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 2017, 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 about 44,000 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 2017.
 
Board of Directors
 
Composition
 
Dr. Cheng Chi-Kong, Adrian was re-designated from the Executive Vice-chairman & Joint General Manager to Executive Vice-chairman & General Manager with effect from 1 March 2017. Mr. Chen Guanzhan was re-designated from Executive Director & Joint General Manager to Non-executive Director and was appointed as an adviser with effect from 1 March 2017, and subsequently resigned as Non-executive Director and adviser with effect from 1 July 2017. Currently, the Board comprises a total of 13 Directors, being six Executive Directors, two Non-executive Directors and five 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 46 to 52 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.
 
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.
 
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 & Joint General Manager (Executive Vice-chairman & General Manager from 1 March 2017), the Executive Director & Joint General Manager (up to 28 February 2017), 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).
 
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.
 
In addition, all Directors are provided with monthly updates on the Company’s performance, position and prospects to 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 2017 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
Ms. Ki Man-Fung, Leonie
Mr. Cheng Chi-Heng -
Ms. Cheng Chi-Man, Sonia -
Mr. Au Tak-Cheong
::: Non-executive Directors :::
Mr. Doo Wai-Hoi, William -
Mr. Cheng Kar-Shing, Peter -
Mr. Chen Guanzhan*
::: Independent Non-executive Directors :::
Mr. Yeung Ping-Leung, Howard
Mr. Cha Mou-Sing, Payson -
Mr. Cha Mou-Zing, Victor (alternate to Mr. Cha Mou-Sing, Payson) -
Mr. Ho Hau-Hay, Hamilton -
Mr. Lee Luen-Wai, John
Mr. Liang Cheung-Biu, Thomas
 
* re-designated from Executive Director to Non-executive Director on 1 March 2017 and resigned as Director on 1 July 2017
 
Chairman and 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. For the period from 1 July 2016 to 28 February 2017, Dr. Cheng Chi-Kong, Adrian, the then Executive Vice-chairman & Joint General Manager and Mr. Chen Guanzhan, the then Executive Director & Joint General Manager, jointly managed the Company’s day-to-day businesses and implement major strategies and policies of the Company. On 1 March 2017, Dr. Cheng Chi-Kong, Adrian and Mr. Chen Guanzhan were re-designated as the Executive Vice-chairman & General Manager and a Non-executive Director respectively. Thereafter, Dr. Cheng Chi-Kong, Adrian being 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 & Joint General Manager (Executive Vice-chairman & General Manager from 1 March 2017), Executive Director & Joint General Manager (up to 28 February 2017) and the other Executive Directors are clearly set out in their respective letters of appointment. The positions of the Chairman, the Executive Vice-chairman & Joint General Manager/ the Executive Vice-chairman & General Manager, and Executive Director & Joint 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. Each Non-executive Director has entered into a letter of appointment with the Company for a fixed term of three years, subject to retirement by rotation in accordance with the Articles of Association.
 
Board Committees
 
The Board currently has four committees, namely the Executive Committee, the Audit Committee, the Remuneration Committee and the Nomination 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. Chen Guanzhan*
Ms. Ki Man-Fung, Leonie
Mr. Cheng Chi-Heng
Ms. Cheng Chi-Man, Sonia
Mr. Au Tak-Cheong
 
* re-designated as Non-executive Director on 1 March 2017 and resigned as Director on 1 July 2017
 
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. Cha Mou-Sing, Payson*
Mr. Lee Luen-Wai, John**
Mr. Yeung Ping-Leung, Howard
Mr. Ho Hau-Hay, Hamilton
Mr. Liang Cheung-Biu, Thomas
 
* ceased to be the chairman on 15 February 2017
** appointed as the chairman on 15 February 2017
 
The Audit Committee is responsible for the review and supervision of the Group’s financial reporting process,risk management and internal control systems. To align with the amendments made to the CG Code relating to risk management and internal control, the terms of reference of the Audit Committee was revised on 23 February 2016 and took effect on 1 July 2016.
 
During the year, the Audit Committee met twice and reviewed the audited financial statements of the Company for the year ended 30 June 2016 and the unaudited interim financial statements of the Company for the six months ended 31 December 2016 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 2017 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.
 
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 subsidiary. Details of the remuneration paid to the Directors and members of senior management for the financial year ended 30 June 2017 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
 
The Nomination Committee is responsible for reviewing the structure, size and composition of the Board and making recommendations on any proposed changes to the Board to complement the Company’s corporate strategy. It shall consider the suitability of a candidate to act as a Director on the basis of the candidate’s qualification, experience, integrity and potential contribution to the Company, and assess the independence of Independent Non-executive Directors taking into account the independence requirements set out in Rule 3.13 of the Listing Rules. During the year, the Nomination Committee met once and reviewed the structure, size and composition of the Board and considered that the Board consists of a diverse mix of members appropriate to the requirements of the businesses of the Company.
 
