Corporate Governance Statement and Appendix 4G

29 August 2024



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


Authorised by the Company Secretary

Rules 4.7.3 and 4.10.3
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 1
Appendix 4G
Key to Disclosures
Corporate Governance Council Principles and Recommendations
Name of entity
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED

ABN/ARBN Financial year ended:
56 004 147 120 30 June 2024
Our corporate governance statement
1
for the period above can be found at:
2

☐
These pages of our
annual report:

☒
This URL on our
website:
www.afi.com.au/corporate-governance
The Corporate Governance Statement is accurate and up to date as at 29 July 2024 and has been
approved by the board.
The annexure includes a key to where our corporate governance disclosures can be located.
3

Date: 29 August 2024
Name of authorised officer
authorising lodgement:
Matthew Rowe


1
“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.
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
Listing Rule 4.10.3.
Under Listing Rule 4.7.3, an entity must also lodge with ASX a completed Appendix 4G at the same time as it lodges its annual
report with ASX. The Appendix 4G serves a dual purpose. It acts as a key designed to assist readers to locate the governance
disclosures made by a listed entity under Listing Rule 4.10.3 and under the ASX Corporate Governance Council’s
recommendations. It also acts as a verification tool for listed entities to confirm that they have met the disclosure requirements of
Listing Rule 4.10.3.
The Appendix 4G is not a substitute for, and is not to be confused with, the entity's corporate governance statement. They serve
different purposes and an entity must produce each of them separately.
2
Tick whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where
your corporate governance statement can be found. You can, if you wish, delete the option which is not applicable.
3
Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not
applicable and just retain the option that is applicable. If you select an option that includes “OR” at the end of the selection and
you delete the other options, you can also, if you wish, delete the “OR” at the end of the selection.
See notes 4 and 5 below for further instructions on how to complete this form.

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 2
ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1 A listed entity should have and disclose a board charter setting
out:
(a) the respective roles and responsibilities of its board and
management; and
(b) those matters expressly reserved to the board and those
delegated to management.
☒
and we have disclosed a copy of our board charter at:
www.afi.com.au/corporate-governance

☐ set out 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 director or
senior executive or putting someone forward for election as
a director; and
(b) provide security holders with all material information in its
possession relevant to a decision on whether or not to elect
or re-elect a director.
☒
☐ set out 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.
☒
☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

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.
☒
☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable


4
Tick the box in this column only if you have followed the relevant recommendation in full for the whole of the period above. Where the recommendation has a disclosure obligation attached, you must insert
the location where that disclosure has been made, where indicated by the line with “insert location” underneath. If the disclosure in question has been made in your corporate governance statement, you
need only insert “our corporate governance statement”. If the disclosure has been made in your annual report, you should insert the page number(s) of your annual report (eg “pages 10-12 of our annual
report”). If the disclosure has been made on your website, you should insert the URL of the web page where the disclosure has been made or can be accessed (eg “www.entityname.com.au/corporate
governance/charters/”).
5
If you have followed all of the Council’s recommendations in full for the whole of the period above, you can, if you wish, delete this column from the form and re-format it.

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 3
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

1.5 A listed entity should:
(a) have and disclose a diversity policy;
(b) through its board or a committee of the board set
measurable objectives for achieving gender diversity in the
composition of its board, senior executives and workforce
generally; and
(c) disclose in relation to each reporting period:
(1) the measurable objectives set for that period to
achieve gender diversity;
(2) the entity’s progress towards achieving those
objectives; and
(3) either:
(A) the respective proportions of men and women
on the board, in senior executive positions and
across the whole workforce (including how the
entity has defined “senior executive” for these
purposes); or
(B) if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
If the entity was in the S&P / ASX 300 Index at the
commencement of the reporting period, the measurable objective
for achieving gender diversity in the composition of its board
should be to have not less than 30% of its directors of each
gender within a specified period.
☒
and we have disclosed a copy of our diversity policy at:
www.afi.com.au/corporate-governance
[insert location]
and we have disclosed the information referred to in paragraph (c)
at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance


and if we were included in the S&P / ASX 300 Index at the
commencement of the reporting period our measurable objective for
achieving gender diversity in the composition of its board of not less
than 30% of its directors of each gender within a specified period.
☐ set out in our Corporate Governance Statement OR

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

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 4
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

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 for each reporting period whether a performance
evaluation has been undertaken in accordance with that
process during or in respect of that period.
☒
and we have disclosed the evaluation process referred to in
paragraph (a) at:
i
n our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance

and whether a performance evaluation was undertaken for the
reporting period in accordance with that process at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance
☐ set out 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 evaluating the performance
of its senior executives at least once every reporting period;
and
(b) disclose for each reporting period whether a performance
evaluation has been undertaken in accordance with that
process during or in respect of that period.
☒
and we have disclosed the evaluation process referred to in
paragraph (a) at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance


and whether a performance evaluation was undertaken for the
reporting period in accordance with that process at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance.


☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 5
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

PRINCIPLE 2 - STRUCTURE THE BOARD TO BE EFFECTIVE AND 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):]
and we have disclosed a copy of the charter of the committee at:
www.afi.com.au/corporate-governance
[insert location]
and the information referred to in paragraphs (4) and (5) at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance


[If the entity complies with paragraph (b):]
and we have disclosed 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 at:

[insert location]

☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

2.2 A listed entity should have and disclose a board skills matrix
setting out the mix of skills that the board currently has or is
looking to achieve in its membership.
☒
and we have disclosed our board skills matrix at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance
.

☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 6
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

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, affiliation 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 or relationship in question and an explanation of
why the board is of that opinion; and
(c) the length of service of each director.
☒
and we have disclosed the names of the directors considered by the
board to be independent directors at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance
[insert location]
and, where applicable, the information referred to in paragraph (b)
at:
N/A .
[insert location]
and the length of service of each director at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance


☐ set out in our Corporate Governance Statement
2.4 A majority of the board of a listed entity should be independent
directors.
☒
☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

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.
☒
☐ set out 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 for periodically reviewing whether there is a need
for existing directors to undertake professional development to
maintain the skills and knowledge needed to perform their role
as directors effectively.
☒
☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 7
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

PRINCIPLE 3 – INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY
3.1 A listed entity should articulate and disclose its values.
☒
and we have disclosed our values at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance


☐ set out in our Corporate Governance Statement
3.2 A listed entity should:
(a) have and disclose a code of conduct for its directors,
senior executives and employees; and
(b) ensure that the board or a committee of the board is
informed of any material breaches of that code.
☒
and we have disclosed our code of conduct at:
www.afi.com.au/corporate-governance.

☐ set out in our Corporate Governance Statement
3.3 A listed entity should:
(a) have and disclose a whistleblower policy; and
(b) ensure that the board or a committee of the board is
informed of any material incidents reported under that
policy.
☒
and we have disclosed our whistleblower policy at:
www.afi.com.au/corporate-governance.

☐ set out in our Corporate Governance Statement

3.4 A listed entity should:
(a) have and disclose an anti-bribery and corruption policy;
and
(b) ensure that the board or committee of the board is
informed of any material breaches of that policy.
☒
and we have disclosed our anti-bribery and corruption policy at:
www.afi.com.au/corporate-governance.

☐ set out in our Corporate Governance Statement

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 8
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

PRINCIPLE 4 – SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS
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 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.
☒
[If the entity complies with paragraph (a):]
and we have disclosed a copy of the charter of the committee at:
www.afi.com.au/corporate-governance

and the information referred to in paragraphs (4) and (5) at:
Page 14 to 16 of the Annual Report located
www.afi.com.au/our-
company#Companyreports and also at this
location: https://www.afi.com.au/people


[If the entity complies with paragraph (b):]
and we have disclosed 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 at:
.........................................................................................
[insert location]
☐ set out in our Corporate Governance Statement

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.
☒
☐ set out in our Corporate Governance Statement
4.3 A listed entity should disclose its process to verify the integrity
of any periodic corporate report it releases to the market that is
not audited or reviewed by an external auditor.
☒
☐ set out in our Corporate Governance Statement

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 9
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
5.1 A listed entity should have and disclose a written policy for
complying with its continuous disclosure obligations under
listing rule 3.1.
☒
and we have disclosed our continuous disclosure compliance policy
at:
www.afi.com.au/corporate-governance


☐ set out in our Corporate Governance Statement
5.2 A listed entity should ensure that its board receives copies of all
material market announcements promptly after they have been
made.
☒
☐ set out in our Corporate Governance Statement
5.3 A listed entity that gives a new and substantive investor or
analyst presentation should release a copy of the presentation
materials on the ASX Market Announcements Platform ahead
of the presentation.
☒
☐ set out 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.
☒
and we have disclosed information about us and our governance on
our website at:
www.afi.com.au/corporate-governance


☐ set out in our Corporate Governance Statement
6.2 A listed entity should have an investor relations program that
facilitates effective two-way communication with investors.
☒
☐ set out in our Corporate Governance Statement
6.3 A listed entity should disclose how it facilitates and encourages
participation at meetings of security holders.
☒
and we have disclosed how we facilitate and encourage participation
at meetings of security holders at:
in our Corporate Governance Statement
available at
www.afi.com.au/corporate-
governance



☐ set out in our Corporate Governance Statement

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 10
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

6.4 A listed entity should ensure that all substantive resolutions at a
meeting of security holders are decided by a poll rather than by
a show of hands.
☒ ☐ set out in our Corporate Governance Statement
6.5 A listed entity should give security holders the option to receive
communications from, and send communications to, the entity
and its security registry electronically.
☒
☐ set out 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):]
and we have disclosed a copy of the charter of the committee at:
www.afi.com.au/corporate-governance

[insert location]
and the information referred to in paragraphs (4) and (5) at:
Page 14 to 16 of the Annual Report located
www.afi.com.au/our-
company#Companyreports and also at this
location: https://www.afi.com.au/people



[If the entity complies with paragraph (b):]
and we have disclosed the fact that we do not have a risk committee
or committees that satisfy (a) and the processes we employ for
overseeing our risk management framework at:
.........................................................................................
[insert location]

☐ set out in our Corporate Governance Statement

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 11
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

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
that the entity is operating with due regard to
the risk
appetite set by the board; and
(b) disclose, in relation to each reporting period, whether
such a review has taken place.
☒
and we have disclosed whether a review of the entity’s risk
management framework was undertaken during the reporting period
at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance


☐ set out 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 governance, risk
management and internal control processes.
☒
[If the entity complies with paragraph (a):]
and we have disclosed how our internal audit function is structured
and what role it performs at:
.........................................................................................
[insert location]
[If the entity complies with paragraph (b):]
and we have disclosed 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 at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance and our Risk Management
Framework Section located at
www.afi.com.au/corporate-governance


