The Company is committed to maintaining a high standard of corporate governance practices. The Board considers shareholders can maximise their benefits from good corporate governance. The Board is of the view that the Company had adopted the principles and complied with all code provisions set out in the Corporate Governance Code (the “CG Code”) contained in Appendix 14 of the Rules (the “Listing Rules”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) during the year ended 31 December 2023.
CORPORATE GOVERNANCE PRINCIPLES AND THE COMPANY’S PRACTICES
A. Directors
A.1. Board of Directors
An issuer should be headed by an effective board which should assume responsibility for leadership and control of the issuer and be collectively responsible for promoting the success of the issuer by directing and supervising the issuer’s affairs. Directors should take decisions objectively in the interests of the issuer.
The major role of the Board is to direct and supervise the administration and management of the Group, establish its strategic directions and set business development plans. It authorizes and delegates certain responsibilities to the chief executive and management for the day-today operation of the Group.
Regular Board meetings are held at quarterly intervals. In addition, special Board meetings will be held when necessary. Attendance of individual Directors at shareholders’ meetings, board meetings, nomination committee meetings, remuneration committee meetings and audit committee meetings in 2023 are as follows:
Directors are consulted to include matters in the agenda for regular Board meetings.
Dates of regular Board meetings are scheduled at least 14 days in advance to provide sufficient notice to give all Directors an opportunity to attend. For all other Board meetings, reasonable notice will be given.
Directors have access to the advice and services of the Company Secretary to ensure that Board procedures, and all applicable rules and regulations, are followed.
Minutes of the Board, the Audit Committee, the Remuneration Committee and the Nomination Committee are kept by the Company Secretary. Minutes are open for inspection at any reasonable time on reasonable notice by any Director.
Minutes of the Board and Board Committees have recorded in sufficient detail the matters considered by the Board and the Committees, decisions reached, including any concerns raised by Directors or dissenting views expressed. Draft and final versions of minutes of the Board are sent to all Directors for their comments and records respectively.
The Board shall resolve to provide separate independent professional advice to Directors to assist Directors to discharge their duties at the Company’s expense.
A.2. Chairman and Chief Executive
There are two key aspects of the management of every issuer — the management of the board and the day-to-day management of the issuer’s business. There should be a clear division of these responsibilities at the board level to ensure a balance of power and authority, so that power is not concentrated in any one individual.
Code Provision C.2.1 stipulates that the roles of chairman and chief executive should be separate and should not be performed by the same individual.
Mr. Ngan Hei Keung is the Chairman of the Company. Mr. Ngan oversees the management of the manufacturing facilities of the Group and also provides leadership for the Board. He ensures that the Board works effectively and discharges its responsibilities, and that all key and appropriate issues are discussed by the Board in a timely manner. Mr. Ngan is also responsible to ensure that all Directors are properly briefed on issues arising at Board meetings and that all Directors receive adequate information, which must be complete and reliable, in a timely manner.
Mr. Ngan is the husband of Madam Ngan Po Ling, Pauline, BBS, JP. Madam Ngan Po Ling, Pauline, BBS, JP is the Deputy Chairman and Managing Director of the Company. She is responsible for the marketing activities of the Group’s Manufacturing Business. Madam Ngan is the wife of Mr. Ngan Hei Keung.
The Board considers that there is adequate segregation of duties within the Board to ensure a balance of power and authority.
A.3. Board Composition
The board should have a balance of skills and experience appropriate for the requirements of the business of the issuer. The board should ensure that changes to its composition can be managed without undue disruption. The board should include a balanced composition of executive and non-executive directors (including independent non-executive directors) so that there is a strong independent element on the board, which can effectively exercise independent judgement. Nonexecutive directors should be of sufficient calibre and number for their views to carry weight.
The Board comprises six executive Directors, namely Mr. Ngan Hei Keung, Madam Ngan Po Ling, Pauline, BBS, JP, Mr. James S. Patterson, Mr. Ngan Siu Hon, Alexander, Mr. Lai Man Sing and Mr. Andrew Ngan; and three independent Non-executive Directors, namely Mr. Gordon Ng, Mr. Cheung Tei Sing, Jamie and Mr. Li Yinquan. All Directors are expressly identified by categories of executive Directors and independent non-executive Directors, in all corporate communications that disclose the names of Directors of the Company.
