NANOSONICS LIMITED — Governance Information 2016

Aug 16, 2016

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August 2016

Corporate Governance Statement

Nanosonics Limited

ABN 11 095 076 896

The Board of Directors of Nanosonics Limited (Nanosonics) is committed to ensuring that its policies and practices reflect good corporate governance consistent with the Australian Securities Exchange (ASX) Listing Rules, and the ASX Corporate Governance Principles and Recommendations (3rd Edition released on 27 March 2014).

This Corporate Governance Statement sets out Nanosonics’ key corporate governance principles and practices, and the extent to which the Company has followed the recommendations set by the ASX Corporate Governance Council during the last reporting period, being 1 July 2015 to 30 June 2016. The Statement was reviewed and approved by the Board on 16 August 2016. A copy of this Statement is available on the Company’s website at http://www.nanosonics.com.au/Investor-Centre/CorporateGovernance, together with the charters and policies referred to in this Statement.

PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Roles and Responsibilities of the Chairman

The Chairman of Nanosonics is responsible for leading the Board, its meetings and Directors so that all Directors are able to contribute effectively, all matters are properly considered and there is clear decision-making. The Chairman has ultimate responsibility for ensuring that corporate governance matters are properly considered by the Directors.

Roles and Responsibilities of the Board

Under the leadership of the Chairman, the role of the Board is to provide strategic guidance to the Company and to provide effective oversight of its management for the benefit of all stakeholders. The Board acts on behalf of shareholders, and is accountable to them for the overall strategy, governance and performance of the Company and its subsidiaries (the Group). The Board retains ultimate authority over the management of the Group. However, the day-to-day management of the Group’s affairs and the implementation of its strategies are formally delegated by the Board to the Chief Executive Officer (CEO) and President / Managing Director and the senior executives.

The respective roles and responsibilities of the Board and senior executives, reflecting how they are distinct from each other, and the matters expressly reserved to the Board and those delegated to management, are set out in detail in the Company’s Board Charter, which is available on the Company’s website.

The Board meets regularly, in accordance with an agreed schedule, and special meetings are held as and when required. Details of Directors’ attendances at meetings of the Board are shown in the Directors’ Report contained in the Company’s Annual Report.

The Board requires that each Director has the appropriate competencies to fulfil their role, and that they perform effectively in their respective role and on the Board. Nanosonics has a Nomination Committee which is responsible for recommending a framework for the assessment and evaluation of the performance of each Director individually, of each committee and of the Board as a whole, and the process for periodically evaluating these performances are explained in the Company’s Nomination Committee Charter, which is available on the Company’s website. The performance of the Board and each of the Board committees is reviewed annually, with the most recent review being completed in November 2015 in accordance with that process.

Roles and Responsibilities of Senior Executives

The responsibilities and performance expectations for all senior executives, including Executive Directors, are described in the Company’s Annual Report in the Information on the Directors, Company Secretaries and Senior Management section and in the Remuneration Report included in the Directors’ Report.

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Nanosonics has a process, and discloses that process, for periodically evaluating the performance of its senior executives. The Nanosonics Performance and Development Programme requires individual appraisals to be made by a Director at least annually for all senior executives, including Executive Directors, but excluding the CEO, who is assessed by the Non-Executive Directors. The Company discloses, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Accordingly, individual appraisals of the performance of all senior executives were undertaken by the CEO during the last reporting period.

Committees of the Board

The Board has established and is assisted by committees that are responsible for aspects of the operation of the Group, and which act by examining relevant matters and making recommendations to the Board. The Board may establish additional committees to assist it in carrying out its responsibilities. The Board may also delegate specified responsibilities to ad-hoc committees. The Directors must be satisfied that the members of a committee are competent and will exercise their delegated functions in accordance with Directors’ duties.

During the recent reporting period there were four committees of the Board: the Nomination Committee, the Audit and Risk Committee, the Remuneration Committee, and the R&D and Innovation Committee. Charters for these four Committees are available on the Company’s website. Details of the number of meetings of the committees and Directors’ attendances at those meetings are shown in the Directors’ Report contained in the Company’s Annual Report.

Checks and Material Information Prior to Appointments

Nanosonics undertakes appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a Director, and the Company provides security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a Director. These include checks as to the person’s character, experience, education, criminal record and bankruptcy history. Information provided to security holders in the Company’s Notices of Meetings includes: biographical details, such as their relevant qualifications and experience, and the skills they bring to the Board; details of any other material directorships currently held by the candidate; in the case of a candidate standing for election as a Director for the first time, any material adverse information revealed by the checks the Company has performed about the Director, details 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 judgement to bear on issues before the Board, and to act in the best interests of the Company and its security holders generally, and, if the Board considers that the candidate will, if elected, qualify as an independent Director, a statement to that effect; in the case of a candidate standing for re-election as a Director, the term of office currently served by the Director and, if the Board considers the Director to be an independent Director, a statement to that effect, and a statement by the Board as to whether it supports the election or re-election of the candidate.

