• Overview Overview
  • Audit Committee Audit Committee
  • Remuneration Committee Remuneration Committee
  • Nomination Committee Nomination Committee

Corporate Governance Report

The Company believes that high corporate governance standards help enhance operational performance and the management's accountability. The Board has always strived to comply with the principles of corporate governance and adopts sound corporate governance practices to meet legal and commercial standards, with a focus on internal control and fair, transparent and timely disclosure.

Throughout the year ended 31 December 2016, the Board considers that the Company has met the code provisions as set out in the corporate governance code ("Corporate Governance Code") contained in Appendix 14 to the Listing Rules.

(A) The Board of Directors

The Board takes responsibility to oversee all major matters of the Group, including the formulation and approval of all policy matters, strategies for development, internal control and risk management systems, and monitoring the performance of the senior management. The daily business operations and administrative functions of the Group are delegated to the senior management.

Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules ("Model Code") as the standard for securities transactions by the directors. The Company has made specific enquiries of all the directors and each of the directors confirmed that he has complied with the required standards set out in the Model Code throughout the year ended 31 December 2016 or (where appropriate) during his tenure as a director of the Company in 2016. Relevant employees who are likely to be in possession of inside information of the Group are also subject to compliance with written guidelines on no less exacting terms than the Model Code.

Directors' Responsibilities for Financial Statements

The Directors acknowledge their responsibilities for preparing the financial statements of the Group in accordance with statutory requirements and applicable accounting standards. The respective responsibilities of the Directors and the Company's external auditors on the financial statements of the Group are set out in the"Independent Auditor's Report" on page 95 of this annual report.

Chairman and Chief Executive Officer

In order to reinforce their respective independence, accountability and responsibility, the role of the Chairman is separate from that of the Chief Executive Officer. The Chairman leads the Board and is responsible for the effective functioning of the Board in accordance with the good corporate governance practices adopted by the Company. He is also responsible for establishing corporate culture and developing strategies for the Company. The Chief Executive Officer focuses on developing and implementing policies approved and delegated by the Board. The Chief Executive Officer is also primarily responsible for the Group's day-to-day management and operations, and the formulation of the organization structure, management systems, and internal control procedures and processes of the Group.

As at 31 December 2016, Mr SONG Weiping and Mr LIU Wensheng were the Co-chairmen of the Board and Mr CAO Zhounan was the Chief Executive Officer of the Company.

Independent Non-Executive Directors

Independent non-executive directors play a significant role in the Board by virtue of their independent judgment. Their views carry significant weight in the Board's decision. In particular, they provide impartial and multi-perspective opinions on the Group's development strategies, operational performance and internal control system. Every independent non-executive Director possesses extensive academic, professional and industry expertise and management experience. They provide professional advice to the Board according to the Group's particular situation. For the year ended 31 December 2016, each of the independent non-executive directors has confirmed his independence to the Company in accordance with the Listing Rules.

Board Meetings and Shareholders' Meetings

The Board meets regularly to discuss the overall strategy as well as the operation and financial performance of the Group. Directors may participate either in person or through video/telephone conferences. 16 Board meetings and 6 shareholders' meetings were convened during 2016. The attendance of each individual director at these Board meetings and shareholders' meetings is set out below:

Executive Directors Number of Meetings attended/ held during the tenure of office
Mr SONG Weiping 13/15
Mr ZHU Bixin* (up to 15 January 2016) 1/1
Mr LIU Wensheng 11/12
Mr SUN Guoqiang 12/12
Mr SHOU Bainian 14/15
Mr CAO Zhounan 12/12
Mr LI Qingan 12/12
Mr LI Yongqian (with effect from 15 January 2016) 11/11
   
Independent Non-Executive Directors Number of Meetings attended/ held during the tenure of office
Mr JIA Shenghua 16/16
Mr KE Huanzhang 16/16
Mr SZE Tsai Ping, Michael 16/16
Mr HUI Wan Fai 16/16

*This person ceased to be a director.

All Directors are provided with the relevant materials relating to the issues for discussion before the meetings. They have access to members of the senior management and the company secretary at all times and may seek independent professional advice at the Company's expense. All Directors have the opportunity to request to include new issues for discussion in the agenda for Board meetings. Notices of Board meetings are given to the directors within reasonable time before meeting and the procedures of Board meetings are conducted in compliance with the Articles of Association of the Company, as well as the relevant laws and regulations.

