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Corporate Governance Practice
The Company has complied throughout the year with the Provisions of the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules, except for the following deviations.
Code Provision A.2.1 — This Code Provision stipulates that the roles of Chairman and Chief Executive Officer should be separated and should not be performed by the same individual. The division of responsibilities between the Chairman and Chief Executive Officer should be clearly established and set out in writing.
During the reporting period, Mr. Kong Qingping, the Company’s Chairman, decided not to concurrently act as the Chief Executive Officer so as to enhance the corporate governance standards of the Company. On the recommendation of the Nomination Committee, the Board of Directors appointed Mr. Hao Jian Min, the Company’s Vice Chairman, to fill the vacancy of Chief Executive Officer with effect from 1 June 2007. Thereafter, the Company has fully complied with the Code Provision A.2.1 set out in Appendix 14 to the Listing Rules as the roles of Chairman and Chief Executive Officer of the Company have been separated and
performed by different individuals.
Code Provision A.4.1 — This Code Provision stipulates that non-executive directors should be appointed for a specific term, subject to re-election.
Code Provision A.4.2 — This Code Provision stipulates that all directors appointed to fill a casual vacancy should be subject to election by shareholders at the first general meeting after their appointment. Every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years.
The Articles of Association of the Company (“Articles”) stipulates that any director appointed to fill a casual vacancy shall hold office only until the next following Annual General Meeting (“AGM”) of the Company and shall then be eligible for re-election, but shall not be taken into account in determining the directors who are to retire by rotation at such meeting. The Articles further stipulates that at each AGM, one-third of the directors for the time being or, if their number is not three or a multiple of three, then the number nearest one-third, shall retire from office, provided that no director holding office as Executive Chairman or as Managing Director shall be subject to retirement by rotation or taken into account in determining the number of directors to retire.
Though the Independent Non-executive Directors of the Company have not been appointed for a specific term, they are subject to retirement and re-election in accordance with the Articles.
To comply with Code Provisions A.4.1 and A.4.2, an internal mechanism has been established by the Company whereby (1) the newly appointed director will retire and be eligible for re-election at the next following AGM or the extraordinary general meeting held before the next following AGM; and (2) any director, including Executive Chairman or Managing Director, who is not required to retire by rotation at the AGM in the third year since his appointment or last election, will be reminded to retire from office voluntarily.
The Board of Directors
The Board convenes meetings on a regular basis. The date of each meeting is decided in advance and notice of at least 14 days is given so that most of the directors entitled to attend the meetings have the chance to attend such meetings in person and have sufficient time to propose matters for inclusion in the agenda. To ensure that all directors are properly informed on matters to be discussed at each meeting, documents in relation to the meeting are sent to each director at least three days prior to the meeting.
All directors have access to the Company Secretary and are entitled to secretarial services so as to ensure full compliance with the procedures of Board meetings and all applicable rules. If the relevant corporate governance regulations have been changed, the Company Secretary will keep the Board updated of such changes.
Minutes of meetings of the Board and the subordinate committees are prepared and maintained by the Company Secretary. Drafts of the minutes of the meeting are sent to the directors who have attended the meeting for their comments within a reasonable time after each meeting, while the final version is filed for
records. Minutes of meetings of the Board and the subordinate committees are available for inspection by all directors. In order to perform their duties, the directors are entitled to seek independent professional advice through the Chairman, at the Company’s expense. If a significant shareholder or director has an interest in a matter to be considered at a Board meeting, the Board will ensure that an adequate number of independent directors are involved in the consideration of the relevant resolutions, and the interested director will abstain from voting.
Details of the Chairman, Executive Directors and Independent Non-executive Directors are set out in the section headed “Directors and Organisation” in the annual report. From 1 June 2007, the roles of Chairman and Chief Executive Officer of the Company have been separated and performed respectively by Mr. Kong Qingping and Mr. Hao Jian Min. Apart from formal Board meetings, the Chairman of the Board and individual directors meet regularly outside formal Board meetings and through these informal meetings together with the formal meetings the Chairman is continuously made aware of the views of the individual directors and can act where necessary to deal with any issues relating to Board effectiveness.
All Executive Directors of the Company have extensive and longstanding management experience while the Company is also confident that the expertise and experience of each Independent Non-executive Director are beneficial for affairs of the Company.
Securities Transactions by Directors
The Company has adopted a Code of Conduct on Directors’ Securities Transactions (the “Securities Code”) on terms no less exacting than the required standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 of the Listing Rules. The directors confirmed that they have complied with the requirements set out in the Securities Code for the year ended 31 December 2007.
Internal Control
The directors of the Company are responsible for the maintenance of an effective system of internal control. The Board conducted periodic reviews of the Group’s internal control system for the year ended 31 December 2007, including financial, operational and compliance control, and risk management functions.
In compliance with the Code on Corporate Governance Practices, the Board continuously reviews the effectiveness of the Company’s system of internal control. The Company has initiated actions to further improve and strengthen its internal control effectiveness by paying even greater attention to the management
of operational, business and policy risks, and applying functional and organisational mechanisms to conduct and evaluate relative analysis.
Others
The Board of the Company attaches great importance to communication with shareholders, particularly opportunities of direct communication with the shareholders at various general meetings, which the shareholders are encouraged to actively participate in.
In addition to direct communications with shareholders at general meetings, the Company also encourages shareholders to enquiries through various means:
To know more about Corporate Governance of the company:
[The above information will also be published on our company’s website on a regular basis]
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