Corporate Governance

Shanghai Turbo Enterprises Ltd (the “Company”) and its management are committed to maintaining high standards of corporate governance, the key principles of which are set out below in an abridged form.

Board Matters

Board’s conduct of its affairs

Principle 1: Effective Board to lead and control the Company

The Board is responsible for setting the overall strategy of the Group, supervising and working with the management team, establishing policies for corporate governance, performance reviews, and managing the appointment of Board members and key management personnel. There are three Board Committees, namely, the Audit Committee, Nominating Committee, and Remuneration Committee.

Board composition and guidance

Principle 2: Strong and independent element on the Board

The Board currently comprises four non-executive directors, of whom three are independent and one is non-independent.

During the year, the non-executive directors helped develop both the Group's short-term and long-term business strategies, corporate governance compliance, and played an important role in tightening the internal control processes risk and compliance monitoring.

Chairman and General Manager (“GM”)

Principle 3: Clear division of responsibilities at the top of the Company

The Company separated the positions of Chairman and GM to ensure an appropriate balance of power, increased accountability, and greater capacity of the Board for independent decision-making. Currently, the Chairman position is vacant.

Additionally, the Company’s Lead Independent Director (“LID”) is appointed as the principal liaison to the regulator (Singapore Exchange), to address shareholders’ concerns, and to facilitate periodic meetings with the non-executive directors to provide non-executive perspectives to the GM.

The LID leads Board meetings and sets the meeting agenda in consultation with the Company Secretary and ensures effective and adequate discussion of all agenda items.

The GM is responsible for the day-to-day running of the subsidiary company, Changzhou 3D Technological Complete Set Equipment Co., Ltd ("CZ3D") and execution of the strategic plans set out by the Board.

Board Membership

Principle 4: Formal and transparent process for appointment and re-appointment of directors to the Board

The Nominating Committee (“NC”) is responsible for determining the criteria and identifying candidates, to review nominations for appointment of directors to the Board, to consider the evaluation of the Board’s performance, and to propose objective performance criteria for the Board’s approval. The NC annually reviews the independence of each director based on the definition and criteria set out in the Code for independence.

Board performance

Principle 5: Formal annual assessment of the effectiveness of the Board and contributions by each director.

The NC is responsible for assessing the Board as a whole and also each individual director’s contribution. The NC also has in place a formal process for shortlisting, evaluating, and nominating candidates for appointment as new directors.

Access to information

Principle 6: Board members to have complete, adequate and timely information

The Board has separate and independent access to the senior management of the Company, the Company Secretary, Internal Auditors and External Auditors at all times. Directors also have unrestricted access to the Company’s records and information, all Board and Board’s committees’ minutes, and have been receiving management accounts so as to enable them to carry out their duties.

Procedures for developing remuneration policies

Principle 7: Formal and transparent procedure for fixing remuneration packages of directors and key management executives

The RC is responsible for ensuring a formal and transparent procedure for developing policy on executive remuneration, and for fixing the remuneration packages of individual directors and senior management.

Level and mix of remuneration

Principle 8: The level of remuneration for directors should be aligned with the long-term interest and risk policies

Directors receive directors’ fees. The key senior management remuneration packages are based on service contracts.

The performance of the GM (together with other key management personnel) is reviewed periodically by the RC and the Board. The RC sets and reviews remuneration linked to the key performance indexes for the GM for every financial year and assesses his performance.

Directors are paid yearly Directors’ fees of an agreed amount based on their contributions. Directors’ fees are recommended by the Board for approval at the Company’s AGM.

Disclosure on remuneration

Principle 9: Clear disclosure of remuneration policy, level and mix of remuneration, and the procedure for setting the remuneration

Directors’ fees of RMB1,125,000 for FY2021 were approved at the Extraordinary General Meeting on 15 March 2021 for the Board of Director.

