The Board is committed to promoting and upholding good corporate governance in order to fulfill its mission of creating value for and maximising returns to the Shareholders. This report sets out the corporate governance structure and major corporate governance practices adopted by the Company.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Throughout the year ended 31 December 2010, the Company applied all the principles and fully complied with all the code provisions, and where appropriate, adopted the recommended best practices of the Code on Corporate Governance Practices contained in Appendix 14 to the Listing Rules (the "Corporate Governance Code").
CORPORATE GOVERNANCE STRUCTURE
The corporate governance structure of the Company is as follows:
THE BOARD OF DIRECTORS
Being accountable to the Shareholders, the Board has the responsibility for providing leadership and monitoring and controlling the Company and is collectively responsible for promoting the long-term sustainable and healthy development of the Group by directing and supervising the Company's affairs.
Composition of the Board
As of the date of this report, the Board comprised the following nine Directors, with a majority of whom are non-executive Directors (including the independent non-executive Directors):
| Category and name of Director | Date of first appointment to the Board |
Date of last re-election by the Shareholders |
| Executive Directors | ||
| Mr. Li Ning (Chairman) | 3 April 2004 | 14 May 2010 |
| Mr. Zhang Zhi Yong (Chief Executive Officer) | 6 May 2004 | 15 May 2009 |
| Mr. Chong Yik Kay (Chief Financial Officer) | 9 February 2009 | 15 May 2009 |
| Non-executive Directors | ||
| Mr. Lim Meng Ann | 6 May 2004 | 15 May 2009 |
| Mr. Chu Wah Hui | 1 June 2007 | 9 May 2008 |
| Mr. James Chun-Hsien Wei | 1 September 2007 | 9 May 2008 |
| Independent non-executive Directors | ||
| Mr. Koo Fook Sun, Louis | 6 May 2004 | 14 May 2010 |
| Ms. Wang Ya Fei | 6 May 2004 | 15 May 2009 |
| Mr. Chan Chung Bun, Bunny | 6 May 2004 | 14 May 2010 |
The composition of the Board is well balanced with each Director having sound knowledge, experience and expertise relevant to the business operations and development of the Group. There are no relationships (including financial, business, family or other material or relevant relationships) among members of the Board. Biographical details of the Directors are set out on pages 76 to 78 of this annual report.
All Directors are aware of their collective and individual responsibilities to the Shareholders and have exercised their duties with care, skill and diligence, in pursuit of the development of the Group. Every newly appointed Director receives a comprehensive, formal and tailored induction to ensure that he has a proper understanding of the business and operations of the Group and that he is fully aware of his duties and responsibilities as a director under applicable rules and requirements. Directors are updated on any developments or changes affecting their obligations from time to time.
Chairman and Chief Executive Officer
To ensure a balance of power and authority, the roles of the Chairman and the Chief Executive Officer are segregated and performed by Mr. Li Ning and Mr. Zhang Zhi Yong, respectively. There is a clear distinction between the Chairman's responsibility for providing leadership for the Board and the Chief Executive Officer's responsibility for managing the day-today operations of the Group's business.
Non-executive Directors and Independent Non-executive Directors
Non-executive Directors and independent non-executive Directors play an important check-and-balance role to safeguard the interests of the Company and the Shareholders as a whole, and will take the lead when potential conflicts of interests arise. The incumbent non-executive and independent non-executive Directors have extensive professional experience and have participated in the meetings of the Board in a conscientious and responsible manner. They serve actively on the Board and its committees to provide their independent and objective views, in particular, on issues of strategy, policy, performance, accountability, resources, key appointments and standards of conduct and to promote critical review and control.
In compliance with Rule 3.10(1) of the Listing Rules, the Company has appointed three independent non-executive Directors. One of the independent non-executive Directors has the appropriate qualifications in accounting or related financial management expertise as required by Rule 3.10(2) of the Listing Rules. The Company has received from each of the independent non-executive Directors an annual confirmation of his or her independence as required under the Listing Rules. Independence of each of the independent non-executive Directors has been assessed by the Board and the Board continues to consider each of them independent as required under the Listing Rules.
