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Volume 605
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Mandate of the Board of Directors

Purpose

The purpose of this mandate is to set out the mandate and responsibilities of the board of directors (the “Board of Directors” or “Board“) of Franco-Nevada Corporation (“Franco-Nevada“).  The Board of Directors is committed to fulfilling its statutory mandate to supervise the management of the business and affairs of Franco-Nevada with the highest standards of ethical conduct and in the best interests of Franco-Nevada.

Composition

The Board of Directors shall be composed of between six and 12 individuals, the majority of whom will be Canadian residents.  The Board shall be constituted with a majority of individuals who qualify as “independent” directors as defined in National Instrument 58-101 – Disclosure of Corporate Governance Practices.

Responsibilities of the Board of Directors

  • to the extent feasible, satisfying itself as to the integrity of the Chief Executive Officer and other executive officers and that the Chief Executive Officer and other executive officers create a culture of integrity throughout the organization;
  • enhancing the reputation, goodwill and image of Franco-Nevada;
  • adopting a strategic planning process and reviewing, on an annual basis, the strategic plan and business objectives of Franco-Nevada (taking into account, among other things, the opportunities and risks of Franco-Nevada’s business) that are presented by management;
  • the identification and review of the principal risks of Franco-Nevada’s business and ensuring, with the assistance of the audit committee of the Board (the “Audit Committee”), the implementation of appropriate risk management systems;
  • ensuring, with the assistance of the compensation and corporate governance committee of the Board (the “Compensation and Corporate Governance Committee”), the effective functioning of the Board of Directors and its committees in compliance with the corporate governance requirements of applicable laws, and that such compliance is reviewed periodically by the Compensation and Corporate Governance Committee;
  • assessing the performance of Franco-Nevada’s executive officers, monitoring succession plans and periodically monitoring the compensation levels of executive officers based on the determinations and recommendations made by the Compensation and Corporate Governance Committee;
  • ensuring internal control and management information systems are in place for Franco-Nevada, with the Audit Committee assessing the effectiveness of the internal control and management information systems through meetings held with the external auditors, as appropriate, and senior management and a review of reports prepared by senior management;
  • establishing the Audit Committee as a standing audit committee of the Board;
  • developing Franco-Nevada’s approach to corporate governance by establishing the Compensation and Corporate Governance Committee as a standing committee of the Board, including developing a set of corporate governance principles and guidelines that are specifically applicable to Franco-Nevada;
  • ensuring that Franco-Nevada has in place a communication policy which enables Franco-Nevada to effectively communicate with shareholders, other stakeholders and the public generally, and is reviewed at such intervals as the Board deems appropriate; and
  • establishing measures for receiving feedback from stakeholders.

The Board of Directors is responsible for the stewardship of Franco-Nevada and in that regard shall be responsible for:

Expectations of Directors

  • Commitment and Attendance.  All directors are expected to maintain a high attendance record at meetings of the Board and the committees of which they are members. Attendance by telephone or video conference may be used to facilitate a director’s attendance.
  • Preparation for Meetings.  All directors are expected to review the materials circulated in advance of meetings of the Board and its committees and should arrive prepared to discuss the issues presented.  Directors are encouraged to contact the Chair of the Board, the Chief Executive Officer and any other appropriate executive officer(s) of Franco-Nevada to ask questions and discuss agenda items prior to meetings.
  • Participation in Meetings.  Each director is expected to be sufficiently knowledgeable of the business of Franco-Nevada, including its financial statements, and the risks it faces, to ensure active and effective participation in the deliberations of the Board of Directors and of each committee on which he or she serves.
  • Loyalty and Ethics.  In their roles as directors, all directors owe a duty of loyalty to Franco-Nevada. This duty of loyalty mandates that the best interests of Franco-Nevada take precedence over any other interest possessed by a director.  Directors are expected to conduct themselves in accordance with Franco-Nevada’s Code of Business Conduct and Ethics.
  • Other Directorships and Significant Activities.  Franco-Nevada values the experience directors bring from other boards on which they serve and other activities in which they participate, but recognizes that those boards and activities also may present demands on a director’s time and availability and may present conflicts or legal issues, including independence issues. No director should serve on the board of a competitor or of a regulatory body with oversight of Franco-Nevada. Each director should, when considering membership on another board or committee, make every effort to ensure that such membership will not impair the director’s time and availability for his or her commitment to Franco-Nevada.  Directors should advise the chair of the Compensation and Corporate Governance Committee and the Chief Executive Officer before accepting membership on other public company boards of directors or any audit committee or other significant committee assignment on any other board of directors, or establishing other significant relationships with businesses, institutions, governmental units or regulatory entities, particularly those that may result in significant time commitments or a change in the director’s relationship to Franco-Nevada.
  • Contact with Management and Employees.  All directors should be free to contact the Chief Executive Officer at any time to discuss any aspect of Franco-Nevada’s business.  Directors should use their judgement to ensure that any such contact is not disruptive to the operations of Franco-Nevada. The Board of Directors expects that there will be frequent opportunities for directors to meet with the Chief Executive Officer in meetings of the Board of Directors and committees, or in other formal or informal settings.
  • Speaking on Behalf of Franco-Nevada.  It is important that Franco-Nevada speak to employees and outside constituencies with a single voice, and that management serve as the primary spokesperson.  As a result, directors should ensure that they adhere to Franco-Nevada’s disclosure policy.
  • Confidentiality.  The proceedings and deliberations of the Board of Directors and its committees are confidential. Each director will maintain the confidentiality of information received in connection with his or her service as a director.

The Board of Directors has developed a number of specific expectations of directors to promote the discharge by the directors of their responsibilities and to promote the proper conduct of the Board.

Measures for Receiving Shareholder Feedback

All publicly disseminated materials of Franco-Nevada shall provide for a mechanism for feedback from shareholders.  Persons designated to receive such information shall be required to provide a summary of the feedback to the Board of Directors on a semi-annual basis or at such other interval as they see fit.  Specific procedures for permitting shareholder feedback and communication with the Board will be prescribed by Franco-Nevada’s disclosure policy approved by the Board.

Meetings

The Board of Directors will meet not less than four times per year: three meetings to review quarterly results and one prior to the issuance of the annual financial results of Franco-Nevada.

Independent Advice

In discharging its mandate, the Board of Directors shall have the authority to retain and receive advice from, special legal, accounting or other advisors and outside consultants if appropriate.

Expectations of Management of Franco-Nevada

Management shall be required to report to the Board of Directors at the request of the Board on the performance of Franco-Nevada, management’s concerns and any other matter the Board or its Chair may deem appropriate.  In addition, the Board expects management to promptly report to the Chair of the Board any significant developments, changes, transactions or proposals respecting Franco-Nevada.

Annual Evaluation

At least annually, the Board of Directors through the Compensation and Corporate Governance Committee shall, in a manner it determines to be appropriate:

  • conduct a review and evaluation of the performance of the Board and its members, its committees and their members, including the compliance of the Board with this mandate and of the committees with their respective charters; and
  • review and assess the adequacy of this mandate on an annual basis.

Audit and Risk Committee Charter

Purpose

The Audit and Risk Committee is appointed by the Board of Directors of Franco-Nevada Corporation (the “Company“) to assist the Board of Directors in its oversight and evaluation of:

  • the quality and integrity of the financial statements of the Company,
  • the compliance by the Company with legal and regulatory requirements in respect of financial disclosure,
  • the qualification, independence and performance of the Company’s independent auditors,
  • the performance of the Company’s Chief Financial Officer,
  • risk management oversight,
  • the compliance by the Company with legal and regulatory requirements in respect of its oil and gas disclosure, and
  • the qualification, independence and performance of the Company’s qualified oil and gas reserves evaluator or auditor.

