The Board of Directors of Boustead Singapore Limited is committed to maintaining a high standard of corporate governance within the Group, in line with the principles set out in the Code of Corporate Governance 2005 (Code). This establishes and maintains a legal and ethical environment in the Group to preserve the interests of all shareholders.

This section describes the Company’s corporate governance practices with references to the principles of the Code. Where there are deviations from the Code, appropriate explanations are provided.

Principle 1: The Board’s Conduct of Affairs

The Board is responsible for the overall management of the Company. It approves the Group’s strategic plans, key business initiatives, major investments and funding decisions. Additionally, the Board has direct responsibility for decision making in respect of the following corporate events and actions:

• Approval for the release of the announcements for the quarterly and full-year results;
• Approval of the annual report and accounts;
• Convening of shareholders’ meetings;
• Recommendations of dividend payments and other distributions to shareholders;
• Approval of corporate strategies;
• Approval of the Group’s annual operating and capital budgets; and
• Approval of material acquisition and disposal of assets.

Additionally, independent directors of the Board deal with conflict of interest issues relating to directors and substantial shareholders, and matters which require the Board’s approval pursuant to the provisions of the Listing Manual of the SGX-ST or applicable laws and regulations.

To facilitate effective management, certain functions of the Board have been delegated by the Board to various Board Committees. The Board is assisted by the Audit Committee, the Nominating Committee and the Remuneration Committee, each of which has its own terms of reference.

The majority of the current members of the Board have been directors of the Company for at least five years and are familiar with its business operations and governance practices. Newly-appointed directors are given comprehensive briefings by management. All non-executive directors are welcome to request for additional explanations, briefings and informal discussions on any aspect of the Group’s operations or business issues at all times.

The Company provides members of the Board with updates on board processes, governance practices, and changes to laws and regulations that have a bearing either on the Group or an individual director. Directors are also encouraged to keep themselves abreast of the latest developments relevant to the Group or themselves and to attend appropriate training courses.

A formal letter is provided to each director upon his appointment, setting out the director’s duties and obligations.

The Board conducts scheduled meetings on a regular basis. Where necessary, additional Board meetings are also held to address significant transactions or issues that arise.

Principle 2: Board Composition and Balance

Presently, the Board comprises eight directors, four of whom are independent directors. The Board is of the view that the current Board size is appropriate, taking into account the nature and scope of the Company’s operations. The Board is also able to exercise objective judgement on corporate affairs independently, in particular, from the management of the Company.

Non-executive directors constructively challenge and help develop proposals on strategy. They also review the performance of management in meeting agreed goals and monitor the reporting of performance.

The Nominating Committee has reviewed the independence of each director in accordance with the Code’s definition of independence and is satisfied that more than one-third of the Board continues to be independent directors. The Board comprises directors capable of exercising objective judgement on corporate affairs of the Company, independent of management.

The Nominating Committee is of the view that the current Board comprises directors with a wide range of skills, experience and expertise in operations, management, strategic planning, and accounting and finance, who collectively ensure that the Board is equipped to deal with a wide range of issues to meet the Company’s objectives. Also, no individual or group of individuals dominate the Board’s decision making.

Principle 3: Chairman and Chief Executive Officer

The Chairman of the Company, Mr Wong Fong Fui, is also the Group CEO.

As Chairman, he is responsible for the workings of the Board, ensuring that Board meetings are held when necessary and setting the Board meeting agenda in consultation with the other executive directors. He also reviews board papers before they are presented to the Board and ensures that information provided to Board members is adequate. During Board meetings, he ensures that Board members engage in constructive debate on strategic issues and business planning.

In his role as CEO, Mr Wong is the most senior executive in the Company and holds executive responsibility for the Company’s business. He is assisted by the other executive directors, Mr Tong Weng Leong and Mr Loh Kai Keong, in the management of day-to-day operations. Messrs Tong and Loh are not related to Mr Wong. In addition to that, the Board has established various committees that comprise a majority of independent directors. The Board has demonstrated that it is able to exercise independent decision making and because of this, the Board feels that a lead independent director is not required.

In view of the above, the Board is of the opinion that the role of Mr Wong as the Chairman and CEO of the Company does not affect the independence of the Board.

Principle 4: Board Membership

The Nominating Committee comprises three directors, two of whom are independent. The members of the Nominating Committee are:

• Chong Ngien Cheong, Chairman (Independent Non-Executive Director);
• John Lim Kok Min (Independent Non-Executive Director); and
• Wong Fong Fui.

