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CorporateGovernance2013AnnualReport98OverviewoftheCorporateGovernanceTheBankstrictlyfollowstheregulatoryrulesoncapitalmarketsandindustries,closelyfollowschangesandtrendsinoverseasanddomesticregulations,andhascontinuouslyenhanceditscorporategovernancecapabilities.
TheBankattachesgreatimportancetobuildingupitscorporategovernancesystem.
ItcontinuestoreviseandimproveitscorporategovernancenormativedocumentsbasedonregulatoryrequirementsandtheBank'sactualdevelopment,andactsinstrictaccordancewiththosedocuments.
TheBank'scomprehensivesystemsupportstheeffectiveoperationofitscorporategovernance.
TheBankproactivelypromotesinnovativepracticesincorporategovernanceandensuresthatminorityshareholdersareproperlyinformedandabletoparticipateandmakedecisions.
Theannualshareholders'meetingsareheldinBeijingandHongKongbywayofvideoconference,allowingshareholdersfrombothChinesemainlandandHongKongtoattendinperson.
Inaddition,onlinevotingforA-ShareHoldersisavailabletoguaranteetherightsofminorityshareholders.
TheBankconstantlyimprovestheoperationmechanismoftheBoardofDirectors,informationdisclosuremechanismandstakeholderengagementmechanism,soastomaketheworkoftheBoardmoreconstructive,tosupportthescienticdecision-makingoftheBoard,topromotethetransparencyoftheBank,andtomeetitsresponsibilitiestostakeholdersincludingshareholders,customers,employeesandsociety.
TheBankcontinuestoenhanceitscorporategovernanceinaforward-lookingandexploratorymanner.
Intermsofgroupgovernance,theBoardofDirectorspayscloseattentiontotheinternalcontrolsandriskmanagementoftheGroup,constantlyimprovestheGroup'soverallriskmanagementcapabilitiesandenhancestheGroup'slevelofcompliance.
Inaddition,theBankcontinuouslytracksdomesticandinternationallatestcorporategovernancetheoriesandpractices.
TakingtheNewBaselCapitalAccordasanopportunitytoimprovecorporategovernance,theBankcarriesoutcorporategovernancewithreferencetotheadvancedpracticesofG-SIFIsandconstantlypursueshigherstandards.
In2013,theBankrevisedtheArticlesofAssociation,formulatedtheBankofChinaLimitedBoardDiversityPolicy,andpromotedtheimplementationofCBRC'sGuidanceonCorporateGovernanceofCommercialBanks.
ItalsoorganisedcorporategovernancetrainingsessionswithintheGroup,andthusachievedmoreinstitutionalisedandstandardisedcorporategovernance.
Duringtheyear,theBankcompletedcorporategovernanceproceduresincludingchangeoftheChairman,appointmentofindependentdirectorsandadjustmentstochairmenandmembersofspecialcommitteesoftheBoard.
TheelectionofnewindependentdirectorswasledandorganisedbytheindependentdirectorservingastheChairmanofthePersonnelandRemunerationCommittee.
CandidateswererecommendedbyincumbentindependentdirectorsandwereproposedtotheBoardofDirectorsafteraselectionmeetingattendedbyallindependentdirectors.
CurrentlytheindependentdirectorsserveastheChairmenoftheAuditCommittee,theRiskPolicyCommittee,thePersonnelandRemunerationCommitteeandtheConnectedTransactionsControlCommitteeoftheBoardofDirectors,respectively.
TheBankfurtherexploredinnovativeapproachesofcommunicationbetweendirectorsandtheseniormanagement,givingdirectorsadvancenoticeandreportonspecicmajorissuesrelatedtoboardproposals.
TheBankimprovedandstandardiseditsproposalmechanism,activelyorganisedtrainingsandsurveysfordirectors,andthusenhanceditsdecision-makingefciency.
In2013,theBank'sprogressincorporategovernancecontinuedtoberecognisedbythecapitalmarketsandthewiderpublic.
TheBankreceived,amongotherawards,theHongKong"CorporateGovernanceExcellenceAwards","TopTenCorporateGovernance"fromChinaCentralTelevision,"GoldenPrizeofRoundTableforExcellentBoardofDirectors"fromDirectors&Boards,"ExcellentBoardofDirectorsAward"and"GoldenBoardSecretaryAward"byDongshiju.
com,and"BestBoardSecretaryAward"byStockstar.
2013AnnualReport99CorporateGovernanceCorporateGovernanceFrameworkTheBank'scorporategovernanceframeworkisshownbelow:Shareholders'MeetingDutyPerformanceandDueDiligenceSupervisionCommitteeFinanceandInternalControlSupervisionCommitteeOfficeofBoardofSupervisorsBoardofSupervisorsBoardSecretariatBoardofDirectorsSeniorManagement(GroupExecutiveCommittee)StrategicDevelopmentCommitteeAuditCommitteeRiskPolicyCommitteePersonnelandRemunerationCommitteeConnectedTransactionsControlCommitteeAuditDepartmentAnti-moneyLaunderingCommitteeSecuritiesInvestmentandManagementCommitteeAssetDisposalCommitteeRiskManagementandInternalControlCommitteeProcurementReviewCommitteeAssetandLiabilityManagementCommitteeCorporateGovernanceComplianceDuringthereportingperiod,theBank'scorporategovernancewasfullyinlinewiththeCompanyLawandtherelevantprovisionsofCSRC.
Duringthereportingperiod,theBankstrictlyobservedtheCorporateGovernanceCode(the"Code")assetoutinAppendix14totheHongKongListingRules.
TheBankhascompliedwithallprovisionsoftheCodeandhassubstantiallycompliedwithmostoftherecommendedbestpracticessetoutintheCode.
TheBankadoptedBankofChinaLimitedBoardDiversityPolicytoputforwarditsstanceregardingthediversityofitsBoardofDirectorsandtospecifytheapproachestorealiseBoarddiversityittookonanon-goingbasispursuanttothenewamendmentstotheCodewhichtookeffectinSeptember2013.
AmendmentstotheArticlesofAssociationThe2013FirstExtraordinaryGeneralMeetingconsideredandapprovedtheproposaltoamendtheArticlesofAssociationregardingthecashdividend.
TheamendmentfurtherspeciedtheBank'sprotdistributionprinciples,policyandadjustmentprocedures,considerationoftheprotdistributionplanandotheraffairs.
Theamendmentstatedthat,exceptunderspecialcircumstances,theBankshalladoptcashastheformofdividenddistributionwherethereisprotinthatyearandtheaccumulatedundistributedprotispositive,andthatthecashdistributionofthedividendshallnotbelessthan10%oftheprotaftertaxattributabletotheshareholdersoftheBank.
TheamendmentalsostatedthattheBankshalladoptcashdividendasthepriorityformoftheprotdistributionandtheBankshallofferonlinevotingtoshareholderswhenconsideringamendmentstoprotdistributionpolicy.
ThisamendmenttotheArticlesofAssociationhasbeenapprovedbyCBRC.
2013AnnualReport100CorporateGovernanceShareholdersandShareholders'RightsTheBankhighlyvaluestheprotectionofitsshareholders'interestsandhasestablishedandmaintainedaneffectiveandmulti-channelplatformtocommunicatewithshareholders.
Thisincludesholdingshareholders'meetingsandsettingupaninvestorhotlinetoensurethatallshareholdersaretreatedequally,properlyinformedandabletoparticipateinandexercisetheirvotingandotherrightsregardingthemajorissuesoftheBank.
TheBankisindependentandcompletelyautonomousinallofitsbusinessoperations.
Itoperatesindependentlyandseparatelyfromitscontrollingshareholder,Huijin,inrespectofitsbusiness,personnel,assets,institutionalandnancialmatters.
Shareholders'RighttoConveneanExtraordinaryShareholders'MeetingandaMeetingofShareholdersofDifferentCategoriesAccordingtotheArticlesofAssociation,shareholdersindividuallyorinaggregateholdingatotalof10%ormoreofthesharesoftheBankhavetherighttomakeawrittenrequesttotheBoardofDirectorstoconveneanextraordinaryshareholders'meeting.
Twoormoreshareholdersholdingatotalof10%ormoreofthesharescarryingvotingrightsoftheBankmaysignoneormorewrittenrequestsofidenticalformandsubstancerequestingtheBoardofDirectorstoconveneameetingofshareholdersofdifferentcategoriesandstatingthesubjectofthemeeting.
IftheBoardofDirectorsfailstoissueanoticeofsuchameetingwithin30daysafterhavingreceivedawrittenrequestforconveninganextraordinaryshareholders'meetingorameetingofshareholdersofdifferentcategoriessubmittedbytheproposingshareholders,theproposingshareholdersmaythemselvesconvenethemeetingwithinfourmonthsaftertheBoardofDirectorsreceivedtherequest.
Theproceduresaccordingtowhichtheyconvenesuchmeetingshall,totheextentpossible,beidenticaltotheproceduresaccordingtowhichshareholders'meetingsareconvenedbytheBoardofDirectors.
WheretheproposingshareholdersconveneandholdameetingbecausetheBoardofDirectorsfailedtoconvenesuchmeetingpursuanttoarequestasmentionedabove,thereasonableexpensesincurredbysuchshareholdersshallbebornebytheBankandshallbedeductedfromthesumsowedbytheBanktothenegligentdirectors.
Shareholders'RighttoProposeResolutionsatShareholders'MeetingsAccordingtotheArticlesofAssociation,anyshareholderswhohold,individuallyorinaggregate,3%ormorevotingsharesoftheBankshallhavetherighttoproposearesolutioninashareholders'meeting.
Anyshareholderswhohold,individuallyorinaggregate,3%ormorevotingsharesoftheBankshallhavetherighttoproposeandsubmitinwritingtotheBoardofDirectorsinterimproposals10dayspriortotheconveningofashareholders'meeting.
WhentheBoardofDirectorsdecidesnottoincludesuchproposalsinthemeeting'sagenda,itshallexplainandclarifythereasonsintheshareholders'meeting.
WhentheproposingshareholdersdissentwiththeBoardofDirectors'decisiontoexcludesuchproposals,theymayrequesttocallforanextraordinaryshareholders'meetingbythemselvesbasedontherelevantproceduresstipulatedintheArticlesofAssociation.
Shareholders'RighttoPresentEnquiriesAccordingtotheArticlesofAssociation,anyshareholderwhoholdsseverallyorjointlywithothers5%ormoreofvotingsharesoftheBankshallhaverighttopresentenquiriestoashareholders'meeting.
TheBoardofDirectors,theBoardofSupervisors,orotherrelevantseniormanagementpersonnelshallattendtheshareholders'meeting,acceptenquiries,andanswerorexplainaccordingly.
PleaserefertotheArticlesofAssociationfordetailsoftherightsentitledtoshareholders.
IfshareholdersneedtocontacttheBoardofDirectorsregardingtheaforementioneditemsorforotherenquiriestotheBoardofDirectors,pleaserefertothesection"ReferenceforShareholders—InvestorEnquiry"forcontactdetails.
2013AnnualReport101CorporateGovernanceShareholders'MeetingFunctionsandPowersofShareholders'MeetingTheshareholders'meetingisthebodyofauthorityoftheBank.
Theshareholders'meetingisresponsibleformakingdecisionsonimportantissuesoftheBank,includingconsideringandapprovingtheBank'sprotdistributionplan,annualnancialbudgetandnancialstatements,changesintheBank'sregisteredcapital,adoptingresolutionsonmatterssuchasissueofbondsandothersecurities,mergeranddivision,amendingtheArticlesofAssociationoftheBank,electingandreplacingdirectors,shareholder'srepresentativesupervisorsandexternalsupervisorsanddecidingonmattersconcerningremunerationsoftheaforementionedpersons.
ConveningofShareholders'MeetingOn26March2013,theBankheldits2013FirstExtraordinaryGeneralMeetinginBeijing.
Thismeetingconsideredandapprovedthreeproposalsincludingtheproposaltoelectnon-executivedirectoroftheBank,theproposalondownwardadjustmenttotheconversionpriceoftheA-ShareConvertibleBondsoftheBankandtheproposaltoamendtheArticlesofAssociationoftheBank.
TheproposalondownwardadjustmenttotheconversionpriceoftheA-ShareconvertiblebondsoftheBankandtheproposaltoamendtheArticlesofAssociationoftheBankwerespecialresolutions.
On29May2013,theBankheldits2012AnnualGeneralMeetinginBeijingandHongKongbywayofvideoconference.
Thismeetingconsideredandapproved20proposalsincludingthe2012workreportoftheBoardofDirectors,the2012workreportoftheBoardofSupervisors,the2012annualnancialstatements,the2012protdistributionplan,the2013annualbudget,theappointmentofErnst&YoungHuaMingastheBank'sexternalauditorfor2013,theelectionofdirectors,there-electionofdirectors,there-electionofsupervisors,andtheissuanceofqualiedwrite-downTier-2capitalinstruments,amongothers.
Theproposalontheissuanceofqualiedwrite-downTier-2capitalinstrumentswasaspecialresolution.
On25March2014,theBankheldits2014FirstExtraordinaryGeneralMeetinginBeijing.
ThismeetingconsideredandapprovedtheproposalontheelectionofMr.
CHENSiqingasExecutiveDirectoroftheBank.
AlloftheaforementionedmeetingswereconvenedandheldinstrictcompliancewiththerelevantlawsandregulationsaswellasthelistingrulesoftheChinesemainlandandHongKong.
TheBank'sdirectors,supervisorsandseniormanagementmembersattendedthemeetingsandcommunicatedwithshareholdersonissuesoftheirconcern.
TheBankpublishedannouncementsontheresolutionsandlegalopinionsoftheaforementionedshareholders'meetingson26March2013,29May2013and25March2014respectively,pursuanttoregulatoryrequirements.
PleaserefertothewebsitesofSSE,HKExandtheBank.
ImplementationoftheResolutionsPassedattheShareholders'MeetingbytheBoardofDirectorsTheBoardofDirectorsearnestlyandfullyimplementedtheresolutionspassedattheshareholders'meetingsduringthereportingperiod.
The2013FirstExtraordinaryGeneralMeetingconsideredandapprovedaproposaltoamendtheArticlesofAssociation.
ThisamendmenttotheArticlesofAssociationhasbeenapprovedbyCBRC,andtheamendedArticlesofAssociationhavebeenpublishedonthewebsitesofSSE,HKExandtheBank.