The Company has complied with Rules 3.10(1) and 3.10(2) of the Listing Rules in relation to the appointment of a sufficient number of independent non-executive directors and an independent non-executive director with appropriate professional qualifications, or accounting or related financial management expertise. The number of independent non-executive Directors of the Company also represents at least one-third of the Board in compliance with Rule 3.10A of the Listing Rules.
According to Appendix 14 to the Listing Rules, it is recommended that serving more than nine years could be relevant to the determination of a non-executive director’s independence. If an independent non-executive director serves more than nine years, any further appointment of such independent non-executive director should be subject to a separate resolution to be approved by shareholders.
Mr. Gordon Ng has been appointed as independent non-executive Director for nine year. The Company has received from Mr. Ng confirmation of independence according to Rule 3.13 of the Listing Rules. Mr. Ng has not engaged in any executive management of the Group. Taking into consideration of their independent scope of work in the past years, the Directors consider Mr. Ng to be independent under the Listing Rules despite the fact that he has served the Company for more than nine years. The Board believes that Mr. Ng’s continued tenure brings considerable stability to the Board and the Board has benefited greatly from the contribution of Mr. Ng in relation to his extensive experience in legal field.
Apart from Mr. Gordon Ng, Mr. Cheung Tei Sing, Jamie and Mr. Li Yinquan being the other two independent non-executive Directors, have also provided annual confirmations to the Company in relation to their independence under Rule 3.13 of the Listing Rules.
Biographies which include relationships of Directors are set out in pages 9 to 12 of the annual report, which demonstrate a diversity of skills, expertise, experience and qualifications among members of the Board.
All Directors attended Corporate Governance training course organised by the Company’s legal advisers, or read the materials provided by the Company’s legal advisers during the year under review.
The Chairman has held one meeting with all the independent non-executive Directors without the presence of other executive Directors to discuss the Company’s business during the year under review.
A.4. Board Diversity Policy
The Company recognises that increasing diversity at the Board level will support the attainment of the Company’s strategic objectives and sustainable development.
The Board has adopted a board diversity policy which sets out the approach to achieve and maintain diversity on the Board.
Pursuant to the board diversity policy, the Company seeks to achieve Board diversity through the consideration of a number of factors, including but not limited to cultural and educational background, ethnicity, professional experience, skills, knowledge and other qualities. The Company also takes into consideration its own business model and specific needs from time to time in determining the optimal composition of the Board.
For the year ended 31 December 2023, the Company maintained an effective Board comprising members of different genders, professional background and industry experience. The board diversity policy was consistently implemented during the year. As at the date of this annual report, the Board consists of one female and seven male Directors. The Board is of the view that the gender diversity in respect of the Board is satisfactory based on the board diversity policy.
The Company is committed to provide equal employment and promotion opportunities for all employees without regard to their genders, ages, religions and place of ancestry. In particular, the male to female ratio in the workforce level (including senior management) is approximately 1:0.9 as at the date of this annual report. The Board considers that the gender ratio is in line with the industry and the Company has achieved gender diversity in the workforce level. For further details in relation to the Company’s employees, please refer to the Environmental, Social and Governance Report of the Company.
A.5. Appointments, Re-election and Removal of Directors — Nomination Committee
There should be a formal, considered and transparent procedure for the appointment of new directors to the board. There should be plans in place for orderly succession for appointments to the board. All directors should be subject to re-election at regular intervals. An issuer must explain the reasons for the resignation or removal of any director.
Code Provision B.2.2 stipulates that all directors should be subject to retirement by rotation at least once every three years.
According to the Company’s bye-law No. 84, at each annual general meeting, one-third of the Directors for the time being (or, if the member is not three or a multiple of three, then the number nearest to but not greater than one-third) shall retire from office by rotation provided that every Director (including those appointed for a specific term, the Chairman of the Board and Managing Director of the Company) shall be subject to retirement by rotation at least once every three years.
All Directors of the Company have a specific term of appointment and all the Independent Non executive Directors of the Company are subject to retirement by rotation and re-election in accordance with the Company’s bye-law No. 84.
All Directors appointed to fill a casual vacancy or as an addition are subject to election by shareholders at the first general meeting after their appointment.
The nomination committee was formed with specific written terms of reference in compliance with the Listing Rules as revised from time to time including the requirements as set out in Code Provisions B.3.1 (a) to (d). Other responsibilities of the Nomination Committee include reviewing the board diversity policy and the relevant objectives, reviewing the performance of the Directors in carrying out their responsibilities, and formulating, reviewing and implementing the nomination procedures of the Directors.