Principal Responsibilities of the Board
While delegating authority and responsibility for implementing business strategies and managing the day-to-day operations of the Group's business to the management, the Board is collectively responsible for formulating the strategic business direction of the Group and setting objectives for the management, overseeing its performance and assessing the effectiveness of management strategies. The Board reviews the operating performance against agreed targets and budgets on a regular basis and also exercises a number of reserved powers, including:
Responsibilities for Accounts
The Directors are responsible for preparation of the financial statements of the Group for each financial year and ensuring that these financial statements give a true and fair view of the state of affairs of the Group, its results and cash flows for that period. The Directors are also responsible for ensuring that proper accounting records which disclose the financial position of the Group are kept at all times.
Board Meetings
The Board holds at least four regular Board meetings a year at approximately quarterly intervals and additional Board meetings are held as and when necessary. Regular Board meetings are scheduled a year ahead to facilitate maximum attendance by the Directors. The meeting agenda is set after consulting with members of the Board so that all Directors have the opportunity to include matters in the agenda. The agenda and accompanying papers are normally sent to the Directors one week before the date of the meeting.
Directors can at any time request relevant information in their role as Directors. The management provides comprehensive reports on the Group's business progress, financial objectives, strategic and development plans to the Directors to enable them to make informed decisions on matters submitted for their approval at the Board meetings. The Board arranges, where appropriate, relevant members of the senior management to attend their meetings and report the latest situation about operations and respond to queries from the Directors.
Directors are required to declare their direct or indirect interests, if any, in any matter to be considered at Board meetings and interested Directors are required to abstain from voting and will not be counted in the quorum present in the Board meetings.
The Board held four meetings in 2009 and the attendance record of the Directors is set out below:
| Members of the Board | Number of Board meetings attended |
|
| Executive Directors | ||
| Mr. Li Ning | 5 out of 5 |
|
| Mr. Zhang Zhi Yong | 5 out of 5 |
|
| Mr. Chong Yik Kay | 5 out of 5 |
|
| Non-executive Directors | ||
| Mr. Lim Meng Ann | 4 out of 5 |
|
| Mr. Stuart Schonberger (Note) | 2 out of 2 |
|
| Mr. Chu Wah Hui | 5 out of 5 |
|
| Mr. James Chun-Hsien Wei | 5 out of 5 |
|
| Independent non-executive Directors | ||
| Mr. Koo Fook Sun, Louis | 5 out of 5 |
|
| Ms. Wang Ya Fei | 5 out of 5 |
|
| Mr. Chan Chung Bun, Bunny | 5 out of 5 |
|
Note:
Mr. Stuart Schonberger ceased to act as non-executive Director after completion of his term of service under his service agreement with the Company on 28 June 2010 and there were two Board meetings during his term of office in 2010.
Minutes of Board meetings record in sufficient detail the matters discussed and the decisions reached, including any concerns raised by Directors or dissenting views expressed. Draft and final version of the minutes are circulated to all Directors for their comments and records within a reasonable time after the meeting.
Directors' Appointment and Re-election
Each of the executive Directors, non-executive Directors and independent non-executive Directors has entered into a service agreement with the Company for a term of three years. Such term is subject to retirement by rotation at least once every three years and the Directors who are subject to retirement by rotation are eligible for re-election in accordance with the articles of association of the Company and the Listing Rules. A new Director appointed by the Board is subject to election by the Shareholders at the first general meeting after his or her appointment.
Directors' and Officers' Liability Insurance
The Company has arranged for appropriate insurance cover in respect of possible legal actions against its Directors and officers. The scope of coverage of the insurance is subject to review annually.
Board Committees
The Board is supported by a number of committees, including the Executive Committee, the Nomination Committee, the Remuneration Committee and the Audit Committee. Each Committee has its defined and written terms of reference approved by the Board covering its duties, powers and functions. The Committees are provided with sufficient internal and external resources to discharge their duties. Each Committee reports the outcome of the Committee's meetings to the Board, addressing major issues and findings, and making recommendations to assist the Board in its decision making.
