Board of Directors
The members of the board of directors are individually and collectively accountable to the shareholders for the success and sustainable development of the Company. The board provides direction and approval in relation to matters concerning the Company’s business strategies, policies and plans, while the day-to-day business operations are delegated to the executive committee. The board is accountable to the shareholders, and in discharging their corporate accountability, directors of the Company are required to pursue excellence in the interests of the shareholders and fulfil their fiduciary duties by applying the required levels of skill, care and diligence to a standard in accordance with the statutory requirements.
During the year under review, the board performed a self-evaluation of its performance and reviewed the contribution required from a director to perform his/her responsibilities. The board is of the view that all directors have given sufficient time and attention to the Company’s affairs and the board operates effectively as a whole. The board also noted the time involved by the directors in the Company and other public companies held by the directors. Mr Francis Siu Wai Keung, an independent non-executive director, has devoted sufficient time to the board notwithstanding that he currently holds directorships in six public companies (including the Company). He is the chairman of the audit and risk management committee and a member of a number of board committees which he attended and actively provided guidance and recommendations in each committee meeting. He also attended all board meetings and the annual general meeting in 2017 as well as attended site visits and the strategic committee and board retreat meeting. The Company considered that he has given sufficient time and attention to the Company’s affairs as an independent non-executive director.
Board composition and changes
The Company announced the following changes in board composition.
Mr Yang Jinming resigned as a non-executive director and a member of the remuneration committee of the Company on 1 June 2017.
Mr Liu Zhuyu was appointed as a non-executive director and a member of the remuneration committee of the Company on 7 August 2017.
Mr Wu Youguang was appointed as a non-executive director of the Company on 20 March 2018.
The appointment of the above directors were recommended by the nomination committee.
The board currently has 17 directors, comprising four executive directors, seven non-executive directors and six independent non-executive directors. Non-executive directors (including independent non-executive directors) comprise more than three-fourths of the board, of which independent non-executive directors satisfy the requirement of representing at least one-third of the board. The Company believes that the board has a balance of skills, experience and diversity of perspectives appropriate to the requirements of the Company’s business.
In relation to the seven non-executive directors who are not independent (as considered by The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”)), Mr Liu Yeqiao, Mr Song Kangle, Ms Yan Shuqin and Mr Liu Zhuyu are all non-executive directors of CITIC Group Corporation (the controlling shareholder of the Company) whilst Mr Liu Zhongyuan holds an executive position in the National Council for Social Security Fund (a shareholder of the Company), Mr Yang Xiaoping is the senior vice chairman of the Charoen Pokphand Group and Mr Wu Youguang is the vice president and CFO of Youngor Group Co., Ltd. (a shareholder of the Company).
The Company has received from each independent non-executive director a confirmation of his/her independence and considers that all independent non-executive directors are independent in accordance with the independence guidelines set out in Rule 3.13 of the Listing Rules. Brief biographical particulars of the directors, together with information about the relationships among them, are set out on "Board of Directors".
All directors, including the non-executive directors, have a specific term of appointment, which is not more than three years since his/her re-election by shareholders at the general meeting. Each director has entered into an appointment letter with the Company. Pursuant to Article 104(A) of the Company’s articles of association, every director, including the non-executive directors, shall be subject to retirement by rotation at least once every three years. One-third of the directors, or if their number is not three or a multiple of three, then the number nearest to one-third, must retire from office at each annual general meeting. Retiring directors are eligible for re-election at the annual general meeting during which they retire. Separate resolutions are proposed for the election of each director and his/her re-election is subject to a vote of shareholders.
Pursuant to Article 95 of the Company’s articles of association, Mr Liu Zhuyu and Mr Wu Youguang who were appointed as directors of the Company by the board since the last annual general meeting shall hold office only until the forthcoming annual general meeting of the Company to be held on 14 June 2018 (“2018 AGM”) and shall then be eligible for re-election at such meeting. Thereafter, they shall be subject to retirement by rotation and re-election in accordance with the Company’s articles of association. Induction materials were provided to the above directors upon their appointment.
Board responsibilities and delegation
The board collectively determines the overall strategies of the Company, monitors performance and the related risks and controls in pursuit of the strategic objectives of the Company. Day-to-day operation and management powers are delegated to the executive committee which reports to the board. All board members have separate and independent access to the management, and are provided with full and timely information about the conduct of the business and development of the Company, including reports and recommendations on significant matters. All board members are provided with monthly management updates on the latest development of the Company’s businesses. Should separate independent professional advice be considered necessary by the directors, independent professional services would be made available to the directors upon request.
The board is also responsible for the Company’s risk management and internal control systems and reviewing their effectiveness. The audit and risk management committee which acts on behalf of the board conducts a review of the effectiveness of the risk management and internal control systems annually and reports to the board on such review. Details are set out in the section below headed “Risk management and internal control”.
