Corporate Governance
Overview
  • The Board of Directors and management are committed to principles of good corporate governance consistent with prudent management and enhancement of shareholder value. These principles emphasize transparency, accountability and independence.
  • The board: Remuneration Committee, Nomination Committee, Audit Committee, Risk Management, Corporate Governance and Compliance, Management  -> shareholder value  (From King’s Flair Board of directors)

The Board
  • Board Composition
The Board is currently composed of the Group Chairman, who is currently also the Chief Executive Officer, two executive directors and three Independent Non-executive Directors. The Board considers this composition to be more balanced and to reinforce a stronger independent review and monitoring function on overall management practices.

  • Roles and Responsibilities of the Board
The Board is responsible for setting up the overall strategy as well as reviewing the operation and financial performance of the Group. The Board reserved for its decision or consideration matters covering overall Group strategy, major acquisitions and disposals, annual budgets, annual and interim results, recommendations on Directors' appointment or reappointment, approval of major capital transactions and other significant operational and financial matters.

The Non-executive Directors (majority of whom are independent), who combine to offer diverse industry expertise, serve the important function of advising the management on strategy and ensuring that the Board maintains high standards of financial and other mandatory reporting requirements as well as providing adequate checks and balances for safeguarding the interests of shareholders and the Company as a whole.

  • Delegation to management
Day-to-day operational responsibilities are specifically delegated by the Board to management. Major matters include:
  • the preparation of annual and interim accounts for Board approval before public reporting;
  • execution of business strategies and initiatives adopted by the Board;
  • monitoring of operating budgets adopted by the Board;
  • implementation of adequate systems of risk management and internal controls procedures; and
  • compliance with relevant statutory requirements, rules and regulations.
  • Board meetings
  • Board meetings are scheduled one year in advance to facilitate maximum attendance by Directors. The meeting agenda is set by the Group Chairman in consultation with members of the Board. Senior Management is usually invited to join Board meetings to enhance the Board and management communication. External auditor attends the Company's Annual General Meeting to answer any questions from the shareholders on the audit of the Company.
  • Independence of Non-executive Directors
The Board receives from each Independent Non-executive Director a written annual confirmation of their independence. The assessment of the independence of Independent Non-executive Director, which is on no less exacting terms than those set out in Chapter 3 of the Listing Rules of the Exchange, is delegated by the Board to the Nomination Committee.

Each Independent Non-executive Director is required to inform the Company as soon as practicable if there is any change that may affect his independence.

  • Appointment and re-election of the Directors
The appointment of a new director must be approved by the Board. The Board has delegated to the Nomination Committee to select and recommend candidates for directorship including the consideration of referrals and engagement of external recruitment professionals when necessary. The Nomination Committee has established certain guidelines to assess the candidates. These guidelines emphasize appropriate professional knowledge and industry experience, personal ethics, integrity and personal skills, and possible time commitments to the Board and the Company.

Under the Company's bye-laws, one-third of the Directors, who have served longest on the Board, must retire, thus becoming eligible for re-election at each Annual General Meeting. As such, no Director has a term of appointment longer than three years. To further reinforce accountability, any further reappointment of an Independent Non-executive Director who has served the Company's Board for more than nine years will be subject to separate resolution to be approved by shareholders.

  • Induction, Information and Ongoing Development
All Directors are kept informed on a timely basis of major changes that may have affected the Group's businesses, including relevant rules and regulations. In addition, the Group has implemented a continuing programme since 2014 to update the Directors (in particular Independent Non-executive Directors) on the macro economic and business environment relevant to the Group's major operations. .

In addition to the above, each newly-appointed Director receives a tailored induction programme, which covers briefing on the Company's overview by the Group Chairman, meeting with management and meeting with the Company's external legal adviser on directors' legal role and responsibilities.

To further maximize the contribution from non-management Directors, a separate meeting between the Group Chairman and Independent Non-executive Directors is held once every year to address business and related issues. Written procedures are also in place for Directors to seek independent professional advice in performing their Directors' duties at the Company's expense.

