The Board of Directors ("the Board") believes that sound corporate governance practices are essential to the wellbeing of Times Technology Group (TTG) and the promotion and protection of its shareholders' interests. The Board oversees the functioning of TTG’s governance system, in part, through the work of its Corporate Governance Committee.
The Board has adopted these guidelines, which reflect TTG’s commitment to high standards of corporate governance, to assist the Board in supervising the management of the business and affairs of TTG as required under applicable law.
The fundamental responsibility of the Board is to supervise the management of the business and affairs of TTG with a view to sustainable value creation for all shareholders. The Board promotes fair reporting, including financial reporting, to shareholders of TTG and other interested persons as well as ethical and legal corporate conduct through an appropriate system of corporate governance, internal control over financial reporting and disclosure controls and procedures. The Board believes that TTG is best served by a board of directors that functions independently of management and that is informed and engaged.
The Corporate Governance Committee will review these guidelines annually, or more often if warranted, and recommend to the Board such changes as it determines necessary and appropriate in light of TTG’s needs and legal, regulatory and other developments.
2. BOARD COMPOSITION
(a)
Board Membership Criteria
The Corporate Governance Committee is responsible for assessing the need for new directors, the preferred experience and qualifications for new directors, and the skills and competencies that the Board, its committees, individual directors and candidates should possess. The Corporate Governance Committee recommends candidates for initial Board membership and Board members for re-nomination. Recommendations are based on character, integrity, judgment, business experience, record of achievement and any other skills and talents which would enhance the Board and overall management of the business and affairs of TTG. Each director must have an understanding of TTG’s principal operational and financial objectives, plans and strategies, financial position and performance and the performance of TTG relative to its principal competitors. Directors must be able to dedicate sufficient time to carry out their duties and not assume responsibilities that would materially interfere with or be incompatible with Board membership. Directors who change their principal occupation are expected to advise the Corporate Governance Committee and, if determined appropriate by the Corporate Governance Committee, resign from the Board.
(b)
Director Independence
The Board’s composition and procedures are designed to permit it to function independently from management and to promote and protect the interests of all shareholders. The Board believes that, except during periods of temporary vacancies, no fewer than half of its members should be independent.
The Board reviews the independence of all directors on an annual basis and publicly discloses its determinations. All directors have an ongoing obligation to inform the Board of any material changes in their circumstances or relationships that may affect the Board’s determination as to their independence.
(c)
Board Size The Board is currently of the view that its optimal size for effective decision making and committee work is 5 members, and that its size may vary from time to time because of or in anticipation of retirements from the Board.
(d)
Term
All directors are elected or appointed until the next annual meetings of shareholders or until they resign or their successor is elected or appointed. The Board does not believe it should establish term limits or mandatory retirement ages for its members as such limits may deprive TTG and its shareholders of the contributions of members who have been able to develop, over time, valuable insights into TTG, and its strategy and business operations.
(e)
Board Succession
The Corporate Governance Committee is responsible for maintaining a succession plan for the Board that is responsive to TTG’s needs and the interests of its shareholders.
(f)
Service on Other Boards and Audit Committees
The Board does not believe that its members should be prohibited from serving on the boards of other companies so long as these commitments do not materially interfere with and are not incompatible with their ability to fulfill their duties as a member of the Board. Directors must advise the Chairman in advance of accepting an invitation to serve on the board of another company and, as a general rule, directors are not allowed to join a board of another company on which two or more other directors of TTG serve. Members of the Audit Committee may not serve on the audit committees of more than two other companies without the prior approval of the Board.
3. BOARD RESPONSIBILITIES
Directors have a duty to act honestly and in good faith with a view to the best interests of TTG. In fulfilling its responsibilities, the Board is responsible for the following matters:
(a)
Appointment and Supervision of the Senior Management Officers
The Board appoints and supervises the Chief Executive Officer ("CEO") and other senior management members of TTG, approves their compensation and, as permitted by applicable law, delegates to senior management responsibility for the day-to-day operations of TTG. The Board will satisfy itself that a process is in place to provide for the development, evaluation and succession of the CEO and other members of senior management. The Board maintains a position description for the CEO. The Board will satisfy itself as to the integrity of the CEO and other members of senior management, including confirming that the CEO and other members of senior management maintain a culture of integrity throughout TTG.
