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The Company has complied with provisions ("Code Provisions") in the Code on Corporate Governance ("CG Code") as set out in Appendix 14 of the Rules ("Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Stock Exchange") throughout the financial year. After specific enquiries of each of the directors of the Company ("Directors"), the Directors confirm that they have complied with the standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code"), contained in Appendix 10 of the Listing Rules.
The Board is committed to maintaining high standard of corporate governance practices at all times. The Board believes that good corporate governance helps the Company to safeguard the interests of the Shareholders and to enhance the performance of the Group.
- Board Composition
Executive Directors
Mr. Wu Zhanming (Chairman & Acting Chief Executive Officer)
Mr. Wu Tao
Independent Non-executive Directors
Mr. Yu Tat Chi, Michael
Mr. Zhu Xinhui
Dr. Chan Kin Keung Eugene SBS, BBS, JP
- Responsibility
The business and affairs of the Company and its subsidiaries (collectively, the "Group") are under the direction of and vested with the Board pursuant to the bye-laws of the Company (the "Bye-laws"). The Board is the ultimate decision-making body of the Group except in respect of matters reserved for shareholders. The Board is ultimately accountable and responsible for the performance and affairs of the Group and for the preparation of the accounts of the Company. The Board retains overall responsibility for all major matters of the Group, which include approving and monitoring all policy matters, managing overall strategies and budgets, internal control and risk management systems, entering into material transactions (especially any transactions which may involve a conflict of interest within the Board), providing financial information, appointing directors of the Company and other significant financial and operational matters. Certain authority is delegated by the Board to the management in order to enable the management to develop and implement the Group's strategic planning and operations, and to conduct the Group's day-to-day activities. The Board diligently monitors the management's performance in that regard but responsibility for conducting the Group's daily operations rests with the management.
The role of the Group's Chairman is required to separate from that of the Group's Chief Executive Officer and their respective responsibilities are set out by the Board in the Code of the Company. The Chief Executive Officer is responsible for day-to-day management of the business of the Group, whilst the Chairman provides leadership for the Board to ensure that the Board acts diligently and in the best interests of the Group and that meetings are planned and conducted effectively. The Chairman is also responsible for approving the agenda for each Board meeting, taking into account, where appropriate, matters proposed by the Directors. The Chairman also actively encourages the Directors to make full contributions and actively participate in the Board's affairs.
The Board has established three Board committees, namely the Audit Committee, Remuneration Committee and Nomination Committee, to oversee particular aspects of the Group's affairs. The Company reviews the authorities of the above committees on a regular basis to ensure that they remain appropriate to the needs of the Company. The Board and the Board committees work under the well-established corporate governance practices in accordance with the requirements of the Listing Rules and relevant statutory requirements.
Each Director of the Company is provided, upon reasonable request made to the Board, with means, at the Company's expense, to seek independent professional advice in furtherance of his/her duties if necessary. The Independent Non-executive Directors are high calibre executives or professionals with relevant and/or professional industry experience who provide their skills and expertise to the Board. They ensure that the Board and Company maintain high standards in its financial and other mandatory reportings as well as providing adequate checks and balances to safeguard the interests of shareholders and the Company as a whole.
The Board regularly reviews its composition and structure to ensure appropriate levels of expertise and independence are attained and maintained.
- Appointment and Succession Planning of the Directors
The Company has established a nomination committee, which is comprising a majority of Independent Non-executive Directors. The Company follows a formal, considered and transparent procedure for the appointment and removal of Directors. All Directors who are appointed to fill casual vacancies are subject to re-election at the first annual general meeting after their appointments by the Board. At the annual general meeting of the Company, one third of the Directors for the time-being (or where the number is not a multiple of three, the number nearest to, but not greater than one third), including the Independent Non-executive Directors, are subject to retirement by rotation and shall be eligible for re-election. Independent Non-executive Directors are appointed for a term of three years, subject to retirement by rotation as aforesaid.
- Securities Transactions
The Company has adopted a code of conduct regarding securities transactions by the Directors of the Company (the "Securities Code") on terms no less strict than the standard set out in the Model Code contained in Appendix 10 of the Listing Rules. Pursuant to the Securities Code, a Director must, among other things, notify the Chairman or his/her alternate in writing of the specific purpose of a proposed dealing in the securities of the Company and obtain a dated written acknowledgement prior to any such dealing. All Directors have confirmed that they have complied with the required standard set out in the Securities Code.