Executive Committee
The Board has established the Executive Committee to enhance management efficiency since December 2004. The Executive Committee currently comprises seven members, namely:
| Mr. Zhang Zhi Yong (Chairman of the Committee) | Executive Director & Chief Executive Officer |
| Mr. Li Ning | Chairman of the Board & Executive Director |
| Mr. Chong Yik Kay | Executive Director & Chief Financial Officer |
| Mr. Guo Jian Xin | Vice President & Chief Operating Officer |
| Mr. Fang Shih Wei | Vice President & Chief Operating Officer |
| Mr. Zhang Hui | Vice President |
| Mr. Hsu Mao Chun, Morrison | Vice President & Chief Product Officer |
The Board has delegated the following duties to the Executive Committee:
The Board reviews the terms of reference of the Executive Committee regularly to ensure that proper and appropriate delegation of authority is achieved, and the delegation remains appropriate to the Company's needs.
Nomination Committee
The Nomination Committee has been established since June 2005 and currently consists of the following Directors:
| Mr. Lim Meng Ann (Chairman of the Committee) | Non-executive Director |
| Mr. Koo Fook Sun, Louis | Independent non-executive Director |
| Ms. Wang Ya Fei | Independent non-executive Director |
| Mr. Chu Wah Hui | Non-executive Director |
The Nomination Committee adopts the recommended terms of reference set out in the Corporate Governance Code as its terms of reference which are available on the Company's websites. Its primary role is to evaluate the structure, size and composition of the Board, to make recommendations to the Board on the appointment and succession of Directors based on certain criteria adopted by the Committee, including appropriate skills, knowledge and industry experience, personal ethics and integrity and time commitment to the Board's affairs. The process ensures that the Board comprises a sufficient number of Directors and consists of Directors having sound knowledge, experience and/or expertise pertaining to the business operations and development of the Group. The Nomination Committee considers the current structure, size and composition of the Board suitable for directing the Group's development and made no recommendations to the Board on any proposed changes during the year.
The Nomination Committee met twice in 2010 to review and discuss the competency model of the core management team to match with the Company's development strategy needs, which serves as a guidance for the work of the management. The attendance record of the members of the committee is set out below:
| Members of the Nomination Committee | Number of committee meetings attended |
| Mr. Lim Meng Ann | 2 out of 2 |
| Mr. Koo Fook Sun, Louis | 2 out of 2 |
| Ms. Wang Ya Fei | 2 out of 2 |
| Mr. Chu Wah Hui | 2 out of 2 |
In 2010, the Nomination Committee, together with the Board, assessed the independence of each of the independent non-executive Directors and continued to consider that all independent non-executive Directors were independent as required under the Listing Rules.
Remuneration Committee
The Remuneration Committee has been established since the Company's listing in June 2004. The primary responsibility of the Remuneration Committee is to formulate remuneration policies and structure for Directors and senior executives to enable the Company to attract, retain and motivate quality personnel which is essential to the long-term success of the Company.
The Remuneration Committee has adopted the terms of reference as outlined under the Corporate Governance Code. The current terms of reference of the Remuneration Committee are available on the Company's websites.
The Remuneration Committee currently consists of following three Directors:
| Ms. Wang Ya Fei (Chairman of the Committee) | Independent non-executive Director |
| Mr. Lim Meng Ann | Non-executive Director |
| Mr. Koo Fook Sun, Louis | Independent non-executive Director |
The Remuneration Committee met two times in 2010 and the attendance record of the members of the committee is set out below:
| Members of the Remuneration Committee | Number of committee meetings attended |
| Ms. Wang Ya Fei | 2 out of 2 |
| Mr. Lim Meng Ann | 2 out of 2 |
| Mr. Koo Fook Sun, Louis | 2 out of 2 |
The following is a summary of the major tasks carried out by the Remuneration Committee in 2010:
In discharge of its functions, the Remuneration Committee consults and seeks advice from the Chairman, the Chief Executive Officer, the Chief Financial Officer and the Human Resources Division of the Company. External professional consultants are engaged to provide advice on issues when the Remuneration Committee considers necessary.
