Vtech 2005 Annual Report Download - page 24

Corporate Governance
22 VTech Holdings Ltd Annual Report 2005
VTech is committed to maintaining a strong system of corporate
governance so that all business activities and decision-making
can be properly regulated. The Stock Exchange of Hong Kong
Limited (the “Hong Kong Stock Exchange”) has promulgated a
new Code on Corporate Governance Practices (the “Code”)
which came into effect in January 2005. The Company has
already put in place corporate governance practices to meet all
the provisions of the Code except for the combined role of
Chairman and Chief Executive Officer. The Company has also
complied with, to a certain extent, the recommended best
practices in the Code. Throughout the year ended 31st March
2005, the Company complied with the Code of Best Practice as
set out in Appendix 14 of The Rules Governing the Listing of
Securities on the Hong Kong Stock Exchange (the “Listing
Rules") except for the appointment of non-executive directors
for a specific term despite the one-third rotational provision
(other than the Chairman) under the existing Company’s Bye-
laws. At the forthcoming annual general meeting, the directors
proposed a special resolution to amend the existing Bye-laws of
the Company so that every director is subject to retirement by
rotation at least once every three years in compliance with the
provisions of the Code.
Board of Directors For the year ended 31st March 2005,
the Board of Directors (the “Board”) comprised two executive
directors and four independent non-executive directors. The
independent non-executive directors are high calibre executives
with diversified industry expertise and bring a wide range of
skills and experience to the Group. They bring independent
judgement on issues of strategy, performance, risk and people
through their contribution at board meetings. The Board
considers that four non-executive directors, more than one third
of the Board, are independent in character and judgement and
they also meet the independence criteria set out in Rule 3.13 of
the Listing Rules. All non-executive directors are required to
submit themselves for re-election at least every three years.
Biographical details of all directors are set out on page 24.
Each of the independent non-executive directors has made an
annual confirmation of independence pursuant to Rule 3.13 of
the Listing Rules.
The Board’s focus is on the formulation of business strategy and
policy, and on control. Matters reserved for the Board are those
affecting the Company’s overall strategic policies, finances and
shareholders. These include: financial statements, dividend
policy, the annual operating budgets, major investments and
board memberships.
Four board meetings at approximately quarterly interval are
scheduled for 2005/2006 with other meetings as necessary. All
Directors have access to the advice and services of the Company
Secretary and independent professional advice may be taken by
the Directors as required.
The Directors acknowledge their responsibility for preparing the
financial statements of the Group that give a true and fair view
of the state of affairs of the Group and of the results and cash
flow for the period. In preparing the financial statements for the
year ended 31st March 2005, the Directors have:
• Selected suitable accounting policies and applied them
consistently;
• Made judgements and estimates that are prudent and
reasonable; and have prepared the accounts on a going
concern basis.
The Directors are responsible for keeping proper accounting
records, for safeguarding the assets of the Group and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The following paragraphs describe the key governance
structures operating in the Group under the overall direction of
the Board.