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 Corporate
Governance
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The Board of
Directors of the Group is committed to maintaining the
highest standards of Corporate Governance and fully appreciates
the Best Practice Guide issued by the Singapore Exchange-Stocks
Trading Limited (“SGX-ST”). This statement highlights
the Corporate Governance practices established by the
Group. |
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BOARD
MATTERS
Principle
1 : The Board's Conduct of its Affairs
The principal functions of the Board are to establish
the corporate and strategic policies of the Group and
to monitor the Group's performance. Matters which are
specifically reserved for the Board include acquisition
and disposal proposals, strategic business initiatives,
approving nominations of directors and appointment of
key executives, approval for the release of quarterly
and full year results, approval of annual audited accounts
for the Group and the Directors' Report thereto and other
significant corporate actions.
Additionally, the Board delegates and entrusts certain
of its functions and powers to Board Committees such as
Executive Committee (“EC”), Audit Committee (“AC”), Remuneration
Committee (“RC”), and Nominating Committee (“NC”).
The EC comprises of Mr Lim Kim Thor (Chairman), Mr Lim
Boh Chuan, Mr Lim Yee Kim and Mr Lim Beo Peng.
The EC is established principally to assist the Board
in making decisions expeditiously and is mainly responsible
for planning and strategy, Group policy review, attending
to urgent and important business or business of an unusual
and extraordinary nature, and any other functions delegated
by the Board.
The Board comprises of members with strong business credentials,
industry knowledge and from various professions such as
banking, IT and the legal profession.
The Management regularly furnishes the Board with updates
concerning the changes in laws, regulations or accounting
standards where they may be applicable and relevant in
enabling the Board to carry out its duties and responsibilities
properly.
Newly appointed directors are given briefings by the Management
on the business activities of the Group and its strategic
directions.
The Board is scheduled to meet at least four times a year
and where necessary, hold additional meetings to address
significant issues that may arise. The attendance of the
directors at Board and Board committees meetings is as
follow.
|
|
| |
Board
Meeting |
Executive
Committee |
Audit
Committee |
Remuneration
Committee |
Nominating
Committee |
| |
Held |
Attend |
Held |
Attend |
Held |
Attend |
Held |
Attend |
Held |
Attend |
| Tang See Chim(1) |
5 |
5 |
- |
- |
4 |
4 |
3 |
3 |
2 |
2 |
|
Lim Kim Hock(2) |
5 |
2 |
20 |
11 |
- |
- |
3 |
1 |
- |
- |
| Lim Kim Thor(3) |
5 |
5 |
20 |
20 |
- |
- |
3 |
3 |
- |
- |
| Lim Boh Chuan |
5 |
5 |
20 |
19 |
- |
- |
- |
- |
- |
- |
| Lim Yee Kim |
5 |
5 |
20 |
20 |
- |
- |
- |
- |
- |
- |
|
Lim Eng Chong |
5 |
5 |
- |
- |
- |
- |
3 |
3 |
2 |
2 |
| Lim Puay Koon |
5 |
1 |
- |
- |
4 |
3 |
- |
- |
- |
- |
| Lim Beo Peng |
5 |
5 |
20 |
19 |
- |
- |
- |
- |
- |
- |
| Lim Teck Hui(4) |
5 |
5 |
- |
- |
4 |
4 |
3 |
3 |
2 |
2 |
| Ong Kian Min(5) |
5 |
5 |
- |
- |
- |
- |
3 |
3 |
- |
- |
| Chua Hoo Tai(6) |
5 |
1 |
- |
- |
4 |
1 |
3 |
1 |
- |
- |
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- Mr Tang See Chim was appointed as the Non-Executive
Chairman of the Board of Directors on 21 st February
2005. On 28 th July 2005, he was appointed as the
Chairman of the NC and stepped down as Chairman of
the RC. Mr Tang remains as a member of the RC.
- Dr Lim Kim Hock resigned as Chairman of the Board
and Director with effect from 21 st February 2005.
- Mr Lim Kim Thor was appointed as Chairman of the
Executive Committee on 21 st February 2005.
- Mr Lim Teck Hui passed away on 19 th July 2005.
- Mr Ong Kian Min was appointed as the Chairman of
the RC and a member of the AC and NC on 28 th July
2005.
- Mr Chua Hoo Tai retired as a Director with effect
from 23 rd November 2004.
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Principle
2 : Board’s Composition and Balance
The Board of Directors comprises 8 directors, 2 of
whom are independent and 2 of whom are non independent
and non-executive. Due to the recent demise of one of
its Independent Directors, the Board does not have one
third of its Directors whom are independent as recommended.
