Corporate Governance

Fraser and Neave, Limited (“F&NL” or the “Group”) is committed to a high standard of corporate governance to preserve and enhance shareholder value. The Board is satisfied with the Group’s commitment to compliance with the Code of Corporate Governance, and on the adequacy of internal controls within the Group.

Board of Directors

The Board leads and directs F&NL in its pivotal role in charting the strategic course and direction of the F&NL Group of Companies.

The Board, of which more than half are independent non-executive directors, exercises its powers, objectively and independently. The size of the Board, the standing of members of the Board in the business community, and their experience, knowledge and expertise, provide for effective decision-making and direction to the Group, in achieving its Mission.

The Board, with its expanded size, and the stature, core competencies and experience of its Directors in various fields, is well positioned, effective and equipped to continue to chart the direction forward for the F&NL Group, expanding its core businesses into new markets and boundaries. Non-executive Directors actively participate in setting the strategy and goals for the Company and the F&NL Group. The Board meets regularly to oversee the business affairs of the Group, approves the financial objectives and business strategies, and monitors standards of performance both directly and through its Specialised Committees.

There is clear division of responsibilities between the Chairman and the Group Chief Executive Officer, which ensures an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making.

The division of responsibilities between the Chairman and the Group Chief Executive Officer has been clearly established, and agreed by the Board. The Chairman continues to lead the Board to ensure its effectiveness on all aspects of its role, ensures that Directors receive accurate, timely and clear information, ensures effective communication with shareholders, encourages constructive relations between the Board and Management, as well as among Board members, and promotes high standards of corporate governance.

The Chairman and the Group Chief Executive Officer are not related to each other.

Adequate and timely information prior to Board meetings, and on an on-going basis, are provided to Board members, who have access to the Company’s senior management, including the Group Company Secretary. Under the direction of the Chairman, the Group Company Secretary, who attends all Board meetings, ensures good information flows within the Board and its committees, and between senior management and non-executive Directors, as well as facilitating orientation, and assisting with professional development as required.

Directors may, in the furtherance of their duties, take independent professional advice at the Company’s expense.

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Specialised Committees

Board Executive Committee

The Board Executive Committee (“Board EXCO”), as a Specialised Committee of the Board, is empowered, except for certain reserved matters, to exercise the full powers and authority of the Board, when the Board does not meet. Board EXCO, with the Board’s endorsement, formulates for the F&NL Group, strategic development initiatives, provides direction for new investments and material financial and non-financial matters to secure the achievement of its desired performance objectives and enhancement of long-term shareholder value. It also oversees the F&NL Group’s conduct and corporate governance structure. Board EXCO comprises the following members:

Mr Lee Hsien Yang (Chairman)
Mr Ho Tian Yee (Member)
Mr Simon Israel (Member)
Mr Stephen Lee (Member)

Remuneration & Staff Establishment Committee

The Remuneration Committee was renamed The Remuneration & Staff Establishment Committee on 7 April 2006 and its terms of reference expanded to include succession planning. The composition of the Committee comprises entirely non-executive directors who are independent of Management and free from any business or other relationships.

The Remuneration Committee’s role is to review and recommend to the Board, an appropriate and competitive framework of remuneration for the Board, key executives and the Group. It also administers the F&NL Executives Share Option Scheme.

In setting remuneration packages, the Committee takes into account the performance of the Group, as well as individual directors and key executives, aligning their interests with those of shareholders, and linking rewards to corporate and individual performance. An annual performance incentive plan has been implemented for executive staff.

The Remuneration Committee comprises: 

Mr Stephen Lee (Chairman) (Non-executive)
Mr Ho Tian Yee Member (Non-executive)

Nominating Committee

The Nominating Committee, constituted on 14 August 2002, ensures a formal and transparent process for the Group, for the appointment of new directors and re-nomination and re-election of directors at regular intervals. The Nominating Committee assesses the effectiveness of the Board as a whole, and the contribution of each director to the effectiveness of the Board. In drawing up objective performance criteria for such evaluation and determination, the Nominating Committee considers a number of factors, including those set out in the Code of Corporate Governance. The Nominating Committee also considers and determines the independence of directors.

