ADALTA LIMITED — Governance Information 2016

Aug 17, 2016

ADALTA PTY LTD

ABN 92 120 332 925

CORPORATE GOVERNANCE POLICIES AND COMMITTEE CHARTERS

TABLE OF CONTENTS

1.	BOARD CHARTER .......................................................................................................... 3
2.	CODE OF CONDUCT .................................................................................................... 6
3.	SECURITIES TRADING POLICY ....................................................................................... 9
4.	CONTINUOUS DISCLOSURE POLICY .......................................................................... 17
5.	SHAREHOLDERS COMMUNICATION POLICY ............................................................. 22
6.	RISK MANAGEMENT POLICY ...................................................................................... 24
7.	DIVERSITY POLICY ...................................................................................................... 26
8.	AUDIT & RISK COMMITTEE CHARTER .......................................................................... 29
9.	REMUNERATION & NOMINATION COMMITTEE CHARTER .......................................... 33

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CORPORATE GOVERNANCE POLICIES

1. BOARD CHARTER

The Board of Directors is responsible for guiding and monitoring the Company on behalf of shareholders by whom they are elected and to whom they are accountable.

The Board is responsible for, and has the authority to determine all matters relating to the strategic direction, policies, practices, establishing goals for management and the operation of the Company.

The monitoring and ultimate control of the business of the Company is vested in the Board. The Board’s primary responsibility is to oversee the Company’s business activities and management for the benefit of the Company’s shareholders. The specific responsibilities of the Board include:

• (a) appointment, evaluation, rewarding and if necessary the removal of the Managing Director / CEO Chief Financial Officer (or equivalent) / CSO Chief Scientific Officer and the Company Secretary;

• (b) in conjunction with management, development of corporate objectives, strategy and operations plans and approving and appropriately monitoring plans, new investments, major capital and operating expenditures, capital management, acquisitions, divestitures and major funding activities;

• (c) establishing appropriate levels of delegation to the Managing Director / CEO to allow them to manage the business efficiently;

• (d) monitoring actual performance against planned performance expectations and reviewing operating information at a requisite level, to understand at all times the financial and operating conditions of the Company;

• (e) monitoring the performance of senior management including the implementation of strategy, and ensuring appropriate resources are available;

• (f) via management, an appreciation of areas of significant business risk and ensuring that the Company is appropriately positioned to manage those risks;

• (g) overseeing the management of safety, occupational health and environmental matters;

• (h) satisfying itself that the financial statements of the Company fairly and accurately set out the financial position and financial performance of the Company for the period under review;

• (i) satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that proper operational, financial, compliance, and internal control processes are in place and functioning appropriately;

• (j) to ensure that appropriate internal and external audit arrangements are in place and operating effectively;

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• (k) having a framework in place to help ensure that the Company acts legally and responsibly on all matters consistent with the code of conduct; and

(l) reporting to shareholders.

The Board retains full responsibility for guiding and monitoring the Company. Whilst in discharging its stewardship the Board has formed the following committees:

• (a) Audit & Risk Committee; and

(b) Remuneration & Nomination Committee.

The Board may establish other committees as and when required.

Each director has the right to seek independent professional advice on matters relating to their position as a director of the Company at the Company’s expense, subject to the prior approval of the Chairman, which shall not be unreasonably withheld.

In the event of a conflict of interest or where a potential conflict of interest may arise, the involved director will (unless the remaining directors resolve otherwise in accordance with the Corporations Act 2001 (Cth)):

• (a) withdraw from deliberations concerning the matter;

• (b) abstain from voting on any motion relating to the matter; and

• (c) not receive any board papers bearing on the matter,

at a directors’ meeting where that matter is being considered.

The composition, structure and proceedings of the Board are primarily governed by the Company’s constitution. In accordance with the constitution of the Company, directors (other than the Managing Director) must not hold office without re-election past the 3[rd] Annual General Meeting following the director’s appointment or 3 years, whichever is longer. The Board does not specify a maximum term for which a director may hold office.

Where possible, a majority of the Board will be comprised of independent directors. An independent director is a non-executive director who is free of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect his or her capacity to bring an independent judgment to bear on issues before the Board and to act in the best interests of the Company and its shareholders generally. When determining the independence of a director, the Company will also take into account the factors relevant to assessing the independence of a director listed in Recommendation 2.3 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.

The responsibility for the day-to-day operation and administration of the Company is delegated by the Board to the Managing Director / CEO. The Board must ensure that the Managing Director / CEO and the management team is appropriately qualified and experienced to discharge their responsibilities and will put in place procedures to assess their performance and the performance of executive directors. The Company will have a written agreement with each senior executive setting out the terms of their appointment.

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Where possible, the Chairman will be an independent director. Where possible the roles of Chairman and Managing Director / CEO are not combined. The Managing Director / CEO is accountable to the Board for all authority delegated to the position.

Whilst there is a clear division between the responsibilities of the Board and management, the Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board. The Board will put in place a number of mechanisms to ensure this is achieved including:

• (a) Board approval and monitoring of a strategic plan;

• (b) approval of budgets and regular monitoring actual performance against budget; and

• (c) procedures to be put in place to incorporate presentations covering key relevant areas of the Company’s operations to each Board meeting by financial, operations, exploration and marketing management.

The Board will appoint at least one Company Secretary. The appointment and removal of a Company Secretary will be subject to Board approval. The Company Secretary is directly accountable to the Board through the Chairman, on all matters to do with the proper functioning the Board.

Any amendments to this Charter must be approved by the Board.

Any questions in relation to the Board Charter should be directed to the Chairman.

This policy is reviewed annually by the Board.

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2. CODE OF CONDUCT

This code of conduct aims to encourage the appropriate standards of conduct and behaviour of the directors, officers, employees and contractors (collectively called the employees) of the Company.

Employees are expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

GENERAL PRINCIPLES

1. Employees of the Company must act honestly, in good faith and in the best interests of the Company as a whole.

2. Employees have a duty to use due care and diligence in fulfilling the functions of their position and exercising the powers attached to their employment.

3. Employees must recognise that their primary responsibility is to the Company’s shareholders as a whole but in the context of broader stakeholder interests.

4. Employees must not take advantage of their position for personal gain, or the gain of their associates.

5. Directors have an obligation to be independent in their judgements.

6. Confidential information received by employees in the course of the exercise of their duties remains the property of the Company. Confidential information can only be released or used with specific permission from the Company.

7. Employees have an obligation, to comply with the spirit as well as the letter, of the law and with the principles of this code.

The Company views breaches of this code as serious misconduct. Employees who have become aware of any breaches of this code must report the matter immediately to their manager or the Company Secretary. The manager or Company Secretary has the responsibility to report the breach to the appropriate senior management and to advise the relevant employee of the outcome and actions implemented.

Any employee who in good faith, reports a breach or a suspected breach will not be subject to any retaliation or recrimination for making that report.

