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ESG Report

 

 

 

 

 

 

 
The Company strives to maintain a high standard of corporate governance practices and procedures to safeguard the interests of its shareholders. The corporate governance level is constantly improved and enhanced by establishing an internal control system and enhancing accountability and transparency.

CORPORATE GOVERNANCE PRACTICE

The Directors have adopted various policies to ensure compliance with the code provisions of the Corporate Governance Code (the “Code”) under Appendix 14 of the Listing Rules. The Directors consider that the Company has complied with all applicable Code during the year except with the deviation as disclosed in this report. In the future, the Company will also adopt more Recommended Best Practices according to actual needs, so as to further enhance the level of corporate governance.

DIRECTORS’ AND EMPLOYEES’ SECURITIES TRANSACTIONS

The Company has adopted a model code of conduct no less than that required by the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as its code of conduct of directors conducting securities transactions. All Directors have confirmed, following specific enquiry of all Directors by the Company that they have complied with the required standard set out in the Model Code in relation to such transactions during the year.

The Company has also formulated written guidelines regarding the securities transactions by the employees of the Company who may be exposed to inside information. The requirements of the written guidelines are no less exacting than those set out in the Model Code. The Company recorded no non-compliance events during the year.

THE BOARD OF DIRECTORS

The Board is responsible for formulating of the overall development strategy, operation and financial reporting of the Company, internal control and risk management, major acquisitions, substantial connected transactions, annual and interim results, proposed interim and final dividends, proposed appointment or re-election of directors, appointment of auditor, share issue and repurchase and other operation and financial matters relating to the Company.

Composition of the Board

As at 31st December 2015, the Board consists of seven members, namely three executive directors (Mr. Xiong Gebing, Mr. Zeng He and Mr. Cheng Jie), one non-executive director (Mr. Zhang Lei) and three independent non-executive directors (Mr. Chan Kay-cheung, Ms. Yau Lai Man and Mr. Chow Bing Sing). The Company forms its Board based on the characteristics and uniqueness of its operations to ensure that each Director possesses the required industrial experience and managerial expertise. The personal biographies of the Directors are set out in pages 45 to 47 of the annual report. The Directors clearly understand that they should fulfill their duties diligently in the best interest of the Company and its shareholders.

The Company has signed appointment letter with all Directors for a fixed term of three years, unless terminated by either party giving to the other not less than 1 month’s prior notice in writing, but the Directors are subject to retirement by rotation and re-election according to the Articles of Association of the Company.

The Board delegated its authorities and obligations in daily operations, business strategies and the Group’s business management to the executive Directors and senior management, and delegated certain specific responsibilities to the committees of the Board.

Relationship between Board Members

To the best knowledge of the Company, there is no financial, business, family or other material/relevant relationship between the Board members.

Responsibilities of the Chairman and Managing Director

It is the consistent policy of the Company to appoint different individuals to act as chairman and managing director so as to ensure the accountability and independence of the policy making process of the Company. The chairman of the Group is responsible for leading the Board. The chairman should ensure that the Board works effectively and discharges its responsibilities, building the management of the Company, organising to formulate the development strategies and etc. The managing director is responsible for managing the daily business operations of the Company, implementing the development strategies formulated by the Board, expediting development of high-end integrated logistics business, driving the development of the passenger transportation business and strengthening internal management.

According to the provisions of the Code A.2.1, the roles of chairman and chief executive should be separate and should not be performed by the same individual. The roles of chairman and managing director were acted by Mr. Liu Weiqing and Mr. Xiong Gebing respectively. After the resignation of Mr. Liu Weiqing on 3rd May 2015, as more time is needed to arrange the appointment of a suitable candidate as the chairman of the Board, the Board has unanimous resolved to appoint Mr. Xiong Gebing, the managing director of the Company, as the chairman of the Board (and the chairman of the Executive Committee and the Nomination Committee) temporarily with effect from 3rd May 2015. Announcement in respect of the related appointment of the chairman of the Board will be made by the Company when such appointment is confirmed.

According to the provisions of the Code, the chairman of the Group has held a meeting with the non-executive Directors without other executive Directors present.

