employed by them.
As such, the Diversity Policy is limited to
Board diversity. When the Board is looking
for an additional member, the overarching
priority is to appoint an individual based on
merit who the Board believes will provide
the Company with the best opportunity to
meet its Corporate Objective. Pursuant to
the policy, the Board has set as an objective
to embed gender diversity as an active
consideration in succession planning for
all Board positions.
Gender diversity has been a continuing
focus of discussion for the Nomination
Committee regarding Board succession
during the financial year.
AICS has a small yet diverse workforce
and due to its size and flexibility, is able
to attract outstanding candidates whose
flexible working needs (for example,
returning to work mothers) may not easily
be met in the general investment/financial
services industry.
Performance assessments
Non-Executive Directors
In order to provide a specific opportunity for
performance matters to be discussed with
each Director, each year the Chairman of
the Board conducts a formal Director review
process.
He meets with each Director individually
to discuss issues including performance
and discusses with each Director the
effectiveness of the Board as a whole,
Board Committees, individual Directors
and the Chairman with the intention of
providing mutual feedback.
To assist the effectiveness of these
meetings, the Chairman is provided with
objective information about each Director
(e.g. number of meetings attended,
Committee memberships, other current
directorships etc.) and a guide for
discussion to ensure consistency. The
Chairman reports on the general outcome
of these meetings to the Nomination
Committee, and to the Board where
necessary. In addition, an independent
Director meets with other Directors to
discuss the performance of the Chairman.
Evaluations under this process were
carried out during the financial year.
Management
The Remuneration Committee (see Principle
8), is responsible to the Board for evaluating
the performance of the Managing Director
and the Company’s Senior Executives
in accordance with the Company’s aims
and objectives, and remunerating them
appropriately.
As part of its approach to encouraging
enhanced performance, the Board has
adopted a remuneration structure for
the Managing Director and other Senior
Executives, which includes a significant
component of ‘at risk’ remuneration
designed to encourage and reward
high performance.
Full details of the remuneration process
and the benchmarks used for assessment
are given in the Remuneration Report in
the 2018 Annual Report, available on the
Company’s website. Such an assessment
was carried out in respect of the Managing
Director’s and Senior Executives’
performance for the financial year.
The Board believes that the Company
is fully compliant with Principle 1 and
its recommendations.
CORPORATE GOVERNANCE STATEMENT
Board and Organisational DiversityMale Female
Board (including Managing Director) 7 2
Other Senior Executives 30
Employees (all employed by AICS, including
Managing Director and other Senior Executives)
11 7
4
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

Principle 2: Structure the Board
to Add Value
This Principle requires the Company to have
a Board of effective composition, size and
commitment to enable it to discharge its
duties effectively.
The Board consists of an Independent
Non-Executive Chairman, TA Campbell
AO, a Managing Director, RM Freeman and
seven Non-Executive Directors, RE Barker,
JC Hey, GR Liebelt, J Paterson, DA Peever,
CM Walter AM and PJ Williams. All Non-
Executive Directors with the exception of
RE Barker are considered by the Board
to be independent.
The Directors’ Report in the 2018 Annual
Report sets out the details of the skills,
experience, and expertise of each Director.
The roles of the Chairman and Managing
Director are separate. The role of the
Managing Director is set out under Principle
1, above. The role of the Chairman is set
out in the Board charter, including being
responsible for:
• the business of the Board, taking into
account the issues and the concerns of
all Directors and the requirements of the
Board charter;
• the leadership and conduct of Board and
Company meetings to be in accordance
with the agreed agenda, the Company’s
Corporate Objective and Principles of
Conduct (described under Principle 3,
below); and
• encouraging active engagement by
Directors and an open and constructive
relationship between the Board and the
Managing Director and Senior Executives.
The Chairman also has the authority to
act and speak for the Board between
meetings, subject to any agreed
consultation processes.
Appointment and Renewal
The Company’s constitution provides
that each Non-Executive Director must
seek re-election by shareholders at least
every three years if they wish to remain a
Director. Any new Non-Executive Director
appointed by the Board must seek election
by shareholders at the next Annual General
Meeting of the Company. This approach is
consistent with the ASX Listing Rules.
