Hyflux Ltd (the "Company") continues to place great importance on the governance of the Company and its subsidiaries (together, the "Group"), which it believes is vital to its well being and success. The Company is committed to maintaining high standards of corporate governance and processes that will enhance the Group's effectiveness, ensure the appropriate degree of accountability and transparency and an increase in long term value and return to shareholders.
The Group subscribes to the Singapore Code of Corporate Governance issued by the Monetary Authority of Singapore ("Code") and believes that this forms a sound platform for supporting good corporate governance practices.
This corporate governance statement ("Statement") outlines the main corporate governance practices of the Group with specific reference made to the principles and guidelines of the Code, forming part of the Continuing Obligations set out in the Listing Manual of Singapore Exchange Securities Trading Limited ("SGX-ST").
The Company has complied substantially with the requirements of the Code and provided an explanation for any deviation from the Code, where applicable. The Group will continue to review and refine its practices in light of best practices in the market, consistent with the needs and the circumstances of the Group.
In developing the appropriate corporate governance practices, the Group takes into account all applicable legislations and recognised standards. The Group is committed to instilling and maintaining good corporate governance at all times.
Principle 1: The Board’s Conduct of Affairs
The primary role of the Company's board of directors ("Board") is to protect and enhance long-term shareholders' value and to ensure that the Group is run in accordance with best international management and corporate governance practices, appropriate to the needs and development of the Group.
The Board is responsible for general oversight of the Group's activities and performance and for setting the Group's overall strategic direction. It provides leadership and guidance on corporate strategies, business directions, risk policies and implementation of corporate objectives, thereby taking responsibility for the overall corporate governance of the Group.
In delegating responsibility for the day-to-day operation and leadership of the Group to the Executive Chairman and Chief Executive Officer and the management team, the Board has processes and systems in place to ensure that significant issues, risks and major strategic decisions are monitored and considered at Board level.
To assist in the execution of its responsibilities, the Board has established several Board Committees, namely, Audit Committee, Nominating Committee, Remuneration Committee, Risk Management Committee and Investment Committee. These Board Committees function within clearly defined terms of reference, which are reviewed on a regular basis.
Matters which are specifically reserved to the full Board for decision are those involving material acquisitions, disposal of assets, corporate or financial restructuring, share issuances, dividends and other returns to shareholders, conflict of interest for substantial shareholder or Director, as well as interested person transactions.
The meeting schedules of all the Board and Board Committees for the calendar year are given to all Directors well in advance. The Board may convene additional meetings to address any specific significant matters that may arise from time to time.
The Constitution of the Company provide for Directors to conduct meetings by teleconferencing or videoconferencing. The Board and Board Committees may also make decisions by way of circulating resolutions.
The Board held four meetings in the 2017 financial year. A summary of attendance by Directors at Board and Board Committees meetings for the financial year ended 31 December 2017 is as follows:
|Board of Directors||Audit Committee||Nominating Committee||Remuneration Committee||Risk Managment Committee||Investment Committee|
|Name of Directors||No. of Meetings Attended||No. of Meetings Attended||No. of Meetings Attended||No. of Meetings Attended||No. of Meetings Attended||No. of Meetings Attended|
|Olivia Lum Ooi Lin||4||4*||2||2*||1*||2|
|Teo Kiang Kok||4||4||2||2||1||NA|
|Lee Joo Hai||4||4||NA||NA||1||NA|
|Gay Chee Cheong||4||4||2||2||NA||2|
|Lau Wing Tat||4||4||NA||NA||1||NA|
|Gary Kee Eng Kwee||4||NA||NA||NA||NA||2|
NA Not Applicable
* Attendance by invitation.
The Group has adopted a set of Policy on Signing Limits, setting out the level of authorization required for specific transactions, including those that require Board's approval.
Newly appointed Directors are provided with a training and induction programme, so as to familiarise them with the Group's business activities, strategic directions, policies and new key projects. In addition, newly appointed Directors are also introduced to the senior management team.
Directors are updated from time to time on changes in relevant laws and regulations; industry developments and business initiatives; and analyst and media commentaries on matters related to the Group and its relevant industries.
Principle 2: Board Composition and Guidance
As at the date of this Statement, the Board comprises eight Directors, of whom six are Non-Executive Independent Directors.
