Terms of Reference

Audit Committee
Remuneration Committee
Nomination Committee
Terms of Reference of the Audit Committee
  • PURPOSE
    1. 1.1 The purpose of the Committee is to assist the Board in establishing formal and transparent arrangements to consider how the Board should apply financial reporting and internal control principles and for maintaining an appropriate relationship with the Company’s auditors and to develop and evaluate the corporate governance practices of the Company with the goal of achieving high standards of corporate governance to safeguard the interests of all shareholders of the Company.
  • COMPOSITION
    1. 2.1 The Committee shall comprise a minimum of three members consisting of non-executive directors only and a majority of which must be independent non-executive directors of the Company. The Committee must comprise of at least one independent non-executive director who has appropriate professional qualifications or accounting or related financial management expertise as required under Rule 3.10(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) (as amended from time to time). Members of the Committee shall be appointed by the Board.
    2. 2.2 The Board shall appoint one member of the Committee as the chairman (the “Chairman”), who must be an independent non-executive director.
    3. 2.3 A former partner of the Company’s existing auditing firm shall be prohibited from acting as a member of the Committee for a period of two years from the date of his ceasing: (i) to be a partner of the firm; or (ii) to have any financial interest in the firm, whichever is later.
  • MEETINGS
    1. 3.1 Unless otherwise specified hereunder, the provisions contained in the Company’s articles of association (the “Articles”) (as amended from time to time) for regulating meetings and proceedings of directors shall apply to the meetings and proceedings of the Committee.
    2. 3.2 Members of the Committee may attend meetings of the Committee either in person or through other electronic means of communication or in such other manner as the members may agree.
    3. 3.3 The Committee shall meet at least twice annually or more frequently if circumstances require.
    4. 3.4 The Board, any member of the Committee and the external auditors may request a meeting if they consider that one is necessary.
    5. 3.5 The chief financial officer of the Company and at least one representative of each of the external auditors shall normally attend meetings. Other members of the Board shall also have the right of attendance. However, the Committee shall meet with the external auditors at least twice a year. At least once a year the Committee shall meet with the external without executive directors present.
    6. 3.6 Members of the Committee may be represented at a meeting of the Committee by an alternative appointed by him or her or his or her alternate.
    7. 3.7 The Chairman shall be responsible for leading the Committee, including scheduling meetings, preparing agendas and making regular reports to the Board.
    8. 3.8 A meeting of the Committee may be convened by any of its members.
    9. 3.9 A quorum shall be two members of the Committee.
    10. 3.10 Unless otherwise agreed by all the members of the Committee, notice of at least seven days shall be given for a regular meeting of the Committee. For all other meetings of the Committee, reasonable notice shall be given. The Chairman shall determine whether or not a meeting of the Committee is a regular meeting.
    11. 3.11 The agenda and accompanying supporting papers shall be sent to all members of the Committee and to other attendees as appropriate at least three days before the date of the meeting (or such other period as the members may agree).
    12. 3.12 Each member shall have one voting right. Subject to the Articles, questions arising at any meeting of the Committee shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote.
    13. 3.13 The members of the Committee shall appoint a secretary of the Committee (the “Secretary”) to take minutes. In the absence of the Secretary, his/her delegate(s) or any person elected by the members present at the meeting of the Committee, shall attend the meeting of the Committee and take minutes. Any such minutes shall be conclusive evidence of any such proceedings if they purport to be signed by the Chairman or the Secretary of the meeting or succeeding meeting.
    14. 3.14 Full minutes of meeting of the Committee shall be kept by the Secretary or any one of the joint company secretaries of the Company. They shall be open for inspection at any reasonable time on reasonable notice by any director.
    15. 3.15 Minutes of meetings of the Committee and the record of individual attendance at such meetings shall be prepared by the Secretary which shall be sent to all members of the Board within a reasonable time after the conclusion of any meeting of the Committee for their comment and records. For the purposes of recording attendance only, the attendance of an alternate of members of the Committee will not be counted as attendance by the relevant member of the Committee himself or herself. The minutes of meetings shall record details of the matters considered and decisions reached, including any concerns raised by directors or dissenting views expressed. Minutes of meetings shall be kept by the Secretary and shall be open for inspection at any reasonable time on reasonable notice by any director.
    16. 3.16 Without prejudice to any requirement under the Listing Rules, a resolution in writing signed by all of the members of the Committee (or their respective alternate) shall be as valid and effectual as if it had been passed at a meeting of the Committee duly convened and held.