As at the date of this annual report, this Committee is chaired by Mr. Li Yinquan. The other members are Mr. Gordon Ng, Mr. Cheung Tei Sing, Jamie, Mr. Ngan Hei Keung and Mr. Andrew Ngan.
Nomination Committee has considered measurable objectives based on their professional experience and ethnicity to implement the board diversity policy. Such objectives will be reviewed from time to time to ensure their appropriateness and the progress made towards achieving those objectives will be ascertained. Nomination Committee will review the board diversity policy, as appropriate, to ensure its continued effectiveness from time to time.
A proposal for the appointment of a new Director will be considered and reviewed by the Board. All candidates must be able to meet the standards as set forth in Rules 3.08 and 3.09 of the Listing Rules. A candidate who is to be appointed as an independent non-executive Director should also meet the independence criteria set out in Rule 3.13 of the Listing Rules.In selecting and recommending candidates for directorship, the Nomination Committee takes into account a wide variety of factors, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge, length of service and any other factors that it may consider relevant and applicable from time to time.
A.6. Director Nomination Procedures
According to the Company’s bye-law No. 85, other than a Director retiring at the meeting, a person may be eligible for election as a Director at a general meeting if such person is recommended by the Directors for election or if a member of the Company (other than the person to be proposed) duly qualified to attend and vote at the meeting proposes such person for election by timely lodging a notice of his intention together with a notice of such person’s willingness to be elected at the head office or registration office of the Company. Two candidates were nominated for directorship in 2023.
A.7. Responsibilities of Directors
Every director is required to keep abreast of the responsibilities as a director of an issuer and of the conduct, business activities and development of that issuer. Given the essential unitary nature of the board, non-executive directors have the same duties of care and skill and fiduciary duties as executive directors.
Every newly appointed Director of the Company is ensured to have a proper understanding of the operations and business of the Group and that he is fully aware of his responsibilities under statue and common law, the Listing Rules, applicable legal and regulatory requirements and the business governance policies of the Group. The Directors are continually updated with legal and regulatory developments, business and strategic development of the Group for discharging their responsibilities.
All independent non-executive Directors take an active role in Board meetings to bring in independent judgement to bear on issues of strategy, policy, performance, accountability, resources, key appointments and standards of conducts. They scrutinise the Company’s performance in achieving agreed corporate goals and objectives, and monitor the reporting of performance. They also take the lead where potential conflicts of interests arise and serve the Audit, Remuneration and Nomination Committees.
Every Director is aware that he/she should give sufficient time and attention to the affairs of the Company.
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules. All Directors have confirmed, following enquiry by the Company, that they have complied with the required standard set out in the Model Code throughout the year ended 31 December 2023. Other employees of the Group who are likely to be in possession of inside information of the Company are also subject to the same dealing restrictions.
The Board also takes up the corporate governance function pursuant to the CG Code. During 2023, the Board has performed the following work in relation to corporate governance:
1. developed and reviewed the Company’s policies and practices on corporate governance;
2. reviewed and monitored the training and continuous professional development of the Directors and senior management;
3. reviewed and monitored the Company’s policies and practices on compliance with legal and regulatory requirements;
4. developed, reviewed and monitored the code of conduct and compliance manual applicable to employees and the Directors; and
5. reviewed the Company’s compliance with the CG Code and disclosure in the Corporate Governance Report.
A.8. Board independence
The Company is of the view that board independence is important in good corporate governance and to ensure an effective operation of the Board. The Board has established mechanisms to ensure independent views and input from individual Director are conveyed to the Board to promote the objectiveness in decision making. In particular, the Company has adopted the following mechanisms:
1. as at the date of this annual report, the Board consists of nine Directors and three of them are independent non-executive Directors, which complies with the requirements of the Listing Rules that the Board must have at least three independent non-executive Directors representing at least one-third of the Board;
2. on an annual basis, all independent non-executive Directors are required to confirm in writing their compliance of independence requirements pursuant to Rule 3.13 of the Listing Rules, and to disclose the number and nature of offices held by them in public companies or organisations and other significant commitments;
3. the Nomination Committee assesses the independence of the independent non-executive Directors and review their annual confirmations on independence;
4. external independent professional advice is available as and when required by individual Directors at the Company’s expense; and
5. all Directors are encouraged to speak freely and express their views without influence from other Directors during the Board meetings and/or Board committee meetings.