In addition, the Audit and Risk Committee provides an avenue for communication between the independent auditor, financial management, other employees and the Board of Directors concerning accounting and auditing matters.

The Audit and Risk Committee is directly responsible for the appointment, compensation, retention (and termination) and oversight of the work of the independent auditor (including oversight of the resolution of any disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing audit reports or performing other audit, review or attest services for the Company.

The Audit and Risk Committee is not responsible for:

  • planning or conducting audits,
  • certifying or determining the completeness or accuracy of the Company’s financial statements or that those financial statements are in accordance with applicable accounting principles or standards, or
  • guaranteeing the report of the Company’s independent auditor.

The fundamental responsibility for the Company’s financial statements and disclosure rests with management. It is not the duty of the Audit and Risk Committee to conduct investigations, to itself resolve disagreements (if any) between management and the independent auditor or to ensure compliance with applicable legal and regulatory requirements.

Reports

The Audit and Risk Committee shall report to the Board of Directors of the Company on a regular basis and, in any event, before the public disclosure by the Company of its quarterly and annual financial results. The reports of the Audit and Risk Committee shall include any issues of which the Committee is aware with respect to the quality or integrity of the Company’s financial statements, its compliance with legal or regulatory requirements in respect of financial matters and disclosure, and the performance and independence of the Company’s independent auditor.

The Committee shall also prepare, as required by applicable law, any committee report required for inclusion in the Company’s publicly filed documents.

Composition

The members of the Audit and Risk Committee shall be three or more individuals who are appointed (and may be replaced) by the Board of Directors of the Company on the recommendation of the Company’s Compensation and Corporate Governance Committee. Each of the members of the Audit and Risk Committee shall be “independent” and “financially literate” within the meaning of National Instrument 52-110 – Audit Committees (“NI 52-110“) and any other securities legislation and stock exchange rules applicable to the Company, and as confirmed by the Board of Directors using its business judgment. In addition, at least one member of the Audit and Risk Committee shall be a “financial expert” as determined by the Board of Directors in its business judgment. No member of the Audit and Risk Committee shall accept (directly or indirectly) any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries or affiliates (collectively, the “Franco-Nevada Group“) (other than remuneration for acting in his or her capacity as a director) or be an “affiliated entity” within the meaning of NI 52-110.

Responsibilities

Independent Auditors

The Audit and Risk Committee shall:

  • Recommend to the Board of Directors the independent auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company and the compensation of the independent auditor;
  • Recommend to the Board of Directors any change of the independent auditor, and oversee any such change to ensure compliance with the provisions of the Canada Business Corporations Act and applicable securities legislation;
  • Require and obtain confirmation from the independent auditor that it ultimately is accountable, and will report directly, to the Audit and Risk Committee and the Board of Directors of the Company;
  • Oversee the work of the independent auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Company, including the resolution of disagreements between management and the external auditor regarding financial reporting;
  • Pre-approve all audit and permitted non-audit services provided to the Company and its subsidiary entities by the independent auditor, including adopting policies and procedures for the pre-approval of the retention thereof (subject to any restrictions on such services imposed by applicable securities legislation) and including procedures for the delegation of authority to provide such approval to one or more members of the Audit and Risk Committee; and
  • At least annually, review the qualifications, performance and independence of the independent auditor. In doing so, the Audit and Risk Committee should, among other things, undertake the measures set forth in Schedule “A”.

The Financial Statements, Audit Process and Related Disclosure

The Audit and Risk Committee shall:

  • As may be delegated by the Board of Directors, review, approve and authorize the issuance of the Company’s interim financial statements, MD&A and interim earnings press releases before the Company publicly discloses this information;
  • Review and recommend to the Board of Directors for approval the Company’s annual financial statements, MD&A and press releases before the Company publicly discloses the information; and
  • Be satisfied that adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements and will periodically assess the adequacy of those procedures.

The Audit and Risk Committee shall also, as it determines to be appropriate:

  • Review with management and the independent auditor,
    • the planning and staffing of the audit by the independent auditor,
    • financial information and any earnings guidance provided to analysts and rating agencies, recognizing that this review and discussion may be done generally (consisting of a discussion of the types of information to be disclosed and the types of presentations to be made) and need not take place in advance of the disclosure of each release or provision of guidance,
    • any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the selection or application of accounting principles or standards, any major issues regarding auditing principles and practices, and the adequacy of internal controls that could significantly affect the Company’s financial statements, as raised by the independent auditor, and review management’s response thereto,
    • all critical accounting policies and practices used,
    • all alternative treatments of financial information by applicable accounting principles or standards that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor,
    • the use of “pro forma” or “adjusted” information that is not consistent with applicable accounting principles or standards,
    • the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures, transactions, arrangements and obligations (contingent or otherwise), on the Company’s financial statements,
    • any disclosures concerning any weaknesses or any deficiencies in the design or operation of internal controls or disclosure controls made to the Audit and Risk Committee by the Chief Executive Officer and the Chief Financial Officer during their certification process for forms filed with applicable securities regulators, and
    • the adequacy of the Franco-Nevada Group’s internal accounting controls and management information systems and its financial, auditing and accounting organizations and personnel and any special steps adopted in light of any material control deficiencies.

  • Review with the independent auditor,
    • the quality as well as the acceptability of the accounting principles or standards that have been applied,
    • any problems or difficulties the independent auditor may have encountered during the provision of its audit-related services, including any restrictions on the scope of activities or access to requested information and any significant disagreements with management, any management letter provided by the independent auditor or other material communication (including any schedules of unadjusted differences) to management and the Company’s response to that letter or communication, and
    • any changes to the Company’s significant auditing and accounting principles, standards and practices suggested by the independent auditor to members of management.

Risk Management Oversight

The Audit and Risk Committee shall:

  • Generally review with management the Franco-Nevada Group’s significant risks and exposures and the steps management has taken to manage, monitor and control such risks and exposures.
  • More specifically review the Company’s principal business, political, financial, litigation and control risks and exposures with a view to ensuring that such risks and exposures are being effectively managed, monitored or controlled by:
    • reviewing the Company’s risk philosophy as set forth by management and the Board of Directors,
    • reviewing management’s assessment of the significant risks and exposures facing the Company,
    • reviewing management’s policies, plans, processes and programs to manage and control significant risks and exposures, including the Company’s loss prevention policies, disaster response and recovery programs, corporate liability protection programs for directors and officer and any other insurance programs, as applicable,
    • receiving regular reports from management regarding the development and implementation of its policies, plans, processes and programs to manage, monitor and control significant risks and exposures, and
    • if the Audit and Risk Committee deems it appropriate, requesting the independent auditor’s opinion of management’s assessment of significant risks facing the Company and how effectively they are managed, monitored and controlled.

Oil and Gas Reserves

The Audit and Risk Committee shall:

  • Recommend to the Board of Directors the appointment of the qualified oil and gas reserves evaluators or auditors, who must be independent of the Company and who will report to the Board of Directors and the Committee on the Company’s oil and gas reserves data.
  • Review, with reasonable frequency, the Company’s procedures relating to the disclosure of information with respect to oil and gas activities, including its procedures for complying with applicable disclosure requirements and restrictions.
  • Review each appointment of the Company’s qualified oil and gas reserves evaluators or auditors, and in the case of any proposed change in such appointment, determine the reasons for the proposal and whether there have been disputes between the appointed qualified oil and gas reserves evaluator or auditor and management of the Company.
  • Review, with reasonable frequency, the Company’s procedures for providing information to the qualified oil and gas reserves evaluators or auditors who report on oil and gas reserves data.
  • Prior to approving the filing of oil and gas reserves data and the report of the qualified oil and gas reserves evaluators or auditors meet with management and each qualified oil and gas reserves evaluator or auditor to:
    • determine whether any restrictions affect the ability of the qualified oil and gas reserves evaluator or auditor to report on the oil and gas reserves data without reservation; and
    • review the oil and gas reserves data and the report of the qualified oil and gas reserves evaluator or auditor thereon.

