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CORPORATE GOVERNANCE PRACTICES

The Company is committed to the establishment of good corporate governance practices and procedures which serves as an important element of risk management throughout the growth and expansion of the Company. The Company emphasizes on maintaining and carrying out sound, solid and effective corporate governance principles and structures.

The Board has reviewed the Company’s corporate governance practices and is satisfied that the Company has complied with all the applicable code provisions set out in the Corporate Governance Code (the “Code”) contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) throughout the year ended 31 December 2017, save and except for the following deviations:

Code provision A.6.7 stipulates that, among others, the independent non-executive Directors and other non-executive Directors should attend general meetings of the Company. Mr. Zhang Xin Zhi, an independent non-executive Director, was unable to attend the annual general meeting of the Company held on 29 May 2017 (“2017 AGM”) due to other business commitment.

Code provision A.2.1 stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. On 14 September 2016, Mr. Xuan Rui Guo, the Chairman and executive Director of the Company, was appointed as the Chief Executive Officer of the Company. The Board believes that with the support of the management, vesting the roles of both chairman and chief executive officer by the same person can facilitate execution of the Group’s business strategies and boost effectiveness of its operation. In addition, under the supervision by the Board which currently consists of two executive Directors and three independent non-executive Directors, the interests of the shareholders of the Company will be adequately and fairly represented.

The Company will continue to review and enhance its corporate governance practices to ensure compliance with the Code.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) set out in Appendix 10 of the Listing Rules as its own code of conduct regarding directors’ securities transactions. The Company has made specific enquiries of all the Directors, and all of them had confirmed that they have complied with the required standard set out in the Model Code during the year ended 31 December 2017.

BOARD OF DIRECTORS

The overall management of the Company’s business is vested in the Board. The Board has delegated the day-to-day management of the Company’s business to the executive management team, and focuses its attention on matters affecting the Company’s overall strategic policies, finances and shareholders. Major responsibilities of the Board include approving the Company’s overall business, financial and technical strategies, setting key performance targets, approving budgets and overseeing the performance of management.

As at the date of this annual report, the Board comprises five members, consisting of two executive Directors, namely Mr. Xuan Rui Guo (the Chairman and the Chief Executive Officer) and Mr. Wang Chuensheng; and three independent non-executive Directors, namely Mr. Wang Tai Wen, Mr. Zhang Xin Zhi and Mr. Ng Wing Fai.

Non-executive Directors have a term of office of three years, subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Company’s bye-laws. The relationship among members of the Board (including financial, business, family or other material or relevant relationships, if any) are also disclosed.

The Company has received from each independent non-executive Director an annual confirmation of his independence pursuant to Rule 3.13 of the Listing Rules, and considers all of the independent non-executive Directors to be independent.

Four Board meetings were held during the year ended 31 December 2018. Directors actively participated in each meeting in person or via telephone conferencing. Directors received reports on the activities of the operating divisions and present papers supporting decisions which required the Board’s approval. The Board’s consents were given by vote at the Board meetings.

If a Director has a conflict of interest in a transaction or proposal to be considered by the Board and which the Board has determined to be material, the individual Director concerned must declare his interest and is required to abstain from voting. The matter is considered at a Board meeting attended by independent non-executive Directors who have no material interest in the transaction.

Details of the attendance of Directors at these Board meetings, committee meetings (the Audit Committee, the Remuneration Committee and the Nomination Committee) and general meetings in the Relevant Period are set out in the following table:


Number of meetings attended / Number of meetings held (during Director's tenure)
Name of Directors Board Audit Committee Remuneration Committee Nomination Committee AGM
Executive Directors

Mr. Xuan Rui Guo
Mr. Wang Chuensheng

 
4 / 4
4 / 4

 
N/A
N/A

 
1 / 1
N/A

 
1 / 1
N/A

 
1 / 1
N/A

Independent non-executive Directors

Mr. Wang Tai Wen
Mr. Ng Wing Fai
Mr. Zhang Xin Zhi

 
4 / 4
4 / 4
4 / 4

 
2 / 2
2 / 2
2 / 2

 
1 / 1
1 / 1
1 / 1

 
1 / 1
1 / 1
1 / 1

 
1 / 1
1 / 1
1 / 1


Minutes of Board meetings are taken by the company secretary and, together with any supporting documents, are available to all the Directors. Draft and final versions of the minutes are sent to all the Directors for their comment and record respectively.

The company secretary regularly updates the Board on governance and regulatory matters.

Whenever the Board appoints a new Director, such new Director receives formal and comprehensive induction on the first occasion of his/her appointment to ensure proper understanding of the business and operations of the Company and full awareness of director’s responsibilities and obligations under the Listing Rules and relevant statutory requirements.

