Announcement PDF Notice of Annual General Meeting Location: Mezzanine Floor, 200 Mary Street, Brisbane, QLD, 4000 Virtual Attendance: https://meetnow.global/MZ24WQZ Date: Wednesday, 29 November 2023 Time: Commencing at 1:00PM AEST (Brisbane Time) Verbrec Limited (ASX : VBC) Level 14, 200 Mary Street Brisbane QLD 4000 ACN: 127 897 689 verbrec.com Key Dates The key dates for the Annual General Meeting are set out below: Key Dates EVENT DATE Last day for receipt of proxies # Monday, 27 November 2023 1:00PM Australian Eastern Standard Time (Brisbane Time) Snapshot time for eligibility to vote Monday, 27 November 2023 6:00PM Australian Eastern Standard Time (Brisbane Time) Annual General Meeting Wednesday, 29 November 2023 1:00PM Australian Eastern Standard Time (Brisbane Time) # Proxy forms received after 1:00PM AEST (Brisbane Time) on Monday, 27 November 2023 will be disregarded. Questions Shareholders are invited to contact the Company Secretary at Investors@verbrec.com if they have any questions regarding the AGM. 1 Notice of Annual General Meeting Notice is given that the Annual General Meeting of Verbrec Limited (ACN: 127 897 689) (ASX : VBC) will be held on Wednesday, 29 November 2023 commencing at 1:00PM Australian Eastern Standard Time (Brisbane Time). Shareholders may attend the meeting by attending the location or following the virtual attendance link below: Location: Mezzanine Floor, 200 Mary Street, Brisbane, QLD, 4000 Virtual Attendance: https://meetnow.global/MZ24WQZ Shareholders will be able to attend physically or virtually at this Hybrid Annual General Meeting. The Explanatory Statement, which accompanies and forms part of this Notice, contains information to assist Shareholders including access and registration, and to decide how to vote on the matters to be considered at the AGM. Terms used in this Notice are defined in the Glossary in the Explanatory Statement. Ordinary Business Financial Statements and Reports To receive and consider the financial report of the Company and the reports of the Directors and report of the auditors for the year ended 30 June 2023. Resolution 1: Adoption of Remuneration Report To consider and, if thought fit, to pass, the following non-binding ordinary resolution: ‘That for the purposes of section 250R(2) of the Corporations Act, the remuneration report contained in the Director’s report for the year ended 30 June 2023 be adopted by the Company.’ Note that the vote on this resolution is advisory only and does not bind the Directors or the Company. Resolution 2: Re-election of Mr Matthew Morgan as a Director To consider and, if thought fit, to pass, the following ordinary resolution: ‘That, for the purposes of Listing Rule 14.4 and 14.5, and clause 9.2 of the Company’s constitution, Mr Matthew Morgan, being a Director of the Company appointed as an addition to the Board, who retires by rotation, and being eligible, is re-elected as a Director of the Company.’ 2 Special Business Resolution 3: Approval of the Verbrec Limited Rights Plan To consider and, if thought fit, to pass, the following ordinary resolution: ‘That, for the purposes of Listing Rule 7.2, Exception 13, and for all other purposes, the Verbrec Limited Rights Plan (the Plan) and any grants of Rights (as defined in the Plan) issued under the Plan, be approved.’ Resolution 4: Increase of Placement Capacity To consider and, if thought fit, to pass, the following special resolution: ‘That, for the purposes of Listing Rule 7.1A, the issue of Equity Securities up to 10% of the issued capital of the Company (at the time of issue) calculated in accordance with the formula in Listing Rule 7.1A.2, and on the terms and conditions in the Explanatory Statement, be approved.’ By Order of the Board Joel Voss JVoss Company Secretary Verbrec Limited 27 October 2023 3 Proxy Appointment, Voting and Meeting Instructions Meeting details and how to register, vote and ask questions The Annual General Meeting of shareholders of the Company will be held both physically and virtually (hybrid) at 1:00pm Australian Eastern Standard Time (Brisbane time) on Wednesday, 29 November 2023. Location: Mezzanine Floor, 200 Mary Street, Brisbane, QLD, 4000 You may register to attend the webcast by following the link below: Virtual Attendance: https://meetnow.global/MZ24WQZ You will be able to vote live during the Annual General Meeting by: - filling in a voting card provided at the venue - visiting www.investorvote.com.au on a smartphone, tablet or computer (using the latest version of Chrome, Safari, Microsoft Edge or Firefox) as per the instructions on the attached Proxy Form. Online voting registration will commence 30 minutes prior to the start of the Annual General Meeting and close 5 minutes after the last item of business. For full details on how to log on and vote online, please