Composition of Board and Board Committees
|Name of Directors||Board||Audit Committee||Nominating Committee||Remuneration Committee||Risk Management Committee||Investment Committee|
|Olivia Lum Ooi Lin||Executive Chairman and Director||Member||Chairman|
|Teo Kiang Kok||Lead Independent Director||Member||Chairman||Member||Member|
|Lee Joo Hai||Non-Executive Independent Director||Chairman||Member|
|Gay Chee Cheong||Non-Executive Independent Director||Member||Member||Chairman||Member|
|Christopher Murugasu||Non-Executive Independent Director||Member||Member||Member|
|Simon Tay||Non-Executive Independent Director||Member||Member|
|Lau Wing Tat||Non-Executive Independent Director||Member||Chairman|
|Gary Kee Eng Kwee||Non-Executive Independent Director||Member|
The Board considers an Independent Director as one who has no relationship with the Company, its related companies or its officers that could interfere or be reasonably perceived to interfere, with the exercise of the Director's independent business judgment acting in the interests of the Group. The Company's policy is to have Independent Directors make up at least half of the Board.
While all the Directors have equal responsibilities for the performance of the Group, Non-Executive Directors exercise no management function in the Company or any of its subsidiaries. The role of Non-Executive Directors is primarily to ensure that the strategies proposed by the management are fully discussed, vigorously examined, taking into consideration the long-term interest of the shareholders, employees, customers, suppliers and the communities in which the Group conducts its business.
The Board is of the view that there is a strong and independent element on the Board in that all Directors, other than Ms Olivia Lum Ooi Lin and Mr Gary Kee Eng Kwee, are Independent Directors. The present Board size and number of Board Committees facilitate effective decision making and is appropriate for the nature and scope of the Group's business and operations.
The Board believes the composition of the Board requires consideration of a number of factors, including the mix in skills, abilities and expertise, the mix in the length of time Directors have served on the Board, as well as experience on other boards.
The Board consists of respected business leaders and professionals whose collective core competencies and experience are extensive, diverse and relevant to the Group. The names, qualifications and relevant skills, experience and expertise of the Directors can be found in the "Board of Directors" section of the annual report. As evidenced by this information, the Directors bring to the Board a broad range of experience and expertise.
Where necessary, the Company arranges informal meeting sessions for Independent Directors to meet without the presence of the management.
Principle 3: Chairman and Chief Executive Officer
Ms Olivia Lum Ooi Lin is the Executive Chairman and Group Chief Executive Officer of the Company. The Board considers that vesting two roles in the same person provides the Group with strong and consistent leadership in the development and execution of the Group's business strategies and is beneficial to the Group.
In line with the Code, Mr Teo Kiang Kok was appointed as the Lead Independent Director in 2012 and has been holding this position since then. As Lead Independent Director, Mr Teo Kiang Kok chairs all Board meetings. If shareholders of the Company have serious concerns for which contact through the normal channels of the Executive Chairman and Chief Executive Officer or the Chief Financial Officer have failed to resolve or is inappropriate, they may contact the Lead Independent Director.
The Board is of the opinion that the process of decision making by the Board has been independent, based on collective decisions without any individual exercising any considerable concentration of power or influence.
The Independent Directors, led by the Lead Independent Director, meet amongst themselves without the presence of the other directors where necessary, and the Lead Independent Director will provide feedback to the Executive Chairman after such meetings.
Principle 4: Board Membership
The Nominating Committee ("NC") has been tasked by the Board to identify, select and recommend individuals with the appropriate skills, expertise and experience for appointment, thereby ensuring a balanced and effective Board at all times.