☐ set out in our Corporate Governance Statement
7.4 A listed entity should disclose whether it has any material
exposure to environmental or social risks and, if it does, how it
manages or intends to manage those risks.
☒
and we have disclosed whether we have any material exposure to
environmental and social risks at:
in our Corporate Governance Statement
available at www.afi.com.au/corporate-
governance
[insert location]
and, if we do, how we manage or intend to manage those risks at:
[insert location]

☐ set out in our Corporate Governance Statement

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 12
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

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):]
and we have disclosed a copy of the charter of the committee at:
www.afi.com.au/corporate-governance
[insert location]

and the information referred to in paragraphs (4) and (5) at:
Page 14 to 16 of the Annual Report located
www.afi.com.au/our-
company#Companyreports and also at this
location: https://www.afi.com.au/people
.........................................................................................
[insert location]
[If the entity complies with paragraph (b):]
and we have disclosed 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 executives and
ensuring that such remuneration is appropriate and not excessive:

[insert location]

☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

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.
☒
and we have disclosed separately our remuneration policies and
practices regarding the remuneration of non-executive directors and
the remuneration of executive directors and other senior executives
at:
in the Remuneration Report of the 2024 Annual Report (page 18-29)
at this location:
www.afi.com.au/our-
company#Companyreports


☐ set out in our Corporate Governance Statement OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 13
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

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.
☒
and we have disclosed our policy on this issue or a summary of it at:
in our Corporate Governance Statement available at
www.afi.com.au/corporate-governance
[insert location]
☐ set out 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

ADDITIONAL RECOMMENDATIONS THAT APPLY ONLY IN CERTAIN CASES
9.1 A listed entity with a director who does not speak the language
in which board or security holder meetings are held or key
corporate documents are written should disclose the processes
it has in place to ensure the director understands and can
contribute to the discussions at those meetings and
understands and can discharge their obligations in relation to
those documents.
☐
and we have disclosed information about the processes in place at:
.................................................................................
[insert location]
☐ set out in our Corporate Governance Statement OR
☒ we do not have a director in this position and this
recommendation is therefore not applicable OR
☐ we are an externally managed entity and this recommendation
is therefore not applicable

9.2 A listed entity established outside Australia should ensure that
meetings of security holders are held at a reasonable place and
time.
☐
☐ set out in our Corporate Governance Statement OR
☒ we are established in Australia and this recommendation is
therefore not applicable OR

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

9.3 A listed entity established outside Australia, and an externally
managed 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.
☐
☐ set out in our Corporate Governance Statement OR
☒ we are established in Australia and not an externally managed
listed entity and this recommendation is therefore not
applicable
☐ we are an externally managed entity that does not hold an
AGM and this recommendation is therefore not applicable

Appendix 4G
Key to Disclosures Corporate Governance Council Principles and Recommendations
ASX Listing Rules Appendix 4G (current at 17/7/2020) Page 14
Corporate Governance Council recommendation Where a box below is ticked,
4
we have followed the
recommendation in full for the whole of the period above. We
have disclosed this in our Corporate Governance Statement:
Where a box below is ticked, we have NOT followed the
recommendation in full for the whole of the period above. Our
reasons for not doing so are:
5

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;
and
(b) the role and responsibility of the board of the responsible
entity for overseeing those arrangements.

☐

and we have disclosed the information referred to in paragraphs (a)
and (b) at:
.........................................................................................
[insert location]

☐ set out 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.

☐

and we have disclosed the terms governing our remuneration as
manager of the entity at:
.........................................................................................
[insert location]

☐ set out in our Corporate Governance Statement

Income,
Capital Growth,
Low Cost
2024Corporate
Governance
Statement

CORPORATE GOVERNANCE STATEMENT 2024
Introduction
The Board of Australian Foundation
Investment Company Limited (‘AFIC’
or ‘the Company’) is committed to having
high standards of ethical behaviour
and an effective system of corporate
governance for the Group, commensurate
with our size and the scope of our
operations. ‘The Group’ entails AFIC
and its subsidiary Australian Investment
Company Services Limited (AICS).
This Corporate Governance Statement
describes AFIC’s key corporate
governance policies and practices
during the 2024 reporting period through
to the date of this report. It has been
approved by AFIC’s Board and is dated
29 July 2024.
AFIC has followed each of the
recommendations of the ASX
Corporate Governance Council’s
Corporate Governance Principles
and Recommendations (fourth edition)
(ASX Principles) throughout the period
covered by this report.
In addition to having its shares listed on
the Australian Securities Exchange (ASX),
AFIC also has shares listed on the
New Zealand Stock Exchange (NZX).
As an overseas listed issuer on the NZX,
AFIC is generally deemed to comply with
the NZX Listing Rules provided that the
Company remains listed on the ASX,
follow the ASX Listing Rules, and give
the NZX the same information that
the Company 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.
The ASX’s corporate governance
rules and principles can be found at
www.asx.com.au; details regarding
the NZX are at www.nzx.com.
ASX Principles and Recommendations
Section
Reference
Principle 1Lay solid foundations for management and oversight1, 2, 4
Principle 2Structure the Board to be effective and add value2, 3
Principle 3Instil a culture of acting lawfully, ethically and responsibly4
Principle 4Safeguard the integrity of corporate reports3, 7
Principle 5Make timely and balanced disclosure7
Principle 6Respect the rights of security holders6
Principle 7Recognise and manage risk3, 5
Principle 8Remunerate fairly and responsibly2, 3, 4
Governance Structure
Shareholders
Board of Directors
Investment
Committee
Audit
Committee
Remuneration
Committee
Nomination
Committee
AICS
(75% owned
by AFIC)
Each Board Committee operates under a formal charter available at www.afi.com.au.
The number of meetings held by the Board and each Committee during the reporting
period and each member’s attendance at those meetings is detailed in AFIC’s FY24
Director’s Report. All Directors are invited to attend Investment, Audit and Nomination
Committee meetings.
2
Australian Foundation Investment Company LimitedCorporate Governance Statement 2024ABN: 56 004 147 120

