Responsibility and governance


I. Purpose

The corporate governance committee (the “Committee”) is a committee of the board of directors (the “Board”) of Caspian Energy Inc. (the “Corporation”), appointed by the Board to assist it in fulfilling its responsibilities relating to the enhancement of governance. In fulfilling its responsibilities, the Committee shall have the specific duties set out in Part IV of this Charter.

II. Composition and Meetings

The Committee shall be comprised of at least three directors of the Corporation (“Directors”), all of whom shall satisfy the applicable independence and experience requirements (or recommendations, as the case may be, to the extent desirable by the Board) of the laws governing the Corporation, the stock exchanges on which the Corporation’s securities are listed and the applicable securities regulatory authorities. Each member will have, to the satisfaction of the Board, sufficient skills and experience which are relevant and will contribute to the carrying out of the mandate of the Committee.

The members of the Committee shall serve at the pleasure of the Board for such term or terms as the Board may determine. The Board may remove a member of the Committee at any time in its sole discretion by resolution of the Board. Unless a chairman is elected by the Board, the members of the Committee may designate a chairman by majority vote of the full membership of the Committee.

The Committee shall meet at least twice per annum or more frequently as circumstances require. The Committee may ask any Director, member of management of the Corporation, outside counsel of the Corporation or others to attend a meeting of the Committee or to meet with members of, or advisors to, the Committee and to provide pertinent information as necessary. The Committee may retain the services of outside compensation specialists to the extent required.

Quorum for the transaction of business at any meeting of the Committee shall be the presence in person or by telephone or other communication equipment of a majority of the number of members of the Committee or such greater number as the Committee shall by resolution determine. If within one hour of the time appointed for a meeting of the Committee, a quorum is not present, the meeting shall stand adjourned to the same hour on the next business day following the date of such meeting at the same place. If at the adjourned meeting a quorum as hereinbefore specified is not present within one hour of the time appointed for such adjourned meeting, such meeting shall stand adjourned to the same hour on the second business day following the date of such meeting at the same place. If at the second adjourned meeting a quorum as hereinbefore specified is not present, the quorum for the adjourned meeting shall consist of the members then present.

If and whenever a vacancy shall exist, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.

Meetings of the Committee shall be held from time to time and at such place as the Committee or the chairman of the Committee shall determine upon not less than 48 hours notice to each of the members, provided that notice of a meeting shall not be required if all members are present either in person or by telephone conference or if those members who are absent have waived notice or otherwise signified their consent to the holding of the meeting. A notice of a meeting of the Committee may be given verbally, in writing or by telephone, facsimile, e-mail or other means of communication, and need not specify the purpose of the meeting.

Each of the chairman of the Committee or any member of the Committee shall be entitled to request that the chairman of the Committee call a meeting which shall be held within 72 hours of receipt of such request.

The Committee shall keep minutes of its meetings which shall be submitted to the Board. The Committee may, from time to time, appoint any person who need not be a member, to act as secretary at any meeting.

All decisions of the Committee will require the vote of a majority of its members present at a meeting at which a quorum is present. Actions of the Committee may be taken by an instrument or instruments in writing signed by all of the members of the Committee, and such actions shall be effective as though they had been decided by a majority of votes cast at a meeting of the Committee called for such purpose. Such instruments in writing may be signed in counterparts and by facsimile, each of which shall be deemed to be an original and all originals together shall be deemed to be one and the same instrument.

III. Authority of the committee

The Committee has the authority to engage and compensate any outside advisors that it determines to be necessary to permit it to carry out its duties and to conduct or authorize investigations into any matters within the scope of its responsibilities. The Committee may create one or more subcommittees and may delegate, in whole or in part, its duties and responsibilities to such subcommittees or to individual members of the Committee.

Responsibilities and duties

To fulfill its responsibilities and duties, Committee shall:

General Responsibilities

1.   Review and assess this Charter, at least annually, and submit any proposed changes to the Board for approval.
2.   Review and evaluate, at least annually, the performance of the Committee and its members, including reviewing the compliance of the Committee with this Charter.
3.   Report regularly to the Board with respect to such matters as are relevant to the Committee’s discharge of its responsibilities and with respect to such recommendations as the Committee may deem appropriate, and provide a copy of the minutes of each meeting of the Committee to the Secretary of the Corporation for inclusion in the Corporation’s minute books.

Governance Responsibilities

4.   Facilitate the independent functioning of the Board and maintain an effective relationship between the Board and management of the Corporation.
5.   Develop and recommend to the Board corporate governance guidelines for the Corporation, periodically review and reassess the adequacy of the Corporation's guidelines and recommend any proposed changes to the Board for approval.
6.   Keep up to date with regulatory requirements and other new developments in governance.
7.   Annually review performance and qualification of existing Directors in connection with their re-election.
8.   Lead an annual review of the Board, including an assessment of the composition and effectiveness of the Board, as a whole (including the appropriateness of its size), and the committees of the Board, and the contribution and effectiveness of individual Directors, and report its assessment to the Board following the end of each fiscal year.
9.   Consider and make available continuing education opportunities for all Directors so that they may maintain or enhance their skills and abilities as directors of the Corporation and ensure their knowledge and understanding of the Corporation's business remains current.
10.   Ensure that disclosure and securities compliance policies, including the Corporation's Disclosure Policy/Share Dealing Code, are in place and that such policies are reviewed annually.
11.   Monitor compliance with the Corporation's Code of Business Conduct and Ethics and its Disclosure Policy/Share Dealing Code.
12.   Assess shareholder proposals as necessary for the Corporation's management information circular and make appropriate recommendations to the Board.

Dated : June 27, 2005.