CITIC Group (hereunder “the Group”) is a conglomerate established upon the approval of the State Council. It is funded by the Ministry of Finance on behalf of the State Council.
2. Board of Directors
The Board of Directors consists of nine members, including one chairman, one vice chairman and one employee director.
The mandate of the Board of Directors
●Drafting corporate development strategies, business principle and investment plans.
●Deciding on corporate business plans, investment schemes, setup of management bodies and compensation schemes for managers.
●Formulating basic corporate policies and bylaws.
●Preparing annual corporate budget, final accounts, profit distribution and loss recovery plans.
●Developing the plans for corporate merger, pision, dissolution and/or transformation, plans for the amendment of the Articles of Association.
●Reviewing and approving General Manager's Work Report.
●Appointing and/or removing general managers and/or other senior managers, and hiring or dismissing external auditors.
3. Board of Supervisors
The Board of Supervisors consists of six members, including four internal supervisors and two employee supervisors.
The mandate of the Board of Supervisors
●Examining business operations and financial positions of the Group.
●Supervising the actions taken by Directors and the Management.
●Reviewing the Group's Annual Business Plan, Annual Report, the Board of Supervisors'Work Report and proposals on the relevant policies formulated by the Board of Supervisors.
The Management of the Group makes decisions on matters related to business operations and management within its mandate authorized by the Board of Directors.
Measures to Enhance Corporate Governanc
1. In accordance with the Company Law and the Articles of Association,the Group further improved its governance structure in line with modern business operations, and the checks and balances among the Board of Directors, the Board of Supervisors and the Management, to provide the mechanisms necessary for operation efficiency. In 2012,the Board of Directors of the Company convened three times with seven proposals reviewed. The Board of Supervisors convened once and reviewed three proposals. On the level of CITIC Limited, four shareholder meetings were convened with eight proposals reviewed.The Board of Directors convened six times and reviewed 18 proposals.The Board of Supervisors convened twice and reviewed seven proposals.CITIC Limited established the Strategy Committee, Auditing and Risk Management Committee, Nominations and Compensation Committee.
2. The Group enhanced oversight to ensure compliance, integrity and diligence on the part of all parties involved to improve overall operational and management efficiency and decision-making. In 2012, CITIC Limited’s Board of Supervisors improved its organizational structure by establishing the Financial Supervision Committee and Due Performance Committee. The system was further strengthened with the development of the (Provisional) Working Rules of the Sub-committees under the Board of Supervisors of CITIC Limited, the (Provisional) Rules of the Board of Supervisors of CITIC Limited for Financial Supervision and the (Provisional) Rules of the Board of Supervisors of CITIC Limited for Supervision of the Board of Directors, Management and Its Members Concerning Due Performance.
3. In its effort to optimize management and control models and taking into account optimization proposals made by consultants as well as needs for business development and management, the Group conducted research on key topics including corporate strategies and operations, in a bid to achieve more specialized operations at the subsidiary level and flatter management structure at the Group. The group also developed principles and standards of management and control tailored to different category of subsidiaries,improved reviewing rules and decision-making procedures for material matters, enhanced capacity building at the head office to step up management and control and to further reform of the joint stock system.
4. As part of its efforts to strengthen strategic management, the Group developed the (Provisional) Rules of CITIC Group for the Administration of Evaluation Concerning Asset Management Accountability to establish the responsibility system for assets operation and the system for asset operation performance assessment at subsidiaries. The two value-oriented systems put capital management at the core, encouraging subsidiaries to get more capable for value creation and dividend payout. Besides,the Group revised decision-making processes to strengthen investment management and improve decision-making efficiency.
5. In line with related regulations for listed companies, the Group examined the content and process of disclosing financial reports,dramatically shortening the time for preparing financial statements and improving the quality and efficiency of such disclosure. An Asset and Liability Management Committee was set up to manage the balance sheets and liquidity of the Company and its subsidiaries, allocate financial resources and control financial risks. The Group advanced centralized management of subsidiaries’funds, improved risk management and boosted return on fund. Management of financing and guarantee were enhanced through development of rules and regulations, and major investments were tracked and monitored to keep risks under control.
6. The Group along with its subsidiaries kept improving systems for risk monitoring and management. It advanced risk identification and assessment at all levels, intensified risk assessment and monitoring of major projects and businesses, managed counterparty credit risks and large exposures. With particular attention to weak links and potential risks, the Group prepared reports in that respect and stressed the full implementation of risk management which has become more encompassing and proactive.
7. Internal auditing was conducted independently. The scope of auditing was expanded with forms of supervision diversified, and particular attention was given to the major investments, key risk areas and key control points. Internal auditing played the role of management consultant with results of auditing being further utilized. The collaboration of internal supervision was also enhanced.
8. The Company stressed operation in compliance with laws and regulations and has set up mechanisms against legal risks through formulating rules and policies, reviewing major contracts, managing arbitration and court cases and protecting CITIC trademark.