Appointments, Re-election and Removal of Directors

Each of the executive directors, non-executive directors, independent non-executive directors has entered into a service contract or appointment letter with the Company for a specific term and the details of which, as well as the details of the appointment, re-election and removal of the directors are described in the sections headed "Report of the Directors - Directors" and "- Directors' Service Contracts".

Directors' Continuous Professional Development

Each of the directors has participated in continuous professional development in 2016 in compliance with Code A.6.5 of the Corporate Governance Code. The Company arranges regular seminars to provide Directors with updates on the latest developments and changes in the Listing Rules and other relevant legal and regulatory requirements from time to time. Directors are encouraged to participate in continuous professional development to develop and refresh their knowledge and skills. During the Year, all Directors participated in continuous professional development to develop and refresh their knowledge and skills in compliance with code provision A.6.5 of the Corporate Governance Code. The Company's external lawyers facilitated Directors' training by providing presentations, briefings and materials for the Directors primarily relating to the roles, functions and duties of a listed company director. All Directors received this training.

>> Procedures for Shareholders to Propose a Person for Election as a Director

Board Committees

The Board has established the Audit Committee, the Nomination Committee and the Remuneration Committee (collectively, the "Board Committees") with defined terms of reference. The terms of reference of the Board Committees are available on the websites of the Company and the Stock Exchange. The Board Committees are provided with sufficient resources to discharge their duties and, upon reasonable request, are able to seek independent professional advice in appropriate circumstances, at the Company's expenses.

Audit Committee

The primary duties of the Audit Committee are to review and supervise the Group's financial reporting procedures, internal control and risk management systems, review the internal audit scheme formulated by the Internal Audit Department of the Group and the reports submitted by the Internal Audit Department. It is also responsible for reviewing affairs related to the appointment, resignation and replacement of independent auditors, as well as assessing such auditors' performance, degree of independence and objectivity and reasonableness of their audit fees, and providing relevant recommendations to the Board. All members of the Audit Committee are independent non-executive directors and non-executive directors. As at 31 December 2016, the Audit Committee comprised independent non-executive directors, being Mr SZE Tsai Ping, Michael (Chairman), Mr JIA Shenghua and Mr HUI Wan Fai.

The major tasks accomplished during the year include:

-reviewing the annual and interim results announcements, reports and financial statements of the Group;
-reviewing and providing recommendations on the accounting policies adopted by the Group and the accounting practices;
-monitoring the work of the Internal Audit Department of the Group and reviewing the internal audit reports;
-advising on material transactions of the Group and providing recommendations on related risks to management; and
-reviewing the audit fees of the auditors and recommending the fees for approval by the Board.

The Audit Committee reviewed the financial reporting system, compliance procedures, risk management and internal control systems (including the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function), and processes and the re-appointment of the external auditor during the Year. The Board has not deviated from any recommendation given by the Audit Committee on the selection, appointment, resignation or dismissal of the external auditor.

During the year ended 31 December 2016, the Audit Committee held 2 meetings. The attendance of each individual member at the Audit Committee meetings is set out below:

Independent Non-Executive Directors Number of Meetings attended/held
Mr SZE Tsai Ping, Michael (Chairman) 2/2
Mr JIA Shenghua 2/2
Mr HUI Wan Fai 2/2

Nomination Committee

The Nomination Committee is primarily responsible for considering and recommending to the Board suitably qualified persons to become members of the Board and is also responsible for reviewing the structure, size and composition of the Board on a regular basis and as required. As at 31 December 2016, the Nomination Committee comprised independent non-executive directors Mr SZE Tsai Ping, Michael (Chairman), Mr HUI Wan Fai, Mr JIA Shenghua and Mr KE Huanzhang, and executive directors Mr LIU Wensheng and Mr SHOU Bainian. The Nomination Committee will assess the candidate or incumbent on criteria such as integrity, experience, skill and ability to commit time and effort to carry out duties and responsibilities. The recommendations of the Nomination Committee will then be put to the Board for decision. Their written terms of reference are available on the websites of the Stock Exchange and the Company.

The Nomination Committee adopted and performed certain criteria and procedures in the nomination of new directors during 2016. The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance. In designing the Board's composition, the Board adopts the policy of considering a variety of aspects, such as cultural and educational background, professional experience, skills and knowledge in the industry of the Group's business and the past employment track record.