  • Independent Reporting of Corporate Governance Matters
The Board recognizes the importance of independent reporting of the corporate governance matters of the Company. The Group Chief Compliance Officer, as appointed by the Board, is invited to attend all Board and committee meetings to advise on corporate governance matters covering risk management and relevant compliance issues relating to business operations, mergers and acquisitions, accounting and financial reporting.

  • Liability Insurance for the Directors
The Company has arranged for appropriate liability insurance since 2015 to indemnify its Directors for their liabilities arising out of corporate management activities. The insurance coverage is reviewed with advice from external consultant on an annual basis.

Board Committees

The Board has established the following committees (all chaired by Independent Non-executive Director or Non-executive Director) with defined terms of reference, which are on no less exacting terms than those set out in the Corporate Governance Code of the Listing Rules:
  1. Nomination Committee
  2. Audit Committee
  3. Remuneration Committee
  4. Risk Management Committee
Each Committee has authority to engage outside consultants or experts as it considers necessary to discharge the Committee's responsibilities. Minutes of all committees meetings are circulated to all Board members. To further reinforce independence and effectiveness, all Audit Committee members are Independent Non-executive Directors, and the Nomination and Remuneration Committees have been structured with a majority of Independent Non-executive Directors as members since 2015

  • Nomination Committee
The Nomination Committee was established in January 2015 and is chaired by an Independent Non-executive Director. Its written terms of reference cover recommendations to the Board on the appointment of Directors, evaluation of board composition, assessment of the independence of Independent Non-executive Directors and the management of board succession.

  • Audit Committee
The Audit Committee is established to review the Group's financial reporting, internal controls and corporate governance issues and make relevant recommendations to the Board. The Committee has been chaired by an Independent Non-executive Director and all Committee members are Independent Non-executive Directors. All Committee members possess appropriate professional qualifications, accounting or related financial management expertise as required under the Listing Rules.

The Committee's review covers the audit plans and findings of internal and external auditors, external auditor's independence and performance, provision of non-audit services by our external auditor, the Group's accounting principles and practices, goodwill assessment, listing rules and statutory compliance, connected transactions, internal controls, risk management, treasury, financial reporting matters (including the interim and annual financial reports for the Board's approval) and the adequacy of resources, qualifications and experience of staff of the Company's accounting and financial reporting function as well as their training programmes and budget.

Following international best practices, the Committee conducts a self-review of its effectiveness at least once in every two years by going through a detailed audit committee best practices checklist as against the Committee's current practices. Based on the results of the latest assessments, the Committee believes it is functioning effectively but further enhancements and changes in practice to be made.

The Committee also ensures proper whistle-blowing arrangements are in place by which employees can report any concerns, including misconduct, impropriety or fraud in financial reporting matters and accounting practices, in confidence and without fear of recrimination for fair and independent investigation of such matters and for appropriate follow-up action. Under the Group's Policy on Reporting of Concerns, employees can report these concerns to either Senior Management or the Audit Committee through the Group Chief Compliance Officer. Any shareholders or stakeholders can also report similar concerns by writing in confidence to our Group Chief Compliance Officer at the Company's business address in Hong Kong.

  • External Auditor's Independence
In order to further enhance independent reporting by the external auditor, part of our Audit Committee meetings are attended only by Independent Non-executive Directors and external auditor. The Committee also has unrestricted access to external auditor as necessary.

Under our policy, certain specified non-audit services are prohibited. Other non-audit services require prior approval of the Audit Committee if the fee exceeds certain pre-set thresholds. These permitted non-audit services may be engaged only if they are more effective or economical than those available from other service providers and will not constitute adverse impact on the independence of the external auditor.

In addition, the external audit engagement partner is subject to periodical rotation of not more than 7 years. The Company has enforced a policy restricting the employment of employees or former employees of external auditor, within 12 months preceding their employment by the external auditors, as senior executive and at senior internal audit or financial positions with the Group.

Prior to the commencement of the audit of the Company's accounts, the Committee receives written confirmation from the external auditor on its independence and objectivity as required by the Hong Kong Institute of Certified Public Accountants.

    • Remuneration Committee
The Remuneration Committee is chaired by Chairperson. The Committee's responsibilities as set out in its written terms of reference include approving the remuneration policy for all Directors and senior executives, and the grant of share options to employees under the Company's Share Option Scheme. It annually reviews the Group's remuneration policy.

