meso-6k_20201026.htm

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 Form 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934

For the month of October 2020

Commission File Number 001-37626

Mesoblast Limited

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Australia
(
Jurisdiction of incorporation or organization)

 

Silviu Itescu

Chief Executive Officer and Executive Director

Level 38

55 Collins Street

Melbourne 3000

Australia

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes No

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes No

 

 


INFORMATION CONTAINED ON THIS REPORT ON FORM 6-K

On October 26, 2020, Mesoblast Limited filed with the Australian Securities Exchange its Appendix 4G and Corporate Governance Statement, which is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

On October 26, 2020, Mesoblast Limited filed with the Australian Securities Exchange a Notice of Annual General Meeting, which is attached hereto as Exhibit 99.2, and is incorporated herein by reference.

 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized.

 

 

 

 

 

 

Mesoblast Limited

 

 

 

 

 

/s/ Charlie Harrison

 

 

 

 

 

 

 

Charlie Harrison

 

 

 

Company Secretary

 

 

 

Dated: October 28, 2020


INDEX TO EXHIBITS

 

Item

 

 

 

 

 

99.1

 

Corporate Governance Statement and Appendix 4G of Mesoblast Ltd, dated October 26, 2020.

99.2

 

Notice of Annual General Meeting of Mesoblast Ltd, dated October 26, 2020.

 

meso-ex991_8.htm

 

Appendix 4G

Exhibit 99.1

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

Rules 4.7.3 and 4.10.31

 

Appendix 4G

Key to Disclosures

Corporate Governance Council Principles and Recommendations

Introduced 01/07/14 Amended 02/11/15

 

Name of entity

Mesoblast Limited

 

 

 

ABN / ARBN

 

Financial year ended:

109 431 870

 

30 June 2020

Our corporate governance statement 2 for the above period above can be found at:3

These pages of our annual report:

This URL on our website:                 www.mesoblast.com/company/corporate-governance

The Corporate Governance Statement is accurate and up to date as at 26 October 2020 and has been approved by the board.

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

Date: 26 October 2020

Name of Director or Secretary authorising

lodgement: Charlie Harrison

 

 

 

1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX.

Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period.

Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.

2“Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

3 Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found. You can, if you wish, delete the option which is not applicable.

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 chapter 19 for defined terms

 

2 November 2015

Page 1

 


 

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

 

Corporate Governance Council recommendation

 

We have followed the recommendation in full for the whole of the period above. We have disclosed …

 

We have NOT followed the recommendation in full for the whole of the period above. We have disclosed … 4

 

PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

1.1

A listed entity should disclose:

(a)    the respective roles and responsibilities of its board and management; and

(b)    those matters expressly reserved to the board and those delegated to management.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

… and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management):

 

    at www.mesoblast.com/company/corporate-governance/role- and-composition-of-the-board

    an explanation why that is so in our Corporate Governance Statement OR

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

1.2

A listed entity should:

(a)    undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and

(b)    provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

1.3

A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

1.4

The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

 

 

 

 

 

 

4 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.

+ See chapter 19 for defined terms

 

2 November 2015

Page 2

 


 

 

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

1.5

A listed entity should:

(a)    have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;

(b)    disclose that policy or a summary of it; and

(c)    disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either:

(1)    the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or

(2)    if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.

… the fact that we have a diversity policy that complies with paragraph (a):

    in our Corporate Governance Statement OR

    at [insert location]

… and a copy of our diversity policy or a summary of it:

☒    at www.mesoblast.com/images/pdf/DiversityPolicy.pdf

… and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them:

    in our Corporate Governance Statement OR

    at [insert location]

… and the information referred to in paragraphs (c)(1) or (2):

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

1.6

A listed entity should:

(a)    have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and

(b)    disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

… the evaluation process referred to in paragraph (a):

    in our Corporate Governance Statement OR

    at [insert location]

… and the information referred to in paragraph (b):

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

1.7

A listed entity should:

(a)    have and disclose a process for periodically evaluating the performance of its senior executives; and

(b)    disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

… the evaluation process referred to in paragraph (a):

    in our Corporate Governance Statement OR

    at [insert location]

… and the information referred to in paragraph (b):

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

 

+ See chapter 19 for defined terms

 

2 November 2015

Page 3

 


 

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

2.1

The board of a listed entity should:

(a)    have a nomination committee which:

(1)    has at least three members, a majority of whom are independent directors; and

(2)    is chaired by an independent director, and disclose:

(3)    the charter of the committee;

(4)    the members of the committee; and

(5)    as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)    if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.

[If the entity complies with paragraph (a):]

… the fact that we have a nomination committee that complies with paragraphs (1) and (2):

    in our Corporate Governance Statement OR

    at [insert location]

… and a copy of the charter of the committee:

    at www.mesoblast.com/company/corporate-governance/board- committees-and-charters

… and the information referred to in paragraphs (4) and (5):

    in our Corporate Governance Statement OR

    at [insert location]

[If the entity complies with paragraph (b):]

… the fact that we do not have a nomination committee and the processes we employ to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively:

in our Corporate Governance Statement OR

at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

2.2

A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

… our board skills matrix:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

 

+ See chapter 19 for defined terms

 

2 November 2015

Page 4

 


 

 

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

2.3

A listed entity should disclose:

(a)   the names of the directors considered by the board to be independent directors;

(b)    if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and

(c)   the length of service of each director.

… the names of the directors considered by the board to be independent directors:

    in our Corporate Governance Statement OR

    at [insert location]

… and, where applicable, the information referred to in paragraph (b):

    in our Corporate Governance Statement OR

    at [insert location]

… and the length of service of each director:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

2.4

A majority of the board of a listed entity should be independent directors.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

2.5

The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

2.6

A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY

3.1

A listed entity should:

(a)    have a code of conduct for its directors, senior executives and employees; and

(b)    disclose that code or a summary of it.

… our code of conduct or a summary of it:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

 

+ See chapter 19 for defined terms

 

2 November 2015

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Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING

4.1

The board of a listed entity should:

(a)    have an audit committee which:

(1)    has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and

(2)    is chaired by an independent director, who is not the chair of the board,

and disclose:

(3)    the charter of the committee;

(4)    the relevant qualifications and experience of the members of the committee; and

(5)    in relation to each reporting period, the 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):]

… the fact that we have an audit committee that complies with paragraphs (1) and (2):

    in our Corporate Governance Statement OR

    at [insert location]

… and a copy of the charter of the committee:

    at www.mesoblast.com/company/corporate-governance/board- committees-and-charters

… and the information referred to in paragraphs (4) and (5):

    in our Corporate Governance Statement OR

    at [insert location]

[If the entity complies with paragraph (b):]

… the fact that we do not have an audit committee and the processes we employ that independently verify and safeguard the integrity of our corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so 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.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

 

+ See chapter 19 for defined terms

 

2 November 2015

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Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

4.3

A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

5.1

A listed entity should:

(a)    have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

(b)    disclose that policy or a summary of it.

… our continuous disclosure compliance policy or a summary of it:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS

6.1

A listed entity should provide information about itself and its governance to investors via its website.

… information about us and our governance on our website:

    at www.mesoblast.com/company/corporate-governance

    an explanation why that is so in our Corporate Governance Statement

6.2

A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

6.3

A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

… our policies and processes for facilitating and encouraging participation at meetings of security holders:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

6.4

A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

… the fact that we follow this recommendation:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

 

+ See chapter 19 for defined terms

 

2 November 2015

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Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

7.1

The board of a listed entity should:

(a)    have a committee or committees to oversee risk, each of which:

(1)    has at least three members, a majority of whom are independent directors; and

(2)    is chaired by an independent director, and disclose:

(3)    the charter of the committee;

(4)    the members of the committee; and

(5)    as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)    if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.

[If the entity complies with paragraph (a):]

… the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2):

    in our Corporate Governance Statement OR

    at [insert location]

… and a copy of the charter of the committee:

    at www.mesoblast.com/company/corporate-governance/board-committees-and-charters

… and the information referred to in paragraphs (4) and (5):

    in our Corporate Governance Statement OR

    at [insert location]

[If the entity complies with paragraph (b):]

… 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:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

7.2

The board or a committee of the board should:

(a)    review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and

(b)    disclose, in relation to each reporting period, whether such a review has taken place.

… the fact that board or a committee of the board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound:

    in our Corporate Governance Statement OR

    at [insert location]

… and that such a review has taken place in the reporting period covered by this Appendix 4G:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

 

+ See chapter 19 for defined terms

 

2 November 2015

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Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

7.3

A listed entity should disclose:

(a)    if it has an internal audit function, how the function is structured and what role it performs; or

(b)    if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.

[If the entity complies with paragraph (a):]

… how our internal audit function is structured and what role it performs:

    in our Corporate Governance Statement OR

    at [insert location]

[If the entity complies with paragraph (b):]

… the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

7.4

A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.

… whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY

 

+ See chapter 19 for defined terms

 

2 November 2015

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Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

 

8.1

The board of a listed entity should:

(a)    have a remuneration committee which:

(1)    has at least three members, a majority of whom are independent directors; and

(2)    is chaired by an independent director, and disclose:

(3)    the charter of the committee;

(4)    the members of the committee; and

(5)    as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)    if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

[If the entity complies with paragraph (a):]

… the fact that we have a remuneration committee that complies with paragraphs (1) and (2):

    in our Corporate Governance Statement OR

    at [insert location]

… and a copy of the charter of the committee:

    at www.mesoblast.com/company/corporate-governance/board- committees-and-charters

… and the information referred to in paragraphs (4) and (5):

    in our Corporate Governance Statement OR

    at [insert location]

[If the entity complies with paragraph (b):]

… the fact that we do not have a remuneration committee and the processes we employ for setting the level and composition of remuneration for directors and senior executives and

ensuring that such remuneration is appropriate and not excessive:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

8.2

A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.

… separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

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

8.3

A listed entity which has an equity-based remuneration scheme should:

(a)    have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b)    disclose that policy or a summary of it.