A.9. Supply of and Access to Information
Directors should be provided in a timely manner with appropriate information in such form and of such quality as will enable them to make an informed decision and to discharge their duties and responsibilities as directors of an issuer.
In respect of regular Board meetings, and so far as practicable in all other cases, an agenda and accompanying Board papers are sent in full to all Directors in a timely manner and at least 3 days before the intended date of a Board or Board Committee meeting.
Management are regularly reminded by the Company Secretary that they have an obligation to supply the Board and its Committees with adequate information in a timely manner to enable it to make informed decisions. The information supplied must be complete and reliable. The Board and each Director shall have separate and independent access to the Company’s senior management.
All Directors are entitled to have access to Board papers, minutes and related materials. Where queries are raised by Directors, steps are taken to respond as promptly and fully as possible.
B. Remuneration of directors and senior management
B.1. The Level and Make-up of Remuneration and Disclosure
An issuer should disclose information relating to its directors’ remuneration policy and other remuneration related matters. There should be a formal and transparent procedure for setting policy on executive directors’ remuneration and for fixing the remuneration packages for all directors. Levels of remuneration should be sufficient to attract and retain the directors needed to run the company successfully, but companies should avoid paying more than necessary for this purpose. No director should be involved in deciding his own remuneration.
The Company has established a Remuneration Committee with specific written terms of reference as set out in Code Provisions E.1.2 (a) to (i) of the CG Code. The Remuneration Committee is responsible for making recommendations to the Board regarding the Company’s remuneration policy, and for the formulation and review of the specific remuneration packages of all executive Directors and senior executives of the Group.
A majority of the members of the Remuneration Committee are independent non-executive Directors. This Committee is chaired by Mr. Gordon Ng. The other members are Mr. Cheung Tei Sing, Jamie, Mr. Li Yinquan, Madam Ngan Po Ling, Pauline, BBS, JP and Mr. Ngan Siu Hon, Alexander.
The Committee had considered the following proposals for the remuneration of Directors and senior management and made recommendation to the Board:
1. annual salary review policy;
2. offer of share options as part of the long term incentive schemes; and
3. performance related bonus.
The Group ensures that the pay levels of its employees, including Directors and senior management, are competitive and employees are remunerated based on their positions and performance. Key employees of the Group are also granted share options under the share option schemes operated by the Company.
Details of the amount of the Directors’ emoluments for 2023 are set out in note 39(a) to the financial statements. Details of the share option schemes of the Company are set out in the Report of the Directors and note 29 to the financial statements.
The remuneration of senior management whose names appear in the 2023 and 2022 “Biographical Details of Directors and Senior Management” section are within the following bands:
The Remuneration Committee is provided with sufficient resources, including access to professional advice, to discharge its duties if considered necessary.
No material matters relating to share schemes under Chapter 17 of the Listing Rules were required to be reviewed or approved by the Remuneration Committee during the year ended 31 December 2023.
C. Accountability and audit
C.1. Financial Reporting
The board should present a balanced, clear and comprehensible assessment of the company’s performance, position and prospects.
Management has provided such explanation and information to the Board as would enable the Board to make an informed assessment of the financial and other information put before the Board for approval.
The Directors acknowledge their responsibility to keep proper accounting records and prepare financial statements of each financial period, which shall give a true and fair view of the state of affairs of the Group and of the results and cash flow for that period. In preparing the financial statements for the year ended 31 December 2023, the Directors have made judgements and estimates that are prudent and reasonable and prepared the financial statements on a going concern basis. The Directors, having made appropriate enquiries, are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Group’s ability to continue as a going concern.
A statement by the auditor about his reporting responsibilities is included in the Independent Auditor’s Report on pages 65 to 70 of the annual report for the year ended 31 December 2023.
The Board’s responsibility to present a balanced, clear and understandable assessment extends to annual and interim reports, other price-sensitive announcements and other financial disclosures required under the Listing Rules, and reports to regulators as well as information required to be disclosed pursuant to statutory requirements.
C.2. Internal Controls
The board should ensure that the issuer maintains sound and effective internal controls to safeguard the shareholders’ investment and the issuer’s assets.