  • ACCESS
    1. 4.1 The Committee shall have full access to management and may invite members of management or others to attend its meetings.
    2. 4.2 The Company should provide the Committee with sufficient resources to perform its duties, including but not limited to obtaining independent professional advice and assistance from internal or external legal, accounting or other advisors at the expense of the Company if necessary.
  • REPORTING PROCEDURES
    1. 5.1 The Committee shall evaluate and assess its effectiveness and the adequacy of these Terms of Reference on an annual basis and recommend any proposed changes to the Board.
    2. 5.2 The Committee shall report back to the Board on their decisions or recommendations, unless there are legal or regulatory restrictions on their ability to do so (such as a restriction on disclosure due to regulatory requirements).
  • AUTHORITY
    1. 6.1 The authorities and responsibilities of the Committee shall include such responsibilities and authorities set out in the relevant code provisions of the Corporate Governance Code (the “CG Code”) as contained in Appendix 14 to the Listing Rules (as amended from time to time).
    2. 6.2 The Committee is authorized by the Board to investigate any activity within these Terms of Reference. It is authorized to seek any information it requires from any employee and all employees will be directed to co-operate with any request made by the Committee.
    3. 6.3 Where the Board disagrees with the Committee’s view on the selection, appointment, resignation or dismissal of the external auditors, the Company should include in the corporate governance report a statement from the Committee explaining its recommendation and also the reason(s) why the Board has taken a different view.
  • DUTIES
    1. 7.1 Without prejudice to any requirements under the CG Code, the duties of the Committee shall include the following:
    2. (a) to be primarily responsible for making recommendations to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of its resignation or dismissal;
    3. (b) to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;
    4. (c) to develop and implement policies on engaging an external auditor to supply non-audit services. For this purpose, an “external auditor” includes any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party knowing all relevant information would reasonably conclude to be part of the audit firm nationally or internationally. The Committee should report to the Board, identifying and making recommendations on any matters where action or improvement is needed;
    5. (d) to monitor the integrity of the Company’s financial statements, annual reports, accounts, half yearly reports and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in them. In reviewing these reports before submission to the Board, the Committee should focus particularly on:
    6.       (i)any changes in accounting policies and practices;
    7.       (ii)major judgemental areas;
    8.       (iii)significant adjustments resulting from the audit;
    9.       (iv)the going concern assumptions and any qualifications;
    10.       (v)compliance with accounting standards; and
    11.       (vi) compliance with the Listing Rules and legal requirements in relation to financial reporting;
    12. (e) regarding paragraph (d) above:
    13.       (i) members of the Committee should liaise with the Board and senior management and the Committee must meet, at least twice a year, with the Company’s auditors; and
    14.       (ii) the Committee should consider any significant or unusual items that are, or may need to be, reflected in report and accounts, it should give due consideration to any matters that have been raised by the Company’s staff responsible for the accounting and financial reporting function, compliance officer or auditors;
    15. (f) to review the Company’s financial controls, risk management and internal control systems;
    16. (g) to discuss the risk management and internal control systems with management to ensure that management has performed its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programs and budget of the Company’s accounting and financial reporting function;
    17. (h) to consider major investigation findings on risk management and internal control matters as delegated by the Board or on its own initiative and management’s response to these findings;
    18. (i) where an internal audit function exists, to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor its effectiveness;
    19. (j) to review the Company and its subsidiaries’ and consolidated affiliated entities’ operating, financial and accounting policies and practices;
    20. (k) to review the external auditor’s management letter, any material queries raised by the auditor to management about accounting records, financial accounts or systems of control and management’s response;
    21. (l) to ensure that the Board will provide a timely response to the issues raised by external auditor’s management letter;
    22. (m)to report to the Board on the matters in the CG Code;
    23. (n) to review arrangements employees of the Company can use, in confidence, to raise concerns about possible improprieties in financial reporting, internal control or other matters and to ensure that proper arrangements are in place for fair and independent investigation of these matters and for appropriate follow-up action;
    24. (o) to act as the key representative body for overseeing the Company’s relations with the external auditor;
    25. (p) to review ongoing connected transactions of the Company and ensure compliance with terms of approval by shareholders of the Company; and
    26. (q) to consider such other matters as the Board may from time to time determine.