…our policy on this issue or a summary of it:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement OR

    we do not have an equity-based remuneration scheme and this recommendation is therefore not applicable OR

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

ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES

-

Alternative to Recommendation 1.1 for externally managed listed entities:

The responsible entity of an externally managed listed entity should disclose:

(a)    the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity;

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

… the information referred to in paragraphs (a) and (b):

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

-

Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities:

An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager.

… the terms governing our remuneration as manager of the entity:

    in our Corporate Governance Statement OR

    at [insert location]

    an explanation why that is so in our Corporate Governance Statement

 

 

 

 

+ See chapter 19 for defined terms

 

2 November 2015

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Corporate Governance Statement

 

Mesoblast Limited (the Company or Mesoblast) and its Board of Directors (the Board) are committed to implementing and achieving an effective corporate governance framework to ensure that the Company is managed effectively and in an honest and ethical way.

 

 

A description of the Company and its controlled entities’ (together, the Group) corporate governance practices are set out below. All of these practices, unless otherwise stated, were in practice for the entire year and are in compliance with the ASX Corporate Governance Council’s (Council) Corporate Governance Principles and Recommendations (the ASXCGPR), third edition. The Council released the fourth edition of the ASXCGPR in February 2019 which the Company will be required to measure its governance practices against in respect of the financial year ending 30 June 2021. In this statement, Mesoblast has reported against the third edition of the ASXCGPR. In certain places, the Company has additionally indicated that its current governance practices also comply with the fourth edition of the ASXCGPR.

The information in this statement is current as at 26 October 2020 and has been approved by the Board.

This statement includes cross references to the Company’s charters, policies and codes, relevant copies or summaries of which are available in the Corporate Governance section of the Company’s website, www.mesoblast.com. Further, this statement should be read in conjunction with the Directors’ Report, the Remuneration Report and the Financial Report for the financial year ended 30 June 2020 as these reports also contain information required to be included by the ASXCGPR. The Directors’ Report can be found at Part 1 on the Form 20-F contained within our Annual Report (principally Item 4.B and Item 5.A), the Remuneration Report can be found at Item 6 of the Form 20-F contained within the 2020 Annual Report, and the Financial Report can be found at Item 18 of Form 20-F contained within the 2020 Annual Report.

 

PRINCIPLE 1.

LAY SOLID FOUNDATIONS FOR

MANAGEMENT AND OVERSIGHT

 

ROLE OF THE BOARD

The Board of Directors is primarily responsible for setting the strategic direction and corporate governance of the Group, and for overseeing the management and operations of the Group. In particular, the principal roles and responsibilities of the Board are to:

facilitate accountability to the Group and its shareholders;

ensure timely reporting to shareholders;

provide strategic guidance to management including contributing to the development and review of the corporate strategy;

oversee management of the Group and ensure there are effective management processes in place;

appoint, if necessary remove, and monitor the performance of the Chief Executive;

review the performance of the Board, individual Directors and the committees of the Board;

monitor:

 

organizational performance and the achievement of the Group’s strategic goals and objectives;

 

financial performance including approval of the annual, half-year and quarterly financial reports and liaison with the Company’s auditors;

 

progress of major capital expenditures and other significant corporate projects including any acquisitions or divestments;

 

compliance with the Group’s corporate governance policies and procedures;

 

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progress in relation to the Group’s diversity objectives and compliance with its diversity policy;

review and approve business plans, the annual budget and financial plans including available resources and major capital raising or expenditure initiatives;

approve major corporate initiatives;

enhance and protect the reputation of the Group including through the entity’s statement of values and code of conduct, which is a responsibility of the Board of Directors that is expressly recognized in the ASXCGPR, fourth edition;

oversee the operation of the Group’s system for compliance and risk management; and

ensure appropriate resources are available to senior management.

The Board operates in accordance with the broad principles set out in its charter, which provides a framework for its effective operation. The charter specifically addresses the following:

role, authority and responsibilities of the Board;

Board committees;

composition of the Board and the election of the Chair;

Directors’ rights and duties;

responsibilities of and delegations to management;

performance of the Board; and

role of a Company Secretary.

A summary of the charter is available at www.mesoblast. com. This charter will be reviewed in the coming year to ensure alignment with the ASXCGPR, fourth edition.

BOARD COMMITTEES

The Board has delegated specific authority to two committees. These committees are the Nomination and Remuneration Committee and the Audit and Risk Committee.

The role and responsibilities of these committees are set out in each Board Committee Charter and summarized in Principle 2 and Principle 4 of this statement, respectively.

ROLE OF MANAGEMENT

Day to day management of the Group’s operations and the implementation of the corporate strategy and policy initiatives are delegated by the Board to the Chief Executive and the executive team.

Specific limits of authority delegated to the Chief Executive and senior executive team are outlined in a

formal delegation of authority policy, which has been approved by the Board.

DIRECTOR SELECTION AND APPOINTMENT

The Company conducts appropriate checks before it appoints a person or puts forward to shareholders a new candidate for election as a Director. These include checks as to the person’s character, experience, education, criminal record, bankruptcy history, probity and any other relevant matters.

The Company also provides shareholders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a Director in the notice of meeting provided to shareholders. This includes information relevant for shareholders to be able to assess the Director’s skills and competencies, industry experience, time commitments and other relevant information in their consideration of that election.

Formal letters of appointment are issued to all incoming new Directors setting out the Company’s expectations, their responsibilities and rights and the terms and conditions of their engagement.

COMPANY SECRETARIES

The Company Secretaries are accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company

Secretaries assist the Board in its effectiveness by monitoring that Board policies and procedures are followed and coordinating the timely completion and dispatch of the Board agenda and supporting papers. The Directors have direct access to the Company Secretaries and regularly communicate with them through email, by telephone and in in-person meetings.

DIVERSITY

The Group values diversity and recognizes the benefits it can bring to the organization’s ability to achieve its goals. Diversity can lead to a competitive advantage through broadening the talent pool for recruitment of high quality employees, by encouraging innovation and improving a corporation’s professionalism and reputation. Accordingly, the Group is committed to promoting diversity within the organization and has adopted a formal policy outlining the Group’s diversity objectives.

A copy of the diversity policy is available at www.mesoblast.com.

With respect to gender diversity, the Group has set the following objectives:

1)

aim to increase the number of women on the Board of Directors as vacancies arise and circumstances permit;

 

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2)

aim to increase the number of women who hold senior executive positions as vacancies arise and circumstances permit; and

3)

ensure the opportunity exists for equal gender participation in all levels of professional development programs.

The following table reports the Group’s progress towards achieving its gender diversity objectives for points one and two above. In regard to point three, the Group ensured that an equal opportunity existed for gender participation in all levels of professional development programs during the year. The Group intends to review these objectives and its diversity policy in the coming year, in line with the principles under the ASXCGPR 4th edition. For completeness, as at 30 June 2020 the Company had 102 employees, of which 56 (55%) were female.

 

Category

Number  of women  

as at 30 June 2020

Number  of women  

as at 30 June 2019

Increase/ (Decrease)

Board of Directors

1

1

Senior  executive positions*

4

4

 

*

A senior executive position is one held by an executive who reports directly to the Chief Executive.

The Board has delegated the responsibility for reviewing and reporting on diversity, specifically gender diversity, to the Nomination and Remuneration Committee.

BOARD PERFORMANCE EVALUATION

The performance of the Board, its committees, individual Directors and senior management are reviewed periodically. A copy of the Group’s performance evaluation process is available at www.mesoblast.com. The next evaluation of the Board, individual non-executives and the Board committees will be undertaken at the end of the calendar year. This review encompasses feedback on the Chair and individual non-executive Directors as well as consideration of Board succession planning, diversity, and the breadth and sufficiency of skills represented on the Board. The results of the review will be reported back to the Board, for the purpose of confirming that the Board continues to function in an appropriate manner.

The Board also carries out informal performance monitoring sessions at each in-person meeting of the Board (or their current virtual equivalents). In addition, Directors are encouraged to raise any issues or

concern regarding the performance of the Board, Board committees or individual Directors with the Chair, or if the concern relates to the Chair, with the Chair of the Audit and Risk Committee.

SENIOR EXECUTIVE PERFORMANCE EVALUATION

The process for assessing performance of the Chief Executive and the senior executive team is described in the Remuneration Report. A performance evaluation for senior executives, which accords with the process described in the Remuneration Report, was undertaken with respect to the 2020 financial year.

 

PRINCIPLE 2.

STRUCTURE THE BOARD TO ADD VALUE

 

NOMINATION AND REMUNERATION COMMITTEE

The Board has established a Nomination and Remuneration Committee to assist it in the discharge of its responsibilities, and in particular to ensure that appointments to the Board are subject to formal, rigorous and transparent procedures in order to create an environment where the Board can carry out effective and responsible decision making and oversight. The main responsibilities of the committee are to:

conduct reviews of the membership of the Board having regard to present and future needs of the Company and to make recommendations on Board composition, appointments and reappointments;

conduct reviews of and determine the independence of each Director;

propose candidates for Board vacancies;

oversee annual executive performance evaluations, including recommendations for long and short term incentive grants as well as pay reviews;

oversee Board succession, including the succession of the Chair, and review whether succession plans are in place to maintain an appropriately balanced mix of skills, experience and diversity on the Board;

manage the processes in relation to meeting Board diversity objectives;

oversee senior management succession plans; and

assess the effectiveness of the Board induction process.

The Nomination and Remuneration Committee operates in accordance with its charter which sets out its roles and responsibilities, composition, structure and membership requirements. A summary of the Nomination and Remuneration Committee charter is available at www.mesoblast.com.

 

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The following independent Directors are the members of the Nomination and Remuneration Committee:

 

Name 

Position held during the year

Donal O’Dwyer

Independent chair

William Burns

Independent member

Michael Spooner

Independent member

Shawn Tomasello

Independent member

 

The details of the meetings attended by each member of the Nomination and Remuneration Committee during the 2020 financial year are set out in Item 6.A of Form 20-F contained within our Annual Report.

BOARD SKILLS MATRIX

The Company has developed a skills matrix setting out the mix of skills and diversity that the Board currently has or is looking to achieve in its membership. The skills matrix helps to identify any gaps in the collective skills of the Board that can then be addressed through professional development initiatives for Directors and in Board succession planning.