The Board is responsible for the Group’s system of internal controls and for reviewing its effectiveness through the Audit Committee. The Board requires management to establish and maintain sound and effective internal controls. Review of the Group’s internal controls covering financial, operational and compliance controls, and risk management functions on different systems is done on a systematic rotational basis based on the risk assessments of the operations and controls.
C.3. Audit Committee
The board should establish formal and transparent arrangements for considering how it will apply the financial reporting and internal control principles and for maintaining an appropriate relationship with the company’s auditor. The audit committee established by an issuer pursuant to the Listing Rules should have clear terms of reference.
The Company has established the Audit Committee with specific written terms of reference which deal clearly with its authority and duties. The terms of reference of the Audit Committee have included the duties set out in Code Provisions D.3.3 (a) to (n) of the CG Code, with appropriate modifications where necessary. The Audit Committee has made available its terms of reference, on the website of the Company, explaining its role and the authority delegated to it by the Board.
As set out in the terms of reference, the Audit Committee is responsible for reviewing the financial reporting system and internal control procedures, annual report and financial statements and interim report.
The Audit Committee comprises three independent non-executive Directors of the Company and is chaired by Mr. Cheung Tei Sing, Jamie. External auditor attended one meeting in 2023.
The following is a summary of the work performed by the Audit Committee during the year:
1. reviewed external auditor audit committee report and management’s response;
2. reviewed and recommended to the Board for approval of the audit fee proposal for 2022;
3. considered and recommended to the Board that the shareholders be asked to re-appoint the existing auditor as the Company’s external auditor for 2023;
4. reviewed and approved the Group’s internal audit plan for 2024;
5. reviewed internal audit reports, and risk management and internal control report and brought to the attention of Management on internal control issues and high risk areas;
6. reviewed the audited financial statements and final results announcement for the year 2022;
7. reviewed the interim report and the interim results announcement for the six months ended 30 June 2023;
8. reviewed the determination and reporting of key audit matters;
9. supported the Board in monitoring the performance of corporate governance, financial reporting, risk management and internal control systems; and
10. reviewed the risks raised during annual risk register execution and approved risk tolerance.
All issues raised by the Committee have been addressed by Management. The work and findings of the Committee have been reported to the Board. During the year, no issues brought to the attention of Management and the Board were of sufficient importance to require disclosure in the Annual Report.
The Board agrees with the Audit Committee’s proposal for the re-appointment of existing auditor as the Company’s external auditor for 2024.
The remuneration of the Group’s external auditor is HK$3,033,000 for audit fees and HK$156,000 for other non-assurance services.
Full minutes of Audit Committee meetings are kept by the Company Secretary. Draft and final versions of minutes of the Audit Committee meetings are sent to all members of the Committee for their comments and records respectively, in both cases within a reasonable time after the meeting.
The Audit Committee does not have a former partner of the Company’s existing audit firm. The Audit Committee is provided with sufficient resources to perform its duties.
D. Dividend Policy
Policy on Payment of Dividend of the Company is in place setting out the factors in determination of dividend payment of the Company, the Company’s long-term earning capacity and expected cash inflow and outflow, the frequency and form of dividend payments. The policy shall be reviewed periodically and submitted to the Board for approval if amendments are required.
E.1. Risk Management and Internal Control System
During the year, the Group has complied with the Code Provision D.2 of the CG Code by establishing appropriate and effective risk management and internal control system. The Board is responsible for the risk management and internal control systems of the Group and is responsible for reviewing their effectiveness on a regular basis. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.
(i) Control Environment
The Group operates within an established control environment and it comprises four layers of roles and responsibilities to manage risk and internal control:
(ii) Risk Assessment
The Group’s risk management process is embedded into our strategy formulation, business planning, capital allocation, investment decisions, internal controls and day-today operations. Management is responsible for performing risk assessments and owning the design, implementation and maintenance of controls. Finance Department, Human Resources Department, Compliance Department and external professionals provide assistance and expertise management to help it in undertaking its responsibilities. Major identified risks are recorded in the risk register which has been monitored and updated regularly to reflect the latest development of situations.
Executive Directors communicate regularly with each individual business unit/department heads to identify day-to-day operational risks and find ways to mitigate them if any.
Regarding financial risks, the Board approves Company’s yearly financial budgets and reviews its operating and financial performance and key performance indicators against the budget on a semiannual basis. Management closely monitors the financial reports of each business unit on a monthly basis against budget to detect material deviation at business unit level. Board approval is required for all significant capital investment or acquisition decisions.
