Board Governance Policies
The Board of Trustees ("Trustees") of the Saturna Investment Trust (the "Funds") recognizes the critical role which the Trustees, and particularly its independent trustees ("Independent Trustees"), serve in overseeing operations of the Funds and policing conflicts of interest between the Funds and its investment adviser and other service providers. To enhance the independence and effectiveness of the Funds' Independent Trustees and to assist them in furthering their roles as watchdogs of the interests of the Funds' shareholders, the Trustees have adopted the following Governance Policies and Procedures.
- Super Majority of Independent Trustees. At all times, at least 75 percent of the Trustees of the Funds will be non-interested directors as defined under Section 2(a)(19) of the Investment Company Act of 1940 (the "1940 Act").
- Affiliated Persons Restriction. Former officers or directors of (i) the Funds' investment adviser and principal underwriter, (ii) majority-owned subsidiaries of the Funds' investment adviser or principal underwriter, or (iii) parent companies of the Funds' investment adviser or principal underwriter are ineligible to serve as Independent Trustees of the Funds.
- Selection and Nomination of Independent Trustees. Independent Trustees shall be selected and nominated by vote of a majority of the Independent Trustees. There shall be a Nominating Committee of the Board consisting solely of Independent Trustees, the members of which shall be decided by a vote of the Independent Trustees. The advisor may provide suggestions to the Independent Trustees of persons deemed qualified to serve as Independent Trustees, and will be afforded the opportunity to meet with a prospective new Independent Trustee prior to final decision of the Trustees.
- Compensation of Independent Trustees. The Independent Trustees shall be responsible for recommending to the Board of Trustees the compensation to be paid to Trustees for services which they perform on behalf of the Funds.
- Fund Share Ownership Policy. Trustees are strongly encouraged to own a personally material quantity of shares of the Funds of the Trust consistent with personal investment objectives.
- Independent Counsel. The Independent Trustees shall appoint and retain counsel to the Independent Trustees, who shall be independent from the Funds' investment adviser and the Funds' other service providers, as defined in ICA Rule 0-1(a)(6). The Independent Trustees shall determine the duties and responsibilities of independent counsel. Counsel to the Independent Trustees and counsel to the Funds may be the same firm.
- Other Experts. The Independent Trustees are authorized to use Fund assets to retain advisers and experts necessary to carry out their duties. The Independent Trustees shall consult with the Funds' independent auditors or other experts, as they deem appropriate.
- Annual Relationships Questionnaire. At the commencement of service as a Trustee and thereafter on a basis no less frequently than annually, the Trustees shall complete a questionnaire that solicits information on business, financial, and family relationships with the investment adviser, other service providers, and their affiliates, as well as other relationships that could affect their status as Trustees. The Trust's Chief Compliance Officer shall review each questionnaire.
- Audit and Compliance Committee. The Trust shall have an Audit and Compliance Committee composed entirely of Independent Trustees, which shall have a written charter outlining its duties and responsibilities. The committee's charter shall provide for meetings with the independent auditors, which may be held outside the presence of representatives of management. On an annual basis, the committee shall receive a representation from the independent auditors of the auditors' independence from management.
- 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 should be free from conflicts of interests that in the judgment of the Board are substantial including those which may result from service as a director in a competing fund complex or competing industry. Trustees should devote the time necessary to perform the sometimes-rigorous duties of a mutual fund director, including a commitment to attend all board and committee meetings.
- Independent Trustees Meetings. At least quarterly, and at such other times as they deem appropriate, the Independent Trustees shall meet separately in a session at which no trustees who are interested persons of the Trust are present.
- Chairman of the Board. There shall be selected from among the Independent Trustees a Chairman of the Board, who shall preside over meetings of the board and who has substantially the same responsibilities as would a chairman of a board of directors.
- Insurance Coverage. The Independent Trustees shall obtain directors and officers errors and omissions ("E&O/D&O") insurance coverage and indemnification from the Funds, which is adequate to ensure their independence and effectiveness. Such insurance should provide coverage to the Trustees in instances in which the Trustees and its investment adviser are opposing parties in litigation. The Independent Trustees shall ensure that each Independent Trustee is provided with adequate E&O/D&O coverage if an insurance policy is terminated or modified and/or if an Independent Trustee ceases to serve as a Trustee. Coverage for the E&O/D&O policy shall be paid pro-rata by the Funds.
- Trustee Retirement Policy. Trustees are required to retire upon reaching age 78. Should a Trustee desire to continue serving past the retirement age, the Board shall vote, by unanimous secret ballot, to determine whether to waive the retirement age requirement for that Trustee each year.
- Board Performance Review. At least once annually, the board will evaluate the performance of the board and the committees thereof, which evaluation must include a consideration of the effectiveness of the committee structure of the board and the number of funds on whose boards each trustee serves.
- Trustee Orientation and Education. All newly elected or appointed Independent Trustees shall receive an orientation conducted by, among others, counsel to the Independent Trustees, which will address, among other matters, the legal responsibilities imposed upon directors of registered investment companies by applicable laws, rules, regulations and Fund policies and procedures. At each quarterly meeting of the Trustees, and periodically between such meetings as may be desirable, the Trustees shall be provided by their counsel, other experts, and Fund management with written materials that address timely industry and regulatory topics. The Independent Trustees shall be eligible to attend conferences or educational seminars directed towards the work of investment company directors. Upon approval by the Chairman, the costs of such attendance shall be reimbursed to the Independent Trustees by the Funds. Periodically, Fund management may arrange for the Trustees to be provided with special sessions and/or reports which focus upon topics of particular interest to the Independent Trustees in furtherance of their duties and responsibilities.
- Disclosure of Information. Information on Trustees, including share ownership, is presented in tabular form in Fund annual reports and the Statement of Additional Information according to SEC rules.
- Disclosure of Potential Conflicts of Interest. The Statement of Additional Information and proxy statements for election of directors disclose information on potential conflicts of interest involving any Trustee or member of his immediate family according to SEC rules.
- Disclosure of Board's Role in Governing Process. The Statement of Additional Information discloses information on the Governing Process according to SEC rules.
Amended June 14, 2011