Corporate Governance

The Board (the “Board”) of Directors (the “Directors”) is committed to maintaining a high standard of corporate governance within China Fishery Group Limited (the “Company” or “China Fishery”) & its subsidiaries (the “Group”) and confirms that the Company has adhered to the principles and guidelines as set out in the Code of Corporate Governance 2005 (the “Code”) unless otherwise specified.

Board Matters (As at the date of publication of the last Annual Report)
Principle 1: Board’s Conduct of its Affairs

The Board oversees the business affairs of the Company and assumes responsibility for the Group’s overall strategic plans, key operational initiatives, major funding and investment proposals, financial performance reviews and corporate governance practices.

The Board is supported by the Audit and Risk Management Committee (“ARMC”), the Remuneration Committee (“RC”), the Nominating Committee (“NC”), the Investment Committee (“IC”) and the Corporate Social Responsibility Committee (“CSRC”).

The Board conducts regular scheduled meetings at least four times a year and meets as and when warranted by particular circumstances between these scheduled meetings. The Company’s Articles of Association provide for meetings to be held via telephone and video conferencing.

The Company will formalise orientation programmes for newly-appointed Directors to ensure that they are familiar with the Group’s structure, its business and operations. Newly appointed Directors are expected to participate in the orientation programmes, which include meetings with the Chairman/Managing Director and the Finance Director to obtain in-depth knowledge and a better understanding of the Group’s business.

The Company has also set aside a training budget for its Directors to attend the relevant courses and seminars. The Directors are provided with updates on changes in the relevant laws and regulations, where appropriate, to enable them to make well-informed decisions and to discharge their duties responsibly.

Board approval is required for matters likely to have a material impact on the Group’s operations as well as matters other than in the ordinary course of business.

The Board’s principal functions include the review and approval of the following:

  • Strategic plans, major investments and divestments as well as funding requirements;
  • Budget and performance of the business;
  • Financial results announcements;
  • Interested persons transactions;
  • Dividend payments; and
  • Transactions of a material nature requiring announcement under the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”).

Details of Directors’ attendance at Board and Board committee meetings held in the financial year ended September 28, 2014 (“FY2014”) are summarised in the table below:

Board ARMC RC NC
Mr Ng Joo Kwee 2 - - -
Mr Sung Yu Ching 4 - - -
Mr Ng Joo Siang 6 - - -
Mr Chan Tak Hei 6 - - -
Mr Tse Man Bun 6 4 2 3
Mr Lim Soon Hock 6 4 2 3
Mr Tan Ngiap Joo 6 4 2 3
Mr Patrick Thomas Siewert
    (alternate: Ms Janine Feng Junyuan)
6 4 - -
Total held in FY2014 6 4 2 3

Board Matters – continued
Principle 1: Board’s Conduct of its Affairs – continued

IC
Mr Ng Joo Siang 4
Mr Patrick Thomas Siewert 4
Ms Janine Feng Junyuan (alternate to Mr Patrick Thomas Siewert) 1
Mr Tse Man Bun 4
Mr Tan Ngiap Joo (alternate to Mr Tse Man Bun) 4
Total held in FY2014 4

CSRC
Mr Tse Man Bun 2
Mr Tan Ngiap Joo (alternate to Mr Tse Man Bun) 2
Mr Ng Joo Siang 2
Lt-Gen (Ret) Ng Jui Ping (alternate to Mr Ng Joo Siang) 2
Mr Patrick Thomas Siewert 2
Ms Janine Feng Junyuan (alternate to Mr Patrick Thomas Siewert) 1
Ms Ng Puay Yee 1
Total held in FY2014 2

Principle 2: Board Composition

The Board comprises 8 Directors. The Board is of the view that its current size is appropriate, taking into account the nature and scope of the Group’s operations.

As at the date of this report, the Board composition is as follows:

Executive Directors:
Mr Ng Joo Kwee (Executive Chairman)
Mr Sung Yu Ching (Managing Director)
Mr Ng Joo Siang
Mr Chan Tak Hei

Independent Non-Executive Directors:
Mr Tse Man Bun (Lead Independent Director)
Mr Lim Soon Hock
Mr Tan Ngiap Joo

Non-Executive Director:
Mr Patrick Thomas Siewert (alternate: Ms Janine Feng Junyuan)

The NC, which reviews the independence of each Director on an annual basis, adopts the 2012 Code’s definition of what constitutes an independent director. The Independent Directors are Mr Tse Man Bun, Mr Lim Soon Hock and Mr Tan Ngiap Joo.

