AFT Pharmaceuticals : FY22 Governance Statement

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2 0 2 3 C O R P O R AT E G O V E R N A N C E S TAT E M E N T

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Contents

1. Corporate Governance Statement
2. PRINCIPLE 1
   Code of Ethical Standards
3. PRINCIPLE 2
   Board Composition and Performance

7 PRINCIPLE 3

Board Committees

1. PRINCIPLE 4
   Reporting and Disclosure
2. PRINCIPLE 5 Remuneration

13 PRINCIPLE 6

Risk Management

1. PRINCIPLE 7 Auditors
2. PRINCIPLE 8 Shareholder Rights and Relations

Corporate Governance Statement

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The Board and management of AFT Pharmaceuticals Limited ('AFT' or 'the Company') are committed to ensuring that the Company maintains corporate governance practices in line with best practice and adheres to the highest ethical standards.

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The Board has had regard to the NZX Listing Rules and a number of corporate governance recommendations when establishing its governance framework, including:

• the NZX Corporate Governance Code as dated 1 April 2023 ('NZX Code'); and
• the Third and Fourth Editions of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (notwithstanding AFT is not required to follow these recommendations owing to its ASX Foreign Exempt Listing).

The NZX Listing Rules require AFT to formally report its compliance against the recommendations contained in the NZX Code. For the financial year ended 31 March 2023, AFT may elect to either report against the version of the NZX Code as dated 17 June 2022 or to report against the current version of the NZX Code as dated 1 April 2023. AFT has elected to do the latter and it sets out

in this Corporate Governance Statement how it has implemented the recommendations in the current version of the NZX Code.

Except to the extent outlined in this Corporate Governance Statement, the Board considers that AFT's corporate governance structures, practices and processes have followed all the recommendations in the NZX Code in the financial year ended 31 March 2023.

For ease of reference, relevant sub-headings in this Corporate Governance Statement include a reference to the primary relevant recommendation(s) in the NZX Code to which the disclosures under that sub-heading relate. Please note that this is a general guide only, and disclosures under a particular sub-heading are not limited solely to the recommendation(s) referred to in that sub-heading.

AFT's governance charters and policies can be found in the Investor Centre on the Company's website (https://investors.aftpharm.com/investors/). AFT's corporate governance charters and policies have been approved by the Board and are regularly reviewed by the Board and amended (as appropriate) to reflect developments in corporate governance practices.

This Corporate Governance Statement was approved by the Board on 18 May 2023 and is current as at that date.

Stock Exchange Listings

AFT is incorporated in New Zealand and is listed on the NZX Main Board and on the Australian Securities Exchange ('ASX') as an ASX Foreign Exempt Listing. As an ASX Foreign Exempt Listing, AFT needs to comply with the NZX Listing Rules (other than as waived by NZX) but does not need to comply with the vast majority of the ASX Listing Rule obligations.

Overview of AFT's Governance Structure

The AFT Board of Directors has been appointed by shareholders to protect and enhance the long-term value of AFT and to act in the best interests of AFT and its shareholders. The Board is the ultimate decision-making body of the Company and is responsible for the corporate governance of the Company. The role and responsibilities of the Board are set out in the Board Charter, which can be found in the Investor Centre on the Company's website.

The Board currently comprises an independent non-executive Chair, three other independent non-executive directors, and two executive directors, as detailed in the Investor Centre on the Company's website.

The Board has established three standing Board Committees to assist in the execution of the Board's responsibilities:

• Audit and Risk Committee;
• Remuneration and Nominations Committee; and
• Regulatory and Product Development Oversight Committee.

A F T P H A R M A C E U T I C A L S CORPORATE GOVERNANCE STATEMENT 2023

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PRINCIPLE 1:

Ethical Standards

"Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these standards being followed throughout the organisation."

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Code of Culture and Ethics

(Recommendation 1.1)

The Board recognises that high ethical standards and behaviours are central to good corporate governance and has implemented a Code of Culture and Ethics ('the Ethics Code') to guide the behaviour of its directors, senior managers, and employees.

The Ethics Code establishes the framework

by which directors and staff of AFT are expected to conduct their professional lives by facilitating behaviour and decision-making that meets AFT's business goals and is consistent with AFT's values, policies, and legal obligations.

The Ethics Code is available to staff on AFT's intranet and forms part of the induction process for new employees. Existing staff receive refresher courses at least once every three years. Regular reminders are provided to staff about the application of the Ethics Code.

The Ethics Code addresses:

• AFT's values and commitments to establishing an inclusive culture;
• conflicts of interest;
• receipt of gifts;
• corporate opportunities;
• confidentiality;
• behaviours and responsibilities;
• proper use of AFT property and information;
• compliance with laws and AFT policies;
• reporting issues regarding breaches of the Ethics Code, legal obligations, or other AFT policies; and
• additional director responsibilities.