refer to the user guide, available online at: www.computershare.com.au/onlinevotingguide. You can also lodge your proxy online, by post or by facsimile in accordance with the instructions contained in the proxy form accompanying this notice. The Board strongly encourages lodgement of proxy votes and submission of questions prior to the Annual General Meeting so the meeting can be held in an efficient manner. Lodgement of Proxy Form The Proxy Form (and any power of attorney or other authority, if any, under which it is signed) or a copy or facsimile which appears on its face to be an authentic copy of the Proxy Form (and the power of attorney or other authority) must be lodged no later than 1:00pm Australian Eastern Standard Time (Brisbane time) on Monday, 27 November 2023. Any Proxy Form received after that time will not be valid for the Annual General Meeting. The Proxy Form may be lodged in one of the following ways: Online: Follow the directions on the Proxy Form By hand: Level 14, 200 Mary Street, Brisbane QLD 4000 By mail: Computershare Investor Services Pty Limited, GPO Box 242, Melbourne VIC 3001 Australia By fax: 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia) 4 Appointment of a Proxy A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy. The proxy may, but need not be, a member of the Company. If you wish to appoint the Chairperson of the Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy is someone other than the Chairperson of the Meeting, please write the name of that person. If you leave this section blank, or your named proxy does not attend the meeting, the Chairperson of the Meeting will be your proxy. A proxy need not be a Shareholder of the Company. 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 emailing the Company Secretary at Investors@verbrec.com or you may photocopy the Proxy Form. To appoint a second proxy, you must on each Proxy Form state (in the appropriate box) the percentage of your voting rights that are the subject of the relevant proxy. If both Proxy Forms do not specify that percentage, each proxy may exercise half your votes. Fractions of votes will be disregarded. The Chairperson of the Annual General Meeting acting as proxy If a member directs the Chairperson how to vote on an item of business, the Chairperson must vote in accordance with the direction. For proxies without voting instructions that are exercisable by the Chairperson, the Chairperson intends to vote all available proxies in favour of each Resolution. In relation to the remuneration-related resolution (being Resolution 1), if you appoint the Chairperson of the meeting as your proxy, or the Chairperson is appointed as your proxy by default, then unless you mark one of the voting instruction boxes for the relevant Resolution, you will be taken to have expressly authorised the Chairperson to vote in favour of that Resolution. Corporate Shareholders Corporate Shareholders should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by: - two directors of the company; - a director and a company secretary of the company; or - for a proprietary company that has a sole director who is also the sole company secretary – that director. Votes on Resolution You may direct your proxy how to vote by placing a mark in one of the boxes opposite the Resolutions. All your shareholding will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on the Resolutions 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 Resolutions, and your proxy is not the Chairperson, your proxy may vote as he or she chooses. If you mark more than one box on a Resolution your vote on the Resolutions will be invalid. 5 Corporate Representatives A corporation may elect to appoint an individual to act as its representative in accordance with section 250D of the Corporations Act, in which case the Company will require a certificate of appointment of the corporate representative executed in accordance with the Corporations Act. The certificate of appointment must be lodged with the Company or the Company's share registry, Computershare Investor Services, before the Meeting or at the registration desk on the day of the Meeting. Certificates for the appointment of corporate representatives are available at www.computershare.com or on request by contacting Computershare Investor Services on telephone number 1300 552 270 (within Australia) or +61 3 9415 4000 (outside Australia). Voting Entitlement (Snapshot Time) The Company's Directors have determined that all Shares of the Company that are quoted on ASX at 6:00pm Australian Eastern Standard Time (Brisbane time) on Monday, 27 November 2023 will, for the purposes of determining voting entitlements at the Annual General Meeting, be taken to be held by the persons registered as holding the Shares at that time. Transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting. Questions from Shareholders At the Meeting the Chairperson will allow a reasonable opportunity for Shareholders to ask questions or make comments on the management of the Company and the remuneration report. Cameron Smith of Grant Thornton, as the auditor responsible for preparing the auditor's report for the year ended 30 June 2023 (or his representative), will attend the Meeting. The Chairperson will also allow a reasonable opportunity for Shareholders to ask the auditor questions about: - the conduct of the audit; - the preparation and content of the auditor's report; - the accounting policies adopted by the Company in relation to the preparation of financial statements; and - the independence of the auditor in relation to the conduct of the audit. To assist the Board and the auditor of the Company in responding to questions please submit any questions you may have in writing no later than 3:00pm Australian Eastern Standard Time (Brisbane time) on Tuesday, 21 November 2023: By Email: Investors@verbrec.com By hand: Level 14, 200 Mary Street, Brisbane QLD 4000 By mail: PO Box 3291, Brisbane GPO QLD 4000 By fax: +61 7 3058 7111 As required under section 250PA of the Corporations Act, at the Meeting, the Company will distribute a list setting out any questions directed to the auditor received in writing by 1:00pm Australian Eastern Standard Time (Brisbane time) on Wednesday, 22 November 2023, being questions that the auditor considers relevant to the content of the auditor's report or the conduct of the audit of the financial report for the year ended 30 June 2023. The Chairperson will allow reasonable opportunity to respond to the questions set out on this list. 6 Explanatory Statement This Explanatory Statement has been prepared for the information of Shareholders in relation to the business to be conducted at the Company's Annual General Meeting. The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company that is material to a decision on how to vote on the Resolutions in the accompanying Notice of Annual General Meeting. This Explanatory Statement should be read in conjunction with the Notice of Annual General Meeting. Capitalised terms in this Explanatory Statement are defined in the Glossary. Financial Report The Corporations Act requires the Directors’ report, auditor’s report and the financial statements of the Company for the year ended 30 June 2023 to be tabled at the Annual General Meeting. Neither the Corporations Act nor the constitution requires a vote of Shareholders on the reports or financial statements. However, Shareholders will be given reasonable opportunity to raise questions on the reports and ask questions of the Company's auditor. Resolution 1: Adoption of Remuneration Report The remuneration report is set out in the Directors’ report in the Company's FY2023 Annual Report on pages 44 to 52), which is available on the Company’s website at https://verbrec.com/investor_centre_category/company-reports/ The remuneration report contains information regarding: - the remuneration policy of the Company; the structure of the remuneration of Directors and senior executives and how it aligns with the Company’s performance; and the remuneration of Directors and senior executives for the year ended 30 June 2023. The Corporations Act requires the Company to put a resolution to Shareholders that the remuneration report be adopted. Under section 250R(3) of the Corporations Act, the vote on the Resolution is advisory only and does not bind the Directors or the Company. In accordance with Division 9 of Part 2G.2 of the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the remuneration report at two consecutive annual general meetings, Shareholders will be required to vote at the second of those annual general meetings on a resolution (a “spill resolution”) that another meeting be held within 90 days at which all of the Company’s Directors must go up for reelection. Voting prohibition statement In accordance with section 250R of the Corporations Act, a vote on this Resolution 1 must not be cast (in any capacity) by or on behalf of either of the following persons: - 7 a member of the Key Management Personnel whose remuneration details are included in the remuneration report; or - a Closely Related Party of such member. however, the above persons may cast a vote on Resolution 1 if: - the person does so as a proxy; the vote is not cast on behalf of a member of the Key Management Personnel whose remuneration details are included in the remuneration report or a Closely Related Party of such a member; and, either: - the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on Resolution 1; or - the voter is the Chairperson of the Annual General Meeting and the appointment of the Chairperson as proxy does not specify