rural funds management limited compliance policy and procedures...

Rural Funds Management Limited

Compliance Policy and Procedures Manual

Last Updated October 2014


CONTENTS 1. Document Information ............................................................................................. 1

1.1. Primary Contact ............................................................................................................... 1 1.2. Version Control ................................................................................................................ 1 1.3. Authorisation and Sign-off ............................................................................................... 2 1.4. Acronyms / Definitions Used Throughout the Document ................................................ 3 1.5. References (Related Policies / Procedures and Requirements) ..................................... 3

2. Introduction ............................................................................................................... 4

2.1. Background ...................................................................................................................... 4 2.2. Purpose ........................................................................................................................... 4 2.3. Scope ............................................................................................................................... 4 2.4. Roles and responsibilities ................................................................................................ 4 2.5. Sign-offs and approvals ................................................................................................... 5 2.6. Key definitions ................................................................................................................. 6 2.7. Reporting requirements ................................................................................................... 6

3. RFM Compliance Framework .................................................................................. 8

3.1. Overview .......................................................................................................................... 8 4. Compliance Plan Framework .................................................................................. 0

4.1. Introduction ...................................................................................................................... 0 4.2. Role of the RFM Board .................................................................................................... 0 4.3. Role of the Compliance Officer ........................................................................................ 0 4.4. Compliance Plan Reporting ............................................................................................. 1

5. Internal Compliance Program ................................................................................. 2

5.1. Introduction ...................................................................................................................... 2 5.2. Tickit Compliance System ............................................................................................... 2 5.3. ASIC Lodgements & Correspondence Register Procedure ............................................ 3 5.4. Compliance Auditing Procedure ...................................................................................... 3 5.5. External Service Providers Register Procedure .............................................................. 4 5.6. RFM Contracts Database ................................................................................................ 4 5.7. RFM Corporate Calendar ................................................................................................ 5 5.8. RFM Policies and Procedures Management Procedure ................................................. 5 5.9. Staff Training – Compliance, Risk Management & Other ................................................ 5 5.10. RFM Key Document Management Procedure ................................................................ 6 5.11. Soft Dollar Benefits .......................................................................................................... 6 5.12. Other Compliance Tasks ................................................................................................. 7 5.13. RFM Insurance ................................................................................................................ 9 5.14. Anti-Money Laundering and Counter Terrorism Financing Act 2006 ............................ 10 5.15. ASX and NSX Listing Rules .......................................................................................... 12 5.16. Internal Compliance Committee – Scope and Operation .............................................. 12

5.16.1. Scope of Operation ................................................................................................ 12 5.16.2. Membership of Committee..................................................................................... 13 5.16.3. Internal Compliance Committee Meetings ............................................................. 13

6. ASIC, ASX & NSX Lodgements and Reporting ................................................... 15 7. Recommended Reading / References: ................................................................. 17


ATTACHMENT 1 .............................................................................................................. 18 Internal Compliance Committee: Agenda Template ................................................... 18 ATTACHMENT 2…………………………………………………………………………….20 Internal Compliance Committee: Minutes Template .................................................. 20 ATTACHMENT 3: Compliance Committee Report to the Board ............................... 22


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1. Document Information

1.1. Primary Contact

For all enquiries or proposed changes, please contact: Document Owner: Compliance Officer

1.2. Version Control

Word Doc whilst in Draft (PDF = Final)

Version Date Comments Initials

1.0 June 2009 First Draft SK

1.1 December 2009 Amendments LW

1.2 Jan-March 2010 Comments & Amendments KS

1.3 May 2010 ICC Review LW

1.4 November 2010 Amendments LW

1.5 September 2011 Annual review LW

1.6 September 2012 Annual review LW

1.7 December 2013 Annual review LW

1.8 January 2014 Amendments LW

1.9 February 2014 Amendments (AML/CTF Compliance Officer, ICC committee membership only)

LW

2.0 March 2014 Amendments LW

2.1 April 2014 Amendments LW

2.2 May 2014 Amendments LW

2.3 August 2014 Amendments LW

FINAL


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1.3. Authorisation and Sign-off

Date Name Position / Department

Sign-Off

19/5/2010 Stuart Waight General Manager Corporate Services

Dec 2010 Stuart Waight Chief Operating Officer

Oct 2011 Stuart Waight Chief Operating Officer

Oct 2012 Stuart Waight Chief Operating Officer

Feb 2014 Stuart Waight Chief Operating Officer

Feb 2014 RFM Board Tabled and noted Approved

March 2014 RFM Board Tabled and noted Approved

May 2014 Stuart Waight Chief Operating Officer

September 2014, to be effective 8/10/2014

Andrea Lemmon Executive Manager – Funds Management


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1.4. Acronyms / Definitions Used Throughout the Document

Acronym Description

RFM Rural Funds Management (Responsible Entity)

ICP Internal Compliance Program

ICC Internal Compliance Committee

AFSL Australian Financial Services Licence

FSC Financial Services Council (formerly IFSA)

ASX Australian Securities Exchange

NSX National Stock Exchange

1.5. References (Related Policies / Procedures and Requirements)

Related Policies / Procedures

Compliance Plans (all schemes)

RFM Consolidated Compliance Register

Tickit Compliance System (Tickit)

Rapid Induct: Compliance – Induction, Compliance – Induction Refresher

Rapid Induct: Tickit User Guide, Tickit Breaches & Complaints Reporting, Tickit Incident Reporting & Management, Tickit Risk Management & Assessments

Rapid Induct: AML/CTF Program

Legislation / Other References

RFM Australian Financial Services Licence 226701

Corporations Act 2001 (Cth)

International and Australian Standards

ASIC Regulatory Guides

FSC Standards and Guidance Notes

AUSTRAC AML/CTF legislation

Privacy Act 1988 (Cth)

ASX and NSX Listing Rules


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2. Introduction

2.1. Background RFM is required to meet a range of compliance requirements for the managed investment schemes for which it is Responsible Entity. There are also public company compliance requirements relating to RFM and RFM Farming Pty Ltd.