As a group, the Directors bring with them a broad range of expertise and experience in areas such as accounting, finance, business and management experience, industry knowledge, strategic planning, as well as customer-based experience and knowledge. The diversity of the Directors’ experience allows for the useful exchange of ideas and views. The profile of Board members is set out in the section entitled ‘Profile of Directors and Senior Management’ of this Annual Report.

The Non-Executive Directors constructively challenge Management and assist in the development of proposals on strategy. The Non- Executive Directors also review the performance of Management.

Board Matters – continued
Principle 3: Chairman and Managing Director

Mr Ng Joo Kwee is the Executive Chairman of the Company. Mr Ng is one of the founders of the Group and plays a key role in developing the business of the Group and provides the Group with strong leadership and vision. He is responsible for the workings of the Board and ensures the integrity and effectiveness of the governance process of the Board.

The Company’s Managing Director (“MD”) is Mr Sung Yu Ching, who is responsible for the day-to-day running of the Group.

Mr Ng Joo Siang is an Executive Director of the Company and a founder of Pacific Andes International Holdings Limited (“PAIH”) and Pacific Andes Resources Development Limited (“PARD”) (collectively, “Pacific Andes Group”), of which PAIH is listed on The Stock Exchange of Hong Kong Limited and PARD is listed on the SGX-ST. Mr Ng is responsible for the overall management of the Company, including implementing major business strategies and co-ordinating the business and operations of both Pacific Andes Group and China Fishery Group and ensuring the quality, quantity and timeliness of information flow between the Board and Management.

There is a clear division of responsibilities between the Chairman and the MD. This ensures a balance of power and authority at the top such that there is no concentration of power in any single individual. The roles of the Chairman and the MD are separate in line with good corporate governance practices. This also ensures increased accountability and provides the Board with greater capacity for independent decision-making.

All major decisions made by the Executive Chairman and the MD are endorsed by the Board. The NC and RC reviews their performance and remuneration packages periodically respectively. The NC and the RC comprise Independent Non-Executive Directors. As such, the Board believes that there are adequate safeguards in place against an unbalanced concentration of power and authority in any single individual.

Lead Independent Director, Mr Tse Man Bun, is available to shareholders should they have concerns for which contact through the Chairman, the MD or the Finance Director is inappropriate.

Principle 4: Board Membership

The Directors who held office in FY2014 and at the date of this report are disclosed on page 2 (Corporate Information) and pages 13 to 15 (Report of the Directors) of this Annual Report respectively. Profiles of Directors as at the date of this report are disclosed on pages 11 and 12 (Profile of Directors and Senior Management) of this Annual Report.

Principle 5: Board Performance
Nominating Committee

The NC, regulated by written terms of reference, comprises 3 members, all of whom are Independent Non-Executive Directors, as follows:

Mr Tse Man Bun (Chairman)
Mr Lim Soon Hock
Mr Tan Ngiap Joo

Mr Tse Man Bun, Chairman of the NC, is an Independent Non-Executive Director and the Lead Independent Director who is not associated with any substantial shareholder of the Company.

The terms of reference for the NC had been amended to be in line with the recommendations of the 2012 Code. The principal functions of the NC stipulated in its terms of reference are summarised as follows:

  1. Reviews and makes recommendations to the Board on all Board appointments;
  2. Reviews the Board structure, size and composition and makes recommendations to the Board with regards to any adjustment that are deemed necessary;
  3. Reviews the board succession plans for Directors, in particular, the Chairman and the MD;
  4. Determines the independence of each Director;
  5. Makes recommendations to the Board for the continuation of services by any Director who has reached the age of 70 (seventy) or otherwise;
  6. Assesses the effectiveness of the Board and its Board committees, the performance and contribution of each Director;
  7. Determines whether a Director is able to and has been adequately carrying out his duties as a Director of the Company, particularly when the Director has multiple Board representations;
  8. Reviews and recommends newly-appointed Directors (including Alternate Directors, if applicable) and Directors retiring by rotation for re-election at each annual general meeting (“AGM”); and
  9. Reviews training and professional development programmes for the Board.