The NC comprises four Directors:
Mr Teo Kiang Kok (Chairman)
Mr Gay Chee Cheong
Ms Olivia Lum Ooi Lin
Mr Christopher Murugasu
The primary function and duties of the NC are outlined as follows:
- to make recommendations to the Board on all Board appointments and re-nominations having regard to the composition and each Director's competencies, commitment, contribution and performance (e.g. attendance, preparedness, participation, candour, and any other salient factors);
- to ensure that all Directors would be required to submit themselves for re-nomination and re-election at regular intervals and at least once in every three years;
- to determine annually, and as and when circumstances require, whether a Director is independent, in accordance with the independence guidelines set out in the Code;
- to review whether a Director is able to and has adequately carried out his duties as a Director of the Company, in particular where the Director concerned has multiple board representations;
- proposes a framework for assessing Board effectiveness and individual Director's contribution, and carry out such assessment; and
- reviews and recommends to the Board, the training and professional development programmes for the Directors
In carrying out the assessment of the independence of the Non-Executive Directors, the NC considered the following attributes and contributions of all the Non-Executive Independent Directors and found that the length of tenure does not have any impact on their independence:
- The Non-Executive Independent Directors provide their objective and constructive views to the Board and management;
- The Non-Executive Independent Directors do not hesitate to speak up and offer constructive viewpoints and practical solutions to issues and work towards increasing value of the Group for the benefit of all shareholders; and
- The Non-Executive Independent Directors evaluate and assess the information provided to the Board in an independent and constructive manner and render such advice as may be necessary to assist management to implement plans or policies adopted by the Group.
The NC believes that the Non-Executive Independent Directors' experience and knowledge of the Group's business, combined with their external business and professional experience enable them to provide effective challenges and make constructive contributions to management discussions.
In addition, all the Non-Executive Independent Directors have made written confirmations to their independence in accordance with the Code and the SGX-ST's Listing Manual.
Accordingly, the NC has determined that Mr Teo Kiang Kok, Mr Lee Joo Hai, Mr Gay Chee Cheong and Mr Christopher Murugasu are independent directors notwithstanding that each of them has served on the Board for more than nine years from the dates of their respective appointments. The Board accepts the NC's view and affirms the independence of these Directors.
All Directors are required to declare their board representations. Although the Non-Executive Independent Directors hold directorships in other companies, the Board is of the view that such multiple Board representations do not hinder them from carrying out their duties as Directors. These Directors would widen the experience of the Board and give it a broader perspective. The NC has reviewed the work and other commitments of such Directors and assessed their ability to effectively discharge their Board responsibilities. The NC is satisfied that these Directors have committed and are able to commit sufficient time, effort and attention to the affairs of the Group. The NC is of the view that fixing a number for such board representations is not meaningful in the context of the Group. The Board accepts and affirms the view of the NC.
The NC has recommended the nomination of Directors retiring by rotation under the Company's Constitution, namely, Mr Lee Joo Hai, Mr Gay Chee Cheong and Mr Simon Tay.
In reviewing the nomination of the retiring Directors, the NC considered the performance and contribution of each of the retiring Directors, having regard not only to their attendance and participation at Board and Board Committee meetings but also the time and effort devoted to the Group's business and affairs.
There is no alternate director on the Board.
The profiles of the Directors are set out in the "Board of Directors" section of the annual report. The shareholdings of the individual Directors of the Company are set out in the "Directors' Report" of the annual report. None of the directors hold shares in the subsidiaries of the Company.
Principle 5: Board Performance
The Code recommends that the NC be responsible for assessing the effectiveness of the Board as a whole and the individual Directors' contribution. The NC believes that it is more appropriate and effective to focus the assessment on the Board as a whole, bearing in mind that each member of the Board contributes in different ways to the success of the Group.
The NC, in conducting the evaluation and appraisal process, focuses on a set of performance criteria which includes the evaluation of the size and composition of the Board, the Board's access to information, Board processes and accountability, Board performance in relation to discharging its principal responsibilities and the Directors' standards of conduct.
The Board is of the view that the financial indicators, as set out in the Code as a guide for the evaluation of the Board and its Directors, may not be appropriate as they are more relevant as a form of measurement of the management's performance.
The NC conducted a Board performance evaluation to assess the effectiveness of the Board as a whole throughout the financial year ended 31 December 2017 and is satisfied that sufficient effort, time and attention have been given by the Directors to the affairs of the Group. The NC has discussed with the Board its assessment of the Board's performance and effectiveness.
The NC also evaluated on a continual basis the performance of individual Directors based on performance criteria which included individual skills, industry experience and business knowledge, attendance record, contributions to strategy development and quality of participation at Board and Committee meetings.
Principle 6: Access to Information
The Board has separate and independent access to senior management of the Group, the Company Secretary and the external auditors at all times. The Directors also have unrestricted access to the Company's records and information, all minutes of meetings held by the Board and Board Committees and management accounts to enable them to carry out their duties.