Employees who breach the policies outlined in this code may be subject to disciplinary action, including in the case of serious breaches, dismissal.

DIRECTORS

The following additional comments apply to directors of the Company and aim to ensure directors have a clear understanding of the Company’s expectations of their conduct.

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Fiduciary duties

All directors have a fiduciary relationship with the shareholders of the Company. A director occupies a unique position of trust with shareholders, which makes it unlawful for directors to improperly use their position to gain advantage for themselves.

Duties of directors

Each director must endeavour to ensure that the Company is properly managed so as to protect and enhance the interests of all shareholders. To this end, directors need to devote sufficient time and effort to understand the Company’s operations.

Directors should ensure that shareholders and the ASX are informed of all material matters which require disclosure and avoid or fully disclose conflicts of interest.

Conflict of interest

At all times a director must be able to act in the interests of the Company. Where the interests of associates, the personal interest of a director or a director’s family may conflict with those of the Company, then the director must immediately disclose such conflict and either:

• (a) eliminate the conflict, or

• (b) abstain from participation in any discussion or decision-making process in relation to the subject matter of the conflict.

Executive directors must always be alert to the potential for a conflict of interest between their roles as executive managers and their fiduciary duty as directors.

Insider trading

Information concerning the activities or proposed activities of the Company, which is not public and which could materially affect the Company’s share price must not be used for any purpose other than valid Company requirements.

Managing Director / CEO and CFO

It is the responsibility of both the Managing Director / CEO and the CFO to provide a written declaration to the Board that, in their opinion:

• (a) the financial records of the Company have been properly maintained;

• (b) the financial statements comply with the appropriate accounting standards;

• (c) the financial reports submitted to the Board represent a true and fair view of the Company’s financial position and performance; and

• (d) that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

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STAKEHOLDERS

The Board recognises that the primary stakeholders in the Company are its shareholders. Other legitimate stakeholders in the Company include employees, customers and the general community.

The Company’s primary objective is to create shareholder wealth through capital growth and dividends by the continued development of its business. This is achieved by:

• (a) keeping the market informed of its clinical development activities;

• (b) actively progressing its clinical trials; and

• (c) seeking new opportunities in the vicinity of the project areas in which the Company has intellectual property and know how.

The Company is committed to conducting all its activities in a manner which:

• (a) protects the health and safety of all employees, contractors and community members;

• (b) recognises, values and rewards the individual contribution of each employee;

• (c) achieves a balance between economic development, maintenance of the environment and social responsibility;

• (d) maintains good relationships with suppliers and the local community; and

• (e) is honest, lawful and moral.

All employees (including directors) are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

Any questions in relation to this Policy should be directed to the Chairman.

This policy is reviewed annually by the Board.

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3. SECURITIES TRADING POLICY

These guidelines set out the policy on the sale and purchase of securities in the Company by its Key Management Personnel.

Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any Director (whether executive or otherwise) of that entity.

For the purposes of this policy, Key Management Personnel means all Directors and officers of the Company including the Managing Director / CEO, those employees directly reporting to the Managing Director / CEO, their associates (as defined in the Corporations Act 2001 (Cth)) and other persons identified by the Company from time to time.

Key Management Personnel are encouraged to be long-term holders of the Company’s securities. However, it is important that care is taken in the timing of any purchase or sale of such securities.

The purpose of this policy is to assist Key Management Personnel to avoid conduct known as ‘insider trading’. In some respects, the Company’s policy extends beyond the strict requirements of the Corporations Act 2001 (Cth).

WHAT TYPES OF TRANSACTIONS ARE COVERED BY THIS POLICY?

This policy applies to both the sale and purchase of any securities (or interests in these securities) of the Company and its subsidiaries on issue from time to time.

WHAT IS INSIDER TRADING?

Prohibition

Insider trading is a criminal offence. It may also result in imposition of a civil penalty or incurring of civil liability. In broad terms, a person will be guilty of insider trading if:

• (a) that person possesses information which is not generally available to the market and, if it were generally available to the market, it would or would be likely to have a material effect on the price or value of the Company’s securities (i.e. information that is ‘price sensitive’); and

• (b) that person:

• (i) buys or sells securities in the Company; or

• (ii) procures someone else to buy or sell securities in the Company; or

• (iii) passes on that information to a third party where that person knows, or ought reasonably to know, that the third party would be likely to buy or sell the securities or procure someone else to buy or sell the securities of the Company.

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Examples

To illustrate the prohibition described above, the following are possible examples of price sensitive information which, if made available to the market, may be likely to materially affect the price of the Company’s securities:

• (a) the Company considering a major acquisition;

• (b) the threat of major litigation against the Company;

• (c) the Company’s revenue and profit or loss results materially exceeding (or falling short of) the market’s expectations;

• (d) a material change in debt, liquidity or cash flow;

• (e) a significant new development proposal (e.g. new product or technology);

• (f) the grant or loss or a major contract;

• (g) a management or business restructuring proposal;

• (h) a share issue proposal;

• (i) an agreement or option to acquire an interest in a patent or other intellectual property, or to enter into a joint venture, collaboration or development agreement in relation to certain intellectual property; and

• (j) significant discoveries, clinical trial results, or changes in relevance of intellectual property in which the Company has an interest.

Dealing through third parties

The insider trading prohibition extends to dealings by individuals through nominees, agents or other associates, such as family members, family trusts and family companies (referred to as “ Associates ” in this policy).

Information however obtained

It does not matter how or where the person obtains the information – it does not have to be obtained from the Company to constitute inside information.

Employee share schemes

The prohibition does not apply to acquisitions of shares or options by employees made under employee share or option schemes, nor does it apply to the acquisition of shares as a result of the exercise of options under an employee option scheme. However, the prohibition does apply to the sale of shares acquired under an employee share scheme and also to the sale of shares acquired following the exercise of an option granted under an employee option scheme.

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GUIDELINES FOR TRADING IN THE COMPANY’S SECURITIES

Insider trading is prohibited at all times

If you possesses inside information you must not buy or sell Company securities, advise or get others to do so or pass on the inside information to others. This prohibition applies regardless of how or when you learn the information.

General rule

Key Management Personnel must not, except in approved exceptional circumstances, deal in securities of the Company during the following periods:

• (a) the period each year from the close of trading at the end of the full financial year, and until 10.00am on the next trading day following the release of the Consolidated Interim Financial Report or the Company’s Annual Financial Report;

• (b) the period each year from the close of trading at the end of the financial half year, and until 10.00am on the next trading day following the release of the half yearly results of the Company;

• (c) the period each year from the close of trading at the end of the financial quarter, and until 10.00am on the next trading day following the release of the Company’s quarterly reports,

(together, the Closed Periods );

• (d) at any time while the Company is relying on ASX Listing Rule 3.1A to not disclose particular information; and,

• (e) any other period that the Company specifies from time to time,

(together, the Prohibited Periods ).

