Corporate Governance
 

Introduction

The Board and the management team of the Company are committed to maintaining a higher standard of corporate governance and the accountability and transparency of its management. The Company has been in compliance with a high standard of corporate governance practices and the Directors takes seriously their duty to implement good corporate governance practices to ensure their duties are discharged in a transparent and accountable manner. The Board believes that by running the business in a way which is responsible to its shareholders and of high level of integrity, the long-term benefit of the Group and the shareholders as a whole would be achieved and safeguarded.

 

Corporate governance practices

The Company has, throughout the financial year ended 31 December 2013, has complied with the code provisions (the “CG Code Provisions”) set out in Appendix 15 of Corporate Governance Code and Corporate Governance Report (the “CG Code”) of the GEM Listing Rules.

 

The Board of Directors

The Board, which currently comprises eight Directors, is primarily responsible for formulating the business strategy, reviewing and monitoring the business performance of the Group, preparing and approving the financial statements and annual budgets as well as directing and supervising the management of the Company. Execution of perational matters and the powers thereof are delegated to management by the Board.

The Board comprises two non-executive Directors, namely Mr. Yan Zhi (who is also the Chairman of the Board) and Mr. Fang Yibing; three executive Directors, namely Ms. Liu Qin and Mr. Duan Yan and Mr. Xie Bing Mu and three independent nonexecutive Directors, namely Mr. Lee Kang Bor, Thomas, Dr. Wong Tin Yau, Kelvin and Mr. Wong Wai Keung, Frederick. Nonexecutive Directors currently represent two-eighths of the Board. Independent non-executive Directors currently represent threeeighths of the Board.

In full compliance with Rules 5.05(1) and (2) of the GEM Listing Rules, the Company has appointed three independent nonexecutive Directors, at least one of whom has appropriate professional accounting qualifications. The Company has received from each independent non-executive Director an annual confirmation of his independence, and the Company considers such Directors to be independent in accordance with each and every guideline set out in Rule 5.09 of the GEM Listing Rules.

 

Chairman and chief executive officer

In order to have a clear division between the management of the Board and the day-to-day management of the business operation of the Group, the role of the chairman is separate from that of the chief executive officer. The chairman, Mr. Yan Zhi, focuses on overall corporate development and strategic direction of the Group and provides leadership for the Board and oversees the efficient functioning of the Board. The chief executive officer, Mr. Xie Bing Mu, is responsible for all day-to-day corporate management matters as well as assisting the chairman in planning and developing the Group’s strategies. Such division of responsibilities helps to reinforce their independence and to ensure a balance of power and authority.

 

Re-election of Directors

All executive Directors and non-executive Directors are appointed for a term of 3 years, and each of the independent nonexecutive Directors, is appointed for a period commencing from 26 May 2014 until the Company’s annual general meeting in 2015. According to Article 114 of the Company’s Articles of Association (the “Articles”), all Directors appointed to fill a causal vacancy should be subject to re-election by Shareholders at the first general meeting after their appointment. According to Article 130 of the Articles, one-third of the Directors shall retire from office by rotation and are subject to re-election at annual general meeting at least once every three years.

 

Remuneration committee

During the year under review, the Remuneration Committee comprised of four Directors, namely Mr. Lee Kang Bor, Thomas (chairman), Dr. Wong Tin Yau, Kelvin, Mr. Fan Chun Wah, Andrew (resigned on 1 April 2014), Mr. Wong Wai Keung, Frederick (appointed on 1 April 2014) and Mr. Fang Yibing.

The terms of reference of the Remuneration Committee have been determined with reference to the CG Code. Under the terms of reference of the remuneration committee, the responsibilities of the Remuneration Committee include, inter alia, assisting the Company in the administration of a formal and transparent procedure for developing remuneration policies, making recommendations to the Board on the remuneration packages of individual executive Directors and senior management, and ensuring that no Director or any of his associates is involved in deciding his own remuneration.

During the year ended 31 December 2014, the work performed by the Remuneration Committee includes, inter alia, the review of Group’s remuneration policy for its executive Directors and senior management and their levels of remuneration.

 

Audit committee

During the year under review, the Audit Committee comprised of four Directors, namely Mr. Lee Kang Bor, Thomas (chairman), Dr. Wong Tin Yau, Kelvin, Mr. Fan Chun Wah, Andrew (resigned on 1 April 2014), Mr. Wong Wai Keung, Frederick (appointed on 1 April 2014) and Mr. Fang Yibing.

Under its terms of reference, the Audit Committee is required, among other things, to oversee the relationship with the independent auditor, to review the Group’s first-quarterly, interim, third-quarterly and annual results as well as the effectiveness of the systems of internal control (the “Systems of internal control”) of the Group which covers financial, operational and compliance controls and risk management qualified functions. The Audit Committee has liaised with the Directors, senior management and the chief financial officer as well as reviewed the “Report to the Audit Committee” from and discussed with the auditors on the audit and internal control related issues of the Group.

During the year ended 31 December 2014, management of the Company had conducted an internal audit on the systems of internal control of WIT to ensure compliance with procedures laid down by the Company and the board of directors of WIT and a review of the overall systems of internal control and risk management functions of the Group.