AllactivitiesoftheBankareinlinewiththeamendedArticlesofAssociation.
Asapprovedbythe2012AnnualGeneralMeeting,theBoardofDirectorsdiligentlycarriedoutthe2012protdistributionplan,distributeddividendstoshareholdersinatimelymannerandeffectivelyservedtheshareholders'interests.
TheprotdistributionwascompletedinJuly2013.
2013AnnualReport102CorporateGovernanceProposalstoelectdirectorswereapprovedbythe2012AnnualGeneralMeeting.
Therelevantapprovalandlingprocedureshavebeencompletedwithregulatoryauthorities.
Asapprovedbythe2012SecondExtraordinaryGeneralMeetingandthe2012AnnualGeneralMeeting,theBankhascompletedtheappointmentofErnst&YoungHuaMingastheexternalauditorfor2013.
BoardofDirectorsFunctionsandPowersoftheBoardofDirectorsTheBoardofDirectors,whichisresponsibletotheshareholders'meeting,istheBank'sdecision-makingbody.
TheBoardofDirectorsexercisesthefollowingfunctionsandpowersasspeciedbytheBank'sArticlesofAssociation:conveningshareholders'meetingsandimplementingtheresolutionsofshareholders'meetings;decidingontheBank'sstrategicpolicies,businessplansandmaterialinvestmentplans(exceptforthosematerialinvestmentplansthataresubjecttoshareholders'meetingapprovalasspeciedintheArticlesofAssociation);formulatingtheannualnancialbudgets,nalaccountsandplansforprotdistributionandlossmaking-upoftheBank;appointingordismissingmembersofspecialcommitteesandtheseniormanagementoftheBank;reviewinganddecidingontheestablishmentoftheBank'sbasicadministrativesystem,internalmanagementframeworkandimportantsub-entities;developingandreviewingcorporategovernancepoliciesoftheBank;takingchargeofperformanceevaluationandmattersofmaterialrewardandpunishmentforseniormanagementmembers,andhearingthereportsoftheseniormanagementandexaminingtheirwork,amongothers.
TheBoardofDirectorscontinuouslyreviewsandupdatestheArticlesofAssociationandtheBank'scorporategovernancepoliciesandsystemsinaccordancewiththeapplicablelawsandregulations,relevantregulatoryrequirementsandlistingrules,andensurescompliancewithsuchpoliciesandsystems.
CompositionoftheBoardofDirectorsTheBoardofDirectorshassetuptheStrategicDevelopmentCommittee,AuditCommittee,RiskPolicyCommittee,PersonnelandRemunerationCommittee,andConnectedTransactionsControlCommitteetoassisttheBoardinperformingdifferentaspectsofitsfunctions.
ThepositionsofChairmanandPresidentoftheBankareassumedbytwopersons.
TheBoardofDirectorsoftheBankisrationallystructuredanddiversied.
Currently,theBoardofDirectorscomprisesthirteenmembers.
BesidestheChairman,therearetwoexecutivedirectors,venon-executivedirectorsandveindependentdirectors.
Thenumberofindependentdirectorsexceedsone-thirdofthetotalnumberofdirectors.
TheBank'sdirectorsareelectedattheshareholders'meeting,withatermofofceofthreeyearsstartingfromthedatewhentheBankreceivesapprovaloftheappointmentfromCBRC.
Adirectormayserveconsecutivetermsbyre-electionandre-appointmentunlessotherwisespeciedbylaws,regulationsandsupervisoryrequirements.
FordetailedbackgroundandanexplanationofrecentchangestotheBoardmembers,pleaserefertothesection"Directors,SupervisorsandSeniorManagementMembers".
BoardComposition012345678910111213NationalityAgeGroupDirectorshipwiththeBank(years)NumberofDirectorsMaleFemale66-7556-6545-55Othercountriesandregionsover31-3HongKongChinaChinesemainlandExecutiveDirectorIndependentDirectorNon-executiveDirectorGenderDesignation2013AnnualReport103CorporateGovernanceConveningoftheBoardMeetingsIn2013,theBankconvenedeighton-sitemeetingsoftheBoardofDirectorson30January,26March,25April,29May,29July,29August,30Octoberand19December,respectively.
Atthesemeetings,theBoardofDirectorsreviewedandapproved44proposalsrelatedtotheBank'sregularreports,thenominationofcandidatesfordirectors,theelectionoftheChairman,the2012corporatesocialresponsibilityreport,the2012internalcontrolself-assessmentreport,theBoardDiversityPolicy,thedevelopmentstrategyplanoftheBankfor2013-2016,theGroupRecoveryandResolutionPlans,andsoon.
ItalsoheardninereportsrelatedtotheBank'sconsolidatedmanagementandothermatters.
In2013,theBankconvenedelevenmeetingsoftheBoardofDirectorsviawrittenresolutions.
Atthesemeetings,theBoardofDirectorsapprovedtheproposalsrelatedtochangesinthecompositionofspecialcommitteesundertheBoardofDirectorsandtheAnnouncementinRelationtotheIncreaseinShareholdingoftheBankbyItsControllingShareholder,amongothers.
GuidanceoftheBoardofDirectorsandtheAuditCommitteeregardingInternalControlTheBoardattachesgreatimportancetoandcontinuestopromotetheconstructionoftheGroup'seffectivelong-actinginternalcontrolsystem,andregularlyreviewstheseniormanagementreportsconcerningoperationalmanagement,riskmanagement,fraudcasegovernanceandinternalcontrolenhancementandassessment.
TheBoardhaseffectivelytakentheresponsibilityforestablishing,improvingandperformingeffectiveinternalcontrolsandmadegreateffortstoprovideguidancefortheBank'sinternalcontrolandcompliancework.
TheGroup'sriskmanagementandmitigationcapabilityandlevelofoperationalcompliancehavebeenenhancedcontinuously.
TheAuditCommitteeoftheBoardofDirectorscloselymonitoredthechangingeconomicandnancialenvironmentbothdomesticallyandoverseas,aswellastheoverallconditionsoftheGroup'sinternalcontrol,includingtheestablishmentandoperationofitsinternalcontrolsystemsfornancialandnon-nancialreporting.
Inaddition,thecommitteelistenedtoandreviewed,onaregularandadhocbasis,theinternalauditreports,theassessmentopinionsoninternalcontrol,theprogressofinternalcontrolimprovementsbasedontheremedialmeasuresrecommendedbytheexternalauditor,andtheoverallsituationofthepreventionandcontroloffraudcasesandnon-complianceactivities.
Thecommitteeguidedandurgedtheseniormanagementtocontinuouslyimprovetheinternalcontrolsystem,andconductedspecialresearchonanti-moneylaunderingandliquidityriskmanagement.
Moreover,theAuditCommitteeprovidedguidancetotheinternalauditfunctionasitsettheinternalcontrolprioritiesandperformedtheinspectionworkbasedonthephilosophyofcomprehensiveriskmanagementandriskassessmentresults.
Thecommitteealsopromotedandfolloweduptheimplementationofadvancedcapitalmanagementapproachandprovidedindependentsuggestionsandopinionsoninternalcontrolimprovement,soastoimprovetheGroup'soperatingeffectivenessandefciencyandtoenhanceitscorporategovernance.
Duringthereportingperiod,theBankfollowedrelevantrequirementssetforthintheBasicStandardforEnterpriseInternalControlanditssupportingguidelines,andperformedinternalcontrolself-assessmentinaccordancewiththeStandardsofInternalControlAssessmentofBankofChinaLimitedandtheStandardsofRecognisingInternalControlDecienciesofBankofChinaLimited,withnomaterialdecienciesidentiedintheinternalcontrolsystemsoftheBank,includingbothnancialandnon-nancialreporting.
Ernst&YoungHuaMingLLP,astheBank'sinternalcontrolauditor,auditedtheeffectivenessoftheBank'sinternalcontrolsovernancialreportingandissuedastandardunqualiedopinion.
The2013InternalControlAssessmentReportofBankofChinaLimitedandAuditor'sReportonInternalControlissuedbyErnst&YoungHuaMingLLPhavebeenpublishedonthewebsitesofSSE,HKExandtheBank.
2013AnnualReport104CorporateGovernanceDutyPerformanceofDirectorsDirectors'AttendanceoftheShareholders'Meeting,MeetingsoftheBoardofDirectorsandSpecialCommitteesDuringthereportingperiod,theattendancerateofeachdirectoroftheshareholders'meeting,theBoardofDirectorsmeetingsandspecialcommitteesmeetingsisgivenbelow:Numberofmeetingsattendedinperson/NumberofmeetingsconvenedduringtermofofceSpecialCommitteesDirectorsShareholders'MeetingBoardofDirectorsStrategicDevelopmentCommitteeAuditCommitteeRiskPolicyCommitteePersonnelandRemunerationCommitteeConnectedTransactionsControlCommitteeIncumbentDirectorsTIANGuoli0/013/133/3––––LIZaohang2/219/19––––3/3WANGYongli2/219/19––5/5––SUNZhijun2/219/195/55/5–––LIULina2/219/195/5–5/5––ZHANGXiangdong2/219/195/52/2–2/2–ZHANGQi2/219/195/5––7/7–WANGYong0/010/102/33/3–––CHOWManYiu,Paul2/219/19–5/55/57/73/3JacksonTAI2/219/195/55/53/3–2/3NoutWELLINK2/219/195/55/55/5––LUZhengfei0/09/9–3/3–1/11/1LEUNGCheukYan0/06/6–2/2–0/01/1FormerDirectorsXIAOGang0/01/10/0––––LILihui2/218/195/5––––JIANGYansong2/214/144/4–4/4––AnthonyFrancisNEOH2/213/13–3/33/36/72/2HUANGShizhong0/213/13–3/32/34/72/2HUANGDanhan2/213/13–3/3–7/72/2Note:Pleaserefertothesection"Directors,SupervisorsandSeniorManagementMembers—ChangesinDirectors,SupervisorsandSeniorManagementMembers"forchangesindirectors.
TrainingandExpertiseEnhancementofDirectorsIn2013,theBoardofDirectorspaidmuchattentiontoenhancedirectors'expertise,withaspecialfocusonarrangingrelevanttrainings.
AlldirectorsoftheBankfullyobservedRuleA6.
5oftheCodeaswellasregulatoryrequirementsofChinesemainlandandparticipatedinmanyspecialtrainingsessionsfocusingontopicssuchasinterestrateliberalisationandcommercialbankdevelopment,corporategovernanceoflargebanks,normsforannualreportauditandnances,lawsandregulationsoninsideinformationandtheHongKongListingRules.
TheBankgaveadetailedexplanationofitsbusinessoperationstoallnewlyappointednon-executivedirectorsandindependentdirectorsin2013.
TheBank'sdirectorshavealsotakenituponthemselvestoenhancetheirprofessionalskillsinvariousways,includingwritingandpublishingprofessionalarticlesandbooks,attendingforumsandseminars,participatingspecialtrainingsessionsandgivingpubliclectures,andconductingon-siteresearchexercisesatleading2013AnnualReport105CorporateGovernanceinternationalbanksandattheBank'sdomesticandoverseasbranches.
Directors'LiabilityInsuranceTheBankrenewedthedirectors'liabilityinsurancein2013toprovideprotectionagainstclaimsarisingfromthelawfuldischargeofdutiesbythedirectors,thusencouragingthedirectorstofullyperformtheirduties.
IndependenceandDutyPerformanceofIndependentDirectorsTherearecurrentlyveindependentdirectorsontheBoardofDirectors.
Thisexceedsone-thirdofthetotalnumberofdirectorsandisincompliancewiththequorumrequirementspeciedintheArticlesofAssociationandrelevantregulatoryrequirements.
Fortheprofessionalbackgroundsandotherdetailsoftheindependentdirectors,pleaserefertothesection"Directors,SupervisorsandSeniorManagementMembers".
TheindependentdirectorsserveastheChairmenoftheAuditCommittee,RiskPolicyCommittee,PersonnelandRemunerationCommitteeandConnectedTransactionsControlCommittee,respectively.
AsstipulatedinrelevantdomesticregulatoryrequirementsandRule3.
13oftheHongKongListingRules,theBankhasreceivedtheannualconrmationinwritingfromeachindependentdirectorwithregardtohis/herindependence.
BasedontheseconrmationsandrelevantinformationinpossessionoftheBoardofDirectors,theBankconrmstheirindependentstatus.
In2013,theBank'sindependentdirectorsattendedmeetingsoftheBoardofDirectors,reviewedproposals,participatedindiscussionsandofferedtheirprofessionalopinionsindependently,objectivelyanddiligently,inaccordancewiththeArticlesofAssociation,theProceduralRulesforBoardofDirectorsofBankofChinaLimitedandtheWorkRulesofIndependentDirectorsofBankofChinaLimited.
Pleaserefertothesection"Directors'AttendanceoftheShareholders'Meeting,MeetingsoftheBoardofDirectorsandSpecialCommittees"fortheattendanceofindependentdirectorsatmeetings.
In2013,independentdirectorsputforwardrecommendationsontheBank'sstrategicplanning,capitalmanagement,liquidityriskmanagement,datamanagement,consolidatedmanagement,andsoon.
TherecommendationswereadoptedanddiligentlyimplementedbytheBank.
In2013,theindependentdirectorsdidnotraiseanyobjectiontotheresolutionsoftheBoardofDirectorsoritsspecialcommittees.
SpecicExplanationandIndependentOpinionsofIndependentDirectorsontheGuaranteeBusinessoftheBankPursuanttotheprovisionsandrequirementssetforthinthecircular(ZhengJianFa[2003]No.
56)issuedbyCSRC,andaccordingtotheprinciplesofjustice,fairnessandobjectivity,theIndependentDirectorsoftheBank,Mr.
CHOWManYiu,Paul,Mr.
JacksonTAI,Mr.
NoutWELLINK,Mr.
LUZhengfeiandMr.
LEUNGCheukYanhaveprovidedthefollowinginformationregardingtheBank'sguaranteebusiness:TheguaranteebusinessisoneoftheBank'sordinarybusinessactivities.
IthasbeenapprovedbyPBOCandCBRCanddoesnotfallwithinthescopeofguaranteesasdenedintheCircularonRegulatingGuaranteeBusinessesofListedCompanies.
