The Board of directors of MaxSec is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of MaxSec on behalf of the shareholders by whom they are elected and to whom they are accountable.

To ensure the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board.

Composition of the Board

The composition of the Board is determined in accordance with the following principles and guidelines:

• The Board should comprise at least three directors and should maintain a majority of nonexecutive directors;
• The chairperson must be a nonexecutive director;
• The Board should comprise directors with an appropriate range of qualifications and expertise; and
• The Board shall meet at least bi-monthly and follow meeting guidelines set down to ensure all directors are made aware of, and have available all necessary information, to participate in an informed discussion of all agenda items.

The directors in office at the date of this statement are:

Audit Committee

The Board has established an audit committee which operates under a charter approved by the Board. It is the Board's responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes.

This includes the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as nonfinancial considerations such as the benchmarking of operational key performance indicators. The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of the consolidated entity to the audit committee.

The committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. All members of the audit committee are nonexecutive directors.

The audit committee is also responsible for: nomination of the external auditor and reviewing the adequacy of the scope and quality of the annual statutory audit and half year statutory audit or review.

Board Responsibilities

As the Board acts on behalf of and is accountable to the shareholders, the Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. The Board seeks to discharge these responsibilities in a number of ways.12

The responsibility for the operation and administration of the consolidated entity is delegated by the Board to the managing director. The Board ensures that he is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the managing director and his staff.

The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved, these mechanisms include the following:

• Board approval of a strategic plan, which encompasses the entity’s vision, mission and strategy
• Statements, designed to meet stakeholders’ needs and manage business risk;
• The strategic plan is a dynamic document and the board is actively involved in developing and
• Approving initiatives and strategies designed to ensure the continued growth and success of the entity;
• Implementation of operating plans and budgets by management and Board monitoring of progress against budget - this includes the establishment and monitoring of key performance indicators (both financial and non-financial) for all significant business processes;
• Procedures to allow directors, in the furtherance of their duties, to seek independent professional advice at the Company’s expense;

Monitoring of the Board’s Performance and Communication to Shareholders

In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all directors is reviewed annually by the chairperson. Directors whose performance is unsatisfactory are asked to retire.

The Board of directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the directors. Information is communicated to the shareholders through:

• The annual report which is distributed to all shareholders;
• The half-yearly report distributed to all shareholders; and
• The annual general meeting and other meetings so called to obtain approval for Board action as appropriate.

ASX Corporate Governance Principles

The directors of 4C Security Solutions Limited support the principles of the ASX Corporate Governance Guidelines. To date, due to the size of the company the Board has not formally adopted all policies or guidelines required for compliance with the ASX’s guidelines. The Board will, during the next year, adopt policies as appropriate and as outlined below.

Principle 1 - Lay Sound Foundations for Management and Oversight
Due to its size the Company has not as yet formalised and disclosed the functions reserved for the Board and Management but they plan to do so this year when the Company grows.

Principle 2 - Structure the Board to Add Value
The Board currently includes four independent directors one of whom is the Chairman. Information on the experience and competencies are included in the Annual Report. The Company will seek during the year to establish a remuneration committee, which due to the Company’s size has not as yet been done.

Principle 3 - Promote Ethical and Responsible Decision-Making
Due to its size the company has not established formal Ethical guidelines.

Principle 4 - Safeguard Integrity in Financial Reporting
An audit committee was established on 4 June 2003 being made up of the non-executive members of the Board.

Principle 5 - Make Timely and Balanced Disclosure
The Directors have always adhered to the principles of continuous disclosure. Written policies and procedures designed to ensure compliance will be introduced during the year once the company grows to a sufficient level.

Principle 6 - Respect the Rights of Shareholders
The Company believes that it adequately communicates relevant information to all shareholders on a timely basis. The Company encourages shareholder participation at shareholder meetings.

Principle 7 - Recognise and Manage Risk
The Directors are aware of the need to identify and manage risk, no formal policies or procedures have been established to date, given the size of the Company.

Principle 8 - Encourage Enhanced Performance
Formal performance evaluation criteria and processes will be established in the future. Given the current size and direction of the Company this was not formally introduced during the year.

Principle 9 - Remunerate Fairly and Responsibly
Remuneration of the Company’s Directors has been disclosed in the Annual Report. Due to its size no formal structure for the remuneration of Directors has been established as yet but the company plans to do so when appropriate

Principle 10 - Recognise the Legitimate Interests of Stakeholders
The Directors recognise the importance of compliance with legal and other obligations. The Directors believe they, together with their advisors, have the necessary experience to ensure these interests are protected.