The Board is currently looking for suitable candidate
to be appointed as Independent Director. The NC reviews
the independence of each director annually. At each
annual general meeting, one-third of the directors are
subject to retirement by rotation. However, a Managing
Director shall not while he continues to hold that office
be subject to retirement by rotation. Directors who
have attained the age of 70 and above are subject to
annual retirement and re-appointment in accordance with
Section 153(6) of the Companies Act, Cap. 50. Key information
about the directors is detailed in the “Board of Directors”
section.
Principle 3 : Role of Chairman and Chief Executive
Officer
Mr Tang See Chim was appointed as the Non Executive
Chairman of the Board of Director on 21 February 2005.
Mr Lim Kim Thor is the Chief Executive Officer of the
Group.
The Chairman is responsible for board proceedings in
the best interests of the Group. The Chairman ensures
that the Board members work together with the Management
and that the Board engages Management in constructive
discussions on various matters, including strategic
issues and business planning processes.
The Chief Executive Officer (‘CEO') bears executive
responsibility for the Group's business. The CEO oversees
the daily running of the Group's operations and is responsible
to execute strategies and policies adopted by the Board.
Principle 4 : Board membership
The NC is made up of members all of whom are non-executive
and the majority of whom are independent. The NC ensures
that appointment and re-election of directors are formal
and transparent. All directors to be appointed or re-elected
are recommended by the NC before submission for Board
approval. The NC also determines annually whether or
not a director is independent.
Principle 5 : Board Performance
The NC assesses the effectiveness of the Board as a
whole and the contribution by each director to the effectiveness
of the Board on an annual basis.
In its assessment of the Board effectiveness, the NC
takes into consideration the frequency of the Board
meetings, the rate at which issues raised are adequately
dealt with and the reports from the various committees.
In the like manner, the NC is able to assess the contribution
of each individual director to the effectiveness of
the Board.
Principle 6 : Access to Information
The Board has separate and independent access to the
Management. Requests for information from the Board
are dealt with promptly. The Board is informed of all
material events and transactions as and when they occur.
The company secretary attends all board meetings and is
responsible for ensuring that board procedures are followed. |
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REMUNERATION
MATTERS
Principle 7 : Procedures for Developing
Remuneration Policies
Principle 8 : Level and Mix of Remuneration
Principle 9 : Disclosure on Remuneration
The RC comprises of 4 directors, of
which 2 are independent, 1 non executive and 1 executive.
The RC recommends a framework of remuneration for key
executives and to determine specific remuneration packages
for all the executive directors. The RC is also responsible
for administering the Company's Employee Stock Options
Scheme. The RC is chaired by an independent non-executive
director and the committee has access to expert advice
inside and outside the Company for knowledge on executive
compensation.
The RC's recommendations are made in consultation with
the Chairman of the Board and are submitted for endorsement
by the entire Board. The RC takes into account the pay
and employment conditions within the industry and in
comparable companies, as well as the Company's relative
performance and the performance of the individual directors
when setting remuneration packages so as to attract,
retain and motivate the directors needed to run the
Company successfully. All aspects of the remuneration,
including but not limited to directors' fees, salaries,
allowances, bonuses, profit sharing incentives, and
benefits in kind are covered in the review by the RC.
A proportion of the executive directors' remuneration
is linked to performance.
Remuneration Report |
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Base
|
Variable
|
Other
|
|
|
Share
|
|
Salary
|
Payments
|
Benefits
|
Fees
|
Total
|
Options
|
Name
of director |
(%)
|
(%)
|
(%)
|
(%)
|
(%)
|
Granted
|
$500,000
and above |
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Lim Kim
Hock (1) |
21.9
|
76.5
|
0.2
|
1.4
|
100
|
-
|
Lim Kim
Thor (2) |
19.9
|
71.4
|
7.0
|
1.7
|
100
|
-
|
Lim Boh
Chuan |
24.1
|
62.4
|
11.1
|
2.4
|
100
|
-
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Lim Yee
Kim |
26.7
|
57.8
|
13.2
|
2.3
|
100
|
-
|
| |
|
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$250,001
and $500,000 |
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Lim Beo
Peng |
29.0
|
62.0
|
1.9
|
7.1
|
100
|
100,000
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| |
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Below
$250,000 |
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|
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Lim Eng
Chong |
-
|
-
|
-
|
100
|
100
|
-
|
Lim Puay
Koon |
-
|
-
|
-
|
100
|
100
|
-
|
Tang See
Chim (3) |
-
|
-
|
-
|
100
|
100
|
-
|
Lim Teck
Hui (4) |
-
|
-
|
-
|
100
|
100
|
-
|
Chua Hoo
Tai (5) |
-
|
-
|
-
|
100
|
100
|
-
|
Ong Kian
Min (6) |
-
|
-
|
-
|
100
|
100
|
-
|
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Notes
- Dr Lim Kim Hock retired as Executive Chairman &
Director on 21 st February 2005.
