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Zhangzhou Ceramic Industrial Co., Ltd. is a professional manufacturer

Enterprise Architecture

 

The Board of the Company recognizes and appreciates the importance and benefits of good corporate governance practices and has adopted corporate governance and disclosure practices for achieving a higher standard of transparency and accountability.


Upon the listing of the Company on the Hong Kong Stock Exchange on 13 July 2012 (“Listing Date”), the Board adopted the code provisions (the “Code Provisions”) of the Corporate Governance Code (the “Code”) set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) as the guidelines for corporate governance of the Group, and has taken steps to comply with the Code wherever appropriate.

 

 


A. BOARD OF DIRECTORS


A1: Responsibilities and Delegation

The Board of Directors, led by the chairman, steers the Group’s business direction. It is responsible for formulating the Group’s long-term strategies, setting business development goals, assessing results of management policies, monitoring the management’s performance and ensuring effective implementation of risk management measures on a regular basis.


The Board reserves for its decision all major matters of the Company, including the approval and monitoring of all policy matters, overall strategies and budgets, internal control and risk management systems, material transactions (in particular those that may involve conflict of interests), financial information, appointment of directors and other significant financial and operational matters.


All directors have timely access to all relevant information as well as the advice and services of the Company Secretary and senior management, with a view to ensuring compliance with Board procedures and all applicable laws and regulations. Any director may request independent professional advice in appropriate circumstances at the Company’s expense, upon reasonable request made to the Board.


The senior management of the Company are delegated the authority and responsibilities by the Board for the day-to-day management and operation of the Group. The delegated functions and work tasks are periodically reviewed. Approval has to be obtained from the Board prior to any significant transactions entered into by the senior management. The Board has the full support of the senior management to discharge its responsibilities.


A2: Chairman and Chief Executive Officer

Code provision A.2.1 of the Code stipulates that the roles of Chairman and Chief Executive Officer should be separate and should not be performed by the same individual.


Mr. Xiao Zhiyong currently holds the offices of Chairman and Chief Executive Officer of the Company. Mr. Xiao is the founder of the Group and has over 28 years of experience in sanitary ware products industry. The Board believes that vesting the roles of both Chairman and Chief Executive Officer in Mr. Xiao provides the Company with strong and consistent leadership and allows for effective and efficient planning and implementation of business strategies and decisions.


The Board also considers that the current structure of vesting the roles of Chairman and Chief Executive Officer in the same person will not impair the balance of power and authority between the Board and the management of the Company. The Board shall review this structure from time to time to ensure appropriate and timely action to meet changing circumstances.


A3: Board Composition

The Board currently comprises 7 directors, including 4 executive directors and 3 independent non-executive directors (“INEDs”). The composition of the Board has not undergone any changes since the listing of the Company on the Hong Kong Stock Exchange.


Details of the biographies of the directors are given under the section “Directors and Senior Management” of this Annual Report. Except that Ms. Ye is the spouse of Mr. Xiao as disclosed in this Annual Report, none of the directors or senior management is related to each other.


The INEDs, play an important role on the Board. Accounting for a significant portion of the Board members, they are experienced professionals in their respective fields. They are responsible for ensuring that the Board maintains high standards of financial and other mandatory reporting as well as providing adequate checks and balances for safeguarding the interest of the shareholders of the Company and the Group as a whole.


A4: Appointment, Re-election and Removal

Each director is engaged for a term of three years and is subject to re-election in accordance with the Company’s Articles of Association.


According to the Company’s Articles of Association, one-third of the directors for the time being (if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation at each annual general meeting provided that every director shall be subject to retirement at an annual general meeting at least once every three years. The above provision complies with the code provision A.4.2 of the Code, which stipulates that every

director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years. In addition, any new director appointed by the Board to fill a casual vacancy in the Board shall hold office only until the first general meeting after appointment, and any new director appointed by the Board as an addition to the Board shall hold office until the next following annual general meeting of the Company. The retiring directors are eligible for re-election by the shareholders at the respective general meetings.


A5 Remuneration Policy and Long-Term Incentive Plan

To attract and retain talent and caliber, the Group provides competitive remuneration packages to its executive directors and senior management. These comprise base monthly salary and bonuses. The remuneration payable to the directors are determined with reference to their duties and responsibilities with the Company and the market rate for the positions.


