The Company is committed to sound corporate governance practices designed to promote greater transparency, investor confidence and the ongoing development of the Company and its subsidiaries (the "Group"), having always as its ultimate objective, the best long term interest of the Group and the enhancement of value for all shareholders. The Company also believes that sound corporate governance practices benefit the Group's employees and the community in which the Group operates.
BOARD OF DIRECTORS (THE "BOARD")
Mr. Han Jingyuan (Chairman and Chief Executive Officer)
Mr. Zhu Jun (Executive Deputy General Manager and Chief Operating Officer)
Mr. Shen Xiaoling
Mr. Zhu Hao
Mr. Han Li
Independent Non-Executive Directors
Mr. Wong Man Chung, Francis
Mr. Wang Tianyi
Mr. Wang Bing
The composition of the Board is reviewed regularly to ensure that it has a good balance of expertise, skills and experience, which can meet the requirements of the business of the Group.
There is a clear division of responsibilities between the Board and the management. The Board is responsible for providing high-level guidance and effective oversight of the management while day-today management of the Group is delegated to the management team of each respective subsidiary. Generally speaking, the Board is responsible for:
Formulating the Group's long-term strategy and monitoring the implementation thereof;
Approval of dividends;
Reviewing and approving the interim and annual reports;
Ensuing good corporate governance and compliance;
Monitoring the performance of the management;
Reviewing and approving any material acquisition and disposal of assets and other material ransactions.
To the best knowledge of the Directors, there is no financial, business, family relationship among the Directors. All of them are free to exercise their independent judgment.
Independent Non-Executive Directors
Pursuant to Rules 3.10(1) and 3.10(2) of the Listing Rules, the Company has appointed three Independent Non-Executive Directors of whom Mr. Wong Man Chung, Francis has appropriate professional qualifications and experience in financial matters.
The Company has received, from each of the Independent Non-Executive Directors, an annual confirmation of their independence pursuant to Rule 3.13 of the Listing Rules. The Company considers all of the Independent Non-Executive Directors to be independent.
As an integral part of sound corporate governance, the Board has established the following committees whose authorities and functions, compositions and duties are set out below:
The Audit Committee has been established since 2005. It comprises three Independent Non-Executive Directors during the year under review in compliance with Rules 3.21 of the Listing Rules. The Audit Committee's term of reference includes those specific duties as set out in the code provision C.3.3 of the CG Code. Pursuant to its term of reference, the Audit Committee is required, amongst other things, to consider and recommend to the Board the appointment, re-appointment and removal of the external auditors and to approve their remuneration, to review the interim and annual financial statements, to review the Group's financial controls, internal controls and risk management system including the adequacy of resources, qualification and experience of staff of the accounting and financial reporting function and their training programmes and budget, and to consider any findings of major investigation of internal control matters as delegated by the Board or on its own initiative and management's response. The Audit Committee should meet at least twice each year and when the need arises.
Pursuant to Code Provision B.1.1 of the CG Code, a majority of the members of the Remuneration Committee should be Independent Non-Executive Directors. Currently, the Remuneration Committee consists of the Chairman of the Company and three Independent Non-Executive Directors.
The Remuneration Committee's term of reference includes those specific duties as set out in the Code Provision B.1.3 of the CG Code. Pursuant to its term of reference, the Remuneration Committee is required, amongst other things, to review and recommend to the Board the compensation packages of the Executive Directors, Non-Executive Directors and senior management, to review and approve performance based remuneration by reference to corporate goals and objectives resolved by the Board from time to time; to review and approve the compensation payable to Executive Directors, Non-Executive Directors and senior management in connection with any loss or termination of their office or appointment to ensure that such compensation is determined in accordance with relevant contractual terms and that such compensation is otherwise fair and not excessive for the Company; and to ensure that no Director is involved in deciding his/her own remuneration. The Remuneration Committee should meet at least once a year and when the need arises.
The Board recognizes that constant changes taking place in the business environment call for periodical reviews of the system of internal controls. Well-managed internal controls enable effective and efficient operations, ensure the reliability of internal and external reporting and assist in the compliance with applicable laws and regulations.
COMMUNICATION WITH SHAREHOLDERS
The Board recognizes that it has overall responsibility for the Group's system of internal controls and for reviewing its effectiveness. Pursuant to the Group's framework, senior management is primarily responsible for designing and implementing the policies and procedures of the internal controls, which the Board and the Audit Committee oversee the actions of senior management and monitor the effectiveness of the controls previously established.
The Company's internal audit function is performed by Internal Audit Department which reports to the Chief Operating Officer and the Chief Financial Officer and has direct access to the Chairman of the Audit Committee. The Chief Operating Officer and the Chief Financial Officer report directly to Chief Executive Officer. The internal audit functions include (i) review and report on internal and operational controls, (ii) follow-up on the suggestion made by external auditors, (iii) ongoing monitoring and reviews on different operating cycles; and (iv) special review of areas of concern identified by senior management.
However, internal control can only provide reasonable but not absolute assurance against errors or deliberate attempt to defraud the Company. The Board and the Audit Committee confirms to closely monitor the efficiency and effectiveness of the system of internal control of the Group. Periodical meetings will be held and guidance notes and training will be issued and provided to the senior management where appropriate, to ensure an efficient and effective system of internal control is in place.
The Board recognizes the importance of good communication with shareholders. Information in relation to the Group is disseminated to shareholders in a timely manner through a number of formal channels, which include interim and annual reports, announcements and circular.
The general meeting of the Company provides a forum for exchange of views between the shareholders and the Board. The Chairman of the Board, the Directors and senior management of the Group and where applicable, the Directors (including Independent Non-Executive Directors) are available to answer questions at the Shareholders' Meeting.