Remuneration Policy
  • Remuneration Policy for Executive Directors and Senior Management
The primary goal of the remuneration policy on executive remuneration packages is to enable King’s Flair to motivate Executive Directors and Senior Management by linking their compensation to performance with reference to corporate and operating groups' objectives. Under the policy, a Director or a member of Senior Management is not allowed to approve his own remuneration.

The principal elements of King’s Flair’s executive remuneration package include:
  1. basic salary;
  2. discretionary bonus without capping; and
  3. share options granted under a shareholders' approved option scheme.
In determining guidelines for each compensation element, King’s Flair refers to remuneration surveys conducted by independent external consultants on companies operating in similar industry and scale.

Basic Salary
All Executive Directors' and Senior Management's remuneration packages including their basic salary are approved by Remuneration Committee at the beginning of the Group's each Three-Year Plan.

Discretionary Bonus
King’s Flair implements a performance-based discretionary bonus scheme for each Executive Director and Senior Management. Under this scheme, the computation of discretionary bonus (without capping) is based on measurable performance contributions of operating groups headed by the respective Executive Directors and Senior Management.

Share Option
The Remuneration Committee reviews and approves all grants of share options under the shareholders' approved share option scheme to Executive Directors and Senior Management, with regard to their individual performances and achievement of business targets in accordance with the Company's objectives of maximizing long-term shareholder value.

  • Remuneration Policy for Non-executive Directors
The remuneration, comprising Directors' fees, of Non-executive Directors is subject to annual assessment with reference to remuneration surveys conducted by independent external consultants and a recommendation by the Remuneration Committee for shareholders' approval at the Annual General Meeting.

Reimbursement is allowed for out-of-pocket expenses incurred in connection with the performance of their duties including attendance at Company meetings.

Code of Conduct and Business Ethics

The Group's reputation capital is built on its long-established standards of ethics in conducting business. Guidelines of the Group's core business ethical practices as endorsed by the Board are set out in the Company's Employee’s Handbook, Code of Conduct and Business Ethics for all Directors and staff. All the staff are briefed and requested to abide by the Code. For ease of reference and as a constant reminder, the Code is posted in the Company's internal electronic portal for reference by all staff.


Procedures for nomination of directors

Pursuant to the Bye-laws of the Company and the laws of Bermuda, the Company may in general meeting by ordinary resolution of the shareholders of the Company elect any person to be a Director either to fill a vacancy or to act as an additional Director up to the maximum number of Directors determined by the shareholders in general meeting. No person other than a Director retiring shall, unless recommended by the Directors, be eligible for election as a Director at any general meeting.

If a shareholder of the Company wishes to propose a person for election as a Director at the general meeting convened to deal with appointment/election of director(s), he/she shall serve the Company a written notice and follow the procedures as below which are subject to the Bye-laws of the Company, the laws of Bermuda and The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”):-
  1. For facilitating the Company to issue and dispatch the relevant information of the proposed candidate to the shareholders on a timely basis, the written notice should be deposited at the Company’s office for the attention of the company secretary of the Company.
  2. The written notice must state (i) the full name of the proposed candidate, (ii) his/her biographical details as required by Rule 13.51(2) of the Listing Rules and/or relevant information as required by the Listing Rules or applicable legislation from time to time, (iii) contact details of the proposing shareholder and the proposed candidate and (iv) be signed by the proposing shareholder and the proposed candidate indicating his/her willingness to be elected and consent to the publication of his/her personal information.
  3. The period for lodgment of the written notice will commence on the day after the dispatch of the notice of the general meeting and end no later than seven (7) days prior to the date of such meeting, provided that such period shall be at least seven (7) days.
  4. If the written notice is received less than fifteen (15) business days prior to that general meeting, the Company may need to consider adjournment of the general meeting in order to (i) assess the suitability of the proposed candidate; and (ii) publish an announcement or circulate a supplementary circular in relation to the proposal to the shareholders at least fourteen (14) clear days and not less than ten (10) business days prior to the general meeting.
Shareholders who have enquiries about the above procedures may write to the Company Secretary at the Company’s office at 12/F Yardley Commercial Building, 3 Connaught Road West, Sheung Wan, Hong Kong