2.2. Purpose The purpose of this manual is to outline the framework of the RFM Compliance Program including the policies and procedures in place for ongoing compliance monitoring and review.

2.3. Scope This policy applies to all employees of the Company and its managed and/or owned entities.

2.4. Roles and responsibilities Role of the Internal Compliance Committee (ICC) The ICC monitors the RFM Compliance Program to ensure that it is effective in meeting RFM’s compliance requirements. The ICC also provides a supporting role to the Compliance Officer. Role of the Compliance Manager The Compliance Manager oversees the Compliance Officer and the broader implementation of the Compliance Program. Role of the Compliance Officer The Compliance Officer must be familiar with the Compliance Program and the Compliance Plans. They will assume responsibility for compliance and for rectifying breaches. The compliance officer must: Identify legal compliance obligations with the assistance of RFM

management and external advisers (legal counsel); ensure that these obligations become part of the business systems and

processes; report to compliance committees on compliance with the requirements; and be familiar with RFM’s compliance obligations.


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It is the responsibility of the Compliance Officer to directly monitor compliance on most issues. Other duties of the Compliance Officer include: Introducing and updating policies and procedures necessary to the Plan; Reporting breaches to the compliance committees and the Board; Ensuring ongoing development of the compliance framework and promoting

the compliance culture within the organisation; Ensuring Representatives maintain adequate training and education; Ensure necessary compliance training and consult relevant experts such as

external lawyers and auditors when required; and Manage and administer the Tickit Compliance System (Tickit). Role of Managers Identified Managers across all business units (Client Services, Finance & Accounting, Operations, HR) are responsible for reporting and monitoring key aspects of compliance. Role of Employees / Representatives All employees are required to assist RFM in meeting its compliance obligations. Role of the External Auditor The external auditor of the Compliance Plan will review this compliance manual as part of the annual compliance plan audit.

2.5. Sign-offs and approvals

Position Role

Compliance Officer Annual review and policy amendments as

required

ICC Manual Sign-off

Manager – Corporate Services Initial document approval

Executive Manager – Funds

Management (Compliance Manager)

Final approval


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2.6. Key definitions

Term Explanation

AF06 means RFM Amond Fund 2006



Company Rural Funds Management Limited

Board RFM Board of Directors

Compliance Plans Relates to Compliance Plans lodged with ASIC as follows:

Rural Funds Trust (Master Compliance Plan)

o RFM Land Trust (short form compliance plan)

o RFM Almond Fund 2006 (short form)



o RFM StockBank (short form)

o RFM Poultry (short form)

o RF Active (short form)

LT means RFM Land Trust

RFA means RF Active

RFF means Rural Funds Group which is a collective term for the

RFM managed stapled entity listed on the ASX and

encompassing Rural Funds Trust and RF Active.

RFP means RFM Poultry

RFT means Rural Funds Trust

StockBank means RFM StockBank

Tickit Tickit Compliance System (Tickit on Demand) – an automated

compliance system, hosted externally

2.7. Reporting requirements The Compliance Officer will report to the Board, and the Internal Compliance Committee. The ICC will report to the Board.


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2.8. Policy review and revision

The Compliance Officer will review this Manual annually. If required the Compliance Officer may seek external advice on the Compliance Program as outlined in this Manual. The Manual may be updated more regularly if required as a result of regulatory changes, significant licence changes or changes in the circumstances or operations of RFM.


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3. RFM Compliance Framework

3.1. Overview RFM is committed to a rigorous Compliance Program which aims to provide confidence to investors, meet regulatory requirements and meet best practice standards for corporate governance. Our program is designed to be flexible enough to continuously develop to meet the changing demands of the business and regulatory environment. RFM’s compliance approach is based on the Australian Standard for Compliance Programs: AS 3806. The Compliance Program has three elements:

Structural – reporting lines and the Compliance Officer’s appropriate access to the committees;

Operational – identification and implementation of compliance requirements, reporting and rectification of issues and breaches; and

Maintenance – ongoing education, training and monitoring of compliance procedures

This program is supported by policies and procedures, which provide more detail about how certain functions will be performed. Identified staff across all business units are responsible for reporting and monitoring key aspects of compliance. For the licensee to properly perform its duties a comprehensive compliance program is necessary. The Program must consider all relevant functions and procedures. The Program must be reviewed by the Compliance Officer and the Internal Compliance Committee. The Compliance Plan Auditor will review the manual at the time of annual compliance plan audit. The Compliance Officer has to stay up to date with regulatory and industry changes, and to assess the adequacy of the Compliance Plan when changes occur. Issues that may trigger a change in the Framework would include a:

Change in legislation or regulations; Change in licensing arrangements; Recurring or material breach. Any change to the Compliance Plan will be reviewed and approved by

the Compliance Officer and the Internal Compliance Committee before being signed by the Directors of RFM.


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TABLE 1 - RFM Compliance Program

Entity Compliance Requirement Compliance Program / Measures Key Documents

RFM Responsible Entity (RE) Compliance Corporations Act 2001 - The RE of a registered scheme must

be a public company that holds an Australian financial services licence (AFSL) authorising it to operate a managed investment scheme

AFSL Licensee must have in place arrangements for managing conflicts of interest, complying with licence, ensuring reps comply, have adequate resources (financial, HR, technological), ensure adequate training, maintain competence, have dispute resolution, appropriate risk management systems (Corps Act Sect 912A)

Internal Compliance Committee oversees Responsible Entity adherence to AFSL, Corps Act, ASX and NSX Listing Rules, FSC Standards and Internal Policies and Procedures, and overseas adherence to Risk Management Plan

RFM Board External Audit

Australian Financial Services Licence #226701 Relevant legislation (Corporations Act 2001,

FSC Standards, ASIC Regulatory Guides, ASX Listing Rules, NSX Listing Rules)

RFM Compliance Policy & Procedures Manual Risk Management Plan / Program RFM Policies and Procedures Tickit Compliance System

RFM (and RFM Farming Pty Limited)

Public Company Compliance Requirements include registration of Company, changes to

members / shareholders, issue and changes to share capital, AGM requirements, procedures for documenting meetings, resolutions. Responsibilities in relation to registering charges, financial reporting.