During the year ended 31 December 2016, the Nomination Committee held 3 meetings. The attendance of each individual member at the Nomination Committee meetings is set out below:

Independent Non-Executive Directors Meetings attended/held
Mr SZE Tsai Ping, Michael (Chairman) 3/3
Mr HUI Wan Fai 3/3
Mr JIA Shenghua (Note 1) 3/3
Mr KE Huangzhang (Note 2) 3/3
   
Executive Director Meetings attended/held
Mr LIU Wensheng (Note 1) 1/2
Mr SHOU Bainian 3/3
Mr ZHU Bixin (Note 2) 1/2

Notes:
(1)Mr LIU Wensheng was appointed as a member of Nomination Committee with effect from 15 January 2016.
(2)Mr ZHU Bixin ceased to be a member with effect from 15 January 2016.

Remuneration Committee

The Remuneration Committee is responsible for making recommendations and proposals on directors' remuneration and other benefits to the Board.

The remuneration of all directors is subject to regular monitoring by the Remuneration Committee to ensure that the level of their remuneration and compensation are reasonable. As at 31 December 2016, the Remuneration Committee comprised independent non-executive Directors Mr JIA Shenghua (Chairman), Mr KE Huanzhang, Mr SZE Tsai Ping, Michael and Mr HUI Wan Fai, and executive directors Mr SHOU Bainian and Mr SUN Guoqiang.

During the year ended 31 December 2016, the Remuneration Committee have assessed the performance of directors and reviewed the remuneration packages of the directors and the remuneration policies and structure of the Company, details of which are set out in the section headed "Management Discussion and Analysis - Human Resources" in this annual report. During the year ended 31 December 2016, the Remuneration Committee held 1 meeting. The attendance of each individual member at the Remuneration Committee meeting is set out below:

Independent Non-Executive Directors Number of Meetings attended/held
Mr JIA Shenghua (Chairman) 1/1
Mr SZE Tsai Ping, Michael 1/1
Mr KE Huang Zhang 1/1
Mr HUI Wan Fai 1/1
   
Executive Director Number of Meetings attended/held
Mr SHOU Bainian 1/1
Mr SUN Guoqiang 1/1

Corporate Governance Functions

The Board is responsible for determining the policy for the corporate governance of the Company and it performed the corporate governance duties as follows in 2016:

-developing and reviewing the Company's policies and practices on corporate governance and making recommendations to the Board on changes and updates;
-reviewing and monitoring the training and continuous professional development of the directors and senior management;
-reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory requirements;
-developing, reviewing and monitoring the code of conduct and compliance manual applicable to employees and the directors;
-reviewing the Company's compliance with the Corporate Governance Code and disclosure in the corporate governance report; and
-such other corporate governance duties and functions set out in the Corporate Governance Code (as amended from time to time) for which the Board are responsible.

(B) Financial Reporting and Internal Controls

Financial Reporting

The Board, supported by the finance department, is responsible for the preparation of the financial statements of the Company and the Group. In the preparation of financial statements, International Financial Reporting Standards have been adopted and appropriate accounting policies have been consistently used and applied.

Independent Auditor

Deloitte Touche Tohmatsu has been appointed as the Company's independent auditor since 2004.

A breakdown of the remuneration received by the independent auditor for audit and non-audit services provided to the Company is as follows:

  2016 2015
Service Items (RMB'000) (RMB'000)
Audit services (including interim review) 5,380 5,240
Non-audit services (mainly issuance of comfort letters for senior notes and
major transactions)
1,010 1,950
Total 6,390 7,190

The Audit Committee and the Board have agreed on the re-appointment of Deloitte Touche Tohmatsu as the independent auditor of the Group for 2016, and the proposal will be submitted for approval at the annual general meeting of the Company to be held on 16 June 2017 (Friday).

Risk Management and Internal Control

The Audit Committee is responsible for supervising the risk management and internal control functions of the Group and reviewing their effectiveness. Procedures have been designed to safeguard company assets against unauthorized use or disposition, ensure the maintenance of proper accounting records for the provision of reliable financial information for internal use or for external publication, and ensure compliance with the applicable laws, rules and regulations. The Directors have conducted a review of the effectiveness of the risk management and internal control systems of the Group, and reviewed and monitored the Company's internal management and operation during the year. The Internal Audit Department established by the Company has conducted random internal audit of the Company, its subsidiaries, joint ventures and associates. The work carried out by the Internal Audit Department includes ensuring that the internal control is in place and functions properly as intended. The Audit Committee considered that the risk management and internal control systems remain adequate and effective throughout the year ended 31 December 2016 with no material issues that ought to be brought to the Board's attention.

