Governance Disclosures

There are four (4) committees on the Board: the Audit Committee, the Nomination Committee, the Remuneration Committee and the Executive Committee. The Audit Committee, the Nomination Committee and the Remuneration Committee were all formed on 26 June 2007. The Executive Committee was formed on 26 June 2012. Details of each Board Committee are as follows:

Audit Committee:

The Audit Committee's responsibilities include, among other things, to oversee the system of internal controls, to assess risk management framework and its implementation, to oversee Compliance and Internal Audit Department, to oversee the integrity of financial statements and other disclosures, to review the engagement and independence of the external auditor and to ensure the compliance of Interested Persons Transactions (“IPT”) and Related Party Transactions (“RPT”) with applicable rules and regulations.

Remuneration Committee:

The Remuneration Committee's responsibilities include, among other things, to recommend to the Board a framework of remuneration for the Board and key executives of the Company, to determine performance-related elements of remuneration for the Board's consideration and to administer share award or bonus schemes, if any.

Nomination Committee:

The Nomination Committee's responsibilities include, among other things, to identify or make recommendations to the Board on all candidates nominated for appointment to the Board, to review Board structure, size, composition, core competencies and performance from time to time, and to review all candidates nominated for key positions in the Company from time to time.

Executive Committee:

The Executive Committee's responsibilities include, among other things, to have the authority to approve transactions with a value of up to THB 750 million (circa USD 25 million), to exercise powers of the Board to act upon any specific matters delegated by the Board from time to time, to consider the Company's business plan and annual budget for recommendation to the Board, and to consider the overall performance of the Company and provide recommendations to enhance performance.

Name of Director	Board	Audit Com.	Rem. Com.	Nom. Com.	Exe. Com.
Mr. Prasert Bunsumpun	4/4	-	-	-	2/3
Mr. Chalermchai Mahagitsiri	4/4	-	-	-	3/3
M.L. Chandchutha Chandratat	9/9	-	-	-	3/3
Mr. Chia Wan Huat Joseph	4/4	1/1	1/1	1/1	3/3
Mr. Surasak Khaoroptham	9/9	-	-	-	-
Mr. Ng Cher Yan	4/4	1/1	1/1	1/1	-
Mr. Toh Wen Keong Joachim	3/4	1/1	1/1	1/1	-

Following changes in the shareholding and boardroom structure of Mermaid's controlling shareholder Thoresen Thai Agencies Public Company Limited, on 19 June 2012, Mr. Pichet Sithi-Amnuai, Mr. Leslie George Merszei and Mr. Robert Edward Bier resigned as Directors to make way for the appointment of Mr. Prasert Bunsumpun, Mr. Chalermchai Mahagitsiri and Mr. Ng Cher Yan, respectively. On 26 June 2012, Mr. Ng Chee Keong and Mr. John Willoughby Crane III also resigned as Directors to make way for Mr. Toh Wen Keong Joachim and Mr. Chia Wan Huat Joseph, respectively.

The same disclosure as above in relation to former Directors of Mermaid is as follows:

Name of Director	Board	Audit Com.	Rem. Com.	Nom. Com.	Exe. Com.
Mr. Pichet Sithi-Amnuai	5/5	5/5	-	-	-
Mr. Leslie George Merszei	4/5	4/5	2/2	1/1	-
Mr. Robert Edward Bier	5/5	-	2/2	1/1	-
Mr. Ng Chee Keong	4/5	-	2/2	1/1	-
Mr. John Willoughby Crane III	4/5	5/5	-	-	-

All acquisitions or investments, investments in securities and immovable assets, divestments, funding requests, borrowings and expenditures of Mermaid and its subsidiaries (collectively the “Group”) with a value equal to or exceeding THB 750 million (circa USD 25 million) shall require the approval of the Board. The Executive Committee has the authority to approve such transactions below this threshold, unless they are, due to their nature, deemed to be material, in which case Board approval will be required instead.

Not applicable. Mermaid's independent Directors do not fall into any of the relationship categories or substantive definitions as set forth in the Code that may compromise their independence.

Not applicable. The Executive Chairman and the Chief Executive Officer (Managing Director) of Mermaid are not related to each other.

