Board of Directors
The members of the board of directors are individually and collectively accountable to the shareholders for the success and sustainable development of the Company. The board provides direction and approval in relation to matters concerning the Company’s business strategies, policies and plans, while the day-to-day business operations are delegated to the executive committee. The board is accountable to the shareholders, and in discharging their corporate accountability, directors of the Company are required to pursue excellence in the interests of the shareholders and fulfil their fiduciary duties by applying the required levels of skill, care and diligence to a standard in accordance with the statutory requirements.
During the year, the board performed a self-evaluation of its performance and reviewed the contribution required from a director to perform his/her responsibilities. The board is of the view that all directors have given sufficient time and attention to the Company’s affairs and the board operates effectively as a whole. The board also noted the time involved by the directors in the Company and other public companies held by the directors.
Board composition and changes
During the year 2016, the Company announced the following changes in board composition.
On 18 March 2016, Ms Cao Pu retired from the board as a non-executive director and a member of the audit and risk management committee of the Company. On the same date, Mr Song Kangle and Mr Li Rucheng were appointed as non-executive directors of the Company and Mr Paul Chow Man Yiu was appointed as an independent non-executive director of the Company.
On 12 April 2016, Mr Yu Zhensheng retired from the board as a non-executive director of the Company and Ms Yan Shuqin was appointed as a non-executive director of the Company.
On 20 December 2016, Mr Li Rucheng resigned from the board as a non-executive director of the Company.
The expertise and experience of the new members to the board would complement the existing board and bring significant benefit to the development of the Company’s businesses both in China and overseas.
The board currently has 16 directors, comprising four executive directors, six non-executive directors and six independent non-executive directors. Non-executive directors (including independent non-executive directors) comprise three-fourths of the board, of which independent non-executive directors satisfy the requirement of representing at least one-third of the board. The Company believes that the board has a balance of skills, experience and diversity of perspectives appropriate to the requirements of the Company’s business.
In relation to the six non-executive directors who are not independent (as considered by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”)), Mr Yang Jinming, Mr Liu Yeqiao, Mr Song Kangle and Ms Yan Shuqin are all non-executive directors of CITIC Group Corporation (the controlling shareholder of the Company) whilst Mr Liu Zhongyuan holds an executive position in the National Council for Social Security Fund (a shareholder of the Company) and Mr Yang Xiaoping is the senior vice chairman of the Charoen Pokphand Group.
The Company has received from each independent non-executive director a confirmation of his/her independence pursuant to the independence guidelines set out in Rule 3.13 of the Listing Rules and considers that all independent non-executive directors are independent. Brief biographical particulars of the directors, together with information about the relationships among them, are set out on pages 109 to 112.
All directors, including the non-executive directors, have a specific term of appointment, which is not more than three years since his/her re-election by shareholders at the general meeting. Each director has entered into an appointment letter with the Company and pursuant to Article 104(A) of the Company’s articles of association, every director, including the non-executive directors, shall be subject to retirement by rotation at least once every three years. Retiring directors are eligible for re-election at the annual general meeting during which they retire. Separate resolutions are proposed for the election of each director. One-third of the directors, or if their number is not three or a multiple of three, then the number nearest to one-third, must retire from office at each annual general meeting and their re-election is subject to a vote of shareholders.
Pursuant to Article 95 of the articles of association of the Company, Mr Song Kangle, Mr Li Rucheng, Mr Paul Chow Man Yiu and Ms Yan Shuqin who were appointed as directors of the Company during the year shall hold office only until the next following annual general meeting, or if earlier, the next following extraordinary general meeting of the Company and then shall be eligible for re-election at such meeting. All of the above directors were re-elected at the 2016 AGM. Mr Li Rucheng subsequently resigned as a non-executive director of the Company with effect from 20 December 2016 due to his other work commitments.
Board responsibilities and delegation
The board collectively determines the overall strategies of the Company, and monitors performance and the related risks and controls in pursuit of the strategic objectives of the Company. Day-to-day operation and management powers are delegated to the executive committee which reports to the board. All board members have separate and independent access to the management, and are provided with full and timely information about the conduct of the business and development of the Company, including reports and recommendations on significant matters. All board members are provided with monthly updates on the latest development of the Company’s businesses. Should separate independent professional advice be considered necessary by the directors, independent professional services would be made available to the directors upon request.