Details of the term of office held by each
Director in office as at the date of this report
are shown in the table below.
All Directors are encouraged to have a
meaningful shareholding in the Company of
at least one year’s Director’s fees over time.
In this way Directors benefit in the same
way as all shareholders in improving the
shareholder value of the Company.
To assist Directors to fully meet their
responsibilities to bring an independent
view to matters coming before them, the
Board has agreed upon a procedure in
appropriate situations for Directors to take
independent professional advice, at the
expense of the Company, after advising
the Chairman of their intention to do so.
On appointment, new Directors are
given the opportunity to meet with Senior
Executives of the Company to fully
understand their areas of expertise and
responsibility within the Company. On
an ongoing basis, regular reports are
provided to the Board updating Directors
with legal, regulatory, governance and
financial developments, both in Australia
and internationally, that could impact either
the Company, the companies that AFIC
invests in, or their roles as Directors of
AFIC and other companies. Directors
are also invited to attend meetings
the Company arranges with investee
companies and subject matter experts on
various business and economic issues.
CORPORATE GOVERNANCE STATEMENT
DirectorYears
TA Campbell AO 33
RE Barker16 years (Non-Executive Director since 1 January 2018, Managing Director and CEO from 2001 to 2017
and Alternate Director 1987 to 2001)
JC Hey 4
RM Freeman6 months
GR Liebelt 5
J Paterson 13 years and Alternate Director 1987 to 2005
DA Peever 4
CM Walter AM15
PJ Williams8
5
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

Nomination Committee
The Nomination Committee comprises
J Paterson (Chairman), TA Campbell AO,
JC Hey and PJ Williams. Committee
members are independent Directors
including the Chairman of the Committee.
The Nomination Committee’s charter
sets out the role of the Committee and
its responsibilities, composition and
membership requirements.
The Nomination Committee periodically
reviews Board and Board Committee
composition and succession planning, and
where applicable, recommends suitable
Directors for appointment by the Board and
shareholders. The Committee may also
involve other Directors or the full Board
in this process. Complementary to this
responsibility, the Committee oversees the
Board’s Diversity Policy.
On recommendation from the Committee,
the Board has determined that, in terms of
the mix of skills and diversity it is looking
for in its own membership, it is best served
by having a mix of individuals with different
perspectives that have deep expertise and
a breadth of experience as demonstrated
in the chart below.
The Nomination Committee utilises a
detailed skills matrix when considering
future Board succession matters. The
Committee also reviews the process in
place to assess the Board’s performance.
CORPORATE GOVERNANCE STATEMENT
Number of Board Members with Industry Experience and Skills
Industry Sector
Experience
Skill
Banking
4
6
3
3
2
2
2
1
7
6
Financial Services
Resources/Resource Services
Manufacturing
Legal/Accounting/Governance/Tax
International Business
Technology
Infrastructure/Logistics
Retail Consumer/Energy
Property
Health
Investment
9
4
6
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

Independence of Directors
The Nomination Committee also reviews the
independence of each of the Non-Executive
Directors on an annual basis, taking into
account the factors set out in the ASX
Governance Principles, including situations
where an individual Director may be a
partner in, controlling shareholder of, or
Executive of an entity which has a material
commercial relationship with the Company
and also the behaviours each Director
exhibits in the Boardroom. In looking at
commercial relationships, the Nomination
Committee has set an initial materiality
threshold of $1 million per annum and
this threshold is reviewed annually by
the Committee.
Being a long term investor is an essential
part of the Company’s Corporate Objective
and continuity on the Board is regarded
as an important factor in the Board’s
approach. The Board is of the strong view
that length of tenure is not an indication
of a lack of independence and what is
important is how each Director behaves
in the boardroom, including the ability to
constructively challenge management.
The Board instead regards retention of
corporate memory as an important element
of the Board’s responsibilities. Details of the
length of service of each Director are set
out above.
A number of the Directors are also Directors
of companies in which the Company
invests. Any real or potential conflicts
of interest are dealt with by procedures
consistent with Corporations Act
requirements which are designed to ensure
that conflicted Directors do not take part in
the decision-making process on relevant
issues. On this basis, it is believed that their
independence on all other issues is not
compromised.