The Company Secretary attends all Board and Board Committee meetings. The Company Secretary administers, attends and prepares minutes of the Board and Board Committee meetings, and assists in ensuring that Board procedures are followed and reviewed in accordance with the Company's Constitution so that the Board functions effectively and the relevant rules and regulations applicable to the Company are complied with. The Company Secretary's role is to advise the Board on all governance matters, ensuring that legal and regulatory requirements, as well as Board policies and procedures are complied with. The appointment and the removal of the Company Secretary are subject to the Board's approval.
Should Directors, whether as a group or individually, require professional advice, the Company shall upon the direction of the Board, appoint a professional advisor selected by such Director(s). The costs of such service shall be borne by the Company.
Principle 7: Procedures for Developing Remuneration Policies
The Remuneration Committee ("RC") comprises three Directors:
Mr Gay Chee Cheong (Chairman)
Mr Teo Kiang Kok Mr Christopher Murugasu
The RC is committed to the principles of accountability and transparency; and it ensures that remuneration arrangements demonstrate a clear link between reward and performance.
The RC is responsible for ensuring a formal and transparent procedure for developing policy on executive remuneration, and for fixing the remuneration packages of individual Directors and senior management employees.
The RC's review covers all aspects of remuneration, including but not limited to Directors' fees, salaries, allowances, bonuses, and employee share options, benefits in kind and specific remuneration package for each Director.
In structuring a compensation framework for Executive Directors and senior management employees, the RC seeks to link a portion of the compensation to the Group's performance. RC also reviews and recommends to the Board the remuneration package for the Non-Executive Directors. Its recommendations are submitted for endorsement by the Board. The RC, when deemed necessary, may obtain expert advice with regard to remuneration matters.
Principle 8: Level and Mix of Remuneration
The remuneration policy of the Group is to provide compensation packages at market rates, reward performance and attract, retain and motivate Directors and members of the senior management team.
The Executive Directors do not receive Directors' fees. The remuneration packages of the Executive Directors and senior management employees are based on service contracts and are determined having due regard to the performance of the individuals, the Group as well as market trends.
Non-Executive Independent Directors are paid yearly Directors' fees of an agreed amount based on their contributions, taking into account factors such as effort and time spent, responsibilities of the Directors and the need to pay competitive fees to attract, motivate and retain the Directors.
Principle 9: Disclosure on Remuneration
An appropriate and attractive level of remuneration has been set to attract, retain and motivate Directors and senior management employees. The remuneration package for Executive Directors and senior management employees consists of both fixed and variable components. The variable component is determined based on the performance of the individual employee and the Group's performance in the relevant financial year. Annual increments and adjustments to remuneration are reviewed and approved taking into account the outcome of the annual appraisal of the employees.
Non-Executive Directors are paid Directors' fees that are subject to shareholders' approval at the Company's Annual General Meeting ("AGM"). The RC recommends total Directors' fees of S$580,000 be paid to Non-Executive Directors for the financial year ended 31 December 2017. This will be tabled for shareholders' approval at the forthcoming AGM.
The remuneration of each individual Director and top seven key executives of the Group is however not disclosed as the Company believes that disclosure may be prejudicial to its business interests given the highly competitive environment it is operating in as well as competitive pressures in the talent market.
The following table sets out the summary compensation table for Directors and top seven key executives for the financial year ended 31 December 2017:
|Salary||Bonus||Fees||Employees' Share Option Scheme||Allowances and other benefits||Total|
|Between S$750,000 to S$1,000,000|
|Olivia Lum Ooi Lin||87%||7%||0%||0%||6%||100%|
|Teo Kiang Kok||0%||0%||97%||3%||0%||100%|
|Lee Joo Hai||0%||0%||95%||5%||0%||100%|
|Gay Chee Cheong||0%||0%||97%||3%||0%||100%|
|Lau Wing Tat||0%||0%||96%||4%||0%||100%|
|Gary Kee Eng Kwee||0%||0%||93%||7%||0%||100%|
|Salary||Bonus||Fees||Employees' Share Option Scheme||Allowance and other benefits||Total|
|TOP SEVEN KEY EXECUTIVES|
|Between S$500,000 to S$750,000|
|Lim Suat Wah||87%||7%||0%||2%||4%||100%|
|Wong Lup Wai||88%||7%||0%||3%||2%||100%|
|Cheong Aik Hock||86%||7%||0%||2%||4%||100%|
|Chang Cheow Teck1||98%||0%||0%||0%||2%||100%|
|Kum Mun Lock||86%||7%||0%||1%||6%||100%|
|Peter Wu Siu Kin||82%||7%||0%||1%||10%||100%|
|Ang Kim Chye Roland||88%||7%||0%||2%||3%||100%|
- Appointed on 1 November 2017
The Company has not granted any termination, retirement and post-employment benefits to the directors and the top seven executives of the Group.