 

Nomination committee

During the year under review, the Nomination Committee comprised of four Directors, namely Dr. Wong Tin Yau, Kelvin (chairman), Mr. Lee Kang Bor, Thomas, Mr. Fan Chun Wah, Andrew (resigned on 1 April 2014), Mr. Wong Wai Keung, Frederick (appointed on 1 April 2014) and Mr. Fang Yibing.

The terms of reference of the Nomination Committee have been determined with reference to the CG Code. Under its terms of reference, the Nomination Committee is responsible for identifying potential directors and making recommendations to the Board on the appointment or re-appointment of Directors. Potential new directors are selected on the basis of their qualifications, skills and experience which the Nomination Committee considers will make a positive contribution to the performance of the
Board. Mr. Xie Bing Mu and Mr. Wong Wai Keung, Frederick were nominated for appointment and were appointed during the year ended 31 December 2014.

 

Attendance records at meetings

The attendance records of each Director at the various meetings of the Company during the year ended 31 December 2014 are set out as below:

 

Attended/Eligible to attend

 

Annual
general
meeting

 

Board
meetings

 

Remuneration
committee
meetings

 

Audit
committee
meetings

 

Nomination
committee
meetings

 

 

 

 

 

 

 

 

 

 

Number of meetings

1

 

6

 

3

 

4

 

2

Chairman and Non-executive Director

 

 

 

 

 

 

 

 

 

Mr. Yan Zhi

1/1

 

6/6

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

Executive Directors

 

 

 

 

 

 

 

 

 

Ms. Liu Qin

0/1

 

6/6

 

N/A

 

N/A

 

N/A

Mr. Duan Yan

0/1

 

6/6

 

N/A

 

N/A

 

N/A

Mr. Xie Bing Mu (Note 1)

0/1

 

5/5

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

Non-executive Director

 

 

 

 

 

 

 

 

 

Mr. Fang Yibing

0/1

 

6/6

 

3/3

 

4/4

 

2/2

 

 

 

 

 

 

 

 

 

 

Independent Non-executive Directors

 

 

 

 

 

 

 

 

 

Mr. Lee Kang Bor, Thomas

1/1

 

6/6

 

3/3

 

4/4

 

2/2

Dr. Wong Tin Yau, Kelvin

1/1

 

6/6

 

3/3

 

4/4

 

2/2

Mr. Fan Chun Wah, Andrew (Note 2)

0/0

 

3/3

 

3/3

 

1/1

 

2/2

Mr. Wong Wai Keung, Frederick (Note 3)

1/1

 

3/3

 

0/0

 

3/3

 

0/0

Notes:
1. Mr. Xie Bing Mu was appointed as an executive Director on 7 March 2014.
2. Mr. Fan Chun Wah, Andrew resigned as an independent non-executive Director on 1 April 2014. During the period between 1 January 2014 and the date of his resignation, there were three Board meeting, three Remuneration Committee meetings, one Audit Committee meeting and two Nomination Committee meetings held.
3. Mr. Wong Wai Keung, Frederick was appointed as an independent non-executive Director on 1 April 2014. During the period between the date of his appointment and 31 December 2014, there were the annual general meeting, three Board meetings and three Audit Committee meetings held.

 

Directors’ securities transactions

The Company has adopted the rules set out in Rules 5.48 to 5.67 (where applicable) of the GEM Listing Rules as the code of conduct regarding for securities transactions by the Directors (the “Code of Conduct”).

The Company has made specific enquiry of all Directors, and the Directors have confirmed compliance with the Code of Conduct throughout the year ended 31 December 2014.

Specific employees who are likely to be in possession of unpublished inside information of the Group are also subject to compliance with the same Code of Conduct. No incident of non-compliance was noted by the Company for the year ended 31 December 2014.

 

Nomination of Directors

For the purpose of nomination of Directors, the task of nomination of Directors has vested with the Board. During the year under review, the Board reviewed (i) the structure, size and composition (including the skills, knowledge and experience) of Board members on a regular basis and make recommendation regarding any proposed changes; (ii) identifies individuals suitably qualified to become Board members; (iii) assesses the independence of independent non-executive Directors; and (iv) makes recommendations on relevant matters relating to the appointment and re-appointment of Directors and succession planning for Directors.

 

Continuous professional development

All Directors have been given relevant guideline materials regarding to duties and responsibilities of being a Director, the relevant laws and regulations applicable to the Directors, duty of disclosure of interest and business of the Group and such induction materials would also be provided to newly appointed Directors shortly upon their appointment as Directors. All Directors have been updated on the latest developments regarding the GEM Listing Rules and other applicable regulatory requirement to
ensure compliance and enhance their awareness of good corporate governance practices. There is a procedure agreed by the Board to ensure Directors, upon reasonable request, to seek independent professional advice in appropriate circumstance, at the Company’s expenses.

The Directors confirmed that they have completed with the CG code provision A6.5 of the CG Code and report on Directors’ training. All Directors have participated in continuous professional development by the following means to develop and refresh their knowledge during the year under review.