The board has delegated certain functions to the respective committees, the details of which are set out below. Matters specifically reserved for the board include approval of financial statements, dividend policy, significant changes in accounting policies, material contracts, changes to appointments such as company secretary and external auditor, remuneration policy for directors and senior management, terms of reference of board committees, as well as major corporate policies such as the code of conduct and whistle-blowing policy.
The Company has arranged Directors & Officers Liability and Company Reimbursement Insurance for its directors and officers.
Details of the responsibilities, membership, attendance and activities during the year under review of each board committee are set out on "Board Committees".
Board meetings and attendance
The board meets regularly to review the financial and operating performance of the Company and to discuss future strategy. Four regular board meetings and one special board meeting were held in 2017. At the board meetings, the board reviewed significant matters including the Company’s annual and half-year financial statements, annual budget, proposals for final and interim dividends, annual report and half-year report, and notifiable transactions and connected transactions. At each of the regular board meetings, the board received a written report from the president on the Company’s major businesses, investments and projects, and corporate activities. A special board meeting was held in September 2017 to approve a new share subscription agreement for the subscription by CITIC Metal Group Limited (an indirect wholly-owned subsidiary of the Company) for 60% of the enlarged share capital of Star Thrive Investments Limited (an indirect wholly-owned subsidiary of CITIC Group Corporation) in which detailed information of the transaction was presented to the board. Details of the aforesaid subscription are set out in the Company’s announcement dated 29 September 2017.
A schedule of board meeting dates is fixed for each year in advance. At least 14 days’ formal notice of all regular board meetings is given to all directors, and all directors are given the opportunity to include matters for discussion in the agenda. The agenda and board papers for each meeting are sent to all directors at least three days in advance of every regular board meeting. All minutes of the board meetings are kept at the company secretariat office. Copies are provided to directors and the original minutes are available to all directors for inspection. In addition to the board meetings, the chairman also meets with the non-executive directors (including independent non-executive directors) without the presence of executive directors on an annual basis.
The attendance record of each director at board meetings and general meeting in 2017 is set out below:
(1) appointed with effect from 7 August 2017
(2) resigned with effect from 1 June 2017
(3) appointed with effect from 20 March 2018
Chairman and the president
Mr Chang Zhenming serves as the chairman of the Company. Mr Wang Jiong is the president of the Company. The chairman and the president have separate defined responsibilities whereby the chairman is primarily responsible for leadership and effective functioning of the board, ensuring key issues are promptly addressed by the board, as well as providing strategic direction for the Company. The president is responsible for the day-to-day management of the Company and the effective implementation of corporate strategy and policies. Their respective roles and responsibilities are set out in writing, which have been approved and adopted by the board.
Directors’ continuous professional development programme
The Company has a continuous professional development programme (“CPD Programme”) for directors with an aim to improve their general understanding of the Company’s businesses, to refresh their knowledge and skills as well as to receive updates on developments in corporate governance practices. Directors may also choose to attend external courses, conferences and luncheons organised by various local organisations.
In addition, every newly appointed director is provided with a package comprising comprehensive induction materials such as the duties and responsibilities of directors under the Listing Rules and the Companies Ordinance, guidelines for directors issued by the Companies Registry of Hong Kong, legal and other regulatory requirements and the governance policies of the Company to ensure that he has a proper understanding of his responsibilities under the relevant laws, rules and regulations. During the year under review and up to the date of this report, two directors were appointed. The Company has arranged for briefing given by external legal counsel to the new directors.
Under the Company’s CPD Programme for the year 2017, directors were provided with the monthly business updates and other reading materials concerning the latest developments in corporate governance practices and relevant legal and regulatory developments. Further, the Company has organised talks given by professionals on different topics (new accounting standards by PricewaterhouseCoopers; recent enforcement trends in antitrust, recent trends in securities regulations in Hong Kong and disclosure of information and latest development of the Hong Kong Stock Exchange and the Securities and Future Commission by various international law firms) and also arranged for a seminar on CG Code organized by PricewaterhouseCoopers. In addition, the Company has forwarded a series of the directors training webcasts launched by the Hong Kong Stock Exchange on a quarterly basis to the directors for them to fulfil their duties. Directors attended the strategic committee meeting and board retreat meeting held in November 2017 to discuss the corporate strategy and business development of the Company. Directors also made site visits (Dah Chong Hong in Hong Kong in June 2017, Ligang power plant and Xingcheng special steel mill in Jiangyin in November 2017) arranged by the Company.
According to the record of the directors’ participation in the Company’s CPD Programme kept at the company secretariat office, a summary of training received by the directors for the period from 1 January 2017 to 31 December 2017 is as follows:
(1) appointed with effect from 7 August 2017; induction materials and briefing by external legal counsel were provided in respect of his appointment
(2) appointed with effect from 20 March 2018; induction materials and briefing by external legal counsel were provided in respect of his appointment
Mr Yang Jinming resigned as a non-executive director with effect from 1 June 2017. Reading materials, regulatory updates and monthly management updates were provided to him during his tenure. He also attended the seminar organised by the Company in March 2017.