Corporate Governance

Corporate Governance Report

Business Model and Development Strategies

The principal businesses of the Group include investment holding, water resources, property investment and development, department store operation, hotel ownership, operation and management, investment in energy projects and road and bridge operation. The Group is committed to consolidating the operational development of its existing businesses and expanding its core businesses in order to generate continuous and steady investment returns for shareholders. Through optimising asset portfolio, strengthening capital management, enhancing management standard and corporate governance, further fortifying competitive strengths and enhancing the market influence of the Group, they stand to provide strong support for the enterprise’s long-term, steady and sustainable development.

In line with its strategic development plan, the Group will continue its investments in water resources management, property investment and development as well as infrastructure segment in a proactive and prudent manner. The Group continues to actively explore market investment opportunities in areas such as untreated water and urban water supply, sewage treatment and integrated water environment management. The Group will fasten the pace of project acquisitions and development of new business in an effort to further expand its scale, while continuing to optimize its asset structure and facilitate further business integration.

Faced with the trend of globalization, the Group will continue to capitalize on Hong Kong’s status as an international financial centre, improve its capital utilization efficiency, strengthen its capital management capabilities and foster effective value enhancement of capital. Meanwhile, the Group will optimize its human resources operations and further improve the professionalism of its management. The Group will step up its efforts in strengthening corporate culture and enhance corporate core competencies.

Corporate Governance Code

The Group recognizes the importance of achieving the highest standard of corporate governance consistent with the needs and requirements of its businesses and the best interest of all its stakeholders and is fully committed to doing so. It is also with these objectives in mind that the Group has applied the principles of the Corporate Governance Code (the “CG Code”) contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

In the opinion of the directors of the Company (the “Directors”), the Company had complied with the code provisions set out in the CG Code for the year ended 31 December 2017 and, where appropriate, the applicable recommended best practices of the CG Code.

Directors' Securities Transactions

Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules as its own code of conduct for dealings in securities of the Company by the Directors. In response to specific enquiries made, all Directors confirmed that they had complied with the required standards of dealings as set out in the Code during the year.

Board of Directors

The board of Directors (the “Board”), which is accountable to the shareholders of the Company, is responsible for the leadership and control of the Company and it oversees the Group’s businesses, strategic decisions and performances. The management is entrusted by the Board with the authority and responsibility for the day-to-day management of the Group and assumes full accountability to the Board for the operation of the Group. Major corporate matters that are specifically delegated by the Board to the management include the preparation of interim and annual reports and announcements for the Board’s approval before publication, execution of business strategies and initiatives adopted by the Board, implementation of adequate systems of internal controls and risk management procedures, and compliance with relevant statutory and regulatory requirements, rules and regulations. It is the responsibility of the Board to determine the appropriate corporate governance practices applicable to the Company’s circumstances and to ensure processes and procedures are in place to achieve the Company’s corporate governance objectives.

Board Composition

The composition of the Company’s Board has been changed during the year and up to the date of publication of this report. Mr. Wu Jianguo retired as a Non-Executive Director with effect from 23 June 2017.

As at the date of this Annual Report, the Board comprises four Executive Directors, being Mr. Huang Xiaofeng, Mr. Wen Yinheng, Mrs. Ho Lam Lai Ping, Theresa and Mr. Tsang Hon Nam, five Non-Executive Directors, being Mr. Cai Yong, Mr. Zhang Hui, Ms. Zhao Chunxiao, Mr. Lan Runing and Mr. Li Wai Keung, and five Independent Non-Executive Directors, being Dr. Chan Cho Chak, John, Dr. Li Kwok Po, David, Mr. Fung Daniel Richard, Dr. Cheng Mo Chi, Moses and Mr. Wu Ting Yuk, Anthony.