A candidate for appointment or election as a Non-Executive Director must provide the Board with the information above and a consent for Nanosonics to conduct any background or other checks the Company would ordinarily conduct. The candidate must also provide: details of his or her other commitments; an indication of the time involved; and an acknowledgement to the Company that he or she will have sufficient time to fulfil his or her responsibilities as a Director.

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Written Agreements for Terms of Appointment

Nanosonics has a written agreement with each Director and senior executive setting out the terms of their appointment. The Directors and senior executives of Nanosonics have a clear understanding of their roles and responsibilities, and of the Company’s expectations of them and these have been reduced to written agreements. These agreements take the form of letters of appointment in the case of Non-Executive Directors and service contracts in the case of Executive Directors or other senior executives.

In the case of Non-Executive Directors, the agreements generally set out: the terms of appointments; the time commitment envisaged, including any expectations regarding involvement with committee work and any other special duties attaching to the positions; remuneration, including superannuation entitlements; the requirement to disclose Directors’ interests and any matters that may affect Directors’ independence; the requirement to comply with key corporate policies, including Nanosonics’ Code of Conduct and Ethics, and its Securities Trading Policy; Nanosonics’ policy on when Directors may seek independent professional advice at the expense of the Company (which is generally whenever Directors, especially Non-Executive Directors, judge such advice necessary for them to discharge their responsibilities as Directors); indemnity and insurance arrangements; ongoing rights of access to corporate information; and ongoing confidentiality obligations.

In the case of Executive Directors or other senior executives, the service contracts generally set out the information above, to the extent applicable, as well as: descriptions of their positions, duties and responsibilities; the persons or bodies to whom they report; the circumstances in which their services may be terminated; and any entitlements on termination.

Nanosonics is required under the ASX Listing Rules to disclose the material terms of any employment, service or consultancy agreement it or a child entity enters into with its CEO (or equivalent), any of its Directors, and any other person or entity who is a related party of its CEO or any of its Directors. It is also required to disclose any material variation to such an agreement.

Securities Trading Policy

The Company has a Securities Trading Policy, which applies to all designated persons, comprising its Directors, officers, employees, advisors, consultants and contractors, and such other persons as the Board nominates. Designated persons may only deal in the Company’s securities in accordance with the Policy and the Company regularly reviews share trading reports and its share register to ensure compliance with the Policy. A copy of the Securities Trading Policy is available on the Company’s website.

Company Secretaries

The Company Secretaries of Nanosonics are accountable directly to the Board, through the Chairman, on all matters to do with the proper functioning of the Board. The Company Secretaries of Nanosonics play an important role in supporting the effectiveness of the Board and its committees. The role of the Company Secretaries include: advising the Board and its committees on governance matters; monitoring that Board and committee policies and procedures are followed; co-ordinating the timely completion and despatch of Board and committee papers; ensuring that the business at Board and committee meetings is accurately captured in the minutes; and helping to organise and facilitate the induction and professional development of Directors. Each Director is able to communicate directly

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with the Company Secretaries and vice versa. The decision to appoint or remove a Company Secretary is made or approved by the Board.

Diversity

Nanosonics believes that the pursuit of diversity in the workplace increases its ability to attract, retain and develop the best talent available and that it creates an engaged workforce, delivers the highest quality services to its customers, enhances individual work-life balance, encourages personal achievement, improves co-operation and assists in the optimisation of organisational performance. Diversity in the workplace mirrors the diversity of the broader community, encompassing age, gender, ethnicity, cultural and other personal factors. The Company respects the diversity of all employees, consultants and contractors, and cultivates an environment of fairness, respect and equal opportunity. The Company has a Diversity Policy which includes requirements for the Board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and Nanosonics’ progress in achieving them. A copy of Nanosonics’ Diversity Policy is available on the Company’s website.

Set out below are the diversity objectives established by the Board.

• Hiring: The Board will ensure that appropriate selection criteria, based on diverse skills, experience and perspectives, are used when recruiting new staff and Directors. Job specifications, advertisements, application forms and contracts will not contain any direct or inferred discrimination.

• Training: All internal and external training opportunities will be based on merit, and Company and individual needs. The Board will consider senior management training and executive mentoring programmes to develop skills and experience to prepare employees for senior management and Board positions.

• Career Advancement: All decisions associated with career advancement, including promotions, transfers and other assignments, will meet the Company’s needs, and be determined on skill and merit.

• Work Environment: The Company will ensure that all officers, employees, consultants and contractors have access to a work environment that is free from harassment and unwanted conduct in relation to personal circumstances or characteristics. Directors, managers and supervisors will ensure that complainants or reports of sexual, racial or other harassment are treated seriously, confidentially and sympathetically by the Company.

The Board assesses annually the above diversity objectives and the Company’s progress in achieving them.