  • Recommend to the Board of Directors whether to approve:
    • the content and filing of the statement of oil and gas reserves data and other required information,
    • the filing of the report of the independent qualified oil and gas reserves evaluator or auditor, and
    • the content and filing of the required report of management and the directors.

Compliance

The Audit and Risk Committee shall:

  • Establish procedures for:
    • the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and
    • the confidential, anonymous submission by employees of the Franco-Nevada Group of concerns regarding questionable accounting or auditing matters.

  • Review and approve clear policies for the hiring by the Franco-Nevada Group of partners, employees or former partners or employees of the present and former independent auditor of the Company.

The Audit and Risk Committee shall also, as it determines appropriate:

  • Obtain reports from the Chief Financial Officer, other members of management and the independent auditor that the Company’s subsidiary/foreign affiliated entities are in conformity with applicable legal requirements and the Company’s Code of Business Conduct and Ethics, including disclosures of insider and affiliated party transactions.
  • Review with the Chief Financial Officer, other members of management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports, which raise material issues regarding the Company’s financial statements or accounting policies.
  • Advise the Board of Directors of the Company with respect to the Franco-Nevada Group’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Business Conduct and Ethics.
  • Review with the Chief Financial Officer legal matters that may have a material impact on the financial statements, the Franco-Nevada Group’s compliance policies and any material reports or inquiries received from regulators or governmental agencies.
  • Periodically review with management the need for an internal audit function.

Delegation

To avoid any confusion, the Audit and Risk Committee responsibilities identified above are the sole responsibility of the Audit and Risk Committee and may not be delegated to a different committee.

Meetings

The Audit and Risk Committee shall meet at least quarterly and more frequently as circumstances require. All members of the Audit and Risk Committee should strive to be at all meetings. The Audit and Risk Committee shall meet separately, periodically, with management and the independent auditors and may request any officer or employee of the Franco-Nevada Group or the Franco-Nevada Group’s outside counsel or independent auditor to attend meetings of the Committee or with any members of, or advisors to, the Committee. The Audit and Risk Committee also may meet with the investment bankers, financial analysts and rating agencies that provide services to, or follow, the Franco-Nevada Group.

The Audit and Risk Committee may form and delegate authority to individual members and subcommittees where the Committee determines it is appropriate to do so.

Independent advice

In discharging its mandate, the Audit and Risk Committee shall have the authority to retain (and authorize the payment by the Company of) and receive advice from special legal, accounting or other advisors as the Audit and Risk Committee determines to be necessary to permit it to carry out its duties.

Annual evaluation

At least annually, the Audit and Risk Committee shall, in a manner it determines to be appropriate:

  • Perform a review and evaluation of the performance of the Committee and its members, including the compliance of the Audit and Risk Committee with this Charter.
  • Review and assess the adequacy of its Charter and recommend to the Board of Directors any improvements to this Charter that the Committee determines to be appropriate.

Schedule “A”

Qualifications, Performance and Independence of Independent Auditor

  • Review the experience and qualifications of the senior members of the independent auditor’s team.
  • Confirm with the independent auditor that it is in compliance with applicable legal, regulatory and professional standards relating to auditor independence.
  • Review annual reports from the independent auditor regarding its independence and consider whether there are any non-audit services or relationships that may affect the objectivity and independence of the independent auditor and, if so, recommend that the Board of Directors of the Company take appropriate action to satisfy itself of the independence of the independent auditor.
  • Obtain and review such report(s) from the independent auditor as may be required by applicable legal and regulatory requirements.

Updated: March 24, 2011

Compensation and Corporate Governance Committee Charter

Purpose

The Compensation and Corporate Governance Committee (the “Committee”) is appointed by the Board of Directors of Franco-Nevada Corporation (the “Company”) to:

  • develop and recommend to the Board of Directors criteria for selecting new directors,
  • assist the Board of Directors by identifying individuals qualified to become members of the Board of Directors,
  • recommend to the Board of Directors the director nominees for the next annual meeting of shareholders and for each committee of the Board of Directors and to fill vacancies among the directors,
  • develop and recommend to the Board of Directors the Company’s approach to corporate governance issues,
  • assist the Board of Directors in its annual review of the Board’s performance, the effectiveness of the directors and the contribution of individual directors and oversight of the evaluation of management’s performance,
  • review and make recommendations to the Board of Directors with respect to the compensation of directors,
  • undertake such other initiatives that may be necessary and desirable to enable the Board of Directors to provide effective corporate governance,
  • review and recommend to the Board of Directors the appointment of officers of the Company,
  • discharge the Board of Director’s responsibilities relating to compensation of the executives of the Company and its subsidiaries and affiliates (the “Franco-Nevada Group”), and
  • approve and evaluate the compensation plans, policies and programs of senior executives of, or which are otherwise of significance to, the Franco-Nevada Group.

Reports

The Committee shall report to the Board of Directors of the Company on a regular basis, and in any event at least annually, with an assessment of the Board of Director’s performance and discuss the report with the full Board of Directors following the end of each fiscal year. The Committee shall prepare a report on the system of corporate governance practices of the Franco-Nevada Group for inclusion in the annual report or other public disclosure documents of the Company. The Committee also shall report to the Board of Directors of the Company as to the extent (if any) to which the Company does not comply with the standards of corporate governance under applicable legislation (including the rules promulgated by applicable securities regulators) and the rules of the Toronto Stock Exchange (the “TSX”) and any other applicable stock exchanges, if any.

Additionally, the Committee shall report to the Board of Directors of the Company on a regular basis and, in any event, before the public disclosure by the Company, in its management information circular, or as required by continuous disclosure legislation, of directors’ and officers’ remuneration.

The Committee shall also prepare the report on the Company’s executive compensation as required by applicable legislation.

Composition

The members of the Committee shall be two or more individuals who are appointed (and may be replaced) by the Board of Directors of the Company. Each of the members of the Committee shall meet applicable standards for director independence as defined by applicable legislation (including the rules promulgated by applicable securities regulators) and the rules of the TSX and any other applicable stock exchanges, if any. In addition, no more than one-third of the members of the Committee shall be current Chief Executive Officers of publicly traded corporations.

Responsibilities

Director Candidates

The Committee shall:

  • Review annually the competencies, skills and personal qualities required of directors to add value to the Franco-Nevada Group in light of the opportunities and risks facing the Franco-Nevada Group and the Franco-Nevada Group’s proposed strategies, the need to ensure that a majority of the Board of Directors is comprised of individuals who meet applicable independence requirements, and the policies of the Board of Directors with respect to director tenure, retirement and succession and director commitments.
  • Review annually the competencies and skills that the Board considers each existing director to possess and that each new nominee will bring to the Board.
  • In co-operation with the Board of Directors, establish and oversee an appropriate orientation and education program for new directors in order to familiarize them with the Franco-Nevada Group and its business (including the Franco-Nevada Group’s reporting structure, strategic plans, significant financial, accounting and risk issues, compliance programs and policies, management and external auditors).
  • Seek individuals qualified (in context of the Franco-Nevada Group’s needs and any formal criteria established by the Board of Directors) to become members of the Board of Directors for recommendation to the Board of Directors.
  • Review and recommend to the Board of Directors the membership and allocation of directors to the various committees of the Board of Directors.
  • Establish procedures for the receipt of comments from all directors to be included in an annual assessment of the Board of Director’s performance.
  • If the need should arise, approve the engagement of independent advisors for individual directors at the expense of the Company (provided that the Committee shall conduct the independence assessment described below prior to engaging or obtaining advice from any Compensation Advisor (as defined below)).
  • At least annually, review and make recommendations to the Board of Directors with respect to the compensation of directors, the Chairman and those acting as committee chairs to, among other things, ensure their compensation appropriately reflects the responsibilities they are assuming.
  • Have the sole authority to appoint and, if appropriate, terminate any search firm to be used to identify director candidates and to approve the search firm’s fees and other retention terms.