Independent Non-executive Directors

In order to ensure the independence of the policy making process of the Board and protect the interest of its shareholders, the Company appoints three qualified independent non-executive Directors, as such, the Company complies with Rule 3.10A of the Listing Rules of having at least one-third of the Board being represented by independent non-executive Directors. They are professionals experienced in banking, finance and logistics services. One of the independent non-executive Directors has the appropriate professional qualifications and accounting and related financial management expertise required under Rule 3.10(2). The Company undertakes to give them adequate access to the information of the Company and encourage them to discuss and provide independent opinions on matters of the Company.

According to the provisions of the Code, a service term of over nine years is one of the key factors in determining the independence of an independent non-executive director. Mr. Chan Kay-Cheung and Ms. Yau Lai Man have served as such independent non-executive Directors for over nine years. During their years of service with the Company, Mr. Chan and Ms. Yau have contributed by providing an independent viewpoint and advice to the Company in relation to its businesses, operations, future development and strategy. The Board considers that Mr. Chan and Ms. Yau have the character, integrity, ability and experience to continue to fulfill his/her role as required effectively. The Company believes that Mr. Chan and Ms. Yau can independently express opinions on matters of the Company and there is no evidence that his/her over nine years of service with the Company would have any impact on his/her independence and therefore his/her independence is confirmed.

According to the provisions of the Code A.4.3, if an independent non-executive director serves more than nine years, his/her further appointment should be subject to a separate resolution to be approved by shareholders. Mr. Chan and Ms. Yau retired on rotation at the annual general meeting (the “AGM”) held on 21st May 2015, and being eligible, offered them for re-election at the AGM. Mr. Chan and Ms. Yau had already been re-appointed by separate resolutions of the shareholders at the said meeting.

The Company has received from each of the current independent non-executive Directors an annual confirmation of his/her independence in accordance with Rule 3.13 of the Listing Rules. The Company considers that all the independent non-executive Directors have maintained their respective independence in accordance with the Listing Rules.

Board Diversity Policy

Pursuant to the Code, the Board has adopted the Board Diversity Policy since 15th August 2013 which is posted on the Company’s website. To attain diversity of the Board, it is the Company’s policy to consider an array of factors including age, skills, knowledge, experience, cultural and educational background when appointing and re-appointing a member of the Board. All board appointments are based on merits, in the content of the talents, skills and experience the board as a whole requires to be effective.

Directors’ Responsibilities for Financial Statements

During each financial period, the Directors are responsible for the preparation of the financial statements that give a true and fair view of the state of affairs of the Group and of its results and cash flows during the relevant period. In preparing the financial statements for the year, the Directors selected and applied consistently appropriate accounting policies, made careful and reasonable judgment and estimates, and prepared the financial statements on a going concern basis. The Directors are responsible for the filing of appropriate accounting records that reasonably and accurately disclose the financial position of the Company at any time. The Board is not aware so far of any significant uncertain events or circumstances which would affect the business of the Company or its ability to continue its operation. The responsibilities of the Company’s external auditor are set out in the Independent Auditor’s Report on pages 61 to 62 of the annual report.

Board Meeting Procedures

The Board held regular meetings during the year. The company secretary assists the chairman in establishing the meeting agenda, and each Director/committee member may request inclusion of items in the agenda. The time and agenda of the Board meeting will be available to the Directors at least 14 days in advance and related documents will be available to the Directors at least 7 days in advance to enable each Director to fully understand the matters to be discussed and make an informed opinion. Draft and final versions of the minutes of Board meetings and Board committee meetings prepared in sufficient details by the secretary of the meetings, were circulated to the Directors for their comment and record respectively. Originals of such minutes, being kept by the company secretary, are open for inspection at any reasonable time on reasonable notice by any Director. Each Director has the right to seek independent professional advice in furtherance of his/her duties at the expense of the Company. No Director has requested to seek professional advice as mentioned above during the year.

If a Director has a conflict of interest in a matter to be considered at the meetings of the Board and the committee which the Board has determined to be material, the matter will not be transacted by written resolutions. Such Director may express his/her recommendations but shall not be counted in the quorum and shall abstain from voting on the relevant resolution.

All Directors have unrestricted access to the company secretary who is responsible for ensuring that the Board/committee procedures are complied with, and for advising the Board/committee(s) on compliance matters.