At the end of the last reporting period the measurable objectives for achieving gender diversity set by the Board in accordance with Nanosonics’ Diversity Policy and its progress towards achieving them included: continuing to actively seek to represent women on the Board and fund programmes to develop the skills of female employees who have the potential to move into senior roles in the Company. During the last reporting period the Board held further discussions with a number of women with a view to making an appointment to the Board. These discussions are ongoing. In addition, the Company continued sponsoring an employee in the Women in MBA programme with the Macquarie Graduate School of Management at Macquarie University, as well as continuing the sponsorship of another woman employee to complete her MBA programme.

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As at 30 June 2016, women represented 34% (2015: 32%) of the Group’s workforce, 12% in senior executive positions (2015: 27%) and 0% at Board level (2015: 0%). Nanosonics defines “senior executive” for these purposes as those who directly report to the CEO and those positions that report to the CEO’s direct reports.

PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE

Nomination Committee

During the recent reporting period, the three members of Nanosonics’ Nomination Committee were: Mr Richard England (Committee Chairman), Dr David Fisher and Mr Maurie Stang. The Committee comprised of a majority of independent Directors and was chaired by an independent Director. Effective 20 July 2016 Mr Maurie Stang was elected Chairman of this Committee and Mr Steven Sargent was appointed as a member of the Committee.

The Nomination Committee is appointed by the Board to assist it in discharging its responsibilities in relation to:

• the consideration of Board nomination, including composition, structure and operation of the Board, and ensuring the Board is comprised of individuals who are best able to discharge their responsibilities as Directors; and

• the consideration of diversity matters, including ensuring the Company meets the requirements of the ASX Diversity Guidelines.

The Nomination Committee is responsible for the identification and selection of suitable candidates for appointment as a Director. The Committee assesses potential Directors to ensure that the Board includes an appropriate mix of skills to allow it to maximise its effectiveness and contribution to the Company. Selection criteria include relevant experience and qualifications, availability, communication capabilities, community standing and integrity. After assessment, candidates are recommended to the Board by the Committee. A copy of the Nomination Committee Charter is available on the Company’s website. Details of the number of meetings of the Committee and Directors’ attendances at those meetings are shown in the Directors’ Report contained in the Company’s Annual Report.

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Skills Matrix

Nanosonics has a Board skills matrix, listed below, setting out the mix of skills and diversity that the Board currently has.

Skills and experience	Number of Directors (out of six)
Executive leadership Sustainable success in business at a senior executive level	6
Global experience Senior management experience in multiple global locations with exposure to a range of political,regulatoryand business environments	6
Medical devices Senior executive experience in the medical device or bioscience industry, including an in-depth knowledge of the Company’s strategy, markets, competitors, operational and regulatoryenvironment	6
Regulatory strategy and compliance Senior executive experience in the licensing, marketing and legal compliance of medical devices or similarlyregulatedproducts	5
Strategy development Track record of developing and implementing a successful strategy including the monitoringofprogress of management to deliver agreed strategic objectives	6
Marketing Senior executive experience in marketing products in the life sciences industry	5
Corporate governance and compliance Substantial experience with organisations that are subject to rigorous governance and compliance standards and an abilityto assess the effectiveness of management	6
Financial acumen Senior executive experience in financial accounting and reporting, corporate finance and internal financial controls	6
Business development Senior executive experience in successfully building or acquiring new businesses and/or substantially growingexistingbusinesses in new or existingmarkets	5
Risk management Substantial executive experience in the identification, monitoring and management of risk to ensure the deliveryof long-term value to shareholders	6

Directors’ Independence

During the recent reporting period, the Board consisted of three Non-Executive Directors and two Executive Directors. Directors’ independence is assessed according to the provisions set out in the Company’s Board Charter, and in the ASX Corporate Governance Principles and Recommendations (3rd Edition). The names of the Directors, their Board positions, their length of service as Directors and their status as independent / dependent Directors, as at the end of the recent reporting period, is set out below.

• Mr Maurie Stang is the Non-Executive Chairman of Nanosonics and was appointed as a Director on 14 November 2000. He is not considered to be an Independent Director as he is a founder of the Company, he held executive office in the Company until March 2007, he is a major shareholder of the Company and he is a director and/or shareholder of companies with which the Company had significant transactions during the last reporting period (refer to the Directors’ Report included in the Annual Report).

• Mr Michael Kavanagh is the CEO, President and Managing Director of Nanosonics. He was appointed as a Non-Executive Director on 30 July 2012 and became an Executive Director on 21

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October 2013. He is not considered to be an Independent Director as he is an executive of the Company.

• Dr Ron Weinberger is the President Technology Development/Commercialisation of Nanosonics and was appointed as an Executive Director on 2 July 2008. He is not considered to be an Independent Director as he is an executive of the Company.

