Board Governance Policies
The Investment Company Act of 1940 and its related rules (the “1940 Act”) impose significant responsibilities on mutual fund boards and dictate elements of board structures and practices. The articles and by-laws of the Trust establish key elements of the Trust’s governance. To enhance the effectiveness of the Trustees and guide them in the fulfillment of their obligations and responsibilities, the Trustees have adopted the following Board Governance Policies.
- The Trustees serve the shareowners. They establish policies, as well as review and approve contracts and their continuance. They review and address conflicts of interest between the Trust, its investment adviser and administrator (Saturna Capital Corporation, the “Adviser”) and the Trust’s other service providers. The Trustees also elect the officers, declare the amount of any dividend or capital gain distribution and serve on committees of the Board.
- Trustees. Pursuant to the Bylaws of the Trust (Section 3.01), the Board shall endeavor to have five (5) trustees.
- Election of Trustees.Shareowners vote to elect persons to fill any Board vacancies if less than a majority of the Trustees were elected by shareowners. The Board may only fill vacancies if afterwards two-thirds of the Trustees have been elected by shareowners. At least 75 percent of the Trustees will be non-interested directors (“Independent Trustees”) as defined under Section 2(a)(19) of the 1940 Act. Trustees serve for the lifetime of the Trust or until resignation, death, removal, retirement or non re-election by the shareowners.
- Qualification of Trustees. Trustees should demonstrate a stringent dedication to the legal, ethical and fiduciary constraints imposed on the directors of a mutual fund. Trustees must disclose potential conflicts, and should be free from conflicts of interests that in the judgment of the Board are material. In making the determination that each Trustee is qualified to serve, the Board annually considers a variety of criteria, including actual service, commitment, and participation of each Trustee during his tenure with the Trust. Attributes expected of all Trustees are strong educational backgrounds, lifetimes of experience in business and finance, and ability to effectively request, evaluate, and discuss information about the Trust with the Adviser and other service providers.
- Selection and Nomination. Trustees shall be nominated by vote of a majority of the Trustees, upon recommendation by the Board’s Governance, Nominations and Compensation Committee. While only the Independent Trustees select and nominate any other Independent Trustee, the Adviser may provide suggestions regarding the selection of Trustees, and will be afforded an opportunity to meet with prospective new Trustees prior to the nomination of the any candidate for the position of Trustee.
- Affiliated Persons. No person who has served as an officer, director or employee of the Adviser or of any of its affiliates may serve as an Independent Trustee.
- Committees. The Board may charter committees. The charters establish the membership, purpose, authorities and duties of each committee. The Board appoints members of each committee and designates a Chair. The Board shall determine the compensation of Committee members, including the Chairs.
- Chairman. There shall be selected from among the Independent Trustees a Chairman. The Chairman shall preside over meetings of the Board, help prepare meeting agendas, and otherwise serve as a liaison between the Board, its advisers and its experts.
- Chief Compliance Officer. The Board shall appoint a Chief Compliance Officer of the Trust, to serve in accordance with SEC Rule 38a-1. The Board will approve the Chief Compliance Officer’s compensation arrangements.
- Independent Counsel. The Independent Trustees shall appoint and retain counsel to the Independent Trustees (“Independent Counsel”) who shall meet the requirements of ICA Rule 0-1(a)(6). Independent Counsel may also represent the Trust.
- Independent Auditor. The Trustees shall appoint and retain a qualified, independent auditor. The Auditor will report to the Board and shareowners no less than annually.
- Administrator. By contract, the Adviser is also designated the Administrator for affairs of the Trust. The Adviser thus prepares materials for meetings of the Trust, drafts agendas and other reports, conducts research and makes recommendations relevant to the operation of the Trust, and keeps the minutes of the meetings and all other records of the Trust.
- Other Experts. The cost of Independent Counsel, and other experts retained by the Trustees to carry out their duties, shall be paid by the Trust. Trustees shall consult with such experts at their discretion.
- Emeritus Trustee.
- The Board established the honorary status of Emeritus Trustee, to encourage the continued interest of recent Trustees in the activities of the Trust, and to avail the Board of the experience and wisdom of past Trustees.
- Any retiring or resigning Amana Trustee may elect to become an Emeritus Trustee. The term is limited to three years, commencing on the effective date of retirement or resignation as a Trustee.
- Emeritus Trustees may elect to receive electronic versions of Board materials as distributed to Trustees.
- Emeritus Trustees may attend in person the Board’s March regular meeting, including events ancillary to the meeting. Emeritus Trustees do not vote. Emeritus Trustees attending the March meeting receive the meeting attendance fee, plus reimbursement for travel expenses, as provided to active Trustees.
- Emeritus Trustees are not eligible for any indemnity or similar provision available to active Trustees, whether through insurance or agreement with the Trust. Being neither Trustees nor officers, they are not covered by the Trust’s D&O insurance program.
- Emeritus Trustees are not subject to the Trust’s Code of Ethics or Board Governance Policies, not required to maintain an independent status, nor reported in public filings of the Trust. Their presence and honorary status will be noted in the minutes of any Board meeting they attend.
- Meetings of the Board. There shall be four regular meetings of the Board annually. Unless otherwise set by the Board, regular meetings shall be held on the third Monday of March, June, September, and on the second Monday of December. Special meetings of the Board may be called at any time by the Chairman, Vice Chairman, President or on the written request of any two Trustees.