The skills and experience the Board has, and continues to add to its membership, are in the areas of, but not limited to:

Industry experience: pharmaceutical/ biotechnology product development – substantial experience in the drug investigation, testing and development process;

Industry experience: pharmaceutical/biotechnology commercialization and regulatory – substantial experience in the drug commercialization process including clinical trials and path to regulatory and pricing approval;

Industry experience: pharmaceutical/biotechnology manufacturing and supply – substantial experience in the global manufacturing, quality control and supply of approved pharmaceutical products;

Executive management and leadership – substantial experience in managing and leading organizations at senior executive and board levels;

Global business/commercial experience – substantial experience in senior executive roles for businesses operating across multiple global locations;

Strategy – substantial experience in the development and implementation of strategic direction and plans to deliver investor returns over time;

Corporate financing, mergers and acquisitions – substantial experience in capital raisings, mergers and acquisitions of companies and complementary technologies;

Financial and risk management – expertise and experience in audit, financial accounting and

reporting, internal controls, financial disclosure and industry taxation;

Human resources – substantial experience in stakeholder management, oversight of remuneration, incentives, equity programs, benefits, employment contracts and workplace health and safety;

Corporate governance – substantial experience in public entity disclosure, management oversight and inquiry, listing rules and compliance; and

Medical/healthcare leadership – substantial leadership experience in healthcare organizations and/or integrated healthcare delivery.

Each of these skills is well represented on our Board.

INDEPENDENT DIRECTORS

With the exception of our Chief Executive, the Board is comprised of independent Directors, namely:

Mr William Burns;

Mr Donal O’Dwyer;

Dr Eric Rose;

Mr Michael Spooner;

Mr Joseph R. Swedish; and

Ms Shawn Cline Tomasello.

A Director is considered independent if he or she is a non-executive Director and is free of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect his or her capacity to bring an independent judgement to bear on issues before the Board. The Board considers the factors set out in the ASXCGPR, third edition and outlined below when assessing the independence of each non-executive Director, being whether the Director:

is, or has been, employed in an executive capacity by the Group and there has not been a period of at least three years between ceasing such employment and serving on the Board;

is, or has within the last three years been, a partner, director or senior employee of a provider of material professional services to the Group;

is, or has been within the last three years, in a material business relationship (eg, as a supplier or customer) with the Group, or is an officer of, or otherwise associated with, someone in such a relationship;

is a substantial security holder of the Group or an officer of, or otherwise associated with, a substantial security holder of the Group;

has a material contractual relationship with the Group other than as a Director;

 

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has close family ties with any person who falls within any of the categories described above; or

has been a Director of the Company for such a period that their independence may have been compromised.

In assessing director independence, the Board also considers whether the Director receives performance-based remuneration (including options or performance rights) from, or participates in an employee incentive scheme of, the entity, being an additional factor that must be taken into account in accordance with the ASXCGPR, fourth edition.

The Board at least annually assesses the independence of its non-executive Directors. To enable this assessment of independence, the Company maintains a conflicts of interest register, and the Directors must provide all information that may be relevant to the assessment.

As part of its annual assessment of independence for 2020, the Board gave specific consideration to:

the fact that our non-executive Directors have received options under our employee incentive scheme;

the independence of Mr Spooner, who performed the role of Executive Chair from August 2005 to November 2007, at which time he resigned but remained a Director, and also due to Mr Spooner having a tenure of 15 years and 9 months as at 30 June 2020 (with 12 years and 7 months as a non-executive Director); and

the independence of Mr O’Dwyer with a tenure on the Board of 15 years and 9 months as at 30 June 2020.

With respect to the grant of options which have previously been received by non-executive Directors, it is the Board’s view that these grants of options will not interfere with the Director’s capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the Group as a whole. It is noted that these options which have been granted to non-executive Directors, unlike other options granted to employees, are not subject to any performance or service conditions or hurdles.

With respect to Mr Spooner’s former role as Executive Chair and his continuation on the Board, the Board maintains the view that he remains an independent Director on the basis that the Group has significantly expanded its operations since he held an executive role more than ten years ago.

With respect to Mr Spooner and Mr O’Dwyer’s tenure on the Board, the Board considers each of these Directors to be independent Directors on the basis that each continues to bring valuable expertise, independent judgement and has not formed

associations with management or others that might compromise their ability to fulfil their role as an independent Director.

CHAIR

The Chair is responsible for leading the Board and for the efficient organization and conduct of the Board.

The role of the Chair more specifically is to ensure Directors are properly briefed in all matters relevant to their role and responsibilities, to facilitate Board discussions and to manage the Board’s relationship with the Chief Executive and executive team. In accepting the position, the Chair has acknowledged that it will require a significant time commitment and has confirmed that other positions held will not hinder his effective performance in the role of Chair. The Chair, Mr Joseph R. Swedish, is considered an independent Director.

TERM OF OFFICE

The Company’s constitution specifies that no Director, except the Chief Executive, may hold office for a period in excess of three years, or beyond the third Annual General Meeting following the Director’s election, whichever is the longer, without submitting himself or herself for re-election.

The term in office held by each Director in office as at 30 June 2020 is as follows:

 

Director

Term as director

Position held at  30 June 2020

Joseph Swedish

2 years

Independent Chair

William Burns

6 years  3 months

Independent  vice-Chair

Silviu Itescu

16 years

Executive Director

Donal O’Dwyer

15 years  

9 months

Independent Director

Michael Spooner

15 years  

9 months

Independent Director

Eric Rose

7 years  2 months

Independent Director

Shawn Tomasello

1 year 11 months

Independent Director

 

BOARD INDUCTION AND PROFESSIONAL DEVELOPMENT

All new Directors participate in an informal induction program which covers the operation of the Board and its committees, and an overview of the Group’s core programs, key strategy, financial and relevant operational documents. The induction also includes meetings with existing Directors and senior executives

 

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to ensure all relevant and material information is explained thoroughly. The induction provided to new Directors enables them to actively participate in Board decision-making as soon as possible.

The Board encourages Directors to identify opportunities for, and to participate in, continuing education. The Board actively assesses relevant conferences and presentations that are appropriate for them to attend, particularly in the field of regenerative medicine, to heighten their understanding of the Group’s core technologies and industry.

In addition, presentations from management and external advisors are included in the agenda for Board meetings throughout the year to assist with keeping the Directors updated and informed on key developments in laws and the regulatory environment.

 

PRINCIPLE 3.

ACT ETHICALLY AND RESPONSIBLY

 

CODE OF CONDUCT AND VALUES

As part of its commitment to recognizing the legitimate interests of stakeholders, the Group has established a code of conduct (Code) and a suite of policies and procedures to guide all Directors and employees in respect of ethical and compliant behaviour expected by the Group. In summary, the Code requires that at all times all Company personnel act with the utmost integrity, objectivity and in compliance with the law and Company policies. More specifically, the Code covers the following:

conflicts of interest;

confidentiality;

fair dealing;

 

protection of assets;

compliance with laws and regulations;

reporting violations of the code;

security trading; and

commitments to stakeholders.

A copy of the Code and the Company’s statement of values can be found at www.mesoblast.com.

OTHER POLICIES

Among its suite of policies and procedures, the Company has an Anti-Bribery and Anti-Corruption Policy and provides associated training. In addition, the Company has a Disclosure of Complaints and Concerns Policy which addresses, among other things, breaches under the Company’s Code, Anti-Bribery and Anti-Corruption Policy, or other Company policies. A copy of this policy can be found at www.mesoblast.com.

 

PRINCIPLE 4.

SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

 

AUDIT AND RISK COMMITTEE

The Board has established an Audit and Risk Committee to which it has delegated the responsibility for ensuring that an effective internal control framework exists within the Group. The main responsibilities of the Audit and Risk Committee with respect to financial reporting are to:

review and assess the annual financial report, the half-year financial report, the Company’s quarterly accounts and all other financial information published by the Company or released to the market;

recommend to the Board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit and assess performance;

consider the independence and competence of the external auditor on an ongoing basis;

review and approve the level of non-audit services provided by the external auditors and ensure it does not adversely impact on auditor independence;

review and monitor related party transactions;

oversee the effective operation of the risk management framework;

oversee and review the Company’s compliance with the Disclosure of Complaints and Concerns policy by Mesoblast personnel;

assist the Board in reviewing the effectiveness of the organization’s internal control environment covering:

 

effectiveness and efficiency of operations and business processes;

 

safeguarding of assets;

 

reliability of financial reporting and maintaining proper accounting records;

 

compliance with applicable laws and regulations; and

report to the Board on matters relevant to the committee’s role and responsibilities.

In fulfilling its responsibilities, the Audit and Risk Committee:

receives regular reports from management and the external auditors;

meets with the external auditors at least four times a year, or more frequently if necessary;

 

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reviews the processes which the Chief Executive and Chief Financial Officer have in place to support their certifications to the Board;

reviews any significant disagreements between the auditors and management, irrespective of whether they have been resolved; and

provides the external auditors with a clear line of direct communication at any time to either the Chair of the Audit and Risk Committee or the Chair of the Board. The Audit and Risk Committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.

The Audit and Risk Committee operates under a formal charter approved by the Board which sets out the committee’s role and responsibilities, composition, structure and membership requirements and the procedures for inviting non-committee members to attend meetings. A full copy of the Audit and Risk Committee charter can be found at www.mesoblast.com.

The following independent Directors are the members of the Audit and Risk Committee:

 

Name

Position held during the year

Michael Spooner

Independent chair

Donal O’Dwyer

Independent member

Joseph Swedish

Independent member

 

All of the Directors are financially literate and Michael Spooner has accounting qualifications.

Additionally, all the Directors have valuable and relevant industry experience having served in the healthcare industry in senior positions for a number of years. The details of the meetings attended by each member of the Audit and Risk Committee during the 2020 financial year are set out in Item 6.A of Form 20-F contained within our Annual Report.

CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICER DECLARATION

The integrity of the Company’s financial reporting depends upon the existence of a sound system of risk oversight and management and internal control.

Management accountability for this is enhanced by the assurances it is required to give to the Board.

The Chief Executive and the Chief Financial Officer provided assurance to the Board prior to release of the Company’s 2020 financial year financial statements that, in their opinion:

the financial records of the Company for the financial year have been properly maintained in accordance with the Corporations Act 2001 (Cth); and

the financial statements and notes for the relevant financial period comply with the accounting standards and give a true and fair view of the financial position and performance of the Group.

The opinions of the Chief Executive and the Chief Financial Officer were formed on the basis of a sound system of risk management and internal control which is operating effectively.

EXTERNAL AUDITOR

The Audit and Risk Committee’s policy is to appoint an external auditor who demonstrates quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs. PwC was appointed as the external auditor in November 2007.

It is PwC’s policy to rotate audit engagement partners on listed companies at least every five years. The current audit engagement partner was appointed on and from the financial year ended 30 June 2019.

An analysis of fees paid to the external auditors for the 2020 financial year is provided in note 18 to the Financial Report. There were no fees paid for non-audit services provided by the auditor. It is the policy of the external auditors to provide an annual declaration of their independence to the Audit and Risk Committee.

The external auditor will attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

 

PRINCIPLE 5.

MAKE TIMELY AND BALANCED DISCLOSURE

 

CONTINUOUS DISCLOSURE

The Company has a policy and procedures in place to ensure that it identifies and discloses any information concerning the Group that a reasonable person would expect to have a material effect on the price of the Company’s securities (price sensitive information) in accordance with the continuous disclosure requirements under ASX Listing Rule 3.1. The Company’s policy in relation to market disclosure and shareholder communications can be found at www.mesoblast.com.

The Company has established an internal review committee which reviews all market announcements (other than routine administrative and financial announcements) to ensure they are factual, comply with legal obligations, do not omit material information,

 

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provide a balanced view, and are presented in a clear and concise way.

The Board receives copies of all material market announcements either prior to or promptly after they have been made.

All price sensitive information disclosed to the ASX is posted on the Mesoblast website as soon as possible after it is disclosed to the ASX.

Where the Company holds a substantive investor or analyst presentation, including for our quarterly financial results, or one which contains material new information, the material used in the presentation is released to the ASX and posted on the Mesoblast website.  

 

PRINCIPLE 6.

RESPECT THE RIGHTS OF SECURITY HOLDERS

 

COMPANY WEBSITE

The Company provides information about itself and its governance on its website at www.mesoblast.com.

INVESTOR RELATIONS

Mesoblast’s investor relations program involves scheduled and ad hoc interactions with institutional investors, private investors, sell-side and buy-side analysts to facilitate understanding of the Group’s business, corporate strategy, governance, financial and operational performance and prospects.

Further, shareholders can contact us at any time through the Group’s Investor Relations team. The contact details are available on www.mesoblast.com. The Board receives regular reports from our Chief Executive, Chief Financial Officer and our Global Head of Corporate Communications regarding feedback from shareholders and analysts. This ensures Directors are aware of concerns being raised giving them a good understanding of current market and shareholder views.

Where possible, the Company arranges for advance notification of significant group briefings (including, but not limited to, financial results announcements) and makes them widely accessible. Webcasts of analysts’ calls are generally available on our website at www. mesoblast.com.

SHAREHOLDER MEETINGS

The Board encourages full participation by shareholders at the Annual General Meeting to ensure a high level of Director accountability to shareholders and to enhance shareholders’ identification with the Group’s strategy and goals. The shareholders are requested to vote on matters such as the adoption of the Remuneration Report, the granting of securities to

Directors and changes to the Constitution. Importantly, Mesoblast facilitates and encourages shareholder participation at the Annual General Meeting by providing a question forum at the meeting to address individual shareholder queries. The Company determined all resolutions at its 2019 Annual General Meeting by poll.

ELECTRONIC COMMUNICATIONS

Mesoblast gives shareholders the option to receive communications from, and send communications to, Mesoblast and its security registry electronically.

 

PRINCIPLE 7.

RECOGNIZE AND MANAGE RISK

 

AUDIT AND RISK COMMITTEE

The Board is responsible for satisfying itself annually, or more frequently as required, that management has developed and implemented a sound system of risk management and internal control. Detailed work on this task is delegated to the Audit and Risk Committee and reviewed by the full Board. The Audit and Risk Committee is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems. They monitor the Group’s risk management by overseeing management’s actions in the evaluation, management, monitoring and reporting of material operational, financial, compliance and strategic risks. In providing this oversight of the Company’s risk management systems and practices, the committee:

reviews the framework and methodology for risk identification, the degree of risk the Company is willing to accept, the management of risk and the processes for auditing and evaluating the Group’s risk management system;

reviews Group-wide objectives in the context of the above-mentioned categories of corporate risk;

reviews and, where necessary, approves guidelines and policies governing the identification, assessment and management of the Group’s exposure to risk;

reviews and approves the delegations of financial authorities and addresses any need to update these authorities on an annual basis; and

reviews compliance with agreed policies.

The committee recommends any actions it deems appropriate to the Board for its consideration. Details of the committee’s composition, structure and membership can be found under Principle 4 of this statement.

 

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RISK MANAGEMENT FRAMEWORK

The Group’s internal risk management group, headed by the Chief Financial Officer, is responsible for designing, implementing, monitoring and reporting on the Group’s management of material business risks, and the effectiveness of the Group’s risk management and internal control system. The risk management group reports into the Audit and Risk Committee.

Risk and the risk management framework are reviewed at least annually by the Audit and Risk Committee.

Further detail on risks can be found in the ‘Risk Factors’ section (Item 3.D) on the Form 20-F contained within our Annual Report.

INTERNAL AUDIT FUNCTION

In light of the size and nature of the Company’s operations and activities, the Company has not established a formal separate internal audit function. The Company does have, however, a Quality Management Department with appropriate controls in place for monitoring and compliance of clinical and non-clinical studies as well as manufacturing operations. The company also has a compliance function which establishes the controls for and monitors compliance with the Company’s Code of Conduct, policies, and applicable healthcare-related laws and regulations.

As part of our Nasdaq listing, we are required to comply with rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

To meet these requirements the Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s management conducted an assessment of the effectiveness of our internal control  

over financial reporting as of 30 June 2020 and has concluded that its internal control over Financial reporting was effective as of 30 June 2020.

ECONOMIC, ENVIRONMENTAL AND SOCIAL SUSTAINABILITY

The Group monitors its exposure to risks, including economic, environmental and social sustainability risks.

Mesoblast has undertaken an analysis to identify economic, environmental and social sustainability issues which are material from the perspective of the Group and our stakeholders. An analysis was undertaken with the help of an external consultant and drawing on the Sustainability Accounting Standards Board’s (SASB) Biotechnology Accounting Standard, and the Global Reporting Initiative’s (GRI) G4

Guidelines for Sustainability Reporting. A range of potential issues was identified from these guidelines: Mesoblast’s internal and external communications; the disclosures of other companies in the sector; the media; and on-line research. These issues were prioritized based their impact on the Group’s business and key stakeholders.

Many of the issues are associated directly or indirectly with risks reported in the ‘Risk Factors’ section (Item 3.D) on the Form 20-F contained within our Annual Report. At this stage the Board does not consider that the Group has any material exposure to any environmental or social sustainability risk which is not disclosed through the ‘Risk Factors’ section.

 

PRINCIPLE 8.

REMUNERATE FAIRLY AND RESPONSIBLY

 

NOMINATION AND REMUNERATION COMMITTEE

As mentioned above in Principle 2, the Board has established a combined Nomination and Remuneration Committee. The Nomination and Remuneration Committee advises the Board on remuneration and incentive policies and practices generally and makes specific recommendations on remuneration packages and other terms of employment for executive Directors, other senior executives and non-executive Directors. Committee members receive regular briefings from an external remuneration expert on recent developments on remuneration and related matters. Details of the committee’s role and responsibilities, composition, structure and membership can be found under Principle 2 of this statement.

NON-EXECUTIVE DIRECTOR REMUNERATION POLICY

Non-executive Director remuneration consists of Director fees. In addition, certain non-executive Directors were granted options following authorization from shareholders at our 2018 and 2019 Annual General Meetings. These options were not subject to any performance or service hurdles or conditions. Further, non-executive Director remuneration does not include any performance-based remuneration or bonuses. The issue of options to the non-executive Directors is not intended to be an annual or regular event.

Further information on non-executive Directors’ remuneration for the 2020 financial year, including principles used to determine remuneration, is set out in the Remuneration Report.

EXECUTIVE DIRECTOR AND SENIOR EXECUTIVES’ REMUNERATION POLICY

Executive remuneration consists of fixed pay, performance-based remuneration and equity-based

 

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remuneration, and is closely aligned to the success of the Group. Further information on Executive Director and senior executives’ remuneration for the 2020 financial year, including principles used to determine remuneration, is set out in the Remuneration Report.

SHARE TRADING POLICY

The Company has developed a share trading policy which governs the trading of the Company’s shares by Directors, employees and key consultants of the Company – who collectively are known as ‘Mesoblast Personnel’. Mesoblast Personnel are not permitted to trade in the Company’s securities during the period starting a week prior to the last business day of the month prior to the release of our quarterly financial results, and ending one day after the release of those financial results. The Board may also impose blackout

periods during other periods as advised by the Board from time to time.

In addition, no person is able to trade in the Company’s shares whilst in the possession of material inside information, and nor are they able to influence any other person with regard to trading in the Company’s shares.

The share trading policy prohibits Mesoblast Personnel from trading in the Company’s derivatives. This prohibition is in place to prevent such personnel from limiting their economic exposure to risk arising out of an element of remuneration which has not vested, or which has vested but remains the subject of a disposal restriction.

A copy of the Company’s share trading policy can be found at www.mesoblast.com.

