CORPORATE GOVERNANCE REPORT
MANDATORY DISCLOSURE REQUIREMENTS
To provide transparency, the issuers must include the following information for the accounting period covered by the annual report and significant subsequent events for the period up to the date of publication of the annual report, to the extent possible:
CORPORATE GOVERNANCE PRACTICES(a) A narrative statement explaining how the issuer has applied the principles in the Code, enabling its shareholders to evaluate how the principles have been applied;(b) a statement as to whether the issuer meets the code provisions. If an issuer has adopted its own code that exceeds the code provisions, it may draw attention to this fact in its annual report; and(c) for any deviation from the code provisions, details of the deviation during the financial year (including considered reasons).
DIRECTORS' SECURITIES TRANSACTIONS
For the Model Code set out in Appendix 10:(a) whether the issuer has adopted a code of conduct regarding directors' securities transactions on terms no less exacting than the required standard set out in the Model Code;(b) having made specific enquiry of all directors, whether the directors of the issuer have complied with, or whether there has been any non-compliance with, the required standard set out in the Model Code and its code of conduct regarding directors' securities transactions; and(c) for any non-compliance with the required standard set out in the Model Code, if any, details of these and an explanation of the remedial steps taken by the issuer to address them.
BOARD OF DIRECTORS(a) Composition of the board, by category of directors, including name of chairman, executive directors, non-executive directors and independent non-executive directors;(b) number of board meetings held during the financial year;(c) attendance of each director, by name, at the board and general meetings;
Notes:1 Subject to the issuer's constitutional documents and the law and regulations of its place of incorporation, attendance by a director at a meeting by electronic means such as telephonic or videoconferencing may be counted as physical attendance.2 If a director is appointed part way during a financial year, his attendance should be stated by reference to the number of board meetings held during his tenure.(d) for each named director, the number of board or committee meetings he attended and separately the number of board or committee meetings attended by his alternate. Attendance at board or committee meetings by an alternate director should not be counted as attendance by the director himself;(e) a statement of the respective responsibilities, accountabilities and contributions of the board and management. In particular, a statement of how the board operates, including a high level statement on the types of decisions taken by the board and those delegated to management;(f) details of non-compliance (if any) with rules 3.10(1) and (2), and 3.10A and an explanation of the remedial steps taken to address non-compliance. This should cover non-compliance with appointment of a sufficient number of independent non-executive directors and appointment of an independent non-executive director with appropriate professional qualifications, or accounting or related financial management expertise;(g) reasons why the issuer considers an independent non-executive director to be independent where he/she fails to meet one or more of the guidelines for assessing independence set out in rule 3.13;(h) relationship (including financial, business, family or other material/relevant relationship(s)), if any, between board members and in particular, between the chairman and the chief executive; and(i) how each director, by name, complied with A.6.5.
CHAIRMAN AND CHIEF EXECUTIVE(a) The identity of the chairman and chief executive; and(b) whether the roles of the chairman and chief executive are separate and exercised by different individuals.
The term of appointment of non-executive directors.
The following information for each of the remuneration committee, nomination committee, audit committee, risk committee, and corporate governance functions:(a) the role and function of the committee;(b) the composition of the committee and whether it comprises independent non-executive directors, non-executive directors and executive directors (including their names and identifying the chairman of the committee);(c) the number of meetings held by the committee during the year to discuss matters and the record of attendance of members, by name, at meetings held during the year; and(d) a summary of the work during the year, including:(i) for the remuneration committee, disclosing the policy for the remuneration of executive directors, assessing performance of executive directors and approving the terms of executive directors' service contracts, performed by the remuneration committee. Disclose which of the two models of remuneration committee described in B.1.2(c) was adopted;(ii) for the nomination committee, disclosing the policy for the nomination of directors, performed by the nomination committee or the board of directors (if there is no nomination committee) during the year. This includes the nomination procedures and the process and criteria adopted by the nomination committee or the board of directors (if there is no nomination committee) to select and recommend candidates for directorship during the year. This section should also include the board's policy or a summary of the policy on board diversity, including any measurable objectives that it has set for implementing the policy, and progress on achieving those objectives;(iii) for corporate governance, determining the policy for the corporate governance of the issuer, and duties performed by the board or the committee(s) under D.3.1; and(iv) for the audit committee, a report on how it met its responsibilities in its review of the quarterly (if relevant), half-yearly and annual results, and unless expressly addressed by a separate risk committee, or the board itself, its review of the risk management and internal control systems, the effectiveness of the issuer's internal audit function, and its other duties under the Code. Details of non-compliance with rule 3.21 (if any) and an explanation of the remedial steps taken by the issuer to address non-compliance with establishment of an audit committee; and(v) for the risk committee (if any), a report on how it met its responsibilities in its review of the risk management and internal control systems and the effectiveness of the issuer's internal audit function.