Members of the Audit Committee of the Board are as follows :

Name Title
Mr SZE Tsai Ping, Michael (Chairman) Member of the Audit Committee of the Board
Mr JIA Shenghua Member of the Audit Committee of the Board
Mr HUI Wan Fai Member of the Audit Committee of the Board

Rules of Procedure for Audit Committee of the Board

Rule 1 Purpose

(I) These Rules of Procedure are formulated in accordance with the relevant laws, regulations, rules and regulatory documents as well as the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the memorandum and articles of association of the Company (the "Articles of Association") while taking into account the actual conditions of the Company, aiming at completing the governance structure of Greentown China Holdings Limited (the "Company"), improving the corporate governance of the Company, standardising the systems and practices of the financial reports and internal control of the Company and regulating the relationship between the Company and the external auditors appointed by the Company (the "Auditors"), so as to protect the interests of the Company and its shareholders.

(II) The Audit Committee of the Board (hereinafter referred to as the "Committee") is a specialised committee under and accountable to the Board of Directors (hereinafter referred to as the "Board", and its members referred to as the "Directors").

Rule 2 Composition

(I) The Committee consists of at least 3 Directors, and all the members (the "Members") of the Committee must be non-executive Directors and possess certain financial knowledge recognised by the Board. At least one of them must be an independent non-executive Director, who possesses appropriate professional knowledge as required by Rule 3.10(2) of the Listing Rules or appropriate accounting or relevant financial management expertise. More than half of the Members must be independent non-executive Directors.

(II) The appointment or removal of a Member shall be proposed by the Chairman of the Board, and be approved by ordinary resolution at the Board meeting or by written resolution signed by all Directors.

(III) The term of office for a Member shall have the same period as his/her term as a Director. When such term expires, he/she is eligible for re-election. Where a Member resigns as a Director during his/her term, the Chairman of the Board may, for the purposes of maintaining composition of the Committee in compliance with the Rules of Procedure, nominate another Director to serve as an ad hoc Member, who shall, within three months, become a formal Member upon the approval by the Board according to the second paragraph of this Rule.

(IV) One of the Members shall serve as the Chairman of the Committee (the "Chairman"), who shall be an independent non-executive Director. The procedures on appointment or removal of the Chairman are the same as that of a Member.

(V) The Committee shall have a secretary (the "Secretary"), who is concurrently the secretary of the Company.

(VI) A former partner of the auditor who is responsible for auditing the Company's accounts shall not serve as a Member within one year from the following dates, whichever is the later:
(a) the date he stops being a partner of the said company; or
(b) the date he stops enjoying the financial benefits from the said company.

Rule 3 Duties and Responsibilities

The Committee is authorised by the Board to adopt the sub-paragraphs C.3.3 and C.3.7 of Appendix 14 of the Listing Rules as its terms of reference, which are automatically updated in accordance with the provisions of the Listing Rules as amended from time to time. The main duties and responsibilities of the Committee include:

(I) Relationship between the Company and the Auditors

1. to be primarily responsible for making recommendations to the Board in relation to the appointment, re-appointment and removal of the Auditors, approving the remuneration and terms of engagement of the Auditors, and handling any matters in relation to the resignation or dismissal of such Auditors;

2. to review and monitor the independence and objectiveness of the Auditors as well as the effectiveness of the auditing procedures in accordance with applicable standards, and to discuss with the Auditors about the nature and scope of the audit and the relevant reporting obligations prior to the commencement of the audit;

3. to formulate and implement policies in relation to the non-audit services rendered by the Auditors. For the purpose of these Rules, the Auditors may comprise any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally. The Committee shall report to the Board actions to be taken or matters to be improved which it may consider necessary, and make recommendations as to steps to be taken;

(II) Review of the financial information of the Company

1. to monitor the completeness of the financial statements of the Company and the Company's annual reports and accounts, half-year reports and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in such statements and reports. In this regard, in reviewing the Company's annual reports and accounts, half-year reports and, if prepared for publication, quarterly reports before submission to the Board, the Committee shall focus particularly on:

(1) any change in accounting policies and practices;
(2) areas where significant judgment is involved;
(3) significant adjustments resulting from audit;
(4) the going concern assumptions and any qualifications;
(5) compliance with accounting standards; and
(6) compliance with the Listing Rules and other legal requirements in relation to financial reporting;

2. in regard to the first paragraph above:

(1) members of the Committee must liaise with the Company's Board, senior management and the person appointed as the Company's qualified accountant. The Committee must meet, at least once a year, with the Auditors; and
(2) the Committee shall consider any significant or unusual matters that are, or may need to be, reflected in such reports and accounts and must give due consideration to all matters that have been raised by the Company's qualified accountant, compliance officer or the Auditors;