  • ANNUAL GENERAL MEETING
    1. 8.1 The Chairman or in his absence, another member of the Committee or failing this, his or her duly appointed delegate, shall attend the annual general meeting (the “AGM”) of the Company and be prepared to respond to questions at the AGM on the Committee’s work and responsibilities.
Terms of Reference of the Remuneration Committee
  • Members
    1. 1.1 The remuneration committee should be established by the board of the Company (“Board”).
    2. 1.2 The majority of remuneration committee members (“Members”) must be independent non-executive director.
    3. 1.3 The remuneration committee must be chaired by an independent non-executive director and appointed by the Board.
    4. 1.4 The term of appointment to remuneration committee members are determined by the Board at the appointment date.
  • Secretary
    1. 2.1 The company secretary of the Company shall act as the secretary of the remuneration committee.
    2. 2.2 The remuneration committee may from time to time, appoint any other person with appropriate qualification and experience to act as the secretary of the remuneration committee.
  • Meeting
    1. 3.1 The remuneration committee should meet at least once a year.
    2. 3.2 Notice of at least 14 days should be given for any meeting, unless such notification is waived by all members of the remuneration committee. Notwithstanding the notification period, the attendance of the member of the committee at the meeting would deemed to be treated as the waiver of the required notification requirement. If the follow up meeting takes place within 14 days after the meeting, then no notification is required for such follow up meeting.
    3. 3.3 The quorum necessary for the transaction of business of the remuneration committee shall be two members of the remuneration committee, one of whom must be an independent non-executive director.
    4. 3.4 Meeting can be attended in person or via electronic means including telephonic or videoconferencing. The members of the remuneration committee can attend the meeting via telephonic or any similar communication device (all persons attending such meeting should be able to hear from such member via such communication device).
    5. 3.5 The resolution of the remuneration committee should be passed by more than half of the members.
    6. 3.6 The resolution passed and signed by all members of the remuneration committee is valid, and the validity is same as any resolution passed in the meeting held.
    7. 3.7 Full minutes of remuneration committee meeting should be kept by a duly appointed secretary of the remuneration committee and be available for review by the directors. Draft and final versions of minutes of the meeting should be sent to all committee members for their comment and records, within a reasonable time after the meeting.
  • Meeting attendance
    1. 4.1 Upon invitation from the remuneration committee, the chairman of the Board and/or the general manager or the chief executive officer, external advisor and the other persons can be invited to attend all or part of any meeting.
    2. 4.2 Only the member of remuneration committee can vote in the meeting.
  • Annual General Meeting
    1. 5.1 The chairman of remuneration committee or (if absent) the other member of remuneration committee (must be an independent non-executive director) should attend the annual general meeting of the Company, handled the shareholders’ enquiry on the activities and responsibilities related to the remuneration committee.
  • Duties and Powers
    The remuneration committee shall have the following duties and powers:
    1. 6.1 to make recommendations to the Board on the Company’s policy and structure for all directors’ and senior management remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy;
    2. 6.2 to review and approve the management’s remuneration proposals with reference to the Board’s corporate goals and objectives;
    3. 6.3 either: (i) to determine, with delegated responsibility, the remuneration packages of individual executive directors and senior management; or (ii) to make recommendations to the Board on the remuneration packages of individual executive directors and senior management. This should include benefits in kind, pension rights and compensation payments, including any compensation payable for loss or termination of their office or appointment;
    4. 6.4 to make recommendations to the Board on the remuneration of non-executive directors;
    5. 6.5 to consider salaries paid by comparable companies, time commitment and responsibilities and employment conditions elsewhere in the group;
    6. 6.6 to review and approve the compensation payable to executive directors and senior management for any loss or termination of office or appointment to ensure that it is consistent with contractual terms and is otherwise fair and not excessive;
    7. 6.7 to review and approve compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that they are consistent with contractual terms and are otherwise reasonable and appropriate; and
    8. 6.8 to ensure that no director or any of his associates is involved in deciding his own remuneration.
  • Declaration responsibility
    1. 7.1 The remuneration committee shall report to the Board every time after any meeting of the remuneration committee.
  • Authority
    1. 8.1 The remuneration committee should consult the chairman of the Board and/or the chief executive about their remuneration proposals for other executive directors.
    2. 8.2 The remuneration committee is authorized to request the senior management of the Company to provide any required resources information related to the remuneration package to perform its duties.
    3. 8.3 The remuneration committee should have access to independent professional advice in the expense of the Company if necessary, in order to fulfil his responsibility of being the remuneration committee member.
      Remark: the independent professional advice can be seek via the company secretary.