Internal Compliance Committee RFM Policies and Procedures RFM Compliance Policy and Procedures

Manual Tickit Compliance System: Corporate and

Regulator tasks/obligations

Managed Investment Schemes (RFT, SBK, LT, AF06, AF07, AF08, RFP, RFA)

Managed Investment Scheme Compliance The responsible entity of a registered scheme is to operate

the scheme and perform the functions conferred on it by the scheme's constitution and the Corps Act (Sect 601FB)

The compliance plan of a registered scheme must set out adequate measures that the responsible entity is to apply in operating the scheme to ensure compliance with this Act and the scheme's constitution (Corps Act Sect 601HA)

External Review (function delivered by independent RFM Board)

Internal Compliance Committee

RFM Board oversees compliance with Compliance Plans and constitutions

Internal Compliance Committee (compliance on a practical level)

External Audit

Constitutions External Compliance Plans (CP)

RFT Long Form CP o AF06 Short Form CP o AF07 Short Form CP o AF08 Short Form CP o LT Short Form CP o SBK Short Form CP o RFP Short Form CP o RFA Short Form CP

Tickit Compliance System

All entities Risk Management and Business Continuity Internal Compliance Committee Risk Management Policy Risk Register HSE Policy Business Continuity & Disaster Recovery Plan AML/CTF Program Tickit Compliance System


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All entities These documents are provided to either / or both the Board and

Internal Compliance Committee Other Key Compliance documents:

ASIC Lodgements Register ASIC Correspondence Register Breach Register (Responsible Entity and

MIS combined register) Approved Publications Register Complaints Register Register of Interests in Securities External Service Providers Register Related Party Transactions Register Conflict of Interest Register Securities Trading Register Authorised Representatives Register Soft Dollar Register Tickit Compliance System: Corporate and

Regulator tasks/obligations (ICC only) Other registers as required by RFM policy


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4. Compliance Plan Framework

4.1. Introduction The Corporations Act 2001 requires RFM to hold an AFSL so that it may provide financial services. As a licensee RFM has ongoing obligations which include compliance monitoring and reporting for RFM itself and the Managed Investment Schemes for which it is the Responsible Entity. These obligations and procedures for monitoring compliance are documented in Compliance Plans for each Managed Investment Scheme.

4.2. Role of the RFM Board The RFM Board is responsible for overseeing the compliance systems which RFM has in place, with a particular emphasis on monitoring adherence to the Compliance Plans.

4.3. Role of the Compliance Officer The Compliance Officer must complete the compliance reports as required by the Compliance Plans. The Compliance Officer will also record all checks performed in order to verify the status of compliance matters in a written report. Where other staff have compliance reporting responsibilities they must report to the Compliance Officer. The Compliance Officer will communicate with the relevant officers to ensure proper and accurate monitoring of compliance procedures and report to the Board and the Internal Compliance Committee. Members of RFM staff with appropriate qualifications and experience have assumed primary responsibility for each allocated compliance procedure. The Compliance Officer must be up to date with changes in legislation, regulations, ASIC policy and industry standards. The Compliance Officer must review the Plans and the compliance framework in light of the changes to ensure they are adequate. External legal advice may be utilised to support this function.


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4.4. Compliance Plan Reporting The Compliance Officer will report to the Board quarterly on meeting RFM’s obligations in relation to the Compliance Plan. The Tickit Compliance System includes the required external compliance checks to ensure compliance with RFM compliance plan duties. These tasks have been assigned to the Compliance Officer (to perform various compliance checks), Chief Financial Officer (finance checks), Client Services Manager and Executive Manager – Funds Management (Client Services and legal checks), Manager – Corporate Services (HR checks) and other persons as required. When due, Tickit will send automated email notifications that these tasks are due. A summary of the consolidated compliance report (including all tasks for all responsible persons) will be provided to the Board for a review to ensure that:

there is no other matter of which they are aware which is not referred to and which may be relevant;

the persons listed as performing compliance duties or providing the Compliance Report are the appropriate persons to do so; and

they are generally satisfied with the examination and compliance process employed.

The consolidated compliance report (including all tasks for all responsible persons) will be tabled quarterly at the meetings of the Internal Compliance Committee. The committee may direct the Compliance Manager, the Compliance Officer or any other RFM officer to ensure that appropriate action be taken to remedy any identified failures. The committee may communicate directly with the RFM Board of Directors, the auditors of the schemes and the compliance plan.


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5. Internal Compliance Program

5.1. Introduction RFM’s internal compliance program is designed to provide monitoring and review mechanisms. The internal program is managed by the Compliance Officer and is overseen by an Internal Compliance Committee who provides a supporting role to the Compliance Officer.

5.2. Tickit Compliance System

The Tickit Compliance System (Tickit on Demand) has been established to implement an effective, activity based approach to managing and monitoring mandatory tasks to ensure compliance with a range of legislation and internal controls related to: Corporations Act 2001 (Cth); RFM’s Australian Financial Services Licence; regulators’ requirements (namely ASIC, FSC, Austrac, ASX and NSX); other relevant legislation (Privacy Act, ATO requirements); and RFM’s policies and procedures.

