The Board of Directors of Boustead Projects 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 the continuing obligations of 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 accountable to shareholders and responsible for the overall management and long–term success 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 various specific matters, including:–
- approval of corporate strategies;
- approval of the Group’s annual operating and capital budgets;
- approval for the release of financial results announcements;
- approval of the annual report and accounts;
- convening of shareholders’ meetings;
- recommendations of dividend payments and other distributions to shareholders;
- 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 current members of the Board have been directors of the Company for at least one year and they have familiarised themselves with the Company’s business operations and governance practices. Newly appointed directors are given comprehensive briefings by management on the business operations, strategies and plans of the Group. 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 by attending 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.
Principle 2: Board Composition and Guidance
Presently, the Board comprises six 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 help develop proposals on strategy and capital management. They also set objectives and targets for management, review and monitor management performance. At meetings of the Board, the 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.
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 Managing Director/Chief Executive Officer
There is a clear division of roles and responsibilities of the Chairman and Managing Director to ensure a balance of power, increased accountability and greater capacity of the Board for independent decision-making. The Chairman is an Independent Non-Executive Director.
Mr John Lim Kok Min is the Chairman who leads the Board to ensure effectiveness on all aspects of its roles. The Chairman sets the meeting agenda and ensures that sufficient time is allocated for discussion of all agenda items, particularly issues relating to strategic planning and ensures that directors are provided with complete, adequate and timely information. He promotes an open environment for debate and ensures that discussions and deliberations are effective. The Chairman is also charged with the role of maintaining high standards of corporate governance.
Mr Thomas Chu Kok Hong, the Managing Director, is responsible for managing and developing the operations of the Company. He executes strategic plans approved by the Board and ensures that the directors are kept updated and informed of the Group’s business. He is assisted by Deputy Chairman & Executive Director, Mr Wong Yu Wei.
Principle 4: Board Membership
The Nominating Committee comprises five directors, three of whom are independent. The members of the Nominating Committee:
- John Lim Kok Min (Independent Non-Executive Director);
- Dr Tan Khee Giap, Chairman (Independent Non-Executive Director);
- James Lim Jit Teng (Independent Non-Executive Director);
- Wong Yu Wei; and
- Thomas Chu Kok Hong.
The Nominating Committee serves to provide a formal, transparent and objective procedures for appointing Board members and evaluating each Board member’s performance. The principal functions of the Nominating Committee include:
- reviewing and recommending candidates for appointments to the Board and Board committees as well as candidates for senior management staff, who are not also candidates for appointment to the Board;
- reviewing of board succession plans for the directors, in particular, the Chairman and the Managing Director;
- developing a process for the evaluation of the performance of the Board, the Board committees and the directors;
- reviewing of training and professional development programmes for the Board;
- reviewing and recommending nomination for re-appointment or re-election or renewal of appointment of the directors;
- reviewing and recommending candidates to be nominees on the Board and Board committees of the listed company and entities within the Group;
- determining the independence of the directors on an annual basis and as and when circumstances require;
- reviewing the participation (whether by way of obtaining an interest in or taking a board seat or otherwise) by each independent director in any competing business and taking into account such matters in the re-appointment or re-election or renewal of appointment of such independent director; and
- undertaking generally such other functions and duties as may be required by law or the Listing Manual, and by amendments made thereto from time to time.
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 professional recruiters, 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.
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.
One–third of directors who are longest–serving (including 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;
- 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 is 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 recognises that it is essential to provide complete, adequate information on Group affairs and material events and transactions in a timely and ongoing basis to the Board to enable the directors to discharge their duties effectively and efficiently. 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 are:–
- Dr Tan Khee Giap, Chairman (Independent Non-Executive Director);
- James Lim Jit Teng (Independent Non-Executive Director); and
- Chong Lit Cheong (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 key management personnel.
The Remuneration Committee reviews and approves recommendations on remuneration policies and packages to attract, retain and motivate directors and key management personnel 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 key management personnel 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 Committee’s recommendations are submitted to the Board for endorsement.
The Remuneration Committee has appointed an external remuneration consultant, Korn Ferry Hay Group, to assist in the establishment of a proposed Restricted Share Plan for the Company. Korn Ferry Hay Group has no relationship with the Company. The Company also had the benefit of relevant data from market surveys carried out by leading firms of compensation consultants.
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, including the Chairman 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
The Board is responsible for presenting a balanced and comprehensive assessment of the Group’s performance, position and prospects to shareholders through timely release of its quarterly annual financial results through announcements via SGXNET and the Company’s corporate website.
Management provides the Board with information on management accounts and updates on a timely basis in order that the Board may effectively discharge its duties and make a balanced and informed assessment of the Company?s performance, financial position and prospects.
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 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 legislation, 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.
Based on the internal controls policy and procedures established and maintained by the Group, the work performed by the external auditors and the reviews conducted by management and the internal auditor, the Board, with the concurrence of the Audit & Risk Committee, is of the opinion that the Group?s internal controls were adequate to address financial, operational, compliance and information technology risks as at 31 March 2016.
In addition, the Audit & Risk Committee and the Board have received assurance from the Managing Director and the 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 and compliance risks affecting the operations are adequate to meet the needs of the Group in its current business environment.