RE Barker was CEO and Managing Director
of the Company from 2001 to 31 December
2017 and transitioned to a Non-Executive
Director on the 1 January 2018. Taking
into account the factors set out in the
ASX Corporate Governance Principles
Mr Barker is not considered to be an
independent Director.
As noted above, AFIC is a listed investment
company and is a long term investor, and
it is of great assistance to have Directors
with a depth of experience and skills in
the securities industry and who have been
involved in the investment decisions of the
Company over a long period.
It is considered that with the exception
of Mr Barker the remaining seven
Non-Executive Directors are independent
and this is a majority of Directors.
The Board believes that the Company
is fully compliant with Principle 2 and
its recommendations.
Principle 3: Act Ethically and
Responsibly
This Principle requires that the Company
should act ethically and responsibly.
The Board and Senior Executives are
committed to maintaining the highest
standards of integrity. The Company also
maintains a high level of transparency
regarding its actions consistent with
the need to maintain the confidentiality
of commercial-in-confidence material
and, where appropriate, to protect the
shareholders’ interests.
Corporate Principles of Conduct
The Board has adopted Corporate
Principles of Conduct which outline ethical
standards to be followed by Directors and
Senior Executives of the Company when
carrying out their responsibilities with a
view to the Company achieving its aims.
Under the Principles, Directors and
Senior Executives will:
• conduct business in good faith in the
best interests of the Company with
efficiency, honesty and fairness;
• perform their duties with the utmost
integrity and the standard of care and
diligence expected of an organisation
of the highest calibre;
• treat others with dignity and respect; and
• not engage in conduct likely to have an
adverse effect on the reputation of the
Company.
The Corporate Principles of Conduct also
set out details of how conflicts of interest
should be avoided. The Company’s
Directors and employees must disclose
to the Company any material personal
interest that they or any associate may have
in a matter that relates to the affairs of the
Company, and inform the Board, via the
Company Secretary, of any changes.
Where a conflict of interest may arise, full
disclosure by all interested persons must
be made and appropriate arrangements
followed, such that interested persons
are not included in making any relevant
decisions.
AICS also has its own comprehensive
Principles of Conduct in place that cover the
behaviours and actions of its employees.
Compliance with those principles is a
condition of the appointment of each
Senior Executive with the Company and a
condition of their employment with AICS.
CORPORATE GOVERNANCE STATEMENT
7
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

Whistleblower Protection Policy
The Company also has in place a
Whistleblower Protection Policy that
establishes a formal framework within
which individuals are able, in a secure
way, to express their genuine concerns
about unlawful behaviour or breaches of
policy, free from the threat of victimisation
or reprisal and on the understanding that
their concerns will be investigated and that,
where appropriate, action will be taken to
redress the situation.
Any individual making a report in good faith
under the policy will be protected by the
Company from any victimisation, including
harassment, reprisals, discrimination or
other form of detriment, as a result of
making such a report.
The Board believes that the Company
is fully compliant with Principle 3 and
its recommendations.
Principle 4: Safeguard Integrity
in Corporate Reporting
This Principle requires that the Company
has formal and rigorous processes that
independently verify and safeguard the
integrity of its corporate reporting.
The Company has established an Audit
Committee to oversee the integrity of
the financial reporting process and which
reports to the Board. The Committee has
four members, all of whom are independent
Directors: PJ Williams (Chairman),
J Paterson, DA Peever and CM Walter AM.
Members of the Audit Committee have
the requisite financial experience and
understanding to effectively discharge the
Committee’s mandate. In addition, some
members of the Committee have relevant
experience and qualifications as set out in
the 2018 Annual Report, but they have no
responsibilities additional to those of other
members of the Audit Committee.
The Audit Committee is responsible for
reviewing:
• the Company’s accounting policies;
• the content of financial statements;
• issues relating to the controls applied to
the Company’s activities;
• the conduct, effectiveness and
independence of the external audit;
• risk management (including taxation risk)
and related issues; and
• compliance issues.
