Corporate Governance

Shareholders

The board and senior management of Tencent recognize their responsibility to represent the interests of the shareholders and to enhance shareholder value. Tencent uses a number of formal channels to account to shareholders for the performance and operation of the Group and reports to shareholders on a quarterly basis. The Board of Directors’ Office/Investor Relations Department respond to letters, e-mails and telephone enquiries from shareholders/investors on various issues throughout the year.

The directors of Tencent have adopted the Shareholders Communication Policy in March 2012 which aims to ensure that the shareholders of the Company and other stakeholders at large are provided with ready, equal, regular and timely access to material information about Tencent, in order to maintain an on-going dialogue with the shareholders of the Company and to enable them to exercise their rights in an informed manner, and to allow the shareholders of the Company and other stakeholders to engage actively with Tencent through general meetings or other proper means.

  1. Amended and Restated Memorandum of Association and Articles of Association
  2. Procedures for Shareholders to Propose A Person for Election as A Director
  3. Shareholders Communication Policy

The board

Tencent has a unitary board. Independent non-executive directors of the Company represent more than one-third of the board of the Company. The non-executive members of the board bring a wide range of business and financial experience to the board.
The board:

  1. ·determines the Group's mission, provides strategic direction to the Group and is responsible for the approval of strategic plans;
  2. ·approves the annual business plan and budget proposed by management;
  3. ·retains full and effective control over the Group and monitors management with regard to the implementation of the approved annual budget and business plan;
  4. ·appoints the Chief Executive Officer, who reports to the board and ensures that succession is planned;
  5. ·approves the Company's financial statements, quarterly, interim and annual reports;
  6. ·determines the Group's communication policy;
  7. ·determines director selection, orientation and evaluation;
  8. ·ensures that the Group has appropriate risk management, internal control and regulatory compliance procedures in place and that it communicates adequately with shareholders and stakeholders;
  9. ·establishes board sub-committees with clear terms of reference and responsibilities as appropriate;
  10. ·defines levels of delegation in respect of specific matters, with required authority to board sub-committees and management;
  11. ·monitors non-financial aspects pertaining to the business of the Group;
  12. ·considers and, if appropriate, declares the payment of dividends to shareholders; and
  13. ·regularly evaluates its own performance and effectiveness.

The board and its committees are supplied with full and timely information, which enables them to discharge their responsibilities. All directors have access to the company secretary and to independent professional advice and if appropriate, this will be at the Company's expense. Directors' interests in other boards and contracts are regularly declared and recorded.

The Nomination Committee of the Company which has been established in March 2012 identifies candidates suitably qualified to become board members and make recommendations to the board on the selection of candidates nominated as directors, in accordance with its Terms of Reference. Following the appointment of new directors to the board, an orientation programme is arranged to facilitate their understanding of the Group. The list of directors identifying their role and function shall be updated from time to time and made available on the HKExnews’ website and the Company’s website.

Board committees

While retaining overall accountability, and excluding those matters reserved for the board itself, the board has delegated to the Chief Executive Officer the authority to run the day-to-day business of the Group. The board has also established the following sub-committees:

  1. ·audit committee
  2. ·corporate governance committee
  3. ·investment committee
  4. ·nomination committee
  5. ·remuneration committee

Each committee acts within agreed terms of reference.

Internal controls

Internal control systems were introduced to provide management and the board with comfort regarding the financial position of the Group, safeguarding of assets (including information) and compliance with regulatory requirements. The internal and external auditors monitor the functioning of the internal control systems and make recommendations to management and the audit committee.

All internal control systems do, however, have inherent shortcomings, including the possibility of human error and the evasion or flouting of control measures. Even the best internal control system may provide only partial assurance.

External auditors

In order to maintain the independence of the Group’s external auditors, the external auditors will not be engaged for non-audit work unless this constitutes non-audit work pre-approved by the audit committee. There must be clear efficiencies and value-added benefits to the Company from that work being undertaken by the external auditors, with no adverse effect on the independence of their audit work or the perception of such independence.

Code of conduct

Tencent is committed to maintaining its integrity in dealings with all. The Company's code of conduct emphasises honesty and respect. The code of conduct applies to all employees and forms part of their service contracts.

Staff development takes place through formal training and offering employees opportunities in the workplace.