The Company may at its discretion vary this rule in relation to a particular Closed Period or Prohibited Period by general announcement to all Key Management Personnel either before or during the Closed Period or Prohibited Period. However, if a Key Management Personnel is in possession of price sensitive information which is not generally available to the market, then he or she must not deal in the Company’s securities at any time.

No short-term trading in the Company’s securities

Key Management Personnel should never engage in short-term trading of the Company’s securities except for the exercise of options where the shares will be sold shortly thereafter.

No hedging

Key Management Personnel must not, without prior approval of the Chairman or the Board, engage in short selling or other hedging arrangements, deal in derivatives or enter into other arrangements which vary economic risk related to the Company’s securities. This includes engaging in hedging or other

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arrangements that have the effect of limiting the economic risk in connection with unvested securities issued pursuant to any employee option or share plan.

Securities in other companies

Buying and selling securities of other companies with which the Company may be dealing is prohibited where an individual possesses information which is not generally available to the market and is ‘price sensitive’. For example, where an individual is aware that the Company is about to sign a major agreement with another company, they should not buy or sell securities in either the Company or the other company.

Exceptions

• (a) Subject to the note below regarding insider trading, Key Management Personnel may at any time:

• (i) acquire ordinary shares in the Company by conversion of securities giving a right of conversion to ordinary shares;

• (ii) acquire Company securities under a bonus issue made to all holders of securities of the same class;

• (iii) acquire Company securities under a dividend reinvestment, or top-up plan that is available to all holders or securities of the same class;

• (iv) acquire, or agree to acquire or exercise options under a Company Share Option Plan;

• (v) withdraw ordinary shares in the Company held on behalf of the a Key Management Personnel in an employee share plan where the withdrawal is permitted by the rules of that plan;

• (vi) acquire ordinary shares in the Company as a result of the exercise of options held under an employee option scheme;

• (vii) transfer securities of the Company already held into a superannuation fund or other saving scheme in which the restricted person is a beneficiary;

• (viii) make an investment in, or trade in units of, a fund or other scheme (other than a scheme only investing in the securities of the Company) where the assets of the fund or other scheme are invested at the discretion of a third party;

• (ix) where a restricted person is a trustee, trade in the securities of the Company by that trust, provided the restricted person is not a beneficiary of the trust and any decision to trade during a prohibited period is taken by the other trustees or by the investment managers independently of the restricted person;

• (x) undertake to accept, or accept, a takeover offer;

• (xi) trade under an offer or invitation made to all or most of the security holders, such as a rights issue, a security purchase plan, a dividend or distribution reinvestment plan and an equal access

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buy-back, where the plan that determines the timing and structure of the offer has been approved by the board. This includes decisions relating to whether or not to take up the entitlements and the sale of entitlements required to provide for the take up of the balance of entitlements under a renounceable pro rata issue;

• (xii) [dispose of securities of the Company resulting from a secured lender exercising their rights, for example, under a margin lending arrangement;]

• (xiii) exercise (but not sell securities following exercise) an option or a right under an employee incentive scheme, or convert a convertible security, where the final date for the exercise of the option or right, or the conversion of the security, falls during a prohibited period or the Company has had a number of consecutive prohibited periods and the restricted person could not reasonably have been expected to exercise it at a time when free to do so; or

• (xiv) trade under a non-discretionary trading plan for which prior written clearance has been provided in accordance with procedures set out in this Policy.

• (b) In respect of any share or option plans adopted by the Company, it should be noted that it is not permissible to provide the exercise price of options by selling the shares acquired on the exercise of these options unless the sale of those shares occurs outside the Closed Periods.

A trade that falls within an exception listed above may still breach insider trading laws if it is undertaken or procured by someone in possession of inside information at the time.

Notification of periods when Key Management Personnel are not permitted to trade

The Company Secretary will endeavour to notify all Key Management Personnel of the times when they are not permitted to buy or sell the Company’s securities.

APPROVAL AND NOTIFICATION REQUIREMENTS

Approval requirements

• (a) Any Key Management Personnel (other than the Chairman) wishing to buy, sell or exercise rights in relation to the Company’s securities must first obtain the prior written approval of the Chairman or the Board (if the Chairman is not available) before doing so.

• (b) If the Chairman wishes to buy, sell or exercise rights in relation to the Company’s securities, the Chairman must first obtain the prior approval of the Board before doing so.

Approvals to buy or sell securities

• (a) All requests to buy or sell securities as referred to above must confirm that they do not hold any inside information and include the intended volume

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of securities to be purchased or sold and an estimated time frame for the sale or purchase.

• (b) If granted, the approval to trade is valid for the period of time specified on the approval. If no period of time is specified, the approval to trade is valid for 10 business days.

• (c) Copies of written approvals must be forwarded to the Company Secretary prior to the approved purchase or sale transaction.

• (d) Any approval can be given or refused by the Company in its discretion, without giving any reasons.

• (e) An approval to trade can be withdrawn if new information comes to light or there is a change in circumstances.

• (f) If the approval to trade is refused, the person seeking the approval must keep that information confidential and not disclose it to anyone.

• (g) A trade that has been granted approval may still breach insider trading laws if it is undertaken or procured by someone in possession of inside information at the time.

• (h) A person who comes into possession of inside information after receiving approval to trade must not trade despite having received the approval.

Notification

Subsequent to approval obtained, any Key Management Personnel who (or through his or her Associates) buys, sells, or exercises rights in relation to Company securities must notify the Company Secretary in writing of the details of the transaction within five (5) business days of the transaction occurring. This notification obligation operates at all times but does not apply to acquisitions of shares or options by employees made under employee share or option schemes, nor does it apply to the acquisition of shares as a result of the exercise of options under an employee option scheme.

Key Management Personnel sales of securities

Key Management Personnel need to be mindful of the market perception associated with any sale of Company securities and possibly the ability of the market to absorb the volume of shares being sold. With this in mind, the management of the sale of any significant volume of Company securities (i.e. a volume that would represent a volume in excess of 10% of the total securities held by the seller prior to the sale, or a volume to be sold that would be in excess of 10% of the average daily traded volume of the shares of the Company on the ASX for the preceding 20 trading days) by a Key Management Personnel needs to be discussed with the Board and the Company’s legal advisers prior to the execution of any sale. These discussions need to be documented in the form of a file note, to be retained by the Company Secretary.

Exemption from Closed Periods and Prohibited Periods restrictions due to exceptional circumstance

Key Management Personnel who are not in possession of inside information in relation to the Company, may be given prior written clearance by the Managing Director / CEO (or in the case of the Managing Director / CEO by all other

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members of the Board) to sell or otherwise dispose of Company securities in a Closed Period or a Prohibited Period where the person is in severe financial hardship or where there are exceptional circumstances as set out in this policy.

The determination of whether a Key Management Personnel is in severe financial hardship or whether there are exceptional circumstances will be made by the Managing Director / CEO (or in the case of the Managing Director / CEO by all other members of the Board), and that determination can only be made by examining all of the facts and if necessary obtaining independent verification of the facts from banks, accountants or other like institutions.