The system defines responsibility for all tasks within the system, including the timing and recurrence of the tasks. It ensures that appropriate action is taken where required and that RFM meets any compliance obligations imposed on the company. The system sends email alerts of due tasks and risk assessments to users who are responsible for particular activities or controls (tasks and risk assessments), and monitors the performance of those tasks. The system is hosted externally. The system encompasses RFM’s compliance obligations, risks, incidents (breaches, complaints, HSEQ incidents, non-HSEQ incidents, conflicts of interest and related party transactions, potential disclosure items and audit findings) and other corporate obligations. Tickit also includes a database of contracts to assist RFM with managing our contractual obligations. The Compliance Officer is responsible for the maintenance and administration of the system, as specified in the relevant procedure (refer to the Tickit Compliance System Guide).


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Tickit Web Kiosk RFM staff (all staff) can report new breaches, complaints, HSEQ incidents, non-HSEQ incidents, hazards, potential disclosure items and other events to management via Tickit Web Kiosk which can be accessed on RFM Intranet.

5.3. ASIC Lodgements & Correspondence Register Procedure

All documents lodged with ASIC will be listed in the RFM ASIC Lodgement Register to ensure that the Compliance Committees can readily assess compliance with ASIC requirements, and that documents can be quickly located (for audit / compliance checks). All documents lodged with ASIC are to be listed in the ASIC Lodgement Register. This must include lodgement date, forms, and the physical or electronic location of file copies of documentation. A separate register, RFM ASIC Correspondence Register, is maintained for correspondence received from ASIC. This may include annual scheme and company statements, ASIC’s notifications and confirmations and any other correspondence from ASIC. The purpose of the register is to ensure RFM follows up any requests made by ASIC or otherwise takes the appropriate action to ensure compliance with ASIC’s regulations and requirements. It also allows RFM to track the progress of RFM’s correspondence with ASIC, in particular during ASIC’s reviews and compliance requests.

5.4. Compliance Auditing Procedure

Each year, the Responsible Entity (RE) of a managed investment scheme must have an audit performed assessing their compliance with the Compliance Plan of the Scheme. This audit must be performed by an auditor different from the one who performed the audit of the financial report (scheme and company), although they may be from the same firm. This audit report must state whether the RE has complied with the plan for that financial year, and whether the plan continues to meet the requirements of the Corporations Act 2001. This report must be provided to the RE, and must be lodged with ASIC no later than 30 September (also the due date for lodgement of financial reports). The Internal Compliance Committee will assess the internal compliance program annually following receipt of the Compliance Plan auditor’s feedback on the annual compliance audit to assess its ability to adequately meet RFM compliance obligations.


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5.5. External Service Providers Register Procedure

RFM maintains a register of external service providers (the register should only include longer term arrangements where a contract is in place with RFM for provision of ongoing services to enable RFM to perform its duties as Responsible Entity). This register includes details of due diligence undertaken and insurance for external service providers. External Service Provision applies when RFM enters into a written agreement with another party (including a related entity) to perform a business service for RFM. This policy is only applicable in the situations where external service provision or outsourcing arrangements involve business activities that are material in nature. A material business activity is generally defined as one that has the potential, if disrupted, to impact significantly on RFM’s business operations, reputation or profitability. Factors to consider when assessing a potential outsourcing arrangement include:

The financial and reputation impact of a failure of the service provider to perform over a given period of time;

The cost of the outsourcing arrangement as a proportion of total costs; The degree of difficulty, including time taken in finding an alternate

service provider or bringing the business activity “in house”; and The ability of RFM to meet regulatory requirements if there were

problems with the service provider. Where the licensee does not have the necessary resources or expertise for day-to-day operations these may be outsourced to External Service Providers who specialise in the required field. Details of external service providers are documented in the External Service Provider Register.

5.6. RFM Contracts Database

RFM has incorporated its contracts database into the existing Tickit Compliance System. The database contains various contracts between RFM, RFM entities and external parties. The purpose is to capture and manage RFM’s obligations arising from these contracts. Where appropriate, tasks have been created and assigned to the managers responsible for managing the contract. This may include a regular review, contract or term expiry, completion


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of services, delivery of goods etc. The database can be accessed through Tickit.

5.7. RFM Corporate Calendar The RFM Corporate Calendar provides a schedule of all standard or regularly occurring RFM events which occur by virtue or need to occur throughout the year. These events and obligations have been captured as a number of corporate and regulatory tasks scheduled in Tickit. The following events have been included:

Quarterly review of Business Continuity and Disaster Recovery Plan (head offices). The plan will be updated as required, then saved on the G drive, Canberra office (minor frequent updates will occur throughout the year to reflect staff changes). The amended plan will be sent to all senior managers and persons identified in the plan as being responsible in the event of a disaster (regional offices to send to their management teams) to keep on their home computer or as a hard copy – i.e. offsite.

Electronic archiving of G Drive; Review of hard file archiving; ASIC, ASX and NSX lodgements identified for the year in advance

(where the due dates are known); and Policy and procedures review.

When the tasks fall due Tickit will send automatic email notification to RFM staff responsible for their completion and/or events monitoring.

5.8. RFM Policies and Procedures Management Procedure The Compliance Officer is responsible for coordinating the scheduled review of Policies and Procedures. All RFM Policies and Procedures are documented in a Policies and Procedures Register on the G Drive (RFM\Corporate\Compliance\Policies & Procedures). Review dates and appropriate sign-off mechanisms are marked on the Register.

