Corporate Governance Report

All along, the Company is committed to maintain a high standard of corporate governance practices to safeguard the interests of its shareholders and enhance the performance of the Group. From time to time, the board of Directors (the "Board") reviews and improves its corporate governance practices in order to ensure that the Group is under the leadership of an effective board so as to optimise return for its shareholders.
 
Corporate Governance Code
 
Throughout the year ended 30 June 2019, the Company has complied with all the applicable code provisions of the Corporate Governance Code (the “CG Code”) as set out in Appendix 14 of the Listing Rules, with the exception of code provision A.6.4.
 
Code provision A.6.4 is in relation to guidelines for securities dealings by relevant employees. As required under code provision A.6.4, the Board should establish for its relevant employees written guidelines on no less exacting terms than the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the Listing Rules in respect of their dealings in the securities of the Company. Instead of following the Model Code strictly, the Board has established its own guidelines which are not on no less exacting terms than the Model Code. Such deviation from the CG Code is considered necessary, mainly because of the huge size of employees of the Group which is over 45,000 and the Group’s diversified businesses. For these reasons, to follow the exact guidelines of the Model Code will cause immense administrative burden to the Company in processing written notifications from the relevant employees when they deal in the securities of the Company, which can be avoided under the Company’s own guidelines.
 
Directors' Securities Transactions
 
The Company has adopted the Model Code as its own code of conduct for securities transactions by its Directors.
 
Specific enquiries have been made with all Directors who confirmed that they had complied with the required standard set out in the Model Code during the year ended 30 June 2019.
 
Board Governance
 
 
Board of Directors
 
Composition
 
Currently, the Board comprises a total of 16 Directors, being seven Executive Directors, three Non-executive Directors and six Independent Non-executive Directors. The number of Independent Non-executive Directors represents more than one-third of the Board as required by Rule 3.10A of the Listing Rules. The biographies of the Directors are set out from pages 28 to 36 of this annual report.
 
All Directors have entered into formal letters of appointment with the Company, each for a term of three years, subject to retirement by rotation in accordance with the articles of association of the Company (the “Articles of Association”).
 
Article 103(A) of the Articles of Association provides that at each annual general meeting, one-third of the Directors for the time being (or 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, provided that every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every three years. Also, pursuant to Article 94 of the Articles of Association, any Director appointed to fill a casual vacancy or as an addition to the Board is subject to re-election at the next following general meeting or next following annual general meeting of the Company respectively.
 
To ensure that Directors have spent sufficient time on the affairs of the Company, all Directors have annually disclosed to the Company the level of time involved in performing the duties of his/her position held in the Company and other public companies or organisations or other major appointments.
 
Chairman, Executive Vice-chairman & General Manager and Other Executive Directors
 
Dr. Cheng Kar-Shun, Henry, the Chairman, has led the Board and ensured that the Board works effectively and that all important issues are discussed in a timely manner. Dr. Cheng Chi-Kong, Adrian, the Executive Vice-chairman & General Manager, oversees the Company’s day-to-day businesses and the implementation of major strategies and policies of the Company. Each of the other Executive Directors takes up different responsibilities according to their own expertise. The responsibilities of the Chairman, the Executive Vice-chairman & General Manager and the other Executive Directors are clearly set out in their respective letters of appointment. The positions of the Chairman and the Executive Vicechairman & General Manager are held by separate individuals so as to maintain an effective segregation of duties.
 
Non-executive Directors
 
Non-executive Directors (including the Independent Non-executive Directors) serve the relevant function of bringing independent judgement on the development, performance and risk management of the Company. They have the same duties of care and skill and fiduciary duties as the Executive Directors.
 
Independence of Independent Non-executive Directors
 
The Company has received annual confirmation of independence from all Independent Non-executive Directors in accordance with Rule 3.13 of the Listing Rules. The Board is of the view that all Independent Non-executive Directors are independent in accordance with the Listing Rules.
 