Financial hardship

Key Management Personnel may be in severe financial hardship if they have a pressing financial commitment that cannot be satisfied other than by selling the securities of the Company.

In the interests of an expedient and informed determination by the Managing Director / CEO (or all other members of the Board as the context requires), any application for an exemption allowing the sale of Company securities in a Closed Period or a Prohibited Period based on financial hardship must be made in writing stating all of the facts and be accompanied by copies of relevant supporting documentation, including contact details of the person’s accountant, bank and other such independent institutions (where applicable).

Any exemption, if issued, will be in writing and shall contain a specified time period during which the sale of securities can be made.

Exceptional circumstances

Exceptional circumstances may apply to the disposal of Company securities by a Key Management Personnel if the person is required by a court order, a court enforceable undertaking for example in a bona fide family settlement, to transfer or sell securities of the Company, or there is some other overriding legal or regulatory requirement to do so.

Any application for an exemption allowing the sale of Company securities in a Closed Period or a Prohibited Period based on exceptional circumstances must be made in writing and be accompanied by relevant court and/or supporting legal documentation (where applicable).

Any exemption, if issued, will be in writing and shall contain a specified time period during which the sale of securities can be made.

ASX NOTIFICATION FOR DIRECTORS

The ASX Listing Rules require the Company to notify the ASX within 5 business days after any dealing in securities of the Company (either personally or through an Associate) which results in a change in the relevant interests of a Director in the securities of the Company, including a change to a notifiable interest of a Director including whether the change occurred during a closed period where prior written approval was required and, if so, whether prior written approval was provided in accordance with ASX Listing Rule 3.19A.2.

The Company has made arrangements with each Director to ensure that the Director promptly discloses to the Company Secretary all the information required by the ASX.

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Directors are also required to comply with the Corporations Act 2001 (Cth) and must notify under that Act within 2 business days if they begin to have, or cease to have, a ‘substantial holding’ in the Company or if they have a ‘substantial holding’ in the Company and there is a movement of at least 1% in their holding.

EFFECT OF COMPLIANCE WITH THIS POLICY

Strict compliance with this policy is a condition of employment. Breaches of this policy will be subject to disciplinary action, which may include termination of employment. Compliance with these guidelines for trading in the Company’s securities does not absolve that individual from complying with the law, which must be the overriding consideration when trading in the Company’s securities.

Any questions in relation to this Policy should be directed to the Chairman.

This policy is reviewed annually .

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4. CONTINUOUS DISCLOSURE POLICY

This policy outlines the disclosure obligations of the Company as required under the Corporations Act 2001 (Cth) ( Corporations Act ) and the ASX Listing Rules. The policy is designed to ensure that procedures are in place so that the stock market on which the Company’s securities are listed is properly informed of all matters which may have a material impact on the price at which the securities are traded.

The Company is committed to:

• (a) complying with the general and continuous disclosure principles contained in the Corporations Act and the ASX Listing rules;

• (b) preventing the selective or inadvertent disclosure of material price sensitive information;

• (c) ensuring shareholders and the market are provided with full information about the Company’s activities in a timely manner;

• (d) ensuring that all market participants have equal opportunity to receive externally available information issued by the Company.

Disclosure officer

The Managing Director / CEO and the Company Secretary have been appointed as the Company’s disclosure officers responsible for implementing and administering this policy. The disclosure officers are responsible for all communication with ASX and for making decisions on what should be disclosed publicly under this policy.

In the absence of the Managing Director / CEO and Company Secretary, any matters regarding disclosure issues are to be referred to the Chairman.

Material information

In accordance with the ASX Listing Rules, the Company must immediately notify the market (via an announcement to the ASX) of any information concerning the Company which a reasonable person would expect to have a material effect on the price or value of the Company’s securities.

Material information need not be disclosed while:

• (a) a reasonable person would not expect the information to be disclosed; and

• (b) the information is confidential and the ASX has not formed the view that the information has ceased to be confidential; and

• (c) one or more of the following applies:

• (i) it would breach the law to disclose the information;

• (ii) the information concerns an incomplete proposal or negotiation; (iii) the information comprises matters of supposition or is insufficiently definite to warrant disclosure;

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• (iv) the information is generated for internal management purposes; or

• (v) the information is a trade secret.

Irrespective of the above, the Company is required to disclose information if asked to do so by the ASX, in order to correct or prevent a false market.

Note that the Company is deemed to have become aware of information where a director or executive officer has, or ought to have, come into possession of the information in the course of the performance of their duties as a director or executive officer.

The Corporations Act defines a material effect on price or value as being where a reasonable person would be taken to expect information to have a material effect on the price or value of securities if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the securities

Review of communications for disclosure

The disclosure officers will review all communications to the market to ensure that they are full and accurate and comply with the Company’s obligations. Such communications may include:

• (a) media releases;

• (b) analyst, investor or other presentations;

• (c) prospectuses; and

• (d) other corporate publications.

Subject to the exemptions listed in the ASX Listing Rules, examples of information or events that are likely to require disclosure include:

• (a) financial performance and material changes in financial performance or projected financial performance;

• (b) changes in relation to directors and senior executives, including changes in the terms of employment of the Managing Director / CEO and the independence of directors;

• (c) mergers, acquisitions, divestments, joint ventures or material changes in assets;

• (d) significant developments in new projects or ventures;

• (e) material changes to the Company’s security position;

• (f) material information affecting joint venture partners, customers or nonwholly owned subsidiary companies;

• (g) media or market speculation;

• (h) analyst or media reports based on inaccurate or out of date information;

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• (i) industry issues which have, or which may have, a material impact on the Company; and

• (j) decisions on significant issues affecting the Company by regulatory authorities.

Where there is any doubt as to whether an issue might materially affect the price or value of the Company’s securities, the disclosure officers will assess the circumstances with appropriate senior executives and if necessary, seek external professional advice.

All presentations to analysts and investors will be released to the ASX and then included on the Company’s website prior to the presentation being made.

Authorised spokespersons

The Company’s authorised spokesperson is the Managing Director / CEO, and Company Secretary. In appropriate circumstances, the Managing Director / CEO may from time to time authorise other spokespersons on particular issues and those within their area of expertise.

No employees or consultants are permitted to comment publicly on matters relating to the Company. Any information which is not public must be treated by employees and consultants as confidential until publicly released.

Reporting of disclosable information

Once the requirement to disclose information has been determined, the disclosure officers are the only persons authorised to release that information to the ASX.

Information to be disclosed must be lodged immediately with the ASX. Any such information must not be released to the general public until the Company has received formal confirmation of lodgement by the ASX.

Market speculation and rumours

As a guiding principle, the Company has a “no comment” policy on market speculation and rumours, which must be observed by all employees. However, the Company must comply with any request by the ASX to comment upon a market report or rumour and consider whether confidentiality has been lost in respect of any material information affecting the Company.

