(Extracted from Annual Report 2018)
The Company is governed by a Board of Directors, which has responsibility for strategic leadership and control of the Group designed to maximise shareholder value, while taking due account of the interests of those with whom the Group does business and others.
Responsibility for achieving the Company’s objectives and running the business on a day-to-day basis is delegated to management. The Board exercises a number of reserved powers which include:
The CG Code requires that the roles of Chairman and Chief Executive be separate and not performed by the same individual to ensure there is a clear division of responsibilities between the running of the Board and the executives who run the business.
M.B. Swire, the Chairman, is responsible for:
G.M.C. Bradley, the Chief Executive, is responsible for implementing the policies and strategies set by the Board in order to ensure the successful day-to-day management of the Group’s business.
Throughout the year, there was a clear division of responsibilities between the Chairman and the Chief Executive.
The Board is structured with a view to ensuring it is of a high calibre and has a balance of key skills and knowledge so that it works effectively as a team and individuals or groups do not dominate decision-making.
The Board comprises the Chairman, two other Executive Directors and eight Non-Executive Directors. Their biographical details are set out in the section of this annual report headed Directors and Officers and are posted on the Company's website.
G.M.C. Bradley, N.A.H. Fenwick, P. Healy, M.M.S. Low and F.N.Y. Lung are directors and/or employees of the John Swire & Sons Limited (“Swire”) group. M.B. Swire is a shareholder, director and employee of Swire. R.S.K. Lim is an adviser to the Swire group. Before he ceased to be a director of the Company, J.R. Slosar was a director and an employee of the Swire group.
The Non-Executive Directors bring independent advice, judgement and, through constructive challenge, scrutiny of executives and review of performance and risks. The Audit and Remuneration Committees of the Board comprise only Non-Executive Directors.
The Board considers that four of the eight Non-Executive Directors are independent in character and judgement and fulfil the independence guidelines set out in Rule 3.13 of the Listing Rules. Confirmation has been received from all Independent Non-Executive Directors that they are independent as set out in Rule 3.13 of the Listing Rules. None of the Independent Non-Executive Directors holds cross-directorships or has significant links with other Directors through involvements in other companies or bodies.
The Independent Non-Executive Directors:
The number of Independent Non-Executive Directors represents at least one-third of the Board of Directors.
Potential new Directors are identified and considered for appointment by the Board. A Director appointed by the Board is subject to election by shareholders at the first annual general meeting after his or her appointment, and all Executive and Non-Executive Directors are subject to re-election by shareholders every three years.
Potential new Board members are identified on the basis of skills and experience which, in the opinion of the Directors, will enable them to make a positive contribution to the performance of the Board.
On 12th March 2019, the Board, having reviewed the Board’s composition, nominated M.B. Swire, G.M.C. Bradley, N.A.H. Fenwick and S.T. Fung for recommendation to shareholders for election/re-election at the 2019 Annual General Meeting. The nominations were made in accordance with objective criteria (including gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge, length of service and the legitimate interests of the Company’s principal shareholders), with due regard for the benefits of diversity, as set out in the board diversity policy. The Board also took into account the respective contributions of M.B. Swire, G.M.C. Bradley, N.A.H. Fenwick and S.T. Fung to the Board and their firm commitment to their roles. The Board is satisfied with the independence of S.T. Fung having regard to the criteria laid down in the Listing Rules. The particulars of the Directors standing for election/re-election are set out in the section of this annual report headed Directors and Officers and will also be set out in the circular to shareholders to be distributed with this annual report and posted on the Company's website.
Full details of changes in the Board during the year and to the date of this report are provided in the section of this annual report headed Directors’ Report.
The Board has adopted a board diversity policy, which is available on the Company’s website. The Board’s composition reflects an appropriate mix of skills, experience and diversity among its members that are relevant to the Company’s strategy, governance and business and contribute to the Board’s effectiveness. A summary is set out in the table below:
In order to achieve a diversity of perspectives among members of the Board, it is the policy of the Company to consider a number of factors when deciding on appointments to the Board and the continuation of those appointments. Such factors include gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge, length of service and the legitimate interests of the Company’s principal shareholders.
