Antaria : Notice of Extraordinary General Meeting

cc6ede77-e457-4557-9967-ba6a54f17289.pdf

Notice of Extraordinary General Meeting

of

Antaria Limited ACN 079 845 855

To be held at:

Gambaro's Restaurant 33 Caxton St

Petrie Terrace Brisbane, Queensland

on 7 June 2016 at 10:00AM (Brisbane time)

This is an important document. If you are in any doubt about how to deal with this document, please consult your legal, financial or other professional adviser.

Chairman's letter to Shareholders

4 May 2016

Dear Shareholder

EGM

The Antaria Board invites all Shareholders to attend the Extraordinary General Meeting on 7 June 2016 at 10:00AM to be held at Gambaro's Restaurant, 33 Caxton Street Petrie Terrace.

• The Board is fully aware of the ASX Corporate Governance Council Principles and Recommendations, and the reasons behind them. However, as the ASX Corporate Governance Council ("Council") expressly recognises, different entities may legitimately adopt different governance practices, based on a range of factors, including their size, complexity, history and corporate culture. For that reason, the Principles and Recommendations are not mandatory and do not seek to prescribe the corporate governance practices that a listed entity must adopt.

• Under the ASX Principles and Recommendations, if the board of a listed entity considers that a recommendation is not appropriate to its particular circumstances, it is entitled not to adopt it. If it does so, the Board should explain why it has not adopted the recommendation - the "if not, why not" approach. In respect of Mr Acton's appointment as chair of the Audit Committee, the Board, considering all the circumstances at the time, determined

  that Mr Acton was the most appropriately qualified and suitable person to fill that role. Based on the financial resources of the Company, its small size, and coupled with the wealth of accounting and audit experience that Mr Acton brings to the Board it was determined by the Board that it was appropriate not to adopt the ASX Principles and Recommendations so far as having an Independent Chair of the Audit Committee is concerned.

  Related Party Transactions

  The attached Member's Statement refers to a potential related party transaction arising on the transition of Antaria from Perth to Brisbane. At this stage the Board is still considering the best solution for the Company and no decision about new premises has been made.

  The Board understands the legal requirements of approval regarding related party transactions. However, the law recognises that simply because a proposed transaction is with a related party it shouldn't preclude the transaction proceeding so long as certain matters are satisfied. Shareholders should be aware of the following:

• Rule 6.10 of the Company's constitution permits Directors to conduct business with the Company.

• Although the Corporations Act 2001 ("Corporations Act") requires public companies to obtain member approval to provide a financial benefit to a related party, this is subject to certain exceptions. In particular, where the benefit is given on arm's length terms. Whenever determining whether a benefit is on arm's length terms the Board rigorously scrutinises the transaction including, what other alternatives are available, the prevailing economic conditions and the reasonableness of transaction in the circumstances. Further, where the related party is a Director of the Company, that Director will be asked to leave the meeting while the other Directors consider and vote on the matter.

• The ASX Listing Rules also restrict Antaria from transacting with substantial shareholders, Directors and their respective associates (e.g. family members and entices they control) where the transaction involves the acquisition or disposal of a substantial asset from or to the related party. The asset will be considered "substantial" if it the value paid for it is 5% or more of the "equity interests" of Antaria. As at the date of this Notice, this equates to appropriately $200,000.

• Therefore if a transaction is on arm's length terms and less than circa $200,000, the Company is legally permitted to transact with a related party of the Company.

• As at the date of this Notice, the Company does not propose to enter into any arrangements with its Directors or their respective associates which is in breach of the related party restrictions imposed by the Corporations Act or the ASX Listing Rules.

  The previous Board under my guidance did a stellar job in stabilising the company and reversing the negative cash outflows. The current Board recognised that if we continued to operate in the same way in the same environment it was unlikely we would see any further improvements to Antaria's business.

  Therefore, the current Board has been extremely busy over the past few months with a range of operational initiatives that will benefit all shareholders. In particular;

• Reducing the number of paid directors which has saved Antaria in excess of $100,000 compared to 2015 Director fees.

• A further saving of $45,000 by combining the Company Secretary and Chair of Audit Committee roles with the election of Mr Acton.

• A review of accounting and audit functions undertaken by Mr Acton which will see an overall saving of approximately $80,000 for 2016-2017.

• The decision to close the Alusion facility in Perth in December. The current sales volumes from Merck KaAG are at such low levels that the renting of a separate facility including equipment, maintenance and operational costs is not economically viable for Antaria to continue. We will endeavor to seek the return of our licences and negotiate a suitable outcome with Merck in the coming months.

• We have identified a number of non-conforming distributor agreements and underperforming exclusive distributors. Mr Acton has developed a uniform Distributor Agreement which has been sent to all current distributors. Distributors who do not commit to minimum volumes will be non-exclusive and Antaria will seek new distributors for these territories. We expect this to have a positive increase to sales as we expand the distributor network previously tied up with exclusive agreements.

• I recently attended shows in Paris and Tokyo. The Board restructured the approach to these shows by using local sales staff and local formulators. This has achieved an increased number of customer leads whilst saving costs on the attendance of internal Antaria staff. At this show, I have established two exclusive distributor agreements with our largest customers to the end of 2017.

• Reviving R&D activities in two further areas where we have current patents. We have formed a partnership for one project with the University of Queensland which is currently in progress and we are witnessing significant cost and time savings instead of utilising internal Antaria employees to complete the research outcomes.

• We are undertaking a review of the patent register to identify further potential patents that may have commercial viability.

In Summary we agree with Mr Kearney that the current Board members are a very cohesive unit that work independently and together to achieve significant positive outcomes and value to shareholders. This is evidenced with their collective work on the successful Tamawood Board.

Mr Acton - (B.Com, ACA, GAICD) brings significant accounting and corporate experience to the Antaria Board and if not elected, these skills and experience would need to be obtained from external sources at significant cost to shareholders.

Mr Mizikovsky - (FAICD) major shareholder has come back onto the Board with no directors remuneration and without his sizeable capital contribution some years ago, Antaria may well have been unable to continue trading.

Myself - (B.Com, LLB, CPA) since becoming Chairman in 2012, Antaria has gone from a

$2.8million loss to a small profit in December 2015. I have achieved this result without any further capital needing to be raised. I have worked exceptionally long hours to turn around Antaria's performance without any extra remuneration beyond what I receive as Non-executive Chairman.