During the year, Independent Non-executive Directors met quarterly with members of senior management and representatives from major business units, which provided a good opportunity for Independent Non-executive Directors to better understand the businesses of the Group and to discuss a wide range of issues concerning the Group.
 
Role of the Board
 
The Board oversees the management, businesses, strategic directions and financial performance of the Group. It is collectively responsible for the management and operation of the Company. The Board is the ultimate decision making body of the Company except for matters requiring the approval of the shareholders in accordance with the Articles of Association, the Listing Rules or other applicable laws and regulations.
 
Day-to-day businesses of the Company are delegated to the management team which works under the leadership and supervision of the Executive Vice-chairman & General Manager and the Executive Committee of the Board as discussed in sections below.
 
Corporate Governance Functions
 
The Board is responsible for performing the corporate governance duties of the Company including:
 
(a) to develop and review the Company’s policies and practices on corporate governance;
(b) to review and monitor the training and continuous professional development of the Directors and senior management;
(c) to review and monitor the Company’s policies and practices in compliance with legal and regulatory requirements;
(d) to develop, review and monitor the code of conduct and compliance manual (if any) applicable to employees and the Directors; and
(e) to review the Company’s compliance with Appendix 14 of the Listing Rules (Corporate Governance Code and Corporate Governance Report).
 
The Group complied with all major aspects of laws and regulations that are significant to its business operations. There were no threatened or concluded cases of material nature in connection with legal compliance during the year.
 
Board Meetings
 
Regular Board meetings are held at least four times a year with at least 14 days’ notices and additional meetings with reasonable notices are held as and when the Board considers appropriate. The Company Secretary assists the Chairman in preparing agenda for each meeting. Draft agenda for each Board meeting is circulated to all Directors to enable them to include other matters into the agenda. Agenda accompanying board papers are sent to all Directors at least three days before each regular Board meeting. Board decisions are voted upon at the Board meetings. The Company Secretary records all matters considered by the Board, decisions reached and any concerns raised or dissenting views expressed by the Directors. Minutes of meetings are kept by the Company Secretary with copies circulated to all Directors for information and records.
 
Directors' Training
 
Each newly appointed Director is provided with the necessary induction and information to ensure that he/she has a proper understanding of the Company’s operations and businesses as well as his/her responsibilities under the relevant statues, laws, rules and regulations. From time to time, the Company Secretary also provides the Directors with updates on latest development and changes in the Listing Rules and other relevant legal and regulatory requirements.
 
The Executive Vice-chairman and General Manager reports Group business activities including operations review, segment performance, strategies and new initiatives at regular Board meetings. In addition, all Directors are provided with monthly updates on major business segments performance and year-to-date financials. All these give the Board a balanced and understandable assessment of the Group’s performance, position and prospects and enable the Board as a whole and each Director to discharge their duties.
 
All Directors are encouraged to participate in continuous professional development activities to develop and refresh their knowledge and skills. From time to time, the Company has arranged in-house trainings for the Directors in the form of seminars and reading materials. A summary of training received by the Directors for the year ended 30 June 2019 according to the records provided by the Directors is as follows:
 
  Type of Continuous Professional Development
Name of Directors Training on corporate governance, regulatory development and other relevant topics Attending corporate events or visits
::: Executive Directors :::
Dr. Cheng Kar-Shun, Henry -
Dr. Cheng Chi-Kong, Adrian
Mr. Cheng Chi-Heng -
Ms. Cheng Chi-Man, Sonia -
Mr. Au Tak-Cheong
Mr. Sitt Nam-Hoi
Mr. So Chung-Keung, Alfred
::: Non-executive Directors :::
Mr. Doo Wai-Hoi, William -
Mr. Cheng Kar-Shing, Peter -
Ms. Ki Man-Fung, Leonie
::: Independent Non-executive Directors :::
Mr. Yeung Ping-Leung, Howard
Mr. Cha Mou-Sing, Payson
Mr. Cha Mou-Zing, Victor (Alternate Director to Mr. Cha Mou-Sing, Payson) -
Mr. Ho Hau-Hay, Hamilton
Mr. Lee Luen-Wai, John
Mr. Liang Cheung-Biu, Thomas
Mr. Ip Yuk-Keung
 