• Dr David Fisher is a Non-Executive Director of Nanosonics and was appointed as a Director on 30 July 2001. He is considered to be an Independent Director. He served as interim Executive Director for the period 14 December 2007 to 16 June 2008. For the period 9 May 2011 to 29 March 2013 Dr David Fisher served as Managing Director of Aeris Environmental Ltd where Mr Maurie Stang is the Non-Executive Chairman and a substantial shareholder. However, the Board is of the opinion that this, and the fact that Dr David Fisher has been a Director of the Company for 15 years, do not compromise his independence, the nature of his interest, position, association or relationship in question because he complies with all other requirements set out in Box 2.3 of ASX’s Recommendations that are relevant in assessing the independence of a Director, and the Board values his contribution due to his broad healthcare industry experience and knowledge.

• Mr Richard England is a Non-Executive Director of Nanosonics and was appointed as a Director on 5 February 2010. He is considered to be an Independent Director.

Accordingly, the majority of the Board of Directors of Nanosonics is not independent. On 6 July 2016 the Board appointed Mr Steven Sargent as a Non-Executive, Independent Director of the Company. The Board is continuing to consider opportunities to appoint additional, suitably-qualified and experienced Independent Directors. When the Company has appointed other Independent Directors the Board intends to consider its opportunities to appoint an independent chairman. Consistent with the ASX Corporate Governance Principles and Recommendations 3rd Edition, the chair of the Board is not the same person as, and therefore separate from, the CEO of the Company.

Further details on each Director, including their qualifications and experience, are set out in the Information on the Directors, Company Secretaries and Senior Management section of the Annual Report and on the Nanosonics website at www.nanosonics.com.au.

Induction, Education and Access of Directors

Nanosonics has a programme for inducting new Directors. Every new Director receives an appointment letter accompanied by: a Director’s Deed of Access; a Director’s Handbook (containing Company policies and charters); and induction training.

Nanosonics provides appropriate professional development opportunities for Directors to develop and maintain the skills and knowledge needed to perform their role as Directors effectively. Directors and the Board have the right, in connection with their duties and responsibilities, to obtain independent professional advice at the Company’s expense. Subject to prior approval from within the Board, which will not reasonably be withheld, a Director may have direct access to any employee or contractor of the Group and seek any information from any employee in order to perform his or her responsibilities.

PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY

Code of Conduct and Ethics

Nanosonics has a code of conduct for its Directors, senior executives and employees. All Directors, officers, employees, advisors, consultants and contractors of the Group are expected to act with integrity and objectivity, and to maintain the highest possible ethical standards that have been formalised and set out in the Company’s Code of Conduct and Ethics, which is available on the Company’s website.

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Whistleblower Protection Policy

The Company recognises its responsibilities to conduct its business in accordance with both Australian and internationally-accepted practices and procedures. As part of this, the Company is committed to maintaining a culture where all Directors, staff, contractors and consultants of the Company are encouraged to raise concerns about poor and/or unacceptable practices and misconduct.

The Company has a Whistleblower Protection Policy to provide a process by which Directors, staff, contractors and consultants of the Company can express serious concerns and report misconduct. The Whistleblower Protection Policy applies to everyone working for or dealing with Nanosonics in any capacity and it is available to view on the Company’s website.

PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING

Audit and Risk Committee

Nanosonics has a joint Audit and Risk Committee, which has three members, being Mr Richard England (Chairman of the Committee), Dr David Fisher and Mr Maurie Stang, all of whom are NonExecutive Directors and a majority of whom are Independent Directors. The Audit and Risk Committee is chaired by an Independent Director, who is appropriately qualified and financially literate, and who is not the Chairman of the Board. Information about the members of the Audit and Risk Committee, and their relevant qualifications and experience, is set out on the Company’s website in the About Nanosonics section under the Leadership Team link and in the Company’s Annual Report.

The purpose of the Audit and Risk Committee is to assist the Board to discharge its responsibilities in relation to the oversight and monitoring of:

• corporate reporting processes, including the financial reporting process;

• the external audit;

• risk management and internal control;

• compliance with laws, regulations, internal policies and industry standards; and

• activities to prevent, deter, detect and report on fraud.

A copy of the Audit and Risk Committee Charter is available on the Company’s website. Details of the number of meetings of the Committee and Directors’ attendances at those meetings are shown in the Directors’ Report contained in the Company’s Annual Report.

The Audit and Risk Committee is also responsible for selecting and recommending the appointment of the external auditor. The Committee considers a number of criteria in appointing the external auditor, including audit approach, governance processes, key personnel and cost. The Committee then provides the Board with its recommendation. In line with current professional standards, the external audit partner is required to rotate after five years and cannot return as audit partner for a further two years. It is the external auditor’s role to provide an independent opinion as to whether the Company’s financial reports are true and fair, and comply with the Australian Accounting Standards and the Corporations Act 2001 .