The Nominating Committee serves to provide a formal, transparent and objective procedure for appointing Board members and evaluating each Board member’s performance.

The principal functions of the Nominating Committee include:

• Reviewing the background, academic and professional qualifications, and experience of nominees;
• Ensuring that directors submit themselves for re-nomination and re-election at least once in every three years;
• Determining the independence of directors annually;
• Where a director has multiple board representations, deciding whether the director is able to carry out and has been adequate in carrying out his duties as a director; and
• Evaluating the performance and effectiveness of the Board as a whole.

New directors are appointed by the Board after the Nominating Committee recommends their appointment.  When the need for a new director arises, the Nominating Committee will review the expertise, skills and attributes of the Board, identify its needs and shortlist candidates with the appropriate profiles for nomination.  The search will be through search companies, contacts and recommendations.

Principle 5: Board Performance

The Nominating Committee reviews the composition and skills set of the Board on an annual basis to determine whether it is adequate and appropriate, having regard to the nature and scope of the Company's operations and the costs involved.

The Nominating Committee assesses and makes recommendations to the Board as to whether retiring directors are suitable for re-election. It also carries out an annual evaluation of the Board with the aim of assessing how well the Board, its committees, the directors and the Chairman are performing.

Principle 6: Access to Information

Management is required to provide adequate and timely information to the Board on Group affairs and issues that require the Board’s decision, as well as ongoing reports relating to the operational and financial performance of the Group. Where a physical Board meeting is not possible, timely communication with members of the Board is effected through other means (e.g. electronic mail and teleconferencing). Alternatively, management will arrange to personally meet and brief each director before seeking the Board’s approval on a particular issue. Any requests by directors for further explanation, briefings or informal discussions on any aspect of the Group’s operations are always facilitated expeditiously.

The Board has separate and independent access to the management team and the company secretary, as well as to all Board and Board Committee minutes, resolutions and information papers. The Board takes independent advice as and when necessary to enable it or the independent directors to discharge their responsibilities effectively.

The company secretary attends all Board meetings and is responsible for ensuring that Board procedures are followed. The company secretary, together with other management staff, is responsible for ensuring that the Company complies with applicable requirements, rules and regulations.

Principle 7: Procedures for Developing Remuneration Policies
Principle 8: Level and Mix of Remuneration
Principle 9: Disclosure on Remuneration

The Remuneration Committee comprises entirely of non-executive directors, all of whom are also independent. The members of the Remuneration Committee are:

• Godfrey Ernest Scotchbrook, Chairman (Independent Non-Executive Director);
• Chong Ngien Cheong (Independent Non-Executive Director); and
• John Lim Kok Min (Independent Non-Executive Director).

The objectives of the Remuneration Committee are to provide a formal, transparent and objective procedure for fixing the remuneration packages of individual directors and senior management staff, and to implement and administer the Boustead Share Option Scheme 2001.

The Remuneration Committee reviews and approves recommendations on remuneration policies and packages to attract, retain, and motivate directors and senior management to exert their best efforts to work towards the growth of the Group, the protection and promotion of the interests of all shareholders, and the interests of improved corporate performance.  The review of remuneration packages takes into consideration the long-term interests of the Group and ensures that the interests of the directors and senior management are aligned with those of shareholders.  The review covers all aspects of remuneration, including but not limited to, salaries, fees, allowances, bonuses and benefits-in-kind.  No member of the Remuneration Committee shall be involved in discussions concerning his own remuneration.  The Remuneration Committee's recommendations are submitted to the Board for endorsement.

The Remuneration Committee will determine the remuneration packages of the Chairman and the executive directors based on the performance of the Group and the individual director. Non-executive directors will be paid directors’ fees determined by the full Board based on the effort, time spent and responsibilities of the individual director. The payment of fees to non-executive directors is subject to the approval of shareholders at each Annual General Meeting (AGM).

The remuneration policy for staff adopted by the Group comprises a fixed component and a variable component.  The fixed component is in the form of a base salary.  The variable component is in the form of a variable performance bonus that is linked to corporate performance and individual performance.

Principle 10: Accountability

It is the aim of the Board to provide shareholders with a detailed analysis, explanation and assessment of the Group’s financial position and prospects. The directors have access to senior management at all times. Management currently provides the Board with detailed management accounts of the Group’s performance, financial position and prospects on a quarterly basis.