In aggregate, the total remuneration paid to the top seven key executives in financial year ended 2017 is S$2,695,134.20.
The Company implemented Hyflux Employees' Share Option Scheme ("ESOS") as part of the compensation plan to attract, retain and reward talent for performance. Details of the ESOS and options granted can be found in the "Directors' Report" section of the annual report.
Immediate Family Members of Directors
There are no immediate family members of Directors or controlling shareholders in employment with the Group and whose remuneration exceeds S$50,000 during financial year ended 31 December 2017.
Principle 10: Accountability
The Board promotes timely and balanced disclosure of all material matters concerning the Group. It updates shareholders on the operations and financial position of the Group through quarterly, half yearly and full year results announcements as well as timely announcements of other matters as prescribed by the SGXST's Listing Manual requirements and other relevant rules and regulations.
Price sensitive information is first publicly released, either before the Company meets with any group of investors or analysts or simultaneously with such meetings.
The Board is accountable to shareholders for the management of the Group and the management is accountable to the Board by providing the Board with the necessary information for the discharge of its duties.
In line with the Listing Rules of the SGX-ST, the Board provides a negative assurance statement to the shareholders in its quarterly financial statements announcements, confirming to the best of its knowledge that nothing had come to the attention of the Board which might render the financial statements false or misleading in any material aspect.
Pursuant to the amended Rule 720(1) of the Listing Rules of the SGX-ST, all the Directors and executive officers of the Group have signed a letter of undertaking.
Principle 11: Risk Management and Internal Controls
The Board recognises the importance of maintaining a sound system of risk management and internal control within the Group to safeguard the shareholders' interests and the Group's assets, and to manage risks.
The Audit Committee ("AC") and the Risk Management Committee ("RMC") oversee and ensure that such system has been appropriately implemented and monitored.
The risk management and internal control processes and framework are 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 legislations, regulations and best practices, and the identification and containment of business risks.
The RMC comprises five Directors:
Mr Lau Wing Tat (Chairman)
Mr Lee Joo Hai
Mr Teo Kiang Kok
Mr Simon Tay
Mr Christopher Murugasu
The functions of the RMC are as follows:
- to review with management, and, where needed, with external consultants on areas of risk that may affect the viability and smooth operations of the Group, as well as management's risk mitigation efforts, with the view of safeguarding shareholders' interests and the Group's assets;
- to direct and work with management to develop and review policies and processes to address and manage identified areas of risk in a systematic and structured manner;
- to make recommendations to the Board in relation to business risks that may affect the Group, as and when these may arise; and
- to perform any other functions as may be agreed by the Board.
The Board regularly reviews and improves its business and operational activities to identify areas of significant business risks as well as taking appropriate measures to control and mitigate these risks. The management reviews all significant control policies and procedures and highlights all significant matters to the Board. The financial risk management objectives and policies are outlined in the notes to the financial statements. Risk management alone does not guarantee that business undertakings will not fail. However, by identifying and managing risks that may arise, the Board is in a position to make more informed decisions and will benefit from a better balance between risk and reward. This will assist in safeguarding and creating shareholders' value.
The AC and the Board have received assurance from the Chief Executive Officer, the Chief Financial Officer and department heads of the respective business units of the Group that as of 31 December 2017:
- the financial records have been properly maintained and the financial statements give a true and fair view of the Group's operations and finances; and
- the Group's risk management and internal control systems to address the key financial, operational, compliance and information technology risks affecting the operations are effective to meet the needs of the Group in its current business environment.
The AC, together with the Board, have reviewed the adequacy and effectiveness of the Group's risk management and internal control systems put in place to address the key financial, operational, compliance and information technology risks affecting the operations.
Based on the reports submitted by internal and external auditors, and reviews by the management, the Board, with the concurrence of the AC, is satisfied that the risk management and internal control systems put in place to address the key financial, operational, compliance and information technology risks affecting the operations are adequate and effective to meet the needs of the Group in its current business environment as at 31 December 2017.
