Shareholders

Corporate Governance

(a) The Board of Directors

The Board recognises the importance of good corporate practice and is committed to maintaining high standards of corporate governance throughout the group. The Board comprises four executive directors and four non-executive directors. The directors intend to comply with the Combined Code in such respects as are appropriate for a company of this size, nature and stage of development.

The Board meets regularly and has overall responsibility for ensuring that the group is properly led and controlled, and is accountable to shareholders for financial and operational performance. These responsibilities include the overall strategy of the group, approval of significant items of expenditure and consideration of significant financing matters pertaining to the group.

The Board has established an Audit Committee, a Remuneration Committee and a Nominations Committee with formally delegated duties and responsibilities. Each of the Committees comprises four or more non-executive directors, who will invite other members of the Board to attend meetings as appropriate.

(b) The Remuneration Committee

The Remuneration Committee is chaired by Mark Driver. It reviews the performance of executive directors and sets the scale and structure of their remuneration and reviews the basis of their service agreements with due regard to the interests of the shareholders. The Remuneration Committee also makes recommendations to the Board concerning the allocation of share options to directors and employees. The remuneration and terms of appointment of non-executive directors will be set by the Board.

The company has a remuneration policy, the aim of which is to provide, in the context of the group's business strategy, remuneration that will attract and retain high calibre executives and staff. In order to achieve this, total rewards are set at levels that are competitive within the relevant market. Rewards are earned through the achievement of objectives based on measures consistent with shareholder interests.

(c) The Audit Committee

The Audit Committee is chaired by Barry Aling, it meets at least twice each year and is responsible for monitoring the quality of internal control, ensuring that the financial performance of the company is properly measured and reported on, meeting with the auditors and reviewing reports from the auditors relating to accounting and internal controls.

The finance director is invited to attend meetings but the committee meets with the auditors at least once a year without the finance director being present.

(d) The Nominations Committee

The Nominations Committee is chaired by Allan Bufferd. It is responsible for reviewing and proposing appointments to the Board and the various Board committees. In addition, the committee has responsibility for reviewing the composition of the Board and for selecting candidates for appointment, to meet the desired composition.

(e) Corporate Governance in Investee Closed-End Funds

Since 1999, City of London has produced a detailed statement outlining the corporate governance procedures and policies it expects to be employed by closed-end funds in which we invest. We are now on the tenth edition of our "Statement on Corporate Governance and Voting Policy for Closed-End Funds". In publishing this statement we attempt to capture the current best practices in the corporate governance of closed-end funds.

Corporate governance is an integral part of our investment process because it is our firm belief that a closed-end fund with poor corporate governance will generally trade at a wide discount over time. Poor corporate governance in a closed-end fund results in fund price under-performance via the widening of the discount to the Net Asset Value at which the fund trades.

Our statement is addressed to Boards, Managers, Shareholders, and the Professional community. It attempts to define the responsibilities of all the parties involved within a closed-end fund, with the ultimate aim of promoting shareholder value and the long-term interests of the closed-end fund sector. A copy of our statement is distributed to the members of the Boards of the closed-end funds in which we invest and is available on our website.

Country of Incorporation

City of London Investment Group PLC is incorporated and registered in England and Wales under the Companies Act 1985 with registered number 2685257.