Chief Financial Officer, Company Secretary and Senior Human Resources and Administrative Manager work with external legal and financial advisors to review adherence to relevant laws and regulations, Listing Rules compliance, public disclosure requirements and our standards of compliance practices.
(iii) Control Activities
Among others, control activities include approvals and verifications, reviews, safeguarding of assets and segregation of duties. They are performed by personnel at different levels within the Group with the support of well-defined policies and procedures:
(iv) Information and Communication
Information that gathered by business units from customers, suppliers, employees and
relevant trade organizations and authorities are discussed internally and are shared with Hong Kong headquarters management formally or informally to facilitate decision making process. Management report to the Board the latest date status on performance, developments, significant risks and major initiatives and other relevant issues, and the Board, in turn, communicate to management what information it needs and provide directions and feedbacks. There are at least four Board meetings every year.
(v) Monitoring
Monitoring ensures that internal control continues to operate effectively. It involves assessment by appropriate personnel of the design and operation of controls and taking of suitable follow-up actions.
The Board and Audit Committee oversee the process, assisted by internal audit team. There are two audit committee meetings annually. Audit plan and internal audit report were reviewed and approved by the Audit Committee. No significant internal control weaknesses in 2023 is noted.
Our external auditor, PricewaterhouseCoopers, performs independent statutory audits of the Group’s financial statements and reports to the Audit Committee any significant weaknesses in our internal control procedures which come to its notice during the course of the audit.
Overall Assessment for the Financial Year
1. The risk management and internal controls and accounting systems of the Group were in place and functioning effectively, and were designed to provide reasonable but not absolute assurance that material assets were protected, business risks attributable to the Group were identified and monitored, material transactions were executed in accordance with management’s authorization and the financial statements were reliable to produce.
2. There was an ongoing process in place for identifying, evaluating and managing the significant risks faced by the Group.
3. The resources, qualifications, experience, training programs and budget of the employees of the Group’s accounting and financial reporting teams were adequate.
4. The Board conducted a review of the effectiveness of the Group’s risk management and internal control systems, which cover all material control systems, policies and procedures. In particular, the Board evaluated the (i) four-layer control environment established by the Group; (ii) risk assessment and management process; (iii) various control activities by personnel at different levels within the Group; (iv) information reporting and analysis system; and (v) monitoring processes by the external auditor, the Audit Committee and the Board. No material internal control defect was noted in the review.
E.2. Anti-corruption Policy
The Company adopts a zero-tolerance policy towards all kinds of corruption and bribery in all business dealings of the Group. It is fully committed to conducting business with integrity and in compliance with all applicable laws and regulatory requirements for the prevention of corruption and bribery. Corrupt practices may subject the Group and individual employees to potential criminal and civil liabilities, which may in turn cause substantial impact on the reputation and operation of the Group.
In order to promote the awareness of anti-corruption and enhance the integrity standard among the Group’s employees, the Company has adopted an anti-corruption policy. All employees of the Group are required to observe the requirements stated in the policy and comply with the relevant code of conduct. During the year ended 31 December 2023, no material noncompliance
with any laws and regulations in relation to the corruption, bribery and fraudconcerning the Group and its employees had been identified.
E.3. Whistleblowing Policy
The Company is committed to achieving and maintaining the highest standards of openness, integrity and accountability. In order to enhance the efficiency in detecting and inhibiting any suspected misconduct, malpractice or irregularity, the Company has adopted the whistleblowing policy, which forms an essential part of the Company’s risk management and internal control system. Pursuant to the policy, employees of the Group and any third parties (including customers and suppliers) are encouraged to make a good faith report of any actual or suspected misconduct, malpractice or irregularity concerning the Group in a confidential manner. The policy provides certain reporting channels to the employees and third parties and set out clear guidelines for the investigation processes and notification of results.
F. Delegation by the Board
F.1. Management Functions
An issuer should have a formal schedule of matters specifically reserved to the board for its decision. The board should give clear directions to management as to the matters that must be approved by the board before decisions are made on behalf of the issuer.
The Board is responsible for formulating overall strategy, monitoring and controlling the performance of the Group whilst managing the Group’s business is the responsibility of Management.
When the Board delegates aspects of its management and administration functions to Management, it has given clear directions as to the powers of Management, in particular, with respect to the circumstances where Management shall report back and obtain prior approval from the Board before making decisions or entering into any commitments on behalf of the
Company.