TheBankhasformulatedspecicmanagementmeasures,operationalprocessesandapprovalproceduresinlightoftherisksoftheguaranteebusinessandcarriedoutthisbusinessaccordingly.
TheBank'sguaranteebusinessprincipallycompriseslettersofguarantee.
Asat31December2013,theoutstandingamountoflettersofguaranteeissuedbytheBankwasRMB846.
497billion.
2013AnnualReport106CorporateGovernanceResponsibilityStatementofDirectorsonFinancialReportsThefollowingstatement,whichsetsouttheresponsibilitiesofthedirectorsregardingnancialstatements,shouldbereadinconjunctionwith,butunderstoodseparatelyfrom,theauditor'sstatementoftheirresponsibilitiesassetoutintheIndependentAuditor'sReportcontainedinthisannualreport.
ThedirectorsacknowledgethattheyareresponsibleforpreparingnancialstatementsoftheBankthattrulyrepresenttheoperatingresultsoftheBankforeachnancialyear.
Tothebestknowledgeofthedirectors,therewasnomaterialeventorconditionduringthereportingperiodthatmighthaveamaterialadverseeffectonthecontinuingoperationoftheBank.
SpecialCommitteesoftheBoardofDirectorsStrategicDevelopmentCommitteeTheStrategicDevelopmentCommitteecompriseseightmembers,includingChairmanMr.
TIANGuoli,Non-executiveDirectorsMs.
SUNZhijun,Ms.
LIULina,Mr.
ZHANGXiangdong,Mr.
ZHANGQi,Mr.
WANGYongandIndependentDirectorsMr.
JacksonTAIandMr.
NoutWELLINK.
ChairmanMr.
TIANGuoliservesastheChairmanofthecommittee.
Thecommitteeismainlyresponsibleforreviewingthestrategicdevelopmentplanspresentedbytheseniormanagement,assessingthefactorsthatmayaffectthestrategiesoftheBankandtheirimplementation,andadvisingtheBoardwithregardtostrategyadjustments;reviewingtheannualbudget,strategiccapitalallocation(policiesoncapitalstructure,capitaladequacyratioandrisk-rewardtrade-off),objectivesofasset-liabilitymanagement,ITdevelopmentandotherspecialstrategicdevelopmentplansoftheBank,andadvisingtheBoardaccordingly;coordinatingstrategiesontheoveralldevelopmentofvariousnancialbusinessesandthedevelopmentofdomesticandoverseasinstitutions,anddecidingonthesetup,cancellationandincreaseordecreaseofcapitalofdomesticandoverseasinstitutionswithinitsscopeofauthorisation;designingandformulatingkeyinvestmentandnancingplansandmergerandacquisitionplansoftheBank;andreviewingthesubstantialinternalreorganisationandadjustmentplansoftheBank,andadvisingtheBoardaccordingly.
TheStrategicDevelopmentCommitteeheldvemeetingsin2013.
Atthesemeetings,itmainlyapprovedtheproposalonprotdistributionfor2012,theproposalonissuingqualiedwrite-downcapitalinstrumentsandthedevelopmentstrategyplanningfor2013-2016(includingthecapitalmanagementplanningfor2013-2016).
Inresponsetochangesininternationalanddomesticeconomicandnancialsituations,theStrategicDevelopmentCommitteesteppedupitsanalysisoftheoperatingenvironment,paidconstantattentiontoopportunitiesandchallengesbroughtaboutbyinterestandexchangerateliberalisation,depositinsuranceschemeandothermajorpoliciesontheBank,andputforwardmanyimportantcommentsandrecommendationsforformulatingandimplementingtheBank'sstrategicdevelopmentplansandimprovingitscapitalmanagement,thusprovidingstrongsupporttothescienticdecision-makingoftheBoardofDirectors.
AuditCommitteeTheAuditCommitteecomprisessevenmembers,includingNon-executiveDirectorsMs.
SUNZhijun,Mr.
WANGYongandIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
JacksonTAI,Mr.
NoutWELLINK,Mr.
LUZhengfeiandMr.
LEUNGCheukYan.
IndependentDirectorMr.
LUZhengfeiservesastheChairmanofthecommittee.
Thecommitteeismainlyresponsibleforreviewingnancialreportsandothersignicantaccountingpoliciesandregulationsformulatedbytheseniormanagement;reviewingtheexternalauditors'auditopinion,annualauditplanandrecommendationsformanagement;approvingtheinternalannualauditpriorities,theinternalannualauditplanand2013AnnualReport107CorporateGovernancebudget;appraisingthedutyperformanceandworkqualityoftheexternalauditorsandinternalauditandmonitoringtheirindependence;recommendingtheengagement,reappointment,replacementandauditfeeoftheexternalauditors;recommendingtheappointmentanddismissalandappraisingtheperformanceoftheChiefAuditOfcer;overseeingtheBank'sinternalcontrolfunction,reviewingsignicantdecienciesininternalcontroldesignandexecutionbytheseniormanagementandinvestigatingfraudcases;reviewingtheemployeereportingsystemandurgingtheBanktoconductfairinvestigationsandtakeappropriatemeasuresregardingmattersreportedbytheemployees.
TheAuditCommitteeheldvemeetingsin2013.
ItmainlyreviewedproposalssuchastheBank'squarterly,interimandannualnancialreports,theannualself-assessmentreportoninternalcontrol,thematterofrequestingtheAnnualGeneralMeetingtoapprovetheappointmentofexternalauditorfor2013andtheappointmentandauditfeeoftheexternalauditorfor2014.
Inaddition,theAuditCommitteereviewedandapprovedtheinternalauditworkplanandbudgetfor2013andtheinternalauditprioritiesfor2014.
Itheardareportonmajorinspectionndingsbytheinternalauditfunctionin2012,areportoninternalauditrelatedtoanti-moneylaunderingandITaudit,areportoncasesin2013,areportontheauditprogressofinternalcontrolbytheexternalauditor,anassessmentreportonanti-moneylaunderingandareportonthe2014auditplanoftheexternalauditorandonindependencecompliance.
TheAuditCommitteeundertookanimportantroleinpayingcloseattentiontotheimprovementofbusinessperformance,enhancementofinternalcontrolandintensicationofriskcontroloftheBank.
AccordingtotheProcedureRulesonthePreparationofAnnualReportoftheBoardAuditCommitteeofBankofChinaLimited,priortothestartofauditeldworkbytheauditors,theAuditCommitteeconrmedwiththeauditorsthedetailsofthe2013auditplan,includingareasoffocusforauditingthe2013AnnualReport,riskassessmentandidenticationmethods,theapplicationofaccountingstandards,testsofinternalcontrolandfraudrelatedprocedures,andtheallocationofhumanresources.
Inparticular,thecommitteeremindedtheauditorstoreportanydifferencesofjudgmentbetweentheauditorsandtheseniormanagementduringtheaudit,aswellastheprocessandresultsofreconcilingsuchdifferences.
TheAuditCommitteeheardandreviewedreportsfromtheseniormanagementconcerningtheBank'sbusinessperformanceandmajornancialdata.
Thecommitteealsorequestedthattheseniormanagementsubmittheannualnancialstatementstotheauditorsinatimelymanner,toensuresufcienttimefortheannualaudit.
Duringtheaudit,thecommitteemaintainedindependentdiscussionswiththeauditorsandarrangedindependentmeetingsbetweentheauditorsandtheindependentdirectors.
Atitsrstmeetingof2014,theAuditCommitteereviewedandapprovedtheBank's2013nancialstatementsandsubmittedthemtotheBoardofDirectorsforapproval.
InaccordancewiththePoliciesofSelection,RotationandDismissalforExternalAuditorsofBankofChinaLimited,theexternalauditorsmadeasummaryreportontheirworkandsubmittedareportontheirindependencecompliancetothecommittee.
TheBank'sseniormanagementappraisedexternalauditors'work.
Basedonthisappraisal,theAuditCommitteeconducteditsownassessmentontheauditors'performance,effectivenessandindependencein2013.
Itdiscussedre-appointmentmatters,anddecidedtoreappointErnst&YoungHuaMingLLPastheBank'sdomesticauditorandinternalcontrolauditorfor2014,andtoreappointErnst&YoungastheBank'sinternationalauditorfor2014.
SuchproposalshavebeensubmittedtotheBoardofDirectorsforapproval.
RiskPolicyCommitteeTheRiskPolicyCommitteeoftheBankcomprisesvemembers,includingExecutiveDirectorMr.
WANGYongli,Non-executiveDirectorMs.
LIULinaandIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
2013AnnualReport108CorporateGovernanceJacksonTAIandMr.
NoutWELLINK.
IndependentDirectorMr.
NoutWELLINKservesastheChairmanofthecommittee.
ThecommitteeismainlyresponsibleforreviewingtheBank'sriskmanagementstrategies,majorriskmanagementpolicies,proceduresandsystems,andprovidingsuggestionstotheBoardofDirectors;reviewingtheBank'smajorriskactivities,andexercisingitsvetopowerinareasonablemanneroveranytransactionthatwillormayleadtodebtstotheBankand/orexposetheBanktomarketriskinexcessofthesingletransactionrisklimitortheaccumulatedtransactionrisklimitapprovedbytheRiskPolicyCommitteeortheBoardofDirectors;monitoringtheimplementationoftheBank'sriskmanagementstrategies,policiesandprocedures,andprovidingsuggestionstotheBoardofDirectors;reviewingtheBank'sriskmanagementsituation,regularlyassessingthedutyperformanceofriskmanagementandinternalcontrolbytheseniormanagement,departmentsandinstitutionsoftheBank,includingregularlyhearingreportsandrequestingimprovements.
TheRiskPolicyCommitteeheldvemeetingsin2013,inwhichitmainlyreviewedandapprovedtheGroup'srecoveryandresolutionplan,thestatementandqualicationplanoftheGroup'sriskappetite,datamanagementframeworkpolicy,managementmeasuresandlimitsforcountryrisk,marketrisklimitandcreditproposalsexceedingtheapprovalauthorityoftheseniormanagement.
ThecommitteealsoregularlyreviewedtheGroupriskreportsandprogressreportsregardingtheBank'simplementationoftheNewBaselCapitalAccord.
Inaddition,thecommitteepaidconstantattentiontocriticalriskissues,suchastheBank'sloanstocertainindustries,inresponsetochangesinoverseasanddomesticeconomicandnancialconditionsandadjustmentsofthegovernment'smacropolicies.
ThecommitteemembersbroughtforwardimportantopinionsandrecommendationsregardingtheimprovementoftheBank'sriskgovernancemechanismandtheeffectivepreventionandcontrolofrisks,includingcreditrisk,marketrisk,operationalrisk,legalandcompliancerisk,liquidityrisk,andsoon.
PersonnelandRemunerationCommitteeThePersonnelandRemunerationCommitteecomprisesvemembers,includingNon-executiveDirectorMr.
ZHANGXiangdong,Mr.
ZHANGQi,andIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
LUZhengfeiandMr.
LEUNGCheukYan.
IndependentDirectorMr.
CHOWManYiu,PaulservesastheChairmanofthecommittee.
ThecommitteeismainlyresponsibleforassistingtheBoardofDirectorsinreviewingtheBank'shumanresourcesandremunerationstrategiesandoverseeingtheirimplementations;reviewingthestructure,sizeandcompositionoftheBoardofDirectorsonanannualbasis,andmakingsuggestionstotheBoardregardingthescaleandcompositionoftheBoardofDirectors;studyingandreviewingthestandardsandproceduresforselecting,nominatingandappointingdirectors,membersoftheBoardcommitteesandtheseniormanagement,andmakingrecommendationstotheBoardofDirectors;identifyingindividualssuitablyqualiedtobecomedirectorsandmakingrecommendationstotheBoardofDirectorsontheselectionofindividualsnominatedfordirectorships;performingpreliminaryreviewofthecandidatesforseniormanagementmembersandthechairmenoftheBoardcommittees,selectingandnominatingcandidatesfordifferentBoardcommittees,andreportingtotheBoardofDirectorsforapproval;reviewingandmonitoringtheremunerationandincentivepoliciesoftheBank;consideringandexaminingtheremunerationplanfordirectors,supervisorsandseniormanagementmembers,andmakingrecommendationstotheBoardofDirectors;andsettingtheperformanceappraisalstandardsfortheseniormanagementoftheBank,evaluatingtheperformanceofthedirectorsandmembersoftheseniormanagement,andmakingrecommendationstotheBoardofDirectors.
2013AnnualReport109CorporateGovernanceThePersonnelandRemunerationCommitteeheldveon-sitemeetingsandtwomeetingsbywrittenresolutionin2013.
Atthesemeetings,thecommitteemainlyapprovedproposalsontheperformanceevaluationandremunerationdistributionplanfortheChairman,executivedirectorsandseniormanagementmembersfor2012,the2013performancetargetsfortheGroup,performancetargetsfortheChairman,thePresidentandotherseniormanagementmembers,proposalonelectionofMr.
TIANGuoliastheChairmanoftheBank,proposalsonnominationofcandidatesforexecutivedirectors,non-executivedirectorsandindependentdirectors,proposalonre-appointmentoftheCompanySecretaryoftheBank,andaproposalonBankofChinaLimitedBoardDiversityPolicy.
ThecommitteealsoreviewedtheremunerationdistributionplanfortheChairmanoftheBoardofSupervisorsandshareholdersupervisorsin2012.
ThecommitteeputforwardimportantopinionsandrecommendationsonfurtherimprovingtheBank'sperformanceevaluationmanagementincompliancewithregulatoryrequirements.
TheproceduresandmethodsforthenominationofdirectorsandthespecicrequirementsfornominatingindependentdirectorsarespeciedintheArticlesofAssociation.
Fordetails,pleaserefertoarticles59,103and135oftheArticlesofAssociation,whichcanbefoundonthewebsitesofSSE,HKExandtheBank.
Duringthereportingperiod,theBankappointedorre-appointeddirectorsinstrictcompliancewiththeArticlesofAssociation.
ConnectedTransactionsControlCommitteeTheConnectedTransactionsControlCommitteecomprisesvemembers,includingExecutiveDirectorMr.
LIZaohang,andIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
JacksonTAI,Mr.
LUZhengfeiandMr.
LEUNGCheukYan.
IndependentDirectorMr.