The primary goal of the Group's remuneration policy for executive Directors is to enable the Company to retain and motivate executive Directors by linking their compensation with their individual performance as measured against the Group's corporate objectives and operating results, taking into account also the comparable market conditions. The principal elements of the remuneration package of an executive Director include basic salary, discretionary bonus, participation in the Company's share schemes and other benefits and allowances. Remuneration of non-executive Directors and independent nonexecutive Directors includes mainly director's fee which is a matter for the Board to decide by reference to the duties and responsibilities of non-executive Directors and independent non-executive Directors and the comparable market conditions. Non-executive Directors and independent non-executive Directors are also invited to participate in the Company's share schemes. The Company reimburses reasonable out-of-pocket expenses incurred by the Directors in the course of performing their duties as Directors.
Directors do not participate in decisions or attend meetings approving their own remuneration. The emoluments of each Director for the year ended 31 December 2010 are set out in note 25 to the consolidated financial statements.
Audit Committee
The Audit Committee was established since the Company's listing in June 2004. Its role is to assist the Board in discharging its responsibilities for monitoring the integrity of the Group's financial statements, overseeing the Group's financial reporting systems, internal control procedures and the Company's relationship with the external auditor.
The terms of reference of the Audit Committee follow the guidelines set out by the Hong Kong Institute of Certified Public Accountants and are in compliance with the Corporate Governance Code. To ensure compliance with the amended Corporate Governance Code effective from 1 January 2009, the terms of reference of the Audit Committee have been revised by the Board to include the oversight role of the Audit Committee to review the adequacy of resources, qualifications and experience of staff of the Company's accounting and financial reporting function, and their training programmes and budget. The current terms of reference are available on the Company's websites.
The Audit Committee currently consists of the following three Directors:
| Mr. Koo Fook Sun, Louis (Chairman of the Committee) | Independent non-executive Director |
| Ms. Wang Ya Fei | Independent non-executive Director |
| Mr. Chan Chung Bun, Bunny | Independent non-executive Director |
The Audit Committee met three times in 2010 and the attendance record of the members of the committee is set out below:
| Members of the Audit Committee | Number of committee meetings attended |
| Mr. Koo Fook Sun, Louis | 3 out of 3 |
| Mr. Stuart Schonberger (Note 1) | 1 out of 1 |
| Ms. Wang Ya Fei | 3 out of 3 |
| Mr. Chan Chung Bun, Bunny (Note 2) | 2 out of 2 |
Notes:
The external auditor, Chief Executive Officer, Chief Financial Officer and the heads of the Internal Audit Department and Accounting Management Department attended the meetings and provided necessary information and addressed questions from the Audit Committee.
The following is a summary of the work performed by the Audit Committee in 2010:
EXTERNAL AUDITOR
For the year ended 31 December 2010, the total remuneration for the audit services provided by the external auditor amounted to RMB3,900,000 (2009: RMB4,050,000). The audit fees were approved by the Audit Committee.
For the year ended 31 December 2010, the total remuneration for permissible non-audit services provided by the external auditor and its affiliates amounted to RMB1,029,000 (2009: RMB1,386,000). The non-audit services mainly comprised tax compliance and other tax advisory services. The Audit Committee had been notified with the non-audit services and fees and was satisfied that such services did not (in terms of the nature of services and the related fee levels) affect the independence of the external auditor.
Prior to commencement of the audit of the Company's accounts for year 2010, the Audit Committee had received a confirmation from the external auditor on their independence and objectivity. External audit partners are subject to periodic rotation.
The statement of the external auditor of the Company about their reporting responsibilities on the consolidated financial statements is set out on pages 109 and 110 of this annual report.
PricewaterhouseCoopers has been appointed as the external auditor of the Company since the Company's listing on the Hong Kong Stock Exchange in 2004. The re-appointment of PricewaterhouseCoopers as the external auditor of the Company has been recommended by the Audit Committee, endorsed by the Board and is subject to approval by the Shareholders at the forthcoming annual general meeting.
INTERNAL CONTROL
The Board has the responsibility to ensure that the Group's internal control system is sound and effective to safeguard the Shareholders' investment and the Company's assets. Accordingly, the Board has always attached great importance to internal control and offered support thereto.
