Corporate Governance

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Level and Mix of Remuneration

Principle 7: The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the company, taking into account the strategic objectives of the company.

The Company advocates a performance-based remuneration system for Executive Directors and Key Management Personnel that is flexible and responsive to the market. The remuneration of the Executive Directors and the key management personnel comprises a basic salary component and a variable component which is the annual bonus, based on the performance of the Group as a whole and the individuals performance, designed to align their interests with those of shareholders.

The CEO Mr Michael Yap Kiam Siew and the Executive Director Mr Lee Wan Lik has each entered into a service agreement (the “Service Agreement”) with the Company. The Service Agreement is valid for a term of one year and thereafter continues from year to year unless terminated in accordance with the provisions of the Service Agreement. The Service Agreement can be terminated by either party giving not less than three months’ notice provided that the Company shall have the option to pay three months’ salary in lieu of any required period of notice. Except for such payment in lieu of notice as provided for under the Service Agreement, no compensation or damages are payable by the Company to Mr Lee Wan Lik and Mr Michael Yap Kiam Siew respectively, in respect of their termination in accordance with the terms of the Service Agreement.

The RC has adopted a framework which consists of a base fee to remunerate Independent Directors and Non-Executive Directors based on their appointments and roles in the respective Board Committees, taking into account the level of contribution and factors such as effort, time spent and responsibilities, and the fees paid by comparable companies. Directors’ fees to be paid to the Independent Non-Executive Directors will be tabled at the Company’s AGM for shareholders’ approval. The Directors’ fees are reviewed annually to ensure that the Independent Directors are not overcompensated to the extent that their independence may be compromised. Other than Directors’ fees, the Independent Directors do not receive other form of remuneration from the Company. The RC has recommended the payment of the Directors’ fees of S$78,000 for FY2020. This recommendation has been endorsed by the Board and will be tabled at the Company’s AGM for shareholders’ approval.

The RC has adopted a framework which consists of a base fee to remunerate Independent Directors and NonExecutive Directors based on their appointments and roles in the respective Board Committees, taking into account the level of contribution and factors such as eff ort , time spent and responsibilities, and the fees paid by comparable companies. Directors’ fees to be paid to the Independent Non-Executive Directors will be tabled at the Company’s AGM for shareholders’ approval. The Directors’ fees are reviewed annually to ensure that the Independent Directors are not overcompensated to the extent that their independence may be compromised. Other than Directors’ fees, the Independent Directors do not receive other form of remuneration from the Company. The RC has recommended the payment of the Directors’ fees of S$78,000 for FY2022. This recommendation has been endorsed by the Board and will be tabled at the Company’s AGM for shareholders’ approval.

The Company does not use contractual provisions to allow the Company to reclaim incentive components of remuneration from the Executive Director and key management personnel in exceptional circumstances of misstatement of financial statements, or of misconduct resulting in financial loss to the Company. The company should be able to avail itself to remedies against the Executive Directors and key management personnel in the event such breach of fiduciary duties.

Disclosure on Remuneration

Principle 8: The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.

Directors’ remuneration

A breakdown, showing the level and mix of each individual director’s remuneration paid or payable for FY2022 is as follows:

Name of Director Salary Bonus Director’s fees Termination, retirement and post-employment benefits Total
Mr Lee Wan Lik
– spouse of Lam Pui Wan
HK$600,000 HK$18,000 HK$618,000
Mr Michael Yap Kiam Siew HK$1,900,824 HK$780,000 HK$38,223 HK$2,719,047
Ms Lam Pui Wan
– spouse of Lee Wan Lik
HK$208,000 HK$208,000
Mr Stephen Ho ChiMing (S$28,000)/td> HK$161,000 HK$161,000
Mr Koji Miura (S$25,000) HK$143,750 HK$143,750
class=”main-col”Mr Chan Ching Chuen (S$25,000) HK$143,750 HK$143,750

Note:

(1) Mr Michael Yap Kiam Siew was appointed the CEO of the Group on 15 March 2022.

For the FY2022, the Company has six (6) key management personnel and the disclosure of their remuneration for the FY2022 is as follows:

Remuneration band and name of key management personnel Salary Bonus Termination, retirement and post-employment benefits Total
Individual remuneration is above S$250,000 to S$500,000 (approximately HK$1,500,000 to HK$3,000,000)
Ms Mary Rose T. Tan(1) 13% 87% 100%
Individual remuneration is below S$250,000 (approximately HK$1,500,000)
Mr Stephen Ma 84% 14% 2% 100%
Mr Jerry Chua 71% 6% 23% 100%
Mr Rene Toling Lindio 63% 14% 23% 100%
Ms Peggy Sam 88% 12% 100%
Miss Eleanor Jim 84% 14% 2% 100%
Total remuneration paid in FY2022 to the key management personnel HK$3,662,337 HK$518,093 HK$2,342,014 HK$6,522,444

Note:

(1) Ms Mary Rose T. Tan has retired as the President of Azeus Systems Philippines Limited (a wholly owned subsidiary of the Company) on 31 January 2022

The Company believes that it should not disclose the remuneration paid to the key management personnel in absolute amount due to the highly competitive market and in the interest of maintaining good morale and building team work within the Group.

There were no employees who are substantial shareholders of the Company and are immediate family members of a Director, the CEO or a substantial shareholder of the Company, and whose remuneration exceeded S$100,000 in FY2022.

There were no termination of any Directors and Key Management Personnel during FY2022.

ACCOUNTABILITY AND AUDIT

Risk Management and Internal Controls

Principle 9: The Board is responsible for the governance of risk and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of the company and its shareholders.

The Board is responsible for ensuring that there is a system of internal financial controls, operational and compliance controls and information technology controls, and risk management policies and for reviewing its adequacy and effectiveness. The Management is responsible for internal control and for ensuring compliance therewith. The Audit Committee (“AC”) assists the Board in discharging its internal control review responsibilities. The Board makes continuous efforts to embed internal controls into the operations of the businesses and to deal with areas of improvement which come to the attention of the Management and the Board.

The Company does not have a Risk Management Committee. However, the Management regularly reviews the Group’s business and operational activities to identify areas of significant business risks as well as 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 and the AC. The Group’s financial risk management is disclosed under Note 28 of the Notes to the Financial Statements on pages 78 to 85 of this Annual Report.

The Management, internal auditor and the external auditor of the Company conduct reviews and audits on a regular basis that involve testing the adequacy and effectiveness of material internal controls on key risks. Any material noncompliance or lapses in internal controls and its corresponding mitigating actions will be reported to the AC. At least annually, the Board, with the assistance from the AC, will review the adequacy and effectiveness of the Company’s Risk Management and internal control systems, including financial, operational, compliance and information technology risks.

The Board notes that these internal control systems are designed to manage rather than to eliminate the risk of failure to achieve business objectives. In addition, these systems can only provide reasonable but not absolute assurance against material misstatement or loss.

For FY2022, the Board has received written assurances from the CEO and the Group Financial Controller (a) that the financial records have been properly maintained and the financial statements give a true and fair view of the Company’s operations and finances; and (b) that the risk management and internal control systems of the Company is adequate and effective to deal with major risks relating to financial, operational, information technology and compliance aspects.

Based on the systems of risk management and internal controls established and maintained by the Group, work performed and reports by the internal and external auditors and the above written assurances, the Board, with the concurrence of the AC, is of the opinion that the Group’s risk management and internal controls systems, addressing the financial, operational, compliance and information technology risks, are effective and also adequate.