Corporate Governance Practices

The Board is committed to maintaining a high standard of corporate governance. The Board believes that sound and reasonable corporate practices are essential for the growth of the Group and for safeguarding and maximizing Shareholders’ interests.

The Company has adopted the code provisions set out in the Corporate Governance Code (the “CG Code”) contained in Appendix 14 to the Listing Rules. The Company has complied with all the applicable code provisions in the CG Code throughout FY2014, except for the following deviations:

The CG Code provision A.4.1 stipulates that non-executive directors should be appointed for a specific term, subject to reelection. The Independent Non-Executive Directors were not appointed for a specific term but they are subject to retirement by rotation and re-election at the annual general meetings of the Company in accordance with the provisions of the Bye-Laws. As such, the Company considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those in the CG Code.

The CG Code provision E1.2 stipulates that the chairman of the board should attend the annual general meeting. During the year, Teh Hong Eng was unable to attend the annual general meeting of the Company held on 7 March 2014 due to other business commitment. However, the Vice Chairman as well as the Managing Director, Ng Joo Siang, was authorized by the Chairperson to chair the said annual general meeting.

The Board will continue to monitor and review the Company’s corporate governance practices to ensure compliance with the CG Code.

Board of Directors (As at the date of publication of the last annual report)

The Board is responsible for the leadership and control of the Company and oversees the Group’s business, strategic decisions and financial performances. The Board delegates to the management team the day-to-day management of the Company’s business including the preparation of annual and interim reports, and for implementation of internal control, business strategies and plans developed by the Board.

The Board is responsible for performing the corporate governance duties, which include (i) reviewing and monitoring policies and practices on corporate governance adopted by the Company in compliance with legal and regulatory requirements; and (ii) reviewing the Company’s compliance with the CG Code and the disclosure in the corporate governance report.

As at 28 September 2014, the Board comprises five Executive Directors and three Independent Non-Executive Directors. Accordingly, the Independent Non-Executive Directors represented more than one-third of the Board members, such composition is considered by the Board to be a reasonable balance between Executive and Non-Executive Directors.

The Executive Directors have extensive experience in the frozen seafood and shipping industries and the Independent Non- Executive Directors possess appropriate legal, accounting and professional qualifications and financial management expertise.

The Independent Non-Executive Directors provide valuable advice to the Board and make a positive contribution to the development of the Company’s strategy and policies through independent, constructive and informed comments. They also serve the important function of ensuring the Board maintains high standards of financial and other mandatory reporting as well as to provide adequate checks and balances for safeguarding the interests of the Company and the shareholders as a whole.

The Board has determined that each Independent Non-Executive Director is independent. In reaching that conclusion, the Board took into account a number of factors that might appear to affect the independence of some of the Independent Non- Executive Directors, including whether the Independent Non-Executive Director met the specific independence criteria as required by the Listing Rules or has served on the Board for more than nine years from the date of their first election. The Company has received from each Independent Non-Executive Director an annual confirmation of his independence pursuant to Rule 3.13 of the Listing Rules. On 19 December 2014, the Nomination Committee has conducted an annual review of the independence of all Independent Non-Executive Directors. Taking into account the independence criteria as set out in Rule 3.13 of the Listing Rules in assessing the independence of the Independent Non-Executive Directors, the Nomination Committee concluded that all the Independent Non-Executive Directors satisfied the Listing Rule requirement of independence.

The biographies of the Board members are set out in Directors’ Profiles on pages 17 and 18 of this report. Save for the relationships as detailed in the biographies, there is no other relationship among the Board to the best knowledge of the Board members. The Company has also maintained on its website and that of the Stock Exchange an updated list of its Directors identifying their roles and functions and whether they are Independent Non-Executive Directors. The Independent Non-Executive Directors are explicitly identified in all of the Company’s corporate communications.

Board meetings are held at regular interval. The Board would meet more frequently as and when required. The external auditor has attended the annual general meeting convened on 7 March 2014 for FY2013.

The Board met six times during the year. The attendance of the Directors at the Board meetings and general meetings for FY2014 is as follows:

The Board carries out its functions according to the powers conferred upon it by the Bye-Laws which is uploaded onto the websites of the Company and the Stock Exchange and since then, no significant changes has been made.

Pursuant to the Bye-Laws, one-third or the number nearest to one-third of the Directors for the time being shall retire from office at each annual general meeting. The retiring Directors shall be eligible for re-election. New appointments either to fill a casual vacancy or as an addition to the Board are subject to re-election by the Shareholders at the next following annual general meeting of the Company. The terms of all Independent Non-Executive Directors shall be subject to retirement from office by rotation and re-election at the annual general meeting. Each of the Independent Non-Executive Directors shall retire by rotation at least once every three years. Any further appointment of the Independent Non-Executive Director who has served the Board for more than nine years will be subject to separate resolution to be approved by Shareholders.

The Board members are updated and apprised of any laws and regulations applicable to the Company and its Directors as well as any amendments thereto.