During the year, the Non-Executive Directors (including the Independent Non-Executive Directors) provided the Company with a diverse range of expertise and a balance of skills, and brought independent judgments on issues pertaining to strategic direction, development, performance and risk management through their contribution at Board meetings and committee meetings. They also reviewed investment proposals as well as internal audit reports.

The names of the Directors and their roles and functions are posted on the Company’s website at www.gdi.com.hk.

Chairman and Managing Director

The Chairman of the Board is Mr. Huang Xiaofeng and the Managing Director is Mr. Wen Yinheng. The roles of the Chairman and the Managing Director of the Company are clearly defined and segregated to ensure independence and proper checks and balances.

On top of his executive responsibilities, the Chairman provides leadership to the Board and oversees its functioning to ensure that it acts in the best interests of the Group and that Board meetings are planned and conducted effectively. He is also responsible for setting the agenda for each Board meeting, taking into account, where appropriate, matters proposed by the Directors and the Company Secretary. With the support of the other Executive Directors and the Company Secretary, the Chairman seeks to ensure that all Directors are properly briefed on issues arising at Board meetings and provided with adequate and accurate information in a timely manner. The Chairman promotes a culture of openness and actively encourages Directors to voice their opinion and be fully engaged in the Board’s affairs so as to contribute to the Board’s effective functioning. The Board, under the leadership of the Chairman, has adopted good corporate governance practices and procedures and taken appropriate steps to ensure effective communication with shareholders and other stakeholders as outlined in the latter part of this report.

Under the guidance and instructions of the Board, the Managing Director, leading the management of the Company, is accountable to the Board for the implementation of the Company’s strategies and the coordination of various business operations.

Non-Executive Directors

All Directors (including Non-Executive Directors) appointed to fill a casual vacancy or as an addition to the existing Board shall hold office only until the first general meeting after his or her appointment and shall be eligible for re-election.

Moreover, all Directors (including Non-Executive Directors and Independent Non-Executive Directors) of the Company are appointed for a term of not more than approximately three years expiring on the earlier of either (i) the conclusion of the annual general meeting of the Company in the year of the third anniversary of the appointment or re-election (as the case may be) of that Director, or (ii) the expiration of the period within which the annual general meeting of the Company is required to be held in the year of the third anniversary of the appointment or re-election (as the case may be) of that Director and in any event, subject to earlier determination in accordance with the articles of association of the Company and/or any applicable laws and regulations.

Independence of Independent Non-Executive Directors

The Company has complied with the requirements under Rules 3.10(1), 3.10(2) and 3.10A of the Listing Rules. The Company has received confirmation of independence from the five Independent Non-Executive Directors, namely Dr. Chan Cho Chak, John, Dr. Li Kwok Po, David, Mr. Fung Daniel Richard, Dr. Cheng Mo Chi, Moses and Mr. Wu Ting Yuk, Anthony in accordance with Rule 3.13 of the Listing Rules.

Dr. Chan Cho Chak, John, Dr. Li Kwok Po, David, Mr. Fung Daniel Richard and Dr. Cheng Mo Chi, Moses have served on the Board of the Company for more than nine years. They have clearly demonstrated their willingness to exercise independent judgement and to provide objective opinion to the management. There is no evidence that length of tenure is having any adverse impact on their independence. The Board therefore considers that Dr. Chan, Dr. Li, Mr. Fung and Dr. Cheng remain independent, notwithstanding the length of their tenure.

The Board as well as the Nomination Committee have reviewed the independence of all Independent Non-Executive Directors and have concluded that all of them are independent within the definition of the Listing Rules. Further, up to the date of this report, the Board is not aware of the occurrence of any events which would cause it to believe that the independence of any Independent Non- Executive Director has been impaired.