AFT encourages staff to report any concerns they have about compliance with the Ethics Code, AFT policies, or legal obligations.

It achieves this with staff-wide communications and has established a designated email address, that is directed to the personal emails of all non-executive independent directors, for staff to confidentially raise any concerns they may have.

The Board has introduced six-monthly reviews of the Ethics Code and expects any incidents arising under the Ethics Code to be brought to directors' attention

immediately. AFT's process for managing any breach of the Ethics Code is detailed in the Ethics Code.

In addition, AFT has implemented the following stand-alone policies to support the application

of the Ethics Code and define the process for raising concerns about actual, suspected, or anticipated wrongdoings within the AFT group of companies:

• Diversity and Inclusion Policy;
• Anti-Briberyand Anti-Corruption Policy;
• Whistleblowing Policy; and
• Conflicts of Interest Policy.

The Ethics Code and the policies listed above are available in the Investor Centre on the Company's website.

Securities Trading Policy

(Recommendation 1.2)

The Company is committed to ensuring that its people comply with legal requirements not to trade AFT securities while in possession of inside information. AFT's Securities Trading Policy accordingly applies to all directors, officers, employees, and contractors of AFT and its subsidiaries.

The Securities Trading Policy seeks to ensure that those subject to the Policy do not trade in AFT securities if they hold undisclosed price-sensitive information. The Policy sets out additional rules, which includes the requirement to seek Company consent before trading and prescribes certain black-out periods during which trading in the Company's securities is prohibited.

Compliance with the Securities Trading Policy is monitored through the consent process, through education and periodic reminders and via notification by AFT's share registrar when any director or senior manager trades in AFT securities.

All trading by directors and senior managers (as defined by the Financial Markets Conduct Act 2013) is required to be disclosed to NZX and in AFT's Interests' Register.

AFT's Securities Trading Policy is available

in the Investor Centre on the Company's website.

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PRINCIPLE 2

Board Composition and Performance

"To ensure an effective board, there should be a balance of independence, skills, knowledge, experience and perspectives."

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Role of the Board

(Recommendation 2.1)

The business and affairs of the Company are managed under the direction of the Board of Directors. At a general level, the Board is elected by shareholders to:

• provide leadership to the Company;
• build sustainable value for shareholders;
• establish the Company's values and objectives;
• develop major strategies for achieving the Company's objectives;
• manage financial and non-financial risks;
• determine the overall policy framework within which the business and Company are operated; and
• monitor management's performance and remuneration with respect to these matters.

The Board has adopted a Board Charter that regulates internal Board procedure and describes the Board's specific roles and responsibilities.

The Board delegates management of the day-to-day affairs and responsibilities of the Company to the management team under the leadership of the Chief Executive Officer ('CEO'), to deliver on the strategic direction and goals determined by the Board. The Chief Executive Officer has, in some cases, formally delegated certain authorities to his direct reports within set limits.

The Board regularly monitors and reviews management's performance in the execution of its delegated responsibilities and the appropriateness of its delegated authority policy.

The Board met for ten regularly scheduled meetings during the financial year ending 31 March 2023. There were also separate meetings of the Board Committees during the year. In addition,

the Board and management met during the year to undertake strategic planning.

Board Membership, Size, and Composition

(Recommendation 2.2, 2.3)

The size of the Board is determined by the Board from time to time, in accordance with the limitations prescribed in the NZX Listing Rules and in accordance with the provisions of AFT's Constitution and the Board Charter.

As at 31 March 2023 the Board comprised six directors:

	David Flacks	Independent, Non-executive
		Director and Chairman
	Anita Baldauf	Independent, Non-executive
		Director
	Jon Lamb	Independent, Non-executive
		Director
	Ted Witek	Independent, Non-executive
		Director
	Hartley Atkinson	Executive Director and
		Chief Executive Officer
	Marree Atkinson	Executive Director and
		Chief of Staff

The average tenure of non-executive directors

at the date of this report is 5.9 years. A biography of each director, their qualifications and relevant experience can be found in the latest Annual Report and in the Investor Centre on the Company's website.

The Board has delegated to the Remuneration and Nominations Committee the responsibility for identifying and recommending director candidates for the approval of the Board. When recommending candidates, the Committee takes into account factors it deems appropriate, including the diversity of background, experience, and qualifications

of the candidates.

When appointing directors, the Board undertakes appropriate background checks. Newly appointed directors are required to enter into letters

of appointment, setting out the terms of their appointments.

A F T P H A R M A C E U T I C A L S CORPORATE GOVERNANCE STATEMENT 2023

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