Corporate Governance and Compliance

The Committee shall:

  • Review from time to time the size of the Board of Directors and number of directors who are independent for the purpose of applicable requirements.
  • At least annually, review the adequacy of the Company’s corporate governance practices, Code of Business Conduct and Ethics, Policy Concerning Confidentiality, Fair Disclosure and Trading in Securities and other significant policies of the Company and recommend any proposed changes thereto to the Board of Directors for approval.
  • Monitor applicable standards for director independence.
  • At least annually, audit the practices of the Board of Directors (including separate meetings of non-management directors) to ensure compliance of the Company’s corporate governance practices.
  • At least annually, review the powers, mandates and performance, as well as the membership, of the various committees of the Board of Directors and, if appropriate, make recommendations to the Board of Directors relating thereto.
  • At least annually, review the relationship between senior management and the Board of Directors and, if appropriate, make recommendations to the Board of Directors with a view to ensuring that the Board of Directors is able to function independently of management.
  • Periodically review with the Board of Directors the succession plans relating to the position of the Chief Executive Officer and other senior positions and make recommendations to the Board of Directors with respect to the selections of individuals to occupy these positions.
  • Monitor the Company’s Code of Business Conduct and Ethics and be responsible for granting any waivers from the application of that Code and review management’s monitoring of compliance with that Code.
  • Ensure that this Charter is posted on the Company’s web site and include a reference thereto in the Company’s annual report.

Compensation

The Committee shall:

  • Have the sole authority to recommend to the independent directors of the Company the compensation of the Chief Executive Officer, considering (among other things) the input of the Board of Directors.
  • At least annually, review and approve the position description of the Chief Executive Officer and the performance goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance in light of those goals and objectives, and recommend to the Board of Directors the Chief Executive Officer’s compensation levels based on that evaluation. In determining any long-term incentive component of the Chief Executive Officer compensation, the Committee shall consider the Franco-Nevada Group’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and awards given to the Chief Executive Officer in past years, with a view to maintaining a compensation program for the Chief Executive Officer at a fair and competitive level consistent with the best interests of the Franco-Nevada Group.
  • At least annually, review and make recommendations to the Board of Directors with respect to the compensation of all members of the Board of Directors and non-CEO executive officers, including incentive-compensation plans, equity-based plans, the terms of any employment agreements, severance arrangements and change in control arrangements or provisions, and any special or supplemental benefits. In reviewing and making recommendations to the Board of Directors, the Committee shall ensure that a process is in place to maintain a compensation program for the senior executives and directors of the Franco-Nevada Group at a fair and competitive level, consistent with the best interests of the Franco-Nevada Group.
  • Review all executive compensation disclosure before the Company publicly discloses this information.
  • Periodically review and, when necessary, make recommendations to the Board of Directors regarding, the role and design of incentive compensation programs and equity-based compensation programs for the Franco-Nevada Group’s employees.
  • Ensure compliance of the Company’s compensation policies and practices with its enterprise risk management goals.
  • Fix and determine (and, as it determines to be appropriate, delegate the authority to fix and determine) awards to employees of stock or stock options pursuant to any of the Franco-Nevada Group’s employee stock option or stock-related plans now or from time to time in effect and exercise such other power and authority as may be permitted or required under those plans.
  • At least annually, review key human resources policies and programs in place and under development to ensure that programs related to manpower planning, management development, succession planning, career path planning and performance evaluation are effectively integrated with the strategy of the Franco-Nevada Group.
  • At least annually, review and approve the Franco-Nevada Group’s policies on salary administration, recruitment, job evaluation, pay and employment equity, basic incentive and total cash compensation, retirement benefits and long-term incentives.
  • Review management’s policies and practices for ensuring that the Franco-Nevada Group complies with legal prohibitions, disclosure and other requirements on making or arranging for personal loans and amending or extending any such loans or arrangements.

Meetings

The Committee shall meet as circumstances require, but no less than annually. All members of the Committee should strive to be at all meetings. The Committee will have an in camera session at every meeting. The Committee shall meet separately, periodically, with management and may request any officer or employee of the Franco-Nevada Group or the Franco-Nevada Group’s outside counsel to attend meetings of the Committee or with any members of, or advisors to, the Committee.

The Committee may form and delegate authority to individual members and subcommittees where the Committee determines it is appropriate to do so.

Compensation advisors

The Committee shall have the sole authority to retain and terminate (or obtain the advice of) any advisor to assist it in the performance of its duties on compensation matters (a “Compensation Advisor”), but only after taking into consideration all factors relevant to the independence from management, including those specified in Section 303A.05(c) of the NYSE Listed Company Manual. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any Compensation Advisor retained by the Committee, and shall have sole authority to approve the Compensation Advisor’s fees and the other terms and conditions of the Compensation Advisor’s retention. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to any Compensation Advisor retained by the Committee.

Annual evaluation

At least annually, the Committee shall, in a manner it determines to be appropriate:

  • Perform a review and evaluation of the performance of the Committee and its members, including the compliance of the Committee with this Charter.
  • Review and assess the adequacy of its Charter and recommend to the Board of Directors any improvements to this Charter that the Committee determines to be appropriate.

Updated: October 29, 2013

Business Integrity Policy

Introduction

This Business Integrity Policy is intended to ensure that Franco-Nevada Corporation, including its subsidiaries, (the “Company”) does not receive an improper advantage in its business dealings and that all payments and expenses are properly recorded in its financial books and records. This Business Integrity Policy is intended to supplement the Company’s Code of Business Conduct and Ethics, in particular, its provisions on “Compliance with Laws, Rules and Regulations”, “Competition and Fair Dealing”, “Gifts and Entertainment”, “Payments to Government Personnel” and “Accuracy of Company Records and Reporting”.

Definitions

Agent” means a person, a corporation or other entity retained by the Company to represent its business interests or to act on its behalf in a particular country or to make payments on behalf of the Company.

Bribe” means any payment, promise to pay, or authorization of the payment of any money, gift, reward, thing of value, advantage or benefit of any kind, that has been given or offered to a Public Official either directly or through an intermediary, in order to influence the making or not making or implementation of a decision or act by a Public Official, and also means all attempts to make such payments.

Business Partner” means any corporation or other entity with which the Company enters into a partnership or joint venture agreement or other similar business relationship (including a royalty or a stream).

Contractor” means a person, a corporation or other entity retained to supply services to the Company, and for greater certainty includes all consultants; provided however that for purposes of this Policy, anyone who acts on the Company’s behalf in a particular country or makes payments on behalf of the Company, shall be considered an Agent and not a Contractor.

Franco-Nevada Personnel” means all directors, officers and employees of the Company.

Facilitating Payment” means any small payment, promise to pay, or authorization of a modest one-off payment made solely to expedite or secure the performance of routine government actions that are part of a Public Official’s duties or functions such as:

  1. obtaining licences, permits and other official documents to qualify to do business in a foreign country;
  2. processing governmental papers, such as visas and work permits;
  3. providing or obtaining police protection, telephone service, utilities, and mail services; or
  4. actions of a similar nature.

Improper Payment” means a Bribe, Kickback or Facilitating Payment.

Kickback” means the payment, promise to pay, or the authorization of the payment of a portion of contract consideration to a Public Official. This includes the improper utilization of sub contracts, purchase orders, consulting agreements or gifts to channel payments to a Public Official, employees or other representatives of a Public Official, or to their relatives or business associates.