As at 30 September 2012, the Nomination Committee members were Mr. Toh Wen Keong Joachim, Mr. Ng Cher Yan, and Mr. Chia Wan Huat Joseph. The Chairman of the Nomination Committee was Mr. Toh Wen Keong Joachim.

The Nomination Committee reviews and assesses candidates for directorships before making recommendations to the Board. It also reviews the retirement and re-election of Directors at each annual general meeting under Mermaid's Articles of Association and makes recommendations to the Board.

Name	Position	Audit Com.	Rem. Com.	Nom. Com.	Exe. Com.
Mr. Prasert Bunsumpun	Non- Executive Chairman	-	-	-	•
Mr. Chalermchai Mahagitsiri	Executive Vice Chairman	-	-	-	•
M.L. Chandchutha Chandratat	Executive Director	-	-	-	•
Mr. Chia Wan Huat Joseph	Non-Executive Director	•	•	•	•
Mr. Surasak Khaoroptham	Non-Executive Director	-	-	-	-
Mr. Ng Cher Yan	Independent Director	•	•	•	-
Mr. Toh Wen Keong Joachim	Independent Director	•	•	•	-

The same disclosure as above in relation to former Directors of Mermaid is as follows:

Name	Position	Audit Com.	Rem. Com.	Nom. Com.	Exe. Com.
Mr. Pichet Sithi-Amnuai	Independent Director	•	-	-	-
Mr. Leslie George Merszei	Independent Director	•	•	•	-
Mr. Robert Edward Bier	Independent Director	-	•	•	-
Mr. Ng Chee Keong	Independent Director	-	•	•	-
Mr. John Willoughby Crane III	Non-Executive Director	•	-	-	-

On the initiative of the Audit Committee and in line with past practice, each Director will, on an annual basis, undertake a self-assessment exercise of the performance of the Board as a whole and of himself/herself taking into relevant consideration the roles and responsibilities of Directors pursuant to the Code and the results of the business operations. The results of the self-assessment exercise will be reported to and discussed by the Board and areas for improvement will be noted by the Board and recorded in the minutes.

The Remuneration Committee reviews matters concerning the remuneration of Board members and key executives. Level and mix of remuneration are further detailed below.

As at 30 September 2012, the Remuneration Committee members were Mr. Ng Cher Yan, Mr. Chia Wan Huat Joseph, and Mr. Toh Wen Keong Joachim. The Chairman of the Remuneration Committee was Mr. Ng Cher Yan.

Name	Below SGD 250,000	SGD 250,000 to SGD 499,999	SGD 500,000 and above
Mr. Prasert Bunsumpun	•	-	-
Mr. Chalermchai Mahagitsiri	-	•	-
M.L. Chandchutha Chandratat	•	-	-
Mr. Chia Wan Huat Joseph	•	-	-
Mr. Surasak Khaoroptham	•	-	-
Mr. Ng Cher Yan	•	-	-
Mr. Toh Wen Keong Joachim	•	-	-

Directors who receive remuneration as executives of the Company include M.L. Chandchutha Chandratat in his capacity as Executive Director and Mr. Chalermchai Mahagitsiri in his capacity as Executive Vice Chairman and Interim-Chief Executive Officer.

For persons who served in the capacity of a Director for any part of a financial period, remuneration calculated for the purposes of the above disclosure is based on a pro-forma assessment of potential full year remuneration (i.e. the remuneration that the Director would have received if he/she had served as a Director for the full financial period).

The same disclosure as above in relation to former Directors of Mermaid is as follows:

Name	Below SGD 250,000	SGD 250,000 to SGD 499,999	SGD 500,000 and above
Mr. Pichet Sithi-Amnuai	•	-	-
Mr. Leslie George Merszei	-	•	-
Mr. Robert Edward Bier	•	-	-
Mr. Ng Chee Keong	•	-	-
Mr. John Willoughby Crane III	•	-	-