5.9. Staff Training – Compliance, Risk Management & Other

The Manager – Corporate Services will establish and coordinate appropriate training program for RFM staff. The Manager – Corporate Services maintains a training register for all staff. The program will include:

Specific training courses, i.e. Representatives and Fund Administrator team supervisors, Responsible Managers, other management,


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accountants (CPA), staff with Diploma of Financial Planning (or equivalent) and other as appropriate;

Compliance induction – new staff; Staff compliance training – inclusion of various topics on the RFM

intranet and Rapid Induct (web based training program); RFM Management Conference; Attendance at industry related and employee’s position/role relevant

conferences and workshops including external compliance workshops; and

Other training as required. Standard ‘compliance / risk’ staff training requirements have been identified and diarised for RFM staff to complete regularly in Rapid Induct. The Training Manager (Manager – Corporate Services) or a member of the RFM executive team can offer another staff, subject to the ICC approval, to attend the Internal Compliance Committee meeting to gain a more thorough understanding of RFM’s compliance program. This is an important function in creating and maintaining a compliance culture.

5.10. RFM Key Document Management Procedure The following procedure records management of key documents, responsibilities, access to the documents and back-up. The Compliance Officer is responsible for maintenance of Key Documents Register and Hard Files. The Compliance Officer will ensure that RFM Key Documents are kept in a locked drawer/cabinet with only 1-2 people with access and a sign-out register (no-one should really need the originals as they are scanned and should be in an electronic folder). The designated staff member may number and check that docs are scanned to G Drive (parallel filing system).

5.11. Soft Dollar Benefits

The IFSA/FPA Industry Code of Practice on Alternative Forms of Remuneration in the Wealth Management Industry (FSC Standard 14) has been incorporated into the new legislation (FoFA). Effective 1 July 2013, the Financial Services Council (FSC) repealed both the FSC Standard 14 (as above) and the FSC Standard 15 – Rebates and Related Payments.


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The following soft dollar benefits (previously known as alternative forms of remuneration) are permitted: - Non-monetary benefits less than $300 in value as long as they are not

received on a frequent or regular basis (at least 3 times a year); - Non-monetary benefit that has a genuine educational or training purpose

that is relevant to providing financial product advice to the client; - Software for an administration platform where the benefit is given by the

owner or distributor of the software; - Access to an information technology ‘help desk’ for problem that an AFS

licensee or representative experiences in using administration platform software, where the benefit is given by the owner or distributor of the software;

- Access to a website to place client orders; and - Non-monetary benefit given by a retail client.

Amongst the banned non-monetary benefits are those valued at $300 and over, and travel and accommodation relating to the education and training course, and events and functions held in conjunction with the course. The legislation previously allowed benefits to be made by the funds mangers (e.g. RFM) to the platform provider and/or adviser/dealer groups such as sponsorship to attend conferences, seminars and functions, accommodation and entertainment, travel, computer hardware and software cost and other payments greater than $300 in value (per transaction or item). RFM should ensure banned benefits are not offered, even inadvertently, to dealer groups or individual advisers. The Compliance Officer will continue to maintain a register that records the flow of permitted benefits (as outlined above), if such benefits are given. Relevant legislation: Corporations Act 2001 (Cth) s963C9(d) Regulations 7.7A.13, 7.7A.14, 7.7A.15, 7.8.11A RFM maintains a register of material permitted “soft dollar benefits” (non-monetary benefits) in accordance with the current legislation, where such benefits are made by RFM to a Licensee and/or its representative (e.g. dealer groups or individual advisers), or platform providers (or any other third party).

5.12. Other Compliance Tasks Approved Publications – in line with ASIC Licensing, Corporations Act 2001, ASX and NSX Listing Rules and RFM compliance arrangements, all approved


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publications must be checked monthly. Refer to RFM Publications Policy and Continuous Disclosure Policy. Complaints Handling – ASIC licensing requires that RFM as a Responsible Entity maintain membership of an external dispute resolution scheme, as well as have internal complaint handling procedures. Refer to RFM Complaints Handling Policy. Breaches – As an AFS Licensee, RFM is required to report to ASIC certain breaches (or likely breaches) of its obligations under the financial services laws. A failure to report a significant breach (or likely breach) is likely, in itself, to be a significant breach of our obligation to comply with the financial services laws. All breaches, whether significant and reportable to ASIC or not are recorded on the Breach Register. Breaches are reported to the ICC and the Board. Refer to RFM Breach Management Policy. Register of Interest in Securities – RFM maintains a register of securities for senior managers and directors. This is updated annually as specified in the Corporate Calendar. The Compliance Officer will send an email to all senior managers and directors asking for an update of their interests. Their holding in schemes for which RFM is a Responsible Entity can be checked in the Member (investor) registry. Refer to RFM Conflict of Interest Management Policy. Related Party Transactions and Conflict of Interest – RFM maintains a register of conflict of interest and related party transactions that occur during the year. All transactions must be done on an ‘arm’s length basis’ (or commercial basis) as specified in RFM Conflict of Interest Management Policy. All related party transactions are subject to approval by the Board Privacy Law – RFM is bound by the Privacy Act 1988 (Cth) (Privacy Act), including the Australian Privacy Principles. It is important to recognise and respect each client’s right to privacy and confidentiality. Refer to RFM Privacy Policy. Proxy Voting & Investor Meetings – RFM has responsibility to exercise proxy voting authority on behalf of all managed investment schemes (trusts) for which it is the responsible entity, where securities in listed Australian companies form part of the asset portfolio of the trust. Each proxy statement is reviewed on an individual basis to protect the best interests of RFM Unitholders. In certain circumstances RFM is prevented from voting. Refer to RFM Proxy Voting Policy.


