ITEM 16G. CORPORATE GOVERNANCE
Our common shares are wholly owned by a subsidiary of Brookfield Infrastructure. In addition, only our preference shares are listed on the NYSE. As a controlled company with only preference shares listed on the NYSE, we qualify for and rely on exemptions from certain of the NYSE listing rules, corporate governance requirements and provisions of the Exchange Act, including the rules requiring that:
•a majority of our board of directors consist of independent directors;
•we maintain a nominating committee and compensation committee composed entirely of independent directors;
•we maintain a code of conduct and ethics and corporate governance guidelines; and
•we comply with the proxy solicitation rules under the Exchange Act, including the furnishing of an annual proxy or information statement.
For additional information, refer to Item 3.D, "Risk Factors" - "As a controlled company with only preference shares listed on the NYSE, we qualify for and rely on exemptions from certain corporate governance requirements. Holders of our preference shares will not have the same protections afforded to shareholders of companies that are subject to such requirements."
Furthermore, we are a "foreign private issuer" under applicable U.S. federal securities laws. Accordingly, we are permitted to follow certain corporate governance rules that conform to Bermuda requirements in lieu of certain NYSE corporate governance rules applicable to U.S. domestic listed companies. A general summary of those differences is provided below. Also refer to Item 3.D, "Risk Factors" - "We are a "foreign private issuer under U.S. securities law. Therefore, we are exempt from many of the requirements applicable to U.S. domestic registrants."
Independence of Directors
The NYSE requires that the board of directors of domestic listed companies be comprised of a majority of independent directors. We are not required under Bermuda law to maintain a board of directors with a majority of independent directors, and as of the date of this Annual Report, our Board is not comprised of a majority of independent directors.
Non-Management Directors’ Executive Sessions
The NYSE requires that non-management directors of domestic listed companies meet at regularly scheduled executive sessions without management. Under Bermuda law, we are not required to hold such meetings.
Compensation Committee
The NYSE requires domestic listed companies to have a compensation committee comprised entirely of independent directors and a committee charter specifying the purpose, duties and evaluation of the committee. While we have a standing Compensation Committee that operates pursuant to a compensation committee charter, we are not required to do so and the members of the Compensation Committee are not independent.
Nominating / Corporate Governance Committee
The NYSE requires that a domestic listed company have a nominating/corporate governance committee comprised entirely of independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee. Consistent with our status as a foreign private issuer and Bermuda law, we do not have a nominating/corporate governance committee.
Audit Committee
The NYSE requires, among other things, that a domestic listed company have an audit committee with a minimum of three independent members. Our Audit Committee need not comply with the NYSE’s requirements that the audit committee have a minimum of three members or the NYSE’s standards of independence for domestic issuers. As permitted by Rule 10A-3 under the Exchange Act, our Audit Committee consists of one member of our Board who qualifies as independent under Rule 10A-3.
In addition, the NYSE requires that audit committees of domestic listed companies serve a number of functions in addition to overseeing the company’s financial reporting, engaging auditors and assessing their independence, and obtaining the legal and other professional advice of experts when necessary. Foreign private issuers such as us are exempt from these additional requirements if home country practice is followed. Bermuda law does not impose similar requirements, and consequently, we are not required to comply with these requirements, and certain of these additional functions may be performed by our Board as a whole rather than by the Audit Committee.
Corporate Governance Guidelines and Code of Business Conduct
The NYSE requires domestic listed companies to adopt and disclose corporate governance guidelines and a code of business conduct addressing specified requirements. The corporate governance guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession and an annual performance evaluation of the Board. We are not required to adopt such corporate governance guidelines under Bermuda law and do not maintain such guidelines.
Additionally, while as a foreign private issuer we are not required to adopt a code of business conduct, nonetheless, we have adopted codes of conduct as described under Item 16.B, "Code of Ethics."
Differences in Corporate Law
We are incorporated under, and are governed by, the laws of Bermuda. For a summary of certain of the differences between provisions of Bermuda law applicable to us and the laws generally applicable to U.S. companies and their shareholders, refer to Item 10.B, "Memorandum and Articles of Association."