Contributions of Independent Non-Executive Directors

The Company strives to build an effective Board, whose capability is appropriate for the scale, complexity and strategic positioning of our business. With this in mind, the Independent Non-Executive Directors of the Company are highly regarded incumbents with the following expertise and experience present in one or more of them:

- Significant board, financial and general management experience across a range of sectors and knowledge of corporate governance issues;

- In-depth and up-to-date knowledge of the global markets and economic, political and regulatory development;

- Considerable experience and qualification in financial administration, banking, legal and/or compliance;

- Broad experience in government organisations, public bodies and/or regulatory authorities;

- Leadership role in large-scale companies or organizations;

- Deep knowledge of commercial expertise;

- Alert of corporate social responsibility issues.

All of them have a wealth of experience in diverse fields and possess the requisite upright character, integrity and business insight for the proper discharge of their duties as independent directors. In pursuit of the Group’s objectives and business endeavors, by offering independent and constructive advice, they provide valuable contributions and insights to the Board and instill integrity into every aspect of our business which is also aligned to our values. Their considerable pool of knowledge, experience, skills and expertise are crucial to the Board’s deliberations. They have given the Board and the committees on which they serve the benefit of their skills, expertise and varied backgrounds and qualifications through active participation.

In addition, the Independent Non-Executive Directors act as custodian of the policies and practices that define and safeguard the reputation of the Company and are well placed to carry out their role. They have devoted time to satisfying themselves that our corporate governance practices and compliance policies accord with latest requirements. Their drive, enthusiasm and commitment, along with their proven ability to build and lead a strong Board, brings significant value to all stakeholders of the Group.

Relationship amongst Directors

The Board members do not have any financial, business, family or other material/relevant relationships with each other, thus ensuring strong independence across the Board.

Board Diversity Policy

The Board adopted a board diversity policy (the “Board Diversity Policy”) on 28 August 2013 which sets out the approach to achieve diversity on the Board.

The Company recognizes and embraces the benefits of having a diverse Board and perceives increasing diversity at Board level as an essential element in contributing to the attainment of the Company’s strategic objectives and sustainable development.

The Company seeks to promote Board diversity through the consideration of a number of factors, including but not limited to gender, age, cultural and educational background, professional experience, skills, knowledge and length of service. The Company also takes into consideration its own business model and specific needs from time to time. All Board appointments are based on meritocracy, and candidates are considered against objective criteria, having due regard to the benefits of diversity on the Board.

The Nomination Committee has set the measurable objectives based on five focused areas: gender, age, length of service, professional experience and skills and knowledge for the implementation of board diversity of the Company. The Nomination Committee reviews the Board Diversity Policy, as appropriate, to ensure its continued effectiveness from time to time.

As at the date of this report, the Board comprises fourteen directors. Five of them are Independent Non-Executive Directors drawn from a diverse background, spanning business management, investment management, public administration, financial services, legal, compliance and accounting, thereby ensuring critical review and control of the management process. The Board has maintained a balanced composition in terms of gender, age, professional experience, skills and knowledge. It has performed effectively by providing sound judgment on strategic issues and effective oversight of and guidance to management. The biographies of the Directors as at the date of this report set out in pages 27 to 31 to this Annual Report demonstrate a diversity of skills, expertise, experience and qualifications.

Having reviewed the implementation of the Board Diversity Policy and the structure, size and composition of the Board, the Nomination Committee of the Board considered that the requirements of the Board Diversity Policy had been met.

Board Meeting

The Board meets regularly to discuss the overall strategy as well as the operation and financial performance of the Company, and to review and approve the Company’s annual, interim and quarterly results. During the year, seven Board meetings were held and attendance of each Director at the Board meetings is set out in the section headed “Board and Committees Meetings” of this report.

Regular Board meetings in each year are scheduled in advance to facilitate maximum attendance of Directors. At least fourteen days’ notice of a Board meeting is normally given to all Directors who are provided with an opportunity to include matters for discussion in the agenda. The Company Secretary assists the Chairman in preparing the agenda for meetings to comply with all applicable rules and regulations. The agenda and the accompanying Board papers are normally sent to Directors at least three days before the intended date of a Board meeting. Draft minutes of each Board meeting are circulated to Directors for their comment before being tabled at the next Board meeting for approval. All minutes are kept by the Company Secretary and are open for inspection at reasonable time on reasonable notice by any Director.