LEUNGCheukYanservesastheChairmanofthecommittee.
ThecommitteeismainlyresponsibleforadministeringconnectedtransactionsoftheBankinaccordancewithrelevantlaws,regulationsandnormativedocuments,andformulatingadministrativeregulationswithregardtoconnectedtransactions;conrmingtheBank'sconnectedpartiesaccordingtolaws,regulationsandnormativedocuments,andreportingtherelevantconrmationtotheBoardofDirectorsandtheBoardofSupervisors;deningconnectedtransactionsoftheBankinaccordancewithlaws,regulationsandnormativedocuments;examiningconnectedtransactionsoftheBankpursuanttorelevantlaws,regulationsandnormativedocuments,aswellasthebusinessprinciplesofjusticeandfairness;andexamininginformationdisclosuremattersrelatedtosignicantconnectedtransactionsoftheBank.
TheConnectedTransactionsControlCommitteeheldthreemeetingsin2013,inwhichitmainlyreviewedandapprovedthereportontheconrmationofconnectedpartieslistoftheBankandthescheduleofthecommitteemeetingsin2014.
Thecommitteealsoreviewedthespecialreportoffundsoccupiedbycontrollingshareholdersandotherrelatedpartiesin2012,thestatementoftheBank'sConnectedTransactionsin2012,andthereportontheImplementationRulesfortheManagementofConnectedPartyTransactionsofBankofChinaLimited(2013Version).
Duringthereportingperiod,thecommitteepaidconstantattentiontoissuessuchastheITsystemforConnectedTransactionsandtransactionswithkeyconnectedparties.
ThecommitteemembersofferedimportantopinionsandrecommendationsregardingITsystemconstructionsanddatareportoftheconnectedtransactions,amongothers.
BoardofSupervisorsFunctionsandPowersoftheBoardofSupervisorsTheBoardofSupervisorsistheBank'ssupervisoryorganandisresponsibletotheshareholders'2013AnnualReport110CorporateGovernancemeeting.
AsstipulatedintheCompanyLawandtheArticlesofAssociationoftheBank,theBoardofSupervisorsisaccountableforoverseeingtheBank'snancialactivities,internalcontrolandthelegalityandcomplianceoftheBoardofDirectors,theseniormanagementanditsmembersinperformingtheirduties.
CompositionoftheBoardofSupervisorsTheBoardofSupervisorscurrentlycompriseseightmembers.
Therearethreeshareholdersupervisors(includingtheChairmanoftheBoardofSupervisors),threeemployeesupervisorsandtwoexternalsupervisors.
AccordingtotheArticlesofAssociation,asupervisorhasatermofofceofthreeyearsandmayserveconsecutivetermsbyre-electionandre-appointment.
Shareholdersupervisorsandexternalsupervisorsareelectedorreplacedbytheshareholders'meeting.
TheBoardofSupervisorshassetuptheDutyPerformanceandDueDiligenceSupervisionCommitteeandtheFinanceandInternalControlSupervisionCommitteetoassistinperformingitsauthorisedduties.
ThespecialcommitteesmentionedaboveareresponsibletotheBoardofSupervisors,membersofwhicharesupervisors,andeachcommitteeshallhaveatleastthreemembers.
DutyPerformanceoftheBoardofSupervisorsIn2013,theBoardofSupervisorsanditsspecialcommitteesearnestlyperformedtheirsupervisoryresponsibilitiesandreviewedrelevantproposalsthroughdetaileddiscussion.
TheBoardofSupervisorsheldsixmeetingsandmaderelatedresolutions.
TheDutyPerformanceandDueDiligenceSupervisionCommitteeheldonemeeting,whiletheFinanceandInternalControlSupervisionCommitteeheldfourmeetings.
Fortheperformanceof,andsupervisoryopinionsfromtheBoardofSupervisorsduringthereportingperiod,pleaserefertothesection"ReportoftheBoardofSupervisors".
SeniorManagementFunctionsandPowersoftheSeniorManagementTheseniormanagementistheexecutiveorganoftheBank.
ItisheadedbythePresident,withexecutivevicepresidentsandotherseniormanagementmembersassistingthePresident'swork.
ThemainresponsibilitiesofthePresidentinclude:presidingovertheBank'sdailyadministrative,businessandnancialmanagement;organisingtheimplementationofbusinessplanandinvestmentschemes;draftingbasicmanagementregulationsandspecicrules;nominatingcandidatesforotherseniormanagementmembers;andreviewingemployees'remuneration,benet,rewardandpunishmentmeasures.
DutyPerformanceoftheSeniorManagementIn2013,theseniormanagementoftheBankmanagedtheBank'soperationsinaccordancewiththepowersbestoweduponthembytheArticlesofAssociationandtheauthorisationsoftheBoardofDirectors,andcarriedouttheBank'sdevelopmentstrategybasedontheannualperformanceobjectivesapprovedbytheBoardofDirectors.
Followingthestrategicobjectiveof"ServingSociety,DeliveringExcellence",theseniormanagementremainedfocusingonefciency,emphasisedstreamliningstructureandmanagingrisks,pushedforwardthesoundandrapiddevelopmentofvariousbusinesses,andthuscontinuouslyenhancedtheBank'sperformance.
Duringthereportingperiod,theseniormanagementoftheBankheldseventeenregularmeetings,inwhichitdiscussedanddecideduponaseriesofsignicantmatters,includingtheGroup'sbusinessdevelopment,assetandliabilitymanagement,riskmanagement,ITconstruction,productinnovation,humanresourcesandperformancemanagement.
Italsoconvenedonehundredandtwenty-sixspecialmeetingstoarrangeformattersrelatingtocorporatebanking,personalbanking,nancialmarkets,riskmanagementandinternalcontrol,overseasdevelopmentandintegratedoperations.
2013AnnualReport111CorporateGovernanceTheseniormanagementoftheBankpresidesovertheAssetandLiabilityManagementCommittee,theRiskManagementandInternalControlCommittee(whichgovernstheAnti-MoneyLaunderingCommittee,theSecuritiesInvestmentandManagementCommitteeandtheAssetDisposalCommittee)andtheProcurementReviewCommittee.
Duringthereportingperiod,allofthecommitteesdiligentlyfullledtheirdutiesandresponsibilitiesasperthepowersspeciedintheircommitteechartersandtherightsdelegatedbytheGroupExecutiveCommittee,andstrivedtopushforwardthesounddevelopmentofvariousoperationsoftheBank.
SecuritiesTransactionsbyDirectorsandSupervisorsPursuanttodomesticandoverseassecuritiesregulatoryrequirements,theBankformulatedandimplementedtheManagementMeasuresonSecuritiesTransactionsbyDirectors,SupervisorsandSeniorManagementPersonnelofBankofChinaLimited(the"ManagementRules")togovernsecuritiestransactionsbydirectors,supervisorsandseniormanagementmembersoftheBank.
ThetermsoftheManagementRulesaremorestringentthanthemandatorystandardssetoutintheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuerscontainedinAppendix10totheHongKongListingRules(the"ModelCode").
AlldirectorsandsupervisorsconrmedthattheyhavecompliedwiththestandardssetoutinboththeManagementRulesandtheModelCodethroughoutthereportingperiod.
AppointmentofExternalAuditorsIn2011and2012,theBankengagedPricewaterhouseCoopersZhongTianCPAsLimitedCompanyasitsdomesticauditorandinternalcontrolauditor,andPricewaterhouseCoopersasitsinternationalauditor.
AccordingtotherelevantrequirementsofMOFonthetenureofserviceofanexternalauditorengagedbyanancialinstitutionandupontheapprovalofthe2012AnnualGeneralMeeting,theBankengagedErnst&YoungHuaMingLLPtoaudititsnancialstatementsandinternalcontrolpursuanttoCASfor2013.
Ernst&YoungHuaMingLLPentrustedErnst&YoungtoauditnancialstatementsoftheBankpursuanttoIFRS.
FeespaidtoErnst&YounganditsmemberrmsfortheauditofthenancialstatementsoftheGroup,includingthoseoftheBank'soverseassubsidiariesandbranches,wereRMB185millionfortheyearended31December2013,ofwhichthefeesforinternalcontrolauditpaidtoErnst&YoungHuaMingLLPtotalledRMB15million.
Ernst&Younganditsmemberrmswerenotengagedinsignicantnon-auditingserviceswiththeBankin2013.
TheBankincurredRMB9.
74millionfornon-auditingservicesperformedbyErnst&Younganditsmemberrmsfortheyearended31December2013.
Ernst&YoungHuaMingLLPandErnst&YounghaveprovidedauditservicestotheBankforoneyear.
Mr.
ZHANGXiaodongandMr.
YANGBoarethecerticatedpublicaccountantswhosignedtheauditor'sreportontheGroup'snancialstatementspreparedinaccordancewithCASfortheyearended31December2013.
Attheforthcoming2013AnnualGeneralMeeting,theBoardofDirectorswilltenderaresolutionforreviewandapprovalregardingtheproposalonengagingErnst&YoungHuaMingLLPastheBank'sdomesticauditorandinternalcontrolauditorfor2014,providingservicesofauditingitsnancialstatementsandinternalauditpursuanttoCAS;andengagingErnst&YoungastheBank'sinternationalauditorfor2014,providingservicesofnancialstatementsauditpursuanttoIFRS.
InvestorRelationsandInformationDisclosureIn2013,followingthe2012annualresultsand2013interimresultsannouncements,theBanksuccessfullyorganisednon-dealroadshowsinwhichtheseniormanagementexplainedtheBank'sstrategiesandoperatingperformancetoinvestorsfromdifferentcountriesandregionsincludingtheChinesemainland,HongKong,EuropeandNorthAmerica.
Theseniormanagementlistenedearnestlytomarketconcernsandfeedbackandwerewarmlywelcomedbyinvestors.
In2013,facedwithstrategicopportunitiesarisingfrominterestrateliberalisation,RMBinternationalisationandmobileinternet,the2013AnnualReport112CorporateGovernanceBankproactivelyenhanceditsinvestorrelationsactivitiesbyparticipatingininuentialinvestorconferences,expandinginvestorscoveragebaseandearnestlycommunicatingwithinvestorsandanalyststoconsistentlyhighlighttheBank'sdifferentiatedcompetitiveadvantages.
Itreceivedpositiverecognitionfromthecapitalmarketasaresult.
Duringthereportingperiod,theBank'sseniormanagementandrepresentativesofmajordepartmentsheldandattended150meetingswithdomesticandoverseasinstitutionalinvestorsandanalysts,andeffectivelyimprovedtheinvestmentcommunity'sunderstandingoftheBank'sinvestmentvalue.
TheBank'sinvestmentratingswereupgradedbymajorinvestmentbanksanditsshareholderstructurewasfurtheroptimised.
TheBankalsoupgradeditsinvestorrelationswebpagetoensurethatinvestorsreceivedcomprehensiveinformationandauser-friendlyexperience.
TheBankexploitedothercommunicationchannelsincludingitstelephonehotlineandemail.
TheBankalsorepliedinvestors'questionsonthee-interactiononlineplatformrunbySSE.
Itsstatisticsontimelinessandcomprehensivenessleaditspeers.
TheBankcontinuedtoenhancemanagementofitsexternalcreditratingaffairsandimprovetheeffectiveness,timeliness,professionalisminrelatedcommunications.
TheBankstrengthenedcommunicationonmultiplelevelsregardingitsriskmanagement,liquiditymanagement,operatingperformanceanddevelopmentstrategy.
Duringthereportingperiod,Standard&Poor'sRatingsServicesraisedtheBank'sStand-aloneCreditProleandtheBank'sothercreditratingswerereafrmedbyMoody'sInvestorsService,FitchRatingsandotherratingagencies.
In2013,theBankpreparedanddiscloseditsregularandprovisionalreportsinstrictadherencetotheprinciplesoftruthfulness,accuracy,completeness,timelinessandfairness.
Itcontinuouslyenhancedthepertinence,effectivenessandtransparencyofinformationdisclosureinordertoguaranteeinvestors'accesstorelevantinformation.
TheBankthoroughlyreviewedandrevisedtheManagementMeasuresonResponsibilityInvestigationonMaterialInformationDisclosureErrorsofRegularReportsofBankofChinaLimited,tofurtherstrengthentheworkproceduresandqualitycontrolrelatedtoitsregularreports.
Duringthereportingperiod,nomaterialdisclosureerrorintheBank'sregularreportswasfound.
TheBankstrictlycarriedouttheRulesGoverningPersonswithKnowledgeofInsideInformationofBankofChinaLimitedandotherrelevantregulatoryrules,toensurethatinsideinformationwaskeptcondential,awell-managedsystemwasinplaceforregisteringthosewithaccesstoinsideinformationforlingpurposeandtheirmanagement,andthatinsidetradingwasstrictlyprohibited.
TheBankfurtherreinforcedtheaccountabilitysystemsandinformationcorrespondencemechanismswithintheGroupandorganiseddiscussionsandtrainingsessionsforinformationcorrespondents.
TheBankpaidcloseattentiontorelevantregulatoryrulesandrequirements,revisedtheinformationdisclosureworkproceduresanddevelopedcasestudiestoimprovetheinitiation,planningandlong-termperspectiveofitsmanagementwork,andthusenhanceditsinformationdisclosuremanagementabilityandcompliancelevel.
In2013,theBankonceagainreceivedwiderecognitionforitsinvestorrelationsandinformationdisclosureperformance.
TheBankwasawarded"theGreaterChinaTop100"byIRMagazine.
TheBankalsorankedamongthe"Top100HongKonglistedcompanies2013"awardedjointlybyTencent,FinetGroupLimitedandHongKongEconomicJournal.
TheBankwasrecognisedasoneofthe"CompanieswiththeMostSustainableInvestmentValue"awardedbyChineseSecuritiesJournal,"GoldMedalBoardSecretaryforIR"awardedbyChineseSecuritiesJournal,andwasagainrecognisedasa"Top50listedcompany"byInvestorJournalWeeklyanda"Top100ListedCompanybyCapitalCapacity"byChinaCenterforMarketValueManagement.
The2012annualreportoftheBankwasawardedagaina"GoldAward"intheLeagueofAmericanCommunicationsProfessionalsannualreportcompetition,beingamongthe"Top50AnnualReportinAsiaPacic"and"Top50AnnualReportsinChina".
