Statement of Corporate Governance Practices

The Board believes that sound corporate governance practices are essential to the well-being of the Corporation and its Shareholders, and that these practices should be reviewed regularly to ensure that they are appropriate. The Board has reviewed the guidelines for effective corporate governance contained in NP 58-201 issued by the Canadian Securities Administrators and other relevant regulations regarding corporate governance practices. The Canadian Securities Administrators have also adopted NI 58-101 which requires Canadian reporting issuers to annually disclose their corporate governance practices. Regulatory changes to governance practices that have occurred, or will occur, are continually monitored by the Board and the Board has taken, or will take appropriate action as regulatory changes occur. Below is a discussion on the current composition of the Board and the current governance practices of the Corporation.

The Directors have in place appropriate structures to ensure they can function independently of management. The responsibilities of the Chair of the Board include overseeing that the Directors discharge their responsibilities. The Chair of the Board is Don Streuber, FCPA/FCA.

The CEO of the Corporation is responsible for the overall administration and management of the Corporation and its subsidiaries. All major policy decisions relating to the Corporation and its subsidiaries are made by the Directors or a committee thereof. Each subsidiary of the Corporation has its own management team that is responsible for the day-to-day management of each respective subsidiary. As applied to a Director herein, "independent" has the meaning ascribed to such term in respect of a director of an issuer in NI 58-101 and as may subsequently be in effect from time to time or any successor policy thereto and includes having no direct or indirect material relationship with the Corporation, where a "material relationship" is a relationship which could, in the view of the Directors, reasonably interfere with the exercise of such Director's independent judgment.

Board of Directors

The Board is comprised of a majority of independent directors, which facilitates its exercise of independent supervision over management. The composition of independent and non-independent directors is as follows:

  • Brad Bennett (independent)
  • Gary Buckley (independent)
  • Polly Craik (independent)
  • Barb Gamey (independent)
  • Bruce Jack (independent)
  • Duncan Jessiman, Executive Vice-Chair (non-independent)
  • Michael Pyle, CEO (non-independent)
  • Melissa Sonberg (independent)
  • Don Streuber, Chair (independent)
  • Edward Warkentin (independent)

Don Streuber is the Chairman of the Board and is an Independent Director.

The Independent Directors hold regularly scheduled meetings at which the non-Independent Directors are not in attendance. These meetings take place at all quarterly and specially scheduled meetings of the Board. In the financial year of the Corporation ended December 31, 2023, six such in-camera meetings were held by the Independent Directors.

Other Directorships

For a summary of the Directors who are currently directors or trustees of other reporting issuers, see "Particulars of Matters to be Acted Upon at the Meeting - Election of Directors" within the Management Information Circular.

The Board has adopted a policy to limit the number of outside public company directorships that may be held by Directors to two for Directors holding full-time executive positions and to four for other Directors.

There are currently no common memberships on boards of other public companies among the Directors.

Mandate of the Board

Board of Directors Mandate

Position Descriptions

The Chair of the Board and Committee Chairs - Mandate

Chief Executive Officer Mandate

Orientation and Continuing Education

The Board and management of the Corporation have established an informal orientation and education program for new Directors and new committee members regarding the role of the Board, its committees as well as the nature and operation of the Corporation's business. New Directors are provided with sufficient information to enable them to become familiar with the Corporation, its issues, business and operations, including meetings with the Chair of the Board, Chair of the Governance Committee and senior management. Care is taken to ensure that new Directors understand the roles and responsibilities of the Board and its committees, as well as the commitment level that the Corporation expects of the Directors.

The Governance Committee is also charged with ensuring that continuing education opportunities are available to all Directors as appropriate. Each year, Directors are surveyed to identify their priority topics and the Governance Committee works with management to incorporate these into its planning for the following year.

Presentations from a combination of management and external parties are made to the whole Board throughout the year. Presentations in the past year to the Board at Board meetings or special sessions around Board meetings included: The Fight Against Forced Labour and Child Labour in Supply Chains Act (commonly known as Modern Slavery Act), IFRS S1 & S2 developments, various matters including United States of America and world issues, capital allocation strategy and management, tax overview and strategies, stock market analysis, enterprise risk management initiatives and overview, succession planning, ESG and stakeholder engagement initiatives, acquisitions and long-term contracts of the Corporation, various information technology risks and opportunities including but not limited to data privacy, cybersecurity, and leveraging artificial intelligence for operational excellence, human capital retention and recruitment initiatives, and supply chain issues. For 2023, all Board members were present for these presentations. On a rotational basis over approximately 12 to 18 months, the management of each subsidiary presents to the Board a fulsome overview of their business. The Board also schedules site visits where some or all of the Directors visit the operations of a subsidiary. During 2023, board members visited a subsidiary site for an update on related growth and maintenance capital expenditure projects.