According to the current Board practice, if a Director has a conflict of interest in a matter to be considered by the Board which the Board has determined to be material, the matter will be dealt with by the Board at a duly convened Board Meeting. The articles of association of the Company also stipulate that save for the exceptions as provided therein, a Director shall abstain from voting and not be counted in the quorum at meetings for approving any transaction, contract or arrangement in which such Director or any of his/her associates (as defined in the Listing Rules) has a material interest. Every Director is entitled to have access to the Board papers and related materials as well as to the advice and services of the Company Secretary.Relationship amongst Directors

The Board members do not have any financial, business, family or other material/relevant relationships with each other. Such balanced board composition also ensures that strong independence exists across the Board. The biographies of the Directors as at the date of this report as set out in pages 24 to 28 to 2016 Annual Report, demonstrate a diversity of skills, expertise, experience and qualifications.

Directors' Induction and Continuous Professional Development

Upon appointment to the Board, each new Director receives an induction package covering business operations, policy and procedures of the Company as well as the general, statutory and regulatory obligations of being a director to ensure that he/she is sufficiently aware of his/her responsibilities under the Listing Rules and other relevant legal and regulatory requirements.

The Directors are briefed on the amendments to or updates on the relevant laws, rules and regulations. In addition, the Company encourages the Directors to enrol in a wide range of professional development courses and seminars relating to the Listing Rules, Hong Kong ordinances and corporate governance practices so that they can continuously update and further improve their relevant knowledge and skills. Some Directors attended seminars and conferences organized by government authorities, professional bodies and industrial organizations in relation to corporate governance, updates on laws, rules and regulations, accounting, financial, management or other professional skills. The Company has organized Directors’ training in August 2017 and October 2017 for the Directors on “Legal responsibilities of listed companies’ directors and disclosure of inside information” and “Cybersecurity”, respectively. Reading materials have also been provided to the Directors to develop and refresh their professional skills.

According to the records kept by the Company, the Directors attended the following trainings during the year ended 31 December 2017.

 
  Directors' training  Seminars, Conferences and Reading Materials (Note)
Name of Director August 2017 October 2017
Huang Xiaofeng
Wen Yinheng
Ho Lam Lai Ping, Theresa
Tsang Hon Nam
Cai Yong
Zhang Hui
Zhao Chunxiao
Lan Runing
Li Wai Keung
Chan Cho Chak, John
Li Kwok Po, David
Fung Daniel Richard
Cheng Mo Chi, Moses
Wu Ting Yuk, Anthony
Wu Jianguo (retired on 23 June 2017) N/A N/A

 Note: Including director training webcasts entitled “Duties of Directors and Role and Function of Board Committees”, “Corporate Governance – Director and Company Secretary’s Roles” and “Directors’ Responsibilities at IPOs” organized by The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”).

Mr. Huang Xiaofeng, Ms. Zhao Chunxiao and Mr. Li Wai Keung, being directors of Guangdong Land Holdings Limited (“GD Land”), a subsidiary of the Company listed on the Hong Kong Stock Exchange, attended a seminar organised by GD Land regarding environmental, social and governance reporting in October 2017.

To ensure strong compliance culture at all levels of the Group and to foster good governance, directors and management of subsidiaries are encouraged to participate in continuous training to facilitate their understanding of their duties and obligations in respect of compliance with rules and regulations as well as environmental, social and corporate governance.

Board Committees

The Board has established various committees, including the Audit Committee, the Remuneration Committee and the Nomination Committee. For effective oversight and leadership, the Board receives updates/advice from the Board Committees from time to time. The terms of reference stipulating the respective authorities and responsibilities of these committees are available on the Company’s website.