CORPORATE GOVERNANCE STATEMENT 2024
Section 1: Role and
Responsibilities of the Board
The role of the Board underpins and
supports the Company’s corporate
objective. The Board generally sets
objectives and goals for AFIC’s
operations, oversees the Company’s
management, regularly reviews the
Company’s performance and monitors
its affairs in the Company’s best interests.
In executing these responsibilities, the
Board is accountable to its shareholders
as owners of AFIC.
AFIC’s Board operates under a charter,
available on our website. This charter
documents the Board’s role and the
matters that the Board has reserved
for itself, including:
• 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.
• Setting the Company’s risk appetite.
• Appointing and removing the CEO and
carrying out succession planning for
the CEO.
• Reviewing the performance of the CEO,
his/her remuneration and contractual
arrangements.
• With the assistance of recommendations
from the Remuneration Committee:
overseeing the Company’s remuneration
framework, ensuring it is aligned with its
Corporate Objective and risk appetite.
• With the assistance of recommendations
from the Nomination Committee:
overseeing the Board’s performance
and succession plans.
• Reviewing the performance of
management and the Company,
including in relation to the corporate
governance, risk management, internal
controls and compliance frameworks,
systems, policies and processes
adopted by the Company.
• Dealing with any matters in excess
of any specific delegations that the
Board may from time to time delegate
to the CEO and senior executives.
• Approving the half-year and
full-year results.
• Approving the Company’s values
and statement of purpose.
• Any other matters as decided
by the Board.
The Directors meet formally as a Board,
seven times a year with an annual
strategy session. The Non-Executive
Directors meet regularly without the
Managing Director and other senior
executives.
Relationship with AICS
AFIC has entered into an agreement with
AICS for AICS to provide a comprehensive
range of services under the leadership
of the AICS’ Managing Director.
The Managing Director of AICS has been
appointed Managing Director of AFIC,
and the AICS services provided include
day-to-day maintenance of AFIC’s
portfolios and associated research.
AICS is 25 per cent owned by Djerriwarrh
Investments Ltd and 75 per cent owned
by AFIC.
The Managing Director is responsible
to AFIC for AICS’ performance, and the
Board acts in close consultation with
AICS regarding the provision of services.
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 AFIC; their
details are in the 2024 Annual Report.
Section 2: Board Structure
and Composition
The Board currently consists of an
Independent Non-Executive Chairman,
CM Drummond; a Managing Director,
RM Freeman; and six Non-Executive
Directors; RP Dee-Bradbury, JA Fahey,
KM Hudson, GR Liebelt, RL Murray
and DA Peever.
The Directors’ Report in the 2024 Annual
Report details each Director’s skills,
experience, and expertise.
The roles of the Chairman and Managing
Director are separate. The role of the
Managing Director is set out in Section
1 above. The role of the Chairman is
detailed 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 in accordance
with the agreed agenda and AFIC’s
corporate objective and principles
of conduct; and
• encouraging active engagement
by Directors and an open and
constructive relationship between
the Board, 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.
3
Australian Foundation Investment Company Limited

