Corporate Governance

2. Structure the Board to Add Value

Composition and Balance of Skills of Directors
The Directors consider the size and composition of the Board is appropriate given the size and status of the Company. However, the composition of the Board will be subject to review in a number of ways.

• The Company’s constitution provides that at every annual general meeting, one third of the directors shall retire from office but may stand for re-election.
• Board composition will be also reviewed periodically either when a vacancy arises or if it is considered the Board would benefit from the services of a new director, given the existing mix of skills and experience of the Board which should match the strategic demands of the Company. Once it has been agreed that a new director is to be appointed, a search would be undertaken, sometimes using the services of external consultants. Nominations would then be reviewed by the Board.
• The Chief Executive Officer will be a director and will also have the title of Managing Director.

Independence of Directors
The Board believes that the best interests of the Consolidated Entity, when it is fully operational, will be served if a majority of the directors are independent, as defined in the ASX Corporate Governance Guidelines. The Chairman is an independent director and non-executive. Directors of MIKOH Corporation Limited are considered to be independent when they are independent of management and free from any business or other relationship that could (or could reasonably be perceived to) materially interfere with the exercise of their unfettered and independent judgement.

The Board will review annually whether or not each director is independent.
The status of each director is as follows:

		Term in Office
D J Halley – Chairman	Independent	Since 12 January 1988
J M Blomfield - Managing Director	Non-independent	Since 1 December 2004
J S Keniry	Independent	Since 11 March 1994
R O Holcomb	Independent	Since 14 June 2006

The definition of independence is that as set out in the ASX Corporate Governance Guidelines.

The Board believes that where services provided by director related entities are at commercial rates, it is in the interests of the Consolidated Entity at this stage of its development to retain director involvement.

The structure of the Board complies with the ASX principle for a majority of th Board to be independent.  Mr Halley has a relevant interest in nearly 7.3% of the issued shares of the Company although, by virtue of a joint holding, his ultimate interest is less than 5%.  The Board considers that Mr Halley is independent for the purpose of the discharge of his duties and is not compromised by his shareholder interests.

The Board believes in the renewal of Board members to ensure the ongoing vitality of the company.  Generally, directors will serve for 10 years and will not seek re-election at the next AGM at which they retire by rotation, unless unanimously agreed otherwise by the other non-executive directors.  The best interests of the company at the time will significantly influence any such decision.

Appointment of Directors
If the Board determines that there is a need to appoint another director for any reason it will:

• determine the appropriate skills, experience and qualifications having regard to those of the existing directors;
• agree the process to seek such a person;
• set a timetable to appoint, having regards to the timing of the AGM and requirements of the Constitution; and
• prepare a short list and meet the candidates.

Conflicts of Interest
In accordance with the Corporations Act and the Company’s constitution, the Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists, the director concerned will not receive the relevant Board papers, will not be present at the meeting whilst the item is considered, and will take no part in any decision.

Access to Independent Advice
Directors may obtain independent experts’ advice to enable them to fulfil their obligations, at the expense of the Consolidated Entity and after obtaining approval of the Chairman.

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