The Remuneration Committee of the Company was established on 20 April 2005 and includes a majority of Independent Non-executive Directors. The Remuneration Committee currently comprises
Two Independent Non-executive Directors, namely Mr. Zhu Xinhui (Chairman of the Remuneration Committee), Mr. Yu Tat Chi, Michael and One executive Director, namely Mr. Wu Zhanming. The Remuneration Committee is responsible for making recommendations to the Board regarding the Company's policy and structure in relation to the remuneration of the Directors and senior management of the Company. The Remuneration Committee also reviews the assessment criteria and remuneration policies and terms of employment of all Directors and senior management of the Company with reference to corporate goals and objectives resolved by the Board from time to time. - Terms of Reference of the Remuneration Committee
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The Nomination Committee of the Company was established on 15 August 2012 and includes a majority of Independent Non-executive Directors. The Nomination Committee currently comprises one Executive Director, Mr. Wu Zhanming (Chairman of the Nomination Committee) and two Independent Non-executive Directors, namely Mr. Yu Tat Chi, Michael and Mr. Zhu Xinhui. The Nomination Committee is responsible for making recommendations to the Board on proposed changes to the Board and senior management of the Company to complement the Company's corporate strategy after its reviews of the structure, size and diversity of the Board and senior management from time to time. - Terms of Reference of the Nomination Committee
Purpose
The purpose of the Nomination Committee is to assist the board of directors (the "Board") of Applied Development Holdings Limited (the "Company") in identification of suitable individuals qualified to become board members and senior management, review the structure, size and diversity of the Board and senior management and make recommendations on any proposed changes to the Board and senior management to complement the Company's corporate strategy.
Composition
The Nomination Committee shall be appointed by the Board from time to time and shall consist of not less than three directors, a majority of which shall be independent non-executive directors who shall meet and maintain the independence requirements from time to time as stipulated in the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. The Board shall appoint one member of the Nomination Committee (who shall be the chairman of the Board or an independent non-executive director) as the chairman of the Nomination Committee (the "Chairman"). A quorum should be two members. The company secretary of the Company shall be the secretary of the Nomination Committee. The Nomination Committee may from time to time appoint any other person with appropriate qualifications and experience as the secretary of the Nomination Committee.
Meetings
The Nomination Committee shall meet at least annually or more frequently if circumstances require. The Chairman (or in his or her absence, a member designated by the other members of Nomination Committee) shall preside at all meetings of the Nomination Committee. The Chairman shall be responsible for leading the Nomination Committee, including scheduling and conducting meetings in accordance with all applicable laws and regulations and the Bye-laws, preparing agendas and making regular reports to the Board. A quorum for meetings of the Nomination Committee shall be two members.
Access
The Nomination Committee should be provided by the Company with sufficient resources to perform its duties. Where necessary, the Nomination Committee should seek independent professional advice, at the Company's expense, to perform its responsibilities.
Reporting Procedures
The Nomination Committee shall evaluate and assess the effectiveness of the Nomination Committee and the adequacy of the Terms of Reference of the Nomination Committee on an annual basis and recommend any proposed changes to the Board. Minutes of meetings of the Nomination Committee and the record of individual attendance at such meetings shall be prepared by the company secretary of the Company which shall be sent to all members of the Board as soon as practicable after the conclusion of any meeting of the Nomination Committee.
Responsibilities and Duties
The Nomination Committee shall perform the following duties:-
review the structure, size and diversity (including the skills, knowledge and experience) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the Company's corporate strategy; identify individuals suitably qualified to become Board members and select or make recommendations to the Board on the selection of individuals nominated for directorships; assess the independence of independent non-executive directors and where the Board proposes a resolution to elect an individual as an independent non-executive director at the general meeting, it should set out in the circular to shareholders and/or explanatory statement accompanying the notice of the relevant general meeting why they believe he should be elected and the reasons why they consider him to be independent; make recommendations to the Board on the appointment or re-appointment of directors and succession planning for directors, in particular the chairman and the chief executive; and review the Board diversity policy#, as appropriate; and make disclosure of its review results in the Corporate Governance Report annually.