The Nominating Committee comprises

Mr Ho Tian Yee (Chairman)(Non-executive)
Mr Stephen Lee (Member) (Non-executive)
Mr Timothy Chia Chee Ming (Member)(Non-executive)

Audit Committee

The Audit Committee comprises the following non-executive Directors:

Mr Koh Beng Seng (Chairman)(Independent)
Mr Timothy Chia Chee Ming (Member)(Independent)
Mr Stephen Lee (Member)(Independent)
Mr Nicky Tan Ng Kuang (Member)(Non-independent)

The Board ensures that members of the Audit Committee are appropriately qualified to discharge their responsibilities, possessing the requisite accounting and related financial management expertise and experience.

The Audit Committee is empowered to investigate any matter within its terms of reference, and has full access to, and the co-operation of Management. It has reasonable resources to enable it to discharge its functions properly.

The authority and duties of the Audit Committee are set out in its terms of reference.

In performing its functions, the Audit Committee met with the internal and external auditors who have unrestricted access to the Audit Committee, and reviewed the overall scope of both internal and external audits, and the assistance given by Management to the auditors.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and recommends to the Board of Directors, the nomination of the external auditors for re-appointment.

The Audit Committee has recommended for endorsement by the Company, a Whistle-Blowing Policy, for the F&NL Group. The Policy serves to encourage and provide a channel to employees to report in good faith and in confidence, without fear of reprisals, concerns about possible improprieties in financial reporting or other matters. The objective for such arrangement is to ensure independent investigation of such matters and for appropriate follow-up action.

The Board is responsible for ensuring that Management maintains a sound system of internal controls to safeguard shareholders’ investments and the assets of the Company. The Audit Committee reviews the adequacy of such controls, including financial, operational and compliance controls, and risk management policies and systems established by Management.

The Audit Committee, with the assistance of the internal and external auditors, have reviewed, and the Board is satisfied with, the adequacy of F&NL’s internal controls, including financial, operational and compliance controls, and risk management systems.

The Internal Audit Department of the F&NL Group is independent of the activities it audits. The Head of Internal Audit’s primary line of reporting is to the Chairman of the Audit Committee, with an administrative line of reporting to the Director & Group Company Secretary.

The Internal Audit function is adequately resourced, and has appropriate standing within the F&NL Group. The Head of Internal Audit is a certified public accountant.

The Audit Committee has reviewed and is satisfied with the adequacy of the Internal Audit function.

Risk Management

Enterprise-wide risk management (“ERM”) continues to cascade to all levels of the F&NL Group, in Singapore and overseas. Key risks, control measures and management actions are continually identified, updated and monitored by Management. An annual validation session is conducted, attended by the reporting risk units within the F&NL Group, with oversight from the Group Chief Executive Officer. The internal auditors review the adequacy of ERM, as part of their routine audit.

The Risk Management Committee was constituted on 7 April 2006 comprising the following Board members:

Mr Koh Beng Seng (Chairman)
Mr Timothy Chia (Member)
Mr Nicky Tan Ng Kuang (Member)

Focus is being given by the Risk Management Committee to key strategic risks, and to the management of such risks including business continuity plans and use of insurance as a tool for the transfer of a certain portion of the risks.

Communication with Shareholders

F&NL engages in regular, effective and fair communication with its shareholders. Regular dialogues are held with investors, analysts, fund managers and the press. Material information is simultaneously disseminated to SGX, the press and posted on the Company’s website at www.fraserandneave.com.

At the annual general meeting of the Company, shareholders are given opportunity to communicate their views on matters relating to F&NL. The Chairpersons of the Audit, Nominating and Remuneration & Staff Establishment Committees are present and available to address questions at general meetings. The external auditors are also present to address shareholders’ queries, if any, on the conduct of audit and the preparation and content of the auditors’ report.

Code of Business Conduct

F&NL’s Code of Business Conduct also sets the standards and ethical conduct expected of employees of the F&NL Group. Directors, officers and employees are required to observe and maintain high standards of integrity, as are in compliance with the law and the regulations, and company policies.

Dealings in Securities

In line with Listing Rule 1207 (18) on Dealings in Securities, the F&NL Group issues a quarterly circular to its Directors, officers and employees prohibiting dealings in listed securities of the F&NL Group from one month or two weeks, as the case may be, before the announcement of F&NL’s quarterly, half-year and full-year financial results, and at any time they are in possession of unpublished material price sensitive information.