Attendance at Meetings and Time Commitment of Directors

During 2015, the attendance of the Board members at general meetings, the meetings of the Board and its respective committees was as follows:

  Attendance in person/number of meetings held
General Meeting Board Executive Committee Audit Committee Remuneration Committee Nomination Committee
Mr. Liu Weiqing (Chairman of the board, resigned on 3rd May 2015) 0/0 1/1 4/4 N/A N/A 1/1
Mr. Xiong Gebing (Chairman of the board, Managing director) 3/3 4/4 12/12 N/A 2/2 N/A
Mr. Zeng He (Executive director) 2/3 4/4 12/12 N/A N/A N/A
Mr. Cheng Jie (Executive director) 3/3 3/4 12/12 N/A N/A N/A
Mr. Hu Jiahong (Non-executive director, resigned on 9th August 2015) 0/1 1/1 N/A N/A N/A N/A
Mr. Zhang Lei (Non-executive director) 2/3 4/4 N/A N/A N/A N/A
Mr. Chan Kay-cheung (Independent non-executive director) 3/3 4/4 N/A 2/2 2/2 1/1
Ms. Yau Lai Man (Independent non-executive director) 3/3 3/4 N/A 2/2 1/2 1/1
Mr. Chow Bing Sing (Independent non-executive director) 3/3 4/4 N/A 2/2 2/2 1/1

Upon reviewing (i) the annual confirmation of the time commitment given by each director; (ii) the directorships and major commitments of each Director; and (iii) the attendance rate of each Director on Board and their respective Board committee meetings, the Board is satisfied that all Directors have spent sufficient time in performing their responsibilities during the year.

Sub-committees of the Board

In order to assist the Directors to perform their responsibilities, the Board has set up an executive committee, an audit committee, a remuneration committee and a nomination committee, the chairman of all the committees are appointed by the Board, in which the audit committee and the remuneration committee are both chaired by an independent non-executive Director with written terms of reference which were discussed and approved by the Board. The related terms of reference of each committee has been published on the websites of the Company and the Stock Exchange. The duties of the four committees are as follows:

Executive Committee

The Executive Committee was established in 2009 to approve and enter into transactions on behalf of the Board in respect of each investment project within an authorised limit or other day-to-day business operations. The committee consists of the chairman or/and executive Directors.

The Executive Committee comprises:

Mr. Xiong Gebing (Chairman of the committee, appointed on 3rd May 2015)
Mr. Zeng He
Mr. Cheng Jie
Mr. Liu Weiqing (resigned on 3rd May 2015)

Audit Committee

The Audit Committee was established in 2001 to review the Company’s financial reporting, internal control, risk management, appointment of auditor and corporate governance issues and make recommendations to the Board. The Audit Committee consists entirely of independent non-executive Directors, who are experienced in finance, internal audit, banking and logistics, and are therefore capable of providing expert opinions on the steady financial operations of the Company.

The Audit Committee comprises:

Mr. Chan Kay-cheung (Chairman of the committee)
Ms. Yau Lai Man
Mr. Chow Bing Sing

The Audit Committee held two meetings in 2015 with an average attendance rate of 100% to review the following matters with the Company’s senior management and independent auditor:

  • Accounting principles adopted by the Company for preparing financial statements;
  • Draft annual report, interim report and financial statements of the Company;
  • Scope of audit work of external auditor;
  • Independent audit results of the Company’s financial statements;
  • Internal recommendations issued by external auditor to the management and management’s response;
  • Appointment of external auditor for providing non-audit services to the Company;
  • Audit fee proposal for 2015;
  • Internal audit function (including its effectiveness) of the Company including internal audit policy, internal audit plan and internal audit reports, covering financial monitoring, internal control and risk management;
  • Corporate governance of the Company; and
  • Connected transactions of the Company.

To further enhance the independence of the external independent auditors, some parts of the above meetings were only attended by independent non-executive Directors and the independent auditor.

The Board has delegated the corporate governance functions since 2009, their terms of reference are according to the provision of the Code D.3.1, to the Audit Committee as it considered members of the Audit Committee to be better positioned to provide an objective and independent guidance on governance-related matters.

The Audit Committee has reviewed the Company’s compliance with the provisions of the Code for the year and disclosure in this Corporate Governance Report.