Authority
The Nomination Committee is established as a committee of the Board pursuant to bye-law 120(1) of the Bye-laws and the provisions in the Bye-laws regulating meetings and proceedings of the Directors shall apply mutatis mutandis to meetings and proceedings of the Nomination Committee. The Nomination Committee is authorised by the Board to obtain professional advice and assistance from internal or external legal, accounting or other advisors at the expense of the Company if necessary.
# Board Diversity Policy
The Company is committed to equality of opportunity in all aspects of its business and does not discriminate on the grounds of race, gender, disability, nationality, religious or philosophical belief, age, sexual orientation, family status or any other factor.
The Company continuously seeks to enhance the effective of its Board and to maintain the highest standards of corporate governance and enhance the benefits of diversity in the boardroom. The Company sees diversity as a wide concept and believes that a diversity of perspectives can be achieved through consideration of a number of factors, including but not limited to skills, regional and industrial experiences, background, race, gender and other qualities. In infusing its perspective on diversity, the Company will also take into account facts based on its own business model and specific needs from time to time.
For the purpose of implementation of the Board Diversity Policy, the following measurable objectives were adopted:
a) |
at least 1/3 of the members of the Board shall be Independent non-executive Directors; and |
b) |
at least one of the members of the Board shall have obtained accounting or relevant financial management professional qualifications. |
The Company endeavours to ensure that its Board has the appropriate balance of skills, experience and diversity of perspectives that are required to support the execution of its business strategy and in order for the Board to be effective.
Board appointments will continue to be made on a merit basis and candidates will be considered against objective criteria, with due regard for the benefits of diversity on the Board. The Board believes that such merit-based appointments will best enable the Company to sure its shareholders and other stakeholders going forward.
The Nomination Committee is primary responsible for identifying suitably qualified candidates to become members of the Board and in carrying out this responsibility will give adequate consideration to this Policy.
The Company will review this Policy on a regular basis to ensure its continued effectives. In addition, the Company will disclosed details of this Policy and any measureable objectives it has set itself in this regard in the Corporate Governance Report set at its Annual Report.
The Audit Committee comprises three Independent Non-executive Directors, namely, Mr. Yu Tat Chi, Michael (Chairman of the Audit Committee), Mr. Zhu Xinhui and Dr. Chan Kin Keung Eugene SBS, BBS, JP. All of them have appropriate professional qualifications or accounting or related financial management expertise in accordance with the Listing Rules. The Audit Committee is responsible for reviewing and assessing senior management and external auditors of the Company, the risk management and internal control systems and external auditing process and findings, the accounting principles and practices adopted by the Group, Listing Rules and statutory compliance. The members of the Audit Committee also meet to discuss matters relating to auditing, internal control, risk management and financial reporting (including the interim financial report of the Group for the first six-months of each financial year).
The main duties of the Audit Committee include making proposals and recommendations to the Board on the appointment and removal of external auditors and their terms of engagement and termination as well as monitoring the independence and effectiveness of the external auditors and recommending appropriate actions if required.
- Terms of Reference of the Audit Committee
Purpose
The purpose of the Audit Committee is to assist the Board of the Company in considering how the Board should apply financial reporting, risk management and internal control principles and to maintain an appropriate relationship with the Company's auditors.
Composition
Members of the Audit Committee shall be appointed by the Board from amongst the Non-executive Directors and shall comprise of not less than three majority which shall be Independent Non-executive Directors with at least one Independent Non-executive Director having appropriate professional qualifications or accounting or related financial management expertise as required under Rule 3.10(2) of the Listing Rules. The Chairman of the Audit Committee shall be appointed by the Board and shall be an Independent Non-executive Director. A former partner of the existing auditing firm of the Company is prohibited from acting as a member of the Audit Committee for a period of 1 year commencing on the later of (a) the date of his/her ceasing to be a partner of the firm; or (b) the date of his/her ceasing to have any financial interest in the firm. The company secretary of the Company shall be the secretary of the Audit Committee. The Audit Committee may from time to time appoint any other person with appropriate qualifications and experience as the secretary of the Audit Committee.