Policy” means this Business Integrity Policy.

Public Official” means:

  1. any person employed or appointed by a government, state, province, municipality, or public international organization;
  2. any owner, director, officer or employee of an organization that performs a governmental function;
  3. any person employed or appointed by an agency, department, corporation, board, commission or enterprise that is controlled by a government, state, province, municipality, or public international organization;
  4. any person acting in an official capacity for a government, state, province, municipality, or public international organization, or for an agency, department, corporation, board, commission or enterprise that is owned, in whole or in part, or controlled by a government, state, province, municipality, or public international organization;
  5. any person acting for or on behalf of a government, state, province, municipality, or public international organization, or for an agency, department, corporation, board, commission or enterprise that is owned, in whole or in part, or controlled by a government, state, province, municipality, or public international organization; or
  6. any elected officials, candidates for public office, political parties, and officers, employees, representatives and agents of political parties.

Compliance

  1. The Audit and Risk Committee of the Company’s Board of Directors (the “Committee”) shall review compliance with this Policy on an annual basis.
  2. The Chief Legal Officer shall oversee this Policy and shall report directly to the Committee.

Responsibilities of the Chief Legal Officer

The Chief Legal Officer shall be responsible for:

  1. establishing and maintaining the practices and procedures necessary to implement this Policy and monitor compliance with its provisions;
  2. disseminating this Policy to all Franco-Nevada Personnel;
  3. providing a training program on the substance of this Policy for all Franco-Nevada Personnel as the Chief Legal Officer deems appropriate;
  4. procuring from all Franco-Nevada Personnel on an annual basis certification of understanding of and compliance with this Policy;
  5. establishing, maintaining and making accessible to all Franco-Nevada Personnel, a mechanism for the reporting, including anonymously if preferred, of actual or suspected violations of this Policy, including through the Company’s Employee Complaint Procedures for Accounting and Auditing Matters; and
  6. providing the Committee with reports on the operation of and compliance with the Policy as necessary and at least once annually.

Improper Payments

The Company and Franco-Nevada Personnel shall not, either directly or through an intermediary, promise, offer or pay, or authorize the promise, payment or making of an offer to pay an Improper Payment.

In particular, the Company and Franco-Nevada Personnel shall not, either directly or through an intermediary pay or offer anything of value to a Public Official, in order to influence any act within the recipient’s official capacity, or to induce the recipient to violate its, his or her lawful duty, or to induce the recipient to use its, his or her influence with any level of government to affect or influence any act or decision of such government for the purpose of obtaining, retaining or directing business, or any undue advantage.

Exception to Prohibition on Facilitating Payments

Generally, the Company prohibits the making of Facilitating Payments. However, if Franco-Nevada Personnel reasonably believe his or her health or safety to be at risk and believes that the making of a payment in response to a demand is necessary to preserve his or her health or safety, such Personnel may make a payment which would otherwise be prohibited. The amount and purpose of the payment must be properly documented and reported forthwith to the Chief Legal Officer, who will in turn report such payments to the Committee at its next quarterly meeting. The Chief Legal Officer should be consulted if there is any doubt whether a payment constitutes a Facilitating Payment.

Due Diligence

Prior to the Company retaining a Contractor or Agent or entering into a relationship with a Business Partner, the Company shall ensure that appropriate due diligence for the proportionate degree of risk presented by the nature and sensitivity of the role to be performed is carried out, either by the Company or by a reputable third party, and that the reputation and background of the prospective Contractor, Agent or Business Partner, as applicable, is confirmed in the following areas as appropriate in the particular circumstances: management information, ownership information, qualifications, financial information, reputation, references and compensation.

Contractors and Agents

In the ordinary course of business, from time to time, the Company retains persons, corporations and other entities to supply services to the Company, in particular, technical/due diligence services. They are considered “Contractors” within the meaning of the Policy. They do not and are not authorized to act on behalf of the Company and do not and are not authorized to make payments on behalf of the Company and, accordingly, it is expected that the Contractors should not be in a position to present risk to the integrity of the Company’s business dealings.

In very limited circumstances, the Company may retain a person, corporation or other entity to represent its business interests or to act on its behalf in a particular country or to make payments on behalf of the Company. They are considered “Agents” within the meaning of this Policy. Given the potential role of Agents, Agents could present risk to the integrity of the Company’s business dealings.

In order to protect the integrity of the Company’s business dealings, the Company shall retain a Contractor or Agent using a written agreement, where necessary, that contains the provisions in Schedule “A” as appropriate and negotiable for the proportionate degree of risk presented by the nature and sensitivity of the role to be performed by the Contractor or Agent. Given the degree of risk typically presented by the role of Contractors, lesser inclusion, if at all, of the provisions in Schedule “A” would be expected. Given the degree of risk that could be presented by the role of Agents, greater inclusion, if not all, of the provisions in Schedule “A” would be expected. Any such agreement must be approved by the Chief Legal Officer or another executive officer of the Company before the Company can execute same. The specific pre-approval of the Chief Legal Officer is required if an agreement with a Contractor or Agent contemplates compensation that includes a bonus or success fee component.

Business Partners

Any partnership or joint venture agreement or agreement in connection with a similar business relationship (including a royalty or a stream) entered into by the Company shall include the following provisions as appropriate and negotiable in the circumstances:

  1. An acknowledgement by the Business Partner that it understands the provisions of Canadian, U.S. and applicable local laws pertaining to anti-corruption.
  2. The Business Partner shall provide representations and warranties and covenants to the Company relating to compliance with applicable Canadian, U.S. and local laws pertaining to anti-corruption.
  3. The Company has the right to audit the Business Partner’s compliance with the agreement in relation to anti-corruption laws.

Gifts and Entertainment

The offer and acceptance of entertainment, gifts and favours must at all times be in compliance with the policies of the recipient’s employer, with the Company’s Code of Business Conduct and Ethics, this Policy and any Company specific procedures. Gifts and hospitality given to Public Officials must comply at all times with Canadian, U.S. and applicable local anti-corruption laws and must be reasonable, infrequent and appropriate such that they cannot be interpreted as an attempt to influence a decision or act by the Public Official.

Any gift, hospitality and/or reimbursement of travel or other expenses in excess of $150 ultimately provided to a Public Official must be reported to the Chief Legal Officer so that it can be fully and accurately recorded in the Company’s accounting records.

Employment of Public Officials

No Public Official shall be employed or retained as a consultant, agent or representative of the Company, unless:

  1. the Chief Legal Officer is satisfied that such employment or retainer is lawful in the country concerned;
  2. the Chief Legal Officer has determined that the services to be rendered to the Company do not conflict in any manner with the governmental duties of such person;
  3. where possible, an ethics opinion from the Public Official’s government employer has been obtained; and
  4. the Chief Executive Officer of the Company approves such hiring.

Books and Records

Neither Franco-Nevada nor any Franco-Nevada Personnel shall do any of the following for the purpose of bribing a Public Official in order to obtain or retain an advantage in the course of business or for the purpose of hiding an Improper Payment:

  1. establish or maintain accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and auditing standards;
  2. make transactions that are not recorded in those books and records or that are inadequately identified in them;
  3. record non-existent expenditures in those books and records;
  4. enter liabilities with incorrect identification of their object in those books and records;
  5. knowingly use false documents; or
  6. intentionally destroy accounting books and records earlier than permitted by law.

