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Farglory Land Dev Co (FLDS)

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Tuesday 22 February, 2011

Farglory Land Dev Co

Corporate Governance Statement

RNS Number : 6348B
Farglory Land Development Co., Ltd.
22 February 2011
 

Date:February 22, 2011

Farglory Land Development Co. Ltd.

Corporate Governance Statement

Farglory Land Development Co. Ltd. (the "Company" or "Farglory"), a company incorporated in the Republic of China ("ROC"), in accordance with Regulations Governing Corporate Governance of Companies listed on Taiwan Stock Exchange or GreTai Securities Market (the "Corporate Governance Regulations") promulgated by the Taiwan Stock Exchange (the "TSE") and the GreTai Securities Market, as amended on November 10, 2010, hereby issues a report on the Company's best corporate governance practices.

 

Introduction

 

The board of directors of the Company (the "Board") is accountable to the Company's shareholders for the governance of the Company's affairs.  This statement describes how the principles of the Corporate Governance Regulations have been applied to the affairs of the Company.  In applying the principles of the Corporate Governance Regulations, the Board also follows relevant rulings and regulations issued by the ROC Financial Supervisory Commission (the "FSC") and the TSE, such as Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, Regulations Governing Establishment of Internal Control Systems by Public Companies, and Regulations Governing Procedures of the Meetings of the Board of Directors of Public Companies, among others.

 

Application of the Principles of the Corporate Governance Regulations

 

The Board is committed to high standard of corporate governance and seeks to observe the principles identified in the Corporate Governance Regulations and, where applicable and appropriate, the aforesaid relevant rulings and regulations issued by the FSC and TSE.  The principles provided in the Corporate Governance Regulations and the Company's practices are set forth as follows.

 

Capital Structure and Shareholders' Rights and Interests

 

The Company periodically publishes the shareholding changes of its directors, supervisors, management and principal shareholders on the Market Observation Post System ("MOPS"), which is the website designated by the FSC (http://mops.twse.com.tw/mops/web/index) in accordance with law  to ensure that the Company is aware of the identity of it major shareholders, and that the Company is aware of the identity of the beneficial owners in control of the Company, and has established a fire wall between the Company and its related parties.  The Company hasalso stipulated a monitoring guideline to oversee the internal control, management and financial and operational conditions of its subsidiary.  The officers of the subsidiary are appointed by the Company and the representatives designated by the Company are required to attend the meetings of directors and shareholders of the subsidiary.  The subsidiary is further required to stipulate its own internal control policies and issue managerial and self-examination reports, financial data and relevant audit documents to the Company periodically or at the request of the Company from time to time to ensure that the subsidiary has complied with its internal control policies and met the management goals set up by the Company.   The aforesaid measures have been taken for shareholder protection.

 

The Board has designated a spokesperson for the Company to receive and respond to comments and questions from shareholders and report them to the Board. 

 

The Company's major shareholders do not have different voting rights from other shareholders.

 

The following table sets forth certain information as of July 28, 2010, with respect to the common shares owned by each person who, directly or indirectly, has a reportable interest under the ROC law and by all of the Company's directors, supervisors and executive officers as a group.

 

Name

Number of  Common Shares Held as of July 28, 2010

Percentage of Common Shares Held as of July 28, 2010

Fareast Land Development Co., Ltd.

206,109,276

29.18%

Shin Yu Investment Ltd.

128,518,865

18.19%

Farglory International Investment Co., Ltd.

110,816,450

15.69%

Farglory Life Insurance Co. Ltd.

67,769,532

9.59%

Standard Chartered Trust-iShares MSCI Emerging Markets Fund

15,066,000

2.13%

Yu-nu Chao

12,435,840

1.76%

Tung Yuan Construction Co., Ltd.

7,409,980

1.05%

Citigroup US Trust-Primasia Securities - Primasia International Nominees Ltd. Investment Account

4,707,458

0.67%

Yan Jan Investment Co., Ltd.

3,380,240

0.48%

Farglory Logistics Co., Ltd

3,078,000

0.44%

Directors, supervisors and executive officers, as a group

134,674,222

19.1%

 

 

Composition and Operation of the Board

 

The Corporate Governance Regulations require public companies meeting certain criteria to have two independent directors, comprising no less than one-fifth of the total number of directors.  The Company has two independent directors on its five member Board, which is chaired by Mr. Teng-Hsiung Chao, a representative of Shin Yu Investment Ltd.  The Company's current directors were elected by its shareholders at the annual meeting held on June 18, 2010, and their terms expire on June 17, 2013.

