Board of Directors Mandate

MANDATE:
The Board of Directors (“Board”) is responsible for the stewardship of Diversinet Corp. (the “Company”), and ensuring that the Company is appropriately meeting the needs of all of its stakeholders so that short-term and long-term value to its shareholders is achieved.

BOARD COMPOSITION:
The Board shall be comprised of five or more directors, the specific number to be set from time to time by the Board within the minimum and maximum numbers approved annually by the shareholders.  The directors shall be elected by the shareholders, except as permitted by the Ontario Business Corporations Act.  A majority of the members of the Board shall be independent and unrelated, free from any direct or indirect relationship that, in the opinion of the Board, interferes with the exercise of a director’s independent judgement.  The Board shall annually, in consultation with the Governance Committee and in connection with the Company’s annual disclosure regarding corporate governance, determine which directors are “unrelated” and “independent” and provide a summary of the analysis supporting the conclusion.  In making such determination of independence, the Board shall take into account any rules or guidance provided by the applicable securities regulators and stock exchanges.

Where a vacancy arises on the Board, the Board shall determine the appropriate person to fill such vacancy, taking into account the recommendations of the Governance Committee.  Alternatively, where such vacancy results from the resignation or departure of a Board member, the Board may decide to reduce the size of the Board.

The Board appoints all the corporate officers including the Chairman and the Secretary.  The Chairman shall be designated from among the members of the Board.

MEETINGS AND BOARD PROCESS:
The Board shall meet at least six times per year, once after each quarter and twice (semi-annually) to deal with the business plan.  In addition, the Board will meet more frequently as circumstances dictate.  Board meetings will provide, or allow for, independent discussions and input from all Board members.  Board and Board Committee liaison with the Company will be principally through the Chief Executive Officer, and through the Secretary.  The Board may, from time to time, delegate or assign specific duties, tasks or authority to individuals or committees.

To assist the Board with respect to board membership, structure, organization and compensation, and to assist the Board in developing appropriate systems and procedures to enable the Board to exercise and discharge its responsibilities, a Governance Committee has been established.
To assist the Board with respect to matters relating to financial reporting and financial controls, internal and disclosure controls, the external auditor, financial and other risk, and compliance with corporate statutes, an Audit Committee, has been established.
To assist the Board with respect to matters relating to organizational structure, management development, succession planning, compensation design, and performance evaluation, a Compensation Committee has been established.
To assist the Board with respect to matters relating to reviewing and assessing, and assist the Board in reviewing and assessing, potential acquisitions, strategic investments, divestitures and the sale of control of the Company, a Mergers and Acquisitions Committee may be established.  Committee members will not include any person or company who beneficially owns (directly or indirectly) more than 10% of any class of the Company’s equity securities.

Each of the Governance, Compensation and Audit Committees currently operate under a written charter document approved by the Board.  

The Board has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and has direct access to the books, records, facilities and personnel of the organization.  The Board has the ability to retain, at the Company’s expense, special legal, accounting or other consultants or experts it deems necessary in the performance of its duties.

PRIME RESPONSIBILITIES:
Stewardship:  The Board has oversight responsibility to participate directly, and through its committees, in reviewing, questioning and approving the mission of the business and its objectives and goals.  The Board is responsible for adopting a strategic planning process and approving and reviewing, on at least an annual basis, the business, financial and strategic plans by which it is proposed that the Company may reach those goals, and such strategic plans will take into account, among other things, the opportunities and risk of the business.  The Board has the responsibility to provide input to management on emerging trends and issues and on strategic plans, objectives and goals that management develops.

Ensure management of the highest calibre is appointed, trained and assessed and that an adequate succession plan is in place.  Ensure the Company communicates in a timely, reliable and effective manner with its shareholders, other stakeholders and the public generally.  Ensure the integrity and effectiveness of corporate internal control and management information systems.

Appointment of Management:  1. The Board has the responsibility for approving the appointment of Chief Executive Officer (CEO) and all other officers of the Company and approving the compensation of the CEO, following a review of the recommendations of the Compensation Committee.  To the extent feasible, the Board shall satisfy itself as to the integrity of the CEO and other executive officers and ensure that the CEO and other executive officers create a culture of integrity throughout the Company.

2. The Board from time to time delegates to senior management the authority to enter into certain types of transactions, including financial transactions, subject to specified limits.  Investments and other expenditures above the specified limits, and material transactions outside the ordinary course of business are reviewed by and subject to the prior approval of the Board.