The board is also responsible for the Company’s risk management and internal control systems and reviewing their effectiveness. The audit and risk management committee which acts on behalf of the board conducts a review of the effectiveness of the risk management and internal control systems annually and reports to the board on such review. Details are set out in the section below headed “Risk management and internal control”.
The board has delegated certain functions to the respective committees, the details of which are set out below. Matters specifically reserved for the board include approval of financial statements, dividend policy, significant changes in accounting policies, material contracts, selection of directors, changes to appointments such as company secretary and external auditor, remuneration policy for directors and senior management, terms of reference of board committees, as well as major corporate policies such as the code of conduct and whistle- blowing policy.
The Company has arranged Directors & Officers Liability and Company Reimbursement Insurance for its directors and officers with a combined aggregate limit of liability of HK$2 billion.
Details of the responsibilities, membership, attendance and activities during the year of each board committee are set out on pages 87 to 95.
Continuous professional development programme
The Company has a continuous professional development programme (“CPD Programme”) for directors with an aim to improve their general understanding of the Company’s businesses, to refresh their knowledge and skills as well as to receive updates on developments in corporate governance practices. Directors may also choose to attend external courses, conferences and luncheons organised by various local organisations.
In addition, every newly appointed director is provided with a package comprising the induction materials such as the duties and responsibilities of directors under the Listing Rules and the Companies Ordinance, guidelines for directors issued by the Companies Registry of Hong Kong, legal and other regulatory requirements and the governance policies of the Company. During the year, four directors were appointed. The Company has arranged briefings given by external legal counsel to the new directors.
Under the Company’s CPD Programme, directors attended briefings/seminars and reviewed the monthly business updates and other reading materials provided to them concerning the latest developments in corporate governance practices and relevant legal and regulatory developments. A record of the directors’ participation in the CPD Programme is kept at the company secretariat office.
A summary of directors’ participation in the Company’s CPD Programme and other external training for the period from 1 January 2016 to 31 December 2016 is as follows:
(1) appointed with effect from 18 March 2016 and induction materials and briefing by external legal counsel were provided in respect of their appointment.
(2) appointed with effect from 12 April 2016 and induction materials and briefing by external legal counsel were provided in respect of her appointment.
Ms Cao Pu and Mr Yu Zhensheng retired from the board as non-executive directors with effect from 18 March 2016 and 12 April 2016 respectively. Mr Li Rucheng was appointed as a non-executive director with effect from 18 March 2016 and subsequently resigned on 20 December 2016. Reading materials, regulatory updates and management monthly updates were provided to the above directors during the period of their tenure.
Board meetings and attendance
The board meets regularly to review the financial and operating performance of the Company and to discuss future strategy. Four regular board meetings were held in 2016. At the board meetings, the board reviewed significant matters including the Company’s annual and half-year financial statements, annual budget, proposals for final and interim dividends, annual report and half-year report, and notifiable transactions and connected transactions. At each of the regular board meetings, the board received a written report from the president on the Company’s major businesses, investments and projects, and corporate activities.
A schedule of board meeting dates is fixed for each year in advance. At least 14 days’ formal notice of all regular board meetings is given to all directors, and all directors are given the opportunity to include matters for discussion in the agenda. The agenda and board papers for each meeting are sent to all directors at least three days in advance of every regular board meeting. All minutes of the board meetings are kept at the company secretariat office. Copies are provided to directors and the original minutes are available to all directors for inspection. In addition to the board meetings, the chairman also meets with the non-executive directors (including independent non-executive directors) without the presence of executive directors on an annual basis.
The attendance record of each director at board meetings and general meetings in 2016 is set out below:
(1) appointed with effect from 18 March 2016
(2) appointed with effect from 12 April 2016
(3) retired with effect from 18 March 2016
(4) retired with effect from 12 April 2016
(5) appointed with effect from 18 March 2016 and resigned with effect from 20 December 2016
Chairman and the president
Mr Chang Zhenming serves as the chairman of the Company. Mr Wang Jiong is the president of the Company. The chairman and the president have separate defined responsibilities whereby the chairman is primarily responsible for leadership and effective functioning of the board, ensuring key issues are promptly addressed by the board, as well as providing strategic direction for the Company. The president is responsible for the day- to-day management of the Company and the effective implementation of corporate strategy and policies. Their respective roles and responsibilities are set out in writing, which have been approved and adopted by the board.