(III) Oversight of the financial reporting system and internal control procedures of the Company

1. to review the financial control, internal control and risk management systems of the Company;

2. to discuss with the management of the Company on the system of internal control and ensure that the management has discharged its duty to have an effective internal control system;

3. to consider any findings of major investigations of internal control matters on its own initiative or delegated by the Board and the management's response;

4. where an internal audit function exists, to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced in the Company and has appropriate standing, and to review and monitor the effectiveness of the internal audit function;

5. to review the group's financial and accounting policies and practices;

6. to review the Auditor's management letter, any material queries raised by the Auditor to the management of the Company in respect of the accounting records, financial accounts or control systems and the management's response and to ensure that the Board will provide a timely response to the issues raised in the Auditor's management letter;

7. to report to the Board on the matters set out in this code provision; and

8. to consider other topics, as defined by the Board.

Rule 4 Meetings

(I) The Committee shall hold at least two meetings each year. A meeting shall be held when the Chairman or over half of the Members propose(s) to do so.

(II) The meeting shall be presided over by the Chairman. In case that the Chairman is unable to attend the meeting, he/she shall authorise another Member, who shall be an independent non-executive director, to preside over the meeting.

(III) The meeting of the Committee shall not be held unless over two thirds of the Members attend the meeting. Each Member shall have one voting right and the resolutions made at the meeting must be approved by over half of all the Members. If, for any reason, a Member is unable to attend a meeting, he/she may authorise in writing another Member to attend and vote at the meeting on his/her behalf.

(IV) Any or some of the Directors, supervisors, president and other senior management may be invited by the Committee to attend its meeting when necessary. The Committee may also require to hold a meeting with the Auditors alone or to invite any or some of the above parties to attend the meeting.

(V) Full minutes of the meetings of the Committee are kept by the Secretary. The dissension in respect of resolutions of such meeting held by the attendees shall be recorded in the minutes. Draft minutes shall be provided to all the Members as soon as possible for their review. The Members who wish to make revisions and supplements to the draft minutes shall give his/her written opinions within one week after receipt of the drafts. The final minutes shall be completed within a reasonable period after the meeting and delivered to all the Members for record, as well as reported to the Board for circulation.

(VI) Resolutions passed by the Committee and the voting results shall be reported in writing by the Secretary to the Board after the meeting.

(VII) The meetings of the Committee may be held by way of on-site meeting or telecommunication meeting which includes telephone conferences and video conferences.

(VIII) The Committee may also pass the written resolutions signed by all the Members, which have the same effect as the resolutions passed at the meetings of the Committee.

Rule 5 Duties and Powers of the Chairman

The Chairman shall have the following duties and powers:

(I) to convene and preside over the meetings of the Committee;

(II) to follow up the subsequent matters dealt with by the relevant resolutions of the Committee;

(III) to sign on behalf of the Committee the relevant documents, except for the minutes of the Committee meetings, the resolutions passed at such meetings and written resolutions, which shall be signed by all the Members;

(IV) to report to the Board regularly or in accordance with the work arrangement of the Board; and

(V) other duties and powers as authorised by the Board.

Rule 6 Relevant Arrangements

(I) The Committee shall make available its terms of reference, explaining its role and the authority delegated to it by the Board.

(II) The Committee shall be given adequate resources to exercise its duties and powers. The Committee may consult other Directors, the president of the Company and/or other senior management in respect of the performance of its duties. The persons being consulted shall offer adequate supports to the work of the Committee, provide the Committee with such information as necessary for performance of its duties on a timely basis and give answers to the questions raised as soon as possible. As may be necessary in the circumstances, the Committee may also appoint external experts or intermediaries to offer services to it, and the reasonable expenses so incurred shall be borne by the Company.

(III) In any case where the Board has any disagreement with the opinions of the Committee on selection, appointment, dismissal or removal of the Auditors, the Company shall include the statement issued by the Committee on its recommendations and the reasons for any disagreement of the Board in the corporate governance report.

Rule 7 Others

(I) The phrase "more than" as mentioned in these Rules is inclusive of the figure that follows and the word "exceeding" as mentioned in these Rules is exclusive of the figure that follows.

(II) Unless otherwise specified, the terms used in these Rules have the same meanings with those in the Articles of Association.

(III) These Rules shall become effective upon approval by the Board and may be amended by the Board by way of ordinary resolutions.

(IV) These Rules shall be construed by the Board.