    4. 8.4 The remuneration committee should be provided with sufficient resources to perform its duties.
      Remark: “senior management” refers to the same persons referred to in the Company’s annual report. It is the responsibility of the directors of the Company to determine which individual or individuals constitute senior management.
      Senior management may include directors of subsidiaries, heads of divisions, departments or other operating units within the group as, in the opinion of the Company’s directors, is appropriate.
Terms of Reference of the Nomination Committee
  • Member
    1. 1.1 The nomination committee shall be established by the board of the Company (the “Board”) and it shall comprise a majority of independent non-executive directors.
    2. 1.2 The chairman of the nomination committee shall be the chairman of the Board or an independent non-executive director within the nomination committee appointed by the Board.
    3. 1.3 The term of each appointment to the members of the Nomination Committee shall be determined by the Board upon appointment.
  • Secretary of Nomination Committee
    1. 2.1 The company secretary of the Company shall act as the secretary of the nomination committee.
    2. 2.2 The nomination committee may from time to time, appoint any other person with appropriate qualification and experience to act as secretary of the nomination committee.
  • Meeting
    1. 3.1 The member of nomination committee can call for a meeting when it is necessary and should meet at least once a year.
    2. 3.2 Notice of at least 48 hours should be given for any meeting, unless such notification is waived by all members of the nomination committee. Notwithstanding the notice period, the attendance of the member of the nomination committee at the meeting would be deemed a the waiver of the required notice requirement. If a follow up meeting takes place within 48 hours after the meeting, then no notification is required for such follow up meeting.
    3. 3.3 The quorum necessary for the transaction of business of the nomination committee shall be two members of the nomination committee, one of whom must be an independent non-executive director.
    4. 3.4 Meeting can be attended in person or via electronic means including telephonic or video conferencing. The members of the nomination committee can attend the meeting via telephonic or any similar communication device (all persons attending such meeting should be able to hear from such member via such communication device).
    5. 3.5 Resolutions of the nomination committee shall be passed by a majority of votes of the members in attendance.
    6. 3.6 A resolution passed and signed by all members of nomination committee is valid, and the validity is same as any resolution passed at the meeting held.
    7. 3.7 Full minutes of nomination committee meeting shall be kept by the secretary of the nomination committee and be available for review by the directors. Draft and final versions of minutes of the meeting should be sent to all committee members for their comment and records, within a reasonable time after the meeting.
  • Meeting attendance
    1. 4.1 Upon the invitation from the nomination committee, the chairman of the Board and/or the general manager or chief executive, external advisor and the other persons can be invited to attend all or part of any meeting.
    2. 4.2 Only the member of the nomination committee can vote in the meeting.
  • Annual General Meeting
    1. 5.1 The chairman of the nomination committee or (if absence) another member of the nomination committee (who must be an independent non-executive director) shall attend the annual general meeting of the Company, and be prepared to respond to the shareholders questions on the activities and responsibilities of the nomination committee.
  • Duties and Powers
    The nomination committee shall have the following duties and powers:
    1. 6.1 review the structure, size and composition (including the skills, knowledge, experience and diversity of perspectives) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the Company’s corporate strategy;
    2. 6.2 identify individuals suitably qualified to become Board members and select or make recommendations to the Board on the selection of individuals nominated for directorships;
    3. 6.3 assess the independence of independent non-executive directors;
    4. 6.4 make recommendations to the Board on the appointment or re-appointment of directors and succession planning for directors, in particular the chairman and the chief executive;
    5. 6.5 review the policy on Board diversity (the “Board Diversity Policy”) and any measurable objectives for implementing such Board Diversity Policy as may be adopted by the Board from time to time and to review the progress on achieving the objectives; and to make disclosure of its review results in the annual report of the Company annually; and
    6. 6.6 where the Board proposes a resolution to elect an individual as an independent non-executive director at the general meeting, it should set out in the circular to shareholders and/or explanatory statement accompanying the notice of the relevant general meeting why they believe he should be elected and the reasons why they consider the individual to be independent.
  • Declaration responsibility
    1. 7.1 The nomination committee shall report to the Board every time after any meeting of the nomination committee.
  • Authority
    1. 8.1 The nomination committee may seek independent professional advice at the Company’s expense, and invite an independent party possessing a relevant experience and profession to attend the meeting if necessary, in order to discharge its duties.
    2. 8.2 The nomination committee shall be provided with sufficient resources to perform its duties.
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