Prospectus re Admission to the Official List - Heritage Oil

Shareholder and Mr. Anthony Buckingham are at arm’s length and on normal commercial terms. The keyterms and conditions of this agreement are set out in more detail in section 10.4 of Part X ofthis document.4. CORPORATE GOVERNANCEIntroductionThe Directors recognise the importance of maintaining sound corporate governance practices. TheCompany will be in compliance with the corporate governance regime applicable to it as a Jerseyincorporatedcompany. In addition, as its shares will be admitted to listing on the Official List and tradingon the LSE, the Combined Code is also applicable.The Company currently complies with all aspects of the Combined Code except for the recommendationthat at least half of the board of directors of a listed company, excluding the Chairman, should comprisenon-executive directors determined by the board to be independent in character and judgement and freefrom relationships or circumstances which may affect, or could appear to affect, the director’s judgement,and except for the recommendation that the Chairman of the Company should not be appointed to theCompany’s audit committee.As at Admission, only two of the six directors (excluding the Chairman who would also be considered anindependent non-executive for the purposes of the Combined Code), John McLeod and GeneralSir Michael Wilkes, are considered by the Board to be independent according to the criteria of theCombined Code. Gregory Turnbull would not technically be considered to be independent according to thecriteria of independence under the Combined Code, as he is a partner of McCarthy Tetrault LLP,the Canadian legal advisers to the Company. Notwithstanding Gregory Turnbull’s technical lack ofindependence, the Board holds Gregory Turnbull to be independent in character and judgement and tothereby satisfy the Combined Code requirements for independence. In addition, the Chairman and each ofthe other Directors are independent of Anthony Buckingham.Additionally, despite being the Chairman of the Company, Mr Hibberd has been appointed to the AuditCommittee (which is against the recommendations made in the Smith Guidance on the Combined Code)due to his recent and relevant financial experience, including his experience on corporate financial matters.However, upon the appointment of an additional non-executive director to the Board of Directors as soonas is reasonably practicable after Admission, the directors intend to rectify these deficiencies in theCompany’s compliance with the Combined Code.The Board StructureUpon Admission, the Board will consist of Michael Hibberd, Anthony Buckingham, Paul Atherton,Gregory Turnbull, John McLeod and General Sir Michael Wilkes. Mr. Hibberd, John McLeod andGeneral Sir Michael Wilkes are the directors considered by the Board to be independent pursuant to theCombined Code.The Chairman’s role is to ensure good corporate governance. His responsibilities will include leading theBoard, ensuring the effectiveness of the Board in all aspects of its role, ensuring effective communicationwith shareholders, setting the Board’s agenda and ensuring that all Directors are encouraged to participatefully in the activities and decision-making process of the Board.The Board has established an audit committee, a remuneration committee and a nomination committee.Audit CommitteeThe Audit Committee is chaired by an independent non-executive director, and its other members arecertain other non-executive directors of the Company. The Audit committee will meet not less than twotimes a year and will have responsibility for, amongst other things, monitoring the integrity of theCompany’s financial statements and reviewing its summary financial statements. It will oversee theCompany’s relationship with its external auditors and review the effectiveness of the external audit process.The committee will give due consideration to laws and regulations, the provisions of the Combined Codeand the requirements of the Listing Rules. It will also have responsibility for reviewing the effectiveness ofthe Company’s system of internal controls and risk management systems. The ultimate responsibility forreviewing and approving the interim and annual financial statements remains with the Board. Thenon-executive directors of the Company who have been appointed as the initial members of the Auditcommittee are considered by the Board to have recent and relevant financial experience.60