 

Candidates for the offices of directors and supervisors may be nominated at the shareholders' meeting at which ballots for the election are cast.  Moreover, as authorized under the ROC Company Law, the Company has adopted a nomination procedure for election of the independent directors in its articles of incorporation.  In the Company's articles of incorporation, ballots for the election of directors and independent directors are cast separately.   Any shareholder who has a personal interest in a matter to be discussed at the shareholders' meeting, the outcome of which may impair the Company's interests, may not vote or exercise voting right on behalf of another shareholder on such matter.

 

The following table shows certain information with respect to each director:

 

Name

Age

Position

Number of  Common Shares Held as of July 28, 2010

Percentage of Common Shares Held as of July 28, 2010

Teng-Hsiung Chao (as a representative of Shin Yu Investment Ltd.)

66

Chairman and Director

128,518,865

18.19%

Chih-Hung Huang

51

Director

532,534

0.08%

Chih-Chiang Hsu (as a representative of Shin Yu Investment Ltd.)

47

Director

128,518,865

18.19%

Cheng-Sheng Chang

66

Independent Director

-

-

Meng-Han Chuang

63

Independent Director

-

-

 

 

For the fiscal year 2010, the Board held a total of 13 meetings, and the relevant attendance by the directors at Board meetings are set forth in the table below:

 

Title

Name

Attendance

Attendance by Proxy

Attendance Rate (%) (Excluding Attendance by Proxy)

Chairman

Teng-Hsiung Chao (as a representative of Shin Yu Investment Ltd.)

10

1

84.6

Director

Chih-Hung Huang

13

0

100

Director

Chih-Chiang Hsu (as a representative of Shin Yu Investment Ltd.)*

8

0

61.5

Director

Wen-Chia Chao (as a representative of Shin Yu Investment Ltd.)*

0

0

0

Independent Director

Cheng-Sheng Chang

13

0

100

Independent Director

Meng-Han Chuang

9

1

76.9

 

* At the annual meeting held on June 18, 2010, the shareholders reelected the directors of the Company, and Company's previous director Wen-Chia Chao was replaced by Chih-Chiang Hsu as the new representative of Shin Yu Investment Ltd.

 

All of the directors attended the annual shareholders' meeting held in June 18, 2010.

 

Code of Ethics

 

The Company has in place a code of ethics, as adopted and amended by its board of directors and approved at the shareholders' meetings, providing internal guidelines outlining proper procedures governing the management of conflict of interests between the Company's and the directors, the supervisors and the officers of the Company,  including procedures approving interested transactions and voting restrictions on certain matters.  Any person violating the code of ethics will be punished and relevant violation details will be disclosed on the MOPS.

 

Communication Channel with Interested Parties

 

The Company has made the name and telephone number of its spokesperson and the deputy spokesperson available on MOPS to facilitate communications with interested parties.

 

Disclosure of Information

 

In addition to relevant information disclosed by the Company on MOPS as required by the FSC and the TSE, relevant corporate governance, financial and operational information can be found on the Company's website at: http://www.farglory.com.tw/FG_group_website-CH/FG_land/index.html.  Further, the Company has designated specific persons for researching and disclosing material information about the Company and has appointed a spokesperson to promptly communicate to the public material information about the Company.

 

Composition and Operation of the Supervisors

 

While the Company is not legally required to establish Board committees (e.g., nomination, remuneration and audit committees), in addition to the appointment of independent directors, the Company is required to have two or more supervisors under the ROC Company Law.  The Company currently has three supervisors, each of whom was elected by its shareholders for a three-year term.  The Company's current supervisors were elected by its shareholders at the annual meeting held on June 18, 2010, and their terms expire on June 17, 2013.  The Company's supervisors are responsible for implementing the powers and functions of supervisors required by relevant laws and regulations, including investigating its business and financial condition, inspecting corporate records, verifying statements by the Board at shareholders' meetings, calling of shareholders' meetings, representing the Company in negotiations with its directors and notifying, when appropriate, the directors to cease act in contravention of any applicable law or regulation, in contravention of the Company's articles of incorporation or on matters beyond the Company's scope of business.

 

The following table sets forth certain information relating to the Company's supervisors.