CEO / CFO Declarations

Before the Board of Nanosonics approves the Company’s financial statements for a financial period, it receives from its CEO / President / Managing Director and its Chief Financial Officer (CFO) a joint declaration that, in their opinion, the financial records of the Company have been properly maintained, and that the financial statements comply with the appropriate accounting standards, and give a true and fair view of the financial position and performance of the Company, and 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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External Auditor’s Attendance at the Annual General Meeting (AGM)

Nanosonics ensures that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit, such as the conduct of the audit of the Company, and the preparation and content of the Independent Auditor’s Report on the financial statements of the Company.

PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE

The Company recognises and respects the rights of shareholders, and seeks to facilitate the effective exercise of those rights within the limitations of the continuous disclosure provisions of the ASX Listing Rules. Nanosonics has a written Continuous Disclosure and Shareholder Communication policy to ensure compliance with its continuous disclosure obligations under the ASX Listing Rules and for ensuring individual accountability at senior executive level for that compliance. In determining whether information should be disclosed, the Board takes into consideration the needs and interests of the Group’s shareholders and other stakeholders in the context of the Board’s obligations under the Corporations Act 2001 and the ASX Listing Rules. ASX announcements are prepared directly when the Board or executive management becomes aware of information required to be disclosed to the market. A copy of the Continuous Disclosure and Shareholder Communication Policy is available on the Company’s website.

PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS

The Company’s Website

Nanosonics provides information about the Company and its governance practices to investors via its website: www.nanosonics.com.au. The Company ensures that relevant corporate information is complete and available in a timely manner. The Company’s website has an Investor Centre page with a Corporate Governance landing page from where all relevant corporate governance information can be accessed. In the corporate governance area of its website the Company has links to its Board charter and the charters of each of its four Board committees, the corporate governance policies and other corporate governance materials referred to in this Statement. The Investor Centre page on the website also provides links to: Reports and Presentations of the Company, including its Annual Reports and Financial Statements from at least the last six years; Company presentations and analysts reports; ASX Announcements the Company has made after they have been released to the ASX, including Notices of Meetings of security holders and any accompanying documents; contact details for the Company’s share registry; and a glossary of terms.

The names, photographs and brief biographical information for each of Nanosonics’ Directors and senior executives can be found on the About Nanosonics page on the Company’s website. The Company’s website also includes a Technology tab with information on the Company’s platform technology and intellectual property, a Products and Support tab with information on its product Trophon® EPR and the companies Nanosonics has partnered with for distribution and support of its products, an Events tab with information on events that Nanosonics will be attending and a Contact Us page with contact details for enquiries.

Investor Relations

Nanosonics has designed and implemented an investor relations programme to facilitate effective two-way communication with investors, which has been tailored to the individual circumstances of the Company, including a detailed programme of scheduled and ad hoc interactions with institutional investors, private investors, sell-side and buy-side analysts and the financial media. A primary aim of the investor relations programme is to allow investors and other financial market participants to gain a greater understanding of the Company’s business, governance, financial performance and prospects, as well as providing an opportunity for investors and other financial market participants to express their views to the Company on matters of concern or interest to them. Where they do so, those views

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are distilled and communicated to the Company’s Board. Shareholders and prospective shareholders are welcome, by prior appointment, to speak with executive managers responsible for investor relations and to view the Company’s operations. The Company also has a Privacy Policy, which is available on the Company’s website.

Participation at Meetings of Security Holders

The processes Nanosonics has in place to facilitate and encourage participation at meetings of security holders include the ability of shareholders to pre-submit questions to be answered at the Company’s AGM, and the availability of key members of management to answer questions during and after the formal business of the AGM. Nanosonics’ policy for communication with shareholders and encouraging their participation at general meetings is contained in the Company’s Continuous Disclosure and Shareholder Communication Policy, which is available on the Company’s website. The Company encourages shareholder participation, particularly their attendance at the general meetings of the Company. At the Company’s AGMs the external auditor is available to answer shareholder questions. Nanosonics views meetings of security holders as an important forum for two-way communication between the Company and its security holders, providing an opportunity for the Company to impart to security holders a greater understanding of Nanosonics’ business, governance, financial performance and prospects, as well as being a platform to discuss areas of concern or interest to the Board and management. Meetings of security holders also provide an opportunity for security holders to express their views to the Company’s Board and management about any areas of concern or interest for them.

Electronic Communications

Nanosonics gives security holders the option to receive communications from, and send communications to, the Company and its security registry electronically. The Company ensures relevant corporate information is complete and available in a timely manner on its website, including posting webcasts or recordings of teleconferences, and providing updates and reports to shareholders by email. On the Investor section of Nanosonics’ website there is a Share Registry tab providing contact information on the Company’s Share Registry, including links to its website and email address for any shareholder queries. Security holders can also go to the Contact Us section of Nanosonics’ website to electronically submit to the Company any enquiries they may have.

PRINCIPLE 7 – RECOGNISE AND MANAGE RISK

Overseeing Risk

Nanosonics’ joint Audit and Risk Committee is responsible for overseeing and monitoring risk and compliance management. As mentioned under Principle 4 above, the Committee has three members, a majority of whom are independent Directors, and is chaired by an independent Director. The Audit and Risk Committee’s responsibilities in relation to risk and compliance are included in the Audit and Risk Committee Charter, which is available on the Company’s website. Details of the number of meetings of the Committee and Directors’ attendances at those meetings are shown in the Directors’ Report contained in the Company’s Annual Report.