Itwasalsoawardeda"SilverAward"forwrittentextbyAnnualReportCompetition.
TheBankattachesgreatimportancetobuildingupitscorporategovernancesystem.
ItcontinuestoreviseandimproveitscorporategovernancenormativedocumentsbasedonregulatoryrequirementsandtheBank'sactualdevelopment,andactsinstrictaccordancewiththosedocuments.
TheBank'scomprehensivesystemsupportstheeffectiveoperationofitscorporategovernance.
TheBankproactivelypromotesinnovativepracticesincorporategovernanceandensuresthatminorityshareholdersareproperlyinformedandabletoparticipateandmakedecisions.
Theannualshareholders'meetingsareheldinBeijingandHongKongbywayofvideoconference,allowingshareholdersfrombothChinesemainlandandHongKongtoattendinperson.
Inaddition,onlinevotingforA-ShareHoldersisavailabletoguaranteetherightsofminorityshareholders.
TheBankconstantlyimprovestheoperationmechanismoftheBoardofDirectors,informationdisclosuremechanismandstakeholderengagementmechanism,soastomaketheworkoftheBoardmoreconstructive,tosupportthescienticdecision-makingoftheBoard,topromotethetransparencyoftheBank,andtomeetitsresponsibilitiestostakeholdersincludingshareholders,customers,employeesandsociety.
TheBankcontinuestoenhanceitscorporategovernanceinaforward-lookingandexploratorymanner.
Intermsofgroupgovernance,theBoardofDirectorspayscloseattentiontotheinternalcontrolsandriskmanagementoftheGroup,constantlyimprovestheGroup'soverallriskmanagementcapabilitiesandenhancestheGroup'slevelofcompliance.
Inaddition,theBankcontinuouslytracksdomesticandinternationallatestcorporategovernancetheoriesandpractices.
TakingtheNewBaselCapitalAccordasanopportunitytoimprovecorporategovernance,theBankcarriesoutcorporategovernancewithreferencetotheadvancedpracticesofG-SIFIsandconstantlypursueshigherstandards.
In2013,theBankrevisedtheArticlesofAssociation,formulatedtheBankofChinaLimitedBoardDiversityPolicy,andpromotedtheimplementationofCBRC'sGuidanceonCorporateGovernanceofCommercialBanks.
ItalsoorganisedcorporategovernancetrainingsessionswithintheGroup,andthusachievedmoreinstitutionalisedandstandardisedcorporategovernance.
Duringtheyear,theBankcompletedcorporategovernanceproceduresincludingchangeoftheChairman,appointmentofindependentdirectorsandadjustmentstochairmenandmembersofspecialcommitteesoftheBoard.
TheelectionofnewindependentdirectorswasledandorganisedbytheindependentdirectorservingastheChairmanofthePersonnelandRemunerationCommittee.
CandidateswererecommendedbyincumbentindependentdirectorsandwereproposedtotheBoardofDirectorsafteraselectionmeetingattendedbyallindependentdirectors.
CurrentlytheindependentdirectorsserveastheChairmenoftheAuditCommittee,theRiskPolicyCommittee,thePersonnelandRemunerationCommitteeandtheConnectedTransactionsControlCommitteeoftheBoardofDirectors,respectively.
TheBankfurtherexploredinnovativeapproachesofcommunicationbetweendirectorsandtheseniormanagement,givingdirectorsadvancenoticeandreportonspecicmajorissuesrelatedtoboardproposals.
TheBankimprovedandstandardiseditsproposalmechanism,activelyorganisedtrainingsandsurveysfordirectors,andthusenhanceditsdecision-makingefciency.
In2013,theBank'sprogressincorporategovernancecontinuedtoberecognisedbythecapitalmarketsandthewiderpublic.
TheBankreceived,amongotherawards,theHongKong"CorporateGovernanceExcellenceAwards","TopTenCorporateGovernance"fromChinaCentralTelevision,"GoldenPrizeofRoundTableforExcellentBoardofDirectors"fromDirectors&Boards,"ExcellentBoardofDirectorsAward"and"GoldenBoardSecretaryAward"byDongshiju.
com,and"BestBoardSecretaryAward"byStockstar.
2013AnnualReport99CorporateGovernanceCorporateGovernanceFrameworkTheBank'scorporategovernanceframeworkisshownbelow:Shareholders'MeetingDutyPerformanceandDueDiligenceSupervisionCommitteeFinanceandInternalControlSupervisionCommitteeOfficeofBoardofSupervisorsBoardofSupervisorsBoardSecretariatBoardofDirectorsSeniorManagement(GroupExecutiveCommittee)StrategicDevelopmentCommitteeAuditCommitteeRiskPolicyCommitteePersonnelandRemunerationCommitteeConnectedTransactionsControlCommitteeAuditDepartmentAnti-moneyLaunderingCommitteeSecuritiesInvestmentandManagementCommitteeAssetDisposalCommitteeRiskManagementandInternalControlCommitteeProcurementReviewCommitteeAssetandLiabilityManagementCommitteeCorporateGovernanceComplianceDuringthereportingperiod,theBank'scorporategovernancewasfullyinlinewiththeCompanyLawandtherelevantprovisionsofCSRC.
Duringthereportingperiod,theBankstrictlyobservedtheCorporateGovernanceCode(the"Code")assetoutinAppendix14totheHongKongListingRules.
TheBankhascompliedwithallprovisionsoftheCodeandhassubstantiallycompliedwithmostoftherecommendedbestpracticessetoutintheCode.
TheBankadoptedBankofChinaLimitedBoardDiversityPolicytoputforwarditsstanceregardingthediversityofitsBoardofDirectorsandtospecifytheapproachestorealiseBoarddiversityittookonanon-goingbasispursuanttothenewamendmentstotheCodewhichtookeffectinSeptember2013.
AmendmentstotheArticlesofAssociationThe2013FirstExtraordinaryGeneralMeetingconsideredandapprovedtheproposaltoamendtheArticlesofAssociationregardingthecashdividend.
TheamendmentfurtherspeciedtheBank'sprotdistributionprinciples,policyandadjustmentprocedures,considerationoftheprotdistributionplanandotheraffairs.
Theamendmentstatedthat,exceptunderspecialcircumstances,theBankshalladoptcashastheformofdividenddistributionwherethereisprotinthatyearandtheaccumulatedundistributedprotispositive,andthatthecashdistributionofthedividendshallnotbelessthan10%oftheprotaftertaxattributabletotheshareholdersoftheBank.
TheamendmentalsostatedthattheBankshalladoptcashdividendasthepriorityformoftheprotdistributionandtheBankshallofferonlinevotingtoshareholderswhenconsideringamendmentstoprotdistributionpolicy.
ThisamendmenttotheArticlesofAssociationhasbeenapprovedbyCBRC.
2013AnnualReport100CorporateGovernanceShareholdersandShareholders'RightsTheBankhighlyvaluestheprotectionofitsshareholders'interestsandhasestablishedandmaintainedaneffectiveandmulti-channelplatformtocommunicatewithshareholders.
Thisincludesholdingshareholders'meetingsandsettingupaninvestorhotlinetoensurethatallshareholdersaretreatedequally,properlyinformedandabletoparticipateinandexercisetheirvotingandotherrightsregardingthemajorissuesoftheBank.
TheBankisindependentandcompletelyautonomousinallofitsbusinessoperations.
Itoperatesindependentlyandseparatelyfromitscontrollingshareholder,Huijin,inrespectofitsbusiness,personnel,assets,institutionalandnancialmatters.
Shareholders'RighttoConveneanExtraordinaryShareholders'MeetingandaMeetingofShareholdersofDifferentCategoriesAccordingtotheArticlesofAssociation,shareholdersindividuallyorinaggregateholdingatotalof10%ormoreofthesharesoftheBankhavetherighttomakeawrittenrequesttotheBoardofDirectorstoconveneanextraordinaryshareholders'meeting.
Twoormoreshareholdersholdingatotalof10%ormoreofthesharescarryingvotingrightsoftheBankmaysignoneormorewrittenrequestsofidenticalformandsubstancerequestingtheBoardofDirectorstoconveneameetingofshareholdersofdifferentcategoriesandstatingthesubjectofthemeeting.
IftheBoardofDirectorsfailstoissueanoticeofsuchameetingwithin30daysafterhavingreceivedawrittenrequestforconveninganextraordinaryshareholders'meetingorameetingofshareholdersofdifferentcategoriessubmittedbytheproposingshareholders,theproposingshareholdersmaythemselvesconvenethemeetingwithinfourmonthsaftertheBoardofDirectorsreceivedtherequest.
Theproceduresaccordingtowhichtheyconvenesuchmeetingshall,totheextentpossible,beidenticaltotheproceduresaccordingtowhichshareholders'meetingsareconvenedbytheBoardofDirectors.
WheretheproposingshareholdersconveneandholdameetingbecausetheBoardofDirectorsfailedtoconvenesuchmeetingpursuanttoarequestasmentionedabove,thereasonableexpensesincurredbysuchshareholdersshallbebornebytheBankandshallbedeductedfromthesumsowedbytheBanktothenegligentdirectors.
Shareholders'RighttoProposeResolutionsatShareholders'MeetingsAccordingtotheArticlesofAssociation,anyshareholderswhohold,individuallyorinaggregate,3%ormorevotingsharesoftheBankshallhavetherighttoproposearesolutioninashareholders'meeting.
Anyshareholderswhohold,individuallyorinaggregate,3%ormorevotingsharesoftheBankshallhavetherighttoproposeandsubmitinwritingtotheBoardofDirectorsinterimproposals10dayspriortotheconveningofashareholders'meeting.
WhentheBoardofDirectorsdecidesnottoincludesuchproposalsinthemeeting'sagenda,itshallexplainandclarifythereasonsintheshareholders'meeting.
WhentheproposingshareholdersdissentwiththeBoardofDirectors'decisiontoexcludesuchproposals,theymayrequesttocallforanextraordinaryshareholders'meetingbythemselvesbasedontherelevantproceduresstipulatedintheArticlesofAssociation.
Shareholders'RighttoPresentEnquiriesAccordingtotheArticlesofAssociation,anyshareholderwhoholdsseverallyorjointlywithothers5%ormoreofvotingsharesoftheBankshallhaverighttopresentenquiriestoashareholders'meeting.
TheBoardofDirectors,theBoardofSupervisors,orotherrelevantseniormanagementpersonnelshallattendtheshareholders'meeting,acceptenquiries,andanswerorexplainaccordingly.
PleaserefertotheArticlesofAssociationfordetailsoftherightsentitledtoshareholders.
IfshareholdersneedtocontacttheBoardofDirectorsregardingtheaforementioneditemsorforotherenquiriestotheBoardofDirectors,pleaserefertothesection"ReferenceforShareholders—InvestorEnquiry"forcontactdetails.
2013AnnualReport101CorporateGovernanceShareholders'MeetingFunctionsandPowersofShareholders'MeetingTheshareholders'meetingisthebodyofauthorityoftheBank.
Theshareholders'meetingisresponsibleformakingdecisionsonimportantissuesoftheBank,includingconsideringandapprovingtheBank'sprotdistributionplan,annualnancialbudgetandnancialstatements,changesintheBank'sregisteredcapital,adoptingresolutionsonmatterssuchasissueofbondsandothersecurities,mergeranddivision,amendingtheArticlesofAssociationoftheBank,electingandreplacingdirectors,shareholder'srepresentativesupervisorsandexternalsupervisorsanddecidingonmattersconcerningremunerationsoftheaforementionedpersons.
ConveningofShareholders'MeetingOn26March2013,theBankheldits2013FirstExtraordinaryGeneralMeetinginBeijing.
Thismeetingconsideredandapprovedthreeproposalsincludingtheproposaltoelectnon-executivedirectoroftheBank,theproposalondownwardadjustmenttotheconversionpriceoftheA-ShareConvertibleBondsoftheBankandtheproposaltoamendtheArticlesofAssociationoftheBank.
TheproposalondownwardadjustmenttotheconversionpriceoftheA-ShareconvertiblebondsoftheBankandtheproposaltoamendtheArticlesofAssociationoftheBankwerespecialresolutions.
On29May2013,theBankheldits2012AnnualGeneralMeetinginBeijingandHongKongbywayofvideoconference.
Thismeetingconsideredandapproved20proposalsincludingthe2012workreportoftheBoardofDirectors,the2012workreportoftheBoardofSupervisors,the2012annualnancialstatements,the2012protdistributionplan,the2013annualbudget,theappointmentofErnst&YoungHuaMingastheBank'sexternalauditorfor2013,theelectionofdirectors,there-electionofdirectors,there-electionofsupervisors,andtheissuanceofqualiedwrite-downTier-2capitalinstruments,amongothers.
Theproposalontheissuanceofqualiedwrite-downTier-2capitalinstrumentswasaspecialresolution.
On25March2014,theBankheldits2014FirstExtraordinaryGeneralMeetinginBeijing.
ThismeetingconsideredandapprovedtheproposalontheelectionofMr.
CHENSiqingasExecutiveDirectoroftheBank.
AlloftheaforementionedmeetingswereconvenedandheldinstrictcompliancewiththerelevantlawsandregulationsaswellasthelistingrulesoftheChinesemainlandandHongKong.
TheBank'sdirectors,supervisorsandseniormanagementmembersattendedthemeetingsandcommunicatedwithshareholdersonissuesoftheirconcern.
TheBankpublishedannouncementsontheresolutionsandlegalopinionsoftheaforementionedshareholders'meetingson26March2013,29May2013and25March2014respectively,pursuanttoregulatoryrequirements.
PleaserefertothewebsitesofSSE,HKExandtheBank.
ImplementationoftheResolutionsPassedattheShareholders'MeetingbytheBoardofDirectorsTheBoardofDirectorsearnestlyandfullyimplementedtheresolutionspassedattheshareholders'meetingsduringthereportingperiod.
The2013FirstExtraordinaryGeneralMeetingconsideredandapprovedaproposaltoamendtheArticlesofAssociation.
ThisamendmenttotheArticlesofAssociationhasbeenapprovedbyCBRC,andtheamendedArticlesofAssociationhavebeenpublishedonthewebsitesofSSE,HKExandtheBank.
AllactivitiesoftheBankareinlinewiththeamendedArticlesofAssociation.
