Information extracted from the section "Corporate Governance" of 2019 Annual Report:

Board of Directors

Summary of the Board of Directors Mandate

 

Composition and Terms of Office of the Board

As at the date of this Annual Report, the Board is composed of 10 Directors, of whom one is Executive Director, four are Non-executive Directors and five are Independent Non-executive Directors. The Board maintains an appropriate level of checks and balances to ensure independence and objectivity of the decisions of the Board, as well as the impartial oversight of the Management. The Board acts honestly and in good faith so that decisions are made objectively and in the best interests of the Group with a view to delivering long-term and maximum shareholder value and fulfilling its corporate responsibility to other stakeholders of the Group.

Mr LAW Yee Kwan Quinn was appointed as Independent Non-executive Director and a member of each of the Audit Committee and the Risk Committee with effect from 13 March 2019. Mr LI Jiuzhong resigned as Executive Director and Chief Risk Officer with effect from 15 March 2019. Mr CHEN Siqing resigned as Chairman of the Board, Non-executive Director and a member of the Nomination and Remuneration Committee with effect from 28 April 2019. Mr LIU Liange was appointed as Chairman of the Board with effect from 5 July 2019. Dr CHOI Koon Shum was appointed as a member of the Strategy and Budget Committee and ceased to be a member of the Audit Committee with effect from 30 October 2019. The Board newly established the Sustainability Committee on 23 December 2019 and appointed Mdm CHENG Eva as Chairman of the Sustainability Committee, while other members are Mr GAO Yingxin, Dr CHOI Koon Shum, Mr KOH Beng Seng, Mr LAW Yee Kwan Quinn and Mr TUNG Savio Wai-Hok. Mr WANG Jiang was appointed as Vice Chairman, Non-executive Director and a member of each of the Nomination and Remuneration Committee and the Strategy and Budget Committee with effect from 20 March 2020. Mr SUN Yu was appointed as Non-executive Director and a member of the Risk Committee with effect from 20 March 2020. Save as disclosed above, there are no other changes to the composition of the Board and Board Committees during the year and up to the date of this Annual Report.

All Non-executive Directors and Independent Non-executive Directors of the Company have been appointed for a fixed term of approximately three years, with formal letters of appointment setting out the key terms and conditions of their appointment. In accordance with Article 98 of the Articles of Association and pursuant to Code Provision A.4.2 of the Corporate Governance Code, the terms of office of Mr GAO Yingxin, Mr KOH Beng Seng and Mr TUNG Savio Wai-Hok will expire at the forthcoming annual general meeting and, being eligible, offer themselves for re-election. Further, pursuant to Article 102 of the Articles of Association, any Director appointed by the Board shall hold office only until the next following general meeting or the next following annual general meeting of the Company, and shall then be eligible for re-election at such meeting. Accordingly, the terms of office of Mr WANG Jiang and Mr SUN Yu, who were appointed on 20 March 2020, will expire at the forthcoming annual general meeting and, being eligible, offer themselves for re-election.

Further details regarding the proposed re-election of Directors are set out in the section headed “Report of the Directors”. In addition, the Company has also established a written and formal process for the appointment of the Independent Non-executive Directors to ensure that the appointment procedures are standardised, thorough and transparent.

Selection and Nomination of Board Members

The Company has in place relevant policies on the nomination of Board members. The Nomination and Remuneration Committee shall take into account the existing composition of the Board and the business requirements of the Group, follow the board diversity, independence of directors and other relevant supervisory and policy requirements and be responsible for the identification, selection and nomination of Board members.

The Company recognises the importance and benefits of board diversity. In order to promote the Board’s effectiveness and standards of corporate governance, the Company has adopted the “Board Diversity Policy” which will be considered in identifying suitable and qualified candidates to be a Board member. The said policy provides that in designing the Board’s composition, board diversity should be considered in a number of aspects, including but not limited to gender, age, cultural and educational background, ethnicity, geographical location, professional experience, skills, knowledge and track records, etc., to ensure an appropriate diversity of skills, backgrounds and viewpoints. At the same time, all Board nominations and appointments are made on merit, in the context of the skills and experience the Board as a whole required. The various perspectives of Board diversity elements as mentioned above shall also be adequately considered during the selection process of new Board members.

Potential candidates of Executive Directors could be sourced and selected amongst the senior management. Potential candidates of Independent Non-executive Directors could be recruited through global selection. Pursuant to the provisions of the Articles of Association and relevant regulations, shareholders could also nominate a person other than a retiring Director for election as a Director (including Non-executive Director) at a general meeting. Where necessary, the Nomination and Remuneration Committee may appoint external advisors to assist in recruiting appropriate individuals. The Nomination and Remuneration Committee shall consider various factors in assessing the suitability of a proposed candidate for appointment as Board member, which include:

•    Board diversity;

•    Reputation of candidate;

•    Professional knowledge and industrial experience of candidate;

•    Commitment of candidate to devote sufficient time to discharge duties as a Board member; and

•    Satisfaction of independence requirements of the Listing Rules and the “Policy on Independence of Directors” of the Company in the case of a candidate for Independent Non-executive Director.

The Nomination and Remuneration Committee shall assess the candidates pursuant to the selection criteria, hold meetings to discuss and arrange interviews with the candidates where necessary, and make recommendation to the Board. The appointment of Directors shall be eventually approved by the Board and/or shareholders at general meetings.

For the Board member of the Company who was newly appointed in 2019 and the retiring Board members standing for re-election at 2019 annual general meeting of the Company, the Nomination and Remuneration Committee reviewed their biographical details against relevant requirements under the Listing Rules and the selection criteria set out in the Company’s nomination policies of Board members and considered they have the required character, integrity and professional knowledge and experience to continue fulfilling their role and contributing to the Company and the diversity of the Board.

