The Board of Directors of Boustead Singapore Limited (the Board) is committed to maintaining a high standard of corporate governance and transparency within the Company and its subsidiaries (the Group), in line with the principles set out in the Code of Corporate Governance 2012 (the Code). This establishes and maintains a legal and ethical environment in the Group to preserve the interests of all shareholders and stakeholders.
The Board is pleased to present the Corporate Governance Report which outlines the Company’s corporate governance practices with specific reference made to the principles and guidelines of the Code, which forms part of continuing obligations under the Listing Rules of the Mainboard of the Singapore Exchange Securities Trading Limited (SGX-ST). 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 quarterly and full-year results announcements;
- 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;
- approval of material acquisition and disposal of assets; and
- approval of the Group’s risk appetite and internal controls.
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 & Risk 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 has been directors of the Company for at least five years and is 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 on 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 at the Company’s expense.
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.
The Company’s Constitution allows a Board meeting to be conducted by way of teleconference and video–conference.
Principle 2: Board Composition and Guidance
Presently, the Board comprises six directors, three 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.
The Board members as at the date of this report are:
- Wong Fong Fui (Chairman and Group Chief Executive Officer);
- Wong Yu Loon (Executive Director and Deputy Group Chief Executive Officer);
- Loh Kai Keong (Executive Director and Group Chief Financial Officer);
- Goh Boon Seong (Independent Non-Executive Director);
- Chong Ngien Cheong (Independent Non-Executive Director); and
- Godfrey Ernest Scotchbrook (Independent Non-Executive Director).
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. At meetings of the Board, directors are free to discuss and openly challenge the views presented by management and other directors. The decision making process is an objective one.
To facilitate a more effective check on management, non–executive directors also meet at least once a year without the presence of management.
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.
Each of Mr Chong Ngien Cheong and Mr Godfrey Ernest Scotchbrook has been an independent director of the Board for more than nine years. The Board, with the concurrence of the Nominating Committee, has rigorously reviewed the independence of each of them and is satisfied that each of them is independent in character and judgment, and found no evidence to indicate that the length of their respective service has in any way affected their respective independence. Given their respective wealth of business, working experience and professionalism in carrying out their duties, the Nominating Committee has found each of Mr Chong Ngien Cheong and Mr Godfrey Ernest Scotchbrook suitable to act as independent directors. The Board has accepted the Nominating Committee’s recommendation that each of Mr Chong Ngien Cheong and Mr Godfrey Ernest Scotchbrook be considered independent. Each of Mr Chong Ngien Cheong and Mr Godfrey Ernest Scotchbrook has abstained from deliberating on their respective independence and their nomination.
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 Chief Executive Officer (CEO).
As Chairman, he is responsible for the workings of the Board, ensuring that Board meetings are held when necessary and sets 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 Fong Fui is the most senior executive in the Company and holds executive responsibility for the Company’s business. He is assisted by Executive Director and Deputy Group Chief Executive Officer, Mr Wong Yu Loon, and Executive Director and Group Chief Financial Officer, Mr Loh Kai Keong, in the management of day-to-day operations. Whilst Mr Wong Yu Loon is the son of Mr Wong Fong Fui, Mr Loh is not related to Mr Wong Fong Fui. In addition to that, more than half of the Board is made up of independent directors and the various Board committees are chaired by and comprise a majority of independent directors. The Board has consistently demonstrated it is able to exercise independent decision-making. Because of this, the Board has not appointed a lead independent director to date. Notwithstanding this, it may appoint one in the interest of embracing recommended best practices. The Board is of the opinion that the role of Mr Wong Fong Fui as both 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 as at the date of this report are:
- Chong Ngien Cheong, Chairman (Independent Non-Executive Director);
- Goh Boon Seong (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 regularly the composition of the Board and Board committees;
- reviewing the Board’s succession plans for directors, in particular, the Chairman and the CEO;
- 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 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 may be through search companies, contacts and recommendations. The objective of this process is to ensure the Board collectively has the diversity, skills, knowledge and experience necessary to meet the needs of the Company.
One–third of directors who are longest–serving (other than the Managing Director or a director holding an equivalent position) are required to retire from office every year at the Annual General Meeting. Based on such a rotation process, each director is required to submit himself or herself for re–election by shareholders at least once every three years.