Board Committees
 
The Board discharges some of its responsibilities through delegation to respective Board-level committees, namely the Executive Committee, the Audit Committee, the Remuneration Committee, the Nomination Committee and the Sustainability Committee. All the Board committees are empowered by the Board under their own terms of reference which have been posted on HKEx’s website and/or the Company’s website.
 
Executive Committee
 
Members:
 
Executive Directors Dr. Cheng Kar-Shun, Henry (Chairman)
Dr. Cheng Chi-Kong, Adrian
Mr. Cheng Chi-Heng
Ms. Cheng Chi-Man, Sonia
Mr. Au Tak-Cheong
Mr. Sitt Nam-Hoi
Mr. So Chung-Keung, Alfred
 
The Board has delegated to the Executive Committee comprising all Executive Directors with authority and responsibility for handling the management functions and day-to-day operations of the Company, while reserving certain key matters such as the declaration of interim dividend, making recommendation of final dividend or other distributions for the approval by the Board. The Executive Committee shall monitor the execution of the Company’s strategic plans and the operations of all business units of the Company, and manage and develop generally the businesses of the Company. The Executive Committee meets regularly as and when necessary.
 
Audit Committee
 
Members:
 
Independent Non-executive Directors Mr. Lee Luen-Wai, John (Chairman)
Mr. Yeung Ping-Leung, Howard
Mr. Cha Mou-Sing, Payson
Mr. Ho Hau-Hay, Hamilton
Mr. Liang Cheung-Biu, Thomas
Mr. Ip Yuk-Keung
 
The Audit Committee is responsible for reviewing the Group’s financial controls, and its risk management and internal control systems. The Audit Committee is empowered to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. It also reviews the internal audit programme and ensures the internal audit function is adequately resourced and effective.
 
During the year, the Audit Committee met twice and reviewed the audited financial statements of the Company for the year ended 30 June 2018 and the unaudited interim financial statements of the Company for the six months ended 31 December 2018 with recommendations to the Board for approval, reviewed reports on risk management and internal control systems of the Group, and discussed with the management and the external auditors of the accounting policies and practices which may affect the Group and the financial reporting matters. Furthermore, the Audit Committee reviewed the framework and policy of risk management, the system of internal control and the financial statements for the year ended 30 June 2019 of the Company with recommendation to the Board for approval.
 
Remuneration Committee
 
Members:
 
Independent Non-executive Directors Mr. Ho Hau-Hay, Hamilton (Chairman)
Mr. Yeung Ping-Leung, Howard
Mr. Cha Mou-Sing, Payson
Mr. Lee Luen-Wai, John
Executive Director Dr. Cheng Kar-Shun, Henry
 
The Remuneration Committee is responsible for making recommendations to the Board on the Company’s policy and structure on the remuneration of all Directors and senior management of the Company and on the establishment of a formal and transparent procedure for developing remuneration policy for the Company for approval by the Board. It shall also make recommendations to the Board on the remuneration packages of individual Executive Director and senior management.
 
The remuneration of individual Executive Director and senior management is determined with reference to his/her duties and responsibilities with the Company, the Company’s performance as well as remuneration benchmarks in the industry and the prevailing market condition. The Company’s Human Resources Department provides materials on relevant remuneration data, remuneration benchmarks, market analysis and proposals to the Remuneration Committee for consideration. The remuneration package is performance-based and linked to the Company’s profitability, aimed to be competitive to attract and retain talented employees.
 
