Unilife has developed its corporate governance policy to help ensure that all aspects of the Company are managed in an ethical manner to promotethe creation of shareholder value and balance the need for innovation with internal controls and accountability structures appropriate to risk. Infulfilling our obligations and responsibilities to stakeholders, the Board of Unilife has developed its governance framework with due regard not onlyt o the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations but also, the size and available resources of the Company. This statement outlines the principal corporate governance procedures of Unilife. Further information on Unilife’s corporate governance policy is available on its website at www.unilife.com.

ASX Corporate Governance Council Recommendations

Except as disclosed in the following paragraph, Unilife’s current corporate governance practices meet the ASX requirements. The Board will continueto adopt best practice principles and adapt its corporate governance framework as the Company grows and its requirements change. Recommendation 2.1 requires that a majority of the Board be independent, and Recommendation 2.2 requires that the chairperson be independent. Under the Company’s definition of “independence” (see section titled “Board Composition”), the Company does not comply with the requirementsof Recommendation 2.1. The Board is comprised of two independent Directors and two Directors that are not considered independent under the Company’s definition of “independence”.

Recommendation 2.4 requires listed entities to establish a Nomination Committee. Given the current size of the Board and the Company’s requirements,the Board considers this function is efficiently achieved at Board level and is carried out in accordance with the Boards’ charter.

Role of the Board

The Board’s primary responsibility is to plan for the sustainable growth and profitability of the Company. In setting the strategic direction of the Company, the Board is responsible for determining its policies, monitoring the performance of senior management, controlling its business affairs and ensuring statutory compliance. The Board monitors the Company’s performance (both operationally and financially), including the oversight andapproval of major capital expenditures, acquisitions and divestments. It institutes policies, practices and procedures to ensure that the systems of risk management (including determining acceptable risk), internal control and reporting that are in place are both appropriate and effective. The Board, having assumed the responsibilities of the Nomination Committee, is accountable for determining the necessary skills and competencies of Board members; evaluating the performance of the Board and its individual members; and recommending the appointment and removal of Directors.The Board is responsible for appointing and monitoring the performance of the Chief Executive Officer and other members of the executive management team. The Board establishes the key performance indicators (KPIs) for the executive management group and monitors the achievement of these KPIs over time. The Board also ensures that appropriate resources are available to executive management so they can perform their role effectively.

Board Processes

The full Board holds regular meetings each year, plus strategy meetings and extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise. The agenda for meetings is prepared in conjunction with the Chairman and Chief Executive Officer. Standing items include the Chief Executive Officers’ report, financial reports, strategic matters, governance and compliance. Board papers are circulated in advance of the meeting to allow sufficient time for review. Executives are regularly involved in Board discussions, and Directors have other opportunities to liaise with a wider group of employees as deemed appropriate. The Board has established a framework for the management of the economic entity including a system of internal control, a business risk management process and appropriate ethical standards. This include svarious operational and financial approval thresholds, which are underpinned by regular financial and management reporting to the Board. The Board believes that the Company’s business risk management process, risk management policy and internal compliance and control system are sufficientfor the present needs of the organisation given its size and resources.

Board Composition

The skills, experience and expertise relevant to the position of each Director who is in the office at the date of the annual report and their term of office are detailed in the Directors’ Report. The Non-executive Director and Chairman of the Board at the date of this report is Mr Jim Bosnjak. The composition of the Board is determined using the following principles:

1. the Board should comprise a minimum of three Directors; 
2. the Chairman of the Board should be an independent Non-executive Director; and 
3. the Board comprise a majority of Non-executive Directors with at least 50% of the Board being independent Non-executive Directors.

When determining whether a Non-executive Director is independent, the Director must not fail any of the following materiality thresholds:

1. not a member of management;
2. free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company;
3. within the last three years, the Director must not have been employed in an executive capacity by the Company or other controlled entity;
4. less than 5% of the Company shares are held by the Director and any entity or individual directly or indirectly associated with the Director;
5. no sales are made to, or purchases made from, and entity or individual directly or indirectly associated with the Director; and
6. none of the Directors’ income or the income of an individual or entity directly or indirectly associated with the Director or derived from a contract with any member of the economic entity other than income derived as a Director of the entity.

The composition of the Board is reviewed on an annual basis by the Directors to ensure the Board has the appropriate mix of expertise and experience. The terms and conditions of the appointment and retirements of Non-executive Directors are set out in a letter of appointment. Given limited resource sand other relevant factors such as the current size of the Board of Directors, an individual performance evaluation of each Director was undertaken by the Chairman (i.e. Non-executive Director). An individual performance evaluation of the Chairman was undertaken by each Executive Director.

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant Company information and the Company’s executives and, subject to prior consultation with the Chairman, may seek independent professional advice at the Company’s expense. A copy of any advice received by the Director is made available to all other members of the Board.

Directors’ Dealings in Company Shares

Under the Company’s share trading policy, the Directors and executives of the Company are prohibited from trading in the Company’s shares or other securities if they are in possession of “inside information”. Subject to this condition, ASX Listing Rules, the Corporations Act and ASX continuous disclosure requirements, trading can occur at any time excluding periods prior to the publication of financial results and disclosure documents. In addition, in order to trade, Directors of the Company must advise the Chairman of their intention to trade and must also have been advised that there is no know reason to preclude them trading in the Company’s shares or other securities.

Audit and Compliance Review Committee

The role of the Audit and Compliance review Committee (“Audit Committee”) is documented in a charter which is approved by the Board of Directors (“Charter”). The functions of the Audit Committee were performed by the full Board of Directors for the current year. The role of the Audit Committeeis to advise of the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Company. The Board met with and received reports from the External Auditors concerning any matters which arise in connection with the performance of their respective roles, including the adequacy of internal controls.

Remuneration Committee

Due to the small size of the Board, a separate Remuneration Committee has not been established. At present, the Chief Executive Officer, in consultation with the Chairman of the Board, determines the appropriate remuneration of Senior Management. The Company’s remuneration policy has been designed to align Director’s and Executive’s objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific short-term and long-term incentives based on key performance areas affecting the Company’s financial results. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best Executives and Directors to run and manage the Company, as well as create goal congruence between Directors, Executives and Shareholders. The amount of the remuneration is set out in the Director’s Report. All remuneration, except options, is valued at cost and is expensed by the Company. Options are valued using the Black-Scholes methodology and the Barrier Pricing model.

Ethical Standards

The Company has a Code of Conduct that sets out principals to guide each Director, Executive and Employee of the Company in the course of their business dealings. It requires Directors, Executives and Employees to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

Communications with Shareholders

The Board aims to ensure that Shareholders are kept informed of all major developments affecting the Company. Information is communicated to Shareholders through the distribution of annual reports and newsletters and by presentation to Shareholders at the Annual General Meeting. Throughout the year, all releases to the ASX and reports (including quarterly, half yearly and annual reports) with respect to the Company’s activities are posted on the Company’s website located at www.unilife.com. Shareholders and other interested parties can subscribe to receive Company updates via email through the investor relations section of the website.