Asapprovedbythe2012AnnualGeneralMeeting,theBoardofDirectorsdiligentlycarriedoutthe2012protdistributionplan,distributeddividendstoshareholdersinatimelymannerandeffectivelyservedtheshareholders'interests.
TheprotdistributionwascompletedinJuly2013.
2013AnnualReport102CorporateGovernanceProposalstoelectdirectorswereapprovedbythe2012AnnualGeneralMeeting.
Therelevantapprovalandlingprocedureshavebeencompletedwithregulatoryauthorities.
Asapprovedbythe2012SecondExtraordinaryGeneralMeetingandthe2012AnnualGeneralMeeting,theBankhascompletedtheappointmentofErnst&YoungHuaMingastheexternalauditorfor2013.
BoardofDirectorsFunctionsandPowersoftheBoardofDirectorsTheBoardofDirectors,whichisresponsibletotheshareholders'meeting,istheBank'sdecision-makingbody.
TheBoardofDirectorsexercisesthefollowingfunctionsandpowersasspeciedbytheBank'sArticlesofAssociation:conveningshareholders'meetingsandimplementingtheresolutionsofshareholders'meetings;decidingontheBank'sstrategicpolicies,businessplansandmaterialinvestmentplans(exceptforthosematerialinvestmentplansthataresubjecttoshareholders'meetingapprovalasspeciedintheArticlesofAssociation);formulatingtheannualnancialbudgets,nalaccountsandplansforprotdistributionandlossmaking-upoftheBank;appointingordismissingmembersofspecialcommitteesandtheseniormanagementoftheBank;reviewinganddecidingontheestablishmentoftheBank'sbasicadministrativesystem,internalmanagementframeworkandimportantsub-entities;developingandreviewingcorporategovernancepoliciesoftheBank;takingchargeofperformanceevaluationandmattersofmaterialrewardandpunishmentforseniormanagementmembers,andhearingthereportsoftheseniormanagementandexaminingtheirwork,amongothers.
TheBoardofDirectorscontinuouslyreviewsandupdatestheArticlesofAssociationandtheBank'scorporategovernancepoliciesandsystemsinaccordancewiththeapplicablelawsandregulations,relevantregulatoryrequirementsandlistingrules,andensurescompliancewithsuchpoliciesandsystems.
CompositionoftheBoardofDirectorsTheBoardofDirectorshassetuptheStrategicDevelopmentCommittee,AuditCommittee,RiskPolicyCommittee,PersonnelandRemunerationCommittee,andConnectedTransactionsControlCommitteetoassisttheBoardinperformingdifferentaspectsofitsfunctions.
ThepositionsofChairmanandPresidentoftheBankareassumedbytwopersons.
TheBoardofDirectorsoftheBankisrationallystructuredanddiversied.
Currently,theBoardofDirectorscomprisesthirteenmembers.
BesidestheChairman,therearetwoexecutivedirectors,venon-executivedirectorsandveindependentdirectors.
Thenumberofindependentdirectorsexceedsone-thirdofthetotalnumberofdirectors.
TheBank'sdirectorsareelectedattheshareholders'meeting,withatermofofceofthreeyearsstartingfromthedatewhentheBankreceivesapprovaloftheappointmentfromCBRC.
Adirectormayserveconsecutivetermsbyre-electionandre-appointmentunlessotherwisespeciedbylaws,regulationsandsupervisoryrequirements.
FordetailedbackgroundandanexplanationofrecentchangestotheBoardmembers,pleaserefertothesection"Directors,SupervisorsandSeniorManagementMembers".
BoardComposition012345678910111213NationalityAgeGroupDirectorshipwiththeBank(years)NumberofDirectorsMaleFemale66-7556-6545-55Othercountriesandregionsover31-3HongKongChinaChinesemainlandExecutiveDirectorIndependentDirectorNon-executiveDirectorGenderDesignation2013AnnualReport103CorporateGovernanceConveningoftheBoardMeetingsIn2013,theBankconvenedeighton-sitemeetingsoftheBoardofDirectorson30January,26March,25April,29May,29July,29August,30Octoberand19December,respectively.
Atthesemeetings,theBoardofDirectorsreviewedandapproved44proposalsrelatedtotheBank'sregularreports,thenominationofcandidatesfordirectors,theelectionoftheChairman,the2012corporatesocialresponsibilityreport,the2012internalcontrolself-assessmentreport,theBoardDiversityPolicy,thedevelopmentstrategyplanoftheBankfor2013-2016,theGroupRecoveryandResolutionPlans,andsoon.
ItalsoheardninereportsrelatedtotheBank'sconsolidatedmanagementandothermatters.
In2013,theBankconvenedelevenmeetingsoftheBoardofDirectorsviawrittenresolutions.
Atthesemeetings,theBoardofDirectorsapprovedtheproposalsrelatedtochangesinthecompositionofspecialcommitteesundertheBoardofDirectorsandtheAnnouncementinRelationtotheIncreaseinShareholdingoftheBankbyItsControllingShareholder,amongothers.
GuidanceoftheBoardofDirectorsandtheAuditCommitteeregardingInternalControlTheBoardattachesgreatimportancetoandcontinuestopromotetheconstructionoftheGroup'seffectivelong-actinginternalcontrolsystem,andregularlyreviewstheseniormanagementreportsconcerningoperationalmanagement,riskmanagement,fraudcasegovernanceandinternalcontrolenhancementandassessment.
TheBoardhaseffectivelytakentheresponsibilityforestablishing,improvingandperformingeffectiveinternalcontrolsandmadegreateffortstoprovideguidancefortheBank'sinternalcontrolandcompliancework.
TheGroup'sriskmanagementandmitigationcapabilityandlevelofoperationalcompliancehavebeenenhancedcontinuously.
TheAuditCommitteeoftheBoardofDirectorscloselymonitoredthechangingeconomicandnancialenvironmentbothdomesticallyandoverseas,aswellastheoverallconditionsoftheGroup'sinternalcontrol,includingtheestablishmentandoperationofitsinternalcontrolsystemsfornancialandnon-nancialreporting.
Inaddition,thecommitteelistenedtoandreviewed,onaregularandadhocbasis,theinternalauditreports,theassessmentopinionsoninternalcontrol,theprogressofinternalcontrolimprovementsbasedontheremedialmeasuresrecommendedbytheexternalauditor,andtheoverallsituationofthepreventionandcontroloffraudcasesandnon-complianceactivities.
Thecommitteeguidedandurgedtheseniormanagementtocontinuouslyimprovetheinternalcontrolsystem,andconductedspecialresearchonanti-moneylaunderingandliquidityriskmanagement.
Moreover,theAuditCommitteeprovidedguidancetotheinternalauditfunctionasitsettheinternalcontrolprioritiesandperformedtheinspectionworkbasedonthephilosophyofcomprehensiveriskmanagementandriskassessmentresults.
Thecommitteealsopromotedandfolloweduptheimplementationofadvancedcapitalmanagementapproachandprovidedindependentsuggestionsandopinionsoninternalcontrolimprovement,soastoimprovetheGroup'soperatingeffectivenessandefciencyandtoenhanceitscorporategovernance.
Duringthereportingperiod,theBankfollowedrelevantrequirementssetforthintheBasicStandardforEnterpriseInternalControlanditssupportingguidelines,andperformedinternalcontrolself-assessmentinaccordancewiththeStandardsofInternalControlAssessmentofBankofChinaLimitedandtheStandardsofRecognisingInternalControlDecienciesofBankofChinaLimited,withnomaterialdecienciesidentiedintheinternalcontrolsystemsoftheBank,includingbothnancialandnon-nancialreporting.
Ernst&YoungHuaMingLLP,astheBank'sinternalcontrolauditor,auditedtheeffectivenessoftheBank'sinternalcontrolsovernancialreportingandissuedastandardunqualiedopinion.
The2013InternalControlAssessmentReportofBankofChinaLimitedandAuditor'sReportonInternalControlissuedbyErnst&YoungHuaMingLLPhavebeenpublishedonthewebsitesofSSE,HKExandtheBank.
2013AnnualReport104CorporateGovernanceDutyPerformanceofDirectorsDirectors'AttendanceoftheShareholders'Meeting,MeetingsoftheBoardofDirectorsandSpecialCommitteesDuringthereportingperiod,theattendancerateofeachdirectoroftheshareholders'meeting,theBoardofDirectorsmeetingsandspecialcommitteesmeetingsisgivenbelow:Numberofmeetingsattendedinperson/NumberofmeetingsconvenedduringtermofofceSpecialCommitteesDirectorsShareholders'MeetingBoardofDirectorsStrategicDevelopmentCommitteeAuditCommitteeRiskPolicyCommitteePersonnelandRemunerationCommitteeConnectedTransactionsControlCommitteeIncumbentDirectorsTIANGuoli0/013/133/3––––LIZaohang2/219/19––––3/3WANGYongli2/219/19––5/5––SUNZhijun2/219/195/55/5–––LIULina2/219/195/5–5/5––ZHANGXiangdong2/219/195/52/2–2/2–ZHANGQi2/219/195/5––7/7–WANGYong0/010/102/33/3–––CHOWManYiu,Paul2/219/19–5/55/57/73/3JacksonTAI2/219/195/55/53/3–2/3NoutWELLINK2/219/195/55/55/5––LUZhengfei0/09/9–3/3–1/11/1LEUNGCheukYan0/06/6–2/2–0/01/1FormerDirectorsXIAOGang0/01/10/0––––LILihui2/218/195/5––––JIANGYansong2/214/144/4–4/4––AnthonyFrancisNEOH2/213/13–3/33/36/72/2HUANGShizhong0/213/13–3/32/34/72/2HUANGDanhan2/213/13–3/3–7/72/2Note:Pleaserefertothesection"Directors,SupervisorsandSeniorManagementMembers—ChangesinDirectors,SupervisorsandSeniorManagementMembers"forchangesindirectors.
TrainingandExpertiseEnhancementofDirectorsIn2013,theBoardofDirectorspaidmuchattentiontoenhancedirectors'expertise,withaspecialfocusonarrangingrelevanttrainings.
AlldirectorsoftheBankfullyobservedRuleA6.
5oftheCodeaswellasregulatoryrequirementsofChinesemainlandandparticipatedinmanyspecialtrainingsessionsfocusingontopicssuchasinterestrateliberalisationandcommercialbankdevelopment,corporategovernanceoflargebanks,normsforannualreportauditandnances,lawsandregulationsoninsideinformationandtheHongKongListingRules.
TheBankgaveadetailedexplanationofitsbusinessoperationstoallnewlyappointednon-executivedirectorsandindependentdirectorsin2013.
TheBank'sdirectorshavealsotakenituponthemselvestoenhancetheirprofessionalskillsinvariousways,includingwritingandpublishingprofessionalarticlesandbooks,attendingforumsandseminars,participatingspecialtrainingsessionsandgivingpubliclectures,andconductingon-siteresearchexercisesatleading2013AnnualReport105CorporateGovernanceinternationalbanksandattheBank'sdomesticandoverseasbranches.
Directors'LiabilityInsuranceTheBankrenewedthedirectors'liabilityinsurancein2013toprovideprotectionagainstclaimsarisingfromthelawfuldischargeofdutiesbythedirectors,thusencouragingthedirectorstofullyperformtheirduties.
IndependenceandDutyPerformanceofIndependentDirectorsTherearecurrentlyveindependentdirectorsontheBoardofDirectors.
Thisexceedsone-thirdofthetotalnumberofdirectorsandisincompliancewiththequorumrequirementspeciedintheArticlesofAssociationandrelevantregulatoryrequirements.
Fortheprofessionalbackgroundsandotherdetailsoftheindependentdirectors,pleaserefertothesection"Directors,SupervisorsandSeniorManagementMembers".
TheindependentdirectorsserveastheChairmenoftheAuditCommittee,RiskPolicyCommittee,PersonnelandRemunerationCommitteeandConnectedTransactionsControlCommittee,respectively.
AsstipulatedinrelevantdomesticregulatoryrequirementsandRule3.
13oftheHongKongListingRules,theBankhasreceivedtheannualconrmationinwritingfromeachindependentdirectorwithregardtohis/herindependence.
BasedontheseconrmationsandrelevantinformationinpossessionoftheBoardofDirectors,theBankconrmstheirindependentstatus.
In2013,theBank'sindependentdirectorsattendedmeetingsoftheBoardofDirectors,reviewedproposals,participatedindiscussionsandofferedtheirprofessionalopinionsindependently,objectivelyanddiligently,inaccordancewiththeArticlesofAssociation,theProceduralRulesforBoardofDirectorsofBankofChinaLimitedandtheWorkRulesofIndependentDirectorsofBankofChinaLimited.
Pleaserefertothesection"Directors'AttendanceoftheShareholders'Meeting,MeetingsoftheBoardofDirectorsandSpecialCommittees"fortheattendanceofindependentdirectorsatmeetings.
In2013,independentdirectorsputforwardrecommendationsontheBank'sstrategicplanning,capitalmanagement,liquidityriskmanagement,datamanagement,consolidatedmanagement,andsoon.
TherecommendationswereadoptedanddiligentlyimplementedbytheBank.
In2013,theindependentdirectorsdidnotraiseanyobjectiontotheresolutionsoftheBoardofDirectorsoritsspecialcommittees.
SpecicExplanationandIndependentOpinionsofIndependentDirectorsontheGuaranteeBusinessoftheBankPursuanttotheprovisionsandrequirementssetforthinthecircular(ZhengJianFa[2003]No.
56)issuedbyCSRC,andaccordingtotheprinciplesofjustice,fairnessandobjectivity,theIndependentDirectorsoftheBank,Mr.
CHOWManYiu,Paul,Mr.
JacksonTAI,Mr.
NoutWELLINK,Mr.
LUZhengfeiandMr.
LEUNGCheukYanhaveprovidedthefollowinginformationregardingtheBank'sguaranteebusiness:TheguaranteebusinessisoneoftheBank'sordinarybusinessactivities.
IthasbeenapprovedbyPBOCandCBRCanddoesnotfallwithinthescopeofguaranteesasdenedintheCircularonRegulatingGuaranteeBusinessesofListedCompanies.
TheBankhasformulatedspecicmanagementmeasures,operationalprocessesandapprovalproceduresinlightoftherisksoftheguaranteebusinessandcarriedoutthisbusinessaccordingly.