The NC had reviewed the independence of each Director for the FY2014 in accordance with the 2012 Code’s definition of independence and is satisfied that at least one-third of the Board comprises Independent Non-Executive Directors.

The NC had adopted a formal process of evaluating the performance of the Board and the Board Committees as a whole. This process involves the completion of a questionnaire by members. A summary of findings is prepared based on the completed questionnaires and is reviewed and deliberated by the NC and respective Board Committees. The Chairman of the NC confers with the Chairman of the Board on the findings and appropriate follow-up actions are taken as necessary.

A Board performance evaluation was carried out to assess and evaluate amongst other things, the Board’s composition, size and expertise, timeliness of Board information, accountability and processes.

Similar performance evaluations had also been conducted for various Board Committees, namely the ARMC, RC, NC, IC and CSRC.

Based on the attendance of the Directors and their contributions at meetings of the Board and Board Committees, and their time commitment to the affairs of the Company, the NC believes that it would not be necessary to put a maximum limit on the number of listed company board representations and other principal commitments of each Director. However, the NC would continue to review from time to time, their Board representations and other principal commitments to ensure that Directors continue to meet the demands of the Group and are able to discharge their duties adequately.

The NC also has in place a process for the selection and appointment of Directors. The process provides for the identification of prospective candidates, a review of their skills, knowledge and experience and an assessment of the candidates’ suitability. Candidates found to be suitable to be appointed are recommended for consideration by the Board.

In accordance with the Company’s Articles of Association, each Director retires at least once every three years by rotation and all newly appointed Directors retire at the AGM following their appointments. The retiring Directors are eligible to offer themselves for re-election.

The NC had recommended the re-appointment of the following Directors who will be retiring at the forthcoming AGM, following a review of their performance and contributions:

(1) Mr Sung Yu Ching
(2) Mr Tan Ngiap Joo
(3) Mr Lim Soon Hock

The Board had accepted the NC’s recommendation and accordingly, the above-named Directors will be offering themselves for re-election.

Principle 6: Access to Information

Directors have independent access to the Group’s senior management and Company Secretaries. Directors are provided with complete and adequate information prior to Board meetings and on an ongoing basis.

Company Secretaries provide advice, secretarial support and assistance to the Board and ensure adherence to Board procedures and relevant rules and regulations applicable to the Company. The Company Secretary attends all Board and Board committee meetings.

Directors may seek independent professional advice to fulfill their duties and such cost will be borne by the Company.

Remuneration Matters
Principle 7: Procedures for Developing Remuneration Policies
Principle 8: Level and Mix of Remuneration
Principle 9: Disclosure on Remuneration

Remuneration Committee

The RC, regulated by written terms of reference, comprises 3 members, all of whom are Independent Non-Executive Directors, as follows:

Mr Tan Ngiap Joo (Chairman)
Mr Lim Soon Hock
Mr Tse Man Bun

The terms of reference for the RC had been amended to be in line with the recommendations of the 2012 Code. The RC reviews:

(a) the remuneration of the Executive Directors and senior executives of the Group;
(b) the fees for Independent Non-Executive Directors whom are subject to shareholders’ approval at the AGM;
(c) the service contracts and terms of employment of the Executive Directors; and
(d) the awards to be granted under the CFGL Share Awards Scheme, and makes the necessary recommendation to the Board.

For administrative efficiency, the RC has delegated the review of the remuneration of senior executives of the Group to Mr Ng Joo Siang, an Executive Director, but retains its oversight responsibility.

The RC also has access to external professional advice on remuneration matters, if required.

The RC had recommended to the Board an amount of S$150,000 as Directors’ fees for the year ending September 28, 2015, to be paid monthly in arrears. The Board will table this recommendation at the forthcoming AGM for shareholders’ approval.

Directors’ fees payable to the Independent Non-Executive Directors are set in accordance with a remuneration framework and in recognition of their contribution, effort, time spent and responsibilities of the Independent Non-Executive Directors.

The Executive Directors and Mr Patrick Thomas Siewert, a Non-Executive Director, do not receive Directors’ fees.

The remuneration for the Executive Directors and senior executives comprises a basic salary plus other fixed allowances and an annual performance bonus tied to individual performance as well as the Group’s performance.