The Company has also established and documented an enterprise risk management programme for the oversight and management of the Company’s material business risks. Nanosonics’ enterprise risk management system is based on the International Risk Standard AS/NZS ISO 31000:2009 and is complemented by an internal control programme based upon the principles set out in the Australian Compliance Standard AS 3806:2006.

Reviewing the Company’s Risk Management Framework

The Board’s Audit and Risk Committee reviews the Company’s risk management framework at least annually to satisfy itself that it continues to be sound. Such a review has taken place within the last reporting period, which satisfied the Committee that the framework continues to be sound and that

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the Company is operating within the risk appetite set by the Board. The insights that the Company has gained from this latest review confirm the suitability of the Company’s risk management framework.

The Company’s electronic risk and compliance system, which facilitates the linking of material business risks to mitigating controls so that the performance of the Company’s enterprise risk and compliance programmes can be monitored continuously, has been reviewed during the reporting period to ensure that it is working effectively and is up-to-date. Management reports to the Board on the effectiveness of the Company’s management of its material business risks, with the most recent report being provided in April 2016.

The CEO / President / Managing Director, and the CFO have both confirmed to the Board that the declaration provided in the Annual Report in accordance with section 295A of the Corporations Act 2001 is founded upon sound systems of internal control, and that the systems are operating effectively in all material respects in relation to financial reporting risks.

Internal Audit Function

Nanosonics does not have an internal audit function. The processes the Company employs for evaluating and continually improving the effectiveness of its risk management and internal control processes are carried out under the supervision of the Audit and Risk Committee. These processes include: analysing the common risk language that has been developed and through which it considers internal risks, such as those arising from financial and human resource management; and examining external risks, such as those arising from dealings with key stakeholders; and monitoring macroenvironmental issues, such as regulatory changes or economic events beyond the Company’s control. In assessing material business risks, each identified risk is individually evaluated in terms of the likelihood of the risk event occurring and the potential consequences in the event that the risk was to occur.

Material Exposure

Nanosonics has not identified any specific material exposure to economic, environmental and social sustainability risks and it manages any risks it has through the procedures outlined via its Audit and Risk Committee. The Company continues to operate with a long-term perspective in order to achieve a level of economic growth utilising the experience of a Board of Directors who have achieved success in business at a senior executive level. Nanosonics has a goal of not compromising the health of the ecosystems in which it operates over the long term. The Company has worked, and continues to work, in a manner that meets accepted social norms and needs, and intends to continue to do so into the future.

The Company believes that how it conducts its business activities impacts directly on a range of stakeholders, including security holders, employees, customers, suppliers, creditors, consumers, governments and the local communities in which it operates. The Company understands that whether it does so sustainably can impact in the longer term on society and the environment. Nanosonics’ business, in essence, aims to address certain environmental, social sustainability and economic risks, as it develops easy-to-use, environmentally-friendly and quality-assured products for the infection control market. Every aspect of Nanosonics’ activities, from product design, manufacturing, packaging and operations, is focused on the dual objectives of delivering superior, cost-effective healthcare, while ensuring the highest standard of occupational health and environmental safety. Healthcare Acquired Infections (HAIs) – infections caused by a wide variety of common and unusual bacteria, fungi and viruses during the course of receiving medical care – are a large cause of fatalities globally. Nanosonics is committed to preventing HAIs through its first product, trophon® EPR, which is the next generation in ultrasound probe disinfection. Nanosonics identified an unmet need in the market for fast, safe, eco-friendly probe disinfection. Disinfection and sterilisation of medical equipment are essential for ensuring there is no transmission of

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infectious pathogens between patients, thereby reducing HAIs. Nanosonics has an Environmental Policy, which is available on the Company’s website.

PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY

Remuneration Committee

The Board of Nanosonics has a Remuneration Committee consisting of three members, Mr Richard England (Chairman), Dr David Fisher and Mr Maurie Stang. On 20 July 2016 it was resolved to appoint Mr Steven Sargent as Chairman of this Committee, replacing Mr Richard England as Chairman who continues as a member of the Committee. The Committee is chaired by an Independent Director (in both instances) and has a majority of Independent Directors.

The Remuneration Committee oversees remuneration policies and strategies to ensure that performance is rewarded in a manner that is competitive and appropriate for the results delivered. The purpose of the Remuneration Committee is to assist the Board to discharge its responsibilities by:

• recommending appropriate remuneration policies to the Board and monitoring their implementation;

• establishing systems designed to enhance the performance of individual employees, Directors of the Company and of the Company as a whole;

• fairly and responsibly rewarding executives and other employees having regard to the performance of the Company, the performance of the executive or employee and the general pay environment; and

• recommending to the Board a system of performance appraisal for Directors and the Board of the Company as a whole.

