Untitled Document

The Board is responsible for protecting the rights and interests of the shareholders through the implementation of sound strategies and action plans and the development of an integrated framework of controls over the Company’s resources, functions and assets. This process is achieved through the application of appropriate corporate governance policies and procedures given the size of the company and the scale of its operations. The Board guides and monitors the business and affairs of MIKOH Corporation Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

The format of the Corporate Governance Statement has changed in comparison to the previous year due to the introduction of the Australian Stock Exchange Corporate Governance Council’s (the Council’s) “Principles of Good Corporate Governance and Best Practice Recommendations” (the Recommendations). In accordance with the Council’s recommendations, the Corporate Governance Statement must now contain certain specific information and must disclose the extent to which the company has followed the guidelines during the period. Where a recommendation has not been followed, that fact must be disclosed, together with the reasons for the departure. MIKOH’s Corporate Governance Statement is now structured with reference to the Corporate Governance Council’s principles and recommendations, which are as follows:

MIKOH Corporation Limited’s corporate governance practices were in place throughout the year ended 30 June 2007.

Governance Roles to achieve the Vision
The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors’ Report.

The determination of materiality requires consideration of both quantitative and qualitative elements.

The Board will be accountable to the Company shareholders for the performance of the Company and will have overall responsibility for its operations. Day to day management of the Company’s affairs, and the implementation of the corporate strategy and policy initiatives, will be formally delegated by the Board to the Managing Director.

approving the strategic direction and related objectives of the Company and monitoring management performance in the achievement of these objectives;
adopting budgets and monitoring the financial performance of the Company;
reviewing the performance of the Managing Director;
overseeing the establishment and maintenance of adequate internal controls and effective monitoring systems;
ensuring all major business risks are identified and effectively managed; and
ensuring that the Company meets its legal and statutory obligations.

Vision/Strategy:- Formulating with the Board the vision and strategy, developing action plans to achieve the vision and reporting regularly to the Board on progress.
Management team and employees:- Providing leadership, appointing and negotiating terms of employment of senior executives (with Board approval where necessary), developing a succession plan, ensuring procedures are in place for education and training to ensure compliance with laws and policies.
Board:- Responsible for bringing all matters requiring review/approval to the Board, advising on the changes in risk profile, providing certification regarding the financial statements for the half-year and full year, reporting to the Board on a monthly basis the performance of the company and for ensuring education of directors on relevant matters.
Delegated authority:- Levels for capital expenditure, sale of assets, etc.

Vision/Strategy:- Ensuring leadership in setting and reviewing vision;
Board meetings:- Setting agenda with the Managing Director/Company Secretary, ensuring directors receive all relevant information, chairing meetings and dealing with conflicts;
Shareholders’ Meetings:- Chairing shareholders’ meetings and ensuring shareholders as a whole have an opportunity to speak on relevant matters, ensuring audit partner attends the AGM;
External:- Spokesperson with the Managing Director on company matters;
Managing Director:- Primary point of contact between the Board and Managing Director, keeping fully informed on major matters by the Managing Director, chairing the performance appraisal of the Managing Director, and providing mentoring;
Board:- Initiating Board and committee performance appraisal, ensuring agreed composition is maintained and director induction plans are in place.

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
PE Cox – Chairman	Independent	Since 1 December 2004
JM Blomfield – Managing Director	Non-Independent	Since 1 December 2004
JS Keniry	Independent	Since 11 March 1994
DJ Halley	Independent	Since 12 January 1988

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

The Board believes that in each case, 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 the Board to be independent. Mr Halley has a relevant interest in nearly 9% of the issued shares of the Company although by virtue of a joint holding, his ultimate interest is somewhat less. The Board considers that Mr Halley is independent for the purpose of the discharge of his duties and is not compromised by his shareholding 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 then 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.

Code of Conduct of Directors
The directors are expected to use their skills commensurate with their knowledge and experience to increase the value of the company.

execute due care and diligence;
not misuse information or their position for their own gain;
avoid or fully disclose conflicts;
ensure that the market is fully informed of all matters that require disclosure;
actively promote the reputation of the company.

Directors must comply with the law on disclosure of benefits and related party transactions. Directors must have access to all relevant information on the company and this is to be sought through the Managing Director or agreed arrangements.

All directors must maintain strict confidentiality in relation to company matters.

Directors must be aware of insider trading laws and strictly abide by the law and company policies.

Directors are to ensure that the financial statements are drawn up to comply with Australian Corporations Law and Accounting Standards.

Directors must also be aware of environmental impacts of the company’s business and ensure the health, safety and well-being of their employees.

Deeds of access indemnity and insurance will be entered into with the directors to the extent permitted by law.

