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Corporate Governance
The Board fully supports the underlying principles of corporate governance contained in the Combined Code, notwithstanding that, as its securities are not listed on the Official List, it is not required to comply with such recommendations. It has sought to comply with the provisions of the Combined Code, insofar as is practicable and appropriate for a public company of its size and nature, and recognises its overall responsibility for the Company’s systems of internal control and for monitoring their effectiveness.

The main features of the Company’s corporate governance procedures, which do not constitute full compliance with the Combined Code, are as follows:
(a):the Board has 3 non-executive directors who take an active role in board matters;
(b):the Company has an Audit Committee, a Remuneration Committee and an AIM Rules Compliance Committee which consists of Frank Lewis and David Tsui, each of which consists of the non-executive directors, and meets regularly with executive directors in attendance by invitation. The audit committee has unrestricted access to the Group’s auditors and ensures that auditor independence has not been compromised;
(c):all business activity is organised within a defined structure with formal lines of responsibility and delegation of authority, including a schedule of “matters referred to the Board”; and
(d):regular monitoring of key performance indicators and financial results together with comparison of these against expectations.

Audit Committee
The following is a summary of the terms of reference under which the Company’s Audit Committee operates. The Audit Committee comprises Frank Lewis, Alei Duan and Liu Wenxian, all of whom are non-executive directors of the Company.

The Audit Committee shall have at least two members and each member shall be an independent non-executive director. The Board must be satisfied that at least one member of the Audit Committee has recent and relevant financial experience. Appointments to the Audit Committee should be made by the Board in consultation with the Nomination Committee and the chairman of the Audit Committee. The Audit Committee shall meet at least three times in every year and any other time as required by either the chairman of the Audit Committee, the finance director of the Company or the external auditors of the Company. In addition, the Audit Committee shall meet with the external auditors of the Company (without any of the executives attending) at least once a year without the [finance director/chief financial officer or any other executive director present.

The Audit Committee shall, inter alia:
(a): monitor the financial reporting and internal financial control principles of the Company;
(b): maintain appropriate relationships with external auditors including considering the appointment and remuneration of external auditors and review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process;
(c): review all financial results of the Company and financial statements, including all announcements in respect thereof before submission of the relevant documents to the Board;
(d): review and discuss (where necessary) any issues and recommendations of the external auditors including reviewing the external auditors’ management letter and management’s response;
(e): consider all major findings of internal operational audit reviews and management’s response to ensure co-ordination between internal and external auditors;
(f): review the Board’s statement on internal reporting systems and keep the effectiveness of such systems under review; and
(g): consider all other relevant findings and audit programmes of the Company.
The Audit Committee shall report annually on the Board’s behalf to the Shareholders. The Audit Committee shall compile a report to Shareholders on its activities to be included in the Company’s annual report [such report to comply with the Combined Code] or, where the Audit Committee has determined that there are good reasons for not so complying, an explanation of those reasons.
The Audit Committee is authorised to:
(a):investigate any activity within its terms of reference;
(b):seek any information it requires from any employee of the Company; and
(c):obtain, at the Company’s expense, outside legal or other independent professional advice and to secure the attendance of such persons to meetings as it considers necessary and appropriate.

Remuneration Committee
The following is a summary of the terms of reference under which the Company’s Remuneration Committee operates. The Remuneration Committee comprises Frank Lewis, Alei Duan and Liu Wenxian, all of whom are non-executive directors of the Company.
The Remuneration Committee shall have at least two members who shall be independent non- executive directors. The members of the Remuneration Committee shall be appointed by the Board on recommendation from the Nomination Committee. The chief executive officer of the Company will normally be invited to meetings of the Remuneration Committee to discuss the performance of other executive directors but shall not be involved in any of the decisions. The Remuneration Committee may invite any person it thinks appropriate to join the members of the Remuneration Committee at its meetings. The Remuneration Committee shall meet at least twice in every year and any other time as required by either the chairman of the Remuneration Committee, the finance director of the Company or the external auditors of the Company.

The Remuneration Committee shall, inter alia:
(a):ensure that the executive directors are fairly rewarded for their individual contributions to the overall performance of the Company but to ensure that the Company avoids paying more than is necessary for this purpose;
(b):consider the remuneration packages of the executive directors and any recommendations made by the managing director for changes to their remuneration packages including in respect of bonuses (including associated performance criteria), other benefits, pension arrangements and other terms of their service contracts and any other matters relating to the remuneration of or terms of employment applicable to the executive directors that may be referred to the Remuneration Committee by the Board;
(c):oversee and review all aspects of the Company’s share option schemes including the selection of eligible directors and other employees and the terms of any options granted;
(d):demonstrate to the Company’s shareholders that the remuneration of the executive directors is set by an independent committee of the Board; and
(e):consider and make recommendations to the Board about the public disclosure of information about the executive directors’ remuneration packages and structures in addition to those required by law or by the London Stock Exchange.

The chairman of the Remuneration Committee shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Remuneration Committee shall produce an annual report. This should accompany the directors’ report in the Company’s annual report and accounts and consider each year whether such report should be put to the Company’s Shareholders for approval at the annual general meeting.
The Remuneration Committee is authorised to:
(a):investigate any activity within its terms of reference;
(b):seek any information it requires from any employee of the Company;
(c):assess the remuneration paid by other UK listed companies of a similar size in any comparable industry sector and to assess whether changes to the executive directors remuneration is appropriate for the purpose of making their remuneration competitive or otherwise comparable with the remuneration paid by such companies; and
(d):obtain, at the Company’s expense, outside legal or other independent professional advice, including independent remuneration consultants, when the Remuneration Committee reasonably believes it is necessary to do so and to secure the attendance of such persons to meetings as it considers necessary and appropriate.

AIM Rules Compliance Committee
The following is a summary of the terms of reference under which the Company’s AIM Rules Compliance Committee operates. The AIM Rules Compliance Committee comprises Frank Lewis and David Tsui.
The AIM Rules Compliance Committee is responsible for ensuring that the Company:
(a): has in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules;
(b):seeks advice from its nominated adviser regarding its compliance with the AIM Rules whenever it is appropriate and takes advice into account;
(c):provides its nominated adviser with any information it requests in order for the nominated adviser to carry out its responsibilities under the AIM Rules;
(d):ensures that each Director and Proposed Director accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and
(e):ensures that each Director and Proposed Director discloses without delay all information which it needs in order to comply with Rule 17 of the AIM Rules insofar as that information is known to the Directors or Proposed Directors or could with reasonable diligence be ascertained.
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Copyright © 2011 ASIA CERAMICS HOLDINGS PLC All Rights Reserved.
ASIA CERAMICS HOLDINGS PLC
Add: 12 Castle Street, St Helier Jersey, JE2 3RT,UK. UK- 0044 7776 481 237.
Companies (Jersey) Law 1991, as amended with registered number 105875