During the year, the Remuneration Committee met once and reviewed the remuneration policy of the Company, including that for the Directors and senior management of the Company. The remuneration for the Executive Directors comprises basic salary, pensions and discretionary bonus. Share options have been granted to all Directors and senior management to subscribe for shares in the Company under the Company’s share option scheme. In addition, a Director has been granted options under share option scheme of a listed subsidiary of the Group to subscribe for shares in that listed subsidiary. Details of the remuneration paid to the Directors and members of senior management for the financial year ended 30 June 2019 are disclosed in the notes to the financial statements.
 
Nomination Committee
 
Members:
 
Executive Director Dr. Cheng Kar-Shun, Henry (Chairman)
Independent Non-executive Directors Mr. Lee Luen-Wai, John
Mr. Liang Cheung-Biu, Thomas
Mr. Ip Yuk-Keung
 
The Nomination Committee is responsible for reviewing the structure, size and composition of the Board, assessing the independence of Independent Non-executive Directors taking into account the independence requirements set out in Rule 3.13 of the Listing Rules, and making recommendations to the Board on appointment and re-appointment of Directors.
 
The Nomination Committee met twice during the year. To comply with the new requirement under the Listing Rules, the Nomination Committee formalised the Company’s existing approach and procedures and recommended the nomination policy to the Board for adoption. It also reviewed the structure, size and composition of the Board and considered that the Board consists of a diverse mix of members and has provided a good balance of skills and experience appropriate to the business needs of the Group. For the retiring Directors standing for re-election at 2019 annual general meeting of the Company, the Nomination Committee reviewed their biographical details against relevant requirements under the Listing Rules and the nomination criteria set out in the Company’s Nomination Policy and considered they have the required character, integrity and professional knowledge and experience to continue fulfilling their role and contributing to the Company and the diversity of the Board.
 
The Board adopted a Nomination Policy in November 2018 which sets out the criteria and procedures to be adopted when considering candidates to be appointed as Directors and re-appointment of existing Directors. In the case of identifying candidate(s) to be appointed as Director, the Nomination Committee shall hold a meeting to consider the candidate(s) identified or selected pursuant to the nomination criteria and make recommendation to the Board if appropriate. The Board shall deliberate and decide on the appointment based upon the recommendation of the Nomination Committee. In the case of re-appointment of existing Director, the Nomination Committee shall review the overall contribution and service of the retiring Director to the Company and determine whether the retiring Director continues to meet the nomination criteria set out in the Nomination Policy, and if appropriate, recommend the retiring Director to the Board for consideration and recommendation to shareholders for the proposed re-election of Director at a general meeting. The factors considered in assessing the suitability of a proposed candidate for appointment as Director or re-appointment of existing Director are as follows:
 
Contribution to the Board with due regard to the Board’s diversity policy;
Reputation for integrity;
Commitment to devote sufficient time to discharge duties as a Board member;
Potential conflicts of interest with the Company; and
Satisfaction of independence requirements of the Listing Rules in the case of a candidate for Independent Nonexecutive Director.
 
The Board adopted a Board Diversity Policy (the “Policy”) in August 2013 which sets out the approach by the Company to achieve diversity on the Board. Under the Policy, the Company recognises and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining its competitive advantage and supporting its sustainable development. In determining an optimum composition of the Board, the Company will consider all aspects of diversity and will also take into account factors based on its own business model and specific needs from time to time. Board members’ appointment will be based on meritocracy and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board. Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, skills, regional and industry experience and expertise, cultural and educational background, and professional experience. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.
 