 

 

 

10

Mesoblast Limited Corporate Governance Statement 2020

 

meso-ex992_9.htm

 

 

Exhibit 99.2

 

 

 

 

 

 

 

Mesoblast Limited

ABN 68 109 431 870

 

Notice of Annual General Meeting

and

Explanatory Memorandum

 

 

For the Annual General Meeting of the Company to be held at:

 

Time:

11:00am (Melbourne time)

 

 

Date:

24 November 2020

 

 

Place:

Virtually through https://agmlive.link/MSB20

 

 

 

 

 

 

THIS IS AN IMPORTANT DOCUMENT

 

If you are in doubt as to what to do with this document, please immediately see your legal adviser, financial adviser or stockbroker.

 

In light of potential restrictions on public gatherings arising from the COVID-19 pandemic that may be in place at the date of the Annual General Meeting, the Annual General Meeting will be webcast live online through https://agmlive.link/MSB20. Shareholders are encouraged to attend, vote and ask questions online using their computer or mobile device by following the instructions outlined in this Notice of Annual General Meeting

 

 

 


 

 

 

Notice of Annual General Meeting

Notice is given that the Annual General Meeting (AGM) of Mesoblast Limited (ABN 68 109 431 870) (the Company or Mesoblast) will be held virtually at 11.00am (Melbourne time) on 24 November 2020 for the purpose of considering and, if thought fit, passing the resolutions set out below (Notice).

Virtual AGM

In light of the current circumstances resulting from the COVID-19 pandemic and the potential for continued restrictions on physical gatherings and to ensure the safety of shareholders and other participants, our AGM will be held ‘virtually’, with shareholders able to participate via an online platform using their computer or mobile device. Shareholders and proxyholders will be able to ask questions and vote in real time, subject to the connectivity of their devices.

Accessing the AGM online

Shareholders who wish to attend the AGM will be able to participate in the AGM through https://agmlive.link/MSB20.

We recommend logging onto our online platform at least 15 minutes prior to the scheduled start time for the AGM by entering https://agmlive.link/MSB20 into a web browser on your computer or online device.

Shareholders will need their Shareholder Reference Number or Holder Identification Number, which is printed at the top of their personalised proxy appointment form .

Proxyholders will need their proxy code which Link Market Services will provide via email no later than 24 hours prior to the AGM.

Further information on how to participate virtually is set out in this Notice and the Virtual Meeting Online Guide at http://investorsmedia.mesoblast.com/events/event-details/2020-annual-general-meeting.

Voting

Shareholders may vote by either:

using the online platform; or

appointing a proxy.

Detailed instructions on the above options are set out in this Notice in the section titled ‘Information on voting, proxies, corporate representatives and attorneys’.

Asking questions

A discussion will be held on all items to be considered at the AGM.

Shareholders will have a reasonable opportunity to ask questions during the AGM via the virtual AGM platform, including an opportunity to ask questions of the Company’s external auditor.

To ensure that as many shareholders as possible have the opportunity to speak, shareholders are requested to observe the following:

all shareholder questions should be stated clearly and should be relevant to the business of the AGM, including matters arising from the Annual Report, Directors’ Report (including the Remuneration Report) and Auditor’s Report, and general questions about the performance, business or management of the Company;

if a shareholder has more than one question on an item, all questions should be asked at the one time; and

shareholders should not ask questions at the AGM regarding personal matters or those that are commercial in confidence.

Shareholders who prefer to register questions in advance of the AGM are invited to do so. A Shareholder Question Form has been sent to shareholders and is also available on the Company’s website: http://investorsmedia. mesoblast.com/events/event-details/2020-annual-general-meeting.

We will attempt to address the more frequently asked questions in the Chairman and Chief Executive’s presentations at the AGM. Written questions must be received by the Company or Link Market Services Limited by 5.00pm on 17 November 2020, and can be submitted online, by mail, by fax or in person (as set out on the top of the Shareholder Question Form).

 

Mesoblast Limited – Notice of Annual General Meeting 2020

1

 


 

 

 

ITEMS OF BUSINESS

Please note that additional information concerning the proposed resolutions is contained in the Explanatory Memorandum that accompanies and forms part of this Notice.

1.

Receipt and Consideration of Financial Statements and Reports

To receive and consider the Financial Statements of the Company and the reports of the Directors and Auditor for the year ended 30 June 2020, as set out in the Company’s 2020 Annual Report.

2.

Adoption of the Remuneration Report

To consider and, if thought fit, pass the following resolution:

“That the Remuneration Report (which forms part of the Company’s 2020 Annual Report) for the financial year ended 30 June 2020 be adopted.”

The vote on this item is advisory only and does not bind the directors of the Company (Directors) or the Company. Voting exclusions apply to this item 2 - please see the Voting Exclusions on page 4.

3.

Re-election of Mr Donal O’Dwyer as a Director

To consider and, if thought fit, pass the following resolution:

“That Donal O’Dwyer, a Director retiring from office in accordance with clause 64.1 of the Company’s constitution, being eligible, is re elected as a Director of the Company.”

4.

Approval of Proposed Issue of Options to Chief Executive, Dr Silviu Itescu, in Connection with his Remuneration for the 2020/2021 Financial Year

To consider and, if thought fit, pass the following resolution:

“That the Company hereby approves, for the purposes of Listing Rule 10.14 and for all other purposes:

 

(i)

the grant to Dr Silviu Itescu (being the Chief Executive and Managing Director of the Company as at the date this resolution is passed) of 1,200,000 options, which form part of the long-term incentive component of Dr Itescu’s remuneration for the 2020/2021 financial year, under and in accordance with the Company’s Employee Share Option Plan and on the basis described in the Explanatory Memorandum accompanying the Notice of this Meeting; and

 

(ii)

any issue of fully paid ordinary shares in the Company to Dr Silviu Itescu upon the exercise of any such options.”

Voting exclusions apply to this item 4 – please see the Voting Exclusions on page 4.

5.

Ratification of Issue of Shares to Existing and New Institutional Investors

To consider and, if thought fit, pass the following resolution:

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, shareholders approve and ratify the issue of shares by the Company to existing and new Australian and global institutional investors on the terms and conditions as more fully described in the Explanatory Memorandum accompanying the Notice of this Meeting.”

Voting exclusions apply to this item 5 – please see the Voting Exclusions on pages 4 and 5.

 

 

 

2

Mesoblast Limited – Notice of Annual General Meeting 2020

 


ITEMS OF BUSINESS

 

 

 

 

Further information

For detailed information on the above Agenda items, please refer to the Explanatory Memorandum on pages 6-13.

By order of the Board:

 

 

/s/ Charlie Harrison and Niva Sivakumar        

 

Charlie Harrison and Niva Sivakumar

Joint Company Secretaries

 

26 October 2020

 

 

Mesoblast Limited – Notice of Annual General Meeting 2020

3

 


 

 

 

Voting Exclusions

Voting Exclusion for Item 2 – Adoption of the Remuneration Report

The Company will disregard any votes cast on the resolution proposed in item 2:

by or on behalf of any Key Management Personnel (KMP) member whose remuneration details are included in the Remuneration Report, or any of their closely related parties, regardless of the capacity in which the votes are cast; or

by any person who is a KMP member as at the time item 2 is voted on at the AGM, or any of their closely related parties, as a proxy,

unless the votes are cast as a proxy for a person who is entitled to vote on item 2:

in accordance with a direction in the proxy appointment; or

by the Chair of the AGM in accordance with an express authorisation in the proxy appointment to cast the votes even if item 2 is connected directly or indirectly with the remuneration of a KMP member.

Voting Exclusion for Item 4 – Approval of Proposed Issue of Options to Chief Executive, Dr Silviu Itescu, in Connection with his Remuneration for the 2020/2021 Financial Year

The Company will disregard any votes cast in favour of the resolution proposed in item 4:

by a Director who is eligible to participate in the Company’s Employee Share Option Plan (or their respective associates); and

by any person who is a KMP as at the time item 4 is voted on at the AGM (or any respective closely related party).

However, the Company need not disregard a vote on the resolution proposed in item 4 if it is cast as proxy for a person who is entitled to vote:

by a Director or any associate of the Director, in accordance with the directions on the proxy form;

by the Chair of the AGM in accordance with the directions on the proxy form to vote as the proxy decides; or

by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:

 

the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and

 

the holder votes on the item in accordance with directions given by the beneficiary to the holder to vote in that way.

In addition, a vote must not be cast on item 4 by a member of the KMP of the Company, or a closely related party of a KMP, acting as proxy for a person entitled to vote, if their appointment does not specify the way the proxy is to vote on item 4. This restriction on voting undirected proxies does not apply to the Chair of the AGM acting as a proxy for a person entitled to vote on item 4 because the Company’s proxy appointment expressly authorises the Chair of the AGM to exercise undirected proxies.

Voting Exclusion for Item 5 – Ratification of Issue of Shares to Existing and New Institutional Investors

The Company will disregard any votes cast in favour of the resolution proposed in item 5 by or on behalf of:

a person who participated in the issue; or

an associate of that person (or those persons).

 

 

4

Mesoblast Limited – Notice of Annual General Meeting 2020

 


VOTING EXCLUSIONS

 

 

 

 

 However, the Company need not disregard a vote if:

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form;

it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides; or

it is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:

 

the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and

 

the holder votes on the item in accordance with directions given by the beneficiary to the holder to vote in that way.

Defined terms used in these voting exclusions

For the purposes of these voting exclusions:

The KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the Mesoblast consolidated group, either directly or indirectly. This includes all Directors (Executive and Non Executive). The KMP for the Mesoblast consolidated group during the year ended 30 June 2020 are listed in a section titled ‘Key Management Personnel’ in Item 6.A of the Company’s Form 20-F for the year ended 30 June 2020 (which is contained within the Company’s Annual Report for the year ended 30 June 2020).

A closely related party of a KMP member means:

 

a spouse or child of the member; or

 

a child of the member’s spouse; or

 

a dependant of the member or of the member’s spouse; or

 

anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealings with the Mesoblast consolidated group; or

 

a company the member controls.

The Company will also apply these voting exclusions to persons appointed as attorney by a shareholder to attend and vote at the AGM under a power of attorney, as if they were appointed as a proxy.