During the year, the Board unanimously agreed to, with effect from 1st January 2016, revise the terms of reference of the Audit Committee on 30th December 2015 to delegate clearly the function of reviewing the risk management system of the Company (including its effectiveness) by the Audit Committee. Reference to the functions of the Audit Committee is available under the terms of reference of Audit Committee that have been published on the websites of the Company and the Stock Exchange.

Remuneration Committee

The Remuneration Committee was established in 2005 and is chaired by an independent non-executive Director. The Remuneration Committee met twice in 2015 with an average attendance rate of 87.5%. Currently, the Remuneration Committee comprises three independent non-executive Directors and one executive Director.

During the year, the Remuneration Committee reviewed the remuneration packages of the Directors and made its recommendations to the Board. The remuneration packages were approved by the Board and effective from 1st January 2015.

The Remuneration Committee comprises:

Mr. Chan Kay-cheung (Chairman of the committee)
Ms. Yau Lai Man
Mr. Chow Bing Sing
Mr. Xiong Gebing (Executive Director)

The functions of the Remuneration Committee can be referred to the terms of reference of Remuneration Committee that have been published on the websites of the Company and the Stock Exchange.

Remuneration of Executive Directors:

The remuneration of the executive Directors of the Company mainly includes basic salary, bonus and directors’ fee, which were determined by the Board by reference to various factors (including market conditions) upon the recommendations of the Remuneration Committee to the Board. The Company considers various factors in determining the remuneration such as market conditions, comparable companies and time of the executive Directors spent on the affairs of the Company. The executive Directors have not received any director's remuneration currently.

Remuneration of Non-executive Director:

Currently, the non-executive Director has not received any director’s remuneration.

Remuneration of Independent Non-executive Directors:

The Company pays emoluments to independent non-executive Directors in form of directors’ fee. The Remuneration Committee will present a proposal to the Board, and the Board will make decisions based on market conditions.

Nomination Committee

The committee was established in 2011 and it is mainly responsible for making recommendations to the board on the appointment of Directors and senior management. The Nomination Committee held one meeting in 2015 with attendance rate of 100%. Currently, the committee comprises four Directors, of which three are independent non-executive Directors.

The Nomination Committee comprises:

Mr. Xiong Gebing (Chairman of the committee and executive Director, appointed on 3rd May 2015)
Mr. Chan Kay-cheung
Ms. Yau Lai Man
Mr. Chow Bing Sing
Mr. Liu Weiqing (Non-executive Director, resigned on 3rd May 2015)

Reference to the functions of the Nomination Committee is available under the terms of reference of Nomination Committee that have been published on the websites of the Company and the Stock Exchange.

During the year, the Nomination Committee has reviewed the structure, size and composition of the Board and believed that the composition of the Board is diversified (also as disclosed in “Composition of the Board” above); and recommended the appointment of new directors to the Board when needed.

The Nomination Committee has considered the Board Diversity Policy when nominating the Directors (see the “Board Diversity Policy” above).

According to the Articles of Association, all Directors are subject to retirement by rotation and re-election at annual general meetings of the Company. New directors appointed by the Board during the year are required to retire and offer themselves for re-election at the first annual general meeting immediately following their appointments. Further, at each annual general meeting, one-third (if not a multiple of three, then the number nearest to but not more than one-third) of Director shall retire from office by rotation provided that every Director shall be subject to retirement by rotation at least once every three years.

In accordance with Article 88 of the Company’s Articles of Association, Mr. Xiong Gebing and Mr. Zeng He will retire at the forthcoming annual general meeting of the Company and, being eligible, offer themselves for re-election. The Nomination Committee recommended to the Board that Mr. Xiong Gebing and Mr. Zeng He be nominated for re-election at the forthcoming annual general meeting of the Company.

Training for Directors and Company Secretary

All Directors have been given relevant guideline materials regarding the duties and responsibilities of being a Director, the relevant laws and regulations applicable to the Directors, duty of disclosure of interest in shares and business of the Group and such induction materials will also be provided to newly appointed Directors shortly upon their appointment as Directors. All Directors have also been updated on the latest development regarding the Listing Rules and other applicable regulatory requirements to ensure compliance with relevant regulations and enhance their awareness of good corporate governance practices. During the year, the Company organised seminars presented by professionals for Directors and executives to explain the latest amendments to the Listing Rules, and arranged tours to the terminals of the Group for their better understanding in the business and development of the Group.