Principle 11: Audit Committee

The Audit Committee comprises entirely of non-executive directors, all of whom are also independent. The members of the Audit Committee are:

• John Lim Kok Min, Chairman (Independent Non-Executive Director);
• Chong Ngien Cheong (Independent Non-Executive Director); and
• Godfrey Ernest Scotchbrook (Independent Non-Executive Director).

The principal functions of the Audit Committee include:

• Reviewing the audit plan of the external auditors and internal auditors, and the results of the internal auditors’ examination and evaluation of the Group’s system of internal accounting and operational controls;
• Reviewing the Group’s financial and operating results and accounting policies;
• Reviewing the statement of financial position and statement of changes in equity of the Company, and the consolidated financial statements of the Group before their submission to the directors of the Company and the external auditors’ report on those financial statements;
• Reviewing the quarterly and annual announcements on the results and financial position of the Company and the Group;
• Assessing the cooperation and assistance given by management to the external auditors of the Group; and
• Assessing the independence, objectivity and effectiveness of the external auditors of the Group and making recommendations to the Board on their appointment/reappointment.

The Audit Committee has full access to and the cooperation of management. It is given the resources required for it to discharge its function properly. The Audit Committee also has full discretion to invite any director and executive officer to attend its meetings. The external and internal auditors have unrestricted access to the Audit Committee.

The Audit Committee meets at least once a year with the external auditors without the presence of management.

Whistle-Blowing Policy

The Company has in place whistle-blowing policies and arrangements by which staff of the Group may, in confidence, raise concerns about possible improprieties in matters of financial reporting, fraudulent acts and other matters.  To ensure independent investigation of such matters and for appropriate follow-up action, all whistle-blowing reports are sent to a committee comprising of the Chairman of the Audit Committee, the Group Human Resource Director and the Vice President of Internal Audit.

Principle 12: Internal Controls

The Board is responsible for ensuring that management maintains a sound system of internal controls to safeguard shareholders’ investments and the Group’s assets. The Board believes that as a result of its reviews and due enquiry, the system of internal controls that has been maintained by the Group’s management throughout the financial year is adequate to meet the needs of the Group in its current business environment.

The effectiveness of the internal control systems and procedures is monitored and reviewed by the Audit Committee.

The Audit Committee meets at least once a year with the external auditors without the presence of management.

Principle 13: Internal Audit

The Internal Audit Department, headed by the Vice President of Internal Audit, identifies, analyses and manages the risks incurred by the Group in its activities and promotes continuous improvement to the Group’s operations. As far as practicable, all major operating entities are closely examined at least once every year by the Internal Audit Department, which reports to the Chairman of the Audit Committee on any material non-compliance and internal control weaknesses.

The Audit Committee oversees and monitors the implementation of any improvements to the Group’s internal controls and meets regularly with the Vice President of Internal Audit. To ensure the adequacy of the internal audit function, the Audit Committee reviews the internal audit scope of work and resources on an annual basis.

Principle 14: Communication with Shareholders
Principle 15: Encouraging Greater Shareholder Participation

The Board is mindful of its obligations to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy to the SGX-ST. The Board’s policy is that all shareholders should be equally informed of all major developments that impact the Group, in a timely manner. Annual reports, results and announcements of significant transactions are released on SGXNET and are also updated on a timely basis on the Company’s website at www.boustead.sg.

A copy of the annual report, together with the Notice of AGM, is sent to every shareholder. The Notice of AGM is also published in the press. At AGMs, shareholders are given the opportunity to air their views, and directors and management will be present to answer questions from shareholders.

The Articles of Association of the Company allow each shareholder to appoint one or two proxies to attend and vote at general meetings on his/her behalf.

Dealings in Securities

All directors and officers of the Company and the Group are not allowed to deal in the Company’s shares whilst in possession of unpublished price sensitive information. 

In the course of doing business for the Company and the Group or in discussions with clients, vendors or partners, directors and officers of the Company and the Group may become aware of material non-public information about that organisation.  Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making a decision to trade in the public securities of the Company.  The discussion of this information is on a limited, “need to know” basis internally and is not shared with anyone outside the Company or the Group.  Directors and officers are not allowed to buy or sell the public securities of the affected organisations including the Company, on the basis of such information, nor can this information be shared with others.

Interested Person Transactions

All transactions with interested persons must be at arm’s length and reviewed by the Audit Committee.