2. FILE NUMBER Kent Grey, Partner 1 June 2012 Technology in Governance Risk-intelligent approach to the use of technology “in the Boardroom”

3. Overview What is “technology in the Boardroom”? iPads Tape recorders/electronic recording devices Legal requirements for company record keeping Benefits of technology in Boardrooms Issues to consider Tips/traps

4. Company Records – Corporations Act 2001 Requirement to keep minute books – s251A Requirement to keep written financial records – s286 Electronic copies of company records are compliant if: secure from unauthorised access, theft, damage, destruction and falsification can be reproduced in a hard copy on demand can be accessed by those entitled to it (s1306) A person must not conceal, destroy, mutilate or falsify company records (s1307)

5. Benefits of technology “in the Boardroom” Desirability and inevitability of technology “in the boardroom” driven by: Portability Ease of storing, accessing, searching board papers Rapid, timely dissemination of board papers (including updates) Convenience of access Cost savings/environmental considerations Implications are not just “in the boardroom”, but before and after the boardroom: company secretarial practices directors’ duties

6. Status of the Law Law lagging behind technology Use of technology in boardrooms largely untested by Courts limited guidance on electronic recordings Adverse implications might take some time to emerge Best practice tip: implement company policies outlining acceptable uses of technology in Board context

7. Security & confidentiality Materials sent outside the company: to private/personal e-mail addresses to other companies’ e-mail addresses Lack of external security measures Materials in “possession, custody, power” of other companies Materials captured by other companies’ e-mail systems Materials subject to other companies’ document retention policies and security measures (or lack thereof).

8. Security & confidentiality How confidential is the material? What is the commercial damage, if materials fall into wrong hands? Does the company lose important legal protections? ASX Listing Rule 3.1A.2 (ie; the “confidentiality” exception to continuous disclosure) Legal Professional Privilege Should you restrict ability to save locally or print materials? Best practice: encryption, security measures

9. Directors’ duties Centro case (ASIC v Healey & Ors (2011)) “It is the Board’s responsibility to determine the information that it requires or does not require” Directors’ defence relied on volume and complexity of information supplied to board Court held: Board has ability to control amount and format of information received Directors are required to take into account all the information they receive, when performing their duties.

10. Presentation & delivery of information Be wary of exponential increase in volume of information provided for Board’s review Be mindful of how information is conveyed; content presentation accessibility Are these best not provided in electronic form? documents with links to other documents financial spreadsheets information in larger-than-A4 format (maps, charts)

11. Reliability of access to electronic materials Directors (and ex-directors) have some rights to access board papers: common law Corporations Act (s198F, s290) contract (deeds of access, indemnity & insurance) Implement appropriate data protection measures: security back-up/redundancy DRP Best practice tip: retain one hard copy of board papers and minutes.

12. Return of Board materials Policies requiring return of board materials after meetings Deletion from iPads may be problematic: backup storage on local devices; cloud computing ongoing security/confidentiality risks Litigation risk (discovery)

13. Directors’ notes & annotations Increasingly important to demonstrate discharge of directors’ duties duty of care and diligence – s180(1) Business Judgment Rule - s180(2) Personal property of director(?) Not automatically company “property” (but may be in company’s possession, custody or power) Company policies on retention of annotations for future evidentiary purposes Discoverability of annotations on board papers.

14. Tape recording board meetings Use of tape recordings in board meetings: by company secretary/minute-taker by participants at the meeting Listening and Surveillance Devices Act 1972 (SA) consent required to electronically record private conversations exception: for protection of a “lawful interest” Alliance Craton Explorer v Quasar Resources (2010)

15. Conclusion: Tips for use of technology It is good governance and best practice to: Consider “user-friendly” formatting Ensure manageable volume of materials is distributed don’t bombard directors with too much information Ensure management of materials remains professional don’t make late changes, just because they can be distributed easily at the last minute Give directors a choice as to medium of delivery of materials financials, spreadsheets & maps may be better in hard copy