Save and except Mr. Liu Weiqing who resigned on 3rd May 2015 and Mr. Hu Jiahong who resigned on 9th August 2015, all Directors confirmed that they have complied with the provision of Code A.6.5 on directors’ training. During the year, all Directors have participated in continuous professional development by reading materials or attending seminars/briefing sessions to develop and refresh their knowledge and skills and provided records of training to the Company. Current Directors have participated training on the following topics during the year:

  Corporate governance/updates on laws, rules and regulations Accounting/financial/management or other expertise
Reading Material Attending seminars/briefing sessions Reading Material Attending seminars/briefing sessions
Mr. Xiong Gebing (Chairman/managing director)
Mr. Zeng He (Executive director)
Mr. Cheng Jie (Executive director)
Mr. Zhang Lei (Non-executive director)
Mr. Chan Kay-cheung (Independent non-executive director)
Ms. Yau Lai Man (Independent non-executive director)
Mr. Chow Bing Sing (Independent non-executive director)

To comply with Rule 3.29 of the Listing Rules, the company secretary has taken no less than 15 hours of relevant professional training for the year.

Changes in Information of Directors

Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in information of Directors during 2015 were as follows:

Having considered and approved the recommendations made by the Remuneration Committee, the annual fees of the following Directors are revised from 1st January 2015. The original and revised annual fees of each Director are presented as follows (excluding Mr. Liu Weiqing who resigned on 3rd May 2015 and Mr. Hu Jiahong who resigned on 9th August 2015):

  Original fees (HK$) Revised fees (HK$)
Mr. Xiong Gebing (Chairman/managing director) 250,000 0
Mr. Zeng He (Executive director) 250,000 0
Mr. Cheng Jie (Executive director) 250,000 0
Mr. Zhang Lei (Non-executive director) 0 0
Mr. Chan Kay-cheung (Independent non-executive director) 250,000 320,000
Ms. Yau Lai Man (Independent non-executive director) 100,000 200,000
Mr. Chow Bing Sing (Independent non-executive director) 100,000 200,000

Details of changes in the annual remuneration of Directors are set out in the note 39 to the financial statements in the annual report.

Remuneration of Senior Management

Number of senior management according to the level of remuneration:

Level of remuneration Numbers of Senior Management
HK$’000 2015 2014
601-1,200 3 2
1,201-1,800 0 1

INTERNAL CONTROL AND RISK MANAGEMENT

The Board is responsible for the effective internal control system of the Company and reviewing the functions of the control system through the Audit Committee. The Board authorised the senior management to implement the said internal control system. The Company appointed experienced professionals with Hong Kong certified accountant qualification to act as general manager in assurance of the Company, who is responsible for overseeing the Group in connection with its internal control and financial reporting procedures. The Company has set up a task group and held meetings regularly to review the effectiveness of the relevant financial, operational and compliance controls as well as risk management procedures and to make further improvement.

During the year, the Company has conducted the following major works relating to internal control and risk management:

  • completed the study on the procedures and management to charge for business and operation jobs of Foshan Chu Kong Cargo Terminals (Gaoming) Co., Ltd., 6 recommendations for improvement to these procedures have been provided;
  • completed the Risk Reassessment of the cargo terminals in PRC, in which 33 possible significant risks have been identified, and 6 most important risks that require attention have been communicated to the relevant companies. All risk managers were required to conduct periodical reviews on the relevant control activities of such risks to ensure their effectiveness, in addition to ensuring the practicability of the existing relative control activities;
  • through strengthening the internal audit plan, internal auditors training, internal auditors allocation, the internal audit supervision was enhanced, and the scope of internal audit was extended to joint ventures and associates in which two joint ventures and associates were included. During the year, 35 internal audit and resignation audit reports were completed, 130 comments and recommendations were provided and the improvement works were almost finished; and
  • invited professionals to provide training for finance staffs in the PRC.

REMUNERATION OF AUDITOR

For the year ended 31st December 2015, the Company paid the auditor of the Company the following fees for audit and non-audit services.