Continuous Professional Development

On a continuing basis, the Directors are encouraged to keep up to date on all matters relevant to the Group and attend briefings and seminars as appropriate. According to the records maintained by the Company, the Directors have participated in the following continuous professional development to develop and refresh their knowledge and skills in compliance with the CG Code on continuous professional development during the year:

Chairperson and Managing Director

The roles of Chairperson and Managing Director are segregate and discharged by different individuals. The Chairperson of the Company is Teh Hong Eng while Ng Joo Siang acts as the Managing Director of the Company.

The Chairperson of the Company is responsible for the leadership and effective running of the Board and ensuring that all significant and key issues are discussed and where required, resolved by the Board timely and constructively. The Managing Director of the Company is delegated with the authority and responsibility to manage the Group’s business in all aspects effectively, implement major strategies, make day-to-day decisions and coordinate overall business operations.

Directors’ Securities Transactions

The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as its code of conduct for securities transactions by the Directors. Specific enquiry has been made to all Directors and they have confirmed that they have complied with the required standard set out in the Model Code for FY2014.

Auditor’s Remuneration

The external auditor of the Company received approximately HK$16,540,000 and HK$7,465,000 for audit services and nonaudit services rendered to the Group respectively during FY2014. The non-audit services are mainly comprised of interim review and other assurance services.

Board Committees

The Company currently maintains three board committees (namely Audit Committee, Remuneration Committee and Nomination Committee) with terms of reference which are posted on the websites of the Company and the Stock Exchange. The Board is responsible for performing the corporate governance duties set out in the CG Code. During the year, the Board has formulated policies regarding Procedures for Nomination of Director (which policy is posted on the Company’s website), Shareholders’ Communication and Code of Conduct, based on which the Board conducts periodic reviews to ensure compliance. As at the date of this report, the Board Diversity Policy has also been adopted.

Audit Committee

The Audit Committee currently comprises three Independent Non-Executive Directors, namely Lew V Robert (Chairman), Kwok Lam Kwong, Larry and Tao Kwok Lau, Clement.

During the year, two meetings were held. The attendance of the members at the Audit Committee Meeting for FY2014 is as follows:

The primary duties of the Audit Committee include making recommendations to the Board on the appointment, reappointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor and assessing their independence and performance, reviewing of the effectiveness of financial reporting processes and internal control systems of the Group and reviewing the Group’s financial information and compliance.

During the year and up to the date of this report, the works performed by the Audit Committee are principally as follows:

  • .reviewed the interim results for the period ended 28 March 2014 and annual results for the year ended 28 September 2014 of the Group and the internal control system and recommended to the Board;
  • .discussed with the management of the Company the fairness and adequacy of accounting standards and policies of the Group in preparation of the annual financial statements;
  • .reviewed and discussed with external auditor the financial reporting of the Company; and
  • .reviewed, recommended and approved the retirement and re-appointment of external auditor and their remuneration.
  • Terms of Reference

Remuneration Committee

The Remuneration Committee has been established by the Company in accordance with the requirement of the CG Code. The Remuneration Committee currently comprises five members, being three Independent Non-Executive Directors including Kwok Lam Kwong, Larry (Chairman), Lew V Robert and Tao Kwok Lau, Clement, and two Executive Directors including Ng Joo Siang and Ng Joo Puay, Frank.

The Remuneration Committee is responsible for reviewing the remuneration of the Directors and senior management and making recommendation to the Board for approval. The fees of the Independent Non-Executive Directors are recommended by the Remuneration Committee to the Board for approval at the annual general meeting of the Company (with the relevant committee members abstaining from voting on the resolution concerning his own remuneration).

During the year and up to the date of this report, the works performed by the Remuneration Committee are principally as follows:

  • .reviewed the Group’s remuneration policy and reviewed the remuneration package of the Executive Directors and senior management for FY2014 and recommended to the Board;
  • .recommendation of directors’ fees for the Independent Non-Executive Directors; and
  • .administered the vesting of share awards.

During the year, one meeting was held. The attendance of the members at the Remuneration Committee Meeting for FY2014 is as follows:


Terms of Reference

Nomination Committee

The Nomination Committee has been established by the Company in the Board meeting held on 23 December 2011 in compliance with the requirement of the CG Code. The Nomination Committee currently comprises four members, being three Independent Non-Executive Directors including Tao Kwok Lau, Clement (Chairman), Lew V Robert and Kwok Lam Kwong, Larry, and one Executive Director being Ng Joo Siang.

The principal responsibilities of the Nomination Committee are regular reviewing of the Board composition, identifying and nominating suitable candidates as Board members, assessing of the independence of the Independent Non-Executive Directors and Board evaluation.

During the year and up to the date of this report, the works performed by the Nomination Committee are principally as follows:

  • .reviewed the structure, size and composition of the Board
  • .considered the re-election of Directors and recommended to the Board
  • .assessed the independence of the Independent Non-Executive Directors

Below is the summary of the Board Diversity Policy:

The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance and hence the purpose of the Board Diversity Policy aims to build and maintain a Board with a diversity of Directors, in terms of skills, experience, knowledge, expertise, culture, independence, age and gender. These differences will be taken into account in determining the optimum composition of the Board. The Nomination Committee will discuss the measurable objectives for implementing diversity on the Board from time to time and recommend them to the Board for adoption.