Trading in securities
The Company’s constitution permits the Directors to acquire securities in the Company. However, the Company policy prohibits directors and senior management from trading the Company’s securities at any time whilst in possession of price sensitive information, and for 24 hours after:

any major announcements;
the release of the Company’s annual financial results to the ASX; and
the annual general meeting.

Directors must advise the Chairman of the Board before buying or selling securities in the Company. All such transactions will be reported to the Board. In accordance with the provisions of the Corporations Act and the ASX Listing Rules, the Company will advise the ASX of any transaction conducted by the Directors in the Company’s securities.

This policy relates to directors and executive’s spouses and other parties over whom they have significant influence.

Interaction with the media
To ensure clear and consistent messages to the Stock Exchange and media, unless specifically approved otherwise, the Chairman and Managing Director are the only authorised spokespersons of the company.

Certificate from MD/CFO
The Managing Director has provided a certificate to the Board regarding the Financial reports giving a true and fair view and being in accordance with accounting standards. Note that the company did not have a CFO during the entire year.

Board Committees
The Board of Directors takes ultimate responsibility for corporate governance including the functions of:

establishing compensation arrangements of the Managing Director and its senior executives and officers;
appointment and retirement of non-executive directors;
appointment of auditors;
areas of business risk;
maintenance of ethical standards; and
audit committee.

The Board seeks independent professional advice as necessary in carrying out their duties and responsibilities.

The Board has not established a separate audit committee because of the small size of both the Board and the Consolidated Entity. Instead the whole Board monitors performance of the Consolidated Entity closely and in conjunction with the external auditors is satisfied that the reporting systems in place provide accurate and timely reports of the Consolidated Entity’s activities and position.

Contracts and Transactions between the Consolidated Entity and its officers
Any proposed contract between an officer (including associates of the officer) and MIKOH Corporation Limited must be approved by the Board prior to its execution.

Continuous Disclosure
The Company has a policy that all the Company shareholders and investors have equal access to the Company’s information. The Chairman of the Board ensures that all price sensitive information is disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act and the ASX Listing Rules. The company secretary has primary responsibility for all communications with the ASX.

MIKOH Corporation Limited maintains a website which is regularly updated to provide the wider community with all of the available information that is released.

Communication Policy
The Board of Directors’ aim is to ensure that the Company shareholders will be informed of all major developments affecting the Company’s state of affairs. Information will be communicated to the Company shareholders in the following forms:

the annual report will be distributed to all the Company shareholders (unless a shareholder has specifically requested not to receive the document);
the half-yearly report will contain summarised financial information and a review of the operations of the Company during the period (the financial report will be sent to any shareholder who requests it);
the ASX quarterly cash reports will contain summarised financial information and a review of operations of the Company during the relevant period;
notices of all meetings of the Company shareholders; and
the Company’s website, www.mikoh.com.

It is the Company’s policy that the engagement partner of its auditors, Horwarth Sydney Partnership, be present at the AGM and be available to answer relevant questions.

Risk Management and Internal Compliance and Control
The Board determines the Consolidated Entity’s ‘risk profile’ and is responsible for overseeing and approving risk management strategy and policy.

establishing and monitoring the Consolidated Entity’s strategies, goals and objectives
identifying and measuring risks that might impact upon the achievement of those strategies, goals and objectives
formulating risk management strategies to manage the identified risks
monitoring and improving the effectiveness of risks and internal compliance controls.

Performance Evaluation
The Board, through the Chairman, will carry out an evaluation, at least every three years, to:

review the role of the Board
assess the performance of the Board with a view to assisting the Board to better perform its duties
review the type and timing of information provided to directors
review the performance and contribution of each of the non-executive directors.

The Board may, from time to time, use an independent adviser to assist in the reviews.

Managing Director / Chief Executive Officer
The Board will annually review the performance of the Managing Director having regard to performance measures set out at the commencement of each year. These will include financial measures, achievement of strategic objectives and other key performance indicators, and compliance.

Non-Executive Directors
Fees including statutory superannuation paid to non-executive directors will generally be around the market average.

Directors will not be entitled to a retirement benefit.
Directors will not participate in share or option plans except with the approval of the shareholders.

Currently, the fee level is $20,000 per non-executive director per annum and the Chairman $40,000 per annum. The total amount that may be payable by the Consolidated Entity by way of directors’ fees is subject to approval by shareholders.

Senior Executives
Remuneration packages will generally be set to be competitive to both retain executives and attract executives to the company. At this stage of the development of the Consolidated Entity’s main project, the majority of executives consult by way of contract.

For further information refer to the Remuneration Report included in the Directors’ Report.

The Consolidated Entity observes the principles recommended by the ASX Corporate Guidance Council.
The Consolidated Entity acknowledges community and legal standards with respect to anti-discrimination at all levels, particularly with respect to employees and contractors.
The Consolidated Entity acknowledges community and legal standards with respect to occupational safety and health.