Members of the Remuneration Committee of the Board are as follows :

Name Title
Mr JIA Shenghua (Chairman) Member of the Remuneration Committee of the Board
Mr SUN Guoqiang Member of the Remuneration Committee of the Board
Mr SHOU Bainian Member of the Remuneration Committee of the Board
Mr KE Huanzhang Member of the Remuneration Committee of the Board
Mr SZE Tsai Ping, Michael Member of the Remuneration Committee of the Board
Mr HUI Wan Fai Member of the Remuneration Committee of the Board

Rules of Procedure for Remuneration Committee of the Board

Rule 1 Purpose

(I) These Rules of Procedure are formulated in accordance with the relevant laws, regulations, rules and regulatory documents as well as the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the memorandum and articles of association of the Company (the "Articles of Association") while taking into account the actual conditions of the Company, aiming at completing the governance structure of Greentown China Holdings Limited (the "Company"), standardizing the remuneration system of the directors, president and other senior management of the Company, establishing an effective incentive mechanism and supervisory mechanism, enhancing the Company's competitive edge and protecting the interests of the Company and its shareholders.

(II) The Remuneration Committee of the Board (hereinafter referred to as the "Committee") is a specialized committee under and accountable to the Board of Directors (hereinafter referred to as the "Board", and its members referred to as the "Directors").

Rule 2 Composition

(I) The Committee consists of at least 3 Directors, and more than half of the members (the "Members") of the Committee must be independent non-executive Directors.

(II) The appointment or removal of a Member shall be proposed by the Chairman of the Board, and be approved by ordinary resolution at the Board meeting or by written resolution signed by all Directors.

(III) The term of office for a Member shall have the same period as his/her term as a Director. When such term expires, he/she is eligible for re-election. Where a Member resigns as a Director during his/her term, the Chairman of the Board may, for the purposes of maintaining composition of the Committee in compliance with the Rules of Procedure, nominate another Director to serve as an ad hoc Member, who shall, within three months, become a formal Member upon the approval by the Board according to the second paragraph of this Rule.

(IV) One of the Members shall serve as the Chairman of the Committee (the "Chairman"), and the procedures on appointment or removal of the Chairman are the same as that of a Member.

(V) The Committee shall have a secretary (the "Secretary"), who is concurrently the secretary of the Company.

Rule 3 Duties and Responsibilities

The duties and responsibilities of the Committee include:

(I) to make recommendations to the Board on the Group's policy and structure in relation to the remuneration of Directors and senior management and on the establishment of formal and transparent procedures for developing such remuneration policy;

(II) to determine the specific remuneration packages for all the executive Director and senior management, including non-monetary benefits, pension rights and compensation (including that for loss or termination of office or appointment) and make recommendations on the remuneration of non-executive Directors to the Board. Things that should be taken into account by the Committee include remuneration packages offered by comparable companies, time commitment and responsibilities of the Director, employment conditions elsewhere in the Group and whether to link compensation with performance, etc.;

(III) to review and approve performance-based remuneration by reference to corporate goals and objectives resolved by the Board from time to time;

(IV) to review and approve payment of compensation to the executive Directors and senior management in relation to their loss or termination of office or appointment, so as to ensure that such compensation is determined in accordance with the relevant contract terms; should it fail so, the compensation should at least be fair and reasonable and will not impose a heavy burden on the Company;

(V) to review and approve compensation arrangement in relation to dismissal or removal of Directors for misconduct to ensure that such arrangements are determined in accordance with relevant contractual terms; should it fail so, the compensation should at least be fair and reasonable;

(VI) to ensure that no Director or any of his associate is involved in deciding his own remuneration;

(VII) to study and cope with issues in relation to the option scheme for the employees of the Company; and

(VIII) to consider other topics, as defined by the Board.

Rule 4 Meetings

(I) The Committee shall hold at least two meetings each year. A meeting shall be held when the Chairman or over half of the Members propose(s) to do so.

(II) The meeting shall be presided over by the Chairman. In case that the Chairman is unable to attend the meeting, he/she shall authorize another Member to preside over the meeting.

(III) The meeting of the Committee shall not be held unless over two thirds of the Members attend the meeting. Each Member shall have one voting right and the resolutions made at the meeting must be approved by over half of all the Members. If, for any reason, a Member is unable to attend a meeting, he/she may authorize in writing another Member to attend and vote at the meeting on his/her behalf.

(IV) Other Directors, supervisors, president and other senior management may be invited by the Committee to attend its meeting when necessary.