The current Board composition reflects diverse mix of educational background, professional knowledge, industry experience and length of service. The diversity mix of the Board is summarised in the following charts:
 
Diversity Mix
 
 
Areas of Experience
 
 
Sustainability Committee
 
Members:
 
Executive Directors Dr. Cheng Chi-Kong, Adrian (Chairman)
Mr. Sitt Nam-Hoi
Independent Non-executive Directors Mr. Cha Mou-Sing, Payson
Mr. Ip Yuk-Keung
 
The Sustainability Committee is responsible for the oversight of the Company’s sustainability and environmental, social and governance (“ESG”) issues and risks. Supported by the Group Sustainability Steering Committee which comprises heads of business units, the Board-level Committee oversees the ESG management approach and policies, the processes of identifying and evaluating material ESG-related issues to internal and external stakeholders (including risks to the issuer’s businesses) and setting Green, Wellness and Caring targets under “New World Sustainability Vision 2030” to manage ongoing performance. The Board Sustainability Committee monitors integrity of the Company’s sustainability and ESG information in annual and sustainability reports and advises the Board on the matters in the applicable code provision(s) of the Environmental, Social and Governance Reporting Guide (Appendix 27) of the Listing Rules.
 
The Sustainability Committee was established in November 2018 and held the first meeting in March 2019. It discussed and endorsed the Group’s sustainability strategy and policies set under the “New World Sustainability Vision 2030”. It also reviewed the process of sustainability reporting and ESG disclosures. In addition, the Committee discussed relevant global trends including sustainable finance, climate risks and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
 
Attendance at Board Meetings, Board Committee Meetings and General Meetings
 
  Number of Meetings Attended/ Eligible to attend for the year ended 30 June 2019
Name of Directors Board Meeting Audit Committee Meeting Remuneration Committee Meeting Nomination Committee Meeting Sustainability Committee Meeting Annual General Meeting
::: Executive Directors :::
Dr. Cheng Kar-Shun, Henry 5/5 - 1/1 2/2 - 1/1
Dr. Cheng Chi-Kong, Adrian 5/5 - - - 1/1 1/1
Mr. Cheng Chi-Heng 4/5 - - - - 1/1
Ms. Cheng Chi-Man, Sonia 4/5 - - - - 1/1
Mr. Au Tak-Cheong 5/5 - - - - 1/1
Mr. Sitt Nam-Hoi 5/5 - - - 1/1 1/1
Mr. So Chung-Keung, Alfred 5/5 - - - - 1/1
::: Non-executive Directors :::
Mr. Doo Wai-Hoi, William 3/5 - - - - 1/1
Mr. Cheng Kar-Shing, Peter 5/5 - - - - 1/1
Ms. Ki Man-Fung, Leonie 5/5 - - - - 1/1
::: Independent Non-executive Directors :::
Mr. Yeung Ping-Leung, Howard 3/5 1/2 1/1 - - 1/1
Mr. Cha Mou-Sing, Payson 5/5 2/2 1/1 - 1/1 0/1
Mr. Ho Hau-Hay, Hamilton 5/5 2/2 1/1 - - 1/1
Mr. Lee Luen-Wai, John 5/5 2/2 1/1 2/2 - 1/1
Mr. Liang Cheung-Biu, Thomas 5/5 2/2 - 2/2 - 1/1
Mr. Ip Yuk-Keung 5/5 2/2 - 2/2 1/1 1/1
 
Auditor's Remuneration
 
During the year ended 30 June 2019, the total fee paid/payable in respect of audit and non-audit services provided by the Group’s external auditors is set out below:
 
  Fee paid/payable for the year ended 30 June
Type of services 2019
HK$ m
2018
HK$ m
Audit services 63.8 64.1
Non-audit services 32.0 8.8
Total 95.8 72.9
 
Non-audit services comprise primarily tax advisory, circular works related to capital market transactions, due diligence and transaction advisory related to various acquisition activities (including FTLife Insurance Company Limited), services on system enhancement, as well as other related services.
 
Directors' Responsibility for the Financial Statements
 
The Board, supported by the finance and accounts department, is responsible for the preparation of the financial statements of the Company and the Group. The Board has prepared the financial statements in accordance with the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants. Appropriate accounting policies have also been used and applied consistently except the adoption of revised standards, amendments to standards and interpretation. The Directors have not been aware of any material uncertainties relating to events or conditions which may cast significant doubt upon the Group’s ability to continue as a going concern.
 
