CORPORATE GOVERNANCE

The Board of Directors is responsible for the Group's corporate governance policy and recognises the importance of high standards of integrity. Since the Company’s admission to AIM, operated by the London Stock Exchange plc, the Board has consistently sought to apply the principles set out in the Combined Code on Corporate Governance (the "Code"), issued by the Financial Reporting Council, to the extent that they are appropriate for, and applicable to, a company of Leadcom’s size, whose shares are admitted to trading on AIM and which is incorporated in Israel.
The Company's 2007 Annual General Meeting ("AGM") amended the Company’s articles of association to comply with the guidelines set out in the AIM Rules for Companies relating to the disclosure of significant shareholdings, following the EU Transparency Directive.

Further, Leadcom complies with the provisions of the Israeli Companies Law which requires, inter alia, that:

·All Directors’ remuneration must be approved by the Company’s Audit Committee, the Board and then the shareholders; and

· The Board must include at least two “External Directors”, who (amongst other requirements) have appropriate qualifications and expertise and have no economic connection with the Company during the two years immediately prior to their appointment. The External Directors are elected for a three year term and may thereafter be elected for an additional three-year period. All External Directors are required by Israeli law to be members of the Audit Committee. The Company's External Directors are Oded Koritshoner and Irit Ben Ari.

DIRECTORS

Details of the appointment and resignation dates of Directors are shown in the Directors' Report. At each annual general
meeting, one-third of the directors (other than the External Directors) retire from office. Any director (other than the External Directors) who is not required to retire by rotation, but who has been in office for three years or more since his appointment or his last re-appointment or who would have held office at not less than three consecutive annual general meetings without retiring, is required to retire from office. The roles of the Chairman and Chief Executive are separate and have been so throughout the year.

The non-executive Directors meet, without the presence of the executive Directors, whenever it is appropriate for them to do so. Included amongst these independent Directors are the External Directors.

All the Directors have access to the advice and services of the Company Secretary and may, in furtherance of their duties, take independent legal and financial advice at the Company's expense. They also have access to the minutes of the Board, in which any concerns expressed by them regarding matters pertaining to the Group are recorded.

While there is no formal process, the performance and effectiveness of each Director is assessed on an on-going basis by the other members of the Board.

BOARD MEETINGS

The Board generally meets in person on at least a quarterly basis and in person or by teleconference in between, at such other times as required. The Board receives regular reports on a wide range of key issues including operational performance, risk management and corporate strategy, budget and corporate actions, and other areas which are either required by law or deemed relevant by the Company’s management.

The Board deals with the matters specifically reserved for its decision under Israeli law, as well as decisions regarding key areas across the Group's activities. All the Directors are free to bring any matter to the attention of the Board.

COMMITTEES

The Audit Committee and the combined Remuneration and Nomination Committee meet in person at least twice a year.

AUDIT COMMITTEE

The Audit Committee is chaired by Oded Koritshoner. The other members are Irit Ben Ari and Jonathan Kaplan.

In accordance with its terms of reference, the principal functions of this Committee are, together with the internal auditor, to review the effectiveness of the Company's systems of internal controls, as well as to determine the appropriateness of the accounting policies to be used in the Group's annual results. The Committee also reviews the quarterly and annual results before publication, as well as related party transactions. The responsibilities of the Audit Committee include all matters recommended to be covered by the Code and, in addition, those required by the Israeli Companies Law (for example, the approval of Directors’ remuneration and receiving reports from the external auditors and the internal auditor). Management members may attend meetings, at the Committee’s request.

REMUNERATION AND NOMINATION COMMITTEE

The Remuneration and Nomination Committee is chaired by Zvi Limon, the other members being Isaac Angel and Irit Ben Ari.

The Committee determines the Group's remuneration policy and the remuneration (including bonuses and options) of the
executive Directors and certain other senior management members.

Under Israeli law, the remuneration of the Directors has to be approved by the Audit Committee, the Board and then by the shareholders.

The Committee also evaluates the balance of skills, knowledge and experience of the Board.