2015
HK$’000
2014
HK$’000
Audit Services 3,236 3,125
Non-audit Services (including the review of the interim report, continued connected transactions and annual results announcement and issue of revenue certificate) 1,044 975
4,280 4,100

COMMUNICATION WITH SHAREHOLDERS

During the year, the Board has established a shareholders’ communication policy and the procedures for shareholders to nominate a candidate for election as a Director. The policy and procedure are available on the website of the Company.

Set out below are procedures for shareholders of the Company to (1) convene a general meeting; (2) put forward proposals at a general meeting; and (3) put enquiries to the Board. These procedures are generally governed by the Articles of Association and applicable laws, rules and regulations, which prevail over the below information in case of any inconsistencies.

1. Procedures for shareholders of the Company to convene a general meeting

Pursuant to the Articles of Association and the Companies Ordinance of Hong Kong, registered shareholders holding not less than one-twentieth (5%) of the paid up capital of the Company (“General Meeting Requisitionists”) can deposit a written request to convene a general meeting at the registered office of the Company (”Registered Office”), which is presently situated at 22nd Floor, Chu Kong Shipping Tower, 143 Connaught Road Central, Hong Kong for the attention of the company secretary.

The General Meeting Requisitionists must state in their request(s) the objects of the general meeting and such request(s) must be signed by all the General Meeting Requisitionists and may consist of several documents in like form, each signed by one or more of the General Meeting Requisitionists.

The Company’s share registrars (“Share Registrars”) will verify the General Meeting Requisitionists’ particulars in the General Meeting Requisitionists’ request. Promptly after confirmation from the Share Registrars that the General Meeting Requisitionists’ request is in order, the company secretary will arrange with the Board to convene a general meeting by serving sufficient notice to all the registered shareholders in accordance with all the relevant statutory and regulatory requirements. On the contrary, if the General Meeting Requisitionists’ request is verified not in order, the General Meeting Requisitionists will be advised of the outcome and accordingly, a general meeting will not be convened as requested.

The General Meeting Requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting if the Board had not arranged to duly convene a general meeting within 28 days upon serving a written notice in relation to the general meeting within 21 days of the deposit of the General Meeting Requisitionists’ request, provided that any general meeting so convened is held within three months from the date of the original General Meeting Requisitionists’ request. Any reasonable expenses incurred by the General Meeting Requisitionists by reason of the Board’s failure to duly convene a general meeting shall be repaid to the General Meeting Requisitionists by the Company.

2. Procedures for shareholders to put forward proposals at a general meeting

Shareholders may suggest proposals relating to the Company to be discussed at a general meeting by sending written requisition to the Board or the company secretary of the Company and following the procedures set out in the paragraph headed “Procedures for shareholders of the Company to convene a general meeting” above to convene a general meeting for any business specified in such written requisition.

3. Enquiries to the Board

Shareholders may at any time send their enquiries and concerns to the Board in writing through the company secretary whose contact details are as follows:

Address: 24th Floor, Chu Kong Shipping Tower, 143 Connaught Road Central, Hong Kong
Telephone: (852) 2859 1415
Facsimile: (852) 2186 7204
E-mail: maggie-cksd@cks.com.hk

The general meeting is an important occasion for direct dialogues between Directors, senior executives and shareholders, and the Company attaches great importance to any general meeting. All Directors (including independent non-executive Directors) and senior executives will try to attend the meetings, listen to shareholders’ proposals in person, and answer questions raised by shareholders concerning the development strategies and operations of the Company. The Company welcomes shareholders to attend general meetings in person and express their opinions and raised their enquiries to the Directors and management.

INVESTOR RELATIONS AND COMMUNICATIONS

The Company regards investor relations as utmost importance and discloses relevant information timely under the guidelines of the Listing Rules. The Company introduces the situation of the Company to institutional investors and analysts regularly. In the year, the Company frequently met with fund managers and investment bank analysts and responded swiftly to the queries of the small and medium investors.

At the annual general meeting held on 21st May 2015, the shareholders approved and adopted the new articles of association of the Company to substitute for and remove the memorandum and articles of association of the Company, such new articles of association are published on the websites of the Company and the Stock Exchange. The Board agreed unanimously the amendments to the terms of reference of the Audit Committee on 30th December 2015, and such terms of references were effective on 1st January 2016 and are published on the websites of the Company and the Stock Exchange.