Board Committees
The board has appointed a number of committees to discharge the board functions. Sufficient resources are provided to enable the board committees to undertake their specific roles. The respective roles, responsibilities and activities of each board committee are set out below:
Audit and risk management committee
The audit and risk management committee oversees the relationship with the external auditor, and reviews CITIC Limited’s financial reporting, annual audit and half-year report. The committee acts on behalf of the board in providing oversight of CITIC Limited’s financial reporting system, risk management and internal control systems, reviews and monitors the effectiveness of the internal audit function, and reviews CITIC Limited’s policies and practices on corporate governance. The committee currently consists of two non-executive directors and three independent non-executive directors. The chairman of the committee is Mr Francis Siu Wai Keung, an independent non-executive director. Mr Siu has the relevant professional qualification and expertise in financial reporting matters. The audit and risk management committee holds four regular meetings each year (at least two of which are with CITIC Limited’s external auditor). At the invitation of the audit and risk management committee, other directors, senior management and other relevant persons, as well as experts or consultants with relevant experience or expertise may also attend the meetings. The audit and risk management committee members also meet in separate private sessions with the external and internal auditors without the presence of executive directors and management at least once a year.
Duties of the audit and risk management committee
The authority, role and responsibilities of the audit and risk management committee are set out in written terms of reference. The committee reviews its terms of reference at least once a year to ensure they remain in line with the requirements of the CG Code. Any amendments to the terms of reference are submitted to the board for approval. The terms of reference are available on CITIC Limited’s website and the Hong Kong Stock Exchange’s website.
Under its terms of reference, the audit and risk management committee shall
- review and monitor the integrity of CITIC Limited’s financial information and provide oversight of the financial reporting system;
- monitor the effectiveness of external audit and oversee the appointment, remuneration and terms of engagement of CITIC Limited’s external auditor, as well as its independence;
- oversee CITIC Limited’s internal audit, risk management and internal control systems, including the resources for CITIC Limited’s internal audit, risk management, accounting and financial reporting functions, staff qualifications and experience, as well as arrangements for concerns raised by staff on financial reporting, internal control and other matters (“whistle-blowing”);
- undertake corporate governance functions delegated from the board, including
(a) reviewing CITIC Limited’s policies and practices on corporate governance and making recommendations to the board as well as CITIC Limited’s compliance with the CG Code and disclosure in the corporate governance report;
(b) reviewing and monitoring
- the training and continuous professional development of directors and senior management;
- CITIC Limited’s policies and practices on compliance with legal and regulatory requirements;
- the code of conduct and compliance manual (if any) applicable to employees and directors; and
- CITIC Limited’s whistle-blowing policy and system.
- undertake other authorities delegated by the board.
Committee composition and meeting attendance
The composition of the audit and risk management committee during the year under review as well as the meeting attendance of the committee members are as follows:
Membership and Attendance
|
Members |
Attendance/ Number of Meetings |
|---|---|
|
Independent Non-executive Directors |
|
|
Mr Francis Siu Wai Keung (Chairman) |
4/4 |
|
Dr Xu Jinwu |
4/4 |
|
Mr Anthony Francis Neoh |
4/4 |
|
Non-executive Directors |
|
|
Mr Yang Xiaoping |
4/4 |
|
Mr Peng Yanxiang |
4/4 |
|
Other Attendees |
|
|
Representatives of Audit and Compliance Department |
4/4 |
|
Representatives of Financial Control Department |
4/4 |
|
Representatives of Office of the Board of Directors |
4/4 |
|
External Auditor |
4/4 |
The joint company secretary, Mr Ricky Choy Wing Kay acts as the secretary to the committee. The committee is supported by a working group which consists of representatives from Audit and Compliance Department, Financial Control Department, Office of the Board of Directors and other departments of CITIC Limited. The working group provides services to the committee to ensure that sufficient resources are made available for the committee to perform its duties. An agenda and committee papers are sent to the committee members at least three days prior to each regular meeting. The draft and final version of minutes are circulated to all committee members for their comments and records within a reasonable time after the meeting. Full minutes of the meetings are kept by the joint company secretary.
