The Board is committed to the maintenance of good corporate governance practices and procedures. The Company believes that good corporate governance provides a framework that is essential for effective management, a healthy corporate culture, sustainable business growth and enhancing shareholders’ value.
The Company has adopted the Corporate Governance Code (the “CG Code”) as contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules") as its own code of corporate governance practices. The Company has complied with the applicable code provisions of the CG Code during FY2018, except for certain deviations as specified below.
Board of Directors
The Board currently comprises five executive Directors, namely Mr. Cheung Hoo Win (Chief Executive Officer), Mr. Ng Yiu Chuen, Ms. Mak Kit Ping, Ms. Zhang Yuyan and Ms. Chen Lili and five independent non-executive Directors (the “INEDs”), namely Mr. Zhao Qingji (Chairman), Mr. Yeung Shun Kee, Mr. Li Hancheng, Mr. Lo Tsz Fung Philip and Mr. Lee Kwok Yin Denthur. The Directors believe that the composition of the Board has a balance of skills and experience that is appropriate for the requirements of the business of the Group.
As half of the Board members are INEDs, there is a strong independent element within the Board, which can effectively exercise independent judgment and monitor the corporate governance of the Group. All INEDs are appointed for a specific term of two years and each of them has made a confirmation on independency. After reviewing their confirmations on independency, the Company believes that they are still independent under Rule 3.13 of the Listing Rules.
During FY2018, seven Board meetings (including four regular Board meetings to which 14 days’ notice was given to all Directors) and one general meeting of the Company were held. Details of the Directors’ attendance records during FY2018 are as follows:
|Number of board||Number of general|
|meetings attended||meetings attended|
|Mr. Cheung Hoo Win (Chief Executive Officer)||7/7||1/1|
|Mr. Ng Yiu Chuen||6/7||0/1|
|Ms. Mak Kit Ping||7/7||1/1|
|Ms. Zhang Yuyan||7/7||0/1|
|Ms. Chen Lili||5/7||0/1|
|Independent Non-Executive Directors|
|Mr. Zhao Qingji (Chairman)||6/7||0/1|
|Mr. Yeung Shun Kee||7/7||0/1|
|Mr. Li Hancheng||7/7||1/1|
|Mr. Lo Tsz Fung Philip||7/7||1/1|
|Mr. Lee Kwok Yin Denthur||7/7||1/1|
According to the code provision A.6.7 of the CG Code, INEDs should attend general meetings of the Company, and according to E.1.2, the Chairman of the Board should attend the annual general meeting of the Company. Due to their other business commitments, during FY2018, two INEDs, one of whom is the Chairman of the Board, were unable to attend the annual general meeting of the Company held during FY2018.
Functions of the Board
To avoid concentration of power in any one individual, a clear division of responsibilities between the Chairman and the Chief Executive Officer is crucial to the effective running of the Board and the day-to-day management of the Group’s businesses. The positions of the Chairman and the Chief Executive Officer of the Company are held by two different Directors, namely Mr. Zhao Qingji and Mr. Cheung Hoo Win. Their roles and duties are segregated with a clear division of responsibilities.
The Board meets regularly to discuss the overall strategy as well as the operation and business performance of the Group, and to approve the Group’s annual and interim results and other matters which need to be dealt with. The Board has delegated the day-to-day responsibilities to the management through the operation manuals which are reviewed from time to time to ensure that they meet the requirements of the Group’s business development.
To ensure that the Directors’ contribution to the Board remains informed and relevant, all Directors have participated in continuous professional development activities that are relevant to their performance of duties as Directors. According to the training records provided by the Directors, Ms. Mak Kit Ping, Ms. Zhang Yuyan, Ms. Chen Lili, Mr. Yeung Shun Kee and Mr. Lo Tsz Fung Philip have also attended training courses, seminars or conferences to develop and refresh their knowledge and skills. In FY2018, certain materials on legislative and regulatory updates were circulated to the Directors for them to update themselves on changes of regulations. In addition, the Group has in place a continued learning sponsorship scheme to sponsor the members of the Group including the Directors for their continuous professional development.
The Board is also responsible for performing the corporate governance duties as required under the CG Code. The major roles and functions of the Board in respect of corporate governance are:
- to develop and review the Company’s policies and practices on corporate governance;
- to review and monitor the training and continuous professional development of the Directors and senior management;
- to review and monitor the Company’s policies and practices on compliance with legal and regulatory requirements;
- to develop, review and monitor the code of conduct and compliance manual applicable to the employees and Directors; and
- to review the Company’s compliance with the CG Code and disclosure in this Corporate Governance Report.
In FY2018 and up to the date of this report, the Board has performed the corporate governance duties in accordance with its terms of reference.
Board Diversity Policy
The Board has adopted a board diversity policy which sets out its approach to achieving diversity on the Board. The Company recognizes that increasing the diversity at the Board level will support the attainment of the Company’s strategic objectives and sustainable development.
Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, cultural and educational background, professional experience, skills, knowledge and length of service. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board while taking into account diversity.
The Company has an Audit Committee comprising all INEDs. The principal duties of the Audit Committee are to review the Group’s interim and annual results, internal controls and make recommendations to the Board. The detailed terms of reference of the Audit Committee are available for inspection on the websites of the Company and the Stock Exchange respectively.
Three Audit Committee meetings were held in FY2018. The attendance of each member of the Audit Committee is set out as follows:
|Members of Audit Committee||meetings attended|
|Mr. Lo Tsz Fung Philip (Chairman)||3/3|
|Mr. Zhao Qingji||2/3|
|Mr. Yeung Shun Kee||3/3|
|Mr. Li Hancheng||3/3|
|Mr. Lee Kwok Yin Denthur||3/3|
The Audit Committee had performed the following work in FY2018:
- considered the change of auditors and reviewed and approved the audit scope and fee proposed by the external auditor for the annual audit for FY2018;
- discussed with the external auditor any major audit issues of the Group;
- reviewed the change in accounting standards and assessment of potential impacts on the Group’s consolidated financial statements;
- reviewed and recommended for the Board’s approval of the consolidated financial statements and the related draft results announcement for the year ended 31 March 2017;
- reviewed and recommended for the Board’s approval of the consolidated financial statements and the related draft results announcement for the six months ended 30 September 2017;
- reviewed the effectiveness of the internal control system and the risk management of the Group; and
- reviewed the adequacy of the resources, qualifications and experience of the staff from the Group’s accounting and financial reporting function, and their training programmes and budget;
The Company has a Remuneration Committee comprising all INEDs. The Remuneration Committee’s principal duties are to make recommendations to the Board on the remuneration policy and structure for the Directors and senior management and to ensure that they are fairly rewarded for their individual contribution to the Group’s overall performance. It is also the Remuneration Committee’s duty to determine the specific remuneration packages of all executive Directors and senior management. The detailed terms of reference of the Remuneration Committee are available for inspection on the websites of the Company and the Stock Exchange respectively.
Two Remuneration Committee meetings were held in FY2018. The attendance of each member of the Remuneration Committee is set out as follows:
|Members of Remuneration Committee||attended|
|Mr. Yeung Shun Kee (Chairman)||2/2|
|Mr. Zhao Qingji||2/2|
|Mr. Li Hancheng||2/2|
|Mr. Lo Tsz Fung Philip||2/2|
|Mr. Lee Kwok Yin Denthur||2/2|
The Remuneration Committee had performed the following work in FY2018:
- reviewed and approved the renewal of service agreement with INEDs and the adjustment to the salary of executive Directors; and
- reviewed and determined the payment of bonus to certain executive Directors and senior management.
Pursuant to the code provision of B.1.5 of the CG Code, details of the annual remuneration of the members of senior management by band for FY2018 is as follows:
|HK$400,000 to HK$700,000||2|
|HK$700,001 to HK$1,000,000||3|
The Company has set up a Nomination Committee comprising all INEDs. The Nomination Committee shall make recommendations to the Board on all new appointments or re-appointments of Directors. The selection criteria are mainly based on the professional qualifications and work experience of the candidates as well as the diversity policy adopted by the Board. There are no fixed terms of services for executive Directors while INEDs are engaged for a term of two years, subject to retirement by rotation and re-election in accordance with the provisions of the Bye-Laws of the Company. The detailed terms of reference of the Nomination Committee are available for inspection on the websites of the Company and the Stock Exchange respectively.
One Nomination Committee meeting was held in FY2018. The attendance of each member of the Nomination Committee is set out as follows:
|Members of Nomination Committee||attended|
|Mr. Li Hancheng (Chairman)||1/1|
|Mr. Zhao Qingji||1/1|
|Mr. Yeung Shun Kee||1/1|
|Mr. Lo Tsz Fung Philip||1/1|
|Mr. Lee Kwok Yin Denthur||1/1|
The Nomination Committee had performed the following work in FY2018:
- reviewed the structure, size and composition of the Board to ensure they were suitable for the Group’s corporate strategy and development;
- reviewed and recommended for the Board’s approval the proposed resolutions for re-election of the retiring Directors at the 2017 AGM;
- assessed the independence of the INEDs; and
- reviewed the Board diversity policy.
Directors’ Securities Transactions
The Board has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (the “Model Code”) as its own code for securities transactions by Directors. All members of the Board have confirmed, following specific enquiry by the Company, that they have complied with the required standard as set out in the Model Code in FY2018.
For FY2018, the remuneration paid or payable in respect of statutory audit, interim results review and internal control review by the external auditors of the Company were approximately HK$800,000, HK$180,000 and HK$95,000 respectively.