The Nominating Committee is required to consider annually whether directors who serve on multiple boards are able to commit the necessary time to discharge their responsibilities as directors of the Company. In performing its review, the Nominating Committee shall consider factors including:
- the respective director’s actual conduct on the Board;
- the assessment of the effectiveness of the individual director; and
- assessment of the time and attention given by each director to the affairs of the Company and the Group.
In view of the foregoing, the Nominating Committee has not determined a maximum number of listed company board representations which any director may hold as the Nominating Committee has reviewed and is satisfied that all Directors, who sit on multiple Boards, have been able to devote sufficient time and attention to the affairs of the Company to adequately discharge their duties as Directors of the Company, notwithstanding their multiple Board appointments.
The Board does not encourage the appointment of alternate directors. No alternate director has been appointed to the Board.
Where an existing director is required to retire from office, the Nominating Committee reviews the composition of the Board and takes into account factors such as that existing director’s attendance, participation, contribution and competing time commitments when deciding whether to recommend that director for re–election.
Principle 5: Board Performance
The Nominating Committee reviews on an annual basis the composition and skills set of the Board 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 and its independent directors may take 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 as at the date of this report are:
- Godfrey Ernest Scotchbrook, Chairman (Independent Non-Executive Director);
- Chong Ngien Cheong (Independent Non-Executive Director); and
- Goh Boon Seong (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 Restricted Share Plan 2011.
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. The Remuneration Committee has not appointed external remuneration consultants but has had the benefit of relevant data from market surveys carried out by leading firms of compensation consultants. No member of the Remuneration Committee shall be involved in discussions concerning his own remuneration. The 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 contributions, effort, time spent and responsibilities of the individual director. The payment of fees to non-executive directors is subject to the approval of the Company at each Annual General Meeting.
The Company does not currently have in place contractual provisions to allow the Company to reclaim incentive components of remuneration from executive directors and key management personnel in exceptional circumstances of misstatement of financial results, or of misconduct resulting in financial loss to the Company. However, the Company is reviewing its human resource policies to determine the feasibility of incorporating such contractual provisions.
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 and a long-term restricted share award scheme based on the achievement of additional specific key performance indicators.
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: Risk Management and Internal Controls
The Board is responsible for ensuring that management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the Group’s assets, and to manage risks. The system is intended to provide reasonable but not absolute assurance against material misstatements or loss, and to safeguard assets and ensure maintenance of proper accounting records, reliability of financial information, compliance with relevant legislations, regulations and best practices, and the identification and containment of business risks. The effectiveness of the risk management and internal control systems and procedures is monitored and reviewed by the Audit & Risk Committee.
The Board, aided by the Audit & Risk Committee, regularly reviews and improves its business and operational activities to identify areas of significant business risks as well as taking appropriate measures to control and mitigate these risks. Management reviews all significant control policies and procedures and highlights all significant matters to the Audit & Risk Committee and the Board. The financial risk management objectives and policies are outlined in the financial statements. Risk management alone does not guarantee that business undertakings will not fail. However, by identifying and managing risks that may arise, the Board is in a position to make more informed decisions and benefit from a better balance between risk and reward. This will assist in safeguarding and creating shareholder value.
The Audit & Risk Committee and the Board have received assurance from the Group Chief Executive Officer and the Group Chief Financial Officer that as of 31 March 2016:
- the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances; and
- the Group’s risk management and internal control systems to address the key financial, operational, compliance and information technology risks affecting the operations are adequate to meet the needs of the Group in its current business environment.
Based on the internal controls established and maintained by the Group, the work performed by the external auditors and the reviews conducted by management and the Internal Audit Department, the Board, with the concurrence of the Audit & Risk Committee, is of the opinion that the Group’s internal controls addressing financial, operational, compliance and information technology risks were adequate as at 31 March 2016.