 

Mesoblast Limited – Notice of Annual General Meeting 2020

5

 


 

 

Explanatory Memorandum relating to the 2020 Notice of Annual General Meeting

This Explanatory Memorandum accompanies and forms part of the Notice of AGM.

 

ITEMS OF BUSINESS

Item 1 – Receipt and Consideration of Financial Statements and Reports

The laws in Australia require the Company’s financial statements and reports for the last financial year just ended to be presented to the Annual General Meeting. This item does not require a formal resolution to be put at the AGM.

Rather, this agenda item is intended to provide shareholders with the opportunity to raise questions on the financial statements and reports contained in the Company’s 2020 Annual Report, and on the performance of the Company generally.

Shareholders should note that the financial statements and reports will be received in the form presented. It is not the purpose of the meeting for the financial statements and reports to be accepted, rejected or modified in any way. There is no requirement either in the Corporations Act 2001 (Cth) (Corporations Act) or in the constitution of the Company for shareholders to approve the financial report, the Directors’ report or the Auditor’s report.

Item 2 – Adoption of the Remuneration Report

Under the Corporations Act, the Company is required to include in the Directors’ Report a detailed Remuneration Report setting out certain prescribed information relating to Directors’ and Executives’ remuneration and submit this for adoption by resolution of shareholders at the AGM.

The Remuneration Report is set out on pages 94 to 120 of the Company’s 2020 Annual Report. A copy of the 2020 Annual Report can be found on the Company’s website at http://investorsmedia.mesoblast.com/events/event-details/2020-annual-general-meeting or by contacting the Company’s share registry, Link Market Services.

The Remuneration Report includes:

an explanation of the Company’s remuneration strategy and guiding principles;

an explanation of the Company’s policies in relation to the nature and amount of the remuneration of the KMP;

a description of the relationship between such policies and the Company’s performance;

if an element of remuneration is performance based, an explanation why the performance conditions were chosen and how performance is measured against those conditions; and

remuneration details for the KMP.

During this item, there will be an opportunity for shareholders at the meeting to comment on and ask questions about the Remuneration Report and shareholders are asked to adopt the Remuneration Report.

The vote on the resolution in this item is advisory only and will not bind the Directors or the Company. The Board will take the outcome of the vote into consideration when reviewing remuneration practices and policies of the Company.

Recommendation

Noting that each Director has a personal interest in their own remuneration from the Company (as described in the Remuneration Report), and that each Director (or any closely related party of a Director) is excluded from voting their shares on item 2 (as described in the ‘Voting Exclusions’ section above), the Directors unanimously recommend that shareholders vote in favour of item 2 to adopt the Remuneration Report.

 

 

6

Mesoblast Limited – Notice of Annual General Meeting 2020

 


EXPLANATORY MEMORANDUM

 

 

 

Item 3 – Re-election of Mr Donal O’Dwyer as a Director

Mr O’Dwyer has served on our board of directors since 2004. He has over 35 years of experience as a senior executive and director in the global cardiovascular and medical devices industries. From 1996 to 2003, Mr O’Dwyer worked for Cordis Cardiology, the cardiology division of Johnson & Johnson’s Cordis Corporation, initially as its president (Europe) and from 2000 as its worldwide president. Prior to joining Cordis, Mr O’Dwyer worked with Baxter Healthcare, rising from plant manager in Ireland to president of the Cardiovascular Group, Europe, now Edwards Lifesciences. Mr O’Dwyer is a qualified civil engineer with an MBA.

He is on the board of directors of a number of life sciences companies including Fisher & Paykel Healthcare Ltd and NIB Holdings Ltd, and he will be retiring after 15 years service from the board of Cochlear Limited in October this year. With his experience as a senior executive and a director, as well as his extensive experience in the cardiovascular and medical devices industries, Mr O’Dwyer provides business, science, engineering and management expertise.

The Board has determined that Mr Donal O’Dwyer is an independent Director on the basis that he continues to bring valuable expertise, independent judgement and has not formed associations with management or others that might compromise his ability to fulfil his role as an independent Director. With this near-term period being pivotal for the Company with a number of upcoming milestones, Board stability is a priority. With this in mind, the Board considers Mr O’Dwyer’s continuation on the Board, and as Chair of the Nomination and Remuneration Committee, appropriate. Orderly renewal and succession planning remains a focus for the Board.

Mr Donal O’Dwyer’s current directorships of other listed companies

Non-executive Director, Fisher & Paykel Healthcare (since 2013)

Non-executive Director, NIB Holdings Ltd (since 2016)

Recommendation

The Directors (excluding Mr O’Dwyer) recommend that shareholders vote in favour of the re-election of Mr O’Dwyer.

Item 4 - Approval of Proposed Issue of Options to Chief Executive, Dr Silviu Itescu, in Connection with his Remuneration for the 2020/2021 Financial Year

As detailed in the Remuneration Report (set out on pages 94 to 120 of the Company’s 2020 Annual Report), the Board implemented a number of changes to its executive remuneration framework in the FY20 year in response to feedback received from proxy advisors and investors. The key changes relevant to this resolution were:

decreasing the amount of annual cash that the Chief Executive could earn through halving the Chief Executive’s short-term incentive opportunity to 50% of fixed remuneration (down from 100%);

decreasing the weighting of the Chief Executive’s fixed remuneration and increasing the weight of pay contingent on performance via the introduction of long term incentives (LTI), which consists of an option grant subject to milestone performance conditions.

These changes bring the CEO’s remuneration into better alignment with biotechnology peers in key markets for biotechnology personnel, which have a large proportion of remuneration in LTI, strongly aligning CEO outcomes to those of shareholders over a period of three years. This is considered critical at this pivotal point in Mesoblast’s journey to commercialisation.

Therefore, shareholders are asked to approve the issue of 1,200,000 milestone-based options (LTI Options) to Dr Silviu Itescu, Chief Executive and Managing Director of the Company, under the Company’s Employee Share Option Plan, which constitute the LTI component of Dr Itescu’s remuneration for the 2020/2021 financial year.

LTI Options

The LTI component of Dr Itescu’s remuneration will be in the form of options over fully paid ordinary shares in our Company, with each grant vesting on the achievement of specified milestones determined by the Board, as well as minimum holding periods from grant.

 

Mesoblast Limited – Notice of Annual General Meeting 2020

7

 


EXPLANATORY MEMORANDUM

 

 

 

Vesting for the proposed issue of options will be contingent on achievement of the following milestones, being:

LTI Clinical/Commercialisation KPIs – 50% (600,000 options): milestones related to clinical and commercialization progress across the Company’s lead programs. Given the number of key near-term events (including Phase 3 trial readouts in chronic heart failure and chronic low back pain, anticipated completion of the ongoing trial in moderate/severe acute respiratory distress syndrome (ARDS) due to COVID-19, and a Type A meeting with the FDA relating to the Company’s pediatric aGVHD program), the Board intends to maintain some discretion around these milestones so they can best reflect the Company’s development and commercialization priorities following these events.

LTI Financial/Business KPIs – 50% (600,000 options) – completion of a significant licensing/collaboration agreement to build shareholder value and other confidential financing objectives.

Due to their commercially sensitive nature, the Company intends to provide further details related to the above performance metrics in the annual report following the achievement of the relevant milestones. It is noted that the KPIs may be deemed by the Board to have been only partially met, in which case not all of the grant amount may vest. For instance, for KPIs contingent on completion of trials, the proportion that will vest will vary depending on whether the trial finishes on time, on budget and with the expected number of participants.

The options are also subject to minimum holding periods, whereby they are eligible for vesting in three equal tranches subject to the vesting of the above milestones, on the first, second and third anniversary of the grant date. Therefore, if a milestone is achieved early, the vesting will be spread and deferred over three years from grant date.

Dr Itescu will only realise value from the options in the event that the milestones are achieved, and the share price of the company exceeds the exercise price (set based on the share price when the Board approved the grant of the options).

The options will be issued to Dr Itescu in accordance with the Company’s Employee Share Option Plan which was last approved by the Company’s shareholders at the 2019 AGM. Other than with respect to vesting conditions for these options set out above, the LTI Options issued to Dr Itescu will have terms and conditions attaching to the Company’s Employee Share Option Plan which are described in this Explanatory Memorandum at pages 10 to 12.

Recommendation

The Directors (with Dr Itescu abstaining) recommend that shareholders vote in favour of item 4.

Information required by the ASX Listing Rules for item 4

The Company seeks shareholder approval to issue options to Dr Silviu Itescu for the purposes of ASX Listing Rule 10.14 which provides that an entity must not permit any Director to acquire securities under an employee incentive scheme without the prior approval of shareholders.

ASX Listing Rule 10.15 requires that the meeting documents concerning a proposed resolution to approve an issue of securities, in accordance with ASX Listing Rule 10.14, must include the following information:

 

 

 

The name and category which the person falls within in Listing Rule 10.14.1 – 10.14.3 and why

Dr Silviu Itescu is the Chief Executive and Managing Director of the Company.

 

 

 

 

The number and class of securities proposed to be issued to the person

The total number of options that may be issued to Dr Itescu is 1,200,000 milestone-based options.

 

 

 

 

If the person is a director, the details (including the amount) of the director’s current total remuneration package

Dr Itescu’s current total remuneration package consists of A$1,010,000 fixed remuneration, short term incentive payment of up to 50% of fixed remuneration (ie, A$505,000), and long term incentive consisting of 1,200,000 milestone-based options, amounting to a total value of approximately A$2,525,000.

 

 

 

8

Mesoblast Limited – Notice of Annual General Meeting 2020

 


EXPLANATORY MEMORANDUM

 

 

 

 

 

 

The number of securities that have previously been issued to the person under the scheme and the average acquisition price (if any) paid by the person for those securities

Dr Itescu has been previously issued 1,885,334 options under the Company’s Employee Share Option Plan. The exercise price for these options is A$1.47.

 

 

 

 

If the securities are not fully paid ordinary shares, a summary of the material terms of the securities, an explanation of why that type of security is being used and the value attributed to that security and its basis

The LTI Options issued to Dr Itescu will have terms and conditions attaching to the Company’s Employee Share Option Plan which are described in this Explanatory Memorandum at pages 10 to 12.