Under the current board membership, all Directors possess extensive experience in banking and/or management. In addition, over one-third of them are Independent Non-executive Directors, who possess experience in banking and financial industry as well as expertise in strategic development and risk management. The Company has received from each of the Independent Non-executive Directors an annual confirmation of his/her independence by reference to the “Policy on Independence of Directors” of the Company. Based on the information available to the Company, it considers that all of the Independent Non-executive Directors are independent. Moreover, all Directors have disclosed to the Company their significant commitments and have undertaken and confirmed that they are able to devote sufficient time to the affairs of the Company. Biographical details of the professional experience, skills and knowledge of the Board members are set out in the section headed “Board of Directors and Senior Management” and are available under the sub-section “Organisation” of the section headed “About Us” on the Company’s website at www.bochk.com.

An analysis of the Board’s composition as at the date of this Annual Report is set out below:

Mr LIU Liange, Mr WANG Jiang and Mr LIN Jingzhen are Executive Directors of BOC, and Mr SUN Yu is Executive Vice President of BOC. Save as disclosed above, there are no other relationships between the Board members, including financial, business, family or other material relationships.

In addition, it is expressly provided in the Board’s Mandate that, unless the applicable laws or regulations allow otherwise, if a substantial shareholder or Director has a conflict of interest in the matter to be considered by the Board, a Board meeting must be convened and attended by the Independent Non-executive Directors who have no material interest and give professional advice to the subject matter for further consideration and approval.

Directors’ Liability Insurance Policy

During the year, the Company has arranged for appropriate cover on Directors’ Liability Insurance Policy to indemnify the Directors for liabilities arising from the corporate activities. The coverage and the amount insured under such policy are reviewed annually by the Company.

Directors’ Training and Professional Development

To ensure the newly appointed Directors have adequate understanding of the Company’s business operations and to enable all Directors to update their knowledge regularly so as to provide informed recommendation and advice and make contribution to the Company, the Board has established a set of written policies specifying guidelines on Directors’ induction upon appointment and continuous training.

The Company arranges appropriate Directors’ induction through the use of induction handbook, face-to-face meetings and other means, and in accordance with the needs of individual Directors. Topics include but not limited to:

–   governance structure;

–   standing agenda of the Board;

–   regulatory requirements on corporate governance;

–   focus of concern of regulators; and

–   business operation, development plan and focus of internal control.

The Company also provides regular updates to Board members on material changes to regulatory requirements applicable to the Directors and the Group on a timely basis; and the Company arranges regular meetings with the Management to facilitate the understanding of its latest business development. In addition, Board members are encouraged to participate actively in continuous training programmes. The Company also arranges relevant professional training programmes for Board members at the Company’s expense.

During the year, all Directors have participated in continuous professional development to develop and refresh their knowledge and skills in accordance with Code Provision A.6.5 of the Corporate Governance Code contained in Appendix 14 to the Listing Rules. In 2019, the Company invited expert to conduct seminar to the Directors and the senior management with regard to data driven business in Southeast Asia.

Furthermore, each of the Directors has received a series of training locally or overseas as he/she thought fit. During the year, they attended briefings, meetings, seminars, forums and conferences organised by the Company or regulatory authorities, including relevant training for directors provided by the HKMA and the Stock Exchange which covered ESG governance and reporting, climate risk and climate finance, management of talent risk, as well as analysis of global economic and financial situation. Other areas of training received by the Directors included:

–   risk management and internal control;

–   business conduct, anti-corruption and ethical standards;

–   anti-money laundering;

–   corporate governance;

–   developments of technology;

–   regulatory updates;

–   banking industry development trend; and

–   economic developments in the Greater Bay Area, etc.

The Directors’ records of annual training information have been entered in the register of directors’ training records maintained and updated by the Company from time to time. As at year end, the participation of all Directors in continuous professional development is summarised as follows:

Directors’ Attendance at Board Meetings, Board Committee Meetings and General Meeting

Five Board meetings were held during 2019 with an average attendance rate of 93%. Regular meeting schedule for the year was prepared and approved by the Board in the preceding year. Formal notices of regular Board meetings were sent to all Directors at least 14 days before the date of the scheduled meetings, and Board agenda and meeting materials of sufficient quality were despatched to all Board members for review at least seven days prior to the scheduled meetings. Board agenda of each meeting was approved by the Chairman following consultation with other Board members and the senior management. Draft and final versions of Board minutes were sent to all Directors for their comment and record respectively within a reasonable period after the meetings were held.

The Board also received monthly reports with information on the Group’s latest financial and operating performance. Accordingly, Directors can have a balanced assessment of the Group’s performance, position and prospects throughout the year.

In addition, in order to facilitate open discussion with all the Independent Non-executive Directors, the Chairman met with all the Independent Non-executive Directors in the absence of other Directors and the senior management. Relevant practice has been incorporated in the Working Rules of the Board.

Details of respective Directors’ attendance at the Board meetings, Board Committee meetings and annual general meeting in 2019 are set out as follows:

Apart from formal Board meetings and annual general meeting, the Company has set up a system of pre-communication meeting for the Independent Non-executive Directors, where major agenda items have been presented to the Independent Non-executive Directors before each Board meeting, and their comments have been timely conveyed to the Management for follow up actions so as to enhance the effectiveness of deliberation at Board meetings.

Moreover, the Company has arranged, on a regular basis, other informal events for the Board members and the senior management to facilitate their communication and interactions. For example, the Company has organised working meals from time to time, and Board members and the senior management have been invited to join and share insights on the Company’s business and strategic issues. Further, a board retreat to Jakarta has also been held during the year to enhance communication between the Board and the senior management.