Statement of Corporate Governance Practices  Functions and Responsibilities of the Board and Management  Role of the Board of Directors Composition of the Board  Chairperson of the Board  $^{ }$Management of the Business of the Company  Nomination Committee  Code of Conduct  HARVEY NORMAN HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES – ANNUAL REPORT 2003  12  The directors of the Company are accountable to shareholders for the proper management of business and affairs of  the Company. The Managing Director is a member of the Board but does not hold the position of Chairman.  The key responsibilities of the Board are to: The Board delegates responsibility for day-to-day management of the Company to the Managing Director. However,  the Managing Director must consult the Board on matters that are sensitive, extraordinary or of a strategic nature.  The Board has adopted a formal Board Charter.  The constitution of the Company provides that the number of directors must be not less than three and not more than  ten. There are presently ten directors. There are six executive directors, and four non-executive directors. One of  the non-executive directors is an independent director. A majority of the Board are not independent directors. The  Board believes that the individuals on the Board can make, and do make, quality and independent judgments in the  best interests of the Company on all relevant issues, notwithstanding that the Chairperson is not an independent  director and a majority of the Board are not independent directors.  The Chairperson is an executive director, and not an independent director. The roles of Chairperson and Managing  Director are not exercised by the same individual. The Board believes that the Chairperson is able and does bring  quality and independent judgment to all relevant issues falling within the scope of the role of a Chairperson.  The business of the Company is conducted by or under the supervision of the Managing Director, and by employees  to whom management functions have been delegated by the Managing Director. The Board has delegated  responsibility for day-to-day management of the Company to the Managing Director. The Managing Director must  consult the Board on matters that are sensitive, extraordinary or of a strategic nature.  The Board has established a nomination committee, consisting of three non-executive directors.  The Company has established a code of conduct to guide the directors, the Managing Director, the Finance Director  and other key executives as to:  establish, monitor and modify the corporate strategies of the Company; ensure proper corporate governance; monitor the performance of management of the Company; ensure that appropriate risk management systems, internal control and reporting systems and compliance  frameworks are in place and are operating effectively; monitor financial results; approve decisions concerning the capital, including capital restructures, and dividend policy of the Company; and comply with the reporting and other requirements of the law. (i)  the practices necessary to maintain confidence in the Company's integrity; and  (ii) the responsibility and accountability for individuals for reporting and investigating reports of unethical practices. 