The Corporation is a member of the ICD and all Directors have access to the educational programs and regular updates on current governance issues provided by this organization. Several directors participated in ICD and external advisors' webinars and seminars on topics such as business ethics, executive compensation, cybersecurity, human capital management, climate change and corporate governance, Indigenous perspectives on governance and Indigenous Peoples, and future of sustainability reporting with International Sustainability Standards Board standards.

Ethical Business Conduct

The Corporation has adopted a Code of Ethics, an Insider Trading Policy, a Disclosure and Competition Policy, a Conflict of Interest Policy, a Whistleblower Policy, and an Anti-Bribery and Anti-Corruption Policy. Every Director, officer and employee of the Corporation and its subsidiaries receives a copy of these documents upon commencement of employment with the Corporation or a subsidiary, as applicable, and a process is in place for annual certification that the policies have been reviewed. The Code of Ethics is monitored by the Governance Committee.

Code of Ethics

The Board Mandate provides that Directors must understand conflict of interest issues and declare all real or perceived conflicts, and disclose contracts or arrangements with the Corporation or any of its subsidiaries in which a Director has an interest. The by-laws of the Corporation provide that each Director must disclose the nature and extent of his interest in a contract or transaction or proposed contract or transaction in which he has an interest in the manner provided by the Canada Business Corporations Act.

Director Term Limits

Board members are elected annually by our shareholders.

The Board does not believe that arbitrary term limits for Directors are appropriate nor does it believe that Directors should be required to retire from the Board upon reaching a certain age. The Board believes that imposing term limits on Directors or a mandatory retirement age could result in the loss of the contribution of Directors who have valuable experience and qualifications as Directors and who have developed, over a period of time, insight and perspective into the Corporation and its businesses.

The Board relies upon the annual formal Board, committee, and Director assessments for evaluating performance. Accordingly, the Board has not adopted a policy imposing term limits on Directors or imposing a mandatory retirement age for Directors.

Diversity of Board and Executives

The Corporation's belief in diversity translated into a written Board diversity policy first adopted by the Board in February, 2020 and more recently amended in February, 2024. The Board's formal policy on diversity is summarized below.

The Board believes in diversity and values the benefits that diversity can bring to its Board. Diversity promotes the inclusion of different perspectives and ideas, mitigates against groupthink and ensures the Corporation has the opportunity to benefit from all available talent. The promotion of a diverse Board makes prudent business sense and makes for better corporate governance.

The Corporation seeks to maintain a Board comprised of talented and dedicated Directors with a diverse mix of expertise, experience, skills and backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Corporation operates. For purposes of Board composition, diversity includes, but is not limited to, business experience, geography, age, gender, visible minorities, ethnicity and Indigenous Peoples, persons with disabilities. The Board works towards having Directors that are women, Indigenous Peoples, persons with disabilities and members of visible minorities, as such terms are defined in the Employment Equity Act (Canada) (each a "Designated Group"). At this time the Board seeks to maintain a Board in which each gender represents at least 30% of the Board and at least one (1) Director is an Indigenous People and/or a member of a visible minority.

The Corporation is committed to a merit based system for Board composition within a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the Corporation will consider candidates on merit against objective criteria having due regard to the benefits of diversity and the needs of the Board.

The Corporation will periodically assess the expertise, experience, skills and backgrounds of its Directors in light of the needs of the Board, including the extent to which the current composition of the Board reflects a diverse mix of knowledge, experience, skills and backgrounds.

Any search firm engaged to assist the Board or a committee of the Board in identifying candidates for appointment to the Board will be specifically directed to include diverse candidates.

Annually, the Board or a committee of the Board will review its Board Diversity policy and assess its effectiveness in promoting a diverse Board, including the goal of having each gender represent at least 30% of the Board and at least one (1) Board member belonging to one of the following groups: members of visible minorities or Indigenous Peoples.

The Board is also receptive to increasing the number of Designated Groups in executive officer positions with the Corporation, taking into account the particular skills, background, experience and knowledge required for the particular executive officer position. When the Board and members of management conduct searches for potential new executive officers, they always attempt to review a diverse range of candidates, including Designated Groups and consider the representation of Designated Groups in executive officer positions with the Corporation. At this time, the Board has not set a specific target as to the number of members of Designated Groups in executive officer positions as promotions and new hires to executive officer positions are based solely on merit and achievements within the Corporation for promotions or achievements external to the Corporation for new hires. In addition, the Board assesses executive officer candidates on a case by case basis and does not believe that strict adherence to a target ultimately results in the best executive officers being hired.

Related Party Transactions

Due to the Corporation's diverse operations and holdings, the Corporation may, from time to time, enter into transactions with related parties. All non-ordinary course or material related party transactions are reviewed by members of management that have no interest in the transaction to ensure they are on terms that are fair and reasonable to the Corporation. Related party transactions are disclosed in accordance with IFRS in our annual audited financial statements and in the associated management discussion and analysis. As included in the Corporation's Audit Committee charter, the Audit Committee is responsible for reviewing all such disclosed related party transactions prior to the release of the annual audited financial statements.