The Nomination Committee will report annually on the composition of the Board under diversified perspectives, and monitor the implementation of this policy to ensure the effectiveness of this policy. It will also discuss any revisions that may be required, and recommend any such revisions to the Board for consideration and approval.

During the year, one meeting was held. The attendance of the members at the Nomination Committee Meeting for FY2014 is as follows:


Terms of Reference

Accountability

The Directors are acknowledged of their responsibility for preparing of the financial statements of the Group for the year ended 28 September 2014 under applicable statutory and regulatory requirements which give true and fair view of the state of affairs, the results of operations and cashflow of the Group. The Directors ensure that the financial statements for FY2014 were prepared in accordance with the statutory requirements and the applicable accounting standards, and have been prepared on a going concern basis.

Internal Controls

The Board reviews the internal control system of the Company annually and will take any necessary and appropriate action to maintain an adequate internal control system to safeguard Shareholders’ investments and the Company’s assets. Such review will cover all material controls, including financial, operational and compliance controls and risk management functions. The effectiveness of the internal control system of the Group is discussed on an annual basis with the Audit Committee.

The Company has set up an internal audit department, which reports directly to the Audit Committee. The Audit Committee, on an annual basis, will assess the effectiveness of the internal audit department by examining the scope of the internal audit work and its independence of areas reviewed and the internal auditor’s report. The Audit Committee is satisfied that the internal audit department has adequate resources and appropriate standing within the Company to undertake its activities independently and objectively.

Company Secretary

All Directors have access to the advice and services of the Company Secretary, Chan Tak Hei, a full time employee of the Company. He has confirmed that he has taken no less than 15 hours of the relevant professional training for the year ended 28 September 2014 in compliance with Rule 3.29 of the Listing Rules.

Shareholders’ Rights

The Company is committed to pursue active dialogue with Shareholders as well as to provide disclosure of information concerning the Group’s material developments to Shareholders, investors and other stakeholders.

The AGM serves as an effective forum for communication between Shareholders and the Board. Notice of the AGM together with the meeting materials were despatched to all Shareholders not less than 20 clear business days prior to the AGM. The Chairpersons of the Board and of the Audit Committee, the Remuneration Committee and the Nomination Committee, or in their absence, other members of the respective committee, are invited to the AGM to answer questions from Shareholders. External auditor is also invited to attend the AGM to answer questions about the conduct of the audit, the preparation and content of the auditor’s report, the accounting policies and its independence.

Vote of Shareholders at general meeting will be taken by poll in accordance with the Listing Rules, unless otherwise required and permitted. Detailed procedures for conducting a poll will be explained to Shareholders at the inception of general meeting to ensure that Shareholders are familiar with such voting procedures. Separate resolution will be proposed by the chairperson of general meeting in respect of each substantial issue. The poll results will be posted on the websites of the Company and the Stock Exchange on the same day of the general meeting.

Pursuant to the Bye-Laws, a special general meeting can be convened on the written requisition of any two or more members holding in aggregate not less than one-tenth of such of the paid up capital of the Company as the date of the deposit carries the right of voting at general meetings of the Company. Such requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the office of the Company.

Enquiries directed to the Board are facilitated by email to ir@pacificandes.com or through the online messaging system on the Company’s website. All the Company’s announcements, press releases and conducive corporate information are made available on the Company’s website to enhance the transparency of the Company. To further promote effective communication, Shareholders, investors and other stakeholders may subscribe to the email alerts on the Company’s website at http://www.pacificandes.com/html/ir_alert.php.

Investor Relations and Communication

There was no amendment made to the constitutional documents of the Company during the year.

The Company has a proactive policy for promoting investor relations and communications by maintaining regular dialogue and fair disclosure with institutional investors, fund managers, analysts and the media. To ensure our investors have a better understanding of the Group, our Management attends investor meetings on a regular basis and has participated in a number of investor conferences in the region and communicates with research analysts and institutional investors in an on-going manner.

The Group recognises the importance of timely and non-selective disclosure of information. The Company’s corporate website www.pacificandes.com, which features a dedicated Investor Relations section, facilitates effective communication with Shareholders, investors and other stakeholders, making corporate information and other relevant financial and non-financial information available electronically and in a timely manner. Latest information of the Company includes annual reports, interim reports, announcements, press releases and constitutional documents.

Details of the last Shareholders’ meeting, key calendar events for Shareholders’ attention as well as share information, including market capitalisation as of 28 September 2014, are set out in the “Investor” section on the Company’s corporate website.

The Group values feedback from Shareholders on its efforts to promote transparency and foster investor relationships. Comments and suggestions are welcome, and they can be addressed to the Investor Relations Department by mail or by email to the Group at ir@pacificandes.com.

 Disclaimer © PACIFIC ANDES. All rights reserved