Written Affirmations
Prior to approving the Company’s financial
statements, the Board has received from
the Managing Director and the Chief
Financial Officer written affirmations
concerning the Company’s financial
statements required by the Corporations
Act as set out in the Directors’ Declaration
in the 2018 Annual Report.
In respect of both the financial statements
for the year ended 30 June 2018 and the
half-year ended 31 December 2017, the
Board has also received from the Managing
Director and the Chief Financial Officer
written affirmation that, in their opinion, the
financial records of the entity have been
properly maintained and that the financial
statements comply with the appropriate
accounting standards and give a true
and fair view of the financial position and
performance of the Company and that
the opinion has been formed on the basis
of a sound system of risk management
and internal control which is operating
effectively.
The Audit Committee and the Board have
also received reports from the Senior
Executives as to the effectiveness of the
Company’s management of its material
business risks whilst noting that the
Company, as a listed investment company,
actively takes on appropriate levels of
investment risk as part of its investment
activities.
External Audit
The Company has a process to ensure
the independence and competence of the
Company’s external auditor including the
Audit Committee reviewing any non-audit
work to ensure that it does not conflict
with audit independence. Information
on procedures for the selection and
appointment of the external auditor and for
the rotation of external audit engagement
partners is set out in the Committee’s
charter. Policies relating to rotating external
audit engagement partners are set by
the external audit firm in accordance with
Corporations Act and international best
practice requirements. The Audit Committee
meets regularly with the external auditor in
the absence of management. The external
auditor attends the Company’s Annual
General Meeting to answer questions from
shareholders relevant to the audit.
The Board believes that the Company
is fully compliant with Principle 4 and
its recommendations.
Principle 5: Make Timely
and Balanced Disclosure
This Principle requires that the Company
promotes timely and balanced disclosure
of all material matters concerning the
Company.
As a listed entity, the Company has an
obligation under the ASX Listing Rules
and the Corporations Act to maintain
an informed market in its securities.
Accordingly, the market is kept advised
of all information required to be disclosed
under the Listing Rules, which it is believed
would or may have a material effect on the
price or value of the Company’s securities.
CORPORATE GOVERNANCE STATEMENT
8
Australian Foundation Investment Company Limited Corporate Governance Statement 2018

The Company has a written Continuous
Disclosure policy and procedures designed
to ensure compliance with ASX Listing
Rule and Corporations Act disclosure
requirements, to ensure accountability
at a senior management level for that
compliance and to clarify individual,
management and Board responsibilities
in the process. The policy is publicly
available on the Company’s website.
The Board believes that the Company
is fully compliant with Principle 5 and
its recommendation.
Principle 6: Respect the Rights
of Security Holders
This Principle requires that the Company
respects the rights of its security holders by
providing them with appropriate information
and facilities to allow them to exercise those
rights effectively.
The Company is owned by its shareholders
and the Board’s primary responsibility
to them is to do its utmost to meet the
Company’s objectives and so increase
the Company’s value for all shareholders.
The Board’s policy is to maintain active
communication with shareholders as
owners of the Company.
The Company’s website, www.afi.com.au,
contains access to ASX announcements,
Annual Reports, Half-Yearly Reports,
details of corporate governance practices,
presentations to shareholders, NTA
announcements, key date information,
dividend and security issue history and
relevant related material for shareholders
and investors.
In addition to communicating with
shareholders via the Annual Report and
the non-statutory Annual and Half-Yearly
Reviews, the Company holds an Annual
General Meeting of shareholders to
fulfil statutory requirements, to provide
shareholders with the opportunity to meet
with representatives of the Board and
management, to learn more about the
Company’s activities and, particularly,
to provide an opportunity to question
the Board and management about any
aspect of the Company’s activities. The
documentation produced (both hard copy
and electronic) for the Annual General
Meeting makes provision for shareholders
to submit questions to the Company.
In addition to the Annual General Meeting,
the Company holds non-statutory
Shareholder Information Meetings in the
Australian capital cities, some of which
follow the full-year results and some
of which follow the half-year results. In
the financial year ended 30 June 2018,
shareholder meetings were held in Sydney,
Melbourne, Adelaide, Brisbane, Canberra,
Perth, Hobart, Launceston and Auckland,
Tauranga, Wellington and Christchurch. For
the forthcoming financial year shareholder
meetings will be held in Sydney, Melbourne,
Adelaide, Brisbane, Canberra, Perth and
Auckland.