CORPORATE GOVERNANCE STATEMENT 2024
Skills Matrix
The Board has determined that it is best
served by having a mix of individuals with
different perspectives, deep and relevant
expertise and a breadth of significant
experience in the following areas:
• leading, managing and overseeing
corporations in a range of industry
sectors, at both executive and
Board level;
• developing and managing business
strategies and assessing opportunities
and threats;
• risk management and managing
strategic, regulatory, operational
and financial risk;
• advising corporations (including legal,
tax and accounting advice);
• the investment industry; and
• organisations with diverse governance
and regulatory regimes (including
charities, not-for-profit organisations,
government bodies, private companies
and international organisations).
In addition to the skills and experience
outlined above, current and prospective
directors must demonstrate the
following qualities:
• Professionalism, passion and experience
• Integrity
• Respect
• Collaboration
The Nomination Committee uses
this matrix when considering Board
appointments.
Independence of Directors
The Nomination Committee reviews
the independence of each of the Non-
Executive Directors annually. This review
considers the factors set out in the
ASX Principles and Recommendations,
including situations where an individual
Director may be a partner in, controlling
shareholder of, or executive of an
entity that has a material commercial
relationship with AFIC.
Being a long-term investor is an essential
part of AFIC’s corporate objective.
For this reason, having Directors with
experience in different investment cycles
is an important factor in the Board’s
approach. The Board believes that length
of tenure is not an indication of a lack of
independence. What is essential is how
each Director acts in the boardroom,
including the ability to constructively
challenge management and add value
to discussions.
Details of the length of service of each
Director are below.
We consider AFIC’s seven Non-Executive
Directors to be independent.
Conflicts of Interest
Several AFIC Directors are also Directors
of companies we invest in. Any potential
conflicts of interest are dealt with by
procedures consistent with Corporations
Act requirements. Conflicted Directors
do not take part in the decision-making
process on relevant issues. On this basis,
we believe that their independence is not
compromised.
Appointment and Renewal
Consistent with ASX Listing Rules,
AFIC’s constitution provides that
Non-Executive Directors must seek
re-election by shareholders at least
every three years if they wish to remain
on the Board. Any new Non-Executive
Director appointed by the Board must
seek election by shareholders at the
next Annual General Meeting.
While there is no limit on tenure,
directors who have served more than
three terms will be subject to extension
at the discretion of the Board.
Details of the term of office held by each
Director as of the date of this report are:
CM Drummond3 years
RM Freeman (MD/CEO)6 years
RP Dee-Bradbury5 years
JA Fahey3 years
KM Hudson 6 months
GR Liebelt 11 years
RL Murray6 months
DA Peever10 years
To help Directors meet their responsibility
to bring an independent view to matters
coming before them, the Board has agreed
to pay for Directors to obtain independent
professional advice as appropriate.
Once appointed, Directors are
encouraged to meet with AFIC’s
senior executives to develop a strong
understanding of the senior executives’
areas of expertise and responsibility.
The Board receives regular reports
updating Directors on legal, regulatory,
governance and financial developments
in Australia and internationally. These
developments are shared as they could
impact AFIC, the companies that AFIC
invests in, or the Directors in their roles
at AFIC or other companies. Directors
are also invited to attend meetings
with investee companies and subject
matter experts on various business
and economic issues.
All Directors are encouraged to have
a meaningful shareholding in the
Company to ensures that they benefit
from AFIC’s growth in the same way
as our regular shareholders.
Pre-appointment Checks
and AGMs
Prior to their appointment of a
Non-Executive Director to the Board,
the Nomination Committee will determine
the appropriate pre-appointment checks.
Relevant details of each Director standing
for election or re-election are in the
explanatory notes of the Notice of
Annual General Meeting.
Agreements
All Directors have entered into an
agreement with AFIC regarding 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. Each Director
is engaged individually and not via
a separate legal entity.
Company Secretary
The Company Secretary’s details and
experience appear in the 2024 Annual
Report. While the Company Secretary is
an employee of AICS, he is accountable
to the AFIC’s Board, via the Chairman,
on all matters relating to the proper
functioning of the Board.
4
Australian Foundation Investment Company Limited

CORPORATE GOVERNANCE STATEMENT 2024
Performance Assessments
Non-Executive Directors
The Chairman is responsible for
conducting a formal Director review
process each year.
As part of these evaluations, the
Chairman meets with each Director
individually. Prior to this meeting,
each Director is required to provide
their assessment of matters including
performance and Board and Board
Committee effectiveness to facilitate
mutual feedback.
An independent Director also meets
with other Directors to discuss the
Chairman’s performance.
The Chairman and this independent
Director report on the outcome of these
meetings to the Nomination Committee
and the Board where necessary.
Evaluations under this process were
carried out during the financial year.
Management
The Remuneration Committee is
responsible to the Board for evaluating
the performance of the Managing Director
and senior executives and remunerating
them appropriately. To encourage and
reward high performance, the Board
has adopted a remuneration structure
which includes a significant component
of ‘at risk’ remuneration.
Full details of the remuneration process
and benchmarks used for assessment
are in the remuneration report in the 2024
Annual Report. Such an assessment was
carried out in respect of the Managing
Director’s and Senior Executives’
performance for the financial year.
Section 3: Committees of the Board
Audit Committee Remuneration CommitteeNomination CommitteeInvestment Committee
JA Fahey (Chairman)
DA Peever
CM Drummond
KM Hudson
GR Liebelt (Chairman)
CM Drummond
RP Dee-Bradbury
CM Drummond
(Chairman)
RM Freeman
RP Dee-Bradbury
JA Fahey
GR Liebelt
DA Peever
KM Hudson
RL Murray
CM Drummond (Chairman)
RM Freeman
RP Dee-Bradbury
JA Fahey
GR Liebelt
DA Peever
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.
Members of the Audit Committee
have the requisite financial
experience and understanding
to discharge the Committee’s
mandate effectively. In addition,
some members of the Committee
have relevant qualifications as set
out in the 2024 Annual Report,
but these individuals have no
responsibilities additional to other
members of the Audit Committee.
The Remuneration
Committee has been
established to advise the
Board on remuneration and
related issues. This includes:
• Reviewing the level of
fees for directors and
the Chairman
• Reviewing the Managing
Director’s remuneration
arrangements
• Evaluating the Managing
Director’s performance
• Reviewing the annual
remuneration policies for
other senior executives.
The Nomination
Committee periodically
reviews Board and Board
Committee composition
and succession planning
and, where applicable,
recommends suitable
Directors for appointment.
Complementary to
this responsibility, the
Committee oversees the
Board’s Diversity Policy.
The Investment Committee
manages AFIC’s investments and
oversees the investment process.
The Investment Committee:
• approves all purchases, sales,
and other investment decisions
to maintain the investment
and trading portfolios at the
subsequent meeting;
• makes decisions about how
other portfolio-related activities
are carried out, including voting
instructions and lodgement of
proxies for general meetings
of companies in which AFIC
has invested;
• receives reports on portfolio
performance, transaction
reports, portfolio position
reports and performance
attribution analysis; and
• receives reports and
recommendations concerning
the review and analysis of
companies/securities in
which AFIC can invest
or has invested in.
5
Australian Foundation Investment Company Limited