Directors’ Remuneration

The remuneration of the Directors and the MD are disclosed in bands of S$250,000. Although the disclosure is not in compliance with the recommendation of the 2012 Code, the Board is of the view that given the confidentiality and commercial sensitivity attached to remuneration matters, disclosure in bands of S$250,000 will be provided.

The remuneration paid for FY2014 is set out below:

Name of Director Salary (% ) Bonus (% ) Director’s Fee (% ) Other Benefits (% ) Total (% )
S$750,000 to S$1,000,000
Mr Chan Tak Hei 54 19 - 25 100
S$500,000 to below S$750,000
Nil          
S$250,000 to below S$500,000
Mr Ng Joo Siang 48 16 - 36 100
Mr Ng Joo Kwee 58 19 - 23 100
Below S$250,000
Mr Sung Yu Ching 89 11 - - 100
Mr Lim Soon Hock - - 100 - 100
Mr Tse Man Bun - - 100 - 100
Mr Tan Ngiap Joo - - 100 - 100
Mr Patrick Thomas Siewert - - - - -

Employees’ Remuneration
The annual remuneration paid to each of the top five executives (who are not Directors) is set out below:

Name of Executive Salary
(%)
Bonus
(%)
Others Benefits
(%)
Total
(%)
S$500,000 to below S$750,000
Nil        
S$250,000 to below S$500,000
Mr José Miguel Tirado Melgar 100 - - 100
Mr Franciso Javier Paniagua Jara 100 - - 100
Below S$250,000
Mr Eduardo Jauregui 100 - - 100
Mr Vidal Senmache Bernardo Suni 100 - - 100
Mr Mundaca Calderon De La Barca Javier 100 - - 100

The Executive Directors’ and key senior management’s remuneration packages are based on service contracts and their remuneration which are determined by having regard to the performance of the Group as well as individuals and market trends. New service agreements or renewals, if any, will be subject to the RC’s review to ensure that the terms are fair and for a reasonable period. The existing service agreement provides for termination by the Executive Directors or the Company with not less than 6 months’ notice in writing.

With the exception of Mr Ng Joo Siang and Mr Ng Joo Kwee, there were no employees of the Company who are immediate family members of a Director or the Chairman or the MD and whose remuneration exceeded S$50,000 during the financial year under review. Mr Ng Joo Siang, Executive Director, is the brother of Mr Ng Joo Kwee, Executive Chairman.

The Company has in place a Share Awards Scheme (the “Scheme”) administrated by the RC.

The Executive Directors, Non-Executive Directors and employees of the Group, except for those who are controlling shareholders or their associates, are eligible to participate in the Scheme. No grants of awards have been made under the Scheme for the financial year under review.

Details of the Scheme are disclosed under Report of the Directors on page 13 of this Annual Report.

Accountability and Audit
Principle 10: Accountability

The Board provides shareholders with a detailed and balanced explanation and an analysis of the Company’s performance, financial position and prospects on a quarterly basis in the Group’s quarterly and full-year results announcements.

Management provides the Board with financial statements of the Group’s performance, position and prospects on a regular basis.

Principle 12: Audit and Risk Management Committee

The ARMC, regulated by written terms of reference, comprises 3 Independent Non-Executive Directors and 1 Non-Executive Director, as follows;

Mr Lim Soon Hock (Chairman)
Mr Tse Man Bun
Mr Tan Ngiap Joo
Mr Patrick Thomas Siewert

The Board is of the view that the ARMC members have adequate accounting or related financial management expertise and experience to discharge the ARMC’s functions.

The ARMC meets at least four times a year and as and when deemed appropriate, to carry out its functions.

The ARMC has full access to and receives the co-operation of Management. The ARMC also has full discretion to invite any Director or executive officer to attend its meetings and has been given adequate resources to enable it to discharge its functions.