Trading halts

The Company may, where appropriate, request ASX to impose a trading halt to maintain orderly trading in the Company’s securities and to manage any disclosure issues.

No employee of the Company is authorised to seek a trading halt except for the disclosure officers.

Meetings and group briefings with investors and analysts

The Managing Director / CEO is primarily responsible for the Company’s relationship with major shareholders, institutional investors and analysts and shall be the primary contacts for those parties.

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Any written materials containing new price-sensitive information to be used in briefing media, institutional investors and analysts are lodged with ASX prior to the briefing commencing. Upon confirmation of receipt by ASX, the briefing material is posted to the Company’s website. Briefing materials may also include information that may not strictly be required under continuous disclosure requirements.

The Company will not disclose price sensitive information in any meeting with an investor or stockbroking analyst before formally disclosing it to the market. The Company considers that one-on-one discussions and meetings with investors and stockbroking analysts are an important part of pro-active investor relations. However, the Company will only discuss previously disclosed information in such meetings.

Periods prior to release of financial results

During the time between the end of the financial year or half year and the actual results release, the Company will not discuss financial performance, broker estimates and forecasts and, particularly, any pre-result analysis with stockbroking analysts, investors or the media, unless the information to be discussed has already been disclosed to the ASX.

Web-based communication

The Company’s website shall feature discrete sections for shareholders and investors to ensure that such information can be accessed by interested parties. Such information will include:

• (a) annual reports and results announcements;

• (b)

• all other company announcements made to the ASX;

• (c) speeches and support material given at investor conferences or presentations; and

• (d) company profile and company contact details.

Announcements lodged with the ASX will be placed on the Company’s website as soon as practicable after ASX confirms receipt of that information.

Analysts reports and forecasts

Stockbroking analysts frequently prepare reports on listed companies that typically detail their opinion on strategies, performance and financial forecasts. To avoid inadvertent disclosure of information that may affect the Company’s value or share price. The Company’s comments on analyst reports will be restricted to:

• (a) information the Company has issued publicly; and

• (b) other information that is in the public domain.

Given the level of price sensitivity to earnings projections, the Company will only make comment to correct factual errors in relation to information publicly issued by other parties and Company statements.

Any questions in relation to this Policy should be directed to the Chairman.

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This policy is reviewed annually by the Board.

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5. SHAREHOLDERS COMMUNICATION POLICY

The Company recognises the value of providing current and relevant information to its shareholders.

The Managing Director / CEO and Company Secretary have the primary responsibility for communication with shareholders.

Information is communicated to shareholders through:

• (a) continuous disclosure to relevant stock markets of all material information;

• (b) periodic disclosure through the annual report (or concise annual report), half year financial report and quarterly reporting;

• (c) notices of meetings and explanatory material;

• (d) the annual general meeting;

• (e) periodic newsletters or letters from the Chairman or Managing Director / CEO; and

• (f) the Company’s website at www.adalta.com.au.

The Company is committed to the promotion of investor confidence by ensuring that trading in the Company’s securities takes place in an efficient, competitive and informed market.

Electronic communication and website

The Company believes that communicating with shareholders by electronic means, particularly through its website, is an efficient way of distributing information in a timely and convenient manner.

The Company’s website shall include the following sections, which contain relevant information for shareholders:

• (a) section on the Company’s corporate governance policies and practices; (b) reports section, which contains copies of annual, half yearly and quarterly reports;

• (c) news section, containing sections on newsletters, ASX announcements, media clippings and power point presentations; and

• (d) press releases.

The Company’s website will be updated with material released to the ASX as soon as practicable after confirmation of release by the ASX.

All website information will be continuously reviewed and updated to ensure that information is current, or appropriately dated and archived.

The Company shall place the full text of notices of meeting and explanatory material on its website.

Written communication and annual report

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The annual report of the Company is the major written communication by the Company to shareholders each year. The annual report contains key corporate, financial, and operating information about the Company. The annual report will be available on the Company’s website.

The Company may from time to time make other communications, either by regular shareholder updates (which will be released to ASX and be available on the Company’s website) or ad hoc press releases or other statements.

Annual general meeting

The Company recognises the rights of shareholders and encourages the effective exercise of those rights through the following means:

• (a) notices of meetings are distributed to shareholders in accordance with the provisions of the Corporations Act;

• (b) notices of meeting and other meeting material are drafted in concise and clear language;

• (c) shareholders are encouraged to use their attendance at meetings to ask questions on any relevant matter, with time being specifically set aside for shareholder questions;

• (d) notices of meetings encourage participation in voting on proposed resolutions by lodgement of proxies, if shareholders are unable to attend the meeting;

• (e) it is general practice for a presentation on the Company’s activities to be made to shareholders at each annual general meeting; and

• (f) it is both the Company’s policy and the policy of the Company’s auditor for the lead engagement partner to be present at the annual general meeting and to answer any questions regarding the conduct of the audit and the preparation and content of the auditors’ report.

Any questions in relation to this Policy should be directed to the Chairman.

This policy is reviewed annually .

6. RISK MANAGEMENT POLICY

Management determines the Company’s risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. The Company’s process of risk management and internal compliance and control shall include:

• (a) establishing the Company’s goals and objectives, and implementing and monitoring strategies and policies to achieve these goals and objectives;

• (b) continuously identifying and reacting to risks that might impact upon the achievement of the Company’s goals and objectives, and monitoring the environment for emerging factors and trends that affect these risks;

• (c) formulating risk management strategies to manage identified risks and designing and implementing appropriate risk management policies and internal controls; and

• (d) monitoring the performance of, and continuously improving the effectiveness of, risk management systems and internal compliance and controls, including an ongoing assessment of the effectiveness of risk management and internal compliance and control.

Within the identified risk profile of the Company, comprehensive practices are in place that are directed towards achieving the following objectives:

• (a) effectiveness and efficiency in the use of the Company’s resources;

• (b) compliance with applicable laws and regulations; and

• (c) preparation of reliable published financial information.

The Board oversees an ongoing assessment of the effectiveness of risk management and internal compliance and control.

The responsibility for undertaking and assessing risk management and internal control effectiveness is delegated to management. Management is required by the Board to report back on the efficiency and effectiveness of risk management, inter alia, by benchmarking the Company’s performance against industry standards.

The risk profile of the Company contains both financial and non-financial factors including material risks as determined by the Audit & Risk Committee from time to time.

To mitigate these risks, the Company intends to put in place a broad range of risk management policies and procedures as determined by the Audit & Risk Committee from time to time.

Management is responsible for the ongoing management of risk with standing instructions to appraise the Board of changing circumstances within the Company and within the international business environment.

Any questions in relation to this Policy should be directed to the Chairman of the Audit & Risk Committee.

This policy is reviewed every annually by the Audit & Risk Committee.

