The Directors of Grand Banks Yachts Limited (the "Company") are committed to maintaining a high standard of corporate governance within the Company and its subsidiary companies (the "Group"). The Company has adopted the principles set out in the Code of Corporate Governance 2005 (the "Code") established by the Singapore Corporate Governance Committee and the relevant sections of the Listing Manual issued by the Singapore Exchange Securities Trading Limited ("SGX-ST").
This report outlines the Company's main corporate governance practices that are in place. Where there are deviations from the Code, appropriate explanations are provided.
BOARD OF DIRECTORS
(Code of Corporate Governance Principles 1, 2, 3, 4, 6 & 10)
- Robert William Livingston (Chairman)
- Robert William Livingston II
- Jeffrey Stewart Bland
- Michael Grenville Gray
- Roger Gaimster Langdale
- Peter Kevin Poli
The Board of Directors consists of two executive directors, one non-executive director and three independent directors. Every Director is expected, in the course of carrying out his duties, to act in good faith and consider at all times, the interests of the Group. The Board oversees the management of the Group and meets regularly throughout the year to do so. The Board sets the overall strategy of the Group as well as policies covering various matters with an emphasis on internal controls, financial performance and risk management procedures. The Board delegates the implementation of business policies and day-to-day operations to the Executive Directors and the Group's management team.
The Board's three independent directors are respected professionals drawn from a broad spectrum of expertise which enables them, in their collective wisdom, to contribute effectively and provide a balance of views at both Board and Board Committee meetings. Details of the Directors' academic and professional qualifications and other appointments are set out on page 6 and 7 of this Annual Report.
The role of the Chairman is separate from that of the Chief Executive Officer. The Chief Executive Officer is the son of the Chairman. There is adequate accountability and transparency as independent directors make up 50% of the Board. The Board is able to exercise its power objectively and independently from the management.
The Chairman's responsibilities include promoting high standards of corporate governance, scheduling meetings that enable the Board to perform its duties, establishing the agenda for the Board meetings in consultation with the CEO and ensuring that the Board reviews and approves the Group's material strategies and policies. The CEO's responsibilities encompass managing the day-to-day business activities of the Group, developing and executing the Group's strategies, reporting back to the Board on the performance of the Group, and providing guidance to the Group's employees.
Matters which specifically require the Board's approval or involvement are those involving material acquisitions and disposals of assets, borrowings, corporate or financial restructuring, share issuances, dividends and other returns to shareholders, establishment of strategies and objectives, setting the Group's budget and financial plans, monitoring financial and management performance, authorizing executive compensation, evaluating internal controls and risk management, approving quarterly and year-end financial reports and overseeing corporate governance.
The Board held eight meetings in the financial year ended 30 June 2011 including ad hoc Board meetings which are also held whenever the Board's guidance or approval is required, outside of the scheduled Board meetings. The number of Board and Committee meetings and the record of attendance of each director during the financial year ended 30 June 2011 is set out below:
Dates of Board, Board Committee and annual general meetings are scheduled in advance in consultation with all of the Directors. A Director who is unable to attend a Board or Committee meeting in person is invited to participate in the meeting via telephone or video conference.
The Directors are provided with complete and timely information prior to meetings and on an on-going basis to enable them to fulfill their duties. Management provided members of the Board with quarterly management accounts, as well as relevant background information relating to the matters that were discussed at the Board meetings. Detailed board papers are sent out to the Directors before the scheduled meetings so that Directors understand the issues in advance and may spend more time discussing the topic at the meeting. However, certain sensitive issues are tabled at the meeting and discussed without any materials being distributed.
The Directors have separate and independent access to the Company's senior management and the company secretary. Each member of the Board also has direct access to the Group's independent professional advisors, as and when necessary, to discharge his responsibility effectively with any costs of doing so covered by the Group. In addition, the Directors, either individually or as a group, may seek separate independent professional advice, if necessary, at the expense of the Company.
The Directors continuously update themselves on new laws, regulations and changing commercial risks. Every Director is also invited to seek additional training to develop further skills for performing his duties. All three Directors residing in Singapore for the entire fiscal year (Messrs Gray, Langdale and Poli) attended classes and/or events sponsored by the Singapore Institute of Directors in the past year. The Directors may also, at any time, visit the Group's production facility, sales locations or attend dealer meetings, trade shows and customer activities in order to gain a better understanding of the Group's business. If regulatory changes have a material impact on either the Group or the Directors then Management will brief the Directors at the Board meetings.
BOARD MEMBERSHIP
In accordance with the Company's Articles of Association, half of the Board including the Chairman is subject to re-election annually. The directors named below are retiring and being eligible, offer themselves for re-election at the next annual general meeting.
DIRECTORS' INTEREST IN SHARES
The number of shares held, directly and indirectly, in the Company as at 30 June 2011 by each director is listed below:
BOARD COMMITTEES
The Board has established a Nominating Committee, a Remuneration Committee, a Strategic Vision Committee and an Audit Committee to facilitate the discharge of certain of its responsibilities.