The Company has established schedules of Matters Reserved to the Board for Decision and Matters Delegated to Management. The Board shall review those arrangements on a periodic basis to ensure that they remain appropriate to the needs of the Group. Matters Reserved to the
Board for Decision include:
1. business plan;
2. financial statements and budget;
3. mergers and acquisitions and other substantial investments;
4. formation of board committees;
5. appointment and resignation of Directors; and
6. appointment and removal of auditors.
F.2. Board Committees
Board committees should be formed with specific written terms of reference which clearly set out the committees’ authorities and duties.
Apart from the Audit Committee (particulars are disclosed under C.3), Remuneration Committee (particulars are disclosed under B.1) and Nomination Committee (particulars are disclosed under A.5), there are no other board committees established by the Board. Where board committees are established to deal with certain matters, the Board shall prescribe sufficiently clear terms of reference to enable such committees to discharge their functions properly. The terms of reference of board committees shall require such committees to report to the Board on their decisions or recommendations, unless there are legal or regulatory restrictions on theirability to do so.
G. Company Secretary
Ms. Chan Hoi Ying, the Company Secretary and an employee of the Company, confirmed that she has taken no less than 15 hours relevant professional training during the financial year. Ms. Chan reported to the chairman of the Board and is responsible for ensuring that the Board procedures, and all applicable laws, rules and regulations, are followed by the Directors.
H. Communication with shareholders
H.1. Effective Communication
The Board believes that effective and proper communications with shareholders play an
important role in creating shareholders’ value, enhancing the corporate transparency
and establishing market confidence. It endeavours to maintain an on-going dialogue with
shareholders. During the year ended 31 December 2023, the Company has established the
following communication channels:
1. updating the latest news and development of the Company in the “investor relations”
section of the Company’s website;
2. publishing the corporate communications such as annual reports, interim reports and
circulars in printed form and on the websites of the Stock Exchange and the Company at
www.hkexnews.hk and www.mainland.com.hk, respectively;
3. holding annual and special general meetings, which acted as forums for theshareholders to make comments and exchange views with the Directors and the seniormanagement of the Company. The chairman of the Board and the chairmen of the Audit,Remuneration and Nomination Committees attended the 2023 Annual General Meetingand were available to answer questions from shareholders; and
4. receiving enquiries from the shareholders, media and potential investors to the Company
via the website of the Company at www.mainland.com.hk or directed to the Company’shead office and principal place of business in Hong Kong at Rooms 2301 – 2305, 23rdFloor, FTLife Tower, 18 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong.
At the 2023 Annual General Meeting, a separate resolution was proposed by the Chairman in respect of each separate issue, including the re-election of Directors.
In compliance with Code Provision F.2.2, the chairman of the Board shall attend and invite the chairmen of the Audit, Remuneration and Nomination Committees to attend the 2024 Annual General Meeting. The external auditor of the Company shall also attend the 2024 Annual General Meeting to answer questions about the conduct of the audit, the preparation and content of the auditors’ report, the accounting policies and auditor independence.
The Company has reviewed the implementation and effectiveness of the shareholders’ communication policy during the year and considered it to be effective.
H.2. Procedures for putting forward proposals at general meetings
Any shareholder who wish to put forward proposals at general meetings of the Company shall submit such proposals to the Board in writing for its consideration not less than seven days prior to the date of a general meeting through the Company Secretary.
The Company also published all corporate correspondence on the Company’s website, www.mainland.com.hk.
H.3. Voting by Poll
The right to demand a poll was set out in the circular to shareholders of the Company dispatched together with the Annual Report. The results of the voting by poll would be published on the websites of the Stock Exchange and the Company respectively.
H.4. Convening of special general meetings on requisition by Shareholders
Shareholders shall have the right to request the Board to convene a special general meeting of the Company (“SGM”). In accordance with the Company’s bye-law No. 58, members holding not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Board or the Company Secretary, to require a SGM to be called by the Board for the transaction of any business or resolution specified in such requisition. The SGM shall be held in the form of a physical meeting only and within two months after the deposit of such requisition.
If within twenty-one days of such deposit the Board fails to proceed to convene the meeting, the requisitionists themselves may convene such physical meeting in accordance with the provisions of Section 74(3) of the Companies Act 1981 of Bermuda.
I. Constitutional Documents
The latest bye-laws of the Company is available on both the websites of the Company and the Stock Exchange.