In 2010, the Group further strengthened its internal control in various operational, financial and compliance aspects.
Internal Control System
Based on the experience in operation control over the years, the Company has put in place an integrated system of internal control. The system adopts the globally recognised framework outlined by the Committee of Sponsoring Organisations of the Treadway Commission ("COSO"), with the Group's business, operational and financial risks, corporate culture and management philosophy being taken into account. The system is designed to achieve (i) effectiveness and efficiency of operations; (ii) enhancement of reliability of internal and external financial reporting; and (iii) compliance with applicable laws and regulations. The system serves to provide reasonable, but not absolute, assurance against material misstatement, fraud or loss.
During the year, the Group continued to improve its internal control system aiming at providing effective control and forceful support, which are reflected mainly in the following aspects:
The Company has established a top-down organisational and management structure with clear-cut responsibilities and authorities for internal control purposes, embracing three levels which are responsible for ultimate accountability, supervision and implementation, respectively: (i) the Board has the ultimate accountability and authority in internal control management. It is externally accountable to the Shareholders for corporate governance responsibility, whereas internally it acts as the highest authority to foster internal control; (ii) the Audit Committee is responsible for supervising the establishment and operation of the internal control system by the management, monitoring the Group's internal control procedures and advising the Board on the effectiveness thereof. Preliminary assessment on the effectiveness of internal control is conducted by the Internal Audit Department which reports directly to the Audit Committee; (iii) the implementation level comprises a decision-making group (which is an executive team led by the Chief Executive Officer and the Chief Financial Officer being responsible for the daily internal control management), a coordination body (namely, the Internal Control Team, which is responsible for supporting the planning and establishment of the Group's internal control system, coordinating the promotion and implementation of the internal control structures in different systems, and organising examination on the effectiveness of the internal control and assessment of risks) and operational level (which are the units being responsible for execution of the internal control, including various operational and functional divisions and departments that are accountable to the establishment, enhancement and effectiveness of the internal control system).
During the year, in light of the changes of the Company's organisational structure, staff and business flow, the staff organisation under the internal control organisational structure was promptly updated and necessary training was carried out by the Company. The Internal Control Team convened regular internal control work meetings and reported in every meeting of the Audit Committee in relation to the Group's internal control work plans and progress for the supervision and guidance of the Audit Committee and the Board.
The Company pays much attention to the internal promotion on implementation of internal control and risk management. Internal control and risk management awareness was raised among the Company in various manners such as training programmes, regular briefing sessions and posters. An in-house newsletter "Risk Management Developments" (風險管理動態) is issued regularly to share with management staff material internal control and risk-related events in the external environment and draws their attention to internal control and risk management.
Annual Review
The Board is fully aware of its accountability in respect of the Group's internal control system and its responsibility for reviewing the effectiveness of the system. The enhancement of internal control is a continuous process and needs to be responsive and remain relevant over time in the continuously evolving business environment. The Group's internal control system is therefore subject to continuous review and improvement to enable the Group to have appropriate responses to any changing risks faced by the Group.
A comprehensive review on the effectiveness of the Group's internal control system is conducted annually, covering all material controls including financial, operational and compliance controls and risk management functions. The review is performed internally on a self-assessment approach (CSA) with a complete set of reporting forms. Persons in-charge of each division and department are requested to fill in the selfassessment review questionnaire against key items of internal control. In 2010, the Company continued to improve methods for self-assessment, which included simplifying questionnaires, use of information technology systems to complete the questionnaires and increasing the number of interviews. The self-assessment covered more than 70 divisions or departments based on the Company's organisational restructuring and business expansion. In addition, members of senior management were required to assess the effectiveness of the internal control system against the elements outlined by the COSO internal control system, including control environment, risk assessment, information and communication, and control. The review process has enabled the persons-in-charge to verify whether the internal control system is working as intended, to identify failures or weaknesses and to take relevant remedial actions. The Internal Audit Department also carried out independent examination and analysis on the reviewing process and the results. Based on the results, the Chief Executive Officer and the Chief Financial Officer submitted a declaration to the Audit Committee and the Board, certifying the adequacy and effectiveness of the Group's internal control system.