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:–
- Chong Lit Cheong (Independent Non-Executive Director);
- John Lim Kok Min, Chairman (Independent Non-Executive Director); and
- Dr Tan Khee Giap (Independent Non-Executive Director);
The principal functions of the Audit & Risk Committee include:–
- overseeing the adequacy of the controls established by executive management to identify and manage areas of potential risk and to safeguard the assets of the Company;
- evaluating the processes in place to ensure that accounting records are properly maintained in accordance with statutory requirements and financial information provided to shareholders and the directors is accurate and reliable;
- reviewing the significant financial reporting issues and judgments so as to ensure the integrity of the financial statements of the Company and any announcements relating to the Company’s financial performance;
- reviewing the audit plans with external and internal auditors and reporting to the Board at least annually on the results of the internal auditors’ examination and evaluation of the adequacy and effectiveness of the internal control system, including financial, operational, compliance and information technology controls (such review may be carried out internally or with the assistance of competent third parties);
- reviewing with internal auditors, the programme, scope and results of the internal audit and management’s response to their findings to ensure that appropriate follow-up measures are taken;
- reviewing the effectiveness of the Group’s internal audit function;
- reviewing the scope and results of the external audit, and the independence and objectivity of the external auditors;
- reviewing with external auditors the impact of any new or proposed changes in accounting principles or regulatory requirements on the Company’s financial information;
- making recommendations to the directors on the proposals to the shareholders on the appointment, re-appointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors;
- reviewing the interested person transactions or other transactions that may lead to conflicts of interests, to ensure that they are in compliance with the laws and the regulations of the SGX-ST, and are reasonable and in the best interests of the Company;
- monitoring the investments in our customers, suppliers and competitors made by the directors, controlling shareholders and their respective associates who are involved in the management of or have shareholding interests in similar or related business of the Company and making assessments on whether there are any potential conflicts of interests;
- reviewing filings with the SGX-ST or other regulatory bodies which contain financial information and ensuring proper disclosure;
- commissioning and reviewing the findings of internal investigations into matters where there is any suspected fraud, irregularity, failure of internal controls or infringement of any law, rule and regulation which has or is likely to have a material impact on the Company’s operating results and/or financial position;
- reviewing policy and arrangements by which the staff and any other persons may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and ensuring that arrangements are in place for such concerns to be raised and independently investigated, and for appropriate follow-up action to be taken;
- reviewing risk management structure (including all hedging policies) and any oversight of risk management processes and activities to mitigate and manage risk at acceptable levels determined by the directors;
- reporting to the Board the work performed by the Audit Committee in carrying out its functions;
- reviewing the co-operation given by the directors to the external auditors; and
- performing any otperforming any otperforming any other act as delegated by the Board.
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. he Audit & Risk Committee meets at least once a year with the external auditors without the presence of management.
The Audit & Risk Committee meets at least once a year with the external auditors and the 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 Group is committed to a high standard of ethical conduct and has in place a whistle–blowing policy and arrangements by which employees of the Group and third parties are provided with accessible channels to report and to raise, in good faith and in confidence, any concerns about possible improprieties in matters of financial reporting or suspected fraud, corruption, dishonest practices or other misdemeanours.
The objective of the whistle-blowing policy is to facilitate independent investigation of such matters and appropriate follow-up actions.
Principle 13: Internal Audit
The Audit & Risk Committee oversees the implementation of an effective system of internal controls as well as putting in place a risk management framework to continually identify, evaluate and manage significant business risks of the Group. To support the Audit & Risk Committee in its role, the Audit & Risk Committee shall approve the appointment of an experienced and qualified personnel as Internal Auditor to carry out the internal audit function for the Group. The Internal Auditor shall report to the Audit & Risk Committee Chairman and his performance and compensation shall be reviewed by the Audit & Risk Committee. Annually, the Audit & Risk Committee shall review and approve audit plans and resource requirements prepared by the Internal Auditor and shall ensure that the Internal Auditor is able to effectively and adequately discharge his duties. The Internal Auditor shall have unrestricted access to all documents, records, properties and personnel of the Group and unrestricted direct access to the Audit & Risk Committee in carrying out his duties and responsibilities.
Principle 14: Shareholder Rights
Principle 15: Communication with Shareholders
Principle 16: Conduct of Shareholder Meetings
The Company recognises the importance of maintaining transparency and accountability to its shareholders. The Board ensures that all shareholders are treated fairly and equitably and information is communicated to shareholders on a timely basis through annual reports, quarterly financial results and announcements of significant transactions that are released on SGXNET. Shareholders are also able to access investor-related information of the Group through a well-maintained and updated corporate website at www.bousteadprojects.com.
The Company ensures that shareholders have the opportunity to participate effectively and vote at general meetings of shareholders and be informed of the rules, including voting procedures that govern such meetings.
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 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 auditor’s 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.
Dealings in Securities
The Company, its directors and officers, including employees who have access to price-sensitive information, are not to deal in the Company’s securities on short-term considerations and during the two weeks before the announcement of the Group’s financial results for the first three quarters of its financial year and one month before the announcement of the Group’s full-year financial results, and ending on the date of announcement of the relevant results. The Company, its directors and officers, including employees who have access to price-sensitive information, are expected to comply with the Securities and Futures Act (Cap 289) and observe laws against insider trading at all times.
Since the end of the previous financial year, no material contracts involving the interest of the managing director/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.