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 Board consists of 14 members during the year and 13 members as at the date of this report, all coming from diverse professional backgrounds, of which more than one-third are Independent Non-executive Directors. The Board considers the Board composition during the year and as at the date of this report has provided a good balance of skills and experience appropriate to its business needs, and will continue to review its composition from time to time taking into account of the Group’s business development requirements. The diversity mix of the Board at the date of this report is summarised in the following charts:
 
Diversity Mix
 
 
Areas of Experience
 
 
Attendance at Board Meetings, Board Committee Meetings and General Meetings
 
  Number of Meetings Attended/ Eligible to attend for the year ended 30 June 2017
Name of Directors Board Meeting Audit Committee Meeting Remuneration Committee Meeting Nomination Committee Meeting Annual General Meeting Extraordinary General Meeting
::: Executive Directors :::
Dr. Cheng Kar-Shun, Henry 3/5 - 1/1 0/1 1/1 1/2
Dr. Cheng Chi-Kong, Adrian 5/5 - - - 1/1 1/2
Ms. Ki Man-Fung, Leonie 5/5 - - - 1/1 2/2
Mr. Cheng Chi-Heng 5/5 - - - 1/1 1/2
Ms. Cheng Chi-Man, Sonia 5/5 - - - 1/1 1/2
Mr. Au Tak-Cheong 5/5 - - - 1/1 1/2
::: Non-executive Directors :::
Mr. Doo Wai-Hoi, William 4/5 - - - 1/1 1/2
Mr. Cheng Kar-Shing, Peter 4/5 - - - 1/1 0/2
Mr. Chen Guanzhan* 3/5 - - - 1/1 2/2
::: Independent Non-executive Directors :::
Mr. Yeung Ping-Leung, Howard 4/5 1/2 1/1 - 0/1 2/2
Mr. Cha Mou-Sing, Payson 4/5 1/2 1/1 - 0/1 0/2
Mr. Ho Hau-Hay, Hamilton 5/5 2/2 1/1 - 1/1 2/2
Mr. Lee Luen-Wai, John 5/5 2/2 1/1 1/1 1/1 1/2
Mr. Liang Cheung-Biu, Thomas 5/5 2/2 - 1/1 1/1 2/2
 
* re-designated from Executive Director to Non-executive Director on 1 March 2017 and resigned as Director on 1 July 2017
 
Auditor's Remuneration
 
During the year ended 30 June 2017, 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 2017
HK$ m
2016
HK$ m
Audit services 59.2 66.5
Non-audit services 8.6 12.3
Total 67.8 78.8
 
Non-audit services include merger and acquisition related due diligence, taxation and services on system enhancement.
 
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 from pages 98 to 103 of this annual report.
 
Risk Managemnet And Internal Control
 
The Board is responsible to oversee the Company’s risk management and internal control systems on an ongoing basis. Risk Management Committee has been set up under the Audit Committee and a risk management policy has been adopted since 2016. Procedures have been designed 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. The procedures provide reasonable but not absolute assurance against material errors, losses or fraud.
 
The Risk Management Committee has assisted the Audit Committee in deciding the Group’s risk level and risk appetite, considering the Group’s risk management strategies and giving guidelines where appropriate, and ensuring the soundness and effectiveness of the Group’s risk management and internal control systems.
 
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 key business and operational risks are identified and managed, and to ensure that the risk management and internal control measures are carried out appropriately and functioning as intended. The internal audit department reports to the Board with its findings and makes recommendations to improve the risk management and internal control of the Group.
 
The Audit Committee also 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.
 
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 53 of this annual report.
 
Constitutional Documents
 
No change has been made to the Company’s Articles of Association during the year.
 
Corporate Sustainability
 
Please refer to pages 56 to 67 of this annual report the “Corporate Sustainability” section which is prepared in accordance with the Environmental, Social and Governance Reporting Guide issued by the Stock Exchange.
 
Shareholders' Rights
 
Convening Extraordinary General Meeting (“EGM”) and Putting Forward Proposals at Shareholders’ 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 the shareholders’ 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 the shareholders’ 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, 18 Queen’s Road Central, Hong Kong (email: ir@nwd.com.hk).
 
Communication With Shareholders
 
The Board and senior 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 and analysts conferences at least twice a year following the release of interim and full year results announcements at which the Executive Directors and senior management of the Company are available to answer questions 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, the Group participates in different international forums and overseas roadshows on a regular basis to elaborate the Group’s business development plans to global investors. We also show our key development projects in both Mainland China and Hong Kong to the media and investors via site visits and meetings, and establish timely and effective two-way communications with media and investors. The “Investor Relations” Section is set out on pages 54 and 55 of this annual report.