2014 — Page 30

CORPORATE GOVERNANCE REPORT (CONTINUED)

BOARD COMMITTEES

The Board has established three board committees, namely, the Audit Committee, the Remuneration Committee and the Nomination Committee to oversee particular aspects of the Company's affairs. Each committee has been delegated with

certain functions of the Board.

Audit Committee

The Audit Committee of the Company has been established with written terms of reference setting out duties, responsibilities and authorities delegated to them by the Board. The Audit Committee comprises four Independent Non-executive Directors, namely, Mr. Ho Hau Chong, Norman (Chairman of the Audit Committee), Mr. Leung Hay Man, Ms. Wong Yu Pok, Marina and Mr. Wu King Cheong.

The terms of reference of the Audit Committee are available on the websites of the Company (www.hkf.com) and the Stock Exchange (www.hkexnews.hk) respectively.

The major duties and responsibilities of the Audit Committee are to review of the annual and interim results and oversight of the Company's financial reporting principles and practices; to recommend the appointment and re-appointment or removal of the external auditor, to determine their independence and objectivity as well as to review the scope of audit and the reporting obligation of the external auditor. The Audit Committee oversees internal control system of the Group including the adequacy of resources, staff qualifications, experience, programmes and budget of the accounting and reporting function of the Group. The Audit Committee also oversees the risk management of the Group and discusses with the external auditor on financial reporting and compliance. The external auditor is invited to attend the meetings of Audit Committee to present their reports and reviews for the interim and final results of the Group. The Audit Committee has been delegated the corporate governance functions by the Board to review and monitor the corporate compliance within the Group.

During the year, two audit committee meetings were held. During the meetings, the Audit Committee members reviewed the annual results for the year ended 31 December 2013, the Annual Internal Audit Report, the continuous professional development records of Directors and senior management, Continuing Connected Transactions, reviewed of the adequacy

of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting functions, the interim results for the six months ended 30 June 2014, the Interim Internal Audit Report, to approve the remuneration and terms of engagement of the external auditor and the works of the Company's internal audit department and assessed the effectiveness of the Company's systems of risk management and internal control. The Audit Committee performed the corporate governance duties by reviewing the compliance with the Code and disclosure requirements as set out in this Corporate Governance Report.

As a recommended best practice under the Code, the Company has adopted a whistle blowing policy. The policy aims at encouraging and enabling employees of the Group at all levels and others to report violations or suspected violations and to raise serious concerns about possible improprieties in matters of financial reporting or other matters of the Group.

Remuneration Committee

The Remuneration Committee of the Company has been established with written terms of reference setting out duties, responsibilities and authorities delegated to them by the Board. The Remuneration Committee comprises four Independent Non- executive Directors, namely, Mr. Wu King Cheong (Chairman of the Remuneration Committee), Mr. Ho Hau Chong, Norman, Mr. Leung Hay Man and Ms. Wong Yu Pok, Marina and two Executive Directors namely Dr. Lam Ko Yin, Colin and Mr. Li Ning.

The terms of reference of the Remuneration Committee are available on the websites of the Company (www.hkf.com) and the Stock Exchange (www.hkexnews.hk) respectively.

The Remuneration Committee has adopted the operation model where it performs to make recommendations to the Board on the Company's policy and structure for all Directors' and senior

management's remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy.

The Remuneration Committee is responsible for reviewing the policy and structure for the remuneration of all Directors and senior management of the Company, assessing performance of executive directors and establishment of a formal and transparent procedure for developing policy on such

remuneration.

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Hong Kong Ferry (Holdings) Company Limited Annual Report 2014

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