The chairman of the committee summarises the activities of the committee and issues arising and reports to the board after each audit and risk management committee meeting.
Work done in 2021
|
The audit and risk management committee performed the followings in 2021: |
|
|---|---|
| Financial reporting |
Reviewed the 2020 annual financial statements, annual report and results announcement |
|
Reviewed the 2021 half-year financial statements, half-year report and results announcement |
|
|
Recommended to the board approval of the 2020 annual report and 2021 half-year report |
|
|
Examined checklists for compliance with statutory and Listing Rules requirements for ensuring the integrity of the financial statements |
|
|
External audit and interim review |
Reviewed report provided by the external auditor on their statutory audit of the 2020 annual financial statements and their independent review of the 2021 half-year financial statements |
|
Discussed financial reporting and control matters set out in |
|
|
Reviewed the external auditor plans for their independent review of CITIC Limited’s 2021 half-year financial statements and their statutory audit of the 2021 annual financial statements, including the audit scope and the nature of their work |
|
|
Considered the independence of the external auditor of CITIC Limited |
|
|
Internal control and internal audit
|
Examined management’s annual self-assessments of the effectiveness of the risk management and internal control of the Group, including adequacy of the staff resources, qualifications and experience of CITIC Limited’s internal audit, risk management, accounting and financial reporting functions |
|
Approved annual internal audit plan and reviewed the overall audit work progress in each committee meeting |
|
|
Reviewed internal audit’s quarterly reports on risk management and internal control findings, recommendations, progress in rectification and other matters |
|
|
Noted any significant changes in financial or other risks faced by CITIC Limited and reviewed management’s response to them |
|
|
Corporate governance and code requirements
|
Reviewed reports submitted by the management on CITIC Limited’s compliance with the code of conduct, regulatory and statutory obligations, and internal policies regarding the conduct of business and corporate governance work |
|
Reviewed the training and continuous professional development of directors |
|
|
Reviewed CITIC Limited’s compliance with the CG Code and disclosure in the corporate governance report |
|
At the meeting held on 29 March 2022, the audit and risk management committee reviewed and approved CITIC Limited’s annual financial statements and annual report for the year ended 31 December 2021, and considered reports from the external and internal auditors. The audit and risk management committee recommended to the board for approval of the 2021 annual report.
Nomination committee
The nomination committee was established by the board with written terms of reference in compliance with the CG Code. The terms of reference are available on CITIC Limited’s website and the Hong Kong Stock Exchange’s website.
The nomination committee reports directly to the board and its principal duties are:
- to review the structure, size, composition and diversity of the board at least annually and make recommendations on any proposed changes to the board;
- to identify and nominate qualified candidates to become board members and/or to fill casual vacancies for the approval of the board;
- to assess the independence of independent non-executive directors;
- to make recommendations to the board on the appointment or re-appointment of directors and succession planning for directors; and
- to review the board diversity policy and the director nomination policy, and make recommendation on any required changes to the board.
Director Nomination Policy
The nomination committee is authorised by the board to determine the policy for the nomination of directors. The Director Nomination Policy which was adopted in 2018 sets out the nomination procedures and the process and criteria adopted to select and recommend candidates for directorship which shall take into consideration the principle of diversity. A summary of the Director Nomination Policy including the objectives and the selection procedures is set out below:
- The policy is for both nomination of directors and recommendation for re-election of retiring directors.
- The nomination committee shall identify individuals from a number of sources including, without limitation, through referrals and recommendations by the management of CITIC Limited, Human Resources Department and external independent professionals.
- In the identification and evaluation process, the nomination committee shall have regard to the selection criteria which include but not limited to
- qualifications, skills, expertise, independence which contribute to the effective carrying out of the board responsibilities;
- commitment in respect of sufficient time and relevant interest devoted to the business and affairs of CITIC Limited; and
- board diversity including but not limited to skills, experience and background, geographical and industry experience, ethnicity, gender, knowledge and length of service.
- The potential candidates are requested to provide the nomination committee with biographical details.
- The nomination committee shall review the qualification, experience, skills, expertise and the factors of the above selection criteria for the nomination of directors, and shall take into account the factors and requirements as set out in the Listing Rules in the case of nominating or recommending for re-election of independent non-executive directors.