The statement by the auditor of the Company and the Group regarding its reporting responsibilities on the financial statements of the Company and the Group is set out in the Independent Auditor’s Report in this annual report.
 
Risk Managemnet And Internal Control
 
Governance, Risk and Control
 
Robust and effective management of risks is an essential and integral part of corporate governance. The management of the Group proactively manages the risks by establishing an effective risk management framework, setting the appropriate risk appetite and maintaining an optimal risk level.
 
The Board has the overall responsibility for evaluating and determining the nature and extent of the risks it is willing to take in achieving the Group’s strategic objectives, and ensuring that the Group establishes and maintains appropriate and effective risk management and internal control systems. The Audit Committee is delegated with the authority from the Board to oversee the Group’s management in the design, implementation and monitoring of the risk management and internal control systems. It also advises the Board on the Group’s risk-related matters.
 
Sound and effective risk management and internal control systems have been established and maintained for safeguarding assets against unauthorised use or disposition, ensuring the maintenance of proper accounting records for the provision of reliable financial information for internal use or for publication, and ensuring compliance of applicable laws, rules and regulations. It should be acknowledged that such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.
 
The Risk Management Committee assists the Audit Committee in discharging its corporate governance responsibilities for risk management. It is responsible for ensuring that the risk management system is adequate and effective and that the risk management framework is implemented consistently throughout the Group. It also monitors the Group’s overall risk profiles by reviewing the key risks relating to individual business units and the key risks that are enterprise-wide, and ensures alignment with the approved risk appetite.
 
An internal audit department has been established to conduct internal audit of the Company and its subsidiaries, joint ventures and associated companies. The internal audit department performs risk-based audits to review the effectiveness of the Group’s material internal controls so as to provide assurance that all key risks are identified and managed, and to ensure that the risk management and internal control measures are carried out appropriately and functioning as intended. Major audit findings and recommendations are reported to the Audit Committee, which in turn reports to the Board. The implementation of the agreed actions in response to the identified audit issues are tracked and followed up regularly, and the status is reported to the Audit Committee.
 
The Audit Committee receives the report from the internal audit department and takes such report into consideration when it makes recommendation to the Board for approval of the half-yearly or annual results of the Group.
 
Risk Governance Structure
 
 
The Group’s risk governance structure is guided by the “Three Lines of Defence” model. As the first line of defence, risk owners of all corporate departments and business units of the Group identify and evaluate the risks which may potentially impact the achievement of their business objectives, mitigate and monitor the risks (including but not limited to business, operation as well as environmental, social and governance (“ESG”) risks) by designing and executing control procedures in their day-to-day operations. They conduct risk assessment and control self-assessment on a regular basis to evaluate the adequacy and effectiveness of controls that are in place to mitigate the identified risks.
 
As the second line of defence, the Group establishes specific functions to ensure the first line of defence is properly in place and operating as intended. The responsibilities of these functions include but not limited to financial control, risk management and internal control, compliance, data protection and information security, sustainability, and so forth. The Risk Management Committee also oversees and monitors the overall operation of the risk management and internal control systems.
 
As the third line of defence, the Internal Audit Department acts as an independent assessor. It is responsible for reviewing the major operational, financial, compliance and risk management controls of the Group on a continuous basis. It schedules its work in an annual audit plan which is reviewed by the Audit Committee every year. The audit plan is derived from risk assessment basis and is aimed at covering each significant corporate department and business unit in which the Group involves in day-to-day management within a reasonable period.
 
Through independent audit and review, the external auditor provides reasonable assurance on the effectiveness of the risk management and internal control systems. Whistleblowing System is established for staff and other relevant parties to report misconduct cases. Every reported case will be handled in confidentiality and followed through in accordance with the Whistleblowing Policy and its related procedures.
 
