Role of the Board

Philosophy

The Board of Neon represents shareholders’ interest in building a successful oil and gas business that seeks to optimise medium to longterm financial gains for shareholders. By not focusing on short-term gains for shareholders, the Board believes this will ultimately result in the interest of all stakeholders being appropriately addressed when making business decisions.

The Board also recognises its responsibility towards a wider group of stakeholders, together with its social responsibilities including socio economic and environmental responsibilities. The health and safety of all its employees, contractors and other people involved in any of Neon's operations is also of paramount importance to both the Board and senior executives of the Company.

Responsibilities of the Board

The Board is responsible for ensuring that Neon is managed in such a way to best achieve this desired result. Given the current size and operation of the business, the Board currently undertakes an active, not passive role.

The Board is responsible for evaluating and setting the strategic direction for Neon, establishing goals for management and monitoring the achievement of these goals. The Managing Director is responsible to the Board for the day-to-day management of the Company.

Procedures and Guidelines

The Board has sole responsibility for the following:

• Determining the strategic direction of the Group and measuring performance of management against approved strategies;
• Review of the adequacy of resources for management to properly carry out approved strategies and business plans;
• Adopting operating and capital expenditure budgets at the commencement of each financial year and monitoring the progress by both financial and non-financial key performance indicators;
• Monitoring the Group’s medium term capital and cash flow requirements;
• Approving and monitoring financial and other reporting to regulatory bodies, shareholders and other organisations;
• Determining that satisfactory arrangements are in place for auditing the Group’s financial affairs;
• Review and ratify systems of risk management and internal compliance and control, codes of conduct and compliance with legislative requirements;
• Ensuring that policies and compliance systems consistent with generally accepted good practice and the Group’s objectives are in place and that the Company and its officers act legally, ethically and responsibly on all matters;
• Appointing and removing Executive Directors and any other executives and approving their remunerations; and
• Appointing and removing the Company Secretary and Chief Financial Officer and approving their remunerations.

The Board’s role and the Group’s corporate governance practices are being continually reviewed and improved as required.

Composition of the Board

Philosophy

The Constitution of Neon provides that the number of directors shall not be less than three or more than ten. There is no requirement for Directors to own or acquire shares in the Company.

The size and qualifications of the Board is reviewed annually and structured so that the Board is ‘fit for purpose’ to properly perform its responsibilities and functions.

Procedures and Guidelines

• The membership of the Board, its activities and composition is subject to annual review.

• The criteria for determining the identification and appointment of a suitable candidate for the Board shall include quality of the individual, background of experience and achievement, compatibility with other Board members, credibility with the Company’s scope of activities, intellectual ability to contribute to Boards duties and physical ability to undertake Board’s duties and responsibilities.

• Directors are initially appointed by the full Board subject to election by shareholders at the next annual general meeting. Under the Company’s Constitution the tenure of directors (other than Managing Director, and only one Managing Director where the position is jointly held) is subject to reappointment by share holders not later than the third anniversary following his last appointment.

• Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a director.

A Managing Director may be appointed for any period and on any terms the Board think fit and, subject to the terms of any agreement entered into, the Board may revoke any appointment.