The Company views the holding of these
non-statutory meetings as being very
important in terms of communicating with
its shareholders as it allows shareholders
around the country the opportunity to
question management and Directors in an
informal setting on the Company’s activities
and approach.
The Company also ensures, through the
share registry, that shareholders have the
option to communicate electronically with
the Company and the share registry. The
Company also maintains an email address,
invest@afi.com.au, that shareholders can
communicate electronically through.
The Company also utilises a toll free
telephone service, 1800 780 784, that
shareholders can call to hear the latest
NTA information.
The Board believes that the Company
is fully compliant with Principle 6 and
its recommendations.
Principle 7: Recognise and
Manage Risk
This Principle requires that the Company
establish a sound risk management
framework and periodically review it.
The Board believes it has established and
maintains a sound system of risk oversight,
management and internal control. The Risk
Management Framework adopted for the
Company is available on the Company’s
website. The Board has approved the
overarching risk appetite of the Company
and is assisted in its risk management
activities by the Audit Committee and
coordination of risk management activities
is done by the Chief Financial Officer, who
reports to the Audit Committee on such
matters. The Audit Committee reviews the
Framework annually and a review has been
carried out during this financial year.
CORPORATE GOVERNANCE STATEMENT
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Australian Foundation Investment Company Limited Corporate Governance Statement 2018

This approach involves establishing the
context in which it operates, identifying
the risks, analysing those risks, evaluating
the risks, treating the risks where
appropriate and monitoring, reviewing
and reporting risks and the overall
performance of the framework. This
process is underpinned through regular
communication and consultation with key
business stakeholders. The framework
forms the basis for embedding enterprise
risk management within the culture of the
organisation. Its objectives are to:
• enable the Company to meet its
obligations and objectives efficiently
and reliably;
• increase the likelihood that the Company
will be successful in its business
operations by mitigating potentially
damaging events occurring (e.g.
operational risk) and maximising the
results of positive events (e.g. financial
position, investment strategies, etc.),
through the implementation of risk
management strategies;
• provide decision-makers with the means
to identify risks and to determine whether
the controls in place are adequate to
mitigate those risks;
• provide a mechanism to assess the levels
of risk that can be accepted;
• ensure that the application of risk
management practices is understood
by the agents, employees, officers and
Directors of the Company, and a strong
risk culture is well entrenched; and
• reduce the consequence and/or
likelihood of potentially damaging events
by regular reviews of investments and
investment strategies or by transferring
the impact of potentially damaging events
to third parties (e.g. by insurance and
contractual arrangements) for outsourced
arrangements, where appropriate.
There are two main areas of risk that have
been identified:
• investment risk; and
• operational risk.
Investment Risk
Investment risk includes:
• market risk;
• credit, counter-party and settlement risk;
• liquidity risk; and
• reputational risk (insofar as it relates to the
investments that the Company enters into).
The Investment Committee is primarily
responsible for dealing with issues
arising from investment risk. Day-to-day
administration of the portfolios is performed
by AICS. The Investment Committee
manages the portfolio, and reviews,
discusses and approves all purchases and
sales and other matters in connection with
the maintenance of the portfolios, including
the voting of proxies.
By its nature as a listed investment
company, the Company will always carry
investment risk because it must invest its
capital in securities which are not risk-free.
However, the Company seeks to reduce this
investment risk by a policy of diversification
of investments across industries and
companies operating in various sectors
of the market.
In addition to the investment portfolio, the
Company also operates a trading portfolio
for short term opportunities.
The Company seeks to enhance the return
from that portfolio by also selling call and
put options. In normal circumstances,
the Board restricts the size of the trading
portfolio to a maximum size of 10 per
cent of the assets of the Company. The
Board, through its Investment Committee,
maintains close control of option
transactions. Option transactions are limited
to stocks held in the trading portfolio or
in a small sub-category of the investment
portfolio for the purpose of enhancing
returns from that portfolio and buying
and/or selling stocks at attractive prices.