the way the proxy is to vote on Resolution 1 and expressly authorises the Chairperson to vote as the proxy even if the Resolution 1 is connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company or, if the Company is part of a consolidated entity, for the entity. Director’s recommendation The Directors recommend that Shareholders vote in favour of Resolution 1. Resolution 2: Re-election of Mr Matthew Morgan as a Director Listing Rule 14.4 provides that a Director of the Company must not hold office (without reelection) past the third Annual General Meeting following the Director’s appointment or three years, whichever is longer. Furthermore, Listing Rule 14.5 states that an election of Directors of the Company must be held at each Annual General Meeting and that this rule applies where no Director is required to stand for re-election under Listing Rule 14. At least one Director must stand for re-election, who will either volunteer or be determined by ballot. This rule is consistent with the Company’s constitution under clause 9.2. Mr Matthew Morgan has volunteered to retire on the basis of the requirements of 9.2(a) of the Company’s constitution and stands for re-election in accordance with clause 9.2(b)(iv) of the Company’s constitution. Mr Morgan was appointed to the Board on 22 October 2019 as an Independent, NonExecutive Director. Mr Morgan’s background and experience are contained on page 40 of the FY2023 Annual Report. Director’s recommendation The Directors (excluding Mr Morgan) unanimously recommend that Shareholders vote in favour of Resolution 2. 8 Resolution 3: Approval of the Verbrec Limited Rights Plan Consistent with ASX Listing Rule 7.2 (Exception 13), Resolution 3 seeks Shareholder approval for the Verbrec Limited Rights Plan in order to preserve the 15% limit in new issues of equity securities that may be made during any 12-month period, without shareholder approval. If passed, the approval will exclude Rights issued under the Plan, from the calculation of the utilisation of the limit during the subsequent three (3) years. Consistent with the requirements of Listing Rule 14.1A, the Company advises that if holders of ordinary securities do not approve this resolution, Board may determine that: (a) issues under the plan will be settled in cash rather than in equity; or (b) issues under the plan will count toward the 15% limit in Listing Rule 7.1 that may be made without shareholder approval. Executive remuneration in Verbrec Limited (Verbrec or the Company) is reviewed by the nomination and remuneration committee and determined by the non-executive members of the board of Verbrec (Board), after considering relevant market practices and circumstances of the Company, on an annual basis. It is the view of the Board that it is in the interests of shareholders for selected executives, Directors and other employees (the Participants) to receive part of their remuneration in the form of equity. The Plan is aligned with current regulations and market practices that suit the short and medium term goals of the Company. Equity interests are designed to form a significant component of variable remuneration for executives by facilitating long term variable remuneration (LTVR), and the deferral of short term variable remuneration (STVR) into equity, as well as potentially fixed remuneration and retention variable remuneration from time to time. It is the view of the Board that holding of such equity creates alignment between shareholder interests and the interests of Participants. If approved, grants under the Plan will facilitate Verbrec providing appropriate, competitive and performance-linked remuneration to the employees of the Company. The Board seeks to ensure that grants are made at levels that will appropriately position remuneration outcomes when compared to the market, in accordance with Verbrec’s remuneration policies, and appropriate to the circumstances of the Company at the time. Non-executive directors are not eligible to participate in the Plan and this is intended to support their independence in providing governance and oversight for this component of remuneration. The maximum number of equity securities that may be issued under the Plan before Shareholder approval is sought again is 33 million being approximately 15% of the Company’s issued Shares as at the date of this Notice of Meeting. At the annual general meeting held on 27 November 2020 (2020 AGM), shareholders approved Rights to be issued under the Plan for a period of three years after the date of the 2020 AGM. The Company issued 10,354,848 Performance Rights under the Plan since the 2020 AGM, and subsequently, on 28 September 2023, in accordance with the Plan Rules, Board determined to cancel each tranche of Performance Rights issued under the Plan since the 2020 AGM, thus all 10,354,848 Performance Rights have now lapsed. 