The framework that links risk strategy and governance is embedded in the policies that govern the seven areas of management ¡X construction, property management and development, legal and procurement, human resources, international and China business development, operations and finance. These polices, while formulated and implemented at the management level, are under direct supervision of the Board whose approval and any changes to policy is required for enactment.
Sustainability ¡E Established in 2005, the dedicated committee, the Sustainability and Corporate Social Responsibility (S&CSR) Steering Committee, ensures the implementation of policy and initiatives pertaining to sustainable best practices. Chaired by the Director of China and International Business, it supervises the corporate-wide Sustainability Policy, CSR Guideline and related initiatives, and all subsequent related directives, programmes and proposals. The S&CSR Steering Committee replaces the Corporate Sustainability Coordinating Committee (CSCC). With the assumption of expanded responsibilities, the S&CSR Steering Committee meets every two months, albeit all members remain informed on matters through regular circulation of papers. The S&CSR Steering Committee reports directly to the Executive Directorate on a timely basis.
Best practice ¡E As a public company committed to best practice we are bound to transparency, in particular relating to decisions governing related party transactions and minority shareholder interests. Public debate often arises in connection to these issues and the role of Government both as industry regulator and majority shareholder. Under an internal best practice procedure for clear delineation in cases of potential conflict of interests at the Board level, those Members of the Board representing Government as regulator (Commissioner for Transport and Secretary for the Environment, Transport and Works) and as shareholder (Secretary for Financial Services and the Treasury) declare their interests on a particular matter which holds potential conflict of interests and excuse themselves from the Board meeting and subsequent decision-making or voting for the duration of relevant discussions. Issues such as those relating to the approval processes required for the successful merger of the rail companies fall within this practice.
The Company as well enacts established procedures for best practice under the relevant regulations in respect to the protection of minority shareholders interests and in retaining transparency and full disclosure in conducting transactions material to corporate sustainability.
Rail merger ¡E The Board is committed to looking after the interests of independent shareholders of the Company and, for this purpose, the Independent Committee was established in 2004 to consider and review the terms of any possible merger between the Company and KCRC as well as to advise independent shareholders whether the terms are fair and reasonable. All Members of the Independent Committee are independent non-executive directors of the Company.
With the announcement in early 2004 of the possible rail merger, a requested proposal jointly authored by the two rail companies was submitted to Government in September that year for consideration. As of the 2005 year-end, no decision was announced by Government. However, in view of the decision and possible outcome, we have expended significant resources and efforts in preparing a merger strategy and related risk profile for the integration processes as well as the framework for working operations as the single rail transport entity.