Name	(1)	(2)	(3)	(4)	(5)
Mr. Prasert Bunsumpun	100%	-	-	-	-
Mr. Chalermchai Mahagitsiri	-	100%	-	-	-
M.L. Chandchutha Chandratat	-	100%	-	-	-
Mr. Chia Wan Huat Joseph	100%	-	-	-	-
Mr. Surasak Khaoroptham	100%	-	-	-	-
Mr. Ng Cher Yan	100%	-	-	-	-
Mr. Toh Wen Keong Joachim	100%	-	-	-	-

The same disclosure as above in relation to former Directors of Mermaid is as follows:

Name	(1)	(2)	(3)	(4)	(5)
Mr. Pichet Sithi-Amnuai	100%	-	-	-	-
Mr. Leslie George Merszei	100%	-	-	-	-
Mr. Robert Edward Bier	100%	-	-	-	-
Mr. Ng Chee Keong	100%	-	-	-	-
Mr. John Willoughby Crane III	100%	-	-	-	-

Key Executives	Below SGD 250,000	SGD 250,000 to SGD 499,999	SGD 500,000 and above
Mr. Paul Whiley	-	-	•
Mr. Michael Van Ambrose	-	-	•
Mr. Stephen Gregor Lenz	-	•	-
Ms. Siriwan Chamnannarongsak	•	-	-

Ms. Siriwan Chamnannarongsak was appointed as Finance Director effective 7 October 2011; Mr. Stephen Gregor Lenz resumed employment by serving as Executive Director for Mermaid Drilling Ltd. since 2 May 2012; Mr. Paul Whiley assumed the position of Executive Director for Mermaid's subsea business division covering Subtech Ltd., Mermaid Offshore Services Ltd. and Seascape Surveys Pte. Ltd. effective 16 August 2012; and Mr. Michael Van Ambrose was appointed as Managing Director of Mermaid Offshore Services Ltd. effective 1 September 2012.

For the financial year that ended on 30 September 2012 and due to operational changes in Mermaid, the following key executives resigned from their positions with the Group: Mr. James McGhee Nicol serving as General Manager of Mermaid Drilling resigned effective 13 April 2012; Mr. Graham Edward Cooper serving as Commercial Director of Mermaid Offshore Services resigned effective 31 July 2012; Mr. Bruce Muir Gemmell serving as Chief Executive Officer of Mermaid resigned effective 16 August 2012; Mr. Bruce Saunders serving as Projects Director resigned effective 30 September 2012. Mr. Nathan Williams was appointed as Groups Operations Director from 26 March 2012 until 30 September 2012.

The same disclosure as above in relation to former key executives of Mermaid is as follows:

Key Executives	Below SGD 250,000	SGD 250,000 to SGD 499,999	SGD 500,000 and above
Mr. Bruce Muir Gemmell	-	•	-
Mr. Bruce Saunders	-	•	-
Mr. Graham Edward Cooper	-	•	-
Mr. James McGhee Nicol	-	•	-
Mr. Nathan Williams	-	•	-

For persons who served in the capacity of a key executive for any part of a financial period, remuneration calculated for the purposes of the above disclosure is based on a pro-forma assessment of potential full year remuneration (i.e. remuneration that the key executive would have received if he/she was employed for the full financial period).

Key Executives	[1]	[2]	[3]	[4]
Mr. Paul Whiley	80%	13%	4%	2%
Mr. Michael Van Ambrose	75%	-	25%	-
Mr. Stephen Gregor Lenz	90%	-	10%	-
Ms. Siriwan Chamnannarongsak	96%	-	-	4%

The same disclosure as above in relation to former key executives of Mermaid is as follows:

Key Executives	[1]	[2]	[3]	[4]
Mr. Bruce Muir Gemmell	63%	-	37%	-
Mr. Bruce Saunders	98%	-	2%	-
Mr. Graham Edward Cooper	92%	-	8%	-
Mr. James McGhee Nicol	49%	35%	16%	-
Mr. Nathan Williams	98%	-	2%	-

Not applicable. There are no employees who are immediate family members of a Director or the Chief Executive Officer (Managing Director) of Mermaid.

Please refer to Items 12 and 14 above.

