AED OIL LIMITED

Corporate Governance

The Board is committed to ensuring that the Company is properly managed to protect and enhance Shareholders’ interests. Accordingly, the Board has adopted corporate governance policies and practices designed to promote responsible management and conduct of the Company.

In March 2003, the ASX Corporate Governance Council published its Principles of Good Corporate Governance and Best Practice Recommendations (ASX Recommendations). The ASX Recommendations cover a range of principles to promote good corporate governance. Where the Company does not comply with any recommendation during a reporting period, it will disclose that fact in the Company's annual report.

Board Appointment and Composition

The Board has adopted a Board charter which outlines requirements in relation to the size, composition and independence of the Board and the expectations of Directors. It also sets out the Board’s role and responsibilities, the role and responsibilities of the Board Committees and the division of responsibilities between the Executive Chairman and the Managing Director.

The ASX Recommendations state that the:
(a) majority of a company’s board should comprise independent directors (that is non executive directors who meet the criteria specified in the ASX Recommendations); and
(b) chairman should be an independent director.

The Board currently comprises five Directors.

The Board considers that a majority of the current Directors, namely Barry McGuiness, John Branson and Peter Behrenbruch, satisfy the criteria for independence in the ASX Recommendations. David Dix and Kenneth Tregonning are not considered independent as they are employed by the Company in executive positions.

As Mr Dix is an Executive Chairman, the Board does not currently comply with the recommendation that the chairman of the Board be an independent director. The Board supports having Mr Dix as Executive Chairman because he founded the Company and all Shareholders have invested in the knowledge of his role and he has a thorough knowledge of the Company's operations. Recognising that an executive chairman is not able to provide an independent review of the performance of management, the Board has:

appointed a majority of Independent Directors

appointed only non-executive, Independant Directors to the audit and Risk committee

Nomination and Remuneration Committee; and

establish clear protocols for handling conflicts of interest

Board Committees

The Board discharges its duties in relation to specific functions through the committees as set out below.

Audit and Risk Commitee

The Board has established an audit and risk committee to assist the Board in fulfilling its corporate governance responsibilities.

The committee charter provides that the committee’s role is to review the appropriateness of the Company’s accounting and risk management systems, procedures and controls, identifying, prioritising and monitoring regulatory and statutory compliance and conducting reviews of the internal and external audit function. The committee also reviews and implements processes to identify, measure and reduce business risk. The committee will meet regularly and make appropriate recommendations to the Board as required.

The ASX Recommendations provide that the audit committee of an ASX listed company should only consist of non executive directors with a majority of the committee comprising independent directors. The chairman of the committee must also be an independent director and should not be the Chairman.

The current committee members are Barry McGuiness, John Branson and Peter Behrenbruch. Barry McGuiness, an independent director, is the chairman of the committee. As such, the current composition of the committee is in compliance with the ASX Recommendations.

The Company’s auditor, Ernst & Young, will be invited to participate in the committee meetings as required.

Nomination And Remuneration Commitee

The purpose of the nomination and remuneration committee is to make recommendations to the Board regarding the appointment, retirement and remuneration of senior executives, Non Executive and Executive Directors and advising on general personnel issues, including recruitment and termination policies, succession planning and salary packages. The committee also monitors the education and performance of Directors. The committee’s charter, in line with the ASX Recommendations, provides that the committee must comprise at least three Directors. The committee’s members must only be non executive directors with a majority being independent directors. The chairman of the committee must be an independent director and may not be the Chairman except in limited circumstances.

The current committee members are Barry McGuiness, John Branson and Peter Behrenbruch. John Branson, an independent director, is the chairman of the committee. As such, the current composition of the committee is in compliance with the ASX Recommendations.

Continuous Disclosure Policy

The Company will be a disclosing entity under the Corporations Act after Listing. As such, the Company must comply with the continuous disclosure requirements set out in the Listing Rules and the Corporations Act. The Company will be required to disclose to ASX any information concerning the Company which a reasonable person would expect to have a material effect on the price or value of the Company’s securities unless certain exemptions from the requirements apply.

To ensure it meets these obligations, the Company has adopted a continuous disclosure program and has appointed the company secretary as its compliance officer. The company secretary will be required to collate and, where appropriate, disclose share price sensitive information to ASX.

Share Trading Guidelines

The Company has adopted guidelines for dealing in securities which:
(a) prohibit certain dealing in securities; and
(b) establish a best practice procedure in relation to dealing in securities by Directors, management and employees.

Subject to the overriding restriction that no person may deal in Shares while they are in possession of materially price sensitive information, Directors, management and employees will only be permitted to deal in securities during certain window periods, such as following the release of the Company’s financial results and the annual general meeting. Outside these periods, Directors, management and employees must receive clearance for any proposed dealing in securities, which must only be given in specified circumstances