Operational Risk
The Company’s management is primarily
responsible for recognising and managing
operational risk issues such as legal and
regulatory risk, taxation risk, systems
and process risk, human resource risk,
reputation risk (insofar as it relates to
the operations of the Company), disaster
recovery risk, cyber risk, data privacy risk
and workplace health and safety risk. A
further risk comprises ensuring compliance
with AICS’s Australian Financial Services
Licence requirements. This aspect
of management’s role is specifically
overseen by the Risk Management,
Audit and Remuneration Committee of
AICS and reported to the Company’s
Audit Committee. The Chairman of the
Company’s Audit Committee, PJ Williams,
is also Chairman of the AICS Risk
Management, Audit and Remuneration
Committee. J Paterson serves as
Chairman of AICS.
CORPORATE GOVERNANCE STATEMENT
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Australian Foundation Investment Company Limited Corporate Governance Statement 2018

Internal Audit and Written
Affirmation from AICS
The Company has received a report
from AICS outlining the control objectives
for AICS and the specific policies and
procedures established to meet these
procedures. These policies include
management oversight, segregation
of duties, multiple sign-offs and specific
authorisation levels. AICS has stated that
these have been in place throughout the
financial year, and have been effective
in meeting the control objectives.
While the Company does not have its own
internal audit function, AICS has appointed
Ernst & Young as its internal auditor. The
Company has received a report from
Ernst & Young, under the requirements
of Auditing Standard on Assurance
Engagements ASAE 3150 “Assurance
Engagements on Controls” stating their
opinion that, in all material respects, the
internal controls put in place by AICS in
relation to Investment Management and
Administration Operations for this financial
year are suitably designed to meet the
control objectives and have operated
effectively for this financial year.
Economic, Environmental and
Social Sustainability Risks
Economic risk is principally dealt with
under Investment Risk, above. In respect
of environmental and social sustainability
risks, the Company utilises AICS staff
and AICS’ office space for meetings,
so is not subject to material direct
environmental and social sustainability
risks. AICS has resources to identify if
any legal environmental issues arise that
need to be considered by AICS and the
Company going forward. Sustainability
of the companies that AFIC invests in is
considered by the Investment Committee
and Investment Team as part of the
Company’s long-term investment approach,
utilising external experts to gain information
as required.
The Board believes that the Company
is fully compliant with Principle 7
and its recommendations.
Principle 8: Remunerate Fairly
and Responsibly
This Principle requires that the Company
should pay director remuneration sufficient
to attract and retain high quality Directors
and design its Executive remuneration
to attract, retain and motivate high quality
Senior Executives and to align their
interests with the creation of value
for security holders.
The Company has a Remuneration
Committee to oversee remuneration issues
relating to the Non-Executive Directors, the
Managing Director and Senior Executives.
The charter of the Remuneration Committee
is available on the Company’s website.
GR Liebelt (Chairman), TA Campbell
AO, J Paterson and CM Walter AM are
members of the Remuneration Committee.
All members are Independent Non-Executive
Directors.
As set out in the Company’s Securities
Dealing Policy, Senior Executives are
prohibited from using financial products to
protect against or limit the risk associated
with unvested Company securities they may
receive as part of their performance-based
remuneration. Breaches of the Company’s
policy in this regard will normally result in
the termination of the Senior Executive’s
employment.
Further and full details regarding the work
of the Committee and the Company’s
remuneration practices in relation to both
Directors and management are set out in
the Remuneration Report contained in the
2018 Annual Report.
The Board believes that the Company
is fully compliant with Principle 8 and
its recommendations.
Australian Prudential Regulation
Authority Prudential Inquiry into the
Commonwealth Bank of Australia
(APRA Inquiry)
Following the release of the Final Report
of the APRA Inquiry, regarding the role
of risk frameworks and practices in
relation to governance and culture, the
Board has started an assessment of the
recommendations contained in the APRA
Final Report and how they might apply
to the Company’s operations.
Approved by the Board of Australian
Foundation Investment Company
Limited.
Dated: 23 July 2018
CORPORATE GOVERNANCE STATEMENT
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Australian Foundation Investment Company Limited Corporate Governance Statement 2018