CORPORATE GOVERNANCE STATEMENT 2024
Section 4: Integrity, Conduct
and Diversity
The Board and senior executives are
committed to maintaining a high standard
of integrity – a fundamental aspect
of our purpose.
Our Purpose
• To deliver attractive investment returns
that exceed the Australian equity
market over the long term.
• To invest in quality companies taking a
long-term, low turnover approach that
aims to provide both capital growth and
steady to growing dividends over time.
• To produce tax-effective returns that are
less volatile than the market, at a very
low cost with no performance fees.
• To use the internally managed,
listed closed-end company
structure to support our investment
approach, ensure transparency
for all stakeholders, provide strong
governance oversight, and align
interests between employees
and shareholders.
• To sustain our culture over time through
a team of high-quality people who have
a deep sense of purpose, passion,
and conviction for the way we invest,
the way we manage the business, our
history of success, and our privileged
position of serving our shareholders.
To deliver on this purpose, we are guided
by the following qualities:
• Professionalism, Passion
and Experience
• Integrity
• Respect
• Collaboration
AFIC maintains a high level of transparency
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
the ethical standards to be followed
by Directors and senior executives.
Directors and senior executives must:
• 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 a high
calibre organisation;
• treat others with dignity and respect;
and
• not engage in conduct likely to affect
AFIC’s reputation adversely.
The Corporate Principles of Conduct also
detail how conflicts of interest should be
avoided. AFIC’s Directors and employees
must disclose 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 to this interest.
If a conflict of interest arises, full
disclosure must occur, and appropriate
arrangements followed so that interested
persons are not included in the relevant
decision making.
AICS also has its own Principles of
Conduct 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.
As set out in AFIC’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 remuneration.
Breaches of this policy will typically
result in the termination of that senior
executive’s employment.
Board Diversity Policy
The Board recognises that diversity will
support the effective performance of
its role and 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.
AFIC has several characteristics that have
an important influence on how the Board
approaches diversity:
• As a long-term shareholder, it is
beneficial to have Directors who
serve for long periods and experience
different economic and business cycles.
• The Company has no employees as
all executives, management, financial,
business development/marketing and
securities/stock market services are
provided by its subsidiary, AICS.
As such, our 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 AFIC with the best opportunity
to meet its corporate objective.
While AFIC was not in the S&P/ASX300
Index, we have undertaken to comply
with Recommendation 1.5 of the ASX
Governance Principles, and the Board
has set as an objective to have at least
30 per cent of each gender represented
on the Board. As of 30 June 2024,
the Board had met this objective.
Gender diversity has been a continuing
focus of the Nomination Committee
during the financial year.
6
Australian Foundation Investment Company Limited