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7. DIVERSITY POLICY

The Company is committed to workplace diversity. The Company recognises the benefits arising from employee and board diversity, including a broader pool of high quality employees, improving employee retention, accessing different perspectives and ideas and benefiting from all available talent.

Diversity includes, but is not limited to, gender, age, ethnicity and cultural background.

To the extent practicable, the Company will address the recommendations and guidance provided in the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (ASX Principles).

The Company is required to have its own employment related policy, and this policy ( Diversity Policy ) is to complement that existing documentation. This Diversity Policy does not form part of an employee's contract of employment with The Company, nor gives rise to contractual obligations. However, to the extent that the Diversity Policy requires an employee to do or refrain from doing something and at all times subject to legal obligations, this Diversity Policy forms a direction of The Company with which an employee is expected to comply.

OBJECTIVES

The Diversity Policy provides a framework for the Company to achieve:

• a diverse and skilled workforce, leading to continuous improvement in service delivery and achievement of corporate goals;

• a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;

• improved employment and career development opportunities for women;

• a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and perspectives through improved awareness of the benefits of workforce diversity and successful management of diversity; and

• awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity,

collectively, the ( Objectives ).

The Diversity Policy does not impose on the Company, its directors, officers, agents or employee any obligation to engage in, or justification for engaging in, any conduct which is illegal or contrary to any anti-discrimination or equal employment opportunity legislation or laws in any State or Territory of Australia or of any foreign jurisdiction.

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RESPONSIBILITIES

The Board's Commitment

The Board is committed to workplace diversity, with a particular focus on supporting the representation of women at the senior level of the Company and on the Board.

The Remuneration & Nomination Committee is responsible for developing measurable objectives and strategies to meet the Objectives of the Diversity Policy ( Measurable Objectives ) and monitoring the progress of the Measurable Objectives through the monitoring, evaluation and reporting mechanisms listed below.

The Remuneration & Nomination Committee may also set Measurable Objectives for achieving gender diversity and monitor their achievement.

The Remuneration & Nomination Committee will conduct all Board appointment processes in a manner that promotes gender diversity, including establishing a structured approach for identifying a pool of candidates, using external experts where necessary.

Strategies

The Company's diversity strategies include:

• recruiting from a diverse pool of candidates for all positions, including senior management and the Board;

• reviewing succession plans to ensure an appropriate focus on diversity;

• identifying specific factors to take account of in recruitment and selection processes to encourage diversity;

• developing programs to develop a broader pool of skilled and experienced senior management and board candidates, including, workplace development programs, mentoring programs and targeted training and development;

• developing a culture which takes account of domestic responsibilities of employees; and

• any other strategies the Board or Remuneration & Nomination Committee develops from time to time.

MONITORING AND EVALUATION

The Company Secretary will monitor the scope and currency of this policy.

The Company is responsible for implementing, monitoring and reporting on the Measurable Objectives as established by the Remuneration & Nomination Committee.

Measurable Objectives as set by the Remuneration & Nomination Committee will be included in the annual key performance indicators for the CEO and senior executives.

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In addition, the Board will review progress against the Objectives as a key performance indicator in its annual performance assessment.

REPORTING

The Remuneration & Nomination Committee or Company Secretary will report to the Board on progress against the Measurable Objectives on an annual basis.

The Remuneration & Nomination Committee or Company Secretary will report annually to the Board on the achievement of the Objectives .

The Board will include in the Annual Report each year:

• Measurable Objectives, if any, set by the Board;

• progress against the Objectives; and

• the proportion of women employees in the whole organisation, at senior management level and at Board level.

Any questions in relation to this Policy should be directed to the Chairman of the Remuneration & Nomination Committee.

This policy is reviewed annually by the Board.

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8. AUDIT & RISK COMMITTEE CHARTER

The following charter shall apply to the extent that it is relevant to the size of the Company.

Scope

The Audit & Risk Committee shall be a committee of the Board of the Company with the specific powers delegated under this charter. The charter sets out the Audit & Risk Committee’s function, composition, mode of operation, authority and responsibilities.

Function

The primary function of the Committee shall be to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of the Company. In addition, the Committee will:

• (a) oversee, co-ordinate and appraise the quality of the audits conducted by both the Company’s external and internal auditors (if any);

• (b) determine the independence and effectiveness of the external and internal auditors (if any);

• (c) maintain open lines of communications among the Board, the internal and external auditors to exchange views and information, as well as confirm their respective authority and responsibilities;

• (d) serve as an independent and objective party to review the financial information submitted by management to the Board for issue to shareholders, regulatory authorities and the general public;

• (e) consider reports from management on the appropriateness of risk management policies relevant to the company and establish policies for the oversight and management of material business risks; and

• (f) review the adequacy of the reporting and accounting controls of the Company.

The Committee is not required to personally conduct accounting reviews or audits and is entitled to rely on employees of the Company or professional advisers where appropriate.

Membership and composition

The Board shall appoint the members of the Committee and review the composition of the Committee at least annually. The Committee will comprise:

• (a) at least three members;

• (b) all of whom, where possible, will be non-executive directors;

• (c) a majority of whom, where possible, will be independent directors;

• (d) where possible, an independent chairman appointed by the Board and who is not the Chairman of the Board; and

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• (e) where possible, members with sufficient financial skills and experience relevant to the committee’s functions.

Meetings

The Committee shall:

• (a) meet as frequently as required but at least two times per year; and

• (b) the minimum quorum for a committee meeting is two members.

Where only two members are present, the unanimous vote of the two members will constitute an act of the Committee. Where the committee comprises more than two committee members, the vote of a majority of the members present will constitute an act of the Committee.

The secretary of the Committee is the Company Secretary;

Authority

In performing its functions in accordance with any applicable law, the Committee:

• (a) has unrestricted access to the external auditors, the internal audit firm (if any), senior management and employees of the Company;

• (b) has unrestricted access to information and reports relevant to fulfilling its responsibilities;

• (c) may seek independent external advice on matters brought before the Committee or in relation to the functions and responsibilities of the Committee; and

• (d) shall have the power to conduct or authorise investigations into any matters within the committee’s scope of responsibilities or when requested by the Board.

Responsibilities

The Committee must promote an environment within the Company which is consistent with best practice financial reporting and risk management. In particular, the Committee must:

• (a) perform an independent review of financial information prepared by management for external reporting. This will include conducting reviews of the annual report, directors’ report, annual financial statements, half yearly financial statements and any other externally reported financial information required by law;

• (b) monitor the integrity and effectiveness of financial reporting processes;

• (c) review and assess the external audit arrangements;

• (d) appoint, review and assess the internal audit arrangements (if any) and consider significant internal audit findings and management’s responses and related actions;

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• (e) review and ensure implementation of legislated major accounting changes;

• (f) ensure that appropriate policies are established and adequate systems are in place to identify and disclose related-party transactions and assess the propriety of any related party transactions;

• (g) require management to design and implement the risk management and internal control system to manage the company’s material business risks;

• (h) assess whether the Company has any material exposure to economic, environmental and social sustainability risks and, if it does, determine how the Company is to manage those risks;

• (i) consider reports from management as to whether material business risks are being managed effectively; and

• (j) ensure that the Board is kept regularly informed on general progress and activities, and is promptly briefed on all significant matters.