The remuneration package of executives is designed so that a proportion is structured to link rewards to corporate and individual performance, and to give incentives to executives to perform at the highest levels. Through job evaluation and job matching, the Group ensures the pay is internally equitable. Besides, the Group ensures external competitiveness of the pay through reference to market survey and data.


The non-executive directors’ remuneration relates to the time commitment and responsibilities. They receive fees which comprise the directors’ fee, which is usually paid monthly.


The fees and any other reimbursement or remuneration payable to the Directors are set out in note 8 to the financial statements. Emoluments of the senior management (by band) are set out in note 34 to the financial statements.


B. THE BOARD COMMITTEES

B1: Audit Committee

The Audit Committee is accountable to the Board and assists the Board in meeting its responsibilities in ensuring an effective and adequate system is in place for internal controls and for meeting its external financial reporting obligations and compliance with other legal and regulatory requirements. The Audit Committee also reviews and monitors the scope and effectiveness of the work of external auditors.


The Audit Committee is governed by its terms of reference, which have been adopted by the Board on 25 June 2012 pursuant to the Code. The terms of reference have been available on the Group’s website at www.bolina.cc and on HKEx’s website at http://www.hkex.com.hk since 13 July 2012.


The Audit Committee currently comprises 3 members, namely Mr. Lin Shimao, Mr. Leung Ka Man and Mr. Tong Jifeng. Mr. Lin Shimao is the chairman of the Audit Committee. The Audit Committee meets at least twice a year to review the Group’s results.


B2: Remuneration Committee

The Remuneration Committee was established in June 2012 pursuant to the requirements of the Code. It meets from time to time to make recommendations to the Board on the Group’s policy and structure for all remuneration of directors, and on the establishment of a formal and transparent procedure for developing policy on such remuneration.


The Remuneration Committee is governed by its terms of reference, which have been adopted by the Board on 25 June 2012 pursuant to the Code. The terms of reference have been available on the Group’s website at www.bolina.cc and on HKEx’s website at http://www.hkex.com.hk since 13 July 2012.


The Remuneration Committee now consists of 3 members (namely, Mr. Yang Qingyun (Chairman), Mr. Tong Jifeng and Mr. Lin Shimao), the majority of whom are INEDs, namely, Mr. Tong Jifeng and Mr. Lin Shimao.


B3: Nomination Committee

The Nomination Committee was established in June 2012 pursuant to the requirements of the Code. It meets from time to time to consider matters regarding the nomination and/or appointment or re-appointment of director(s).


The Nomination Committee is governed by its terms of reference, which have been adopted by the Board on 25 June 2012 pursuant to the Code. The terms of reference have been available on the Group’s website at www.bolina.cc and on HKEx’s website at http://www.hkex.com.hk since 13 July 2012.


The Nomination Committee now consists of 3 members (namely, Mr. Xiao Zhiyong (Chairman), Mr. Tong Jifeng and Mr. Lin Shimao), the majority of whom are INEDs, namely, Mr. Tong Jifeng and Mr. Lin Shimao.


C. ACCOUNTS AND INTERNAL CONTROL

The Board is also responsible for the integrity of financial information. The directors acknowledge their responsibility for the preparation of the accounts for each financial period which give a true and fair view of the state of affairs of the Group and of the results and cash flows for that period.


C1: Financial Reporting

Executive Directors are provided with a wide range of reports on daily, weekly and monthly intervals and are fully aware of the Company’s latest performance, position and prospects. Non-executive Directors are provided with monthly financial updates to keep them apprised of the latest financial situation of the Company.


All Directors are provided with financial information and relevant reviews and updates on the Group’s performance each time they are required to approve financial or other matters. Where necessary, explanation and additional information are provided in a timely manner to enable the Board to make informed assessment. The Board is assisted by a group of dedicated employees who are qualified in the fields of accounting, law and public companies’ disclosure requirements and who ensure that the information presented is balanced, clear and understandable.


The Directors acknowledge their responsibility for the preparation of financial statements that give a true and fair view of the Group’s state of affairs, results and cashflow for the year. The Directors are not aware of any material uncertainties relating to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.