Risk Management Approach
 
 
The Group adopts both top-down and bottom-up approaches in relation to risk management. It involves collating and appraising bottom-up inputs from risk owners of all corporate departments and business units of the Group, with refinements and adjustments through top-down inputs from the Board in an iterative manner.
 
The risk management process is integrated into our daily operations and is an ongoing process involving all parts of the Group from the Board down to each individual staff. The risk owners and risk oversight parties are clearly defined across the Group. They are required to identify, analyse and evaluate the risks (including but not limited to business, operation as well as ESG risks) facing their businesses with proper management execution to avoid, reduce or transfer those risks accordingly.
 
“Risk Management Policy” is established for enhancing the effective implementation of the risk management and internal control exercises within the Group. To ensure that all major risks are properly identified, evaluated and monitored for achieving a sound and effective risk management system, risk owners across the Group are required to report the risk review exercises to the Internal Audit Department by submitting the “Risk Management and Internal Control Assessment Checklist” (“Checklist”) half-yearly. They need to report the effectiveness of the risk management and internal control systems and set out details of the key risks including the risk description, change of risk level, current risk level and the corresponding key risk control or mitigation action in the “Key Risks Reporting Table”.
 
Besides, an early risk flagging mechanism is established which enables the Group to proactively identify and assess emerging risks and broad areas of changes, emanating from both internal and external factors (including but not limited to business, operation as well as ESG risks), and act on them in a timely manner. Risk owners have to flag and report immediately to the corresponding risk oversight parties when a potential risk is perceived and significant impact is expected in any business areas.
 
After consolidation with a holistic review of the Group, Internal Audit Department submits a written report on the effectiveness of the Group’s risk management and internal control systems to the Risk Management Committee and the Audit Committee for review on a half-yearly basis. The Board, through the Risk Management Committee and the Audit Committee, has put in place effective risk management and internal control systems which will enable the Group to respond appropriately to significant business, operational, financial, compliance, ESG related and other risks in achieving its objectives. The Group strives to continually improve its risk management framework in order to keep pace with the dynamic business environment. The Board, therefore, considers that the risk management and internal control systems of the Group are effective and adequate.
 
Company Secretary
 
The Company Secretary is a full time employee of the Company and has day-to-day knowledge of the Company’s affairs. The Company Secretary reports to the Chairman and is responsible for advising the Board on governance matters. For the year under review, the Company Secretary has confirmed that he has taken no less than 15 hours of relevant professional training. The biography of the Company Secretary is set out on page 37 of this annual report.
 
Constitutional Documents
 
No change has been made to the Company’s Articles of Association during the year.
 
Environmental, Social And Governance
 
The Group will issue a standalone Sustainability Report (“SR”) in December 2019 on the Company’s website (http://www.nwd.com.hk/sustainability/en/publication.html) and the Stock Exchange’s website. The SR will be prepared in accordance with the Core option of the Global Reporting Initiative (GRI) Sustainability Reporting Standards, as well as the Environmental, Social and Governance Reporting Guide issued by the Stock Exchange, which will provide an overview of the Group’s efforts and performance in pursuing corporate sustainability. Please refer to the “Corporate Sustainability” section in this annual report for a summary of the SR.
 
Shareholders' Rights
 
Convening Extraordinary General Meeting (“EGM”) and Putting Forward Proposals at General Meetings
 
Shareholders representing at least 5% of the total voting rights of all the shareholders of the Company having a right to vote at general meetings can deposit a written request to convene an EGM at the registered office of the Company for the attention of the Company Secretary. Such requisition, signed by the shareholders concerned, 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. If the Directors do not within 21 days from the date of the deposit of a request (after being verified to be valid) proceed to convene an EGM on a day not more than 28 days after the date on which the notice convening the EGM is given, the shareholders concerned, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene an EGM, but any EGM so convened shall not be held after the expiration of three months after the date on which the Directors become subject to the requirement to call a meeting.
 