External audit arrangements

The Committee shall report to the Board on external audit arrangements, including:

• (a) making recommendations to the Board on the appointment, reappointment, replacement and remuneration of the external audit firm;

• (b) review the terms of engagement for the external auditor;

• (c) review the scope of the external audit with the external auditor including identified risk areas;

• (d) monitor the performance of the external audit including assessment of the quality and rigour of the audit, quality of the service provided and the audit firm’s internal quality control procedures;

• (e) review and assess non-audit services to be provided by the external auditor, with particular consideration to the potential to impair or appear to impair the external auditors’ independence;

• (f) review and monitor management’s responsiveness to the external audit findings; and

• (g) on a periodic basis, meet with the external auditor without the presence of management.

Appointment of external auditor

Should a change in auditor be considered necessary, a formal tendering process will be undertaken. The Committee will identify the attributes required of an auditor and will ensure the selection process is sufficiently robust so as to ensure selection of an appropriate auditor.

The Committee will ensure that prospective auditors have been provided with a sufficiently detailed understanding of the Company, its operations, its key

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personnel and any other information, including group structures and financial statements, that will have a direct bearing on each firm’s ability to develop an appropriate proposal and fee estimate.

The Committee and the Board will consider the appointment in conjunction with senior management.

In selecting an external auditor, particular consideration will be given to determining whether the fee quoted is sufficient for the work required, that the work is to be undertaken by people with an appropriate level of seniority, skill and knowledge and whether the work proposed is sufficient to meet the Company’s needs and expectations.

The appointment of a new external audit firm will be placed before shareholders for ratification at the next annual general meeting after the appointment is made.

Rotation and succession planning

The Committee will discuss with the auditor the provisions the audit firm has in place for rotation of the lead engagement partner and the independent review partner. The Company shall require that the lead engagement partner be rotated in accordance with legislative requirements.

Management sign-off procedure

The Audit & Risk Committee will ensure that the Managing Director / CEO and Chief Financial Officer prepare a written statement to the Board certifying that the Company’s annual financial report and half yearly financial report present a true and fair view, in all material respects, of the financial condition of the Company and its operational performance and are in accordance with relevant accounting standards.

The statement is to be presented to the Board prior to the approval and sign-off of the respective annual and half yearly financial reports.

Any questions in relation to this Charter should be directed to the Chairman of the Audit & Risk Committee.

This policy is reviewed annually by the Board.

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9. REMUNERATION & NOMINATION COMMITTEE CHARTER

The charter below describes the goals to which the Company shall aspire in relation to its remuneration and nomination strategies to the extent to which it is relevant.

Functions and responsibilities

The Remuneration & Nomination Committee is a committee of the Board with its principle functions being:

• (a) review the composition of the Board and ensure that the Board has an appropriate mix of skills and experience to properly fulfil its responsibilities;

• (b) ensure that the Board is comprised of directors who contribute to the successful management of the Company and discharge their duties having regard to the law and the highest standards of corporate governance;

• (a) to review and recommend to the Board the overall strategies in relation to executive remuneration policies;

• (b) to review and make recommendations to the Board in respect of the compensation arrangements for the Managing Director / CEO, all other executive directors and all non-executive directors;

• (c) to review the effectiveness of performance incentive plans; and

• (d) to review and make recommendations to the Board in respect of all equity based remuneration plans.

In consultation with the Managing Director / CEO, the Committee will review and recommend to the Board for approval, the Company’s general approach to compensation and will oversee the development and implementation of the compensation regime.

Composition

The Committee shall comprise at least three members of the Board the majority of whom where possible will be independent directors. Directors serving on the Remuneration & Nomination Committee should have diverse, complementary backgrounds. The Chairman of the Committee shall, where possible, be an independent director.

The Company Secretary will be the secretary of the Committee and will act as the principal liaison between executive management and the committee on remuneration matters.

Meetings

The Committee shall meet as frequently as required, but not less than annually.

The Committee shall have access to professional advice as required.

Two members of the Committee shall comprise a quorum. Where only two members are present, the unanimous vote of the two members will constitute an act of the Committee. Where the committee comprises more than two

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committee members, the vote of a majority of the members present will constitute an act of the Committee.

Remuneration policy

This policy governs the operations of the Remuneration & Nomination Committee.

General director remuneration

Shareholder approval must be obtained in relation to the overall limit set for nonexecutive directors’ fees. The directors shall set individual Board fees within the limit approved by shareholders.

Shareholders must also approve the framework for any equity based compensation schemes and if a recommendation is made for a director to participate in an equity scheme, that participation must be approved by the shareholders.

Executive remuneration

The Company’s remuneration policy for executive directors and senior management is designed to promote superior performance and long term commitment to the Company. Executives receive a base remuneration which is market related, and may be entitled to performance based remuneration at the ultimate discretion of the Board.

Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive market and business conditions where it is in the interests of the Company and shareholders to do so.

Executive remuneration and other terms of employment are reviewed annually by the Remuneration & Nomination Committee having regard to performance, relevant comparative information and expert advice.

The Committee’s reward policy reflects its obligation to align executive’s remuneration with shareholders’ interests and to retain appropriately qualified executive talent for the benefit of the Company. The main principles of the policy are:

• (a) reward reflects the competitive market in which the Company operates;

• (b) individual reward should be linked to performance criteria; and

• (c) executives should be rewarded for both financial and non-financial performance.

The total remuneration of executives and other senior managers consists of the following:

• (a) salary - executives director and senior manager receive a fixed sum payable monthly in cash;

• (b) bonus - executive directors and nominated senior managers are eligible to participate in a bonus plan if deemed appropriate;

• (c) long term incentives - executive directors may participate in share option schemes with the prior approval of shareholders. Executives may also

participate in employee share option schemes, with any option issues generally being made in accordance with thresholds set in plans approved by shareholders. The Board however, considers it appropriate to retain the flexibility to issue options to executives outside of approved employee option plans in exceptional circumstances; and

• (d) other benefits - executive directors and senior managers are eligible to participate in superannuation schemes.

Remuneration of other executives consists of the following:

• (a) salary - senior executive receives a fixed sum payable monthly in cash;

• (b) bonus - each executive is eligible to participate in a bonus plan if deemed appropriate;

• (c) long term incentives - each senior executive may participate in share option schemes which have been approved by shareholders; and

• (d) other benefits – senior executive are eligible to participate in superannuation schemes.

Non-executive remuneration

Shareholders approve the maximum aggregate remuneration for non-executive directors. The Remuneration & Nomination Committee recommends the actual payments to directors and the Board is responsible for ratifying any recommendations, if appropriate. The maximum aggregate remuneration approved for directors is currently $350,000.