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Financial Services Guide (FSG) – The FSG sets out the financial services that RFM is authorised to provide. The FSG is required by law to be given to a retail client prior to any financial product advice being provided. The Compliance Officer is responsible for reviewing the FSG annually. Corporate Governance – The Compliance Officer assists in reviewing corporate documents including the Code of Conduct, Corporate Governance Charter and is also responsible for reviewing the Staff Compliance Induction. Information Technology – The Compliance Officer will ensure RFM has in place an up-to-date IT Policy, the main Disaster Recovery Plan and regional Disaster Recovery Plans include appropriate IT procedures in the event of a disaster and RFM server back-ups are done as specified in the RFM policy. Another document that includes reference to IT is the Code of Conduct. Board Reporting – The Compliance Officer is responsible for reporting to the Board. The board report should include update on AFS licence, ASIC lodgements, auditors, risk management, Internal Compliance Committees, breaches, complaints, related party transactions and other items as necessary to keep the Board informed. A sample board compliance report is included in Attachment 3. Securities Trading – The Compliance Officer will assist the Company Secretary, where delegated, to maintain a record of authorisations to trade in RFM securities (Rural Funds Group, RFM Poultry and any other entities listed on the ASX or NSX, which RFM is the responsible entity for) and insider information registers including a register of insiders and a list of securities about which there is inside information. Refer to the Securities Trading Policy.

5.13. RFM Insurance The Compliance Officer assists with the administrative aspects of RFM insurance portfolio. The Business Manager (David Thomson) continues to manage the relationships and activities or RFM insurance brokers. Insurance must be obtained for:

RFM Limited – Investment Management Insurance (incorporating Directors’ and Officers’ Liability);

Commercial Insurance Policies for RFM and all entities (including Industrial special risk and public liability for all physical locations and property, motor vehicle fleets for each entity, domestic homes policy for all farm housing, travel insurance).


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The Compliance Officer also assists the Manager – Corporate Services in managing Workers Compensation Insurance and Group Life and Group Salary Continuance Insurance. This involves record keeping, updating the policies and administration. Full details of insurance requirements are located in G:\RFM\Corporate\ Insurance. Particulars relating to Workers Compensation and Group insurance are held securely on the S drive (a limited staff access folder).

5.14. Anti-Money Laundering and Counter Terrorism Financing Act 2006

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), parts of which became effective from 12 December 2006, aims to fulfil Australia’s international obligations to deter money laundering and terrorism financing. The AML/CTF regime consists of principles-based legislation and rules created by the Australian Transaction Reports and Analysis Centre (AUSTRAC). The regulatory regime introduced by the AML/CTF Act has a staggered commencement, with implementation to be completed at six month, 12 month and 24 month intervals from 12 December 2006. In April 2007, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2007 was passed to make technical amendments to the AML/CTF Act, and to effect various other miscellaneous and consequential changes to a number of other pieces of legislation. The objective of the Act and RFM’s program is to ensure that potential money laundering and terrorism financing risks are identified and appropriate measures are in place to mitigate and manage these AML/CTF risks. RFM’s AML/CTF compliance program must be approved by its directors and operational customer identification procedures and other record-keeping requirements must be in place. The main responsibility for maintaining the program and relevant procedures and reporting will rest with the AML/CTF Compliance Officer. The Company Secretary has been appointed in the role of the AML/CTF Compliance Officer. The AML/CTF Compliance Officer will be supported by RFM Compliance Officer (general compliance and policy review), the Manager – Corporate Services (employee due diligence program) and the Client Services Manager will be also responsible for reporting and training staff team members.


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Part of AML/CTF Compliance Officer’s role is to remain up to date with all regulatory and industry standards changes. Any such changes that impact the Program are included in the Officer’s report to the Board. AML/CTF Breach Register and Training Register have been established to record any AML/CTF breaches and maintain records of staff training, as stipulated in the policy. There are further procedures and checklists (employee due diligence process for new and existing employees) to ensure compliance with the program. Training for all staff will be scheduled to occur on a regular basis. The training required will depend on the employee’s role in the company and the level of responsibility they have been given in relation to detecting ML/CTF risks. The policy requires that a regular review (bi-annual at minimum) of the program be carried out by an appropriate, independent party. The RFM Board appointed McCullough Robertson Lawyers to undertake these reviews. RFM’s Internal Compliance Committee will review the program annually (internal review). Chapter 7 of the AML/CTF Rules provides that where an applicable customer identification procedure has been conducted by a financial planner (this term includes an AFS licence holder and an authorised representative as used in the Corporations Act), it can be deemed to have been conducted by another entity in certain circumstances. FSC Guidance Note 24 states that a product issuer (RFM) is deemed to have appropriately relied on the customer identification procedure conducted by the financial planner where they are reasonably satisfied that the procedure conducted was in accordance with this Guidance Note and they have a copy of, or access to, records which demonstrate the procedure of customer identity verification was conducted in a manner consistent with this Guidance Note. RFM has an AML/CTS customer identification agreement in place with financial planning AFSL holders (dealer groups and individual financial planning firms) who in the course of recommending RFM products to their clients, agree to undertake AML/CTF verification on behalf of RFM. The agreement entitles RFM to access copies of customer identification verification retained by financial planners and request that the planner undertake further verification of the client’s identity, which may be required for example if RFM has reasonable grounds to suspect that an investor is not who they claim to be.


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Refer to RFM AML/CTF Compliance Program/Policy.

5.15. ASX and NSX Listing Rules Rural Funds Group (RFF) is a managed investment scheme listed on the ASX. RFM Poultry is a managed investment scheme listed on the NSX. Entities listed on the ASX or NSX must comply with various obligations set out in ASX Listing Rules (for entities listed on the ASX) and NSX Listing Rules (for entities listed on the NSX). The listing rules have been incorporated into the RFM master compliance plan, the relevant RFM policies and procedures. There are ASX specific policies, including the Securities Trading Policy, Diversity Policy and Continuous Disclosure Policy. Tasks to ensure compliance with the ASX and/or NSX lodgement deadlines and obligations have been scheduled in Tickit. The Continuous Disclosure Policy outlines ongoing disclosure requirements for RFF (a stapled entity encompassing RFT and RFA) and RFM Poultry.