Remuneration Committee

The Remuneration Committee comprises all five Independent Non-Executive Directors, being Dr. Chan Cho Chak, John, Dr. Li Kwok Po, David, Mr. Fung Daniel Richard, Dr. Cheng Mo Chi, Moses and Mr. Wu Ting Yuk, Anthony. Dr. Chan Cho Chak, John is the Chairman of the Remuneration Committee. The remuneration of the Directors shall be determined by the members of the Company at the general meetings. Approval has been granted by the shareholders at the annual general meeting in 2017 to authorise the Board to fix the remuneration of the Directors.

The Remuneration Committee advises on policies in regard to the remuneration of Directors and senior management of the Company and is authorised by the Board to determine the remuneration packages for individual Executive Director and senior management. Remuneration of the Executive Directors and senior management shall be determined by the Remuneration Committee with reference to their duties, responsibilities and performance, and the results of the Group. No Director shall be involved in deciding his/her own remuneration.

The meeting of the Remuneration Committee shall be held at least once a year and when necessary. During the financial year ended 31 December 2017, the Remuneration Committee had held three meetings and had passed one written resolution to approve the annual review of the remuneration packages and performance bonuses for the Executive Directors of the Company that came up for determination. The attendance of each member of the Remuneration Committee is set out in the section headed “Board and Committees Meetings” of this report.

Details of the amount of Directors’ remuneration for the year 2017 are set out in note 8 to the financial statements.

Nomination Committee

The Nomination Committee comprises Mr. Huang Xiaofeng, Chairman of the Board, and all five Independent Non-Executive Directors, being Dr. Chan Cho Chak, John, Dr. Li Kwok Po, David, Mr. Fung Daniel Richard, Dr. Cheng Mo Chi, Moses and Mr. Wu Ting Yuk, Anthony. Mr. Huang Xiaofeng is the Chairman of the Nomination Committee.

The Nomination Committee is responsible for, amongst other things, identifying individuals suitably qualified to become Board members, considering the re-appointment of Directors and succession planning for Directors and making recommendations to the Board in respect of the aforesaid matters.

The meeting of the Nomination Committee shall be held at least once a year and when necessary. During the financial year ended 31 December 2017, the Nomination Committee held two meetings to evaluate the structure, size and composition of the Board, to review the implementation of the Company’s Board Diversity Policy, to assess the independence of the Independent Non-Executive Directors and to make recommendations to the Board on the re-election of Directors.

The attendance of each member of the Nomination Committee is set out in the section headed “Board and Committees Meetings of this report.

Audit Committee

The Audit Committee comprises all five Independent Non-Executive Directors, being Dr. Li Kwok Po, David, Dr. Chan Cho Chak, John, Mr. Fung Daniel Richard, Dr. Cheng Mo Chi, Moses and Mr. Wu Ting Yuk, Anthony. Dr. Li Kwok Po, David is the Chairman of the Audit Committee.

The meetings of the Audit Committee shall be held at least twice a year or as and when necessary. During the financial year ended 31 December 2017, the Audit Committee had held four meetings to review, among other matters, the 2016 annual results, the

2017 quarterly and interim results of the Group before their submission to the Board as well as to monitor the integrity of such financial statements/financial information. The Audit Committee oversees matters concerning the external auditors including making recommendations to the Board regarding the appointment of the external auditors, reviewing the nature and scope of their audit and work and approving their fees. In addition to the four meetings as aforesaid, the Audit Committee also had a private meeting with the external auditors to discuss any area of concern. The Audit Committee further ensures that the management has put in place effective risk management and internal control systems and maintains an overview of the Group’s risk assessment, control and management processes. It reviews the adequacy of resources, qualifications and experience of staff of the Group’s accounting, internal audit and financial reporting functions and their training programmes and budget. In addition, it reviews the Group’s internal audit reports and monitors the effectiveness of the internal audit function.

