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Corporate Governance Statement

The Board of Directors of Gas2Grid Limited is committed to attaining and implementing the highest standards of corporate governance. The Board has reviewed the company's corporate governance practices in relation to the best practice recommendations released by the Australian Securities Exchange Corporate Governance Council. The Board supports the intent of the best practice recommendations and recognises that given the present size and scope of the company it is not practical to institute all of the best practice recommendations at present.

A description of the company's main corporate governance practices is set out hereunder. Unless stated otherwise, all of the following practices were in place for the entire year.

The Board of Directors

The Board of Directors are responsible to the shareholders for the performance of the company and the implementation of corporate governance policies. The Board operates in accordance with the following principles:-

The Board should comprise at least three directors, increasing where additional expertise is considered necessary in certain areas to a maximum of nine directors;
The Board should comprise a balance of executive and non-executive directors;
The Board should comprise directors with a range of skills and experience that are appropriate and assist the directors in performing their duties within the scope of the company's operations.

Terms of office

Directors are initially appointed by the full Board and are subject to re-election at the annual general meeting by shareholders at three-yearly intervals, or at the next annual general meeting after their initial appointment.

The Chairman of the Board is a non-executive director who is elected by the full Board.

Corporate governance best practice recommendations 2.1, 2.2, 2.3 which requires the majority of the Board to be independent directors, the Chairman to be an independent director and the roles of Chairman and Chief Executive Officer to be exercised by different individuals have not been adopted by the company. The Board is of the opinion that the company is best served by its current Board composition of executive and non-executive directors and a Chairman who is a non-executive director. The Board at present has three independent directors.

The company considers corporate governance best practice recommendation 1.1 which requires formalisation and disclosure of the functions reserved to the Board and those delegated to management inappropriate given the size of the company's operations, the number of directors constituting the Board and the fact that the company has no employees. Accordingly, the Board is responsible for the functions typically delegated to management in addition to its usual Board functions.

Conflict of Interest

If any business dealings between the consolidated entity and any entity connected with a director occur, the director concerned is required to declare his interests in those dealings to the company and take no part in decisions relating to them. The details of any such business dealings are set out in note 22 to the financial statements.

Independent Professional Advice

Directors have the right, in connection with their duties and responsibilities as directors, to seek independent professional advice at the company's expense. Prior approval of the Chairman is required, which will not be unreasonably withheld.

Performance Assessment

The Board undertakes annual self assessment of its collective performance and the performance of the Chairman.

The Chairman undertakes an annual assessment of the performance of individual directors. Any deficiency(ies) identified in a Directors' performance are addressed directly with the relevant Director(s).

Corporate reporting

The Board has made the following certifications:

that the company's 2007-2008 financial reports are complete and present a true and fair view, in all material respects, of the company's financial condition and operational results of the company and the Group and are in accordance with relevant accounting standards.
that the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board and that the company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

Board committees

Given the size of the company's operations no other committees have been formed, all responsibilities remain with the Board.

Nomination and Remuneration of Directors

Corporate governance best practice recommendations 2.4, 4.2 and 9.2 require listed entities to establish a nomination committee, an audit committee and a remuneration committee respectively. During the year ended 30 June 2008, the company did not have a separate nomination, audit or remuneration committee. However, the duties and responsibilities typically delegated to such committees are considered to be the responsibility of the full Board.

Due to the relatively small size of the company's operations and the number of directors constituting the Board, the Board of Directors unanimously believe that the company's policies relating to the nomination and remuneration of directors and the review of external audit arrangements are best catered for by the involvement of the entire Board. The main procedures that the company has in place regarding the nomination and remuneration of directors and reviewing the adequacy of existing external audit arrangements are set out below.

Nomination of Directors

Any Board member may make recommendations on Board composition and appointments, however appointments are subject to the final approval of the full Board.

Remuneration of Directors

The amount of remuneration payable to directors is determined and reviewed by the full Board annually. Directors' fees are determined within an aggregate fee pool limit, which currently stands at $150,000 per annum. The Chairman receives an annual directors' fee of $35,000 and all other Directors receive annual Directors' fees of $25,000 each.

Contrary to corporate governance best practice recommendation 9.3, there is no distinction between the structure of non-executive directors' remuneration and that of executives. Non-executive directors' remuneration is calculated on the same basis as executive directors' remuneration. The Directors consider this method appropriate at this early stage of the company's development.

Review of External Audit Arrangements

The assessment of the scope and quality of the company's audit is carried out by the full Board. Assessment procedures include:-

Reviewing external audit reports to ensure that any significant deficiencies or breakdowns in controls or procedures have been identified and remedied;
Liaising with the auditors and ensuring that the annual statutory audit and half-year review are conducted in an effective manner;
Reviewing internal controls; and
Monitoring compliance with statutory responsibilities.

The auditor is requested to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor's report.

Ethical Standards

The Board expects all directors to perform their duties in a manner which is ethical, honest and objective and at all times endeavour to maintain and improve the performance and reputation of the company. A code of conduct, as purported in best practice recommendation 3.1 and 10.1, has not been formally established as the Chairman consistently and continuously ensures that all members of the Board have a clear understanding of their duties, responsibilities and their accountability to the company and its shareholders for their conduct.

The purchase and sale of company securities by Directors is permitted. However, buying or selling of the company's shares is not allowed at any time by any person who possesses unpublished information which may affect the price of the company's shares.

Communication with Shareholders and Continuous Disclosure

The company aims to provide relevant and timely information to its shareholders and the broader investment community in accordance with its continuous disclosure obligations under the ASX Listing Rules.

The Board has established policies and procedures to ensure compliance with ASX Listing Rule disclosure requirements and accountability at a senior management level for that compliance. However, the Board believes that the formalisation of these policies and procedures in a written form as recommended in best practice recommendation 5.1 is not necessary as the Board is satisfied that all Board members are expressly aware of the importance of making timely and balanced disclosure.

D J Morton, director and Mr S J Danielson, company secretary, have been nominated as the persons responsible for communications with the Australian Stock Exchange (ASX). This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX listing rules and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.

Risk Assessment and Management

The Board is responsible for reviewing the company's policies on risk oversight and management and is satisfied that management has developed and implemented a sound system of risk management and internal control.

The executive directors are responsible for designing and implementing risk management and internal control systems to manage the company's material business risks and reporting to the Board whether those risks are being managed effectively. As required by the Board, the executive directors have reported to it as to the effectiveness of the company's management of its material business risks.

The Board has received assurance from the CEO and the CFO that the declaration provided in accordance with section 259A of the Corporations Act 2001 is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

The Company relies on the skill, experience and judgement of its Board of Directors to arrive at risk managed decisions within the policy framework and to frankly discuss all risk related matters with each other.

The Company's established policies on risk oversight and management of material business risks are summarised below:

Review the reliability and integrity of financial and operating information and the processes used to identify, measure, classify and report such information
Examine and evaluate the adequacy of internal control systems
Ensure compliance with relevant laws, regulations and standards
Formulate and regularly review programmes for exploration and development
Regularly report against established targets
Manage financial risk
Maintain an annual insurance programme
Oversee of the conduct of contractors
Assess the probability and potential impact of identified risks
Develop actions to eliminate, diminish or deal with the potential consequences of identified risks