Convening a Special General Meeting of the Company by Shareholders
In accordance with the Company’s Bye-Laws 62, as provided by the Companies Act, a special general meeting can be convened on the requisition of shareholders holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company as at the date of the deposit carries the right of voting at general meetings of the Company. Such requisition must state the purposes of the meeting, and must be signed by the requisitionists and deposited at the registered office of the Company.
Procedures for Sending Enquiries to the Board
Enquiries by shareholders to be put to the Board can be sent in writing to the Directors or Company Secretary at the principal place of business in Hong Kong. The shareholders may make any enquiry about the Company through the following hotlines:
- Telephone : (852) 2959 7200
- Facsimile : (852) 2310 4824
- E-mail address : email@example.com
For share registration related matters, such as share transfer and registration, change of name or address, loss of share certificates or dividend warrants, the Company’s registered shareholders can contact the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited.
Procedures for Making Proposals at Shareholders’ Meetings
If a shareholder of the Company wishes to nominate a person to stand for election as a Director, the following documents must be validly sent to the Company’s principal place of business in Hong Kong namely (i) his/her notice of intention to propose a resolution at the general meeting; and (ii) a notice executed by the nominated candidate of the candidate’s willingness to be appointed. The period for lodgment of the notices of (i) and (ii) above will commence no earlier than the day after the despatch of the notice of the general meeting and end no later than seven days prior to the date of such meeting.
To put forward proposals other than the above at a general meeting, shareholders of the Company should submit a written notice of those proposals with their detailed contact information to the Company Secretary at the Company’s principal place of business in Hong Kong. The notice period to be given to all the shareholders for consideration of the proposal raised by the shareholders concerned at general meetings varies according to the nature of the proposal.
Shareholders and Investors Relations
The Board adopts an open and transparent communication policy and ensures that there is full disclosure to the public as a way to enhance corporate governance. The Board aims to provide the Company’s shareholders and the public with the necessary information for them to form their own judgment on the Company. Corporate communication materials such as annual reports, interim reports and circulars are issued in printed form and are also available in electronic format on the websites of the Company, the Stock Exchange and irasia.com. There were no significant changes in the Company’s constitutional documents for FY2018.
Accountability and Audit
The Board acknowledges its responsibility for the preparation of the financial statements for each financial period, which shall give a true and fair view of the state of affairs of the Company. During FY2018, the Board was not aware of any material uncertainties relating to events or conditions that might cast significant doubt upon the Company’s ability to continue in business. Accordingly, the Board has prepared the financial statements of the Company on a going concern basis.
All of the Directors acknowledged their responsibility for preparing the financial statements of the Company for FY2018.
The statement of the external auditor of the Company about their reporting responsibilities on the consolidated financial statements of the Group is set out in the Independent Auditor’s Report on pages 49 to 55 of this annual report.
The Company announces its interim and annual results as soon as reasonably practicable after the end of the relevant financial period and the financial year respectively pursuant to the requirements of the Listing Rules, disclosing all such information as would enable the Company’s shareholders to assess the performance, financial position and prospects of the Company.
Risk Management and Internal Control
The Board also acknowledges its responsibility for overseeing the Group's risk management and internal controls on an ongoing basis and reviewing their effectiveness at least annually. The management continues to allocate resources for the risk management and internal control systems to provide reasonable, though not absolute, assurance against misstatement or loss and to manage rather than eliminate the risk of failure to achieve business objectives.
Risks associated to the business activities of the Group are identified and evaluated by each operating unit. The identified risks together with their control measures will be reported to the Audit Committee and the Board for approval. The Audit Committee and the Board would regularly review the risk factors and their control measures to respond to the changes in its businesses and the external environments.
The Board, through the Audit Committee, has delegated the internal audit function to an independent external assurance provider, who has conducted a review on the adequacy and effectiveness of the Group's risk management and internal control systems for FY2018.
A risk-based approach is adopted for the internal audit of the Group. The annual work plan covers the major activities and process of the Group's operation, business and service segments and corporate governance. The results of these audit activities were communicated to the Audit Committee and will be followed up for proper implementation.
Based on the report from the outsourced internal auditor, the Board considers the Group's internal control and risk management systems adequate and effective.
The Audit Committee has discussed with the management about the adequacy of the resources, staff qualifications and experience, training programmes on the Group's accounting, financial reporting and internal control functions.
Handling and Dissemination of Inside Information
The Group had, from time to time, reminded the management of the requirements of the Listing Rules and guidelines on the inside information issued by the Stock Exchange and the SFC. The blackout notice period and Model Code are sent to the Directors regularly to arouse their awareness to preserve the confidentiality of inside information. Inside information (if any) is only disseminated to specified persons on a need-to-know basis.
- On behalf of the Board
- Cheung Hoo Win
- Chief Executive Officer
- Hong Kong, 28 June 2018