To put forward proposals at general meeting, a request in writing must be made by:
 
(i) shareholders representing at least 2.5% of the total voting rights of all shareholders of the Company having the right to vote at general meeting; or
(ii) at least 50 shareholders of the Company having the right to vote at the meeting,
 
to the Company to give to shareholders notice of any resolution which may properly be moved and is intended to be moved at an annual general meeting, or to circulate to shareholders any statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at any general meeting.
 
The written request must be signed by all the shareholders concerned in one or more documents in like form and deposited at the registered office of the Company for the attention of the Company Secretary not less than six weeks before the meeting in the case of a requisition requiring notice of a resolution at annual general meeting, and not less than seven days before the meeting in the case of requiring circulation of statement. Upon the request verified to be valid, the Company will give notice of the resolution or circulate the statement.
 
If a shareholder of the Company intends to propose a person other than a Director of the Company for election as a Director of the Company at any general meeting, the shareholder concerned shall lodge with the registered office of the Company for the attention of the Company Secretary (i) a written notice of his intention to propose that person for election as a Director; and (ii) a written notice by that person of his/her willingness to be elected as a Director together with the necessary information within the period commencing no earlier than the day after the dispatch of the notice of the general meeting and ending no later than seven days prior to the date of such general meeting.
 
Detailed procedures can be found in the following documents which are available on the Company’s website:
 
“Procedures for Shareholders to convene Extraordinary General Meetings and putting forward proposals at General Meetings”; and
“Procedures for Shareholders to propose a person for election as a Director”.
 
Enquiries to the Board
 
Enquiries may be put to the Board through the Company’s Investor Relations Department at 30/F., New World Tower, 16–18 Queen’s Road Central, Hong Kong (email: ir@nwd.com.hk).
 
Dividend Policy
 
The Board adopted a Dividend Policy in November 2018 which sets out the guidelines for the Board to determine the frequency of dividend payment and target dividend payout ratio for a financial year. The Company would distribute to its shareholders funds surplus to the operating needs of the Company and its subsidiaries twice for each financial year as determined by the Board, subject to its shareholders’ approval, where applicable. In general, it is the policy of the Company to maintain a balance between meeting shareholders’ expectations and prudent capital management with a sustainable dividend policy. The following factors will be taking into account for determining the Company’s target dividend payout ratio:
 
Any restrictions under the Hong Kong Companies Ordinance;
Any banking or other funding covenants by which the Company is bound from time to time;
The capital expenditure and operating requirements of the Group; and
The external economic and market situation.
 
Communication With Shareholders
 
The Board and management maintain a continuing dialogue with the Company’s shareholders and investors through various channels including the Company’s annual general meeting. The Chairman, other members of the Board and the external auditor attend the annual general meeting to meet the shareholders. The Directors will answer questions raised by the shareholders on the performance of the Group. The Company holds press conferences and analysts briefings at least twice a year following the release of interim and full year results announcements at which the Executive Directors and management of the Company are available to answer questions and listen feedbacks regarding the performance of the Group. Our corporate website which contains corporate information, interim and annual reports, announcements and circulars issued by the Group as well as the recent developments of the Group enables the Company’s shareholders to have timely and updated information of the Group. Shareholders can refer to the “Shareholders’ Communication Policy” posted on the Company’s website for more details.
 
Emphasise Investor Relations
 
To ensure that the investors have a comprehensive and thorough understanding of the Group with the establishment of timely and effective two-way communications, the management and investor relations team of the Group participates in different international investment conferences and arranges local and overseas non-deal roadshows on a regular basis to elaborate the Group’s business development and market movement to investors in different locations. We also show our key projects in both Mainland China and Hong Kong to the investor communities via various kinds of project experience tours and reverse roadshows. For details, please refer to the “Investor Relations” section of this annual report.