Accountability

Principle 10: The Board should present a balanced and understandable assessment of the performance, position and prospects

The Board is accountable to shareholders. The Board updates shareholders on the operations and financial position of the Group through quarterly, half yearly and full year results announcements as well as timely announcements of other matters as prescribed by the relevant rules and regulations.

Risk management and internal controls

Principle 11: The Board is responsible for risk governance and internal controls

As the Company does not have a risk management committee, the Board, the AC and the management assume the responsibility of the risk management function. The management reviews all significant policies and procedures and highlights all significant matters to the Board and the AC.

The Group’s internal auditors carry out a review of the effectiveness of the Group’s material internal controls annually as set out in their scope laid out in their audit plan. Major control weaknesses on financial reporting, if any, are highlighted by the external auditors in the course of their audit.

Audit Committee

Principle 12: Establishment of Audit Committee with written terms of reference

The AC provides an independent review of the effectiveness of the financial reporting, management of financial and control risks, and monitoring of the internal control systems. The members of the AC, collectively, have expertise or experience in financial management and are qualified to discharge the AC’s responsibilities. The AC has full access to the Internal Auditors and the Company’s external auditors, RT LLP, Singapore.

The Company has put in place a whistle-blowing framework endorsed by the AC, where employees of the Company may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters and to ensure that arrangements are in place for the independent investigations of such matters and for appropriate follow up actions. Any employee can write to whistleblowing@shanghaiturbo.com and call to the mobile number at +8613917990579 anonymously, and this email is only accessible by members of the Audit Committee. The details of the whistle-blowing policies and arrangements have been made available to all employees.

There were no whistle-blowing incidents in FY2021.

Internal audit

Principle 13: Setting up an independent internal audit function

The Company had appointed Zhong Xing Cai Guang Hua (A member of PKF international CPA network) to undertake the function of internal audit.

Supervisory Team

The AC, through the approval of the board, appointed Mr Henry Lim on 1 January 2015, as Lead Supervisor of CZ3D. The Supervisory Team is a requirement of Chinese companies to provide periodic checks on internal controls and processes, as well as serving as an extension of the internal and external audit. He has visiting CZ3D 6 times in 2016 and he has performed the special assignments which is assigned by the Board of AC Committee. He has 2 full time staff members to support his task.

Communication with shareholders

Principle 14: Fair and equitable treatment of shareholders

The Company believes in timely, fair and adequate disclosure of relevant information to shareholders and investors. The Company does not practise selective disclosure. All information of the Company is published through the SGXNet.

The Company allows The Central Depository (Pte) Limited or other corporations which provide nominee or custodial services to appoint more than two proxies to attend general meetings.

Principle 15: Effective and fair communication with shareholders

The Board informs shareholders promptly of all major developments that may have a material impact on the Group. The Board embraces openness and transparency in the conduct of the Company’s affairs, whilst safeguarding its commercial interests.

General meetings have been and still are the principal forum for dialogue with shareholders. The Company also welcomes shareholders to visit the factory of operating subsidiary located in Changzhou, to gain a better understanding of its operations.

Principle 16: Shareholders’ participation at general meetings

All shareholders receive the annual report and notice of the AGM. At the AGM, shareholders are given the opportunity to pose questions to the directors, management, and external auditors.

The minutes of general meetings, which include substantial comments or queries from shareholders and responses from the Board are available to shareholders upon written request.

Dealing in securities

Officers are advised not to deal in the Company’s shares during the period commencing two weeks before the announcement of the Company’s quarterly results and one month before the announcement of the Company’s full year results, or if they are in possession of unpublished price-sensitive information of the Company. In addition, directors and officers should not deal in the Company’s securities on short-term considerations and are expected to observe insider trading laws at all times.

Material contracts

There are no material contracts of the Company or its subsidiaries involving the interests of the Executive Directors, each director or controlling shareholders.

Interested person transactions

The Group has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC, and that the transactions are conducted on an arm’s length basis and are not prejudicial to the interests of the shareholders. All interested person transactions are subject to review by the AC to ensure compliance with the established procedures.