The Directors acknowledge the need to continue to develop and refresh their knowledge and skills for making contributions to the Company. The Directors confirmed that they have complied with the code provision A.6.5 of the Code on Directors’ training. The participation by individual Directors in the continuous professional development program with appropriate emphasis on the roles, functions and duties of a director of a listed company in 2018 is recorded in the table below.


Name of Directors Reading regulatory updates Attending external seminars/programmes
Executive Directors

Mr. Xuan Rui Guo
Mr. Wang Chuensheng

 

 

Independent non-executive Directors

Mr. Wang Tai Wen
Mr. Ng Wing Fai
Mr. Zhang Xin Zhi

 


 



AUDIT COMMITTEE

The Audit Committee was established in June 2007 and its current members include:
Mr. Ng Wing Fai (Committee Chairman)
Mr. Wang Tai Wen
Mr. Zhang Xin Zhi

The Board considers that each Audit Committee member has broad commercial experience and there is a suitable mix of expertise in legal, business and accounting on the Audit Committee. The composition and members of the Audit Committee complies with the requirements under Rule 3.21 of the Listing Rules. The written terms of reference which describe the authority and duties of the Audit Committee were approved and adopted on 30 March 2012 to conform to the provisions of the Code and the Listing Rules.

The Audit Committee meets regularly to review the Group’s financial reporting and other information provided to shareholders, the system of internal control, risk management, and the effectiveness and objectivity of the audit process. The Audit Committee also provides an important link between the Board and the Company’s auditors in matters coming within the scope of its terms of reference and keeps under review the independence and objectivity of the auditors.

Two Audit Committee meetings were held during the Relevant Period to review and discuss risk management, internal control and financial reporting matters including a review of the financial statements for the six months ended 30 June 2018 and the year ended 31 December 2018.

REMUNERATION COMMITTEE

The Remuneration Committee was established in June 2007 and its current members include:
Mr. Wang Tai Wen (Committee Chairman)
Mr. Zhang Xin Zhi
Mr. Ng Wing Fai
Mr. Xuan Rui Guo

The Remuneration Committee advises and makes recommendations to the Board on the Group’s overall policy and structure for the remuneration of Directors and senior management. The Remuneration Committee ensures that no Director or any of his associate is involved in deciding his own remuneration. The terms of reference of the Remuneration Committee were approved and adopted on 30 March 2012 to conform to the provisions of the Code.

In determining the emolument payable to Directors, the Remuneration Committee takes into consideration factors such as salaries paid by comparable companies, time commitment and responsibilities of the Directors, employment conditions elsewhere in the Group and the desirability of performance-based remuneration.

The Remuneration Committee meets regularly to determine the policy for the remuneration of Directors and assess performance of executive Directors and certain senior management. One Remuneration Committee meeting was held during the Relevant Period and all members have attended the meeting.

NOMINATION COMMITTEE

The Nomination Committee was established in June 2007 and its current members include:
Mr. Zhang Xin Zhi (Committee Chairman)
Mr. Ng Wing Fai
Mr. Wang Tai Wen
Mr. Xuan Rui Guo

The written terms of reference which describe the authority and duties of the Nomination Committee were approved and adopted on 30 March 2012 and amended on 28 December 2018 to conform to the provisions of the Code and the Listing Rules.

The principal duties of the Nomination Committee include reviewing the Board composition, developing and formulating relevant procedures for nomination and appointment of Directors, making recommendations to the Board on the appointment and succession planning of Directors, and assessing the independence of the independent non-executive Directors.

The Nomination Committee reviewed the structure, size and composition of the Board to ensure that it has a balance of expertise, skills and experience appropriate for the requirements of the business of the Company. One Nomination Committee meeting was held during the Relevant Period and all members have attended the meeting.

The Board adopted a board diversity policy (“Board Diversity Policy”) for the Company in August 2013 which stipulates that for selection of candidates to become Directors, the Nomination Committee should take into consideration a range of diversity perspectives, including but not limited to age, experience, cultural and educational background, expertise, skills and know-how. The Board Diversity Policy is available on the Company’s website. The Committee will review the policy to ensure its effectiveness.

Pursuant to articles 86 and 87 of the articles of association of the Company, Mr. Wang Chuensheng and Mr. Zhang Xin Zhi shall retire from office by rotation at the annual general meeting and shall be eligible for re-election.

AUDITORS’ REMUNERATION

For the year ended 31 December 2018, the fees charged by the Company’s auditors in respect of audit and non-audit (taxation) services amounted to approximately RMB3,125,000 for the year ended (2017: RMB4,200,000) and RMB150,000 for the year ended (2017: RMB200,000) respectively.