(b)
Strategic Planning and Risk Management The Board will establish and maintain TTG’s mission, values, long-term strategic goals, performance objectives and operational policies. In this regard, the Board will:
i)
adopt a strategic planning process and review and approve, on an annual basis, a strategic plan which takes into account, among other things, the opportunities and risks of the business;
ii)
review and approve on an annual basis a business plan developed with management which includes rigorous but realistic goals;
iii)
approve strategic and operational policies within which management will operate in relation to capital expenditures, acquisitions and dispositions, disclosure and communications, finance and investment, risk management, human resources, internal control over financial reporting, disclosure controls and procedures and management information systems;
iv)
set annual corporate and management performance targets;
v)
confirm that a system is in place to identify the principal risks facing TTG and its businesses and that appropriate procedures and systems are in place to monitor, mitigate and manage such risks; and
vi)
confirm that processes are in place for TTG and its businesses to address and comply with applicable legal, regulatory, corporate, securities and other compliance matters.
(c)
Financial Reporting and Management The Board will:
i)
review and oversee the integrity of TTG with regard to its compliance with applicable audit, accounting and financial reporting requirements;
ii)
approve the annual and interim consolidated financial statements of TTG;
iii)
approve annual operating and capital budgets;
iv)
confirm the integrity of TTG's internal controls and management information systems;
v)
approve TTG's dividend policy; and
vi)
review operating and financial performance results relative to established strategies, plans, budgets and objectives.
(d)
Disclosure and Communications The Board will satisfy itself that appropriate policies and procedures are in place regarding public disclosure and restricted trading by insiders. In this regard, the Board will periodically review TTG’s corporate disclosure policy and will confirm that a process is in place to disclose all material information in compliance with TTG’s timely disclosure obligations and to prevent market abuse, whether by way of selective disclosure of material information to analysts, institutional investors, market professionals and others or otherwise.
(e)
Corporate Governance
The Board will:
i)
develop TTG’s approach to corporate governance, including establishing appropriate principles and guidelines relating to corporate governance that are specifically applicable to TTG and practices to facilitate the Board’s independence;
ii)
establish committees and approve their respective charters and the limits of authority delegated to each committee;
iii)
establish appropriate processes for the regular evaluation of the effectiveness of the Board and its committees;
iv)
approve the nomination of directors;
v)
review the adequacy and form of directors' compensation to confirm that it realistically reflects the responsibilities and risks involved in being a director;
vi)
arrange for independent non-executive directors to meet at least annually; and
vii)
ensure that sufficient funds are available for its effective operation and that of its committees.
(f)
Observance of TTG Trust Principles The Board will satisfy itself that TTG observes and upholds the TTG Trust Principles.
(g)
Approval of Certain Other Matters
The Board must itself approve those matters which may not be delegated by the Board under applicable corporate law including, inter alia, the declaration of dividends, and matters relating to the adoption, repeal or amendment of the by-laws of TTG. The Board may also reserve to itself the right to approve certain matters notwithstanding the delegation to senior management of the authority to manage the business of TTG.
4. CHAIRMAN
The Board will in each year elect from among its members a Chairman who is not the CEO or otherwise a member of TTG’s senior management. The Chairman is principally responsible for overseeing the operations and affairs of the Board. The Board maintains a position description for the Chairman.
5. SECRETARY TO THE BOARD
The Board will appoint an individual who is not a member of senior management to act as the Secretary to the Board. The Secretary to the Board is responsible for assisting the Chairman in managing the operations and affairs of the Board and for performing additional duties requested by the Chairman, the Board or any of its committees. The Secretary to the Board reports directly to the Chairman.
6. BOARD COMMITTEES
(a)
General
The Board carries out its responsibilities directly and through the following committees and such other committees as it may establish from time to time: the Audit Committee, the Corporate Governance Committee and the Human Resources Committee.