The attendance of each member of the Audit Committee is set out in the section headed “Board and Committees Meetings” of this report.

Board and Committees Meetings

The individual attendance records of each Director at the meetings of the Board, Remuneration Committee, Nomination Committee, Audit Committee and general meetings during the year ended 31 December 2017 are set out below:
 
Name of Director Board Remuneration Committee Nomination Committee Audit Committee AGM EGM on 20 March 2017
Executive Directors
Huang Xiaofeng 7/7 - 2/2 - 1/1 1/1
Wen Yinheng 7/7 - - - 1/1 1/1
Ho Lam Lai Ping, Theresa 7/7 - - - 1/1 1/1
Tsang Hon Nam 7/7 - - - 1/1 1/1
Non-Executive Directors
Cai Yong 6/7 - - - 0/1 1/1
Zhang Hui 6/7 - - - 1/1 1/1
Zhao Chunxiao 7/7 - - - 0/1 1/1
Lan Runing 6/7 - - - 1/1 1/1
Li Wai Keung 7/7 - - - 1/1 1/1
Wu Jianguo (retired on 23 June 2017) 2/3 - - - 0/1 0/1
Independent Non-Executive Directors
Chan Cho Chak, John 7/7 3/3 2/2 4/4 1/1 1/1
Li Kwok Po, David 7/7 3/3 2/2 4/4 1/1 0/1
Fung Daniel Richard 6/7 3/3 1/2 3/4 1/1 1/1
Cheng Mo Chi, Moses 6/7 3/3 2/2 4/4 0/1 0/1
Wu Ting Yuk, Anthony 6/7 3/3 2/2 3/4 1/1 1/1

 

Accountability and Audit

Financial Reporting

The Board receives monthly management updates on the Group’s performance and financial position and is responsible for overseeing the preparation of financial statements for each financial year.

The Directors have acknowledged their responsibility in the preparation of all information and representations contained in the financial statements of the Company for the year ended 31 December 2017, which give a true and fair view of the financial position of the Group and of the results and cash flows for that financial year. In preparing the financial statements for the year ended 31 December 2017, the Board has selected appropriate accounting policies, applied them consistently in accordance with the Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards which are pertinent to its operations and relevant to the financial statements, made judgments and estimates that are prudent and reasonable, and ensured the preparation of the financial statements on a going concern basis.

The Group endeavours to present a balanced, clear and comprehensible assessment of the Group’s performance, position and prospects. The annual, interim and quarterly results of the Company are announced in a timely manner within the limit of three months, two months and 45 days respectively after the end of the relevant periods in accordance with the Listing Rules.

Auditors' Remuneration

During the year under review, the remuneration paid/payable to the Company’s auditors, Ernst & Young, Hong Kong, is set out as follows:

Services rendered Fee paid/payable
HK$'000
Audit of financial statements (Note 1) 10,803
Review of interim results 1,980
Agreed-upon procedures on quarterly results 1,220
Environmental, social and governance reporting consultancy services 628
Enterprise risk assessment and business process review services 298
Total (Note 2) 14,929

 Notes:

1. Another member firm of the Ernst & Young global network was engaged to conduct audit on the financial statements of certain subsidiaries of the Company. The relevant remuneration amounted to HK$2,911,000.

2. The above analysis does not include the services engaged by GD Land. Please refer to the 2017 annual report of GD Land for the relevant details.

Risk Management and Internal Control

The Board is responsible for the Group’s risk management and internal control systems and reviews their effectiveness annually. Such systems are designed to prudently manage the Group’s risks within an acceptable risk profile and provide reasonable assurance against material misstatement or loss. The Board has delegated to management the implementation of the risk management and internal control systems as well as the review of the relevant financial, operational, compliance, risk management and internal control procedures.

The management under the supervision of the Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group and this process includes updating the risk management and internal control framework when there are changes in business, external environment or regulatory guidelines.