- Location. Board meetings shall be held in a convenient location in Herndon VA, except that in odd years the March meetings shall be held at the Bellingham office of the Adviser. Unless otherwise directed by the Chairman, regular Board meetings shall start at 10 AM (local time) and are scheduled to end by 3 PM.
- Independent Trustees Meetings. During each regular Board meeting, the Independent Trustees shall meet in a session at which no Trustees who are interested persons of the Trust are present.
- Committee Meetings. Committee meetings are scheduled and held as called in accordance with their charters. Committees shall normally meet on the same day and place as quarterly Board meetings, commencing at 8 AM. To assist with regulatory schedules, these committee meetings are pre-scheduled:
- June — Audit and Compliance
- July — Audit and Compliance (Telephonic)
- December — Governance, Nominations and Compensation
- Attendance. Trustees should devote the considerable time necessary to perform the fiduciary duties of a mutual fund trustee, including a commitment to be engaged in all meetings of the Board and of each committee on which the Trustee sits. Trustees are expected to regard attendance at meetings as a primary business obligation. Materials presented to meetings of the Trustees are carefully prepared, which materials Trustees are expected to be fully familiar. Attendance may be by teleconference provided all parties can understand and communicate clearly with each other, subject to the requirement that attendance of a majority of Independent Trustees is required to be physically present at the June and September regular Board meetings. Meeting attendance by Trustees is reported annually on Form N-1A.
- Attendance of Experts. Independent Counsel shall attend regular Board meetings and meetings of the Independent Trustees at the Independent Trustees’ discretion. The Chief Compliance Officer shall attend all Board meetings and Audit and Compliance Committee meetings. The Independent Auditor shall attend Audit and Compliance Committee meetings, at least once each year in person. Other experts invited by the Trustees shall attend meetings at the discretion of the Board.
OTHER BOARD POLICIES
- Orientation. The Adviser, Independent Counsel, and/or Chief Compliance Officer shall provide new Trustees information and training related to their position. Among topics that may addressed will be responsibilities of Trustees under applicable laws and regulations, as well as the Trust’s particular policies and procedures.
- Continuing Education. At the expense of the Trust, the Trustees shall be provided with background reports, information and other educational opportunities that address relevant industry and regulatory topics. The Adviser and Independent Counsel may arrange for the Trustees to be provided with presentations and/or reports on topics relevant to the Trust.
- Independent Directors Council. The Adviser pays annual dues to the Investment Company Institute, which includes membership of Trustees of its affiliated mutual funds in the Independent Directors Council and access to voluminous materials. Independent Trustees are encouraged to attend IDC conferences or educational seminars directed at the work of investment company directors. A written report to the Board is expected from a Trustee attending an educational meeting. The cost of meeting attendance will be paid by the Trust according to the Board’s reimbursement policies.
- Board Performance Review. At least once annually (normally scheduled for December), under the direction of the Governance, Nominations and Compensation Committee, the Board will evaluate its performance and that of its committees, which evaluation must include a consideration of the effectiveness of the committee structure of the Board and the number of funds on the board of which each Trustee serves.
- Disclosure of Board’s Role in Governing Process. SEC Form N-1A requires disclosure of information regarding the Trust’s governing process. Trustees are responsible for the accuracy of these disclosures.
- Indemnification. Trustees are personally indemnified by the Trust to encourage their effective service, under a separate agreement approved by the Trust and its Independent Counsel.
- Insurance. The Trust shall obtain directors and officers’ errors and omissions (“E&O/D&O”) insurance coverage for the Trustees, which is adequate to ensure their independence and effectiveness. Such insurance should provide coverage to the Trustees in instances in which the Trustees and the Adviser are opposing parties in litigation. The insurance should provide that each Trustee has adequate E&O/D&O coverage if an insurance policy is terminated or modified and/or if a Trustee ceases to serve as a Trustee. The E&O/D&O insurance may be joint with other affiliates of the Adviser, the costs allocated and paid as directed by the Board.
- Compensation and Expense Reimbursements. Trustees shall be responsible for setting the compensation to be paid to Trustees. The Governance, Nominations, and Compensation Committee, at its annual review meeting each December, shall approve compensation and expense reimbursement policies for recommendation to the Board.
- Fund Share Ownership Policy. All Trustees are required to make personally material long-term investments in the Funds, and to maintain such investments during their tenure as Trustees. The minimum required permanent investment, across all funds of the Trust, is the total compensation received by the Trustee in the Trust’s previous year.
- Trustee Retirement Policy. Trustees are required to retire upon reaching age 78.
- Annual Relationships Questionnaire. At the commencement of service as a Trustee and thereafter on a basis no less frequently than annually, each Trustee shall complete a questionnaire that solicits information regarding certain activities that affect his or her status as Trustee. Such information may include, but not be limited to: business, financial, and family activities and relationships; relationships with the Adviser and its affiliates; and relationships with service providers and other parties. The Trust’s Chief Compliance Officer shall review each questionnaire and take appropriate steps to address any issues that may arise.
- Disclosure of Personal Information. Trustees should be aware that various SEC, state and other regulatory documents, including shareowner reports, proxy statements, registration forms and SEC Form N-1A require disclosure of certain personal information regarding Trustees and those nominated to serve in that position. In addition to information generally required in government forms, such information includes, among other things, share ownership of Trustees and certain family members and affiliates, and existing or potential conflicts of interest involving Trustees and their family members and associates.
Amended March 17, 2014