NOMINATING COMMITTEE
(Code of Corporate Governance Principles 4 & 5)
- Roger Gaimster Langdale (Chairman)
- Robert William Livingston
- Michael Grenville Gray
The Nominating Committee whose terms of reference are approved by the Board is comprised of two independent directors and one non-executive director. It meets at least once a year.
The role of the Committee is to make recommendations to the Board on all Board appointments and on the composition of executive and independent directors of the Board. It is also charged with the responsibility of re-nominating directors who are retiring by rotation as well as determining annually whether or not a director is independent. It assesses the effectiveness of the Board as a whole and the contribution of each individual director to the effectiveness of the Board. It proposes objective performance criteria to evaluate the Board's performance. Such criteria include directors' attendance at meetings, their knowledge of the Company, contribution during discussions and willingness to keep up to date with developments in both the business and legislation. It periodically engages external consultants to help in this evaluation process.
The Nominating Committee periodically reviews the existing attributes and competencies of the Board in order to determine the desired expertise or experience required to strengthen or supplement the Board. This assists the Nominating Committee in identifying and nominating suitable candidates for appointment to the Board.
When the need for a new Director is identified, the Nominating Committee will make recommendations to the Board regarding the identification and selection of suitable candidates based on the desired qualifications, skill sets, competencies and experience, which are required to supplement the Board's existing attributes. If need be, the Nominating Committee may seek assistance from external search consultants for the selection of potential candidates. Directors and Management may also put forward names of potential candidates, together with their curriculum vitae, for consideration.
The Nominating Committee, after completing its assessment, would then meet with the short-listed candidates to assess their suitability, before submitting the appropriate recommendations to the Board for approval.
REMUNERATION COMMITTEE
(Code of Corporate Governance Principles 7, 8 & 9)
- Jeffrey Stewart Bland (Chairman)
- Roger Gaimster Langdale
- Robert William Livingston
The Remuneration Committee (RC) whose terms of reference are approved by the Board is comprised of two independent directors and a non-executive director. It meets at least twice a year.
The role of the Committee is to review and make recommendations to the Board on the framework of remuneration packages and policies applicable to the Chief Executive Officer (CEO) and the directors. The RC also reviews the remuneration of the Group's senior executives.
In reviewing and determining the remuneration packages of the CEO, the Executive Directors and the Group's senior executives, the RC considers the executive's responsibilities, skills, expertise and contribution to the Group's performance and if the remuneration packages are competitive and sufficient to ensure that the Group is able to attract and retain executive talent. In line with Guideline 8.4 of the Code of Corporate Governance which encourages Long-term Incentive Schemes, the RC currently administers the Group's Performance Incentive Plan which was approved by Shareholders at the EGM held on 14 July 2008 with the objective of attracting and retaining key employees of the Group whose contributions are essential to the long-term growth and profitability of the Group.
The RC regularly utilizes external expert advice and data to assist in the evaluation of its compensation recommendations. None of the RC members or Directors is involved in deliberations in respect of any remuneration, compensation or any form of benefit to be granted to him or someone related to him.
No Independent and non-Executive Directors have Service Agreements with the Group. They are paid Directors' fees, which are determined by the Board based on the effort, time spent and responsibilities of the Directors. The Directors' fees are subject to approval by the Shareholders at each AGM.
The schedule of annual fees for Independent and non-executive Directors is as follows:
The tables below show the remuneration bands of the Directors and the top five senior executives of the Group who are not directors as well as the approximate percentage breakdown of the remuneration.
Remuneration of Directors
Remuneration of Top Five Senior Executives (who are not Directors)
STRATEGIC VISION COMMITTEE
- Jeffrey Stewart Bland (Chairman)
- Robert William Livingston
- Robert William Livingston II
The Strategic Vision Committee whose terms of reference are approved by the Board is comprised of the Chairman of the Board of Directors, one independent director and one executive director. It meets as requested by its Chairman.
The role of the Committee is to provide the Board with an objective and innovative view of the future of the boating industry and a comprehensive understanding of the global market opportunities available to the Company. The Committee draws from the experience of management in market research, product development, production, quality assurance, finance and customer service along with its own independent evaluation of market dynamics, trend analysis, public relations, economic and environmental factors in carrying out its duties and responsibilities.
AUDIT COMMITTEE
(Code of Corporate Governance Principle 11; Listing Manual Rule 1207(6)(b))
- Michael Grenville Gray (Chairman)
- Jeffrey Stewart Bland
- Roger Gaimster Langdale
The Audit Committee is comprised of three independent directors who are appropriately qualified to discharge their responsibilities and functions under the terms of reference approved by the Board. It meets at least four times a year.
The Committee reviews the effectiveness of the Group's material internal controls including financial and operational controls, and risk management. It receives reports from the management, the internal and the external auditors and follows up on outstanding matters contained in those reports where appropriate. It reviews the Group's interim and annual announcements and financial statements before they are submitted to the Board for approval. It reviews the Group's compliance with the Listing Manual and Code of Corporate Governance including interested person transactions. It also recommends the appointment of the external auditors and reviews their independence and their fees.