Mermaid's first employee share option plan (“ESOP”) was approved by Mermaid's shareholders on 11 July 2007 (“ESOP 2008”). Mermaid's second employee share option plan was approved by Mermaid's shareholders on 29 January 2009 (“ESOP 2009”). Mermaid's third employee share option plan was approved by Mermaid's shareholders on 28 January 2010 (“ESOP 2010”). Mermaid's fourth employee share option plan was approved by the Mermaid's shareholders on 25 January 2011 (“ESOP 2011”). The following is a summary of the principal rules of the ESOPs.

(a) Objectives of ESOPs

Mermaid recognises that the contributions and continued dedication of its executives and employees are significant to its future growth and development. The ESOPs were offered by Mermaid to advance the best interests of the Group by providing employees of the Group (including Executive Directors) with additional incentives through the grant of options (“Options”) based on the performance of the Group.

The objectives of ESOP 2008, ESOP 2009, ESOP 2010 and ESOP 2011 are as follows: (a) to retain key personnel whose contributions are essential to the long-term growth and profitability of the Group; and (b) to align the interests of participants with the interests of the shareholders. To emphasize these objectives, Mermaid had extended the range of participants in ESOP 2010 and ESOP 2011 to include non-executive Directors of the Group.

The ESOPs are share incentive plans the implementation of which enabled Mermaid to recognise the contributions made by the participants by introducing a variable component into their remuneration package in the form of Options. The ESOPs also provided an opportunity for each participant to participate in the equity of Mermaid and will provide a further incentive for the participants to strive for greater long-term growth and profitability for the Group. Mermaid believes the ESOPs help to attract, motivate and retain key executives and reward them for achievement of pre-determined targets which create and enhance economic value for the shareholders.

(b) Summary of ESOPs

A summary of the rules of each of the ESOPs is set out below. Full details of ESOP 2008 were disclosed to shareholders in Appendix-C of Mermaid's Initial Public Offering (“IPO”) prospectus dated 9 October 2007 and a summary of the principle terms of ESOP 2009, ESOP 2010 and ESOP 2011 were circulated to the shareholders on 9 January 2009, 6 January 2010 and 3 January 2011 respectively with full details available to shareholders upon request.

Plan administration: All ESOPs are administered by the Remuneration Committee (“Committee”), which have powers to determine, among others, the persons to be granted Options, number of Options to be granted, recommendations for modifications to ESOPs and calculation of the exercise price of the Options.

Option Participants: Employees of the Group (including Executive Directors) were eligible to participate in ESOP 2008 and ESOP 2009, at the absolute discretion of the Remuneration Committee. The non-Executive Directors of the Group, and persons who are controlling shareholders and their associates, were not eligible to participate in ESOP 2008 and ESOP 2009. In ESOP 2010 and ESOP 2011, non-Executive Directors of the Group were included as eligible participants.

Size of ESOPs: The aggregate number of new shares that were available to be granted under ESOP 2008 was limited to 3,832,053 shares or 1.0% of the then issued share capital of Mermaid. The aggregate number of new shares that were available to be granted under ESOP 2009 was limited to 3,000,000 shares or 0.55% of the then issued share capital of Mermaid. The aggregate number of new shares that were available to be granted under ESOP 2010 was limited to 4,000,000 shares or 0.51% of the increased issued share capital of Mermaid (after the Rights Issue). The aggregate number of new shares that were available to be granted under ESOP 2011 was also limited to 4,000,000 shares or 0.51% of the paid-up capital of Mermaid.

Maximum entitlements: The number of shares in any Options to be offered to a participant was determined at the absolute discretion of the Remuneration Committee, which took into account criteria such as performance of the employee.

Options, exercise period and exercise price: The exercise price for each share in respect of which an Option is exercisable was set at the price equal to the average of the “Market Price” at the date of each grant of Options, being the price equal to the weighted average price for the shares on SGX-ST fifteen (15) consecutive trading days immediately preceding the date of grant of the Options.

Options may be exercised every six (6) months commencing from the third anniversary from the date of grant of the Option and will expire on the fifth (5th) anniversary from the date of grant of the Options, upon which the Options shall expire automatically.

Grant of Options: Under the rules of the Thai Securities and Exchange Commission (“Thai SEC”), the Options must be granted within one (1) year from the approval date of each ESOP. The expiry dates for the grant of Options under all the ESOPs have already lapsed. Therefore no new Options can be granted under the said schemes.

