The Board of Immuron is accountable to the shareholders and other stakeholders for the performance of the Company. To this end, the Board is committed to maintaining the highest ethical standards and best practice in the area of corporate governance to ensure that the Company's business is conducted in the best interests of all concerned.

The Company has prepared and implemented practices that address all the Principles set out by the ASX Corporate Governance Council. These practices will be reviewed regularly to ensure their relevance and application to the Company's responsibilities and activities.

By adopting these Principles, the Board seeks to create value and provide accountability commensurate with the risks involved.

ASX Principle 1: Lay solid foundations for management and oversight.

Role of the Board.

The primary role of the Board is to provide effective governance over the Company's affairs to ensure the interests of the shareholders are protected and the confidence of the investing market is maintained whilst having regard for the interests of all the stakeholders.

This role is exercised by the Board, as whole, and each director exercising diligent attention to the affairs of the Company. In particular the Board is responsible for:

Setting the Company's values and standards of conduct and ensuring that these are adhered to,
Providing strategic direction and approving corporate strategic initiatives,
Oversight of the Company, including its control and accountability systems,
Appointing and removing the chief executive officer,
Reviewing and ratifying systems of risk management and internal compliance and controls, codes of conduct and legal compliance,
Monitoring senior management performance and ensuring appropriate resources are available,
Approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures, and
Approving and monitoring financial and other reporting to shareholders and regulatory authorities.
To ensure that all new Board members understand what is expected of them, in addition to their obligations under the Corporation Law, the Company provides them with a letter setting out the key terms and conditions relating to their appointment.

Role of Management.

Through the chief executive officer, management is responsible to the Board for the;

Development and implementation of agreed corporate strategy and performance objectives,
Undertaking the day to day activities of the Company,
Identifying all matters to be included in a risk profile of the Company and ensuring that effective risk management systems are implemented and adhered to,
Observing the code of conduct, and
Ensuring that the Board is fully informed of all matters which may have a material impact on the ability of the Company to meet its obligations.

ASX Principle 2: Structure the Board to add value.

Board Composition.

The Board determines its size and composition, subject to the limits imposed by the Company's Constitution, which requires a minimum of three and a maximum of ten. Currently there are four (4) directors.

The Company will at all times bear in mind the need to have a majority of independent directors. An independent director is independent of management and free of any business or other relationship that could materially interfere with the exercise of their unfettered and independent judgment.

Notwithstanding this, the Board recognises that in a small, specialised industry such as biotechnology, it is very desirable that board members have some industry background and therefore may not be completely independent.

Currently all non-executive directors, including the Chairman, are considered to be independent except Mr. Nudel.
 
The skills, experience and expertise of each director is set in the Directors Report in the annual report.

The Board collectively and each director individually may take, at the expense of the Company, such independent professional advice as is considered necessary to fulfill their relevant duties and responsibilities.

Board Committees

The Board has established two committees, Audit & Risk and Science, to assist in the execution of its duties and to allow detailed consideration of complex issues.

The Company does not have a separate nomination committee or a remuneration committee as these tasks are carried out by the full Board. The Board believes that, at this stage of the Company's development, these functions are best handled by the full Board. The Board will establish other committees, either permanent or ad hoc, as required by the Company's future development. In addition and for the reasons mentioned, the Board does not currently have a formal policy on selecting new directors.

Audit & Risk Management Committee.

The Committee is dedicated to independently:

Verifying and safeguarding the integrity of the company’s reporting,
Identifying, assessing and monitoring management applications of risk minimisation procedures, and
Informing the Board of material changes to the Company’s risk profile.
The Board has given the Committee all the necessary powers to carry out the above.

Science Committee.

The primary objective of the Committee is to provide technical support to management in the conduct of the Company's research programs and to critically review the research findings.

This is achieved by undertaking regular meetings with management and providing access to a wide range of scientific knowledge including a number of technical advisors retained by the Company.

ASX Principle 3: Promote ethical and responsible decision- making.

The Company has adopted the Australian National Health and Medical Research Council guidelines on ethical research practices.

Code of Conduct.

Anadis is guided in all its activities by respect for all its stakeholders including employees, shareholders, contractors, customers and suppliers.

The Board has articulated the Company's requirements for standards of conduct, from directors and senior management, based on the following principles;

Directors are subject to re-election every three years,
The Chairman must be independent,
Conflict of interest must be avoided wherever possible. If, for any reason, a potential conflict arises, the director/employee must declare the conflict and absent themselves from all discussions and decisions on the relevant matter.
Employees and directors must respect the confidentiality of the Company's assets, including intellectual property, both during and after employment,
The Company will comply with all relevant legislation and regulation,
The Company will deal fairly with all its stakeholders, and
The Company will promote a culture of ethical behavior, encouraging openness amongst employees, directors and contractors.
Trading in Company Securities.

The Company's policy is that there be no dealings in the Company’s securities, whether in permitted periods or at any other time:

When a designated officer is in possession of inside information, or
Where the dealing is for short-term or speculative gain, or
Within a period that is 72 hours prior to and 48 hours after any announcement.
Apart from these restrictions a designated officer can, unless there are special circumstances, only deal in the Company’s securities in the following periods:

Within the period commencing 48 hours after the announcement of the half year and full year financial results respectively and ending 1 month after each of those announcements.
Within the period commencing 48 hours after the dispatch of the annual report made to shareholders through to one month after the annual general meeting.
Each director has entered into an agreement with the Company to provide information to allow the Company to notify the ASX of any share transactions within five business days.