TheBank'sguaranteebusinessprincipallycompriseslettersofguarantee.
Asat31December2013,theoutstandingamountoflettersofguaranteeissuedbytheBankwasRMB846.
497billion.
2013AnnualReport106CorporateGovernanceResponsibilityStatementofDirectorsonFinancialReportsThefollowingstatement,whichsetsouttheresponsibilitiesofthedirectorsregardingnancialstatements,shouldbereadinconjunctionwith,butunderstoodseparatelyfrom,theauditor'sstatementoftheirresponsibilitiesassetoutintheIndependentAuditor'sReportcontainedinthisannualreport.
ThedirectorsacknowledgethattheyareresponsibleforpreparingnancialstatementsoftheBankthattrulyrepresenttheoperatingresultsoftheBankforeachnancialyear.
Tothebestknowledgeofthedirectors,therewasnomaterialeventorconditionduringthereportingperiodthatmighthaveamaterialadverseeffectonthecontinuingoperationoftheBank.
SpecialCommitteesoftheBoardofDirectorsStrategicDevelopmentCommitteeTheStrategicDevelopmentCommitteecompriseseightmembers,includingChairmanMr.
TIANGuoli,Non-executiveDirectorsMs.
SUNZhijun,Ms.
LIULina,Mr.
ZHANGXiangdong,Mr.
ZHANGQi,Mr.
WANGYongandIndependentDirectorsMr.
JacksonTAIandMr.
NoutWELLINK.
ChairmanMr.
TIANGuoliservesastheChairmanofthecommittee.
Thecommitteeismainlyresponsibleforreviewingthestrategicdevelopmentplanspresentedbytheseniormanagement,assessingthefactorsthatmayaffectthestrategiesoftheBankandtheirimplementation,andadvisingtheBoardwithregardtostrategyadjustments;reviewingtheannualbudget,strategiccapitalallocation(policiesoncapitalstructure,capitaladequacyratioandrisk-rewardtrade-off),objectivesofasset-liabilitymanagement,ITdevelopmentandotherspecialstrategicdevelopmentplansoftheBank,andadvisingtheBoardaccordingly;coordinatingstrategiesontheoveralldevelopmentofvariousnancialbusinessesandthedevelopmentofdomesticandoverseasinstitutions,anddecidingonthesetup,cancellationandincreaseordecreaseofcapitalofdomesticandoverseasinstitutionswithinitsscopeofauthorisation;designingandformulatingkeyinvestmentandnancingplansandmergerandacquisitionplansoftheBank;andreviewingthesubstantialinternalreorganisationandadjustmentplansoftheBank,andadvisingtheBoardaccordingly.
TheStrategicDevelopmentCommitteeheldvemeetingsin2013.
Atthesemeetings,itmainlyapprovedtheproposalonprotdistributionfor2012,theproposalonissuingqualiedwrite-downcapitalinstrumentsandthedevelopmentstrategyplanningfor2013-2016(includingthecapitalmanagementplanningfor2013-2016).
Inresponsetochangesininternationalanddomesticeconomicandnancialsituations,theStrategicDevelopmentCommitteesteppedupitsanalysisoftheoperatingenvironment,paidconstantattentiontoopportunitiesandchallengesbroughtaboutbyinterestandexchangerateliberalisation,depositinsuranceschemeandothermajorpoliciesontheBank,andputforwardmanyimportantcommentsandrecommendationsforformulatingandimplementingtheBank'sstrategicdevelopmentplansandimprovingitscapitalmanagement,thusprovidingstrongsupporttothescienticdecision-makingoftheBoardofDirectors.
AuditCommitteeTheAuditCommitteecomprisessevenmembers,includingNon-executiveDirectorsMs.
SUNZhijun,Mr.
WANGYongandIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
JacksonTAI,Mr.
NoutWELLINK,Mr.
LUZhengfeiandMr.
LEUNGCheukYan.
IndependentDirectorMr.
LUZhengfeiservesastheChairmanofthecommittee.
Thecommitteeismainlyresponsibleforreviewingnancialreportsandothersignicantaccountingpoliciesandregulationsformulatedbytheseniormanagement;reviewingtheexternalauditors'auditopinion,annualauditplanandrecommendationsformanagement;approvingtheinternalannualauditpriorities,theinternalannualauditplanand2013AnnualReport107CorporateGovernancebudget;appraisingthedutyperformanceandworkqualityoftheexternalauditorsandinternalauditandmonitoringtheirindependence;recommendingtheengagement,reappointment,replacementandauditfeeoftheexternalauditors;recommendingtheappointmentanddismissalandappraisingtheperformanceoftheChiefAuditOfcer;overseeingtheBank'sinternalcontrolfunction,reviewingsignicantdecienciesininternalcontroldesignandexecutionbytheseniormanagementandinvestigatingfraudcases;reviewingtheemployeereportingsystemandurgingtheBanktoconductfairinvestigationsandtakeappropriatemeasuresregardingmattersreportedbytheemployees.
TheAuditCommitteeheldvemeetingsin2013.
ItmainlyreviewedproposalssuchastheBank'squarterly,interimandannualnancialreports,theannualself-assessmentreportoninternalcontrol,thematterofrequestingtheAnnualGeneralMeetingtoapprovetheappointmentofexternalauditorfor2013andtheappointmentandauditfeeoftheexternalauditorfor2014.
Inaddition,theAuditCommitteereviewedandapprovedtheinternalauditworkplanandbudgetfor2013andtheinternalauditprioritiesfor2014.
Itheardareportonmajorinspectionndingsbytheinternalauditfunctionin2012,areportoninternalauditrelatedtoanti-moneylaunderingandITaudit,areportoncasesin2013,areportontheauditprogressofinternalcontrolbytheexternalauditor,anassessmentreportonanti-moneylaunderingandareportonthe2014auditplanoftheexternalauditorandonindependencecompliance.
TheAuditCommitteeundertookanimportantroleinpayingcloseattentiontotheimprovementofbusinessperformance,enhancementofinternalcontrolandintensicationofriskcontroloftheBank.
AccordingtotheProcedureRulesonthePreparationofAnnualReportoftheBoardAuditCommitteeofBankofChinaLimited,priortothestartofauditeldworkbytheauditors,theAuditCommitteeconrmedwiththeauditorsthedetailsofthe2013auditplan,includingareasoffocusforauditingthe2013AnnualReport,riskassessmentandidenticationmethods,theapplicationofaccountingstandards,testsofinternalcontrolandfraudrelatedprocedures,andtheallocationofhumanresources.
Inparticular,thecommitteeremindedtheauditorstoreportanydifferencesofjudgmentbetweentheauditorsandtheseniormanagementduringtheaudit,aswellastheprocessandresultsofreconcilingsuchdifferences.
TheAuditCommitteeheardandreviewedreportsfromtheseniormanagementconcerningtheBank'sbusinessperformanceandmajornancialdata.
Thecommitteealsorequestedthattheseniormanagementsubmittheannualnancialstatementstotheauditorsinatimelymanner,toensuresufcienttimefortheannualaudit.
Duringtheaudit,thecommitteemaintainedindependentdiscussionswiththeauditorsandarrangedindependentmeetingsbetweentheauditorsandtheindependentdirectors.
Atitsrstmeetingof2014,theAuditCommitteereviewedandapprovedtheBank's2013nancialstatementsandsubmittedthemtotheBoardofDirectorsforapproval.
InaccordancewiththePoliciesofSelection,RotationandDismissalforExternalAuditorsofBankofChinaLimited,theexternalauditorsmadeasummaryreportontheirworkandsubmittedareportontheirindependencecompliancetothecommittee.
TheBank'sseniormanagementappraisedexternalauditors'work.
Basedonthisappraisal,theAuditCommitteeconducteditsownassessmentontheauditors'performance,effectivenessandindependencein2013.
Itdiscussedre-appointmentmatters,anddecidedtoreappointErnst&YoungHuaMingLLPastheBank'sdomesticauditorandinternalcontrolauditorfor2014,andtoreappointErnst&YoungastheBank'sinternationalauditorfor2014.
SuchproposalshavebeensubmittedtotheBoardofDirectorsforapproval.
RiskPolicyCommitteeTheRiskPolicyCommitteeoftheBankcomprisesvemembers,includingExecutiveDirectorMr.
WANGYongli,Non-executiveDirectorMs.
LIULinaandIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
2013AnnualReport108CorporateGovernanceJacksonTAIandMr.
NoutWELLINK.
IndependentDirectorMr.
NoutWELLINKservesastheChairmanofthecommittee.
ThecommitteeismainlyresponsibleforreviewingtheBank'sriskmanagementstrategies,majorriskmanagementpolicies,proceduresandsystems,andprovidingsuggestionstotheBoardofDirectors;reviewingtheBank'smajorriskactivities,andexercisingitsvetopowerinareasonablemanneroveranytransactionthatwillormayleadtodebtstotheBankand/orexposetheBanktomarketriskinexcessofthesingletransactionrisklimitortheaccumulatedtransactionrisklimitapprovedbytheRiskPolicyCommitteeortheBoardofDirectors;monitoringtheimplementationoftheBank'sriskmanagementstrategies,policiesandprocedures,andprovidingsuggestionstotheBoardofDirectors;reviewingtheBank'sriskmanagementsituation,regularlyassessingthedutyperformanceofriskmanagementandinternalcontrolbytheseniormanagement,departmentsandinstitutionsoftheBank,includingregularlyhearingreportsandrequestingimprovements.
TheRiskPolicyCommitteeheldvemeetingsin2013,inwhichitmainlyreviewedandapprovedtheGroup'srecoveryandresolutionplan,thestatementandqualicationplanoftheGroup'sriskappetite,datamanagementframeworkpolicy,managementmeasuresandlimitsforcountryrisk,marketrisklimitandcreditproposalsexceedingtheapprovalauthorityoftheseniormanagement.
ThecommitteealsoregularlyreviewedtheGroupriskreportsandprogressreportsregardingtheBank'simplementationoftheNewBaselCapitalAccord.
Inaddition,thecommitteepaidconstantattentiontocriticalriskissues,suchastheBank'sloanstocertainindustries,inresponsetochangesinoverseasanddomesticeconomicandnancialconditionsandadjustmentsofthegovernment'smacropolicies.
ThecommitteemembersbroughtforwardimportantopinionsandrecommendationsregardingtheimprovementoftheBank'sriskgovernancemechanismandtheeffectivepreventionandcontrolofrisks,includingcreditrisk,marketrisk,operationalrisk,legalandcompliancerisk,liquidityrisk,andsoon.
PersonnelandRemunerationCommitteeThePersonnelandRemunerationCommitteecomprisesvemembers,includingNon-executiveDirectorMr.
ZHANGXiangdong,Mr.
ZHANGQi,andIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
LUZhengfeiandMr.
LEUNGCheukYan.
IndependentDirectorMr.
CHOWManYiu,PaulservesastheChairmanofthecommittee.
ThecommitteeismainlyresponsibleforassistingtheBoardofDirectorsinreviewingtheBank'shumanresourcesandremunerationstrategiesandoverseeingtheirimplementations;reviewingthestructure,sizeandcompositionoftheBoardofDirectorsonanannualbasis,andmakingsuggestionstotheBoardregardingthescaleandcompositionoftheBoardofDirectors;studyingandreviewingthestandardsandproceduresforselecting,nominatingandappointingdirectors,membersoftheBoardcommitteesandtheseniormanagement,andmakingrecommendationstotheBoardofDirectors;identifyingindividualssuitablyqualiedtobecomedirectorsandmakingrecommendationstotheBoardofDirectorsontheselectionofindividualsnominatedfordirectorships;performingpreliminaryreviewofthecandidatesforseniormanagementmembersandthechairmenoftheBoardcommittees,selectingandnominatingcandidatesfordifferentBoardcommittees,andreportingtotheBoardofDirectorsforapproval;reviewingandmonitoringtheremunerationandincentivepoliciesoftheBank;consideringandexaminingtheremunerationplanfordirectors,supervisorsandseniormanagementmembers,andmakingrecommendationstotheBoardofDirectors;andsettingtheperformanceappraisalstandardsfortheseniormanagementoftheBank,evaluatingtheperformanceofthedirectorsandmembersoftheseniormanagement,andmakingrecommendationstotheBoardofDirectors.
2013AnnualReport109CorporateGovernanceThePersonnelandRemunerationCommitteeheldveon-sitemeetingsandtwomeetingsbywrittenresolutionin2013.
Atthesemeetings,thecommitteemainlyapprovedproposalsontheperformanceevaluationandremunerationdistributionplanfortheChairman,executivedirectorsandseniormanagementmembersfor2012,the2013performancetargetsfortheGroup,performancetargetsfortheChairman,thePresidentandotherseniormanagementmembers,proposalonelectionofMr.
TIANGuoliastheChairmanoftheBank,proposalsonnominationofcandidatesforexecutivedirectors,non-executivedirectorsandindependentdirectors,proposalonre-appointmentoftheCompanySecretaryoftheBank,andaproposalonBankofChinaLimitedBoardDiversityPolicy.
ThecommitteealsoreviewedtheremunerationdistributionplanfortheChairmanoftheBoardofSupervisorsandshareholdersupervisorsin2012.
ThecommitteeputforwardimportantopinionsandrecommendationsonfurtherimprovingtheBank'sperformanceevaluationmanagementincompliancewithregulatoryrequirements.
TheproceduresandmethodsforthenominationofdirectorsandthespecicrequirementsfornominatingindependentdirectorsarespeciedintheArticlesofAssociation.
Fordetails,pleaserefertoarticles59,103and135oftheArticlesofAssociation,whichcanbefoundonthewebsitesofSSE,HKExandtheBank.
Duringthereportingperiod,theBankappointedorre-appointeddirectorsinstrictcompliancewiththeArticlesofAssociation.
ConnectedTransactionsControlCommitteeTheConnectedTransactionsControlCommitteecomprisesvemembers,includingExecutiveDirectorMr.
LIZaohang,andIndependentDirectorsMr.
CHOWManYiu,Paul,Mr.
JacksonTAI,Mr.
LUZhengfeiandMr.
LEUNGCheukYan.
IndependentDirectorMr.
LEUNGCheukYanservesastheChairmanofthecommittee.