Termination of Options: Special provisions in the rules of each ESOP deal with the lapse or earlier exercise of Options in circumstances which include the termination or resignation of the employment of the participant. Compared with ESOP 2008, ESOP 2009 and ESOP 2010 material amendments were made to ESOP 2011 regarding the circumstances wherein Options shall lapse. The rationale for these amendments was principally to limit the circumstances in which participants who subsequently cease or discontinue their service to the Company may exercise their Options post employment since the ESOPs are premised on encouraging participants to remain in the service of the Company.

Share Allotment: Shares which are allotted through exercise of Options will upon issue rank pari passu in all respects with the then existing issued shares, save for any dividend, rights, allotments or distributions, the record date (“Record Date”) for which falls on or before the relevant exercise date of the Option. “Record Date” means the date as at the close of business on which the shareholders must be registered in order to participate in any dividends, rights, allotments or other distributions.

(c) Financial Effects of ESOPs

Share capital: ESOP 2008, ESOP 2009, ESOP 2010 and ESOP 2011 will result in an increase in Mermaid's issued share capital when the Options are exercised into new shares and when new shares are issued to participants pursuant to the grant. This will in turn depend on, among others, the number of shares comprised in the Options to be granted, the vesting schedules under the Options and the prevailing market price of the shares on the SGX-ST.

Costs to the Company: Under Thai Generally Accepted Accounting Principles (“Thai GAAP”), the granting of Options under ESOP 2008, ESOP 2009, ESOP 2010 and ESOP 2011 did not result in having to recognise any expenses in the income statement for those relevant periods.

(d) Status of ESOP 2008

Allocation of Options pursuant to ESOP 2008 was made by the Remuneration Committee on 20 November 2008. In accordance with Rule 704(27) of the SGX-ST Listing Manual, Mermaid had on 20 November 2008 disclosed to the SGX-ST details of the grant of Options pursuant to ESOP 2008. On 20 November 2011, the Options granted under ESOP 2008 reached their third anniversary of the issue date and become exercisable by the participants pursuant to the principle terms of ESOP 2008. As at 15 December 2012, 672,800 of those Options remained exercisable amongst 11 participants.

The Remuneration Committee who administered ESOP 2008 comprised: Mr. Ng Chee Keong, M.L. Chandchutha Chandratat, and Mr. Leslie George Merszei. The Chairman of the Remuneration Committee was Mr. Ng Chee Keong. Effective 24 November 2009, an adjustment was made pursuant to the terms of ESOP 2008 to the number of options granted under ESOP 2008 due to a variation to Mermaid's issued capital arising from the completion of Mermaid's renounceable underwritten rights issue (“Rights Issue”). The Remuneration Committee who approved the adjustments to ESOP 2008 arising from the Rights Issue comprised: Mr. Ng Chee Keong, Mr. Leslie George Merszei and Ms. Joey Horn. The Chairman of the Remuneration Committee was Mr. Ng Chee Keong.

None of the participants of ESOP 2008 received more than 5% or more of the total number of Options available under ESOP 2008 and no Options were granted at a discount. Furthermore, no controlling shareholders or their associates were granted Options under ESOP 2008 and no Options were granted to Mermaid's parent company or other subsidiaries of the parent company outside Mermaid, nor any of its or their Directors and employees.

Reference is made to the Directors of Mermaid that remained in office as at 30 September 2012 (see Item 8). As at 15 December 2012, none of the said Directors are participants of ESOP 2008.

(e) Status of ESOP 2009

Allocation of Options pursuant to ESOP 2009 was made by the Remuneration Committee on 16 November 2009. In accordance with Rule 704(27) of the SGX-ST Listing Manual, Mermaid had on 16 November 2009 disclosed to the SGX-ST details of the grant of Options pursuant to ESOP 2009. On 16 November 2012, the Options granted under ESOP 2009 reached their third anniversary of the issue date and become exercisable by the participants pursuant to the principle terms of ESOP 2009. As at 15 December 2012, 579,000 of those Options remained exercisable amongst 13 participants.