The terms of reference for the ARMC had been amended to be in line with the recommendations of the 2012 Code. The ARMC performs the following functions:

  • Reviews the annual and quarterly financial statements of the Company and the Group before submission to the Board for approval;
  • Reviews with the external and internal auditors, their audit plans, evaluation of the system of internal controls, audit reports and management letter and management’s response;
  • Reviews and discusses with the external auditors, any suspected fraud or irregularity, or suspected infringement of any law, rules or regulations, which has or is likely to have a material impact on the Company’s operating results or financial position, and Management’s response;
  • Reviews the adequacy and effectiveness of the Company’s risk management and material internal controls, including financial, operational and compliance controls, and risk management via reviews carried out by the internal auditors;
  • Reviews the cooperation given by Management to the external and internal auditors;
  • Reviews and nominates the appointment or re-appointment of the external auditors;
  • Reviews the scope and findings of the internal audit procedures including the effectiveness of the Company’s internal audit function;
  • Reviews interested person transactions, if any;
  • Reviews the independence of the external auditors annually; and
  • Reviews hedging policies of the Company for bunker costs and foreign exchange, if any.

The Company has adopted a whistle blowing policy. The scope of this policy has been extended to external parties as recommended by the 2012 Code. Under this policy, the ARMC reviews arrangement by which staff and external parties may, in confidence, report possible improprieties in a responsible and effective manner. The whistle blowing policy is also available on the Company’s website at www.chinafisherygroup.com to facilitate participation by external parties. The objective for such arrangements is to ensure independent investigation of matters raised and allow appropriate actions to be taken.

The ARMC had reviewed the non-audit services provided by the external auditors, Deloitte & Touche LLP, and is of the opinion that the provision of such services does not affect their independence.

The ARMC meets with the external and internal auditors without the presence of Management on a quarterly basis. The Group has an in- house internal audit function.

The ARMC had recommended the re-appointment of Deloitte & Touche LLP as the Company’s auditors at the forthcoming AGM.

The Company has complied with Rules 712 and 715 of the Listing Manual in relation to the appointment of Deloitte & Touche LLP as the external auditors of the Company and its subsidiaries.

The Board has received assurance from the CEO and CFO (a) that the financial records have been properly maintained and the financial statements give a true and fair view of the Company’s operations and finances and (b) regarding the effectiveness of the Company’s risk management and internal control systems.

Accountability and Audit
Principle 11: Internal Controls
Principle 13: Internal Audit (“IA”)

The Board ensures that Management maintains a sound system of internal controls to safeguard shareholders’ investments and the Company’s assets. The ARMC reviews the adequacy of financial, operational, compliance and information technology controls and risk management policies.

The ARMC is fully aware of the need to put in place a system of internal controls within the Group to safeguard shareholders’ interest and the Group’s assets, and to manage risks. The system is intended to provide reasonable but not absolute assurance against material misstatements or loss, and to safeguard assets and ensure maintenance of proper accounting records, reliability of financial information, compliance with appropriate legislation, regulation and best practice, and the identification and management of business risks.

Management regularly reviews and improves its business and operational activities to identify areas of significant business risks and takes appropriate measures to control and mitigate these risks. Management reviews all significant control policies and procedures and highlights all significant matters to the ARMC and the Board. The Group’s financial risk management objectives and policies are outlined in the financial statements. Management is aware that risk management alone does not guarantee that business undertakings will not fail. However, by identifying and managing risks that may arise, Management can make more informed decisions and benefit from a better balance between risks and rewards. This helps to protect and also create shareholders’ value.

The Company has an IA function which reports directly to the ARMC. The internal auditor has adopted the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

The ARMC, on an annual basis, assesses the adequacy and effectiveness of the IA function by examining the scope of the internal audit work, the independence of areas reviewed and the internal audit reports on the state of the Group’s internal controls.

The ARMC is satisfied that the IA function is adequately resourced and has the appropriate standing within the Company to undertake its activities independently and objectively.

The Internal Auditors perform detailed work to assist the ARMC in the evaluation of the Group’s financial, operational, compliance and information technology controls based on an internal audit plan approved by the ARMC. Any material non-compliance or weakness noted in internal controls, including recommendations for improvements, are reported to the ARMC. The ARMC also reviews the effectiveness of actions taken by Management in response to recommendations made by the Internal Auditors.

In addition to the work performed by the Internal Auditors, the External Auditors also perform tests of certain controls relevant to the preparation of the Group’s financial statements. The External Auditors report any significant deficiencies of such internal controls to the ARMC.

The Group had implemented an Enterprise Risk Management framework, which enables the identification, assessment, management and monitoring of key risks and controls of the Group’s business.