Violations

  1. Any Franco-Nevada Personnel who becomes aware of or suspects a violation of this Policy must promptly report the matter to the Chief Legal Officer. To assist Franco-Nevada Personnel in being alert to potential violations, a list of “red flags” is set out in Schedule “B” to this Policy.
  2. Information communicated to any Franco-Nevada Personnel in a supervisory or advisory position in the Company regarding a violation of this Policy shall be reported to the Chief Legal Officer, who in turn shall investigate and report any violation of this Policy to the Company’s Chief Financial Officer and the Committee.
  3. A determination of whether a particular past or proposed payment or action is in violation of this Policy shall be made by the Chief Legal Officer in consultation with the Chief Financial Officer and/or the Chair of the Committee.
  4. Retaliation by anyone as a consequence of Franco-Nevada Personnel making a good faith report of a possible violation of the law or this Policy is strictly prohibited.
  5. Violation of this Policy and/or applicable anti-bribery laws can result in severe civil penalties for both the individual Franco-Nevada Personnel and the Company, and in criminal penalties including fines and imprisonment for up to 5 years per violation for individuals. In addition, a violation may result in other legal and adverse consequences, including securities commission actions or investigations, shareholder lawsuits, disgorgement of profits, and long-term damage to the Company’s reputation both in Canada and the U.S. and abroad. Violating this Policy therefore will result in the Company taking appropriate corrective disciplinary action, including where appropriate dismissal or termination of contract, and immediately reporting same to the Company’s Chief Executive Officer and the Committee.

Audit

The Company’s Controller shall promptly inform the Chief Legal Officer and the Committee of every potential or suspected Improper Payment or violation of this Policy that comes to his or her attention and shall recommend procedures to attempt to prevent the recurrence of any potential or suspected violations.

Adopted: March 19, 2014


Schedule “A”

Suggested provisions for written agreements with Contractors and Agents:

  1. A precise definition of the scope of the Contractor’s/Agent’s duties, the territory in which the services will be performed (if applicable), and the compensation of the Contractor/Agent.
  2. An acknowledgement by the Contractor/Agent that it, he or she understands the provisions of Canadian, U.S. and applicable local laws pertaining to anti-corruption; representations, warranties and covenants by the Contractor/Agent relating to compliance with applicable Canadian, U.S. and local laws pertaining to anti-corruption; and a covenant by a Contractor/Agent whose agreement has a term (including renewal periods) in excess of one year to provide on an annual basis certification of compliance.
  3. A specific acknowledgement by the Contractor/Agent that it, he or she will not make an Improper Payment (based on the defined terms in this Policy).
  4. Representations and warranties by the Contractor/Agent that, except as disclosed in writing to the Company, neither it, he or she nor any of its, his or her family members, owners, directors, officers, principals or key employees are Public Officials, and that it, he or she will promptly inform the Company of any changes in that regard.
  5. A provision that the assignment of the entire agreement or any rights, duties or obligations under the agreement by the Contractor is prohibited without the Company’s prior written consent and that if the Company permits any assignment of the agreement, the resulting agreement will contain similar anti-corruption provisions as in the original agreement, and the Contractor/Agent will not by that fact be discharged from its, his or her obligations.
  6. All requests by the Contractor/Agent for expense reimbursement must be supported by documentation acceptable to the Company. Detailed records for all approved expenses shall be kept for at least the minimum period required under the applicable laws.
  7. Provision for automatic termination, at the Company’s sole discretion, in the event the Contractor/Agent has made, attempted to make, makes, attempts to make, or proposes to make, an Improper Payment.
  8. The Company has the right to audit the Contractor’s/Agent’s compliance with the agreement, including the expenses and invoices of the Contractor/Agent and otherwise in relation to anti-corruption laws.

Schedule “B”

Red Flags

Franco-Nevada Personnel must be sufficiently well-informed about the risks of conducting Company business through Contractors/Agents to be able to identify and report red flags that appear in relation to existing or previous relationships, such as:

  • Country with reputation for widespread corruption;
  • Unusual or excessive commissions or fees;
  • Requests for cash payment or payment to offshore accounts or requests to alter or backdate invoices;
  • Public reports, rumours or inferences of improper payments;
  • Unwillingness to involve or inform superiors or to certify compliance;
  • Lack of facilities or qualified staff;
  • Lack of experience or track record in the field or industry;
  • Close relationships or family ties to government officials;
  • A potential government customer or authorizing agency is recommending the consultant or requiring the retention of that consultant as a condition of doing business;
  • Misrepresentations or inconsistencies in the due diligence process; or
  • Unwillingness of the consultant to provide information to support thorough due diligence by the Company.

Code of Business Conduct and Ethics

Introduction

This Code of Business Conduct and Ethics covers a wide range of business practices and procedures, and reflects the core values of honesty, responsibility and fairness of Franco-Nevada Corporation (the “Company“). It does not cover every issue that may arise, but sets out basic principles to guide all directors, officers and employees of the Company and its subsidiaries and affiliates (collectively, “Franco-Nevada Personnel“). All Franco-Nevada Personnel must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. This Code also should be provided to and followed by the agents and representatives, including advisors, of the Company and its subsidiaries and affiliates (the “Franco-Nevada Group“).

If a law conflicts with a policy in this Code, Franco-Nevada Personnel must comply with the law. If a local custom or policy conflicts with this Code, Franco-Nevada Personnel must comply with this Code. If you have any questions about these conflicts, you should ask the Franco-Nevada Group’s Chief Legal Officer how to handle the situation.

Franco-Nevada Personnel who violate the standards in this Code will be subject to disciplinary action, which could include the termination of their employment or other relationship with the Company. If you are in a situation that you believe may violate or lead to a violation of this Code, follow the guidelines described below under “Compliance Procedures”.

The code

Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which the Franco-Nevada Group’s ethical standards are built and is critical to our reputation and continued success. All Franco-Nevada Personnel must respect and obey the laws of the various jurisdictions in which the Company operates and avoid even the appearance of impropriety. Although not all Franco-Nevada Personnel are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel. The Franco-Nevada Group’s Chief Legal Officer (or delegate) is always available to assist Franco-Nevada Personnel in determining applicable legal requirements.

Conflicts of Interest

A “conflict of interest” exists when a person’s private interests interfere in any way with the interests of the Company. Franco-Nevada Personnel may also find it difficult to perform their work for the Franco-Nevada Group objectively and effectively if they or members of their families have received improper personal benefits through their position with the Franco-Nevada Group.

Loans to, or guarantees of obligations of, Franco-Nevada Personnel may present conflicts of interests.
It is almost always a conflict of interest for Franco-Nevada Personnel to work at the same time for a competitor or a person with whom the Franco-Nevada Group has a business relationship. Franco-Nevada Personnel are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business relationship (except on behalf of the Franco-Nevada Group) with competitors of the Franco-Nevada Group or persons with whom the Franco-Nevada Group has business relationships. All outside interests must be brought to the attention of Franco-Nevada Group’s Chief Legal Officer before any action or commitment is undertaken.

Conflicts of interest are prohibited as a matter of Franco-Nevada Group policy, except under guidelines approved by the Board of Directors of the Company. Conflicts of interest may not always be clear-cut. If you have a question, you should consult with the Franco-Nevada Group’s Chief Legal Officer (or delegate). Any Franco-Nevada Personnel who become aware of a conflict or potential conflict should bring it to the attention of the Franco-Nevada Group’s Chief Legal Officer (or delegate) and consult the procedures described below under “Compliance Procedures“.

Confidentiality

Franco-Nevada Personnel must maintain the confidentiality of confidential information entrusted to them by the Company and persons with whom the Franco-Nevada Group does business, except when disclosure is authorized by the Chief Executive Officer or the Chief Legal Officer or is required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors or harmful to the Franco-Nevada Group or the person to whom it relates if disclosed. The obligation to preserve confidential information continues even after Franco-Nevada Personnel cease to have a relationship with the Franco-Nevada Group.