9 A summary of the main features of the Plan is set out in the table below: Rights Plan Feature Summary ASPECT DETAILS Instrument The Plan uses Rights which may be constructed as part of the terms of an Invitation as an entitlement to the value of a Share (less any Exercise Price) which may be satisfied either in cash and/or in Shares (at the Board’s discretion). Generally, it is expected that exercised Rights will be satisfied in Shares. The Plan allows for three classes of Rights which may be appropriate forms of remuneration under various circumstances, being; • Performance Rights which vest when performance conditions have been satisfied and will generally be used for the purpose of granting LTVR to executives, • Service Rights which vest after completion of a period of service and which will generally be used as a retention incentive below the executive level, if and when appropriate, and • Restricted Rights which are vested at grant but may not be exercised within 90 days of grant and will generally be used to defer earned remuneration from time to time e.g. to defer STVR or as part of fixed remuneration. When an Exercise Price greater than nil is specified in an Invitation the Rights are Share Appreciation Rights that only produce value when the Share Price exceeds the Exercise Price at the time of Exercise i.e. equivalent to an option. They may be Performance Share Appreciation Rights, Service Share Appreciation Rights or Restricted Share Appreciation rights under the foregoing classes of Rights. Terms and Conditions The Board has the discretion to set the terms and conditions on which it will offer Rights under the Plan. Such terms and conditions will be included in Invitations. When vesting conditions are included it is intended that they will be challenging and linked to indicators of sustainable value creation for shareholders. The terms and conditions of the Plan include those aspects legally required as well as terms addressing exceptional circumstances, such as a de-listing, a major return of capital to shareholders, including the treatment of Rights and Restricted Shares on termination of employment. The Plan contains customary and usual terms having regard to Australian law for dealing with winding up, administration, variation, suspension and termination of the Plan. 10 Variation of Terms and Conditions To the extent permitted by the ASX Listing Rules, the Board retains the discretion to vary or amend the terms and conditions of the Plan. Eligibility Eligible Persons selected by the Board will be invited to participate in the Plan provided that an Eligible Person shall not be a non-executive Director of the Company. Term Each Invitation will specify the Term of Rights, as determined by the Board, and if not exercised within the Term the Rights will lapse. The maximum term allowable is 15 years under the Rules, which is based on the maximum tax deferral period in Australia. Number of Rights The number of Rights specified in an Invitation will be at the discretion of the Board. It is intended that the number of Rights to be granted will be determined subsequent to the AGM with regard to the relevant goals of the Company, relevant market practices and the relevant policies of the Company regarding remuneration, such that total remuneration is appropriate in both quantum and structure. Cost of Rights No amount is payable by Participants for Rights unless otherwise determined by the Board. ASPECT DETAILS Exercise Price No Exercise Price is payable by a Participant to exercise Rights under the Rules. However, as part of the terms of an Invitation the Board may determine that a notional Exercise Price applies, which will be deducted from the value of a Share in determining the Exercised Rights Value i.e. creating a cashless exercise option or Share Appreciation Right which functions identically to an option, but is less dilutive than traditional options from a shareholder perspective. Measurement Period The Measurement Period is the period over which vesting conditions are assessed and may be determined by the Board as part of each Invitation but will generally be tested for vesting against Vesting Criteria annually over a five-year period for Performance Rights, starting from the beginning of the first financial year in the Measurement Period (including for Performance Share Appreciation Rights). Vesting Conditions Vesting Conditions may be determined by the Board as part of each Invitation. Performance Rights will vest based on selected measures of Company performance and service with the Company. They are intended to create alignment with indicators of shareholder value creation over the Measurement Period. Service Rights will vest solely based on periods of service with the Company and will