The Remuneration Committee who administered ESOP 2009 comprised: Mr. Ng Chee Keong, Mr. Leslie George Merszei and Ms. Joey Horn. The Chairman of the Remuneration Committee was Mr. Ng Chee Keong.

None of the participants of ESOP 2009 received more than 5% or more of the total number of Options available under ESOP 2009 and no Options were granted at a discount. Furthermore, no controlling shareholders or their associates were granted Options under ESOP 2009 and no Options were granted to Mermaid's parent company or other subsidiaries of the parent company outside Mermaid, nor any of its or their Directors and employees.

Reference is made to the Directors of Mermaid that remained in office on 30 September 2012 (see Item 8). As at 15 December 2012, none of the said Directors are participants of ESOP 2009.

(f) Status of ESOP 2010

Allocation of Options pursuant to ESOP 2010 was made by the Remuneration Committee on 01 December 2010. In accordance with Rule 704(27) of the SGX-ST Listing Manual, Mermaid had on 1 December 2010 disclosed to the SGX-ST details of the grant of Options pursuant to ESOP 2010. ESOP 2010 will not be exercisable until 1 December 2013 being the third anniversary of the issue date. As at 15 December 2012, 370,000 of those Options remained exercisable amongst 14 participants.

The Remuneration Committee who administered ESOP 2010 comprised: Mr. Ng Chee Keong, Mr. Leslie George Merszei and Ms. Joey Horn. The Chairman of the Remuneration Committee was Mr. Ng Chee Keong.

None of the participants of ESOP 2010 received more than 5% or more of the total number of Options available under ESOP 2010 and no Options were granted at a discount. Furthermore, no controlling shareholders or their associates were granted Options under ESOP 2010 and no Options were granted to Mermaid's parent company or other subsidiaries of the parent company outside Mermaid, nor any of its or their Directors and employees.

Reference is made to the Directors of Mermaid that remained in office on 30 September 2012 (see Item 8). As at 15 December 2012, none of the said Directors are participants of ESOP 2010.

(g) Status of ESOP 2011

Allocation of Options pursuant to ESOP 2011 was made by the Remuneration Committee on 15 December 2011. In accordance with Rule 704(27) of the SGX-ST Listing Manual, Mermaid had on 15 December 2011 disclosed to the SGX-ST details of the grant of Options pursuant to ESOP 2011. ESOP 2011 will not be exercisable until 15 December, 2014, being the third anniversary of the issue date. As at 15 December 2012, 755,000 of those Options remained exercisable amongst 24 participants.

The Remuneration Committee who administered ESOP 2011 comprised: Mr. Ng Chee Keong, Mr. Leslie George Merszei and Mr. Robert Edward Bier. The Chairman of the Remuneration Committee was Mr. Ng Chee Keong.

None of the participants of ESOP 2011 received more than 5% or more of the total number of Options available under ESOP 2011 and no Options were granted at a discount. Furthermore, no controlling shareholders or their associates were granted options under ESOP 2011 and no Options were granted to Mermaid's parent company or other subsidiaries of the parent company outside Mermaid, nor any of its or their Directors and employees.

Reference is made to the Directors of Mermaid that remained in office on 30 September 2012 (see Item 8). As at 15 December 2012, none of the said Directors are participants of ESOP 2011.

(h) Summary of ESOP Distributions

	ESOP 2008	ESOP 2009	ESOP 2010	ESOP 2011
Shares Allocated for Options	3,832,053	3,000,000	4,000,000	4,000,000
Options Issue Date	20 Nov 2008	16 Nov 2009	1 Dec 2010	15 Dec 2011
Total Options Issued	968,000	891,000	700,000	1,310,000
Original No. of Participants	18	21	25	33
Total Options Remaining*	672,000	579,000	370,000	755,000
No. of Participants Remaining*	11	13	14	24

(* as at 15 December 2012)

As at 15 December 2012, none of the Options in any of the ESOPs have been exercised. The reduction in the number of exercisable Options remaining and reduction in number of participants remaining in each scheme was primarily due to cessation of employment or engagement of such participants. No new Options can be issued under any of the ESOPs. The Company does not have any ESOP in respect of 2012.