Principle 12: Audit Committee
The AC comprises four Directors:
Mr Lee Joo Hai (Chairman)
Mr Gay Chee Cheong
Mr Teo Kiang Kok
Mr Lau Wing Tat
In accordance with the principles in the Code, the AC comprises all Non-Executive Directors. The members of AC, collectively, have expertise and extensive experience in accounting, business, financial management and legal, and are qualified to fulfill the AC's responsibilities.
The primary functions of the AC are as follows:
- to assist the Board in discharging its statutory responsibilities on financial and accounting matters;
- to review the financial and operating results and accounting policies of the Group;
- to review significant financial reporting issues and judgments relating to the quarterly and annual financial statements before submission to the Board for approval;
- to review the adequacy and effectiveness of the Group's internal control (financial, operational, compliance and information technology) policies and systems established by the management, either carried out internally or with the assistance of any competent third parties;
- to review the audit plans and reports of the external and internal auditors and to consider the effectiveness of the actions taken by management on the auditors' recommendations;
- to appraise and report to the Board on the audits undertaken by the external and internal auditors, the adequacy of the disclosure of information, and the appropriateness and quality of the system of management and internal controls;
- to review the independence of external auditors annually and to consider the appointment or re-appointment of external auditors, the level of audit and non-audit fees and matters relating to the resignation or removal of the auditors and to approve the remuneration and terms of engagement of the external auditors; and
- to review interested person transactions, as defined in the SGX-ST's Listing Manual
In fulfilling its responsibilities, the AC receives regular reports from the management and the external auditors, KPMG LLP. The AC has full access to and co-operation of the management and meets with KPMG LLP as well as the internal auditors in private at least once a year, and more frequently if necessary. The external auditors provide the AC with updates on recent developments in accounting standards on a periodic basis.
During the year, the AC reviewed the financial statements of the Group before the announcement of the Group's quarterly and full-year results. In the process, the AC considered the key areas of management's estimates and judgement applied for key financial issues including impairment testing, provisioning policies, critical accounting policies and any other significant matters that might affect the integrity of the financial statements and considered the report from the external auditor, including their findings on the key areas of audit focus.
Significant matters that were discussed with management and the external auditor have been included as key audit matters ("KAMs") in the audit report for the financial year ended 31 December 2017. Refer to independent auditors' report of this annual report.
In assessing each KAM, the AC took into consideration the approach and methodology applied in the valuation of assets, as well as the reasonableness of the estimates and key assumptions used. Subject matter experts, such as independent valuers, were consulted where necessary. The AC concluded that management's accounting treatment and estimates in each of the KAMs were appropriate.
The AC reviewed all the non-audit services provided by the external auditors and the aggregate amount of audit fees paid to them. For details of fees payable to the external auditors in respect of audit and non-audit services, please refer to note 22 of the financial statements of this annual report. The AC is satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors; hence has recommended the re-appointment of KPMG LLP as external auditors of the Company at the coming AGM of the Company.
The AC has explicit authority within the scope of its responsibilities to seek any information it requires or to investigate any matter within its terms of reference. The AC has adequate resources to enable it to discharge its responsibilities properly.
The Board has put in place a confidential communication programme as endorsed by the AC. Employees may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters and to ensure that arrangements are in place for the independent investigations of such matters and for appropriate follow-up actions. The details of the confidential communication programme and arrangements have been made available to all employees.
No former partner or director of the Company's existing external auditors is a member of the AC.
Principle 13: Internal Audit
The Board has put in place a dedicated team of internal auditors. The internal audit function reviews the effectiveness of the material internal controls of the Group. The head of internal audit reports directly to the Chairman of the AC and has an appropriate standing within the Group. The AC also ensures that the internal audit function is adequately resourced, and reviews annually the adequacy of the internal audit function. The internal audit team meets the standards set by nationally and internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.
Within this framework, the internal audit function provides reasonable assurance that the risks incurred by the Group in each major activity will be identified, analysed and managed by management. The internal auditors will also make recommendations to enhance the effectiveness and security of the Group's operations.
Principle 14: Shareholder Rights
Principle 15: Communication with Shareholders
Principle 16: Conduct of Shareholder Meetings
The Company is committed to regular and proactive communication with its shareholders. It aims to provide shareholders with clear, balanced, useful and material information on a timely basis to ensure that shareholders receive a balanced and up-to-date view of the Group's performance and business.
