Charter of the Board of Directors
The Board of Directors (the "Board") of Caledonia Mining Corporation ("Caledonia") is responsible for overseeing the management and business affairs of Caledonia and makes all major policy decisions. It may delegate certain of its authority and responsibilities to Board committees ("Committees") or management of Caledonia ("Management"). Nonetheless, it will retain full effective control over the company.
The authority of the Board comes from its mandate given by the shareholders - and the applicable law - to supervise the management of Caledonia. Through the Chief Executive Officer ("CEO"), the Board sets standards of conduct, including the general moral and ethical standards for the conduct of the business.
III. COMPOSITION and MEETINGS
- The Board consists of a pre-determined number of directors elected annually by shareholders. A director may be re-elected each year.
- The Board must include a majority of individuals who qualify as independent directors. The Board will meet all applicable legal and regulatory requirements.
- The Board appoints one director Chairman. The Chairman is responsible for ensuring that the Board carries out its responsibilities effectively.
- The agenda for Board meetings shall contain standing business reporting items. At a prior meeting, or through the office of the Chairman, any director may request additional items for inclusion on the agenda.
- All reports and material for approval by the Board shall be delivered at least 48 hours in advance of a Board meeting in rush circumstances, and seven days for regular reporting, unless extenuating circumstances, as approved by the Chairman, dictate otherwise.
- A simple majority of the members forms the quorum of such meetings; providing that at least 25% of the Directors present at every meeting of the Board must be resident Canadians.
- Any director may request a meeting of the Board with no Management in attendance.
- Within five business days of a meeting the Secretary will circulate the minutes for review and comment.
- In the event a resolution is to be passed by way of written consent rather than a meeting of the Board, a brief summary of the background and purpose of the resolution will be provided to the directors.
In discharging its duties and stewardship responsibility, the Board's duties include the following:
- Selecting, appointing, evaluating and (if necessary) terminating the Chief Executive Officer.
- Adopting a strategic planning process, approving strategic plans, and monitoring performance against plans.
- Reviewing and approving annual operational budgets, capital expenditure limits and corporate objectives, and monitoring performance on each of the above.
- Reviewing policies and procedures to identify business risks, and ensure that systems and actions are in place to monitor them.
- Reviewing policies and processes to ensure that the Corporation’s internal control and management information systems are operating properly.
- Approving the financial statements and MD&A, and making a recommendation to shareholders for the appointment of auditors.
- Approving the Corporation’s Code of Ethics & Business Conduct, monitoring compliance with the code and granting any waivers from the code for the benefit of directors or officers of the Corporation in accordance with applicable requirements of the securities regulatory authorities or the TSX.
- Assessing the contribution of the Board, committees and all directors annually, and planning for succession of the Board.
- Evaluating the relevant relationships of each independent director and making an affirmative determination that such relationship does not preclude a determination that the director is independent.
- Arranging formal orientation programs for new directors, where appropriate, and a continuing education program for all directors.
- Establishing and maintaining an appropriate system of corporate governance including practices to ensure the Board functions effectively and independently of management, including reserving a portion of all Board and its committee meetings for in camera discussions without management present.
- Reviewing and approving the compensation of members of the senior management team, as well as corporate objectives and goals applicable to each member, in order to ensure that the compensation is competitive within the industry, the composition mix (i.e., between cash, short-term incentives and long-term incentives) is appropriate to incentivize and reward each member relative to his or her responsibilities and the Corporation’s objectives and goals and the form of compensation aligns the interests of each such individual with those of the Corporation.
- Ensuring that an adequate system of internal control is maintained to safeguard the Company’s assets and the integrity of its financial and other reporting systems.
- Ensuring that there is in place a system of internal disclosure controls and procedures that, among other things, creates a disclosure charter setting out the Corporation’s disclosure policy and mandates activities relating to public disclosure, ensures all material information is properly gathered, reviewed and disseminated, and monitors and evaluates compliance with, and the effectives of, such controls and procedures.
- Adopting a process for shareholders and other interested parties to communicate directly with the Board or the independent directors of the Board, as appropriate.
- Reviewing and considering for approval all amendments or departures proposed by management from established strategy, capital and operating budgets, or matters of policy, which diverge from the ordinary course of business.
- Ensuring that a process is established that adequately provides for management succession planning, including the appointing, training, and monitoring of senior management.
- In addition to the above, adherence to all other Board responsibilities as set forth in the Company’s By-laws and other statutory and regulatory requirements.
- The day-to-day management of the business and affairs of Caledonia are delegated by the Board to the CEO and other executive officers as directed by the CEO.
- The Board assigned to the Compensation Committee the authority to examine the compensation of the Officers - including options proposed to be granted to the Officers.
- The Board assigned to the Audit Committee the authority to monitor the integrity of Caledonia's financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance; to monitor the independence and performance of Caledonia's independent auditors and internal auditing department: and to provide an avenue of communication among the independent auditors, Management, the internal auditing department, and the Board of Directors
- The Board assigned to the Governance Committee the authority to develop Caledonia's approach to governance issues to ensure that all requirements are met.
- The Board assigned to the Nominating Committee the responsibility of establishing the criteria for Board membership and identifying, vetting and recommending prospective nominees for Board membership.
VI. NOT DELEGATED AUTHORITY
The following matters require the prior approval of the Board:
- Strategic plans and annual budgets;
- Approval of the annual audited and un-audited quarterly financial statements;
- Any transaction which is not in the ordinary course of business of Caledonia;
- Acquisitions and dispositions of fixed assets in excess of $1 million. The Chairman is mandated to approve acquisitions and dispositions and below $1 million;
- Borrowings or giving guarantees in excess of $1 million;
- All contracts with officers or directors in excess of $75,000 annually;
- Decisions and recommendations of any Committee; and
- All other matters that are within the Powers of the Board and are not delegated pursuant to Clause V.
Charter date: March 1, 2005.
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