The management assists the Board with the implementation of all relevant policies and procedures on risk and control by identifying and assessing the risks faced by the Group and designing, operating and monitoring suitable internal controls to mitigate and control these risks. The key processes that have been established in reviewing the adequacy and integrity of the risk management and internal control systems include the following:

A defined management structure is maintained with specified limits of authority and control responsibilities, which is designed to (a) safeguard assets from inappropriate use; (b) maintain proper accounts; (c) ensure compliance with laws and regulations; and (d) identify, manage and mitigate key risks to the Group.

The Audit Committee reviews, among others, the financial controls, risk management and internal control systems of the Group and any significant internal control issues identified by the internal audit department, external auditors and management. It also conducts review of the internal audit functions with particular emphasis on the scope and quality of management’s on-going monitoring of risks and of the internal control systems and the work of the internal audit functions and independence of the internal audit department. During its annual review, the Audit Committee also considers the adequacy of resources, qualifications and experience of staff of the Group’s accounting, financial reporting and internal audit functions, and their training programmes and budgets.

The internal audit department monitors compliance in regard to policies, procedures, the effectiveness of risk management and internal control systems and highlights significant findings in respect of any non-compliance. It plays an important role in the Group’s internal control framework, and provides objective assurance to the Board that a sound internal control system is maintained for compliance with the established processes and standards through periodic checking. The internal audit department issues reports to the Board and relevant management covering various operational and financial processes of the Group and provides summary reports to the Audit Committee, highlighting the status of implementation of their recommendation in each Audit Committee meeting. In addition, the internal audit department reviews the continuing connected transactions of the Group and reports to the Audit Committee.

The Company has adopted policies on monitoring, reporting and disclosure of inside information (as defined in the Listing Rules). This ensures timely reporting and disclosure as well as fulfilment of the Group’s continuous disclosure obligations.

The Board has conducted a review of the effectiveness of the risk management and internal control system and is satisfied that the risk management and internal control systems in place covering all material controls including financial, operational and compliance controls and risk management functions for the year under review and up to the date of issuance of this Annual Report and accounts are reasonably effective and adequate.

Company Secretary

The Company Secretary reports to the Chairman and the Managing Director and all members of the Board have access to the advice and services of the Company Secretary.

Mrs. Ho Lam Lai Ping, Theresa has been the Company Secretary of the Company since December 1992. She is a full time employee with day-to-day knowledge of the Company’s affairs and is supporting the Board for ensuring that Board procedures are followed and Board activities are efficiently and effectively conducted. These objectives are achieved through adherence to proper Board processes and the timely preparation and dissemination of comprehensive Board meeting agendas and papers to Directors. She advises the Board on corporate governance matters, arranges induction programs including briefings on the general and specific duties of directors under legal and regulatory requirements for newly appointed Directors.

For the year under review, Mrs. Ho has confirmed that she has taken over 15 hours of relevant professional training.

Shareholders’ Rights

Shareholders Convening an extraordinary general meeting

Shareholders are encouraged to attend all general meetings of the Company. Pursuant to the Hong Kong Companies Ordinance, shareholders of the Company holding not less than 5% of the total voting rights of all the members having a right to vote at general meeting may request the Directors to call a general meeting of the Company. The request must state the general nature of the business to be dealt with at the meeting and may include the text of a resolution that may properly be moved and is intended to be moved at the meeting. The request may be sent to the Company in hard copy form or in electronic form and must be authenticated by the person or persons making it. Directors of the Company must call a meeting within 21 days after the date on which they become subject to the requirement. The meeting being called must be held on a date not more than 28 days after the date of the notice convening the meeting. If the Directors fail to call the meeting, the shareholders who requested the meeting, or any of them representing more than one half of the total voting rights of all of them, may themselves call a general meeting. The meeting must be called for a date not more than three months after the date on which the Directors become subject to the requirement to call a meeting.