On appointment, the Directors receive information about the Group including:
Directors update their skills, knowledge and familiarity with the Group through their participation at meetings of the Board and its committees and through regular meetings with management at the head office and in the divisions. Directors are regularly updated by the Company Secretary on their legal and other duties as Directors of a listed company.
Through the Company Secretary, Directors are able to obtain appropriate professional training and advice.
Each Director ensures that he/she can give sufficient time and attention to the affairs of the Group. All Directors disclose to the Board on their first appointment their interests as a Director or otherwise in other companies or organisations and such declarations of interests are updated regularly.
Details of Directors’ other appointments are shown in their biographies in the section of this annual report headed Directors and Officers.
All committees of the Board follow the same processes as the full Board.
The dates of the 2018 Board meetings were determined in 2017 and any amendments to this schedule were notified to Directors at least 14 days before regular meetings. Suitable arrangements are in place to allow Directors to include items in the agenda for regular Board meetings.
The Board met six times in 2018. The attendance of individual Directors at meetings of the Board and its committees is set out in the table on page 65. Average attendance at Board meetings was 99%. All Directors attended Board meetings in person or through electronic means of communication during the year.
Agendas and accompanying Board papers are circulated with sufficient time to allow the Directors to prepare before meetings.
The Chairman takes the lead to ensure that the Board acts in the best interests of the Company, that there is effective communication with the shareholders and that their views are communicated to the Board as a whole.
Board decisions are made by vote at Board meetings and supplemented by the circulation of written resolutions between Board meetings.
Minutes of Board meetings are taken by the Company Secretary and, together with any supporting papers, are made available to all Directors. The minutes record the matters considered by the Board, the decisions reached, and any concerns raised or dissenting views expressed by Directors. Draft and final versions of the minutes are sent to all Directors for their comment and records respectively.
Board meetings are structured so as to encourage open discussion, frank debate and active participation by Directors in meetings.
A typical Board meeting would consist of:
The executive management provides the Board with such information and explanations as are necessary to enable Directors to make an informed assessment of the financial and other information put before the Board. Queries raised by Directors are answered fully and promptly.
When necessary, the Independent Non-Executive Directors meet privately to discuss matters which are their specific responsibility.
The Chairman meets at least annually with the Independent Non-Executive Directors without the presence of other Directors.
All Directors named above have received the training referred to above and have been provided with “A Guide on Directors’ Duties” issued by the Companies Registry and “Guidelines for Directors” and “Guide for Independent Non-Executive Directors” issued by the Hong Kong Institute of Directors. The Company makes available continuous professional development for all Directors at the expense of the Company so as to develop and refresh their knowledge and skills.
The Company has arranged appropriate insurance cover in respect of potential legal actions against its Directors and Officers.
If a Director has a material conflict of interest in relation to a transaction or proposal to be considered by the Board, the individual is required to declare such interest and abstains from voting. The matter is considered at a Board meeting and voted on by Directors who have no material interest in the transaction.
Responsibility for delivering the Company’s strategies and objectives, as established by the Board, and responsibility for day-to-day management is delegated to the Chief Executive. The Chief Executive has been given clear guidelines and directions as to his powers and, in particular, the circumstances under which he should report back to, and obtain prior approval from, the Board before making commitments on behalf of the Company.
The Board monitors management’s performance against the achievement of financial and non-financial measures, the principal items monitored being:
The Company has adopted a code of conduct (the “Securities Code”) regarding securities transactions by Directors and officers on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules. These rules are available on the Company’s website.
A copy of the Securities Code has been sent to each Director of the Company and will be sent to each Director twice annually, immediately before the two financial period ends, with a reminder that the Director cannot deal in the securities and derivatives of the Company during the blackout period before the Group’s interim and annual results have been published, and that all their dealings must be conducted in accordance with the Securities Code.
Under the Securities Code, Directors and senior executives of the Company are required to notify the Chairman and receive a dated written acknowledgement before dealing in the securities and derivatives of the Company and, in the case of the Chairman himself, he must notify the Chairman of the Audit Committee and receive a dated written acknowledgement before any dealing.
On specific enquiries made, all the Directors of the Company have confirmed that they have complied with the required standard set out in the Securities Code.
Directors’ interests at 31st December 2018 in the shares of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance) are set out in the section of this annual report headed Directors’ Report.