- After the assessment and evaluation, if the nomination committee considers the potential candidate is suitable to be nominated as a director, it will make recommendation for the board’s consideration and approval.
- The board shall approve the nomination and appoint the proposed qualified candidate as director if it agrees with the nomination committee’s recommendation.
- The ultimate responsibility for selection and appointment of directors rests with the entire board.
The nomination committee shall monitor the implementation of the policy and conduct a review on an annual basis.
Board Diversity Policy
CITIC Limited recognises and embraces the benefits of diversity in board members. CITIC Limited sees diversity as a whole concept and believes that diversity in all aspects, including experience and expertise, provides CITIC Limited with a high level of corporate governance and penetrating insights into CITIC Limited’s businesses and industry.
The Board Diversity Policy which was adopted in 2013 sets out the approach to achieve diversity in the board, which includes and makes good use of the difference in skills, experience and background, geographical and industry experience, ethnicity, gender, knowledge and length of service and other qualities of the members of the board. These differences will be considered in determining the optimum composition of the board and all board appointments will be based on merit, having due regard to the overall effective functioning of the board as a whole. CITIC Limited believes that diversity can strengthen the performance of the board, promote effective decision-making and better corporate governance and monitoring. The nomination committee discusses and agrees annually the relevant measurable objectives that the board has set for implementing this policy and makes recommendation to the board for approval. It also monitors the implementation of this policy and reports to the board on the achievement of the measurable objectives for achieving diversity under this policy.
The following chart shows the diversity profile of the current board members:
The board is comprised of experienced senior management from varied backgrounds, accounting, banking and tax professionals. Nationalities of the directors are diverse, spanning Chinese, American and Japanese. Such composition serves to enrich the perspective and deliberations of the board.
The nomination committee currently comprises two executive directors, one non-executive director and four independent non-executive directors, and is chaired by the chairman of the board. The committee meets at least annually and at such other times as it shall require. The joint company secretary, Mr Ricky Choy Wing Kay acts as the secretary to the committee. The committee is provided with sufficient resources enabling it to perform its duties, and it can seek independent professional advice at CITIC Limited’s expense if necessary.
During the year under review, one nomination committee meeting was held and two sets of written resolutions were passed by all the committee members. The joint company secretary prepared full minutes of the nomination committee meeting and the draft minutes were circulated to all committee members within a reasonable time after the meeting.
Committee composition and meeting attendance
The composition of the nomination committee during the year under review as well as the meeting attendance of the committee members are as follows:
Membership and Attendance
|
Members |
Attendance/Number of Meetings |
|---|---|
|
Executive Directors |
|
|
Mr Zhu Hexin (Chairman) |
1/1 |
|
Mr Xi Guohua |
1/1 |
|
Non-executive Directors |
|
|
Ms Yu Yang |
1/1 |
|
Independent Non-executive Directors |
|
|
Mr Francis Siu Wai Keung |
1/1 |
|
Dr Xu Jinwu |
1/1 |
|
Mr Anthony Francis Neoh |
1/1 |
|
Mr Gregory Lynn Curl |
1/1 |
Work done in 2021
The nomination committee completed the following work in 2021:
- recommended the appointment of one independent non-executive director to the board for approval;
- made recommendations to the board on re-election of the directors retiring at the annual general meeting of CITIC Limited held on 9 June 2021;
- reviewed the structure, size, composition and diversity of the board;
- reviewed the board diversity policy and discussed the measurable objectives; and
- reviewed the director nomination policy.
In early 2022, two sets of written resolutions were passed by all the committee members, one of which was to recommend to the board the appointment of two non-executive directors and the other was to recommend to the board the retiring directors for re-election at the forthcoming annual general meeting to be held in 2022.
Remuneration committee
The principal role of the remuneration committee is to determine the remuneration packages of individual executive directors and senior management including salaries, bonuses, benefits in kind, pension rights and compensation payments (including any compensation payable for loss or termination of office or appointment). The remuneration committee reviews and approves the management’s remuneration proposals with reference to the board’s corporate goals and objectives, salaries paid by comparable companies, regulations promulgated by national regulatory authorities on the remuneration of directors and senior management, time commitment and responsibilities and employment conditions elsewhere in the Group, so as to align management incentives with shareholder interests.