A copy of Nanosonics’ Remuneration Committee Charter is available on the Company’s website. Details of the number of meetings of the Committee and Directors’ attendances at those meetings are shown in the Directors’ Report contained in the Company’s Annual Report.

The Company’s remuneration philosophy and policies are set out in the Remuneration Report in the Annual Report, and includes a summary of the Company’s remuneration strategy together with details of securities trading restrictions.

Remuneration of Non-Executive Directors, and Executive Directors and Senior Executives

Nanosonics is required under the Corporations Act to make detailed disclosure in its Remuneration Reports of its remuneration policies for key management personnel. Those reports are subject to an advisory vote by security holders and a “two-strikes rule” at the AGM. Nanosonics’ Remuneration Report clearly articulates and separately discloses its policies and practices regarding the remuneration of Non-Executive Directors, and the remuneration of Executive Directors and other senior executives. These policies and practices appropriately reflect the different roles and responsibilities of Non-Executive Directors compared with Executive Directors and other senior executives.

The Company intends to develop policies and practices regarding the deferral of performance-based remuneration and the reduction, cancellation or clawback of performance-based remuneration in the event of serious misconduct or a material misstatement in the Company’s financial statements. As noted in the Company’s Remuneration Report, these policies will be developed as clear market trends emerge.

As noted in the Company’s Remuneration Committee Charter, this Committee has regard to the overriding goal of ensuring that Directors and senior executives of the Company are motivated to pursue the long-term growth and success of the Company within an appropriate control framework, and that there is a clear relationship between performance and remuneration.

Nanosonics Corporate Governance Statement – August 2016

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Equity-Based Remuneration Scheme

Nanosonics has an equity-based remuneration scheme and a policy that prohibits participants from entering into transactions (whether through the use of derivatives or otherwise) that limit the economic risk of participating in the scheme without prior approval of the Board. The policy can be found in section 4 of the Company’s Securities Trading Policy, which is available on the Company’s website. The Corporations Act prohibits the key management personnel of an ASX-listed company established in Australia, or a closely-related party of such personnel, from entering into an arrangement that would have the effect of limiting their exposure to risk relating to an element of their remuneration that either has not vested or has vested but remains subject to a holding lock. Nanosonics is required to obtain security holder approval for the issue of securities to Directors or their associates under any equity-based incentive scheme.

Nanosonics Corporate Governance Statement – August 2016

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Rules 4.7.3 and 4.10.3[1]

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Name of entity:

Nanosonics Limited

ABN / ~~ARBN~~ : Financial year ended: 11 095 076 896 30 June 2016

Our corporate governance statement[2] for the above period above can be found at:[3]

• ☐ These pages of our annual report:

☒ This URL on our website: http://www.nanosonics.com.au/Investor-Centre/Corporate-Governance

The Corporate Governance Statement is accurate and up to date as at 16 August 2016 and has been approved by the board.

The annexure includes a key to where our corporate governance disclosures can be located.

Date: 17 August 2016

Name of ~~Director or~~ Secretary authorising lodgement: McGregor Grant

1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX. Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period. Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3.

2 “Corporate governance statement” is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

3 Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity’s corporate governance statement can be found. You can, if you wish, delete the option which is not applicable.

Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes “OR” at the end of the selection and you delete the other options, you can also, if you wish, delete the “OR” at the end of the selection.

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ANNEXURE – KEY TO CORPORATE GOVERNANCE DISCLOSURES

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1	A listed entity should disclose: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management): ☒ in The Company’s Board Charter at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.2	A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.3	A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.4	The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

4 If you have followed all of the Council’s recommendations in full for the whole of the period above, you can, if you wish, delete this column from the form and re-format it.