Based on the internal controls established and maintained by the Group, work performed by the Internal and External auditors, and reviews performed by Management, various Board Committees and the Board; the Board with the concurrence of the ARMC, is of the opinion that the internal controls and risk management systems in place are adequate in addressing the Group’s financial, operational, compliance and information technology risks in its current business environment.

Shareholder Rights and Responsibilities
Principle 14: Shareholders Rights
Principle 15: Communication with Shareholder
Principle 16: Conduct of Shareholder Meetings

In line with continuous disclosure obligations, the Company is committed to regular and proactive communication with its shareholders. It is the Board’s policy that shareholders are informed of all major developments within the Group.

Information is communicated to shareholders on a timely basis through:

  1. Announcements and press releases made via SGXNET on major developments of the Group;
  2. Financial statements containing a summary of the financial information and affairs of the Group for the respective quarters and full- year which are released via SGXNET;
  3. Annual reports sent to all shareholders; and
  4. Notices of annual general meetings and extraordinary general meetings together with the respective explanatory notes.

At the AGM, shareholders are given opportunities to communicate their views on matters pertaining to the Group and to participate in the meeting. Issues seeking approval of shareholders, if any, are tabled as separate resolutions.

The Chairpersons of all the Board Committees as well as the external auditors will be available at the forthcoming AGM to address any queries raised by shareholders.

Dividends
The Company did not propose dividends for FY2014 as to enable the Company to conserve cash for redemption of the Copeinca Senior Notes.

Investment Committee

The IC’s primary function is to evaluate all investments in excess of US$20 million proposed to the Group.

The IC, regulated by written terms of reference, comprises 3 members, a majority of whom are Non-Executive Directors, as follows:

Mr Ng Joo Siang (Chairman)
Mr Patrick Thomas Siewert
Ms Janine Feng Junyuan (alternate to Mr Patrick Thomas Siewert)
Mr Tse Man Bun
Mr Tan Ngiap Joo (alternate to Mr Tse Man Bun)

Corporate Social Responsibility Committee

The CSRC, regulated by written terms of reference, comprises the following members:

Mr Tse Man Bun (Chairman) Mr Ng Joo Siang
Mr Patrick Thomas Siewert
Ms Ng Puay Yee – executive director of PAIH
Mr Tan Ngiap Joo (alternate to Mr Tse Man Bun)
Lt-Gen (Ret) Ng Jui Ping (alternate to Mr Ng Joo Siang)
Ms Janine Feng Junyuan (alternate to Mr Patrick Thomas Siewert)

Note: The Company is an indirect non-wholly owned subsidiary of PAIH.

The CSRC’s key objective is to monitor and evaluate corporate social responsibility matters (including but without limitation to fishery sustainability, environmental compliance and food safety) arising from the business and operations of the Group.

The CSRC met two times in FY2014 to carry out its function. A report on corporate social responsibility is included in this Annual Report on page 28.

Securities Transactions

The Company has adopted an internal code governing dealings in securities by Directors and key officers of the Group. This code provides guidance on dealings in the Company’s securities. Directors and key officers of the Group are required to comply with this code.

Directors and key officers have been informed not to deal in the Company’s securities at all times whilst in possession of unpublished price sensitive information and during the periods commencing at least one month and 14 days prior to the announcement of the Company’s results for the full-year and for the three quarters respectively.

Directors and key officers are also encouraged not to deal in the Company’s securities on short-term considerations.

The Company has complied with its Best Practices Guide on Securities Transactions.

Interested Person Transactions

The Company has adopted procedures for the identification, approval and monitoring of interested person transactions. All interested person transactions are subject to review by the ARMC.

There were no interested person transactions in FY2014 undertaken pursuant to the shareholders’ general mandate under Rule 920 of the Listing Manual of the SGX-ST obtained at the AGM.

Material Contracts

Except for the service agreements entered into with Mr Ng Joo Kwee, Mr Sung Yu Ching, Mr Ng Joo Siang and Mr Chan Tak Hei, no material contract involving the interests of any Director or controlling shareholders of the Company has been entered into by the Company or any of its subsidiaries in FY2014.

Disclaimer | Copyright © 2015 China Fishery Group Limited. All rights reserved.

Valid HTMLValid CSS