(b)
Composition
All committees are comprised solely of directors who are not members of management and who are selected by the Board on the recommendation of the Corporate Governance Committee. Members of the Audit Committee must be independent and are subject to the additional requirements that they may not (i) accept directly or indirectly any consulting, advisory, or other compensatory fee from TTG, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), or (ii) be an "affiliated person" of TTG. Each member of the Audit Committee must be “financially literate”.
(c)
Chair The Audit Committee, Corporate Governance Committee and the Human Resources Committee are each chaired by an independent director who is selected by the Board on the recommendation of the Corporate Governance Committee. The chair of each committee is responsible for determining the agenda, frequency and conduct of committee meetings. The Board maintains a position description for the committee chairs.
(d)
Charters
Each committee has its own charter that sets out its responsibilities and duties, qualifications for membership, procedures for committee member removal and appointment and reporting to the Board. On an annual basis, each committee’s charter is reviewed by both the committee itself and the Corporate Governance Committee and is also reviewed and approved by the Board.
7. BOARD AND COMMITTEE MEETINGS
(a)
Scheduling Board meetings are scheduled in advance at appropriate intervals throughout the year. In addition to regularly scheduled Board meetings, additional Board meetings may be called upon proper notice at any time to address specific needs of TTG. The Board may also take action from time to time by unanimous written consent. A Board meeting may be called by the Chairman or any two directors. Each committee meets as often as it determines is necessary to fulfill its responsibilities. A meeting of any committee may be called by the chair or any other member of the committee, the Chairman or the secretary to the committee. Board meetings are held in a manner and at a location determined by the Chairman and meetings of each committee are held in a manner and at a location determined by the committee chair. The Board generally meets at least once a year at the offices of one of TTG’s businesses so that directors may meet operating management and develop a deeper understanding of a particular business group.
(b)
Agenda
The Chairman establishes the agenda for each Board meeting in consultation with the other directors, the Secretary to the Board and the CEO. Any director may propose the inclusion of items on the agenda or at any Board meeting raise subjects that are not on the agenda for that meeting. Committee chairs establish the agenda for each committee meeting. Any committee member may propose the inclusion of items on the agenda or at any committee meeting raise subjects that are not on the agenda for the meeting.
(c)
Meetings of Independent Non-Executive Directors
To facilitate the Board’s independence, independent non-executive directors meet as a group after each Board meeting without management present. Independent non-executive directors may also meet without management present at such other times as appropriate. One of the directors will chair these meetings and inform management of their substance to the extent that action is appropriate or required. At least annually, the independent non-executive directors meet separately. The Senior Independent Non-Executive Director chairs these meetings and informs the Chairman of the substance of these meetings to the extent that action is appropriate or required.
(d)
Distribution of Information
Information that is important to the Board’s understanding of the business and its meeting agenda is distributed to the Board before it meets. Sensitive subject matters may be discussed at a meeting without written materials being distributed in advance or at the meeting. The Board periodically receives reports on the operating activities of TTG, as well as reports on certain nonoperational matters, including corporate governance, insurance, pensions and treasury matters. TTG maintains a secure intranet site for directors, which is used to distribute information and to foster communication among directors and between directors and TTG’s senior management.
(e)
Preparation, Attendance and Participation
Each director is expected to prepare adequately for and attend all meetings of the Board and any committee of which he or she is a member. A director who is unable to attend a Board or committee meeting in person may participate by telephone or teleconference.
(f)
Procedures
Procedures for Board meetings are determined by the Chairman unless otherwise determined by the by-laws of TTG or by a resolution of the Board. Procedures for committee meetings are determined by the chair of the committee unless otherwise determined by the by-laws of TTG or by a resolution of the committee or the Board.