Meetings
The financial controller of the Company and the company secretary of the Company will normally attend all the Meetings of the Audit Committee, unless requested otherwise by the Audit Committee. At least twice a year, the Audit Committee will meet the Company's external auditors without any senior executives of the Company being present, except by invitation of the Audit Committee. Only members of the Audit Committee are entitled to vote at the meetings of the Audit Committee. The Audit Committee shall meet at least twice each year. A member of the Audit Committee, a Director, the financial controller of the Company or the Company's external auditors may request that a meeting be held if they consider it necessary. Notice of any meetings of the Audit Committee has to be given at least 7 days prior to any such meeting being held, unless the majority of the members of the Audit Committee waive such notice. Irrespective of the length of notice being given, attendance of a meeting by a member of the Audit Committee shall be deemed waiver of the requisite length of notice by the member. Notice of any adjourned meeting is not required if the adjournment is for less than 7 days. The quorum for meetings of the Audit Committee shall be any two members. Resolutions of the Audit Committee shall be passed by a majority of votes or by way of unanimous written resolutions. Meetings can be held in person, by telephone or by video conference. Minutes shall be kept by the secretary of the Audit Committee. Draft and final versions of minutes shall be circulated to all members of the Audit Committee for their comment and records respectively, in both cases within a reasonable period of time after the meeting.
Authority
The Audit Committee is established as a committee of the Board pursuant to bye-law 120(1) of the Bye-laws and the provisions in the Bye-laws regulating the meetings and proceedings of the Directors shall apply mutatis mutandis to meetings and proceedings of the Audit Committee. The Audit Committee is authorised by the Board to investigate any activity within its functions and responsibilities outlined in these terms of reference. It is authorised to seek any information it may require from any employee, director, agent or advisor and all such persons will be directed to co-operate with any request made by the Audit Committee. The Audit Committee shall have unrestricted access to the executive Directors, other senior executives or employees and the external auditors of Company. The Audit Committee shall also have the right to consult the external auditors without reference to management or to consult the management without reference to the external auditors. The members of the Audit Committee are authorised by the Board to seek independent professional advice in appropriate circumstances, at the Company's expense, to discharge his/her duties as a member. Arrangement to seek independent professional advice could be made through the company secretary of the Company. The Audit Committee shall be provided with sufficient resources to discharge its duties.
Responsibilities and Duties
The duties of the Audit Committee shall be:-
to be primarily responsible for making recommendation to the Board on the appointment, reappointment and removal of the external auditor of the Company, and to approve the remuneration and terms of engagement of the external auditor of the Company, and any questions of resignation or dismissal of that auditor;
Note: Rule 13.51(4) of the Listing Rules requires an announcement to be published when there is a change of auditors. The announcement must also include a statement as to whether there are any matters that need to be brought to holders of securities of the Company. to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. The Audit Committee shall discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences; to develop and implement policies regarding the engagement of an external auditor to supply non-audit services. For this purpose, an external auditor shall include any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally; to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken; to monitor the integrity of financial statements of the Company and the Company's annual report and accounts, half-yearly report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in them. In this regard, in reviewing the Company's annual report and accounts, half-yearly report and, if prepared for publication, quarterly reports before submission to the Board, the Audit Committee shall focus particularly on:-
- any changes in accounting policies and practices;
- major judgmental areas;
- significant adjustments resulting from the audit;
- the going concern assumptions and any qualifications;
- compliance with accounting standards; and
- compliance with the Listing Rules and other legal requirements in relation to financial reporting;
In regard to (5) above:
members of the Audit Committee shall liaise with the Board, senior management and the person appointed as the Company's qualified accountant (if any) and the Audit Committee must meet, at least twice a year, with the Company's auditors; and the Audit Committee shall consider any significant or unusual items that are, or may need to be, reflected in such reports and accounts and shall give due consideration to any matters that have been raised by the Company's qualified accountant (if any), compliance officer (if any) or auditors;
to review the Company's financial controls and to review the Company's risk management and internal control systems; to discuss with management the systems of risk management and internal control and ensure that management has discharged its duty to have effective risk management and internal control systems including the adequacy of resources, qualifications and experience of staff of the Company's accounting and financial reporting function, and their training programmes and budget; to consider any findings of major investigations of risk management and internal control matters as delegated by the Board or on its own initiative and management's response; where an internal audit function exists, to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has the appropriate standing within the Company, and to review and monitor the effectiveness of the internal audit function; to review the Group's financial and accounting policies and practices; to review the external auditor's management letter, any material queries raised by the auditor to management in respect of the accounting records, financial accounts or systems of control and management's response; to ensure that the Board will provide a timely response to the issues raised by external auditors; to report to the Board on the matters set out in the CG Code; to review arrangements by which employees of the Company may, in confidence, raise concerns about possible improprieties in financial reporting, risk management and internal control or other matters and to ensure that proper arrangements are in place for the fair and independent investigation of such matters and for appropriate follow-up action; to act as the key representative body for overseeing the Company's relationship with the external auditor; to consider such other matters as the Board may from time to time determine.