(V) Full minutes of the meetings of the Committee are kept by the Secretary. The dissension in respect of resolutions of such meeting held by the attendees shall be recorded in the minutes. Draft minutes shall be provided to all the Members as soon as possible for their review. The Members who wish to make revisions and supplements to the draft minutes shall give his/her written opinions within one week after receipt of the drafts. The final minutes shall be completed within a reasonable period after the meeting and delivered to all the Members for record, as well as reported to the Board for circulation.

(VI) Resolutions passed by the Committee and the voting results shall be reported in writing by the Secretary to the Board after the meeting.

(VII) The meetings of the Committee may be held by way of on-site meeting or telecommunication meeting which includes telephone conferences and video conferences.

(VIII) The Committee may also pass the written resolutions signed by all the Members, which have the same effect as the resolutions passed at the meetings of the Committee.

Rule 5 Duties and Powers of the Chairman

The Chairman shall have the following duties and powers:

(I) to convene and preside over the meetings of the Committee;

(II) to follow up the subsequent matters dealt with by the relevant resolutions of the Committee;

(III) to sign on behalf of the Committee the relevant documents, except for the minutes of the Committee meetings, the resolutions passed at such meetings and written resolutions, which shall be signed by all the Members;

(IV) to report to the Board regularly or in accordance with the work arrangement of the Board; and

(V) other duties and powers as authorised by the Board.

Rule 6 Relevant Arrangements

(I) The Committee shall make available its terms of reference, explaining its role and the authority delegated to it by the Board.

(II) The Committee shall be given adequate resources to exercise its duties and powers. The Committee may consult other senior management in respect of the performance of its duties. The persons being consulted shall offer adequate supports to the work of the Committee, provide the Committee with such information as necessary for performance of its duties on a timely basis and give answers to the questions raised as soon as possible. As may be necessary in the circumstances, the Committee may also appoint external experts or intermediaries to offer services to it, and the reasonable expenses so incurred shall be borne by the Company.

Rule 7 Others

(I) The phrase "more than" as mentioned in these Rules is inclusive of the figure that follows and the word "exceeding" as mentioned in these Rules is exclusive of the figure that follows.

(II) The "Senior Management" referred to in these Rules of Procedure represents the same class of people mentioned in the prospectus or (after the first annual report following its IPO is published) the latest annual report of the Company.

(III) Unless otherwise specified, the terms used in these Rules have the same meanings with those in the Articles of Association.

(IV) These Rules shall become effective upon approval by the Board and may be amended by the Board by way of ordinary resolutions.

(V) These Rules shall be construed by the Board.

Members of the Nomination Committee of the Board are as follows :

Name Title
Mr SZE Tsai Ping, Michael (Chairman) Member of the Nomination Committee of the Board
Mr LIU Wensheng Member of the Nomination Committee of the Board
Mr SHOU Bainian Member of the Nomination Committee of the Board
Mr JIA Shenghua Member of the Nomination Committee of the Board
Mr KE Huanzhang Member of the Nomination Committee of the Board
Mr HUI Wan Fai Member of the Nomination Committee of the Board

Rules of Procedure for Nomination Committee of the Board

Rule 1 Purpose

(I) These Rules of Procedure are formulated in accordance with the relevant laws, regulations, rules and regulatory documents as well as the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the memorandum and articles of association of the Company (the "Articles of Association") while taking into account the actual conditions of the Company, aiming at completing the governance structure of Greentown China Holdings Limited (the "Company"), standardising the procedures for nominating the directors, chief executive officer and other senior management of the Company so as to select qualified directors, president and other senior management for the Company, and enhancing the competitive edge of the Company .

(II) The Nomination Committee of the Board (hereinafter referred to as the "Committee") is a specialised committee under and accountable to the Board of Directors (hereinafter referred to as the "Board", and its members referred to as the "Directors").

Rule 2 Composition

(I) The Committee consists of at least 3 Directors, and more than half of the Members must be independent non-executive Directors.

(II) The appointment or removal of a Member shall be proposed by the Chairman of the Board, and be approved by ordinary resolution at the Board meeting or by written resolution signed by all Directors.

(III) The term of office for a Member shall have the same period as his/her term as a Director. When such term expires, he/she is eligible for re-election. Where a Member resigns as a Director during his/her term, the Chairman of the Board may, for the purposes of maintaining composition of the Committee in compliance with the Rules of Procedure, nominate another Director to serve as an ad hoc Member, who shall, within three months, become a formal Member upon the approval by the Board according to the second paragraph of this Rule.

(IV) One of the Members shall serve as the Chairman of the Committee (the "Chairman"). The procedures on appointment or removal of the Chairman are the same as that of a Member.