It is recognised that non-executive directors’ remuneration is ideally structured to exclude equity based remuneration. However, whilst the Company remains small if non-executive directors are included in the operations of the Company more intimately than may be the case with larger companies, the non-executive directors may be entitled to participate in equity based remuneration schemes.

All directors are entitled to have their indemnity insurance paid by the Company.

Bonus plan

Performance incentives may be offered to executive directors and senior management of the Company through the operation of a bonus plan at the ultimate discretion of the Board.

Access

Members of the Committee have rights of access to the books and records of the Company to enable them to discharge their duties as Committee members, except where the Board determines that such access would be adverse to the Company’s interests.

The Committee may consult independent experts where the Committee considers this necessary to carry out its duties and responsibilities. Any costs incurred as a result of the Committee consulting an independent expert will be borne by the Company.

Responsibilities - Nomination

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The Committee shall periodically review and consider the structure and balance of the Board and make recommendations regarding appointments, retirements and terms of office of directors. In particular, the Committee is to:

• (a) identify and recommend to the Board candidates for the Board after considering the necessary and desirable competencies of new Board members to ensure the appropriate mix of skills and experience and after assessment of how the candidates can contribute to the strategic direction of the Company;

• (b) approve and review induction procedures for new appointees of the Board to ensure that they can effectively discharge their responsibilities;

• (c) assess and consider the time required to be committed by a nonexecutive director to properly fulfil their duty to the Company and advise the Board.

• (d) consider and recommend to the Board candidates for election or reelection to the Board at each annual shareholders’ meeting;

• (e) review directorships in other public companies held by or offered to directors and senior executives of the Company;

• (f) review succession plans for the Board with a view to maintaining an appropriate balance of skills and experience on the Board;

• (g) make recommendations to the Board on the appropriate size and composition of the Board; and

• (h) make recommendations to the Board on the terms and conditions of appointment to, and removal and retirement from, the Board.

Procedures for selection and appointment of Directors

Over time the Board shall work towards ensuring, collectively, it has the appropriate range and expertise to properly fulfil its responsibilities, including:

• (a) accounting and legal;

• (b) business development and risk management;

• (c) industry and public company experience; and

• (d) an appropriate ratio and skills matrix for executive and non-executive directors.

In the circumstances where the Board believes there is a need to appoint another director, whether due to retirement of a director or growth or complexity of the Company, certain procedures will be followed, including the following:

• (a) determine the skills and experience appropriate for the appointee having regard to those of the existing directors and any other likely changes to the Board;

• (b) agree the process and timetable for seeking such a person, which may involve an external search firm;

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• (c) a short list of candidates will be prepared for the Board’s consideration and interview. The selection process will encourage visitation to the Company’s operating sites and an understanding of management information systems. Candidates will be assessed on the following basis:

• (i) competencies and qualifications;

• (ii) independence;

• (iii) other directorships;

• (iv) time availability;

• (v) contribution to the overall balance of the composition of the Board; and

• (vi) depth of understanding of the role of and legal obligations, of a director.

The Company will undertake appropriate checks (including criminal record and bankruptcy checks) before appointing a person, or putting forward to shareholders a candidate for election as a director.

The Board composition and size shall be regularly reviewed to ensure it is appropriate for the size of the Company and provides the balance of skills and experience necessary for the conduct of the Company’s activities.

If an invitation to become a director is accepted, the Board will appoint the new director during the year and that person will then stand for re-election by shareholders at the next annual general meeting. Shareholders will be provided with all material information in the Company’s possession relevant to a decision on whether or not to elect or re-elect a director.

The Company will have a written agreement with each director setting out the terms of their appointment. When appointed to the Board, a new director will receive an induction appropriate to their experience.

The Company will provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

All directors are entitled to the benefit of the Company’s standard Deed of Access, Indemnity and Insurance.

Performance Evaluation Practices

As part of the annual review of the performance of the Board, the appropriate size, composition and terms and conditions of appointment to and retirement from the Board are considered. The level of remuneration for non-executive directors is considered with regard to practices of other public companies and the aggregate amount of fees approved by shareholders. The Board also reviews the appropriate criteria for Board membership collectively.

The Board shall establish formal processes to review its own performance and the performance of individual directors and the committees of the Board, annually.

Board

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A process shall be established to review and evaluate the performance of the Board. The Board shall meet annually with the specific purpose of reviewing the role of the Board, assessing its performance over the previous 12 months, including comparison with others, and examining ways in which the Board can better perform its duties. The review will incorporate the performance of the Board.

The annual review includes consideration of the following measures:

• (a) comparison of the performance of the Board against the requirements of the Board charter;

• (b) assessment of the performance of the Board over the previous twelve months having regard to the corporate strategies, operating plans and the annual budget;

• (c) review the Board’s interaction with management;

• (d) identification of any particular goals and objectives of the Board for the next year;

• (e) review the type and timing of information provided to the directors; and (f) identification of any necessary or desirable improvements to Board or committee charters.

The method and scope of the performance evaluation will be set by the Board and which may include a Board self-assessment checklist to be completed by each director. The Board may also use an independent adviser to assist in the review.

Committees

Similar procedures to those for the Board review are applied to evaluate the performance of each of the Board committees.

An assessment will be made of the performance of each committee against each charter and areas identified where improvements can be made.

Non-executive directors

The Chairman will have primary responsibility for conducting performance appraisals of non-executive directors in conjunction with them, having particular regard to:

• (a) contribution to Board discussion and function;

• (b) degree of independence including relevance of any conflicts of interest; (c) availability for and attendance at Board meetings and other relevant events;

• (d) contribution to Company strategy;

• (e) membership of and contribution to any Board committees; and

• (f) suitability to Board structure and composition.

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Where the Chairman, following a performance appraisal, considers that action must be taken in relation to a director’s performance, the Chairman must consult with the remainder of the Board regarding whether a director should be counselled to resign, not seek re-election, or in exceptional circumstances, whether a resolution for the removal of a director be put to shareholders.

Managing Director / CEO

The Board will annually review the performance of the Managing Director / CEO. At the commencement of each financial year, the Board and the Managing Director / CEO will agree a set of generally Company specific performance measures to be used in the review of the forthcoming year.

These will include:

• (a) financial measures of the Company’s performance;

• (b) the extent to which key operational goals and strategic objectives are achieved;

• (c) development of management and staff;

• (d) compliance with legal and Company policy requirements; and

• (e) achievement of key performance indicators.

Senior executives

The Managing Director / CEO is responsible for assessing the performance of the key executives within the Company. This is to be performed through a formal process involving a formal meeting with each senior executive.

The basis of evaluation of senior executives will be on agreed performance measures.

Any questions in relation to this Policy should be directed to the Chairman of the Remuneration & Nomination Committee.

This policy is reviewed annually by the Board.

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