CORPORATE GOVERNANCE STATEMENT 2024
AFIC Board Composition
as of 30 June 2024
Male Female
Board (including
Managing Director) 5 3
Other Senior
Executives 30
Employees (all
employed by AICS,
including Managing
Director and other
Senior Executives)14 7
AICS has a small yet diverse workforce.
Due to its size and flexibility, AICS can
attract outstanding candidates whose
flexible working needs may not easily be
met in the broader investment/financial
services sector.
Whistleblower Protection Policy
AFIC has a whistleblower protection
policy that establishes a formal framework
within which individuals are able to
express 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
from any form of detriment. A copy of this
policy is available on the AFIC website.
Anti-bribery and Corruption Policy
AFIC’s anti-bribery and corruption policy
establishes the Company’s prohibition
of bribery and facilitation payments and
its approach to political contributions/
donations, gifts and entertainment.
A copy of this policy is available
on the AFIC website.
Modern Slavery Statement
AFIC is required to lodge an annual
modern slavery statement with the
Australian Border Force under the Modern
Slavery Act and has complied with this
requirement. The Board is committed to
complying with relevant local and national
laws, community expectations and
ethical standards related to human rights
and modern slavery in respect to our
employees, our business operations
and supply chains.
Section 5: Risk Management
The Board believes it has established
and maintains a sound system of risk
oversight, management and internal
control. Our Risk Management Framework
is available on the AFIC website.
The Board has approved the overarching
risk appetite of the Company and is
assisted in its risk management
activities by the Audit Committee.
The Chief Financial Officer coordinates
risk management activities and reports
to the Audit Committee on such
matters. The Audit Committee reviews
the framework annually; a review was
completed this financial year.
This approach involves establishing
the context in which AFIC operates,
identifying the risks, analysing those
risks, treating the risks where appropriate
and monitoring, reviewing and reporting
risks and the overall performance
of the framework. This process is
underpinned by regular communication
and consultation with key business
stakeholders. The framework forms
the basis for embedding enterprise risk
management within the organisation’s
culture. 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 determine
whether the controls in place are
adequate to mitigate those risks;
• provide a mechanism to assess
acceptable levels of risk;
• ensure that the application of risk
management practices is understood
by AFIC’s agents, employees, officers
and directors, and a strong risk culture
is well entrenched; and
• reduce the consequence and/or
likelihood of potentially damaging
events with 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:
• financial risk; and
• operational risk.
Financial Risk
The risk of financial loss to members
resulting from external or internal factors
or inadequate financial controls. AICS
and AFIC further recognise the following
sub-categories of financial risk:
(i) Liquidity risk – a risk that cash funds
may not be available for AFIC to
meet its preferred dividend options
or invest in certain market conditions
without having to sell assets from its
investment portfolio.
(ii) Investment risk – a risk that investment
decisions may lead to sub-optimal
performance.
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.
AFIC will always carry investment risk
because it must invest its capital in
securities that are not risk-free. However,
the Company seeks to reduce this
investment risk by diversifying investments
across industries and companies
operating in various market sectors.
In addition to the investment portfolio,
AFIC also operates a trading portfolio
to take advantage of short-term
opportunities. We seek to enhance the
return from that portfolio by selling call
and put options. In normal circumstances,
the Board restricts the size of the trading
portfolio to a maximum of 10 per cent
of company assets.
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CORPORATE GOVERNANCE STATEMENT 2024
The Board maintains close control of
option transactions via the Investment
Committee. 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 and buying and/or
selling stocks at attractive prices.
Operational Risk
AFIC’s management is primarily
responsible for recognising and managing
operational risk issues such as:
• compliance risk;
• taxation risk;
• governance risk;
• reputation risk (including Environmental,
Social & Governance risk);
• strategic risk;
• outsourcing risk;
• business continuity risk;
• fraud risk;
• people risk;
• political risk; and
• cyber risk.
A further risk is ensuring compliance
with AICS’ Australian Financial Services
Licence requirements. This specific
aspect is overseen by AICS’ Risk
Management, Audit and Remuneration
Committee and reported to AFIC’s
Audit Committee.
The Chairman of AFIC’s Audit Committee,
JA Fahey, is invited to attend each
meeting of the AICS Risk Management,
Audit and Remuneration Committee.
CM Drummond is Chairman of AICS.
DA Peever also represents the Company
on the Board of AICS.
Internal Audit and Written
Affirmation from AICS
AFIC 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
signoffs and specific authorisation levels.
AICS advises that these policies have been
in place throughout the financial year and
have effectively met the control objectives.
While AFIC does not have an 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 for
this financial year are suitably designed
to meet the control objectives and have
operated effectively.
Economic, Environmental
and Social Risks
Economic risk is principally dealt with
under investment risk. In respect of
environmental and social risks, AFIC
utilises AICS staff and AICS’ office space
for meetings. AFIC and AICS are not
subject to material direct environmental
and social sustainability risks. AICS has
resources to identify if any environmental
risks arise that need to be considered in
the future.
Investment Philosophy
Our investment philosophy is built on
taking a medium to long term view on
companies in a diversified portfolio with
an emphasis on identifying and investing
in quality companies that are likely to
sustainably grow their earnings and
dividends over this time frame.
Quality in this context is an outcome of
our assessment of the following factors:
1. We prefer companies that have a
leadership position or are developing
one within the industry in which they
operate. This will often mean we are
investing in a unique set of assets with
competitive advantages that produces
attractive returns on invested capital.
2. As a long term, tax aware investor we
seek to be in companies that have a
long-term sustainable business model,
with low risk of disruption. This helps
to ensure portfolio turnover remains
low. The analysis may consider
technological disruption, environmental
issues, including the impact of climate
change, and social risks as all of these
factors can have a material impact on
the assessment of a company’s long-
term sustainability.
3. We consider how a company’s
business can be potentially impacted
by influences outside the control
of management such as change in
government regulation and or policy.
4. We are attracted to companies with
outstanding management teams
and boards with strong governance
processes, whose interests are
closely aligned with shareholders,
and act in the best interest of all
their stakeholders, including their
employees, customers, suppliers
and wider communities. We consider
matters including safety, diversity,
social impacts, environmental impact,
and modern slavery where material
or appropriate in the context of that
company. We regularly review and
meet with companies to ensure
ongoing alignment with our investment
frameworks. Our process may
include an assessment of the Board
in terms of their past performance,
history of capital allocation, level of
accountability, mix of skills, relevant
experience and succession planning.
We also consider a company’s degree
of transparency and disclosure.
Voting on resolutions is one of the
key functions that a shareholder has
in ensuring better long term returns
and management of investment risk.
We take input from proxy advisers
but conduct our own evaluation of
the merits of any resolution. We vote