ASX Principle 4: Safeguard integrity in financial reporting.

In addition to the financial review functions of the Audit & Risk Committee referred to above, the Board regularly reviews the monthly financial reports. It also requires the Chief Executive Officer to provide written assurances in respect to the accuracy and compliance of the annual and half yearly published financial statements. Due to the size of the Company, there is not a separate role for a Chief Financial Officer and, as a result, the Chief Executive Officer fills that role.

The Audit & Risk Committee has its own Charter, four non-executive members (three of whom are independent). It is chaired by an independent member who is not the chairman of the Board. Details of the number of meetings are set out in the Directors Report in the annual report.

The auditor provides a certificate to the Company confirming their independence. Rotation of the auditor has proceeded as required by Law or Regulation. The Company currently has no intention of replacing the existing auditors, however should this arise it will made a selection following a competitive process. Non audit work is arranged based on cost and the needs of the Company.

ASX Principle 5: Making timely and balanced disclosure.

As a company whose shares are traded on the Australian Stock Exchange (ASX), Anadis is very conscious that it has an obligation to ensure that the market is both fully and accurately informed about material matters by timely and balanced disclosure.

The information disclosed will be factual and presented in a clear and balanced way. The Company has prepared and issued to all senior staff a written policy document on this matter and requires strict adherence to this policy. Continuous disclosure is a standard agenda item at all Board meetings.

ASX Principle 6: Respect the rights of shareholders.
The Company is committed to respecting the rights of shareholders and facilitating the effective exercise of those rights.

This is achieved by;

Effective and regular communications including a regular newsletter and modern up to date website.
Providing access to timely, balanced and understandable information about the Company and its current and future direction, and
Facilitating easy participation at general meetings.
The Company's external auditor attends each general meeting and is available to answer any questions with regard to the conduct of the audit and their report.

ASX Principle 7: Recognise and managing risk.

In addition to the risk review functions of the Audit & Risk Management Committee referred to above, the Board receives regular written reports from the Science Committee and the Chief Executive Officer covering all matters within their respective portfolios.

As part of its Charter, the Audit & Risk Management Committee has prepared an annual checklist of risk management and internal control matters which it systematically reviews with senior staff including external consultants. The Chief Executive Officer also provides a written statement that the control systems are operating efficiently and effectively in all material respects.

In addition to the usual business risks, the particular risks associated with the Company's activities are:

long lead times and high costs associated with biotech R&D ,
the low success rate of biotech research in Australia,
stringent health regulations which are subject to regular change,
the high level of funding required over a long period of time, and
securing intellectual property.
ASX Principle 8: Encourage enhanced performance.

To ensure that the directors and key executives are equipped to develop the Company, the directors are committed to fairly review and actively encourage enhanced board and management effectiveness.

This will be achieved by informing, training, and evaluating individual and collective performance regularly and fairly.

Qualitative indicators are established for board members (including their roles on committees) and key executives and their performance will be regularly reviewed against these indicators. This is an ongoing process achieved through the completion of questionnaires and peer assessment.

ASX Principle 9: Remunerate fairly and responsibly.

The Board notes the Corporate Governance Council recognises that, for small companies, the efficiencies expected to flow from a formal committee structure may not be apparent. The Board agrees with this view.

The full Board will exercise these responsibilities and set the policies for remuneration of directors and senior managers so as to comply with the Corporation Act, accounting standards and the ASX Listing Rules. Remuneration for executive directors and staff is determined by reference to market rates. From time to time employees are offered Options under plans previously agreed by shareholders. In a company at this stage of its development, the only meaningful performance target is the share price and the exercise price for such options are set well in advance of where the shares are trading at the time of issue and, for executives, usually have a two year vesting period.

As the number of options on issue at anyone time is low and the price and exercise periods differ, the Board considers that the exercise of such options will have little or no effect on the Company's share price or Earnings Per Share.

In setting remuneration for non-executive directors, the Board will use the following principles;

Non-executive directors shall be paid fees and superannuation plus supplements for committee work within the aggregate amount set by shareholders in general meeting (last set in 2005 at $350,000 for cash remuneration),
Non-executive directors participate in options arrangements subject to shareholder approval. The Board does not accept that options should not be given to non-executive directors as it believes (and shareholders have previously agreed) that in an R&D company their particular expertise is vital to the team effort and therefore options are a valid incentive,
Non-executive directors retirement payments are limited to compulsory employer superannuation, and
Bonuses will not be paid to non-executive directors.
Details of remuneration paid to directors and senior staff is set out in the Directors Report in the annual report.

ASX Principle 10: Recognise the legitimate interests of stakeholders.

The Board is committed to delivering maximum share value to the shareholders while maintaining high standards of customer service and employment. In addition, the Company aims to achieve full compliance with relevant legislation and contribute to the wider community and therefore all stakeholders.

This will be achieved by the application of the principles set out in this Corporate Governance Statement.

Revised by the Board of Anadis limited 13 June, 2006.