As at 30 September 2012, the Audit Committee members were: Mr. Ng Cher Yan, Mr. Toh Wen Keong Joachim and Mr. Chia Wan Huat Joseph. The Chairman of the Audit Committee was Mr. Ng Cher Yan.

The Audit Committee held five (5) meetings during the financial year. The management of Mermaid, including the Chief Executive Officer, Financial Director, Senior Finance and Accounting Manager, General Counsel, and concerned Managers also participated in those meetings when invited. Mermaid's external auditors from PricewaterhouseCoopers ABAS Limited also participated in the meetings to review Mermaid's financial statements and reports with the Audit Committee and management during the financial year. Mermaid's Internal Audit Director and Manager attended the meetings to review the internal audit activities and results with the Audit Committee during the financial year. The meeting agenda and minutes were prepared.

The Audit Committee carried out its functions as stated in the Audit Committee's scope of responsibilities as set out in Item (1) above.

The Board recognizes the importance of sound internal controls and risk management practices to good corporate governance.

The Compliance and Internal Audit Department is independent of management and has a direct and primary reporting line to the Chairman of the Audit Committee. The Compliance and Internal Audit Director assists the Audit Committee in the discharge of its duties and responsibilities by being responsible for all regulatory compliances, internal audits, corporate governance matters, and risk management systems of the Company. The Company Secretary assists in overseeing compliances with all law and regulations concerning public companies.

In line with the commitment of a high standard of compliance with accounting, financial reporting, internal controls, corporate governance and auditing requirements and any legislation relating thereto, the Company has a Code of Business Conduct applicable to Company personnel covering a wide range of business practices and procedures. This includes, but is not limited to, compliance with laws, rules and regulations, conflicts of interests, insider trading, corporate opportunities, competition and fair dealing, discrimination and harassment, health and safety, environmental matters, record-keeping, financial controls and disclosures, confidentiality, protection and proper use of company assets, financial reporting and compliance.

The Company also has a Share-Dealing and Inside Information Policy to ensure proper access and use of Company information. The said policy sets out a prohibition on dealing in Company shares on short term considerations, prohibition on dealing in Company shares prior to release of financial results, prohibition on dealing in Company shares when in possession of inside information, prohibition on giving advice in respect of dealing in Company shares using inside information and general obligations to observe confidentiality.

The Company has also set in place a Whistleblowing Policy, providing an avenue for its employees and external parties to raise concerns and offer reassurance that they will be protected from reprisals or victimization for whistleblowing in good faith. The Policy conforms to the guidance set out in the Code which encourages employees to raise concerns, in confidence, about possible irregularities.

The Audit Committee has been working with the Compliance and Internal Audit Department to continuously improve Mermaid's internal control systems and provides progress reports to the Board on a quarterly basis.

Thai law presently do not recognise telephonic and videoconference meetings. Therefore, Mermaid is presently unable to comply with the recommendation in Guideline 1.4 of the Code of Corporate Governance on the conduct of Board meetings which provides that "Companies are encouraged to amend their Articles of Association to provide for telephonic and videoconference meetings". This also applies to all of Mermaid's subsidiaries incorporated in Thailand.

However, the Thai Cabinet had on 18 August 2009 approved an amendment to the law to allow Thai private limited companies to conduct Board meetings using modern technology, such as teleconferencing, provided that, among other things, the company's Articles of Association specifically allows the company to do so. If the amendment to the law is submitted to, and passed by Thai parliament as proposed, Mermaid's subsidiaries incorporated as private limited companies in Thailand may amend their Articles of Association to allow for this compliance.

Notwithstanding this present limitation in Thailand, Mermaid is in compliance with this recommendation insofar as it relates to its subsidiaries incorporated in jurisdictions outside Thailand, to the extent permissible by applicable laws in such jurisdictions.

On 19 June 2012, following a re-composition of several of the Directors on the Board, the number of independent Directors on the Board became one short of Guideline 2.1 of the Code's recommendation that at least one-third (1/3) of the Board comprise Directors who are independent.

The Nomination Committee had already proposed the election of a new independent Director to the Board at the upcoming Annual General Meeting of shareholders to be held on 28 January 2013 in order for the Company to be compliant with the Code on this matter.