Confidentiality
All members of the Audit Committee shall treat and keep all information and documents received or accessible from the Company (including, but not limited to, the reports or minutes of the Audit Committee) in the strictest confidence and shall not directly or indirectly communicate or disclose or divulge (whether in writing or orally or in any other manner) any such information or document to any third party without prior written approval from the Board, save as disclosure is required under the laws and regulations of Hong Kong or is necessary to perform or discharge the member's duties.
A copy of the terms of reference will be made available to any person without charge upon request.
As the Board believes that a well-designed system of internal control is crucial to safeguard the assets of the Group and to ensure reliability of financial reporting as well as compliance with the relevant rules and regulations, a system of internal control has been set up, with the intention of preventing material misstatements and losses and to manage, and, where possible, eliminate risks of failure in operational systems to achieve the Group's objectives.
The Board has overall responsibility for the Group's internal control, financial control and risk management system. The Board also monitors their effectiveness from time to time, and reviews the scope and frequency of audit reviews according to risk assessment. Special reviews may be conducted on areas of concern identified by management or the Audit Committee from time to time.
During each reporting year, the Directors will through the Audit Committee, reviewed the effectiveness of the risk management and internal control systems of the Group, including the functions of financial, operation, compliance and risk management. The Directors, also through Audit Committee, where necessary, also initiated necessary improvements and reinforcements to the risk management and internal control systems.
The rights of shareholders and the procedures for demanding a poll on resolutions at shareholders' meeting are contained in the Company's Bye-laws. Amendments to the Listing Rules which came into force on 1 January 2009 have made it mandatory for all voting at meetings of shareholders of the Company to be taken by way of poll. Effective 1 January 2012, the Listing Rules have been amended to allow voting by poll on procedural and administrative matters to be dispensed with by the chairman of the meeting. The Company has taken steps to ensure compliance with the requirements about voting by poll and arrangements have been made for the voting of each of the resolutions being put to the meetings to be dealt with by means of poll where required to do so under the Listing Rules. At general meetings the Board and the respective committee members of Audit Committee and Remuneration Committee are responsible for answering questions raised by the shareholders.
In order to provide detailed and up-to-date information to our shareholders, the Company has a range of communication channels to ensure its shareholders are kept well-informed. These comprise communication by way of general meetings, annual reports, public notices, announcements and circulars.
The Company seeks to enhance communications and positive relationships with investors by maintaining regular dialogues with institutional investors and analysts to keep them updated about the business, operations and development of the Group, and by replying to any enquiries from investors appropriately. Investors are welcome to make enquiries to the Company at its office in Hong Kong or directly visit the Company's website (www.applieddev.com) for updated corporate and financial information.
Shareholders' meetings provide a principal forum for dialogue between shareholders and the Company. The Board encourages shareholders to attend and welcomes their participation. For the annual general meeting of the Company, notice of the meeting and the related circular are dispatched to the shareholders of the Company at least 20 business days before the meeting. Separate resolution for each substantial issue, including the election of Director, is proposed at the annual general meeting and details of the poll voting procedures and rights of shareholders to demand a poll are included in the related circular. Poll results in respect of each resolution proposed at the annual general meeting will be published by way of an announcement after the close of the meeting in accordance with the Listing Rules.
The Company believes that good corporate governance reflects a high quality of management and operations of the Group's operations and business. Good corporate governance can safeguard the proper use of funds and effective allocation of resources which in turn, protect the interests of the shareholders. The management recognises the importance of good corporate governance practices and will use its best endeavours to maintain, strengthen and improve the standard and quality of the Group's corporate governance.
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