 

Options have been selected as the instrument for the LTI because they conserve cash, align with shareholder interests, and focus executives on ensuring strategy, risk management, and execution optimizes shareholder value.

 

The value attributed to each option is calculated using the Black Scholes formula, based on the 5-day VWAP leading up to the date of Board approval of the options.

 

 

 

 

The date or dates on or by which the Company will issue the securities to the person under the scheme which must not be later than 3 years after the date of this meeting

If item 4 is approved by shareholders, the corresponding options will be issued no later than 12 months after the meeting.

 

 

 

 

The price at which the Company will issue the securities to the person under the scheme

A$3.41

 

 

 

 

A summary of the material terms of the scheme

See below

 

 

 

 

No loans

No loans are proposed in connection with the proposed issue of Options.

 

 

 

 

Additional disclosures

If item 4 is passed, the Company will proceed with the issue of options noted above to Dr Itescu.

 

 

 

 

 

If item 4 is not passed, the Company will not be able to proceed with the issue of options noted above to Dr Itescu and the Company will consider alternative means of providing long term incentives to Dr Itescu.

 

 

 

 

 

Details of any securities issued under the scheme will be published by the Company in its annual report relating to the relevant period in which they are issued, along with a statement that approval for the issue was obtained under Listing Rule 10.14.

 

 

 

 

 

Any additional persons covered by Listing Rule 10.14 who become entitled to participate in an issue of securities under the scheme after this resolution is approved by shareholders and who are not named in this Notice of AGM will not participate until shareholder approval is obtained under Listing Rule 10.14.

 

 

 

Mesoblast Limited – Notice of Annual General Meeting 2020

9

 


EXPLANATORY MEMORANDUM

 

 

 

 

Summary of the terms of the Employee Share Option Plan

 

 

 

 

Maximum number of shares able to be issued

In broad terms, the maximum number of shares that may be issued (including shares issued on the exercise of options) to persons in Australia during any three-year period may not exceed 5% of the total number of shares on issue. There are certain exclusions from this limit, including shares issued under a formal disclosure document (such as a prospectus) and shares issued to certain exempt classes of persons provided for in the Corporations Act.

 

 

 

In addition, there is a maximum of 10,000,000 shares over which US Incentive stock options may be issued to individuals who are employed by the Company or another member of the Group that qualifies as a ‘related corporation’, as defined in US Treasury Regulations section 1.421-1(i)(2).

 

 

 

 

Ranking of shares issued under the Employee Share Option Plan

Shares issued on the exercise of the options will rank equally in all respects with other shares from the date of issue, subject to the satisfaction of any applicable disposal restrictions.

 

 

 

 

Participation on new issues of shares

Option holders cannot participate in new issues of shares to existing shareholders without exercising the option within the exercise period, and becoming a shareholder by the relevant record date.

 

 

 

 

Vesting conditions, expiry dates, exercise price and share acquisition price

Options are issued to eligible participants with each option entitling the holder to subscribe for one fully paid ordinary share in the Company on exercise.

 

 

 

The vesting conditions, expiry date and exercise price of options are determined by the Board in its discretion at the time of issue of the options.

 

 

 

The Company typically issues options under the Employee Share Option Plan on the following basis:

 

 

 

•   options issued are either time-based vesting or milestone-based vesting, or both, depending on the employee’s role. Time-based options vest in three equal tranches, with a tranche vesting on each of the first, second and third anniversary of the issue date. Milestone-based options vest upon achievement of pre-specified performance milestones;

 

 

 

•   options have an expiry date of seven years from date of issue; and

 

 

 

•   the exercise price of options is the higher of (i) the volume weighted average share price of the five ASX trading days up to the date the Board approved the grant, and (ii) the closing price of an ordinary share on the ASX at Board approval.

 

 

 

 

10

Mesoblast Limited – Notice of Annual General Meeting 2020

 


EXPLANATORY MEMORANDUM

 

 

 

 

 

 

Treatment of options on cessation of employment

Cessation of employment as a Leaver.

 

If a participant in the Employee Share Option Plan ceases employment, and the Board determines that the participant is a ‘Leaver’, then:

 

 

 

•   the participant may retain vested options, however they must be exercised within 60 days of cessation of employment (or within a longer period if so determined by the Board), after which time the options will lapse; and

 

 

 

•   any unvested options will normally be forfeited and lapse.

 

A ‘Leaver’ means a participant who ceases employment and who is not a Bad Leaver. A Leaver will include a participant who ceases employment due to resignation or retirement.

 

Cessation of employment as a Bad Leaver.

 

 

 

If a participant in the Employee Share Option Plan ceases employment, and the Board determines that the participant is a ‘Bad Leaver’, all rights, entitlements and interests in any unexercised options (whether vested or unvested) held by the participant will lapse immediately.

 

 

 

A ‘Bad Leaver’ is a participant who ceases to be employed by the Company where the Board determines that the participant has:

 

 

 

•   committed any serious or persistent breach of any provisions of employment;

 

 

 

•   been convicted of any criminal offence which involves fraud or dishonesty;

 

 

 

•   engaged in any conduct which brings the Company into substantial disrepute;

 

 

 

•   committed any wrongful or negligent act or omission which has caused the Company substantial liability;

 

 

 

•   engaged in grave misconduct or recklessness in the discharge of the participant’s duties;

 

 

 

•   become disqualified from managing corporations in accordance with Part 2D.6 of the Corporations Act or has committed any act that, pursuant to the Corporations Act, may result in the participant being banned from managing a corporation; or

 

 

 

•   engaged in any other conduct which the Board reasonably considers to be analogous to, or having a substantially similar seriousness to, any of the circumstances specified above.

 

 

 

 

Mesoblast Limited – Notice of Annual General Meeting 2020

11

 


EXPLANATORY MEMORANDUM

 

 

 

 

 

 

Change of control

The Board has discretion to determine at any time that an unvested option may or may not vest on the occurrence of a Control Event – whether or not any or all applicable vesting conditions have been met.

 

 

 

A ‘Control Event’ means any of the following:

 

 

 

•   an offer is made by a person for the whole of the issued ordinary share capital of the Company (or any part as is not at the time owned by the offeror or any person acting in concert with the offeror) and after announcement of the offer the offeror (being a person who did not Control the Company prior to the offer) acquires Control of the Company;

 

 

 

•   any other event occurs which causes a change in Control of the Company; or

 

 

 

•   any other event which the Board reasonably considers should be regarded as a Control Event.

 

 

 

‘Control’ of an entity means having the right:

 

 

 

•   to vote 50% (or more) of the votes that can be cast at a meeting of shareholders;

 

 

 

•   to appoint or remove directors who possess 50% (or more) of the votes exercisable by all directors of the entity; or

 

 

 

•   to 50% (or more) of the profits or distributions of the entity or of its net liquidation proceeds.

 

 

 

 

Amendments and administration

Subject to the ASX Listing Rules, the rules of the Employee Share Option Plan may be amended or supplemented by resolution of the Board. Unless the resolution of the Board expressly states otherwise, any amendment or supplement will not apply to any options granted which have not yet been exercised.

 

 

 

The Employee Share Option Plan is managed by the Board which has powers including to determine appropriate procedures for the administration of the Employee Share Option Plan, and to determine matters falling for determination under the Employee Share Option Plan in its discretion having regard to the interests of and for the benefit of the Company.

 

 

 

The Employee Share Option Plan may be terminated at any time at the discretion of the Board and no compensation under any employment contract will arise as a result.

 

 

 

 

 

 

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Mesoblast Limited – Notice of Annual General Meeting 2020

 


EXPLANATORY MEMORANDUM

 

 

 

Item 5 – Ratification of Issue of Shares to Existing and New Institutional Investors

The Company is seeking the approval of shareholders for the purposes of ASX Listing Rule 7.4 and for all other purposes, in respect of the issue of shares that has been made by the Company resulting from the placement announced to the ASX on 13 May 2020, as set out in the following table:

 

 

 

Persons to whom the issue was made

Existing and new Australian and global institutional investors received shares through the placement which was conducted with Bell Potter Securities as lead manager and underwriter.

 

 

 

 

Date of issue

18 May 2020

 

 

 

 

Number of shares issued

43 million

 

 

 

 

Issue price

A$3.20 per share

 

 

 

 

Terms of shares issued

Fully paid ordinary shares ranking equally with all other existing fully paid ordinary shares.

 

 

 

 

Use of the funds raised

A significant portion of the net proceeds was and will be used to scale up manufacturing of the Company’s lead product candidate remestemcel-L for the treatment of critically ill patients suffering with disease caused by cytokine release syndromes associated with high mortality, particularly COVID-19 acute respiratory distress syndrome (ARDS). Proceeds will also be used for working capital and general corporate purposes.

 

 

 

The issue of the above shares was within the 15% limitation imposed by ASX Listing Rule 7.1.

Under ASX Listing Rule 7.1, the Company may issue up to 15% of its share capital in any 12-month rolling period without shareholder approval, unless an exception in ASX Listing Rule 7.2 applies.

ASX Listing Rule 7.4 permits a company to obtain subsequent approval of a prior issue of securities from its shareholders. Such subsequent approval means the prior issue of securities is treated as having been made with shareholder approval for the purposes of ASX Listing Rule 7.1, and thereby refreshes the Company’s ability in the future to issue up to 15% of its share capital without obtaining prior shareholder approval to the extent of the number of shares being approved under this resolution.

If item 5 is not passed, the issue of placement shares noted above will be included in calculating the Company’s 15% limit in Listing Rule 7.1, effectively decreasing the number of equity securities it can issue without shareholder approval over the 12 months following the issue date for those shares.

As noted above, shareholder approval is now being sought for the purposes of ASX Listing Rule 7.4.

Recommendation

The Directors recommend that shareholders vote in favour of this resolution.

 

 

 

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Information on voting, proxies, corporate representatives and attorneys

Eligibility to Vote

For the purpose of voting at the AGM, the Directors have determined that all shares in the Company are taken to be held by the persons who are registered as holding them at 7.00pm (Melbourne time) on 22 November 2020. The entitlement of shareholders to vote at the AGM will be determined by reference to that time.