- Mr Lim Kim Thor was appointed as Chairman of the
Executive Officer on 21 st February 2005.
- Mr Tang See Chim was appointed as the Non-Executive
Chairman of the Board of Directors on 21 st February
2005. On 28 th July 2005, he was appointed as the
Chairman of the NC and stepped down as Chairman of
the RC. Mr Tang remains as a member of the RC.
- Mr Lim Teck Hui passed away on 19 th July 2005.
- Mr Chua Hoo Tai retired as Director on 23 rd November
2004.
- Mr Ong Kian Min was appointed as the Chairman of
the RC and a member of the AC and NC on 28 th July
2005.
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The Group adopts a remuneration policy for staff comprising
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 bonus that is linked
to the performance of the Group and of the individual
staff. Staff appraisals are conducted once a year. The
Hup Seng Huat Employees' Share Option Scheme is another
element of the variable component to align the interests
of staff with that of the shareholders. Details of options
granted can be found in the Directors' Report.
The Board is of the view that disclosure of the remuneration
of key management staff who are not directors will be
detrimental to the Group's interest because of the very
competitive nature of the industry the Group operates
in.
There is no employee in the Group, being an immediate
family member of a director, whose remuneration exceeded
S$150,000 during the year. |
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ACCOUNTABILITY
AND AUDIT
Principle 10 : Accountability
The Board account to the shareholders through providing
timely information relating to the financial and operations
of the Group as well as any issues faced by the Group
regularly and as and when required through announcement
releases to the SGX-ST.
Principle 11 : Audit Committee
Principle 12 : Internal Controls
The AC comprises 3 directors of whom 2 are independent
and 1 non executive and all members have accounting
or financial management expertise. Details of the functions
and responsibilities of the AC are found in the Directors
Report.
The AC has full access to and co-operation from Management
and it meets external and internal auditors without
the presence of Company's Management.
With the assistance of the external and internal auditors,
the AC conducts annual review of all material internal
controls. The AC is satisfied that the Company's material
internal controls are adequate.
The AC confirmed that it has undertaken a review of
all non-audit services provided by the external auditors
and is satisfied that such services would not, in the
AC's opinion, affect the independence of the auditors.
Principle 13 : Internal Audit
The Group has outsourced the internal audit functions
to Messrs Ernst & Young. The internal auditors undertake
the following functions and responsibilities in line
with the Standards for the Professional Practice of
Internal Auditing:
- review the effectiveness of the Company's material
internal controls;
- provide assurance that key business and operational
risks are identified and managed;
- ensure internal controls are in place and functioning
as intended; and
- ensure operations are conducted in an effective
and efficient manner.
The Internal Auditor reports directly to the Chairman
of the Audit Committee and make recommendations on their
findings. |
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COMMUNICATION
WITH SHAREHOLDERS
Principle 14 : Regular, effective and fair
communication with shareholders
The Board strives to ensure that all material information
is disclosed to the shareholders in an adequate and
timely basis. The Board informs and communicates with
shareholders through annual reports, announcement releases
through SGX-ST, advertisement of notice of meetings
and at General Meetings.
Principle 15 : Greater shareholder participation
Chairmen of the EC, AC, NC and RC, or members of the
respective committees standing in for them, as well
as external auditors will be present and available to
address questions at General Meetings
SECURITIES TRANSACTIONS
The Company has clear policies and guidelines for
dealings in the securities of the Company by Directors
and employees which are in conformity with the SGX-ST
Best Practices Guide.
INTERESTED PERSON TRANSACTIONS
The Company monitors all its interested person transactions
closely and [all interested person transactions are
subject to review by the Audit Committee.
The aggregate value of interested person transactions
entered into during the year were as follows:- |
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Name
of interested person |
Aggregate
value of all interested person transactions during
the financial year under review (excluding transactions
less than $100,000 and transactions conducted
under shareholders' mandate pursuant to Rule 920
|
Aggregate
value of all interested person transactions conducted
under shareholders' mandate pursuant to Rule 920
(excluding transactions less than $100,000) |
Dr
Lim Kim Hock - Service |
105,638
|
-
|
Mdm
Teo Ah Leng (Widow of the late Mr Lim Boon Wan)
- Gratuity |
180,000
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-
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