The results of the review conducted for the year ended 31 December 2010 have been reported to the Audit Committee and the Board. According to the results, the Audit Committee and the Board confirms that the systems and procedures of the Group's internal control are in good order and are able to identify, control and report on significant risks involved in achieving the Group's strategic objectives. Improvement areas of the systems and procedures have been identified and remedial actions have either been taken or designated to be taken. No material weaknesses have been identified so far and there were no significant areas of concern which may affect the Shareholders.
The Audit Committee and the Board also received the annual review results with regard to the adequacy of resources, qualifications and experience of the Group's accounting and financial reporting staff, and their training programmes and budget. In accordance with such results, the Audit Committee and the Board are of the view that the Group has an adequate number of accounting and financial reporting staff, with the necessary professional qualification and practicing experience to effectively perform their respective functions, and there have been sufficient training programmes and related budget for the staff.
The Board considers that the Group's internal control system is adequate and effective and the Company has complied with the code provisions in respect of internal control under the Corporate Governance Code for the year ended 31 December 2010.
Internal Audit
The Internal Audit Department has been established soon after the Company's listing on the Hong Kong Stock Exchange in 2004. The main functions of the Internal Audit Department are reviewing operational and financial conditions of the Group free from restrictions, so as to disclose potential risks, and to follow up with related remedial measures, with a view to continue to enhance operation effectiveness and efficiency of the Group. The Internal Audit Department plays an important role in the Group's internal control and risk management framework with an aim to providing objective assurance to the Audit Committee and the Board that a sound internal control system and risk management system is maintained and operated and that the risks associated with the achievement of business objectives are being managed properly and circumvented. The Internal Audit Department reports directly to the Chief Financial Officer and can refer matters to the Audit Committee directly. The head of the Internal Audit Department attends every meeting of the Audit Committee and maintains constructive dialogue with the Company's external auditor. The Internal Audit Department also collaborates with the external auditor where appropriate.
The Internal Audit Department formulates the internal audit plan every year in accordance with the Group's strategic goals and risk assessment results, and engages in related tasks with the approval and support of the Audit Committee. The tasks of the Internal Audit Department include (i) regular audit and evaluation of the operational effectiveness and efficiency of various business and functional systems; and (ii) special audits in various concerned areas designated by the management and the Audit Committee based on the assessment of risks. In the year 2010, the Internal Audit Department conducted audits on the product system, sales system, supply chain management system, retail subsidiaries and finance system of LI-NING brand, as well as on new business areas, including Double Happiness, Lotto, Kason and international markets, and submitted the relevant audit reports to the Audit Committee, Chief Executive Officer and Chief Financial Officer.
For material audit findings and risk factors, the Internal Audit Department will notify the Audit Committee and the management of such risks in a timely manner, and will regularly follow up with the improvement progress. As at 31 December 2010, various audit findings and risk factors had been or were being properly handled by the management, and there were no material irreparable audit findings and risk factors. Based on the risk assessment and the Group's strategic focus, the Internal Audit Department has planned to carry out audits focusing on brand, sales channels (including various regions and retail subsidiaries), supply chain, human resources, information technology system and new businesses in 2011.
The Internal Audit Department also plays an important role in the realm of internal control and risk management system and is responsible for reviewing and assessing the adequacy and compliance level of the Group's internal control system and risk management system and providing an independent and objective opinion on the effectiveness of the systems. In 2010, the Internal Audit Department participated in certain parts of the relevant work on reviewing the risk management system and internal control, and also conducted audits on the implementation of the risk management review of sales channels and the internal control review of the information technology system.
PRICE SENSITIVE INFORMATION
With respect to procedures and internal controls for the handling and dissemination of price-sensitive information, the Company is fully aware of its obligations under the Listing Rules and the overriding principle that price-sensitive information should be announced immediately when it is the subject of a decision. The Company reviews from time to time its internal guidelines on price sensitive or potentially price sensitive information by reference to its own and industry circumstances and the Guide on Disclosure of Price-Sensitive Information issued by the Hong Kong Stock Exchange. The Company's policy contains a strict prohibition on the unauthorised use of confidential or insider information and has established and implemented procedures for responding to external enquiries about the Group's affairs. The Chairman, Chief Executive Officer and the Chief Financial Officer are identified and authorised to act as the Company's spokespersons to respond to enquiries made in relation to the Group's affairs.