on all company resolutions as part
of our regular engagement with the
companies in the portfolio and our
voting record is on the Company’s
website. We actively engage with
companies when we are concerned
about resolutions that are not aligned
with shareholders’ interests. We seek
to stay engaged with the companies
and satisfy ourselves that any issues
are taken seriously and worked
through constructively. Ideally we
seek to remain invested to influence
a satisfactory outcome for stakeholders.
5. We prefer companies with more
stable income flows. We are wary
of companies that have large,
inconsistent profit streams.
6. We like our companies to be financially
strong and the assessment of the
balance sheet and the degree to which
the company is self-funding is critical
in our analysis. Cash generation is also
an important consideration.
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CORPORATE GOVERNANCE STATEMENT 2024
Analysis of the above factors help to
inform us of the structure of the industry
and a company’s sustainable competitive
position as well as the quality of the
people running the business, strength
of the balance sheet and consistency
of earnings. Within this analysis some
key financial metrics are considered.
These include return on capital employed,
return on equity, the level of gearing
in the balance sheet, margins and free
cash flow generation.
Alongside the assessment of quality is
an analysis of the ability of companies to
grow earnings over time, which ultimately
should drive dividend growth.
Recognising value is also an important
aspect of sound long term investing.
Short term measures such as the price
earnings ratio, price to book or price to
sales may be of some value but aren’t
necessarily strong predictors of future
performance. Our assessment of value
tries to capture the opportunity a business
has to prosper and thrive over the
medium to long term.
Reporting of social and environmental
issues will be influenced by the
development of standards by the
International Sustainability Standards
Board (ISSB) Their potential introduction
in Australia should enable investors over
time to better make informed decisions
on these issues based on company
disclosures arising from these standards.
Assessment of commitments and plans
by companies to reach net zero by 2050
may also be considered having regard to
several factors. These include the industry
in which they operate, progress against
their plans, their broader contribution to
social good in addressing the challenge
of reducing global carbon emissions,
and the impact on their value if they
fail to achieve their stated goals. In
applying external data for benchmarking*,
the current carbon intensity of AFIC’s
portfolio is less than the S&P/ASX 200
Index.
In building the investment portfolio with
the principles outlined, we believe we can
offer investors a well-diversified portfolio
of quality companies structured to deliver
total returns ahead of the Australian
equity market over the long term
with less volatility and with more
consistent dividends.
From time to time, some borrowings
may be used where potential investment
returns justify the use of debt.
AFIC is managed for the benefit of its
shareholders with fees based on the
recovery of costs rather than as a fixed
percentage of the portfolio. There are
no additional fees. As a result, the benefit
of scale over time results in a very low
expense ratio for investors. For the
12 months to 30 June 2024 this was
0.15 per cent, or 15 cents for each
$100 invested.
* Data provided by ISS ESG. Portfolio
at 30 June 2024.
Section 6: Engaging with
Our Shareholders
AFIC 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 increase its value.
The Board maintains active
communication with shareholders. Our
website contains 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. Key governance
documents are available at www.afi.com.
au/corporate-governance.
In addition to communicating with
shareholders via the Annual Report and
the non-statutory Annual and Half-Yearly
Reviews, AFIC holds an Annual General
Meeting to:
• fulfil statutory requirements;
• provide shareholders with the
opportunity to learn more about
the Company’s activities; and,
• provide an opportunity for
shareholders to question the Board
and management about any aspect
of the Company’s activities.
The documentation produced for the
Annual General Meeting makes provision
for shareholders to submit questions to
the Company. In 2023 the Annual General
Meeting was held via a hybrid model
with shareholders able to attend the
meeting in person or via an Online AGM
Platform. Shareholders using the Online
AGM Platform where able to vote and ask
questions. All resolutions at the Annual
General Meeting were decided by poll.
The Company will continue to use voting
by poll for all resolutions.
In addition to the Annual General
Meeting, the Company held non-statutory
Shareholder Information Meetings in the
Australian capital cities following the
half-year results. In the financial year
ended 30 June 2024, shareholder
meetings were held in Adelaide, Brisbane,
Canberra, Melbourne, Perth and Sydney.
The Company also held two results
webcast presentations following the
release of the full year and half year results
and a Melbourne evening shareholder
information session in May.
The Company views the holding of
non-statutory meetings and webcasts
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.
AFIC ensures that shareholders have
the option to communicate electronically
with the Company via the share registry.
We also maintain an email address,
invest@afi.com.au, and offer a free
telephone service, 1800 780 784, that
shareholders can call to hear the latest
NTA information.
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CORPORATE GOVERNANCE STATEMENT 2024
Section 7: Integrity in
Corporate Reports and
Ensuring Timely and
Balanced Disclosure
Written Affirmations
Prior to approving the Company’s financial
statements, the Board has received
written affirmations from the Managing
Director and the Chief Financial Officer
concerning these financial statements,
as required by the Corporations Act
and set out in the Directors’ Declaration
in the 2024 Annual Report.
In respect of both the financial statements
for the year ended 30 June 2024 and
the half-year ended 31 December 2023,
the Board has also received written
affirmation from the Managing Director
and the Chief Financial Officer that:
• in their opinion, the entity’s financial
records have been properly maintained
and the financial statements comply
with the appropriate accounting
standards and give a true and fair
view of AFIC’s financial position
and performance; and
• this opinion has been formed
based on a sound system of risk
management and internal control
which is operating effectively.
The Audit Committee and the Board
have also received reports from senior
executives as to the effectiveness of
AFIC’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
AFIC 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 detailed in the
Committee’s charter. The firm conducting
the external audit sets policies relating to
rotating audit partners in accordance with
the 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 pertaining to the audit.
The Company’s external auditor audits
and reviews the annual and half-yearly
financial reports respectively. Before the
release and publication of any corporate
report, a robust review process confirms
that information provided is accurate
and sends a consistent and balanced
message to shareholders.
Continuous Disclosure
As a listed entity, AFIC has an obligation
under the ASX Listing Rules and the
Corporations Act to maintain an informed
market in its securities. Accordingly,
the market is 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.
The Company has a documented
continuous disclosure policy and
procedures designed to ensure
compliance with ASX Listing Rules and
Corporations Act disclosure requirements.
This policy ensures senior management
accountability for compliance with
disclosure requirements and clarifies
individual, management and Board
responsibilities. The policy is available
on the AFIC website.
Board approval is required on any material
market announcements before release.
AFIC always releases any shareholder
presentation material to the ASX Market
Announcements Platform ahead of
the presentation.
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Australian Foundation Investment Company LimitedCorporate Governance Statement 2024