Communication is made through:
- an annual report that is prepared and issued to all shareholders. The Board makes every effort to ensure that the annual report includes all relevant information about the Group, including future development and other disclosures required by the Companies' Act, Chapter 50, and Singapore Financial Reporting Standards;
- quarterly and full-year financial statements comprising a summary of the financial information and affairs of the Group for the relevant period;
- explanatory memoranda for AGM and extraordinary general meetings;
- press releases on major developments of the Group;
- disclosures to the SGX-ST via SGXNET; and
- the Group's website at http://www.hyflux.com at which shareholders can access information on the Group at all times.
In addition, shareholders are encouraged to attend the Company's AGM to ensure a high level of accountability and to stay informed of the Group's strategies and growth plans.
The Constitution of the Company does allow a shareholder (who is not a relevant intermediary, as defined in Section 181(6) of the Companies Act) to vote either in person or appoint not more than two proxies to attend and vote in his stead. Such proxy to be appointed need not be a Shareholder. Pursuant to the Companies (Amendment) Act 2014, a shareholder of the Company who is a relevant intermediary (as defined in Section 181(6) of the Companies Act), may appoint more than two proxies to attend, speak and vote at the shareholders' meetings.
Separate resolutions are proposed on each substantially separate issue at the shareholders' meeting. All the resolutions at the general meeting are in single item resolutions.
All shareholders are entitled to vote in accordance with the established voting rules and procedures. To promote greater transparency and effective participation, the Company conducted electronic poll voting for all resolutions tabled at the shareholders' meetings. The rules, including the voting process, are clearly communicated at such meetings.
Shareholders are given the opportunity to raise questions and clarify any issues that they may have relating to the resolutions to be passed. The Board and senior management are present at each shareholders' meeting to respond to any questions from the shareholders. The Group's external auditors are also present to address queries about the conduct of the audit and the preparation and content of the auditors' report. The Group fully supports the Code's principle to encourage active shareholder participation.
The Company does not have a fixed dividend policy for its ordinary shares. The form, frequency and amount of dividends will depend on the Group's earnings, general financial condition, results of operations, capital requirements, cash flow, general business condition, development plans and other factors as the Directors may deem appropriate. Any payouts are clearly communicated to the shareholders via the financial results announcement through SGXNET.
The Investment Committee ("IC") comprises four Directors:
Ms Olivia Lum Ooi Lin (Chairman)
Mr Gay Chee Cheong
Mr Gary Kee Eng Kwee
Mr Simon Tay
The functions of the IC are as follows:
- to oversee all aspects of investment policy and strategy for Group;
- to review proposals on major investments which are not in the ordinary course of the Group's business and to make recommendations to the Board for its approval; and
- to review any other matters as authorised by the Board
KEY MANAGEMENT COMMITTEE
The Company's Key Management Committee is responsible for driving the Group's strategic vision, formulating business plans to achieve business goals, creating the conditions for successful day-to-day operation and delivering long-term value for all stakeholders.
The Key Management Committee comprises the following members:
Ms Olivia Lum Ooi Lin (Chairman)
Ms Lim Suat Wah
Mr Wong Lup Wai
Mr Cheong Aik Hock
Mr Chang Cheow Teck
DEALING IN SECURITIES
The Company has adopted its own internal compliance code pursuant to the SGX-ST's best practices on dealings in securities and these are applicable to all its officers in relation to their dealings in the Company's securities. Its officers are advised not to deal in the Company's shares during the period commencing two weeks or one month before the announcement of the Group's quarterly or full-year results respectively, or if they are in possession of unpublished price-sensitive information of the Group. All officers and employees are also not allowed to deal in the Company's securities on short-term considerations, and are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period.
There are no material contracts of the Company or its subsidiaries involving the interests of the Executive Chairman and Group Chief Executive Officer, each Director or controlling shareholders, either still subsisting at the end of the financial year or entered into since the end of the previous financial year.
INTERESTED PARTY TRANSACTION
The Group has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that the transactions are at arm's length basis. All interested person transactions are subject to review by the AC to ensure compliance with established procedures.
For the financial year ended 31 December 2017, the Group did not enter into any transaction that would be regarded as an interested person transaction pursuant to SGX-ST's Listing Manual.