5.16. Internal Compliance Committee – Scope and Operation

5.16.1. Scope of Operation Assessment of AFSL conditions, authorisations and Responsible

Managers / Key Persons to ensure the arrangements are appropriate to current and future business requirements.

Review of business activities and funds review, projects and events planning.

Review of the tasks scheduled in Tickit (Corporate and Regulator) to ensure that all business processes are occurring in accordance with the requirements.

Review of the Staff Training Register / Report (including sales and marketing representatives), staff compliance training and other training necessary to meet our human resource obligations.

Review of the Consolidated Compliance Report (compliance plan duties) and any issues arising from the compliance activities performed.

Discussion of any compliance issues identified by Internal Compliance Committee members across the Company.

Review of risks and the RFM Risk Register. Review of the Breach, Complaints and Related Party transaction

registers. FSC Standards Compliance – Annually. Compliance with ASX and NSX Listing Rules – Ongoing. RFM Policy and Procedure Review – Annually.


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Review of the Business Continuity and Disaster Recovery Plan and regional Disaster Recovery Plans – Annually.

5.16.2. Membership of Committee

The Internal Compliance Committee is structured to include representation from different business units. This ensures that compliance monitoring and review are well embedded across RFM. The Internal Compliance Committee is to include: Compliance Officer Compliance Manager (Executive Manager – Funds Management) Manager – Corporate Services Chief Financial Officer and/or Financial Controller Client Services Manager Rotating additional staff member, as approved by the ICC By invitation: Business Managers

5.16.3. Internal Compliance Committee Meetings

Meetings of the Internal Compliance Committee are held quarterly however can be held more frequently, if required. The minutes are circulated to the ICC members and the Board. Procedure for Meetings The Compliance Officer will prepare an agenda (include update on previous action items) and include any attachments, i.e. documents for review, discussion, approval etc. At least one week prior to the meeting send a request to the ICC members to provide any papers for inclusion in the agenda and other items for discussion. Follow up outstanding action items (or remind those responsible) prior to the meeting. The ICC meetings are of informal nature. The role of the Internal Compliance Committee is to monitor compliance with RFM’s AFS licence and compliance plan and improve systems on a practical level. The papers should be distributed at least 1 day prior to the meeting. Meeting is to be minuted including action items and any breaches noted. Minutes need to be approved by the Manager – Corporate Services prior to distribution by email to the members. The Compliance Officer signs the minutes.


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Provide the ICC minutes to the Executive Assistant for inclusion in Board papers. Include a summary in the Board compliance report.

Template Agenda and Minutes Standard agenda and minute items are provided in a summary in Attachments 1 (agenda template) and Attachment 2 (minutes template).


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6. ASIC, ASX & NSX Lodgements and Reporting RFM’s standard ASIC, ASX and NSX reporting requirements are diarised in Tickit. These include:

What Due Date Lodged by Form

Company Statements (RFM, RFM Farming) Issued by ASIC 20 February

Compliance Officer

484

Scheme Statements (AF06) * Issued by ASIC 20 February

Compliance Officer

491

Scheme Statements (RFT) * Issued by ASIC 28 February

Compliance Officer

491

Scheme Statement (LT) * Issued by ASIC 1 November

Compliance Officer

491

Scheme Statement (AF07) * Issued by ASIC 3 May

Compliance Officer

491

Scheme Statement (SBK) * Issued by ASIC 11 October

Compliance Officer

491

Scheme Statement (AF08) * Issued by ASIC 17 October

Compliance Officer

491

Scheme Statement (RFP) * Issued by ASIC 31 July

Compliance Officer

491

Scheme Statement (RFA) * Issued by ASIC 4 April

Compliance Officer

491

ASIC: Statutory Accounts (Annual) and Audit Report – RFM (incorporating RFMF)

30 September Compliance Officer

388 FS70 FS71

ASIC: Statutory Accounts (Annual) and Audit Report – SBK, RFP, LT, AF06, AF07, AF08


388

ASIC: Compliance Plan Audit (RFT, RFA, SBK, LT, AF06, AF07, AF08, RFP)


5111

ASIC: Half Yearly Reports – SBK, LT, AF06, AF07, AF08, RFMP (75 days after calendar year end)

16 March Compliance Officer

7051

ASX: Preliminary Financial Report – RFF 31 August ASX Communications Officer

Appendix 4E

ASX: Half-Yearly Report – RFF 28 February ASX Communications Officer

Appendix 4D

NSX: Preliminary Financial Report – RFP 13 September Communications Officer

NSX: Half-Yearly Report: RFP 16 March Communications Officer

* Note: Check that all Funds are up to date including units on issue (obtained from the Member registry)


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Ad-hoc disclosure requirements are:

What Due Date Lodged by Form

Redemption Offers As soon as practicable

Client Services Letter

Investor Newsletter As soon as practicable

Client Services RFM Website (ASIC RG198 compliant)

Fund material changes As soon as possible (ASX Listing Rule 3)

Client Services

RFM Website (ASIC RG198 compliant), ASX Market Releases

Breaches (if deemed ‘significant’)

Within 10 days Compliance Officer as notified by the committee or staff

ASIC form FS80

Company changes - (RFM) to Share Register / structure

Within 28 days Compliance Officer as notified by Chief Operating Officer

ASIC form 484 or 211

Changes to AFSL (key persons, licence conditions change)

Within 5 days Compliance Officer / Legal Officer (internal/external)

ASIC form FS03, FS03X, FS20

PDS In-use notice Within 5 days Compliance Officer ASIC form FS88 Changes to PDS – Fees and charges

Within 5 days Compliance Officer ASIC form FS89

Cessation of a PDS Within 5 days Compliance Officer ASIC form FS90 ASX, NSX Other (refer to the Ongoing Disclosure Policy)