Details of the procedures for shareholders to propose a person for election as a Director of the Company are available on the Company’s website.

Shareholders' Enquiries and Proposals

Shareholders should direct their enquiries about their shareholdings to the Company’s share registrar, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or call its customer service hotline at (852) 2980 1333.

Shareholders’ enquiries and proposals can be made by mail, email or by phone. The contact details of the Company are set out in the subsection headed “IR Contact” under the “Investor Relations” section of the Company’s website. In addition, the Company is committed to maximizing the use of its website as a channel to provide updated information in a timely manner and to strengthen communications with both the public and the shareholders. The Company has formulated the “Shareholders Communication Policy” which enables shareholders to exercise their rights in an informed manner.

Investor Relations

Communication with Shareholders

The Company actively promotes investor relations and communication with the investment community throughout the year under review. The Company responds to requests for information and queries from the investment community including shareholders, analysts and the media through regular briefing meetings, announcements, conference calls and presentations.

The Board is committed to providing clear and full information on the Company to shareholders through the publication of notices, announcements, circulars, interim and annual reports. Moreover, additional information on the Company is also available to shareholders and stakeholders through the “Investor Relations” page on the Company’s website.

Constitutional Documents

During the year under review, no changes have been made to the constitutional documents of the Company. An up-to-date consolidated version of the Company’s articles of association is available on the Company’s website.

Environmental Policies and Performance

Environmental protection is one of the Group’s key focuses in fulfilling its corporate social responsibilities. The Government of the People’s Republic of China requires that all applicable businesses comply with environmental laws and regulations. As the majority of its operations are in Mainland China, the Group strictly follows the above laws and regulations. The Group has relevant environmental policies in place for each business segment. The Group also cooperates with its partners, including tenants, customers and suppliers, to support environmental protection. The Group requires its suppliers to operate in strict compliance with all relevant environmental regulations and rules. Moreover, the suppliers’ environmental performance is evaluated on a regular basis.

To the extent necessary for an understanding of the development, performance or position of the Group’s business, management is not aware of any non-compliance with relevant laws and regulations that may have a significant impact on the Company during the year ended 31 December 2017 and up to the date of this report.

For more detailed information about the Company’s environmental policies and performance for this financial year, please refer to the Company’s 2017 environmental, social and governance report to be issued separately.

Key Relationships with Stakeholders

The Group recognises that employees, customers, business associates and the local community are key stakeholders of the Group’s success. The Group strives to achieve corporate sustainability through engaging employees, providing quality services to customers and collaborating with business associates (including suppliers and contractors) to deliver sustainable products and services and support the local community.

The below paragraphs only describe the Group’s key relationships with stakeholders to the extent necessary for an understanding of the development, performance and position of the Group’s business. For more detailed information, please refer to the Company’s 2017 environmental, social and governance report to be issued separately.

Employees

Employees are one of the Group’s most important assets. The Group ensures that its recruitment policies are in compliance with the rules and regulations on equal opportunity and anti-discrimination. The Group also provides training and career development opportunities to attract and retain talents, who are pivotal to business development. A safe and healthy work environment is also maintained for employees. The Group has dedicated safety management committees in its operation that oversee health and safety matters.

Customers

Customer satisfaction with the Group’s products and services is key to its business success. The Group has dedicated customer service teams to reach out to and receive feedback from customers. The hotel business segment, for example, conducts continuous customer feedback and complaint management and formulates next steps to improve and ensure that the best services are provided to customers.

Suppliers

All of the Group’s procurement processes are subject to open, fair and impartial bidding to select suitable suppliers. In addition, significant emphasis has been put on industrial safety to ensure that suppliers comply with all relevant local laws and regulations. The Group has also incorporated green procurement policies into the hotel business segment, created a list of qualified suppliers and prioritised suppliers that provide environmentally friendly products.

By Order of the Board
HUANG Xiaofeng
Chairman

Hong Kong, 28 March 2018