Board Committees

The Board fulfills its role directly and through committees to which it delegates certain responsibilities. The Board and its committees are focused on the continued improvement of governance principles and practices. Maintaining a leadership position in corporate governance requires constant review of these principles and practices to be sure they meet or exceed evolving best practices and regulatory guidance.

Governance Committee

Governance Committee Charter

Audit Committee

Audit Committee Charter

Compensation Committee

Compensation Committee Charter

Aerospace & Aviation Sector Advisory Committee

Aviation Sector Advisory Committee Charter

Manufacturing Sector Advisory Committee

Manufacturing Sector Advisory Committee Charter

Disclosure and Competition Committee

Disclosure and Competition Committee Charter

Board Information

The information which management provides to the Board is critical. The Board must have confidence in the data gathering, analysis and reporting functions of management. The Directors believe that they are provided with all necessary information and with a sufficient amount of information to facilitate effective decision making. The Board continually monitors the nature of the information requested by and provided to it in order to enable it to determine whether it can be more effective in identifying problems and opportunities for the Corporation and its Subsidiaries.

Environmental, Social, Governance (ESG)

Since its inception, the Corporation's management and the Board have always believed in the importance of good governance, social responsibility, and care for the environment. The Corporation maintains a long-term focus and ensures the businesses it acquires demonstrate its commitment to good governance, strong community and stakeholder relations and environmental protection, in order to ensure long-term sustainability.

Integrating environment, social, and governance (ESG) considerations into the Corporation's acquisition process and the ongoing operations of the Corporation's Subsidiaries has a direct influence on creating value and mitigating risk for the Corporation's stakeholders. Developing stronger and more stable companies can have a positive impact on local communities, the Corporation's workforces and customers, and society in general.

Accordingly, the Corporation is engaged in a process to help it better understand its most material ESG risks and committed to implementing systems and programs to manage those risks.

As part of this commitment, the Corporation began by enhancing its oversight of ESG issues. The Corporation placed primary responsibility for oversight and coordination of ESG matters with the Governance Committee. As data privacy and cyber security requires specialized oversight, that responsibility has been assigned to the Audit Committee. Executive compensation, which includes ESG performance measurements, is the responsibility of the Compensation Committee.

The Corporation has assigned operational responsibility of ESG issues to a senior member of its executive team and engaged an ESG advisory firm to help the Corporation develop and execute a strategy to improve ESG performance and reporting.

Insider Trading Policy

The Company has adopted an Insider Trading Policy that applies to all employees, Directors and officers of the Company, including the Company's operating subsidiaries. The Insider Trading Policy aims to educate members of the organization on the legal obligations associated with being deemed an "insider" for the purposes of securities legislation. The policy goes further and establishes rules that help members of the organization avoid a situation where insider trading laws are inadvertently violated. These include rules regarding the disclosure of confidential information to outsiders, the imposition of regular and special trading blackouts around the time of the release of financial information and a general prohibition against speculative trading of the Company's shares.

Anti-Bribery and Anti-Corruption Policy

The Company has adopted an Anti-Bribery and Anti-Corruption Policy that applies to all employees, Directors and officers of the Company, including the Company's operating subsidiaries. The Anti-Bribery and Anti-Corruption Policy provides guidance aimed to ensure the Company and the Representatives conduct business in an honest and ethical manner, reflecting the highest standards of integrity and compliance with all applicable laws, rules and regulations, including Canada's Corruption of Foreign Public Officials Act (the "CFPOA"), the U.S. Foreign Corrupt Practices Act (the "FCPA"), and any foreign anti-bribery or anti-corruption laws that may be applicable. The policy provides examples of incidents to be reported, the protocol for reporting such incidents, and a disciplinary position in the event that the policy is violated.

Whistleblower Policy

Securities Regulators in Canada have established rules requiring that the audit committees of public companies develop procedures to receive and address complaints regarding accounting, internal accounting controls or auditing matters, and for a confidential, anonymous submission procedure for employees who have concerns regarding questionable accounting or auditing matters. This policy has been developed to meet these requirements, as well as to discourage illegal activity and unethical business conduct and to promote a climate of accountability within Exchange Income Corporation and its subsidiaries. The policy provides examples of matters to be reported, reporting procedure, and the handling of reports.

Whistleblower Policy

Majority Voting Policy

Majority Voting Policy

Advance Notice of Director Nominations

Please refer to section 4.13 in the Second Amended and Restated General By-Law No. 1 and the amendments made to section 4.13 noted in the Amendment to Second Amended and Restated General By-Law No. 1

Constating Documents

Articles of Amalgamation - Jan 1, 2010

Articles of Amendment - Jun 14, 2019

Second Amended and Restated General By-Law No. 1

Amendment to Second Amended and Restated General By-Law No. 1

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