COMPLIANCE WITH THE MODEL CODE ON SHARE DEALINGS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in Appendix 10 to the Listing Rules regarding securities transactions by its Directors. Directors are reminded regularly of their obligations under the Model Code. Following specific enquiry by the Company, all Directors have confirmed that they have complied with the required standard set out in the Model Code throughout the year ended 31 December 2010.
Employees who are likely to be in possession of unpublished price-sensitive information of the Group are also subject to the compliance with guidelines on no less exacting terms than the Model Code. No incident of non-compliance was noted by the Company in year 2010.
SHAREHOLDERS' RIGHTS
Under the Company's articles of association, any one or more Shareholders 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 to require an extraordinary general meeting to be called by the Board for transactions of any business specified in such requisition. Such requisition can be deposited at the Company's principal place of business in Hong Kong situated at Suites 2804-5, Times Square, Shell Tower, Causeway Bay, Hong Kong. Shareholders may also send their enquiries which require the Board's attention to the same address.
For the year 2010, there was no change made in the Company's articles of association.
SHAREHOLDERS' MEETINGS
Shareholders' meetings provide a principal channel of direct communication between the Company and the Shareholders. They provide an opportunity for Shareholders to better understand the Group's operation, financial performance, business strategies and outlook.
The Company has adopted poll voting in its Shareholders' meetings since listing in 2004 before poll voting was made mandatory for all general meetings effective from 1 January 2009 under the Listing Rules. All resolutions put forward at any Shareholders' meeting are voted by poll so that each Share is entitled to one vote. The procedures for demanding and conducting a poll are included in the circular to the Shareholders accompanying the notice of the meeting and are explained at the beginning of the meeting.
The last annual general meeting, which was also the last Shareholders' meeting of the Company, was held on 14 May 2010. To encourage Shareholders to attend the meeting, more than 20 clear business days' notice and a circular containing necessary information were given to Shareholders so as to enable them to make informed decisions on the resolutions proposed to be considered in the meeting. A majority of the Directors, including all executive Directors, a non-executive Director and all independent non-executive Directors, and the Company's external auditor were present at the meeting. A question and answer session was available for Shareholders to raise questions.
At the last annual general meeting, separate resolutions were proposed for the following businesses and were voted by poll:
All the resolutions proposed at the last annual general meeting were approved by Shareholders. The poll was scrutinised by the Company's Hong Kong branch share registrar in the meeting. Details of the poll results were declared at the meeting and the poll results announcement made pursuant to the Listing Rules was published on the same day of the meeting.
No extraordinary general meeting was held during the year. The next annual general meeting of Shareholders will be held on 13 May 2011. Details of the meeting and necessary information on issues to be considered in the meeting are set out in the circular dispatched to the Shareholders together with the Company's annual report 2010.
WAY FORWARD
During the year, the Company was delighted to be one of the awardees at the "Class of 2010 The Best of Asia" by Corporate Governance Asia, one of the Region's most authoritative publications on corporate governance. The award is a stamp of approval to the Group's continued efforts to ensure that its affairs are conducted in an ethical, transparent and accountable manner. In December 2010, the Company was also honoured to be one of the awardees of the Titanium Award for "Corporate Governance, Social Responsibility and Investor Relations" in "The Assets Corporate Awards" by The Asset, an Asia's leading financial publication.
Corporate governance is a continuous process. The Board will continue to review and improve its corporate governance regime in response to internal and external changes with an aim to maintain a high degree of transparency, accountability and independence.
By order of the Board
| Zhang Zhi Yong | Chong Yik Kay |
| Executive Director & Chief Executive Officer | Executive Director & Chief Financial Officer |
Hong Kong, 16 March 2011
updated 21st July, 2011
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