Franco-Nevada Personnel who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of the Franco-Nevada Group’s business. Compliance by all Franco-Nevada Personnel with the Company’s Policy Concerning Confidentiality, Fair Disclosure and Trading in Securities, as amended from time to time, is required, and all Franco-Nevada Personnel are required to sign the Franco-Nevada Group’s Confidentiality Agreement.

Corporate Opportunities

Franco-Nevada Personnel are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or positions without the consent of the Board of Directors and from using corporate property , information, or position for improper personal gain. No Franco-Nevada Personnel may compete with the Franco-Nevada Group directly or indirectly. Franco-Nevada Personnel owe a duty to the Franco-Nevada Group to advance its legitimate interests, before their own, when the opportunity to do so arises.

Protection and Proper Use of Company Assets

All Franco-Nevada Personnel should endeavor to protect the Franco-Nevada Group’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Franco-Nevada Group’s profitability. Any suspected incident of fraud, theft or other irregularity should be reported immediately to the Franco-Nevada Group’s Chief Legal Officer for investigation. Franco-Nevada Group equipment should not be used for non-Franco-Nevada Group business, other than incidental personal use; other use requires pre-approval by an immediate supervisor.

The obligation of Franco-Nevada Personnel to protect the Franco-Nevada Group’s assets includes the Franco-Nevada Group’s proprietary information. Proprietary information includes any information that is not known generally to the public or would be helpful to the Franco-Nevada Group’s competitors. Examples of proprietary information include intellectual property (such as trade secrets, patents, trademarks, copyrights, or scientific or technical engineering data), business, marketing and service plans, designs, databases, company guides, manuals, client information, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Franco-Nevada Group policy and could be illegal and result in civil or criminal penalties. The obligation to preserve the confidentiality of proprietary information continues even after Franco-Nevada Personnel cease to have a relationship with the Franco-Nevada Group.

Franco-Nevada Group assets (such as funds, products or computers) may be used only for legitimate business purposes. Franco-Nevada Group assets may never be used for illegal purposes.

Competition and Fair Dealing

The Franco-Nevada Group seeks to excel and to outperform any competitors fairly and honestly through superior performance and not through unethical or illegal business practices. Taking proprietary information without the owner’s consent, inducing disclosure of that information by past or present employees of other persons or using that information is prohibited. Franco-Nevada Personnel should respect the rights of, and deal fairly with, the Franco-Nevada Group’s competitors and persons with whom the Franco-Nevada Group has a business relationship. No Franco-Nevada Personnel should take unfair advantage of anyone through illegal conduct, manipulation, concealment, abuse of proprietary information, misrepresentation of material facts or any other intentional unfair-dealing practice. Nor should any Franco-Nevada Personnel act in a manner that may be anti-competitive under anti-trust laws. The Franco-Nevada Group’s Chief Legal Officer (or delegate) is always available to assist Franco-Nevada Personnel in determining the application of those laws.

Gifts and Entertainment

Business gifts and entertainment are customary courtesies designed to build goodwill and constructive relationship among business partners. These courtesies may include such things as meals and beverages, tickets to sporting or cultural events, discounts not available to the general public, accommodation and other merchandise or services. A problem may arise when these courtesies compromise, or appear to compromise, the Franco-Nevada Group’s ability to make fair and objective business decisions or to gain an unfair advantage.

Offering or receiving any gift, gratuity or entertainment that might be perceived to unfairly influence a business relationship should be avoided. These guidelines apply at all times and do not change during traditional gift-giving seasons.

No gift or entertainment should ever be offered, given, provided, authorized or accepted by any Franco-Nevada Personnel or their family members unless it is not a cash gift, is consistent with customary business practices, is not excessive in value, cannot be construed as a bribe or payoff, and does not violate any laws. Strict rules apply when the Franco-Nevada Group does business with governmental agencies and officials. Franco-Nevada Personnel should discuss with Franco-Nevada Group’s Chief Legal Officer any gifts or proposed gifts about which they have any questions.

Payments to Government Personnel

All Franco-Nevada Personnel must abide by all the laws of Canada as well as all the laws of the countries in which Franco-Nevada conducts business. In addition all Franco-Nevada Personnel must comply with all laws prohibiting improper payments to domestic and foreign officials. Everyone is reminded that many countries in which the Company operates have specific laws, rules and regulations in this area which must be complied with.

Certain governments have laws regarding business gifts that may be accepted by government personnel. The promise, offer or delivery to an official or employee of various governments of a gift, favor or other gratuity in violation of these laws would not only violate Franco-Nevada Group policy but could also be a criminal offense. Illegal payments should not be made to government officials of any country. The Franco-Nevada Group’s Chief Legal Officer (or delegate) can provide guidance to Franco-Nevada Personnel in this area.

Discrimination, Harassment and Equal Opportunity

The diversity of Franco-Nevada Personnel is a tremendous asset. The Franco-Nevada Group is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. Franco-Nevada Personnel are encouraged to speak with the Franco-Nevada Group’s Chief Legal Officer (or delegate), when a co-worker’s conduct makes them uncomfortable and to report harassment when it occurs. Compliance by all Franco-Nevada Personnel with the Company’s Discrimination, Harassment and Equal Opportunity Policy, as amended from time to time, is required.

Health and Safety

The Franco-Nevada Group strives to provide all Franco-Nevada Personnel with a safe and healthy work environment. All Franco-Nevada Personnel have responsibility for maintaining a safe and healthy workplace by following health and safety rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. Violence and harassment in the workplace are not permitted. The Company expects that all employees will be free of alcohol and personnel with the Company’s Health and Safety Policy, as amended from time to time, is required.

Accuracy of Company Records and Reporting

The Franco-Nevada Group requires honest and accurate recording and reporting of information to make responsible business decisions. The Franco-Nevada Group’s accounting records are relied upon to produce reports for our management, directors, shareholders, governmental agencies and persons with whom the Franco-Nevada Group does business. All of the Franco-Nevada Group’s financial statements and the books, records and accounts on which they are based must appropriately reflect the Franco-Nevada Group’s activities and conform to applicable legal and accounting requirements and to the Franco-Nevada Group’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless required by applicable law or regulation.

All Franco-Nevada Personnel have a responsibility, within the scope of their positions, to ensure that the Franco-Nevada Group’s accounting records do not contain any false or intentionally misleading entries. The Franco-Nevada Group does not permit intentional misclassification of transaction as to accounts, departments or accounting records. All transactions must be supported by accurate documentation in reasonable detail and recorded in the proper accounts and in the proper accounting period.
Many Franco-Nevada Personnel use business expense accounts, which must be documented and recorded accurately. If Franco-Nevada Personnel are not sure whether a certain expense is legitimate, an immediate supervisor can provide advice.
Business records and communications often become public through legal or regulatory proceedings or the media. Franco-Nevada Personnel should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations that can be misunderstood. This requirement applies equally to communications of all kinds, including e-mail, informal notes, internal memos, and formal reports.

Use of E-mail and Internet Services

E-mail and internet services are provided by the Franco-Nevada Group to assist Franco-Nevada Personnel in carrying out their work. Incidental and occasional personal use is permitted, but never for personal gain or any improper purpose. Franco-Nevada Personnel may not access, send or download any information that could be insulting or offensive to another person, such as sexually explicit messages, cartoons, jokes, unwelcome propositions, derogatory messages based on racial or ethnic characteristics or any other messages that could reasonably be viewed as harassment. Flooding the Franco-Nevada Group’s system with junk mail and trivia hampers the ability of the Franco-Nevada Group’s system to handle legitimate Franco-Nevada Group business and is prohibited.