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
1.5	A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” underthe Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.	… the fact that we have a diversity policy that complies with paragraph (a): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of our diversity policy or a summary of it: ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance … and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and the information referred to in paragraphs (c)(1) or (2): ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.6	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒ in our Corporate Governance Statement AND ☒ in our Nomination Committee Charter at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance … and the information referred to in paragraph (b): ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
1.7	A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.	… the evaluation process referred to in paragraph (a): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and the information referred to in paragraph (b): ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE
2.1	The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.	[If the entity complies with paragraph (a):] … the fact that we have a nomination committee that complies with paragraphs (1) and (2): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of the charter of the committee: ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance … and the information referred to in paragraphs (4) and (5): ☒ in our Corporate Governance Statement AND ☒ in the Directors’ Report contained in the Company’s Annual Report. [If the entity complies with paragraph (b):] … the fact that we do not have a nomination committee and the processes we employ to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
2.2	A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.	… our board skills matrix: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
2.3	A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director.	… the names of the directors considered by the board to be independent directors: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and, where applicable, the information referred to in paragraph (b): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and the length of service of each director: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement
2.4	A majority of the board of a listed entity should be independent directors.	… the fact that we follow this recommendation: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☒ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
2.5	The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.	… the fact that we follow this recommendation: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☒ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
2.6	A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY
3.1	A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it.	… our code of conduct or a summary of it: ☐ in our Corporate Governance Statement OR ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING
4.1	The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non- executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.	[If the entity complies with paragraph (a):] … the fact that we have an audit committee that complies with paragraphs (1) and (2): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of the charter of the committee: ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance … and the information referred to in paragraphs (4) and (5): ☒ in our Corporate Governance Statement AND ☒ at http://www.nanosonics.com.au/Board-Of-Directors and in the Company’s Annual Report [If the entity complies with paragraph (b):] … the fact that we do not have an audit committee and the processes we employ that independently verify and safeguard the integrity of our corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement
4.2	The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
4.3	A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity that does not hold an annual general meeting and this recommendation is therefore not applicable
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
5.1	A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it.	… our continuous disclosure compliance policy or a summary of it: ☐ in our Corporate Governance Statement OR ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance	☐ an explanation why that is so in our Corporate Governance Statement
PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
6.1	A listed entity should provide information about itself and its governance to investors via its website.	… information about us and our governance on our website: ☒ at http://www.nanosonics.com.au/	☐ an explanation why that is so in our Corporate Governance Statement
6.2	A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement
6.3	A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.	… our policies and processes for facilitating and encouraging participation at meetings of security holders: ☒ in our Corporate Governance Statement AND ☒ in our Continuous Disclosure and Shareholder Communication Policy at http://www.nanosonics.com.au/Investor- Centre/Corporate-Governance	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity that does not hold periodic meetings of security holders and this recommendation is therefore not applicable
6.4	A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	… the fact that we follow this recommendation: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
7.1	The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.	[If the entity complies with paragraph (a):] … the fact that we have a committee or committees to oversee risk that comply with paragraphs (1) and (2): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of the charter of the committee: ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance … and the information referred to in paragraphs (4) and (5): ☒ in our Corporate Governance Statement AND ☒ in the Directors’ Report contained in the Company’s Annual Report. [If the entity complies with paragraph (b):] … the fact that we do not have a risk committee or committees that satisfy (a) and the processes we employ for overseeing our risk management framework: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement
7.2	The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place.	… the fact that board or a committee of the board reviews the entity’s risk management framework at least annually to satisfy itself that it continues to be sound: ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and that such a review has taken place in the reporting period covered by this Appendix 4G: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
7.3	A listed entity should disclose: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.	[If the entity complies with paragraph (a):] … how our internal audit function is structured and what role it performs: ☐ in our Corporate Governance Statement OR ☐ at [insert location] [If the entity complies with paragraph (b):] … the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement
7.4	A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.	… whether we have any material exposure to economic, environmental and social sustainability risks and, if we do, how we manage or intend to manage those risks: ☒ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
8.1	The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.	[If the entity complies with paragraph (a):] … the fact that we have a remuneration committee that complies with paragraphs (1) and (2): ☒ in our Corporate Governance Statement OR ☐ at [insert location] … and a copy of the charter of the committee: ☒ at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance … and the information referred to in paragraphs (4) and (5): ☒ in our Corporate Governance Statement AND ☒ in the Directors’ Report contained in the Company’s Annual Report. [If the entity complies with paragraph (b):] … the fact that we do not have a remuneration committee and the processes we employ for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
8.2	A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.	… separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives: ☐ in our Corporate Governance Statement OR ☒ in the Remuneration Report of the Annual Report	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we are an externally managed entity and this recommendation is therefore not applicable
8.3	A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it.	… our policy on this issue or a summary of it: ☐ in our Corporate Governance Statement OR ☒ in section 4 of the Company’s Securities Trading Policy, which is available on the Company’s website at http://www.nanosonics.com.au/Investor-Centre/Corporate- Governance	☐ an explanation why that is so in our Corporate Governance Statement OR ☐ we do not have an equity-based remuneration scheme and this recommendation is therefore not applicable OR ☐ we are an externally managed entity and this recommendation is therefore not applicable

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Corporate Governance Council recommendation

We have followed the recommendation in full for the whole of the We have NOT followed the recommendation in full for the whole period above. We have disclosed … of the period above. We have disclosed …[4]

ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES

Corporate Governance Council recommendation	Corporate Governance Council recommendation	We have followed the recommendation in full for the whole of the period above. We have disclosed …	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed …4
ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES
-	Alternative to Recommendation 1.1 for externally managed listed entities: The responsible entity of an externally managed listed entity should disclose: (a) the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity; (b) the role and responsibility of the board of the responsible entity for overseeing those arrangements.	… the information referred to in paragraphs (a) and (b): ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement
-	Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities: An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager.	… the terms governing our remuneration as manager of the entity: ☐ in our Corporate Governance Statement OR ☐ at [insert location]	☐ an explanation why that is so in our Corporate Governance Statement

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