Principle 12: Audit & Risk Committee
The Audit & Risk Committee comprises entirely of non-executive directors, all of whom are also independent. The members of the Audit & Risk Committee as at the date of this report are:
- Goh Boon Seong, 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 & Risk 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 consolidated financial statements of the Group and the statement of financial position of the Company before their submission to the directors of the Company and the external auditors’ report on those financial statements;
- reviewing the quarterly and full-year announcements on the results and financial position of the Group and the Company;
- assessing the co-operation and assistance given by management to the external auditors of the Group;
- assessing the independence, objectivity and effectiveness of the external auditors of the Group and making recommendations to the Board on their appointment/re–appointment; and
- assessing and recommending to the Board the Group’s risk appetite and reviewing the adequacy and effectiveness of the Group’s internal controls and risk management processes.
The Audit & Risk Committee has full access to and has the co–operation of management. It is given the resources required for it to discharge its function properly. The Audit & Risk 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 & Risk Committee.
The Audit & Risk Committee meets at least once a year with the external auditors and internal auditors without the presence of management.
The Audit & Risk Committee has undertaken a review of the nature and value of non–audit services provided to the Group by the external auditors during the financial year and is satisfied that the independence of the external auditors has not been impaired by the provision of these services.
The Company has complied with Rule 712 and Rule 715 read together with Rule 716 of the Listing Manual of the SGX–ST in relation to the appointment of auditing firms.
The Company has in place a whistle-blowing policy 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 relevant 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 & Risk Committee, the Senior Vice–President – Group Human Resources and the Senior Vice–President – Internal Audit.
Principle 13: Internal Audit
The Internal Audit Department, headed by the Senior Vice-President - 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 & Risk Committee on any material non–compliance and internal control weaknesses.
The Audit & Risk Committee oversees and monitors the implementation of any improvements to the Group’s internal controls and meets regularly with the Senior Vice-President – Internal Audit. To ensure the adequacy of the internal audit function, the Audit & Risk Committee reviews the internal audit scope of work on an annual basis.
Principle 14: Shareholder Rights
Principle 15: Communication with Shareholders
Principle 16: Conduct of Shareholder Meetings
The Board is mindful of its obligations to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of 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 Annual General Meeting (AGM), is sent to every shareholder. The Notice of AGM is also published in the press.
The Constitution of the Company allows each shareholder to appoint up to two proxies to attend and vote at general meetings on his/her behalf. On 3 January 2016, amendments to the Companies Act (Cap. 50) came into force, under which, among other things certain members, defined as “relevant intermediary”, are allowed to attend and participate in general meetings without being constrained by the two–proxy requirement. Relevant intermediary includes corporations holding licenses in providing nominee and custodial services and the Central Provident Fund (CPF) Board which purchases shares on behalf of the CPF investors.
Separate resolutions are proposed on each substantially separate issue at the general meetings. All the resolutions at general meetings are in single item resolutions.
Shareholders are also given the opportunity to participate effectively and vote at general meetings, where relevant rules and procedures governing such meeting are clearly communicated. All resolutions at general meetings of the Company will be voted by poll as required by Rule 730A(2) of the Listing Manual.
Shareholders are given the opportunity to raise questions and clarify any issues that they may have relating to the resolutions to be passed. The Board and senior management are present at each general meeting to respond to any questions from shareholders. The Group’s external auditors are also present to address queries regarding the conduct of the audit and the preparation and content of the auditors’ report.
The Company does not have a fixed dividend policy. The form, frequency and amount of dividends will depend on the Company’s earnings, general financial condition, results of operations, capital requirements, cash flow, general business condition, development plans and other factors as the directors may deem appropriate. Notwithstanding this, the Company has been declaring dividends on a half–yearly basis.
Dealings in Securities
All directors and officers of the Company and the Group are not allowed to deal in the Company’s shares on short–term considerations and whilst in possession of unpublished price sensitive information. The Company, its directors and officers, including employees who have access information to price-sensitive information are expected to comply which the Securities and Futures Act (Cap. 289) and observe laws against insider trading at all times.
In the course of doing business for the Company and the Group or in discussions with customers, 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.
Dealing in the Company’s shares is also prohibited during the period commencing two weeks before the announcement of the Group’s results for each of the first three quarters of the financial year and during the period commencing one month before the announcement of the Group’s annual results, and ending on the date of the relevant announcement.
Since the end of the previous financial year, no material contracts involving the interest of the chief executive officer, each director or controlling shareholder of the Company has been entered into by the Company or any of its subsidiaries, and no such contract subsisted as at 31 March 2016.