C2: Internal Control

The Board is responsible for ensuring that an effective internal control system is maintained within the Group. The directors acknowledge their responsibility to establish, maintain and review from time to time the effectiveness of the Group’s system of internal control. During the year under review, the directors have reviewed the effectiveness of the internal control system of the Group.


The Group has adopted a set of internal control policies and procedures to safeguard the Group’s assets, to ensure proper maintenance of accounting records and reliability of financial reporting, and to ensure compliance with relevant legislation and regulations.


Certain executive directors and senior management have been delegated with respective level of authorities and have specific responsibility for monitoring the performance of business operating units.


D. INVESTOR RELATIONS AND SHAREHOLDERS’ RIGHTS

The Group is committed to enhancing its corporate transparency and maintaining close communication with investors, the media and the public. Latest information of the Group including financial reports, announcements, press releases and presentations are available on its website in a timely manner.


The Group values the importance of maintaining a two-way communication with the investment community. Chairman of the Company has been taking the lead and involved in the investors relations activities of the Company. During the year of 2013  , the Group maintains regular contact with research analysts, investors and the media through various channels such as one-on-one meetings, plant visits, luncheons and teleconferences. Analyst meetings and press conferences were also held after results announcement. In order to keep overseas investors abreast of its results performance and business development, the Group also actively participated in international investment forums or non-deal road shows held in London, Edinburgh, New York, San Francisco, Toronto, Frankfurt, Tokyo, Singapore, Hong Kong, Beijing, etc .


All published information, including all the statutory announcements, press releases and event calendars, is and will be promptly posted on the Group’s website at www.bolina.cc. Viewers can also send enquiries to the Board or senior management and/or proposals to be put forward at shareholders’ meeting by email at ir@bolina.cc or directly by raising questions at the annual general meeting of the Company.


According to the Articles of Association of the Company, the Board may, whenever it thinks fit, convene an extraordinary general meeting. Extraordinary general meetings shall also be convened on the requisition of one or more Shareholders holding, at the date of deposit of the requisition, not less than one tenth of the paid up capital of the Company having the right of voting at general meetings. Such requisition shall be made in writing to the Board or the company secretary for the purpose of requiring an extraordinary general meeting to be called by the Board for the transaction of any business specified in such requisition. Such meeting shall be held within 2 months after the deposit of such requisition. If within 21 days of such deposit, the Board fails to proceed to convene such meeting, the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company.


E. DISCLOSURE OF OTHER INFORMATION

E1: Directors’ Securities Transactions

The Group has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) contained in Appendix 10 to the Listing Rules as the code of conduct regarding the directors and relevant employees’ transactions in securities of the Group. All directors have confirmed, following specific enquiry by the Group, that throughout year 2013, they complied with the required standard set out in the Model Code for securities transactions. The directors’ interests in shares of the Group as at 31 December 2013 are set out in the section “Directors’ Report” of this Annual Report.


E2 : Training and Continuing Development for Directors

Each newly-appointed director receives induction or training, at the Company’s expense, on the first occasion of his/her appointment, so as to ensure that he/she has appropriate understanding of the business and operations of the Group and that he/she is fully aware of his/her responsibilities and obligations under the Listing Rules and relevant regulatory requirements. During the reporting period, all the Directors of the Company received training and read relevant training materials on obligations and responsibilities of directors under the Listing Rules.


The existing directors are continually updated with legal and regulatory developments, and the business and market changes to facilitate the discharge of their responsibilities. Continuing briefings and professional development to directors are arranged and funded by the Company whenever necessary.


The Company encourages our Directors, senior management and colleagues to actively participate in relevant external bodies and organizations and attend relevant seminars and conferences to keep abreast of recent developments. Through active participation, valuable knowledge will be gained and more importantly corporate culture can be cultivated.


E3 : External Auditors and Auditors’ Remuneration

In order to maintain the independence of the Group’s external auditors, the external auditors will not be engaged for non-audit work unless this constitutes non-audit work pre-approved by the audit committee. There must be clear efficiencies and value-added benefits to the Company from that work being undertaken by the external auditors, with no adverse effect on the independence of their audit work or the perception of such independence.


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