ThecommitteeismainlyresponsibleforadministeringconnectedtransactionsoftheBankinaccordancewithrelevantlaws,regulationsandnormativedocuments,andformulatingadministrativeregulationswithregardtoconnectedtransactions;conrmingtheBank'sconnectedpartiesaccordingtolaws,regulationsandnormativedocuments,andreportingtherelevantconrmationtotheBoardofDirectorsandtheBoardofSupervisors;deningconnectedtransactionsoftheBankinaccordancewithlaws,regulationsandnormativedocuments;examiningconnectedtransactionsoftheBankpursuanttorelevantlaws,regulationsandnormativedocuments,aswellasthebusinessprinciplesofjusticeandfairness;andexamininginformationdisclosuremattersrelatedtosignicantconnectedtransactionsoftheBank.
TheConnectedTransactionsControlCommitteeheldthreemeetingsin2013,inwhichitmainlyreviewedandapprovedthereportontheconrmationofconnectedpartieslistoftheBankandthescheduleofthecommitteemeetingsin2014.
Thecommitteealsoreviewedthespecialreportoffundsoccupiedbycontrollingshareholdersandotherrelatedpartiesin2012,thestatementoftheBank'sConnectedTransactionsin2012,andthereportontheImplementationRulesfortheManagementofConnectedPartyTransactionsofBankofChinaLimited(2013Version).
Duringthereportingperiod,thecommitteepaidconstantattentiontoissuessuchastheITsystemforConnectedTransactionsandtransactionswithkeyconnectedparties.
ThecommitteemembersofferedimportantopinionsandrecommendationsregardingITsystemconstructionsanddatareportoftheconnectedtransactions,amongothers.
BoardofSupervisorsFunctionsandPowersoftheBoardofSupervisorsTheBoardofSupervisorsistheBank'ssupervisoryorganandisresponsibletotheshareholders'2013AnnualReport110CorporateGovernancemeeting.
AsstipulatedintheCompanyLawandtheArticlesofAssociationoftheBank,theBoardofSupervisorsisaccountableforoverseeingtheBank'snancialactivities,internalcontrolandthelegalityandcomplianceoftheBoardofDirectors,theseniormanagementanditsmembersinperformingtheirduties.
CompositionoftheBoardofSupervisorsTheBoardofSupervisorscurrentlycompriseseightmembers.
Therearethreeshareholdersupervisors(includingtheChairmanoftheBoardofSupervisors),threeemployeesupervisorsandtwoexternalsupervisors.
AccordingtotheArticlesofAssociation,asupervisorhasatermofofceofthreeyearsandmayserveconsecutivetermsbyre-electionandre-appointment.
Shareholdersupervisorsandexternalsupervisorsareelectedorreplacedbytheshareholders'meeting.
TheBoardofSupervisorshassetuptheDutyPerformanceandDueDiligenceSupervisionCommitteeandtheFinanceandInternalControlSupervisionCommitteetoassistinperformingitsauthorisedduties.
ThespecialcommitteesmentionedaboveareresponsibletotheBoardofSupervisors,membersofwhicharesupervisors,andeachcommitteeshallhaveatleastthreemembers.
DutyPerformanceoftheBoardofSupervisorsIn2013,theBoardofSupervisorsanditsspecialcommitteesearnestlyperformedtheirsupervisoryresponsibilitiesandreviewedrelevantproposalsthroughdetaileddiscussion.
TheBoardofSupervisorsheldsixmeetingsandmaderelatedresolutions.
TheDutyPerformanceandDueDiligenceSupervisionCommitteeheldonemeeting,whiletheFinanceandInternalControlSupervisionCommitteeheldfourmeetings.
Fortheperformanceof,andsupervisoryopinionsfromtheBoardofSupervisorsduringthereportingperiod,pleaserefertothesection"ReportoftheBoardofSupervisors".
SeniorManagementFunctionsandPowersoftheSeniorManagementTheseniormanagementistheexecutiveorganoftheBank.
ItisheadedbythePresident,withexecutivevicepresidentsandotherseniormanagementmembersassistingthePresident'swork.
ThemainresponsibilitiesofthePresidentinclude:presidingovertheBank'sdailyadministrative,businessandnancialmanagement;organisingtheimplementationofbusinessplanandinvestmentschemes;draftingbasicmanagementregulationsandspecicrules;nominatingcandidatesforotherseniormanagementmembers;andreviewingemployees'remuneration,benet,rewardandpunishmentmeasures.
DutyPerformanceoftheSeniorManagementIn2013,theseniormanagementoftheBankmanagedtheBank'soperationsinaccordancewiththepowersbestoweduponthembytheArticlesofAssociationandtheauthorisationsoftheBoardofDirectors,andcarriedouttheBank'sdevelopmentstrategybasedontheannualperformanceobjectivesapprovedbytheBoardofDirectors.
Followingthestrategicobjectiveof"ServingSociety,DeliveringExcellence",theseniormanagementremainedfocusingonefciency,emphasisedstreamliningstructureandmanagingrisks,pushedforwardthesoundandrapiddevelopmentofvariousbusinesses,andthuscontinuouslyenhancedtheBank'sperformance.
Duringthereportingperiod,theseniormanagementoftheBankheldseventeenregularmeetings,inwhichitdiscussedanddecideduponaseriesofsignicantmatters,includingtheGroup'sbusinessdevelopment,assetandliabilitymanagement,riskmanagement,ITconstruction,productinnovation,humanresourcesandperformancemanagement.
Italsoconvenedonehundredandtwenty-sixspecialmeetingstoarrangeformattersrelatingtocorporatebanking,personalbanking,nancialmarkets,riskmanagementandinternalcontrol,overseasdevelopmentandintegratedoperations.
2013AnnualReport111CorporateGovernanceTheseniormanagementoftheBankpresidesovertheAssetandLiabilityManagementCommittee,theRiskManagementandInternalControlCommittee(whichgovernstheAnti-MoneyLaunderingCommittee,theSecuritiesInvestmentandManagementCommitteeandtheAssetDisposalCommittee)andtheProcurementReviewCommittee.
Duringthereportingperiod,allofthecommitteesdiligentlyfullledtheirdutiesandresponsibilitiesasperthepowersspeciedintheircommitteechartersandtherightsdelegatedbytheGroupExecutiveCommittee,andstrivedtopushforwardthesounddevelopmentofvariousoperationsoftheBank.
SecuritiesTransactionsbyDirectorsandSupervisorsPursuanttodomesticandoverseassecuritiesregulatoryrequirements,theBankformulatedandimplementedtheManagementMeasuresonSecuritiesTransactionsbyDirectors,SupervisorsandSeniorManagementPersonnelofBankofChinaLimited(the"ManagementRules")togovernsecuritiestransactionsbydirectors,supervisorsandseniormanagementmembersoftheBank.
ThetermsoftheManagementRulesaremorestringentthanthemandatorystandardssetoutintheModelCodeforSecuritiesTransactionsbyDirectorsofListedIssuerscontainedinAppendix10totheHongKongListingRules(the"ModelCode").
AlldirectorsandsupervisorsconrmedthattheyhavecompliedwiththestandardssetoutinboththeManagementRulesandtheModelCodethroughoutthereportingperiod.
AppointmentofExternalAuditorsIn2011and2012,theBankengagedPricewaterhouseCoopersZhongTianCPAsLimitedCompanyasitsdomesticauditorandinternalcontrolauditor,andPricewaterhouseCoopersasitsinternationalauditor.
AccordingtotherelevantrequirementsofMOFonthetenureofserviceofanexternalauditorengagedbyanancialinstitutionandupontheapprovalofthe2012AnnualGeneralMeeting,theBankengagedErnst&YoungHuaMingLLPtoaudititsnancialstatementsandinternalcontrolpursuanttoCASfor2013.
Ernst&YoungHuaMingLLPentrustedErnst&YoungtoauditnancialstatementsoftheBankpursuanttoIFRS.
FeespaidtoErnst&YounganditsmemberrmsfortheauditofthenancialstatementsoftheGroup,includingthoseoftheBank'soverseassubsidiariesandbranches,wereRMB185millionfortheyearended31December2013,ofwhichthefeesforinternalcontrolauditpaidtoErnst&YoungHuaMingLLPtotalledRMB15million.
Ernst&Younganditsmemberrmswerenotengagedinsignicantnon-auditingserviceswiththeBankin2013.
TheBankincurredRMB9.
74millionfornon-auditingservicesperformedbyErnst&Younganditsmemberrmsfortheyearended31December2013.
Ernst&YoungHuaMingLLPandErnst&YounghaveprovidedauditservicestotheBankforoneyear.
Mr.
ZHANGXiaodongandMr.
YANGBoarethecerticatedpublicaccountantswhosignedtheauditor'sreportontheGroup'snancialstatementspreparedinaccordancewithCASfortheyearended31December2013.
Attheforthcoming2013AnnualGeneralMeeting,theBoardofDirectorswilltenderaresolutionforreviewandapprovalregardingtheproposalonengagingErnst&YoungHuaMingLLPastheBank'sdomesticauditorandinternalcontrolauditorfor2014,providingservicesofauditingitsnancialstatementsandinternalauditpursuanttoCAS;andengagingErnst&YoungastheBank'sinternationalauditorfor2014,providingservicesofnancialstatementsauditpursuanttoIFRS.
InvestorRelationsandInformationDisclosureIn2013,followingthe2012annualresultsand2013interimresultsannouncements,theBanksuccessfullyorganisednon-dealroadshowsinwhichtheseniormanagementexplainedtheBank'sstrategiesandoperatingperformancetoinvestorsfromdifferentcountriesandregionsincludingtheChinesemainland,HongKong,EuropeandNorthAmerica.
Theseniormanagementlistenedearnestlytomarketconcernsandfeedbackandwerewarmlywelcomedbyinvestors.
In2013,facedwithstrategicopportunitiesarisingfrominterestrateliberalisation,RMBinternationalisationandmobileinternet,the2013AnnualReport112CorporateGovernanceBankproactivelyenhanceditsinvestorrelationsactivitiesbyparticipatingininuentialinvestorconferences,expandinginvestorscoveragebaseandearnestlycommunicatingwithinvestorsandanalyststoconsistentlyhighlighttheBank'sdifferentiatedcompetitiveadvantages.
Itreceivedpositiverecognitionfromthecapitalmarketasaresult.
Duringthereportingperiod,theBank'sseniormanagementandrepresentativesofmajordepartmentsheldandattended150meetingswithdomesticandoverseasinstitutionalinvestorsandanalysts,andeffectivelyimprovedtheinvestmentcommunity'sunderstandingoftheBank'sinvestmentvalue.
TheBank'sinvestmentratingswereupgradedbymajorinvestmentbanksanditsshareholderstructurewasfurtheroptimised.
TheBankalsoupgradeditsinvestorrelationswebpagetoensurethatinvestorsreceivedcomprehensiveinformationandauser-friendlyexperience.
TheBankexploitedothercommunicationchannelsincludingitstelephonehotlineandemail.
TheBankalsorepliedinvestors'questionsonthee-interactiononlineplatformrunbySSE.
Itsstatisticsontimelinessandcomprehensivenessleaditspeers.
TheBankcontinuedtoenhancemanagementofitsexternalcreditratingaffairsandimprovetheeffectiveness,timeliness,professionalisminrelatedcommunications.
TheBankstrengthenedcommunicationonmultiplelevelsregardingitsriskmanagement,liquiditymanagement,operatingperformanceanddevelopmentstrategy.
Duringthereportingperiod,Standard&Poor'sRatingsServicesraisedtheBank'sStand-aloneCreditProleandtheBank'sothercreditratingswerereafrmedbyMoody'sInvestorsService,FitchRatingsandotherratingagencies.
In2013,theBankpreparedanddiscloseditsregularandprovisionalreportsinstrictadherencetotheprinciplesoftruthfulness,accuracy,completeness,timelinessandfairness.
Itcontinuouslyenhancedthepertinence,effectivenessandtransparencyofinformationdisclosureinordertoguaranteeinvestors'accesstorelevantinformation.
TheBankthoroughlyreviewedandrevisedtheManagementMeasuresonResponsibilityInvestigationonMaterialInformationDisclosureErrorsofRegularReportsofBankofChinaLimited,tofurtherstrengthentheworkproceduresandqualitycontrolrelatedtoitsregularreports.
Duringthereportingperiod,nomaterialdisclosureerrorintheBank'sregularreportswasfound.
TheBankstrictlycarriedouttheRulesGoverningPersonswithKnowledgeofInsideInformationofBankofChinaLimitedandotherrelevantregulatoryrules,toensurethatinsideinformationwaskeptcondential,awell-managedsystemwasinplaceforregisteringthosewithaccesstoinsideinformationforlingpurposeandtheirmanagement,andthatinsidetradingwasstrictlyprohibited.
TheBankfurtherreinforcedtheaccountabilitysystemsandinformationcorrespondencemechanismswithintheGroupandorganiseddiscussionsandtrainingsessionsforinformationcorrespondents.
TheBankpaidcloseattentiontorelevantregulatoryrulesandrequirements,revisedtheinformationdisclosureworkproceduresanddevelopedcasestudiestoimprovetheinitiation,planningandlong-termperspectiveofitsmanagementwork,andthusenhanceditsinformationdisclosuremanagementabilityandcompliancelevel.
In2013,theBankonceagainreceivedwiderecognitionforitsinvestorrelationsandinformationdisclosureperformance.
TheBankwasawarded"theGreaterChinaTop100"byIRMagazine.
TheBankalsorankedamongthe"Top100HongKonglistedcompanies2013"awardedjointlybyTencent,FinetGroupLimitedandHongKongEconomicJournal.
TheBankwasrecognisedasoneofthe"CompanieswiththeMostSustainableInvestmentValue"awardedbyChineseSecuritiesJournal,"GoldMedalBoardSecretaryforIR"awardedbyChineseSecuritiesJournal,andwasagainrecognisedasa"Top50listedcompany"byInvestorJournalWeeklyanda"Top100ListedCompanybyCapitalCapacity"byChinaCenterforMarketValueManagement.
The2012annualreportoftheBankwasawardedagaina"GoldAward"intheLeagueofAmericanCommunicationsProfessionalsannualreportcompetition,beingamongthe"Top50AnnualReportinAsiaPacic"and"Top50AnnualReportsinChina".
Itwasalsoawardeda"SilverAward"forwrittentextbyAnnualReportCompetition.
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