As required As per allocated responsibilities

As per prescribed forms


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7. Recommended Reading / References:

RFM Policy and Procedures Manual

External Compliance Plans (schemes)

RFM Risk Management Plan

Business Continuity and Disaster Recovery Plan

AFSL 226701 (RFM Licence)

ASIC Regulatory Guide 1-3 – AFSL Requirements

ASIC Regulatory Guide 104 & 105 – Licensing Requirements

ASIC Regulatory Guide 116 – Compliance Plans: Agricultural industry schemes

ASIC Regulatory Guide 132 – Managed Investments: Compliance Plans

ASIC Regulatory Guide 133 – Scheme Property Arrangements

ASIC Regulatory Guide 78 – Breach Reporting

ASIC Regulatory Guide 166 – Licensing: Financial Requirements

ASX Listing Rules

NSX Listing Rules

Other ASIC regulatory guides (internal and external dispute resolution schemes, insurance requirements, authorised representatives, provision of financial advice, conflict of interest etc.).

Other FSC Standards and Guidance Notes

International and Australian Standards

RFM policies and procedures (all)

Constitutions (schemes)

Constitution (RFM)

AUSTRAC (AML/CTF legislation)


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ATTACHMENT 1

Internal Compliance Committee: Agenda Template (RFM letterhead template including a header) Agenda - RFM Internal Compliance Committee Meeting [Weekday, Date, Month, Year, Time]

To be held at: Canberra

Notice given: TO: ICC Members

By invitation:

In attendance: Compliance Officer

1. Welcome and Apologies

2. Confirmation of Agenda

3. Acceptance of minutes of the previous ICC meeting That the minutes of the ICC meeting held on [date, month, year] as circulated be accepted.

4. Matters arising from the minutes of the Internal Compliance Committee meeting held [date, month, year]

Item Number

Item Person Responsible

Date to be Completed

A LW to circulate………. Outcome: To be circulated

LW Immediately

B LW to provide…. Outcome: Completed

LW Immediately

C Etc.

5. Business Review: Compliance with the AFS license

6. Business Operations update (verbal update only generally is required, i.e. anything that

may be happening in relation to RFM business and/or the funds, such as Unitholder meetings, statements, operations, material issues and risks etc)

7. Projects/events (update and new) (verbal update so that all ICC members are aware of

any projects and events that may be happening at any time and note possible future action)

8. Items for discussion (if any – this may include a review of the Corporate Calendar, RFM policies and procedures, and any ad-hoc projects, include a copy of the document for discussion if required)


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9. Registers: Breach, Complaints, Conflict of Interest, Related Party Transactions

10. File Management Guidelines – compliance and review

11. Review of Consolidated Compliance Report (attach the quarterly report reporting on the compliance duties as per RFM master compliance plan)

12. Matters requiring reporting to the Board

13. Outstanding Tickit tasks

14. Other business

15. Next meeting and suggested dates for future meetings

16. Closure Attachments: Agenda Item Number

Item

3 Minutes of the [date] ICC Meeting 8 List of outstanding policies 9 Breach and Complaints Registers etc. Etc

Notes: Other matters can be included or deleted when finalised and no longer needed, as required. Generally, no formal papers are required however can be provided if desired.


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ATTACHMENT 2 Internal Compliance Committee: Minutes Template (RFM letterhead template) RFM Internal Compliance Committee Meeting [Weekday, Date, Month, Year, Time] Held at: [place]

Present: ICC Members & invited persons

In Attendance: Compliance Office

1. Apologies: None

2. Confirmation of Agenda

3. Acceptance of minutes of the previous ICC meeting It was confirmed that the minutes of the ICC meeting held on [date, month, year] as circulated be approved.

4. Review arising from the minutes of the Internal Compliance Committee meeting held [date, month, year]

Item Number



A LW to circulate…… Outcome: To be circulated

LW Immediately

B LW to provide….. Outcome: Completed

LW Immediately

C Etc

[Text]…… Action item: [Text]

5. Heading (as per agenda)

[Text]………… Action item: [Text]

Etc

6. Next meeting

The next meeting is scheduled for [date, month, year]. OR The next meeting will be advised by the Compliance Officer.

7. Closure

The meeting closed at [time, am/pm].


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Action Items Item Number



A LW to circulate….. LW As soon as available

B LW to provide… LW Immediately

C Etc

Authorised as a true and correct record of the meeting. Signed ____________________________ [Name] Compliance Officer / /


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ATTACHMENT 3:

Compliance Committee Report to the Board Template: Use RFM Board paper template (RFM workgroup templates) Items included in the monthly Board report are:

AFS Licence Conditions: licence variation applications, negotiations with ASIC, changes to the licence, responsible managers, key persons etc.

Auditors: change of auditors, annual audits (scheme, company, compliance plan)

ASIC Lodgements: brief description of lodgements during the reporting period, negotiations with ASIC, scheme registrations

Internal Compliance Committee: include the ICC minutes following each ICC meeting if available, report any activities of the ICC, any significant matters raised by the ICC members

Risk Management: report any new risks identified and action taken to manage those risks, changes to RFM risk management plan, risk reviews, a report (Tickit) of all risks with a residual risk rating of High and Extreme

Complaints and Breaches: report any new breaches and complaint and include an updated Breach and Complaints Registers

Conflict of Interest and Related Party Transactions: report any new related party transactions and conflicts of interest and whether there are any actions in regards to the policy or conflict assessments underway, i.e. policy being reviewed etc. Include an updated Related Party Transaction Register or Conflict Of Interest Register, where relevant

Other items as relevant, i.e. changes to the schemes (eg. name changes),

company changes (eg. changes to company directors and registered details), FSC annual statement report, etc.