CODE OF CONDUCT

Introduction

Under the ASX Listing Rule 4.10, companies are required to disclose in their Annual Report the extent to which they have followed the best practice recommendations of the ASX Corporate Governance Council.

Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the Company are achieved, how risk is monitored and assessed, and how performance is optimised.

Good corporate governance structures encourage companies to create value and provide accountability and control systems commensurate with the risks involved.

Brainytoys Limited’s Policy

Ethical Standards

The Board subscribes to the Code of Conduct as published by the Institute of Company Directors. This Code of Conduct has been communicated to all staff and consultants.

All employees (including Directors and consultants) are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

Code of Conduct:

* All employees must act honestly, in good faith and in the best interests of the Company as a whole.
* All employees have a duty to use due care and diligence in fulfilling the functions of their office and exercising the powers attached to that office.
* All employees must use the powers of office for a proper purpose, in the best interests of the Company as a whole.
* All employees must recognise that their primary responsibility is to the Company’s shareholders.
* All employees must not make improper use of information acquired as an employee.
* All employees must not take improper advantage of their position.
* All employees must not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company.
* All employees have an obligation to be independent in judgement and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken.
* Confidential information received by employees in the course of the exercise of their duties remains the property of the Company from which it was obtained; it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law.
* All employees should not engage in conduct likely to bring discredit upon the Company.
* All employees have an obligation, at all times, to comply with the spirit as well as the letter of the law, and with the principles of this Code.
* All employees are encouraged to report, to their appropriate supervisor, instances of unlawful or non ethical behaviour by others.

Trading Policy

Directors – No trading in Brainytoys shares is allowed in the period 10 days before the release of any result, and a clearance from the Board is required at all times before any trading is allowed.

Senior Management and Consultants – No trading in Brainytoys shares is allowed in the period 10 days before the release of any information and a clearance is required at all times from the Board before any trading is allowed.

All employees have been made aware of the insider trading provisions of the Corporations Act (2001).