All Resolutions by Poll

In accordance with clauses 44.2 of the Company’s constitution, the Chair intends to call a poll on each of the resolutions proposed at the AGM. Each resolution considered at the AGM will therefore be conducted by poll, rather than a show of hands. The Chair considers voting by poll to be in the interests of the shareholders as a whole, and to ensure the proportionate representation of shareholders voting at the AGM.

Voting by Proxy

Please note that:

a shareholder of the Company entitled to attend and vote at the AGM is entitled to appoint a proxy. A shareholder who is entitled to cast two or more votes may appoint not more than two proxies;

a proxy may be either an individual or a corporation, and need not be a shareholder of the Company;

a single proxy exercises all voting rights of the relevant shareholder;

where two proxies are appointed, the shareholder may specify the proportion or number of that shareholder’s votes that each proxy is appointed to exercise. If a shareholder appoints two proxies and does not specify each proxy’s voting rights, each proxy may exercise half the votes. Fractions of votes are to be disregarded;

a proxy need not vote in that capacity (unless the proxy is the Chair of the AGM) on a poll. However, if the proxy’s appointment specifies the way to vote on a resolution, and the proxy decides to vote in that capacity on that resolution, the proxy must vote the way specified (subject to the voting exclusions noted above);

if a proxy does not attend the AGM then the Chair of the AGM will be taken to have been appointed as the proxy of the relevant shareholder in respect of the AGM; and

if the Chair of the AGM is appointed, or taken to be appointed, as a proxy, but the appointment does not specify the way to vote on a resolution, then the Chair intends to exercise the relevant shareholder’s votes in favour of the relevant resolution (subject to the voting exclusions noted above).

To be valid, the appointment of a proxy must be received by 11.00am (Melbourne time) on 22 November 2020 using one of the following methods:

faxing the proxy appointment form, along with the power of attorney or other authority (if any) under which the form is signed, to +61 2 9287 0309; OR

lodging the proxy appointment form (online, by mail or in person) along with the power of attorney or other authority (if any) under which the form is signed (or a certified copy thereof), as follows:

 

ONLINE:

by logging into the following website address – www.linkmarketservices.com.au

 

using the holding details as shown on your proxy form and select ‘Voting’ and follow

 

the prompts to lodge your vote

 

 

BY MAIL:

c/- Link Market Services Limited

 

Locked Bag A14

 

Sydney South, NSW 1235, Australia

 

 

BY HAND:

Link Market Services Limited

 

1A Homebush Bay Drive, Rhodes, NSW 2138, Australia; or

 

Level 12, 680 George Street, Sydney, NSW 2000, Australia

 

A personalised proxy appointment form has been sent to shareholders.

 

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Mesoblast Limited – Notice of Annual General Meeting 2020

 


 

 Voting by Corporate Representatives

A shareholder or proxy that is a corporation and entitled to attend and vote at the AGM may appoint an individual to act as its corporate representative. Evidence of the appointment of a corporate representative must be in accordance with the Corporations Act and must be lodged with the Company before the AGM.

Voting by Attorney

A shareholder entitled to attend and vote at the AGM is entitled to appoint an attorney to attend and vote at the AGM on the shareholder’s behalf. An attorney need not be a shareholder of the Company.

The power of attorney appointing the attorney must be duly executed and specify the name of each of the shareholder, the Company and the attorney, and also specify the meetings at which the appointment may be used. The appointment may be a standing one.

To be effective, the power of attorney must also be returned in the same manner, and by the same time, as outlined above for proxy appointment forms.

Evidence of execution

If any instrument (including a proxy appointment form or appointment of corporate representative) returned to the Company is completed by an individual or a corporation under power of attorney, the power of attorney under which the instrument is signed, or a certified copy of that power of attorney, must accompany the instrument unless the power of attorney has previously been noted by the Company or the Company’s share registry.

Voting Online

Shareholders may vote by using the online platform. We recommend logging in to the online platform at least 15 minutes prior to the scheduled start time for the AGM by entering https://agmlive.link/MSB20 into a web browser on your computer or online device.

Shareholders will need their Securityholder Reference Number or Holder Identification Number, which is printed at the top of their personalised proxy appointment form.

Proxyholders will need their proxy code which Link Market Services will provide via email no later than 24 hours prior to the AGM.

Online voting will be open between the commencement of the AGM at 11:00am (Melbourne time) on 24 November 2020 and the time at which the Chair announces the closure of voting.

More information about online participation in the AGM is available in the Virtual Meeting Online Guide at http://investorsmedia.mesoblast.com/events/event-details/2020-annual-general-meeting.

 

 

 

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Mesoblast the regenerative medicine company ABN 68109421870LODGE YOUR VOTE ONLINE www.linkmarketservices.com.au  ABN 68 109 431 870 BY MAIL  Mesoblast Limited  C/- Link Market Services Limited  Locked Bag A14  Sydney South NSW 1235 Australia   BY FAX  +61 2 9287 0309   BY HAND  Link Market Services Limited  1A Homebush Bay Drive, Rhodes NSW 2138; or  Level 12, 680 George Street, Sydney NSW 2000   ALL ENQUIRIES TO  Telephone: 1300 554 474 Overseas: +61 1300 554 474       PROXY FORM I/We being a member(s) of Mesoblast Limited and entitled to attend and vote hereby appoint:   APPOINT A PROXY OR if you are NOT appointing the Chair of the Meeting as your proxy, please write the name and email of the person or body corporate you are appointing as your proxy (an email will be sent to your appointed proxy with details on how to access the virtual meeting) the Chair of the Meeting (mark box) Name Email  or failing the person or body corporate named, or if no person or body corporate is named, the Chair of the Meeting, as my/our proxy to act on my/our behalf (including to vote in accordance with the following directions or, if no directions have been given and to the extent permitted by the law, as the proxy sees fit) at the Annual General Meeting of the Company to be held at 11:00am (Melbourne Time) on Tuesday, 24 November 2020 (the Meeting) and at any postponement or adjournment of the Meeting.  The Meeting will be conducted as a virtual meeting and you can participate by logging in online at https://agmlive.link/MSB20 (refer to details in the Virtual Annual General Meeting Online Guide).  Important for Resolutions 2 & 4: If the Chair of the Meeting is your proxy, either by appointment or by default, and you have not indicated your voting intention below, you expressly authorise the Chair of the Meeting to exercise the proxy in respect of Resolutions 2 & 4, even though the Resolution is connected directly or indirectly with the remuneration of a member of the Company’s Key Management Personnel (KMP).  The Chair of the Meeting intends to vote undirected proxies in favour of each item of business.   VOTING DIRECTIONS   Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the Meeting. Please read the voting instructions overleaf before marking any boxes with an    Resolutions For Against Abstain*   2 Adoption of the Remuneration Report        3 Re-election of Mr Donal O’Dwyer as a Director      4 Approval of Proposed Issue of Options to Chief Executive, Dr Silviu Itescu, in Connection with his Remuneration for the 2020/2021 Financial Year      5 Ratification of Issue of Shares to Existing and New Institutional Investors      * If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.   SIGNATURE OF SHAREHOLDERS – THIS MUST BE COMPLETED  Shareholder 1 (Individual) Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual)   Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director  This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth). MSB PRX2001N  

 

 


 

 

HOW TO COMPLETE THIS SHAREHOLDER PROXY FORM    YOUR NAME AND ADDRESS  This is your name and address as it appears on the Company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.  APPOINTMENT OF PROXY  If you wish to appoint the Chair of the Meeting as your proxy, mark the box in Step 1. If you wish to appoint someone other than the Chair of the Meeting as your proxy, please write the name and email address of that individual or body corporate in Step 1. A proxy need not be a shareholder of the Company.  DEFAULT TO CHAIR OF THE MEETING  Any directed proxies that are not voted on a poll at the Meeting will default to the Chair of the Meeting, who is required to vote those proxies as directed. Any undirected proxies that default to the Chair of the Meeting will be voted according to the instructions set out in this Proxy Form, including where the Resolutions are connected directly or indirectly with the remuneration of KMP.  VOTES ON ITEMS OF BUSINESS – PROXY APPOINTMENT  You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.  APPOINTMENT OF A SECOND PROXY  You are entitled to appoint up to two persons as proxies to attend the Meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the Company’s share registry or you may copy this form and return them both together.  To appoint a second proxy you must:  (a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded; and  (b) return both forms together.  SIGNING INSTRUCTIONS  You must sign this form as follows in the spaces provided:  Individual: where the holding is in one name, the holder must sign.  Joint Holding: where the holding is in more than one name, either shareholder may sign.  Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.  Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 (Cth)) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.    CORPORATE REPRESENTATIVES  If a representative of the corporation is to attend the Meeting virtually the appropriate “Certificate of Appointment of Corporate Representative” must be received at [email protected] prior to the Meeting in accordance with the Notice of Annual General Meeting. A form of the certificate may be obtained from the Company’s share registry or online at www.linkmarketservices.com.au.      LODGEMENT OF A PROXY FORM  This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 11:00am (Melbourne time) on Sunday, 22 November 2020, being not later than 48 hours before the commencement of the Meeting. Any Proxy Form received after that time will not be valid for the scheduled Meeting.  Proxy Forms may be lodged using the reply paid envelope or:         ONLINE   www.linkmarketservices.com.au       Login to the Link website using the holding details as shown on the Proxy Form. Select ‘Voting’ and follow the prompts to lodge your vote. To use the online lodgement facility, shareholders will need their “Holder Identifier” - Securityholder Reference Number (SRN) or Holder Identification Number (HIN).     BY MAIL   Mesoblast Limited   C/- Link Market Services Limited   Locked Bag A14   Sydney South NSW 1235   Australia     BY FAX   +61 2 9287 0309     BY HAND   delivering it to Link Market Services Limited*   1A Homebush Bay Drive   Rhodes NSW 2138       or       Level 12   680 George Street   Sydney NSW 2000       * During business hours (Monday to Friday, 9:00am–5:00pm)