(V) The Committee shall have a secretary (the "Secretary"), who is concurrently the secretary of the Company.

Rule 3 Duties and Responsibilities

Duties and responsibilities of the Committee include:

(I) to review the structure, number of members and composition of the Board (including their expertise, knowledge and experience) regularly, and propose any recommended changes to the Board;

(II) to seek for and select quality persons to be appointed as Directors, and provide the Board with opinions on the nomination of such persons to be appointed as Directors;

(III) to evaluate the independence of independent non-executive Directors;

(IV) to review the procedures and conditions for selection and appointment of the president and other senior management, and provide the Board with relevant opinions for reference; and

(V) to study other matters as defined by the Board.

Rule 4 Meetings

(I) The Committee shall hold at least two meetings each year. A meeting shall be held when the Chairman or over half of the Members propose(s) to do so.

(II) The meeting shall be presided over by the Chairman. In case that the Chairman is unable to attend the meeting, he/she shall authorise another Member to preside over the meeting.

(III) The meeting of the Committee shall not be held unless over two thirds of the Members attend the meeting. Each Member shall have one voting right and the resolutions made at the meeting must be approved by over half of all the Members. If, for any reason, a Member is unable to attend a meeting, he/she may authorise in writing another Member to attend and vote at the meeting on his/her behalf.

(IV) Any or some of the Directors, supervisors, president and other senior management may be invited by the Committee to attend its meeting when necessary.

(V) Full minutes of the meetings of the Committee are kept by the Secretary. The dissension in respect of resolutions of such meeting held by the attendees shall be recorded in the minutes. Draft minutes shall be provided to all the Members as soon as possible for their review. The Members who wish to make revisions and supplements to the draft minutes shall give his/her written opinions within one week after receipt of the drafts. The final minutes shall be completed within a reasonable period after the meeting and delivered to all the Members for record, as well as reported to the Board for circulation.

(VI) Resolutions passed by the Committee and the voting results shall be reported in writing by the Secretary to the Board after the meeting.

(VII) The meetings of the Committee may be held by way of on-site meeting or telecommunication meeting which includes telephone conferences and video conferences.

(VIII) The Committee may also pass the written resolutions signed by all the Members, which have the same effect as the resolutions passed at the meetings of the Committee.

(IX) To ensure that the Committee performs its duties in a fair and equitable manner. When the Committee convenes a meeting to discuss relevant matters, and there are Members who are perceived as interested parties in the following situations, they should disclose such interests to the Committee orally or in writing, and abstain from voting on the relevant resolutions (but they may attend such meetings and express their opinions):

a. the Member himself is proposed to be nominated;

b. a relative of a Member is proposed to be nominated;

c. other situations that may affect a Member to make judgments on objective and fair manner.

Rule 5 Duties and powers of the Chairman

The Chairman shall have the following duties and powers:

(I) to convene and preside over the meetings of the Committee;

(II) to follow up the subsequent matters dealt with by the relevant resolutions of the Committee;

(III) to sign on behalf of the Committee the relevant documents, except for the minutes of the Committee meetings, the resolutions passed at such meetings and written resolutions, which shall be signed by all the Members;

(IV) to report to the Board regularly or in accordance with the work arrangement of the Board; and

(V) other duties and powers as authorised by the Board.

Rule 6 Relevant Arrangements

(I) The Committee shall make available its terms of reference, explaining its role and the authority delegated to it by the Board.

(II) The Committee shall be given adequate resources to exercise its duties. The Committee may consult other Directors, the president of the Company and/or other senior management in respect of the performance of its duties. The persons being consulted shall offer adequate supports to the work of the Committee, provide the Committee with such information as necessary for performance of its duties on a timely basis and give answers to the questions raised as soon as possible. As may be necessary in the circumstances, the Committee may also appoint external experts or intermediaries to offer services to it, and the reasonable expenses so incurred shall be borne by the Company.

Rule 7 Others

(I) The phrase "more than" as mentioned in these Rules is inclusive of the figure that follows and the word "exceeding" as mentioned in these Rules is exclusive of the figure that follows.

(II) The "Senior Management" referred to in these Rules of Procedure represents the same class of people mentioned in the prospectus or (after the first annual report following its IPO is published) the latest annual report of the Company.

(III) Unless otherwise specified, the terms used in these Rules have the same meanings with those in the Articles of Association.

(IV) These Rules shall become effective upon approval by the Board and may be amended by the Board by way of ordinary resolutions.

(V) These Rules shall be construed by the Board.