generally relate to annual remuneration cycles when granted as part of fixed remuneration. Restricted Rights do not have Vesting Conditions and are fully vested at grant. Gates The Board may attach Gates to tranches of Performance Rights. A Gate is a condition that, if not fulfilled, will result in nil vesting of a tranche irrespective of performance in relation to the Vesting Conditions. Exercise Restrictions An Invitation may specify a period of Exercise Restrictions during which Rights may not be exercised, even if vested. For Restricted Rights which are fully vested at grant, Exercise Restrictions apply for at least 90 days following grant. Disposal Restrictions Rights may not be sold, transferred, mortgaged, charged or otherwise dealt with or encumbered, except by force of law. Shares acquired from the exercise of vested Rights will be subject to disposal restrictions due to: (a) The Company’s securities trading policy, and (b) The insider trading provisions of the Corporations Act. Shares resulting from the exercising of Rights that may not be traded due to the foregoing or because of Specified Disposal Restrictions included in an Invitation will be Restricted Shares while they are so restricted. Verbrec will ensure that such restrictions are enforced due to the presence of CHESS holding locks or alternatively by any trustee that may appointed in connection with the Plan. Exercise of Vested Rights Vested Rights may be exercised at any time between the Vesting Date (or the latter elapsing of Exercise Restrictions, if applicable) and the end of their Term, by the Participant submitting an Exercise Notice, otherwise they will lapse. The Exercised Rights Value will be determined as follows and will be either be paid in cash, converted into Shares based on the then Share price, or a combination of cash and Shares, as determined by the Board (depending on the terms of the Invitation): Exercised Rights Value = Number of Rights Exercised x (Share Price at Exercise – Exercise Price) Generally, it is expected that vested Rights will be settled in Shares. Such Shares may be Restricted Shares as they will be subject to disposal restrictions if the exercise occurs during a period in which trading in Shares is prohibited under the Company’s securities trading policy. 11 ASPECT DETAILS Disposal and Exercise Restriction Release at Taxing Point In the event that a taxing point arises in relation to Restricted Rights or Restricted Shares and the Exercise Restrictions or Specified Disposal Restrictions have not elapsed then they will cease to apply to 50% of the taxable Rights and Shares. This ensures that unreasonable tax outcomes are avoided. Termination of Employment Generally, employment is a pre-requisite for a Participant’s Performance Rights to vest. Performance Rights (including Performance Share Appreciation Rights) will be forfeited by the Participant in full if not employed at the time of testing the Vesting Criteria. Service Rights (including Service Share Appreciation Rights) will be dealt with as specified in the relevant Invitation as appropriate to the circumstances of the granting of Service Rights and applicable Measurement Periods. Generally pro-rata vesting for the period of service completed will apply. Vested Rights held after a Participant’s termination of office or employment with the Group will be automatically exercised 90 days after the date on which the Participant ceases to hold any unvested Rights and all Exercise Restrictions have elapsed. If Rights are exercised after the termination of employment and the Share price is lower at the date of exercise than on the date of termination, then the Exercised Rights Value will be settled in cash unless otherwise determined by the Board, in order to ensure an appropriate taxation outcome for the Participant. It should be noted that the Plan contains clauses that address fraud, misconduct, inappropriate benefits and clawback which will result in the forfeiture of unvested and unexercised rights equivalent to traditional “Bad Leaver” approaches, but which may apply at any time including during employment. Board may, at its discretion determine differing or contrary conditions within the Invitation if it deems it appropriate in the circumstances having considered relevant factors. Delisting In the event the Board determines that the Company will be subject to a de-listing, the Vesting Conditions specified in an Invitation for Performance Rights will cease to apply and: (a) Rights with an Exercise Price greater than nil (Share Appreciation Rights) will vest 100% unless otherwise determined by the Board, (b) Unvested Performance Rights in each tranche will vest in accordance with the following formula: Number of Performance Rights to Vest Unvested % of First Year of = Performance x Measurement x Rights