 

Name

Age

Position

Number of  Common Shares Held as of July 28, 2010

Percentage of Common Shares Held as of July 28, 2010

Wen-Chia Chao

40

Supervisor

2,684,959

0.38%

Tiao-Chang Tsai

70

Supervisor

50,303

0.01%

Chang Chun Lin

54

Supervisor

-

-

 

 

For the 2010 fiscal year, the Board held a total of 13 meetings, and the relevant attendance by the supervisors at Board meetings are set forth in the table below:

 

Title

Name

Attendance

Attendance by Proxy

Attendance Rate (%) (Excluding Attendance by Proxy)

Supervisor

Wen-Chia Chao*

0

0

0

Supervisor

Wei-Cheng Wang (as a representative of Farglory International Investment Co. Ltd.)*

5

0

38.5

Supervisor

Tiao-Chang Tsai

8

0

61.5

Supervisor

Chang Chun Lin

10

0

76.9

 

* At an annual meeting held on June 18, 2010, the shareholders reelected the Company's supervisors, and the previous supervisor Wei-Cheng Wang, a representative of Farglory International Investment Co. Ltd., was replaced by Wen-Chia Chao, an individual.  

 

Employee Benefits

 

The Company maintains different pension plans for its employees in accordance with the ROC Labor Standards Law and  the Labor Pension Act depending on the date the employee joins the Company.  In general, according to the Labor Standards Law, before July 1, 2005, the Company has an obligation to contribute, on a monthly basis, an amount between 2% and 15% of the employee's total monthly wage payment to the retirement fund of its pension plan.  On and after July 1, 2005 and under the Labor Pension Act, the Company is obligated to contribute on a monthly basis an amount equal to at least 6% of each employee's monthly wage into the employees' accounts maintained with the Bureau of Labor Insurance. 

 

The Company also maintains employee health and safety insurance and employee [honesty] insurance, and provides various benefit plans and training programs in accordance with the position held by each employee.

 

Relationship with Investors

 

The Company publishes its financial information periodically on MOPS for the investor's reference.  From time to time, the Company attends the investor conferences held by the securities houses to communicate and strengthen its relationship with domestic and international investors.

 

Relationship with Suppliers

 

The Company maintains favorable supply and demand relationship with the its various suppliers and contractors.

 

Rights and Interests of Interested Parties

 

Interested parties may provide their advices and suggestions to, or communicate with, the Company at any time through various channels, including through the Company's spokesperson.

 

Internal Control and Risk Management System

 

The Company has stipulated an internal control policy in accordance with the Regulations Governing Establishment of Internal Controls by Public Companies promulgated by the FSC.  The internal control policy includes generally the following components: internal environment control, risk assessment and response, controlled activities, information and communications and monitoring mechanism.  The internal control policy covers generally all kind of operational and financial activities and the corresponding risk management mechanism and procedures, such as activities related to sale and receipt, purchase and payment, production, finance and investment. 

 

In addition, as a public company, the Company follows the Guidelines for Acquisition and Disposal of Assets by Public Companies promulgated by the FSC for transactions with related parties.  The Company has also adopted an internal guideline for acquisition and disposal of assets.  The Company's internal guideline provides that an acquisition of properties from, or a disposal to, a related party must be conducted at arm's length and approved by the Board.  The Company also adopted an internal guideline on the provision of loans and guarantees to third parties, pursuant to which any loan or guarantee extended to third parties must be assessed of its necessity and approved by the Company's chairman or the Board.  In general, the Company may only provide loans and guarantees to its business partners, its controlled subsidiaries and its controlling shareholders.   Other types of related party transactions are subject to stringent and standard internal approval procedures.  An interested director is required to abstain from voting in the board meeting.

 

Remuneration

 

The Board is authorized under the Company's articles of incorporation to pay and determine remuneration to directors and supervisors according to the extent of their participation in, and the value of their contribution to, the operation of the Company, based on the usual standard prevalent in the particular industry.  In 2009, the Company's directors, supervisors and executive officers, each as a group, received aggregate remunerations of approximately NT$10.7 million (US$0.3 million), NT$3.9 million (US$0.1 million) and NT$17.1 million (US$0.5 million) in 2009.  On March 31, 2010, the Board resolved to propose an aggregate remuneration to its directors of NT$13.0 million (US$0.4 million) for 2010. Such proposal was approved in the annual shareholders' meeting held on June 18, 2010.

 

The Company does not have service contracts with any of its directors, supervisors and executive officers that provide for benefits upon termination of employment.

 

Client Management Policy

 

The Company has established customer service lines and designated relevant personnel for client service, and conducted periodical review on the services performed by relevant departments of the Company to elevate the quality of its products and services.

 

Statement of Compliance

 

The Board believe it has complied with all the material provisions set out in the Corporate Governance Regulations and relevant rulings and regulations issued by the FSC and the TSE.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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