The committee currently comprises three independent non-executive directors and a non-executive director. The chairman of the committee is Mr Anthony Francis Neoh, an independent non-executive director. The committee meets at least once a year. A joint company secretary serves as the secretary of the committee. The terms of reference are available on CITIC Limited’s website and the Hong Kong Stock Exchange’s website.
During the year under review, one remuneration committee meeting was held and one set of written resolutions was passed by all the committee members. A joint company secretary prepared full minutes of the remuneration committee meeting and the draft minutes were circulated to all committee members within a reasonable time after the meeting.
Committee composition and meeting attendance
The composition of the remuneration committee during the year under review as well as the meeting attendance of the committee members are as follows:
Membership and Attendance
|
Members |
Attendance/Number of Meetings |
|---|---|
|
Independent Non-executive Directors |
|
|
Mr Anthony Francis Neoh (Chairman) |
1/1 |
|
Mr Francis Siu Wai Keung |
1/1 |
|
Dr Xu Jinwu |
1/1 |
|
Non-executive Director |
|
|
Mr Liu Zhuyu(Note) |
1/1 |
Note:
On 29 December 2021, Mr Liu Zhuyu resigned as a member of the remuneration committee. On 4 January 2022, Mr Zhang Lin (a Non-executive Director) was appointed as a member of the remuneration committee in his stead.
Work done in 2021
The remuneration committee completed the following work in 2021:
- reviewed and approved the proposal for monthly salary of two new executive committee member; and
- reviewed and approved the proposal for 2020 remuneration for executives in charge (including executive directors and senior management) of CITIC Limited.
Details of CITIC Limited’s remuneration policy in respect of staff remuneration management measures at the Group and its subsidiaries
are set out in the Environmental, Social and Governance Report and directors’ remuneration and retirement benefits.
The remuneration paid to the directors, by name, for the year ended 31 December 2021 is set out in Note 13 to the consolidated financial statements.
The remuneration of senior management, by band, for the year ended 31 December 2021 is set out below:
Remuneration of senior management other than directors for the full year 2021
|
Total Remuneration Bands |
Number of Executives |
|---|---|
|
Below HK$500,000 |
0 |
|
HK$500,001 – HK$1,000,000 |
6 |
|
6 |
Note:
Although the discretionary bonuses have yet to be confirmed by the relevant regulatory authority, it is expected that the unsealed remuneration will have no material impact on the consolidated financial statements of CITIC Limited for 2021.
Strategic committee
A strategic committee has been established to accommodate the strategic development of CITIC Limited and enhance its core competitiveness, make and implement the development plan of CITIC Limited, improve the investment-related decision making procedures and procure well-advised and efficient decision making.
The strategic committee shall be accountable to and report to the board and its powers and functions are:
- considering the major strategic directions of CITIC Limited and making proposals to the board;
- considering the mid-to-long term development plan and 5-year development plan of CITIC Limited and making proposals to the board;
- considering the impact of the macro economic conditions on the development of various business sectors of CITIC Limited and making proposals to the board; and
- other matters in connection with strategy planning pursuant to authorisation of the board.
The committee is chaired by Mr Zhu Hexin, the chairman of the board, and other members include an executive director, Mr Xi Guohua (being vice chairman and president of CITIC Limited), three non-executive directors, Mr Song Kangle, Ms Yu Yang and Mr Yang Xiaoping, and two independent non-executive directors, Mr Anthony Francis Neoh and Mr Toshikazu Tagawa (appointed as committee member in place of Mr Shohei Harada with effect from 3 May 2021). Mr Li Rucheng (being a former non-executive director of CITIC Limited) serves as a consultant to the committee. During the year under review, one strategic committee meeting was held. The Strategic Development Department prepared full minutes of the strategic committee meeting and the draft minutes were circulated to all the committee members within a reasonable time after the meeting. A joint company secretary is responsible for keeping all the minutes of the meetings.
