corporAte goVernAnce 

## independence of tHe BoArd 

ARC’s board comprises nine members, all of whom are “independent” directors, except for the Chief Executive Officer. ARC uses the definition of independence as defined in nI 58-101 that states that a director is independent if the member has no direct or indirect material relationship with the company. A material relationship means a relationship that could, in the opinion of the board of directors, reasonably interfere with the exercise of a member’s independent judgement. 

The Board has determined that none of the directors who serve on its committees has a material relationship with ARC that could reasonably be expected to interfere with the exercise of a director’s independent judgment. Both the Chairman of the Board and the vice-Chairman are independent directors. They are responsible for managing the affairs of the Board and its committees, including ensuring the Board is organized properly, functions effectively and independently of management and meets its obligations and responsibilities. 

## MAndAte of tHe BoArd 

The Board of Directors of ARC sees its primary role as the stewardship of ARC and for overseeing the management of the business and affairs of ARC, with the goal of achieving ARC’s fundamental objective of providing long-term superior returns to shareholders. The Board oversees the conduct of the business and management through a number of activities, including its review and approval of strategic, operating, capital and financial plans; succession planning for senior officers and the appointment and performance review of the Chief Executive Officer. The full mandate of the Board and its committees is available on our website at www.arcresources.com. 

## coMMittees of tHe BoArd 

The Board has established an Audit Committee, a Reserves Committee, a Human Resources and Compensation Committee, a Policy and Board governance Committee, a Health, Safety and Environmental Committee and a Risk Committee to assist it in the discharge of its duties and responsibilities. All of the committees comprise of independent directors and report to the Board of Directors of ARC. 

## Audit coMMittee 

MeMbeRs:  Fred Dyment (Chair), Walter DeBoni, James Houck and Kathleen O’neill. 

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the integrity and completeness of the annual and quarterly financial statements and accompanying management discussion and analysis provided to shareholders and regulatory bodies; compliance with accounting and finance based legal and regulatory requirements; review of the independence and performance of the external auditor, internal accounting systems and procedures. The committee reviews the audit plans of the external auditors and meets with them at the time of each committee meeting, independently of management. 

There were six meetings of the committee in 2010. 

ARC is committed to the highest standards for its governance practices and procedures. ARC’s governance practices are routinely reviewed, appraised and modified to ensure that they are appropriate for a corporation of ARC’ s size and sta ture.  ARC’s a pproach to corporate governance meets the guidelines established by the Canadian Securities Administrators (CSA) as laid out in national Instrument 58-101. 

