Dyesol : Corporate Governance Statement and Appendix 4G

The Board of Directors is responsible for the overall corporate governance of Dyesol Limited and is committed to the principles underpinning best practice in corporate governance, applied in a manner that meets ASX standards and best addresses the Directors' accountability to Shareholders. The Company believes that sound corporate governance adds value to stakeholders and promotes investor confidence.

This Corporate Governance Statement ("Statement") sets out a brief summary of Dyesol's main corporate governance policies and practices and provides details of the Company's compliance with the Recommendations, or where appropriate, indicates a departure from the Recommendations with an explanation. It should be read in conjunction with the following policies and procedures which have been adopted and are available for viewing on the Company's website:

• Statement of Matters Reserved to the Board;

• Corporate Code of Conduct;

• Continuous Disclosure Policy;

• Securities Trading Policy;

• Risk Management Policy;

• Audit and Risk Committee Charter;

• Remuneration Committee Charter;

• Shareholder Communications Strategy;

• Summary of Procedure for Selection of External Auditor and Rotation of Engagement Audit Partner;

• Corporate Social Responsibility; and

• Environmental Policy.

This Statement is current as at 26 August 2016 and has been approved by the Board of Directors of Dyesol Limited.

The Board will comprise both executive and non-executive Directors. Presently there are four non-executive Directors and one Managing Director. The membership of the Board, its activities and composition is subject to yearly review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include the quality of the individual, experience and achievement, credibility within the Company's scope of activities, intellectual ability to contribute to the Board's duties and ability and commitment to undertake Board duties and responsibilities.

The Board has established the following committees:

The Audit and Risk Committee comprises two non-executive Board members. The primary responsibilities of this Committee are to:

• monitor the integrity of the financial statements of the Company;

• review and monitor the Company's internal financial control system; and

• fulfil the Board's responsibility for the oversight of risk management by regularly reviewing the effectiveness of the Company's risk management framework and ensuring the framework is aligned with the Company's business plan and technology development plan.

  Remuneration Committee

  The Remuneration Committee comprises two Board members, two of whom are non-executive directors. The primary responsibility of this Committee is to discharge the Board's responsibilities in relation to remuneration of the Company's executives, including share and benefit plans.

  ROLE OF THE BOARD

  The management and control of the business is vested in the Board. The Board's primary responsibility is to oversee the Company's business activities and management for the benefit of the shareholders.

  The Board strives to create shareholder value and ensure that shareholders' funds are prudently invested. Other key responsibilities of the Board include:

• appointing, evaluating, rewarding and, if necessary, removing the Chairman, Managing Director and Senior Executives;

• development of corporate objectives and strategy with management and approving plans, new investments, major capital and operating expenditures and major funding activities proposed by management;

• monitoring actual performance against budgeted and forecast performance and reviewing operating information to understand at all times the state of the health of the Company;

• overseeing the management of business risks, staff welfare, personnel equity, safety and occupational health, environmental issues and community development;

• being satisfied that the financial statements of the Company fairly and accurately set out the financial position and financial performance for the period under review;

  • being satisfied that there are appropriate reporting systems and controls in place to assure the Board that proper operational, financial, compliance, risk management and internal control processes are established and functioning appropriately and further, approving and monitoring financial and other reporting;

  • being assured that appropriate audit arrangements are in place;

  • ensuring that the Company, its officers and staff act legally, ethically and responsibly on all matters, and assuring itself that a code of business ethics has been adopted and that the Company practice is consistent with that Code; and

  • reporting to and advising shareholders.

The Company acknowledges the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (3rd Edition) (the "Recommendations") applicable to ASX-listed entities. The ASX Listing Rules require listed companies to prepare a statement disclosing the extent to which they have complied with the Recommendations in the reporting period. The Recommendations are not prescriptive, so that if a company considers a recommendation to be inappropriate having regard to its own circumstances, it has the flexibility not to follow it.

The schedule below provides details of the Company's compliance with the Recommendations or, where appropriate, indicates a departure from the Recommendations with an explanation.

Commentary 1.1

The roles and responsibilities of the Board, and the matters expressly applicable to it, are disclosed in the Statement of Matters Reserved to the Board. The Board delegates responsibility for the day-to-day activities of the Company to the Managing Director and senior Company executives. The Operations Review contained in the 2016 Directors' Report sets out the roles and responsibilities of management and staff.

1.5

While the Company provides a workplace that is open to gender diversity, the Company currently does not have a formal policy or specific objectives for gender diversity. The Board does however recognise the benefits of a diverse workforce and the value of considering how the Company can best achieve those benefits at its current stage of development. The adoption of a formal diversity policy will continue to be assessed periodically as the Company's circumstances change.

1.6 and 1.7

Performance evaluations of individual directors and key executives were undertaken during the reporting period in accordance with the Company's policy.

Commentary 2.1

At the present time, a separate nomination committee has not been established. The entire Board currently conducts the

function of such a committee, the duties of which have been considered and adopted by the Board. If considered appropriate, the Board may invite persons with relevant industry and financial experience to assist in carrying out the functions of such a committee.

2.2

The Board strives to ensure that it is comprised of directors with a blend of skills, experience and attributes appropriate to the Company and its business. The principal criterion for the appointment of new directors is their ability to add value to the Company and its business. In light of this, it has not been deemed necessary to create a formal document setting out the mix of skills and diversity that the Board currently has or is looking to achieve in its membership. The Board will periodically give consideration to the establishment of such a matrix.

2.3

The Board consists of the non-executive Chairman, the Managing Director, and three non-executive directors. Details of their skills, experience and expertise and the period of office held by each have been included in the 2016 Directors' Report. The number of Board and Committee meetings held and the attendance of the directors at those meetings are also set out in the 2016 Directors' Report.

The Board has reviewed the position and associations of each of the five directors in office and has determined that each of the four non-executive directors, including the Chairman, are currently independent directors. In making this determination, regard was given to the independence criteria set out in the Recommendations, and other facts, information and circumstances that the Board considered relevant.

Mr Neal holds shares in the Company. However, the Board does not consider the holding to be of a size such that it might influence, or reasonably be perceived to influence, in a material respect his capacity to bring independent judgement to bear on issues before the Board.

Ms McDonald and Dr McIntyre are nominees of the Company's major shareholder. It is the unanimous view of the Directors that this representation has not and does not influence the independence of their directorships and has not affected their independence to act in the best interests of the Company and all of its security holders.

Mr Thompson has been engaged to provide additional services to the Company through a consulting arrangement over his period of tenure as a Director, which has been more than ten years. He was regarded as an executive director in 2012 and engaged through a business services agreement during that period. In addition, he has an interest in 2.33 million shares (0.7% of the Company's present issued capital). Nevertheless, the Board still considers him to be an "independent director" as these factors are not believed to be of such materiality as to impair his independent judgement on Board matters.