Messages (including voice-mail) and computer information sent, received or created by Franco-Nevada Personnel are considered Franco-Nevada Group property and Franco-Nevada Personnel should recognize that these messages and information are not “private”. Unless prohibited by law, the Franco-Nevada Group reserves the right to access and disclose those messages and information as necessary for its business purposes. Franco-Nevada Personnel should use good judgement and not access, send messages or store any information that they would not want to be seen or heard by others.

Additional Policies

The Company may adopt additional policies, including without limitation, various accounting and finance and policies, a privacy policy, information systems use and internet and social networking policies, contract and document retention policies, human resources and employee conduct policies and other policies on topics or issues of importance to the proper and ethical conduct of the business of the Company and Franco-Nevada Personnel must seek out these policies and adhere to their purposes and specific terms.

Reporting any illegal or unethical behavior

The Franco-Nevada Group has a strong commitment to the conduct of its business in a lawful and ethical manner. Franco-Nevada Personnel are expected to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is the policy of the Franco-Nevada Group not to allow retaliation for reports of misconduct by others made in good faith. It is, at the same time, unacceptable to file a report knowing that it is false. All Franco-Nevada Personnel are required to cooperate in internal investigations of misconduct.

Compliance procedures

All Franco-Nevada Personnel must work to ensure prompt and consistent action against violations of this Code. However, in some situations it is difficult to know right from wrong. Since we cannot anticipate every situation that will arise, it is important that the Franco-Nevada Group have a way to approach a new question or problem. These are the steps to keep in mind:

  • Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.
  • Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will help you to focus on the specific question you are faced with and the alternatives you have. Use your judgement and common sense – if something seems unethical or improper, it probably is.
  • Clarify your responsibility and role. Are you qualified to do what is being asked? In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.
  • Discuss the problem with Franco-Nevada Group’s Chief Legal Officer. This is the basic guidance for all situations. In many cases, Franco-Nevada Group’s Chief Legal Officer will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is the responsibility of Franco-Nevada Group’s Chief Legal Officer to help solve problems.
  • You may report ethical violations in confidence and without fear of retaliation. If your situation requires that your identity be kept secret, your anonymity will be protected. The Franco-Nevada Group does not permit retaliation of any kind against employees for good faith reports of ethical violations.
  • Always ask first, act later: If you are unsure of what to do in any situation, seek guidance before you act.

Updated: March 24, 2011

Acknowledgement


I, ______________________, acknowledge that I have read and understand Franco-Nevada Corporation’s Code of Business Conduct and Ethics (the “Code”) and agree to comply with the Code.

Date
Signature

Employee Complaint Procedure

Introduction

As indicated in its Code of Business Conduct and Ethics, Franco-Nevada Corporation (the “Company”) and its subsidiaries and affiliates (the “Franco-Nevada Group”) has a strong commitment to the conduct of its business in a lawful and ethical manner. Directors, officers and employees of the Franco-Nevada Group (collectively “Franco-Nevada Personnel”) are expected to talk to Franco-Nevada Group’s Chief Legal Officer or other appropriate personnel about concerns they may have in respect of illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is the policy of the Franco-Nevada Group not to allow retaliation for reports of such conduct made in good faith. It is, at the same time, unacceptable to file a report knowing it is false.

The Franco-Nevada Group requires honest and accurate recording and reporting of information. The Franco-Nevada Group's accounting records are relied upon to produce reports for management, directors, shareholders, governmental agencies and persons with whom the Franco-Nevada Group does business. All of the Company's financial statements and the books, records and accounts on which they are based, must appropriately reflect the Franco-Nevada Group's activities and conform to applicable legal, accounting and auditing requirements and to the Franco-Nevada Group's system of internal controls.

Confidential Complaint Procedures

The Company has established procedures to permit Franco-Nevada Personnel to submit good faith complaints relating to any questionable accounting or auditing matter, including:

  • fraud or deliberate error in the preparation, evaluation, review or audit of any financial statements of the Company,
  • fraud or deliberate error in the recording or maintaining of financial records of the Franco-Nevada Group,
  • deficiencies in, or non-compliance with, the Franco-Nevada Group's system of internal controls,
  • misrepresentations or false statements to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Franco-Nevada Group, or
  • deviations from full and fair reporting of the Franco-Nevada Group's financial condition.

Any employee with a good faith concern about any accounting or auditing matter can report those concerns directly to the Franco-Nevada Group’s Chief Legal Officer as follows:

Franco-Nevada Corporation
Attention: Chief Legal Officer (CONFIDENTIAL), 199 Bay Street, Suite 2000,
P.O. Box 285, Commerce Court Postal Station, Toronto, Ontario M5L 1G9
facsimile: (416) 306-6330

or directly to the Chair of the Audit and Risk Committee as follows:

Attention: Chair Audit and Risk Committee, Franco-Nevada Corporation (CONFIDENTIAL)
Brookfield Place, 181 Bay Street, Suite 3510, Toronto, Ontario M5J 2T3
facsimile: (416) 324-9494

or through the Franco-Nevada Group’s Compliance Hotline. Instructions for access to the Compliance Hotline are available on the Franco-Nevada Group’s intranet.

Confidentiality of complaints received by the Franco-Nevada Group’s Chief Legal Officer will be maintained to the fullest extent possible, consistent with the need to conduct an appropriate review. When possible, the Franco-Nevada Group’s Chief Legal Officer will acknowledge receipt of a complaint, although it is not the intention to communicate to the person making the complaint the status of its review or resolution.

Upon receipt of a complaint, the Franco-Nevada Group’s Chief Legal Officer, acting alone or as appropriate with consultation with the Chief Financial Officer will determine whether the complaint relates to a questionable accounting or auditing matter. Any complaints that do, will be immediately brought to the attention of, and reviewed under the direction of, the Audit and Risk Committee, with oversight by the Franco-Nevada Group’s Chief Legal Officer or such other persons as the Audit and Risk Committee determines to be appropriate. Prompt and appropriate corrective action will be taken when and as warranted in the judgement of the Audit and Risk Committee.

The Franco-Nevada Group’s Chief Legal Officer will maintain a log of all complaints that are received, tracking their receipt, investigation and resolution. Complaints and the log will be maintained in accordance with the Franco-Nevada Group's document retention policy.

Protection of Franco-Nevada Personnel

The Franco-Nevada Group will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any Franco-Nevada Personnel in the terms and conditions of employment based upon any lawful actions with respect to good faith reporting of complaints as contemplated in these procedures.

Diversity Policy

The board of directors (the “Board”) of Franco-Nevada Corporation (the “Corporation”) believes that highly qualified individuals of diverse backgrounds at both the board and senior management levels are important elements in achieving strong corporate performance as well as good governance.

To support this, the Compensation and Corporate Governance Committee of the Board, when identifying candidates to recommend for appointment/election to the Board or for appointment/promotion to senior management positions:

(a) considers candidates who are highly qualified based on their experience, functional expertise, and personal skills, qualities and values;

(b) puts emphasis on diversity including gender, ethnicity and geographic background;

(c) engages where appropriate, qualified independent external advisors to conduct searches for candidates that meet the Board’s skills and diversity criteria.

In addition to the significant progress made to date, the Board aspires towards meaningful progress being achieved in future in respect of the number of independent women directors on the Board.

The Board will review this policy annually to ensure that it is effective in achieving its objectives.

Franco-Nevada Practices and NYSE Rules

As a foreign private issuer listed on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (the “TSX”), we are generally permitted to follow the corporate governance practices and guidelines applicable to Canadian issuers under Canadian corporate and securities laws, including National Instruments
52-110 and 58-101 and National Policy 58-201, as well as the rules of the TSX. We are, however, required by Section 303A.11 of the NYSE Listed Company Manual to identify any significant ways in which our corporate governance practices differ from those required to be followed by U.S. domestic companies under NYSE listing standards. There are no significant differences between our corporate governance practices as compared to the NYSE standards.