CORPORATE GOVERNANCE FUNCTIONS

The Board is responsible for determining the policy for the corporate governance of the Company and performing the corporate governance duties as follows:
(i) to develop, review and update the Company’s policies and practices on corporate governance;
(ii) to review and monitor the training and continuous professional development of directors and senior management;
(iii) to review and monitor the Company’s policies and practices on compliance with legal and regulatory requirements;
(iv) to develop, review and monitor the code of conduct and compliance manual (if any) applicable to the employees and directors;
(v) to review the Company’s compliance with the code of corporate governance and disclosure in the Corporate Governance Report; and
(vi) to perform such other corporate governance duties and functions set out in the code of corporate governance (as amended from time to time) for which the Board are responsible.

COMPANY SECRETARY

Mr. Chow Chiu Chi (“Mr. Chow”) is the company secretary of the Company. Mr. Chow is a fellow member of the Hong Kong Institute of Certified Public Accountants. In compliance with Rule 3.29 of the Listing Rules, Mr. Chow had undertaken no less than 15 hours of relevant professional training during the Relevant Period.

DIRECTORS’ AND AUDITORS’ RESPONSIBILITIES FOR THE ACCOUNTS

The Board is responsible for presenting a balanced, clear and comprehensible assessment of the Group’s performance and prospects. The Directors are responsible for the preparation of accounts which give a true and fair view of the state of affairs and of the results and cash flows of the Group on a going concern basis. The Company’s accounts are prepared in accordance with all relevant statutory requirements and applicable accounting standards. The Directors are responsible for ensuring that appropriate accounting policies are selected and applied consistently and that judgments and estimates made are prudent and reasonable. The Directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board is responsible for implementation and maintenance of the Group’s systems of risk management and internal control for the smooth running of its business. In this connection, the management of the Company has established a set of comprehensive policies, standards and procedures in areas of operational, financial and risk controls for safeguarding assets against unauthorized use or disposition; ensuring the maintenance of proper accounting records for internal use or for publication; and for ensuring the reliability of financial information to achieve a satisfactory level of assurance against the likelihood of the occurrence of fraud and errors. The Company has an internal audit function and the risk management and internal control systems of the Group are reviewed on an annual basis. The Board has reviewed the Group’s risk management and internal control systems for the year ended 31 December 2018 and considered the systems to be effective and adequate.

COMMUNICATION WITH SHAREHOLDERS

The Group believes that effective communication with investors is essential in developing its business. Since the listing of the Company in July 2007, it has devoted itself to strengthen good communication with all shareholders, investors, analysts and public media all the time in order to enhance the level of corporate governance.

The Group uses several formal channels to ensure fair disclosure and comprehensive and transparent reporting of its performance and activities. Annual and interim reports are printed and sent to all shareholders. Press releases are posted on the Company’s website at www.cag.com.hk, which is constantly being updated in a timely manner, and so contains additional information on the Group’s business activities.

The Directors have been continuing to put their utmost effort to develop direct communication channels with all investors to deepen their understanding in the business, strategies and future development of the Group.

SHAREHOLDERS’ RIGHTS

Procedures for convening an extraordinary general meeting by shareholders

Under article 58 of the articles of association of the Company, any one or more of the shareholders of the Company holding at the date of deposit of the requisition 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 of the Company, to require an extraordinary general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within 2 months after the deposit of such requisition. If within 21 days of the deposit of such written requisition the Board fails to proceed to convene such general meeting, the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company.

Putting forward proposals at general meetings

To put forward a proposal at the general meeting of the Company (the “Proposal”), a shareholder should lodge at the head office and principal place of business of the Company in Hong Kong at Unit 3205B-3206, 32nd Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong, a written notice setting out (i) information of the shareholder and his/her/its contact details and (ii) details of the Proposal and relevant supporting documents.

Making Enquiries to the Board

Shareholders may send written enquiries, either by post or by facsimiles, together with his/her contact details, such as postal address, fax or email, addressing either to (i) the principal place of business of the Company in Hong Kong at Unit 3205B-3206, 32nd Floor, Office Tower, Convention Plaza, 1, Harbour Road, Wan Chai, Hong Kong or facsimile number (852) 2598 6633; or (ii) the principal place of business and head office of the Company in Beijing, the PRC at No. 7, Anxiang Street, Area B, Tianzhu Airport Economic Development Zone, Shunyi District, Beijing, China, 101318 or facsimile number (86) 10 8046 9966.

INVESTOR RELATIONS

Amendment of the Company’s Constitutional Documents

There have been no changes to the Company’s constitutional documents during the year ended 31 December 2018.

 

 
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