8. DIRECTOR COMPENSATION
Compensation for directors of TTG is designed to attract and retain highly talented, committed and experienced directors. The Board believes that directors must be competitively compensated, taking into account the size and complexity of TTG. The Corporate Governance Committee is responsible for reviewing directors’ compensation to ensure that it is competitive and consistent with the responsibilities and risks associated with being an effective director and, to this end, periodically reviews directors’ compensation in the marketplace. Independent non-executive directors have the option to receive all or any portion of their annual retainer in the form of deferred share units, TTG common shares or cash. If a director elects to receive any portion of his or her annual retainer or other remuneration in the form of shares, the amount (net of withholding taxes) is used to buy shares on the open market. If a director elects to receive deferred share units, units representing the value of TTG common shares are credited to the director’s account based on the market value of a TTG common share. Deferred share units are paid to the director by March 31 of the calendar year following termination of Board service. Payment will be made in TTG common shares or cash (net of withholding taxes), based on the market value of the TTG common shares on the date of payment. Deferred share units also accumulate additional units based on notional equivalents of dividends paid on TTG common shares. The Board believes that this plan further aligns the interests of directors with the interests of other shareholders. The Chairman receives an annual retainer. The CEO does not receive additional compensation for serving as a director.
9. REIMBURSEMENT OF EXPENSES
Directors are reimbursed by TTG for reasonable travel and out-of-pocket expenses incurred in connection with their duties as directors. The Corporate Governance Committee periodically reviews expenses submitted for reimbursement.
10. DIRECTOR INDUCTION AND CONTINUING EDUCATION
New directors receive induction materials describing the TTG business, its corporate governance structure and related policies and information. New directors also have meetings with the Chairman, CEO and other executive officers. Early in their tenure, new directors are provided with the opportunity to visit major facilities and meet with operating management. The Corporate Governance Committee is responsible for confirming that procedures are in place and resources are made available to provide directors with appropriate continuing education opportunities. Directors may attend continuing education programs at TTG’s expense.
11. BOARD ACCESS TO MANAGEMENT AND ADVISORS
The Board has complete access to members of TTG’s management and directors are encouraged to raise any questions or concerns directly with management. The Board and its committees may invite any member of senior management, employee, outside advisor or other person to attend or report at any of their meetings. In carrying out their duties, the Board and any of its committees may at any time retain an outside advisor at the expense of TTG and have the authority to determine the advisor’s fees and other retention terms. Individual directors may retain an outside advisor at the expense of TTG subject to notifying the Corporate Governance Committee in advance.
12. PERFORMANCE ASSESSMENTS
The Board, acting through the Corporate Governance Committee, annually reviews the effectiveness of the Board, each director and each Board committee in fulfilling their responsibilities and duties. The Corporate Governance Committee also annually reviews the performance of the Chairman and the chair of each of the Board committees.
13. CODE OF BUSINESS CONDUCT AND ETHICS
The Board has adopted a Code of Business Conduct and Ethics. The Board expects all directors, officers and employees of TTG to conduct themselves in accordance with the highest ethical standards and to adhere to the Code. Any waiver of the Code for directors or executive officers may only be made by the Board or one of its committees and will be disclosed by TTG to the extent required by law.
14. PROHIBITION ON PERSONAL LOANS
TTG does not extend or maintain credit, arrange for the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any director or executive officer.
15. CONFLICTS OF INTEREST
Each director is required to inform the Board of any potential or actual conflict of interest he or she may have with TTG. A director who has a conflict of interest in a matter before the Board or a committee must not attend any part of a meeting during which the matter is discussed or participate in any vote on the matter, except where the Board or the committee has expressly determined that it is appropriate for him or her to do so and may be required to take other steps to avoid the conflict. To avoid potential conflicts of interest, interlocking directorships are not allowed. Interlocking directorships occur where a member of senior management of TTG serves on the board or as a trustee of a company or institution that employs a director of TTG.
16. TO CONTACT THE BOARD AND ITS COMMITTEES
The Board invites input and comments from shareholders, employees, and fellow associates of TTG. Anyone may contact one or more members of the Board or its committees by writing directly and mark confidential to:
Ms Peggy Wu
Secretary to the Board
Times Technology Group
9th Floor, Effectual Building
16 Hennessy Road, Wanchai
Hong Kong