An analysis of remuneration in respect of audit and non-audit services provided by the auditors (including any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally) to the issuer. The analysis must include, in respect of each significant non-audit service assignment, details of the nature of the services and the fees paid.
Note: The code provisions expect issuers to make certain specified disclosures in the Corporate Governance Report. Where issuers choose not to make the expected disclosure, they must give considered reasons for not doing so under paragraph G(c). For ease of reference, the specific disclosure expectations of the code provisions are:1 directors' acknowledgement of their responsibility for preparing the accounts and a statement by the auditors about their reporting responsibilities (C.1.3 of the Code);2 report on material uncertainties, if any, relating to events or conditions that may cast significant doubt upon the issuer's ability to continue as a going concern (C.1.3 of the Code);3 a statement that the board has conducted a review of the effectiveness of the internal control system of the issuer and its subsidiaries (C.2.1 of the Code); and4 a statement from the audit committee explaining its recommendation and the reason(s) why the board has taken a different view from the audit committee on the selection, appointment, resignation or dismissal of external auditors (C.3.5 of the Code).
COMPANY SECRETARY(a) Where an issuer engages an external service provider as its company secretary, its primary corporate contact person at the issuer (including his/her name and position); and(b) details of non-compliance with rule 3.29.
SHAREHOLDERS' RIGHTS(a) How shareholders can convene an extraordinary general meeting;(b) the procedures by which enquiries may be put to the board and sufficient contact details to enable these enquiries to be properly directed; and(c) the procedures and sufficient contact details for putting forward proposals at shareholders' meetings.
Any significant changes in the issuer's constitutional documents during the year.
RISK MANAGEMENT AND INTERNAL CONTROL
Where an issuer includes the board's statement that it has conducted a review of its risk management and internal control systems in the annual report under code provision C.2.1, it must disclose the following:(a) whether the issuer has an internal audit function;(b) how often the risk management and internal control systems are reviewed, the period covered, and where an issuer has not conducted a review during the year, an explanation why not; and(c) a statement that a review of the effectiveness of the risk management and internal control systems has been conducted and whether the issuer considers them effective and adequate.
The disclosures set out in the following paragraphs on corporate governance matters are provided for issuers' reference. They are not intended to be exhaustive or mandatory. They are intended to show the areas which issuers may comment on in their Corporate Governance Report. The level of detail needed varies with the nature and complexity of issuers' business activities. Issuers are encouraged to include the following information in their Corporate Governance Report:
SHARE INTERESTS OF SENIOR MANAGEMENT
The number of shares held by senior management (i.e. those individuals whose biographical details are disclosed in the annual report).
INVESTOR RELATIONS(a) Details of shareholders by type and aggregate shareholding;(b) details of the last shareholders' meeting, including the time and venue, major items discussed and voting particulars;(c) indication of important shareholders' dates in the coming financial year; and(d) public float capitalisation at the year end.
The division of responsibility between the board and management.
Note: Issuers may consider that some of the information recommended under paragraphs R to T is too lengthy and detailed to be included in the Corporate Governance Report. As an alternative to full disclosure in the Corporate Governance Report, issuers may choose to include some or all of this information:(a) on its website and highlight to investors where they can:(i) access the soft copy by giving a hyperlink direct to the relevant webpage; and/or(ii) collect a hard copy of the relevant information free of charge; or(b) where the information is publicly available, by stating where the information can be found. Any hyperlink should be direct to the relevant webpage.