Corporate Governance

Tencent Holdings Limited ("Tencent" or the "Company", together with its subsidiaries and companies consolidated for accounting purposes, the "Group") is a leading provider of Internet value-added services in China. The shares of the Company are listed on the Main Board of The Stock Exchange of Hong Kong Limited.

The directors of Tencent recognise the need to conduct the business of the Group with integrity and in accordance with suitable governance practices.The requisite improvements to the Group’s corporate governance procedures and policies have either been implemented or are in the process of being made.

Shareholders

The Board and senior management of Tencent recognise 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 Company Secretarial Department/Investor Relations Department respond to letters, e-mails and telephone enquiries from shareholders/investors on various issues.

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 the Company, 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.

The Board

Tencent has a unitary Board. The non-executive directors of the Company bring a wide range of business and financial experience to the Board. Independent non-executive directors of the Company represent more than one-third of the Board, providing sufficient checks and balances that safeguard the interests of the shareholders and the Group. The Company receives from each independent non-executive director a confirmation annually of his independence and the Nomination Committee conducts annual reviews to assess the independence of all independent non-executive directors.

The Board:
determines the Group's mission, provides its strategic direction and is responsible for the approval of strategic plans;
approves the annual business plan and budget proposed by management;
retains full and effective control over the Group and monitors management with regard to the implementation of the approved annual business plan and budget;
appoints the Chief Executive Officer, who reports to the Board and ensures that succession is planned;
approves the Company's financial statements, and interim and annual reports;
determines the Group's communication policy;
determines director selection, orientation and evaluation;
ensures that the Group has appropriate risk management, internal control, internal audit and regulatory compliance procedures in place and that it communicates adequately with shareholders and stakeholders;
establishes Board committees with clear terms of reference and responsibilities as appropriate;
defines levels of delegation in respect of specific matters, with required authority to Board committees and management;
monitors non-financial aspects pertaining to the businesses of the Group;
considers and, if appropriate, declares the payment of dividends to shareholders; and
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 full and timely access to all relevant information as well as the advice and services of the Company’s general counsel and the company secretary, and to independent professional advice at the Company's expense if appropriate . Directors' interests in other boards and contracts are regularly declared and recorded.

The Nomination Committee 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’s operations and businesses, and responsibilities under the Listing Rules and applicable laws. 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 delegates the responsibility of day-to-day business and operations to the Company’s senior management team, which includes its chief officers, the president and executive vice-presidents. The Board has also established the following committees:

Audit Committee
Corporate Governance Committee
Investment Committee
Nomination Committee
Remuneration Committee

Each of the committee has its terms of reference which clearly specify its powers and authorities. Each committee acts within agreed terms of reference.

Internal control

Internal control systems have been 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 which emphasises integrity and respect. The code of conduct applies to all employees and forms part of their employment agreement. The Company provides employees with formal training and opportunities in the workplace to facilitate staff development.