Name of Directors

Training received

 

 

Mr. Yan Zhi

Reading materials

Ms. Liu Qin

Reading materials

Mr. Duan Yan

Reading materials

Mr. Xie Bing Mu

Reading materials

Mr. Fang Yibing

Reading materials

Mr. Lee Kang Bor, Thomas

Reading materials/attending training course

Mr. Wong Tin Yau, Kelvin

Reading materials/attending training course

Mr. Wong Wai Kung, Frederick

Reading materials/attending training course

 

Auditors’ remuneration

Remuneration in respect of audit and non-audit services provided by the Auditors to the Group for the year ended 31 December 2014 was HK$695,000 and HK$75,000, respectively.

 

Company secretary

Ms. Lai Pik Chi, Peggy, the chief financial officer of the Company, also acts as the company secretary of the Company.

 

Internal control

The Board is responsible for maintaining sound and effective systems of internal control to safeguard the Group’s assets and shareholders’ interests, as well as reviewing the effectiveness of such systems. The internal control system of the Group is designed for the achievement of business objectives, safeguard assets against unauthorised use or disposition, ensure maintenance of proper books and record for the provision of reliable financial information for internal use or publication, and to ensure compliance with relevant legislations and regulations. The management and various departments conduct periodic selfassessment of the effectiveness of the internal control policies and procedures. Besides, the Board reviews at least annually the overall effectiveness of the Group’s internal control system.

The Board is of the view that the systems of internal control and risk management are effective and there are no irregularities, improprieties, fraud or other deficiencies that suggest material deficiency in the effectiveness of the Group’s internal control system.

 

Shareholders value

The Board and senior management recognise their responsibility to represent the interests of all shareholders and to enhance shareholder value and have made the following commitments to the Groups’ shareholders:

•         Continuing effort to maintain long-term stability and growth in shareholder value and return on investment;
•         Responsible planning, construction and operation of the Group’s core businesses;
•         Responsible management of the Group’s investment and business risks; and
•         True, fair, in depth and timely disclosure of the financial position and operating performance of the Group.

 

Constitutional documents

The Board is not aware of any change in the Company’s constitutional documents. An updated version of the Company’s memorandum and articles of association is available on both the websites of the Stock Exchange and the Company.

 

Shareholder’s rights and relations

Investor relations
The Company believes that shareholders’ rights should be well respected and protected. The Company endeavours to maintain good communications with shareholders on its performance through quarterly results announcements, interim and annual reports and annual general meetings of the Company, so that they may make an informed assessment of their investments and the exercise of their rights as shareholders. The Group also encourages shareholders’ participation through general meetings or other means.

 

Communication with Shareholders of the Company

The Board and senior management recognise the responsibility of safeguarding the interest of Shareholders and provide highly transparent and real-time information on the Company so as to keep the Shareholders and investors abreast of the Company’s position and help them to make the best investment decision. The Company believes that maintaining good and effective communication with Shareholders can facilitate their understanding of the business performance and strategies of the Group. The Board and senior management also recognise the responsibility of safeguarding the interest of Shareholders. In order to safeguard the interest of the Shareholders, the Company reports its financial and operating performance to shareholders through annual reports and interim reports. Shareholders can also obtain information of the Group in time through annual reports, quarterly reports interim reports, announcements, circulars, press releases and the Company’s website at www.cigyangtzeports.com.

The annual general meetings are an appropriate forum for direct communications between the Board and Shareholders. Shareholders can raise questions directly to the Board in respect of the performance and future development of the Group at annual general meetings.

 

Shareholder’s right

Procedures for putting forward proposals at general meeting by Shareholders
In accordance with the requirements under Article 79 of the Articles, extraordinary general meetings shall also be convened on the requisition of one or more shareholders holding, at the date of deposit of the requisition, not less than one tenth of the paid up capital of the Company having the right of voting at general meetings. Such requisition shall be made in writing to the Directors or the secretary for the purpose of requiring an extraordinary general meeting to be called by the Directors for the transaction of any business specified in such requisition. If within twenty-one days of such deposit, the Board fails to proceed to convene such meeting, the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Directors shall be reimbursed to the requisitionist(s) by the Company.

Pursuant to Article 116 of the Articles, no person, other than a retiring Director, shall, unless recommended by the Board for election, be eligible for election to the office of Director at any general meeting, unless notice in writing of the intention to propose that person for election as a Director and notice in writing by that person of his willingness to be elected shall have been lodged at the head office or at the registration office. The minimum length of the period, during which the notices required under the articles of association of the Company will commence no earlier than the day after the despatch of the notice of the general meeting appointed for such election and end no later than 7 days prior to the date of such general meeting.

Procedures for directing Shareholders’ enquiries to the Board
Shareholders or investors can enquire or make comments by putting their views to the Company or the Audit Committee by the following means:

Attention:

The company secretary
CIG Yangtze Ports PLC

By post:

Suite 1606, 16/F., Two Exchange Square, Central, Hong Kong

Email:

cigyp@cigyangtzeports.com

The company secretary shall forward the Shareholders’ enquiries and concerns to the Board and/or relevant Board committees of the Company, where appropriate, to answer the questions of the Shareholders.