With respect to the Group's audit, the Audit Committee reviews the following: the scope of the independent auditors audit plan, the cost-effectiveness of the independent audit, the independent auditor's reports and the significant financial reporting issues and judgements to assess the integrity of the Group's financial statements.
The Committee has full access to and the cooperation of the Group's management team to enable it to properly discharge its responsibilities. The Audit Committee has full discretion to invite any Director or executive officer to attend its meetings and has access to other outside resources to enable it to complete its duties. In performing its functions, the Audit Committee also reviews the assistance given by the Group's managers to the independent auditors. The internal and the external auditors also have unrestricted access to the Audit Committee.
The Committee has reviewed the non-audit services provided by the external auditors and these services, in its opinion, would not affect the independence of the external auditors. The Committee recommends their re-appointment.
INTERNAL CONTROL
(Code of Corporate Governance Principle 12)
The Board with the assistance of the Audit Committee ensures that the Group maintains an adequate system of internal controls to safeguard shareholders' investments and the Group's assets. The internal controls provide reasonable but not absolute assurance that the Group will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives. Reviews and tests of the internal control procedures and systems are carried out by an external internal audit firm. The Board is thus satisfied with the adequacy of the Group's internal controls.
INTERNAL AUDIT FUNCTION
(Code of Corporate Governance Principle 13)
During the fiscal year ended 30 June 2010, Management recommended to the Board that the internal audit function be outsourced to an external organization for a variety of reasons. As a result, the Audit Committee conducted an exhaustive search process and selected JF Virtus Pte Ltd last year. The Audit Committee originally committed to a two-year engagement with the outside firm which terminates 30 June 2012. So far, the Audit Committee has determined the outside firm has met or exceeded its obligations under the terms of engagement. The internal audit firm reports to the Chairman of the Audit Committee and has unrestricted, direct access to the Audit Committee. The Audit Committee reviews and approves the annual internal audit plan as well as reviews the results of the regular audits. The Board is satisfied with the adequacy of the internal audit function and is confident it has an appropriate standing within the Group and is independent of the activities it audits.
COMMUNICATION WITH SHAREHOLDERS
(Code of Corporate Governance Principles 14 & 15)
The Company makes all necessary disclosures to the public via SGXNET. The Company also maintains a comprehensive website accessible to the public which describes the Company's products and independent dealers, among other items, and includes an investor relations tab to assist shareholders.
Shareholders of the Company receive the Annual Reports and notices of Annual General Meetings (AGMs) which are also advertised in the newspapers at least 14 days prior to the AGMs. The Board encourages shareholders' participation at the AGMs and periodically communicates with shareholders through the course of the financial year. Members of the Board and chairmen of the Board committees use their best efforts to be present at the AGM and any Extraordinary General Meeting, if required, to answer queries raised at the meetings.
DEALING IN SECURITIES
(Listing Manual Rule 1207(18))
The Company has adopted and complied with the section on dealings in securities in the Best Practices Guide issued by SGX-ST.
Directors and senior executives of the Group are advised not to deal in the Company's shares on short-term considerations or when they are in possession of unpublished material price-sensitive information. They are also reminded regularly not to deal in the Company's shares during the period commencing one month before the announcement of the Group's interim and annual results and ending on the date of announcement of those results. And such reminders include a computer generated email sent to all Directors and Senior executives on a quarterly basis. Directors and Senior executives are required to report to the Company secretary whenever they deal in the Company's shares. The Company secretary assists the Audit Committee and the Board in monitoring such share transactions and making the necessary announcements. Directors and Senior executives are also reminded to be mindful of the laws on insider trading and to ensure that their dealings in securities do not contravene the laws on insider trading as determined by the Securities and Futures Act, the Companies Act and other appropriate regulatory authorities.
INTERESTED PERSON TRANSACTIONS
(Listing Manual Rule 907 & 1207 (16))
There were no interested person transactions during the year.
MATERIAL CONTRACTS
(Listing Manual Rule 1207(8))
No material contracts of the Company or its subsidiaries involving the interests of the Chief Executive Officer or any Director or controlling shareholders existed at the end of the financial year or have been entered into since the end of the previous financial year. In addition, no Director or a related company with a Director has received a benefit from any contract entered into by the Group since the end of the previous financial year.
RISK MANAGEMENT
With the help of an external consultant, the Group has designed an enterprise risk management (ERM) framework to monitor, manage and build awareness within the Group of the various risks to which the Group is exposed. The Board also reviews the Group's business and operational activities to identify areas of significant business risk as well as appropriate measures to control and mitigate these risks within the Group's policies and business strategies. The independent external firm retained to perform the Group's internal audit function has updated the Group's Enterprise Risk Assessment Process and created a risk register to be used by the Audit Committee and the external firm to monitor the manner in which the Group manages such risks. The previous risk assessment of the Group's operations has also been updated by the new internal audit firm. The objective of the risk assessment is to identify and assess risks which include key financial, operational, strategic and regulatory risks.
The Audit Committee is regularly updated on the Group's risk management program.