3. The Board oversees that succession planning programs are in place, including programs to appoint, train, develop and monitor management.

Board Constitution: Consider and determine the most appropriate and effective Board for Diversinet Corp. while taking into consideration member relationships, independence, size and the issue of director liability.  Consider and implement a process for nominating, orienting, assessing and remunerating board members.

Board Organization: Consider and determine the position, responsibilities, appointment, assessment and remuneration of the Chairman.  With a view to board duties, responsibilities and composition consider the regulatory and discretionary committees required.  Consider and determine the working formats and processes under which the Board and Committees will operate.

Code of Conduct: Consider and monitor corporate ethics and policy as developed by management, in order to ensure the Company’s business is conducted in accordance with high ethical standards and in compliance with applicable laws and regulations.

Orientation and Continuing Education:  The Board is responsible for:

ensuring that all new directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual directors are expected to make (including the commitment of time and resources that the Company expects from its directors) and that they understand the nature and operation of the Company’s business; and
providing continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure that their knowledge and understanding of the Company’s business remains current.

Nomination of Directors:  In connection with the nomination or appointment of individuals as directors, the Board is responsible for:

considering what competencies and skills the Board, as a whole, should possess;
assessing what competencies and skills each existing director possesses; and
considering the appropriate size of the Board, with a view to facilitating effective decision making.

In carrying out each of these responsibilities, the Board will consider the advice and input of the Governance Committee.  Director nominees shall be selected by a majority of the directors and approved by the shareholders at the Annual General Meeting.

Board Evaluation:  The Board is responsible for ensuring that the Board, its committee and each individual director are regularly assessed regarding his, her or its effectiveness and contribution. An assessment will consider, in the case of the Board or a Board committee, its mandate or charter and in the case of an individual director, any applicable position description, as well as the competencies and skills each individual director is expected to bring to the Board.

Annual Review:  The Governance Committee shall review and reassess the adequacy of this Mandate at least annually and recommend changes to the Board, as necessary.  The Governance Committee will ensure that this Mandate or a summary that has been approved by the Board is disclosed in accordance with all applicable securities laws or regulatory requirements in the Company’s annual management information circular or such other annual filing as may be permitted or required by applicable securities regulatory authorities.

SPECIFIC BOARD FUNCTIONS, RESPONSIBILITIES AND DUTIES:
Board Operation

Maintain an awareness of the overall responsibilities and functions of a Board of Directors.
Review and reassess the adequacy of this Mandate at least annually and submit any recommended changes in the Mandate to the Governance Committee of the Board.
Annually assess the effectiveness of the Board against its Mandate.
Evaluate the effectiveness of the Board as a whole and ensure that appropriate succession plans are in place.
Review and approve the reports and/or minutes of the Committees.
Evaluate the areas of exposure to corporate, director and officer liability and consider minimizing the risks.

Shareholder Interests

Refer to the shareholders all matters requiring their approval.
Consider the best interest of other stakeholders generally.

Operational Matters

Appoint officers and approve their compensation.  The responsibility to recommend annual compensation for officers other than the President and Chief Executive Officer for Board approval is delegated to the Compensation Committee.
Ensure that a proper strategic planning process is employed by the Company.
Review and approve corporate goals, objectives, strategies, business plans and performance on an annual basis.  Ensure that there is a balance between long and short-term goals as well as long and short-term risk.
Review performance relative to the Business Plan (sales targets, marketing plans, development plans, and guidelines for contract terms and conditions) on at least an annual basis.
Review and approve the investment in and allocation of all human and capital resources.
Review and approve all business acquisitions, joint ventures, divestitures and dividend payments.
Review and approve the capital expenditure procedure and those requests that exceed management’s approval limit thereunder.
Review and approve company banking resolutions.
Review and approve any changes in the issued shares.

Financial and Public Reporting

Review accounting policies, internal control and audit procedures.
Review and approve the Information Circular for the annual meeting of shareholders.
Review and approve the quarterly and annual reports to shareholders, including the audited consolidated financial statements and related notes and Management’s Discussion and Analysis statements.  The responsibility for reviewing and recommending approval of the quarterly and annual reports and related notes and Management’s Discussion and Analysis statements is delegated to the Audit Committee.
Recommend the appointment of auditors to the shareholders and affix their remuneration as directed by the shareholders.  The approval of audit fees is delegated to the Audit Committee.

General

Provide advice to management.

The Board shall also undertake any other task assigned by operation of law from time to time.