Topic 2: Roles and Responsibilities of Board of Directors and Management to Master Ethical Challenges

Mr James SIU Kai-lau, Executive Director and Group Chief Compliance Officer, Li & Fung (1937) Group represented the six Cantonese discussion groups to report back on the topic "Roles and Responsibilities of Board of Directors and Management to Master Ethical Challenges". His sharings were as follows.

Board Composition & Meeting
  • Close relationship among directors sometimes could hardly be avoided. Private relationship among directors was conducive to smooth cooperation and better communication. However, perceived conflict of interest might entail.

  • INEDs like Fred should observe the Listing Rules requirements first to uphold their or his independence.

  • Audit committee could lead INEDs to balance dominant board chairman and maintain an effective dialogue. The Chairman of the audit committee should proactively seek information whenever in doubt.

  • Board meetings should be conducted in a frank and open atmosphere for free discussion among members, which was extremely important. Otherwise, the board meeting, like the case in question, would become a "rubber stamp" exercise, reducing the usefulness of having board meetings.
Director's Roles and Responsibilities
  • An INED should follow-up issues or clarify doubts thoroughly. He could seek assistance from internal and external auditors, and other professionals.

  • Directors' commitment was another focus. Taking up 15 INED posts would be too many and too excessive, making Matthew unable to perform each role dutifully. Attending board meetings should not be regarded as a token of formality.

  • The failure of both the Chairman and Maggie in disclosing conflicts of interests reflected poor directors' ethics from the top. The Chairman even proactively plotted to achieve better short term financial figures at the expense of the long term interest of the whole company.

  • The board should make all decisions on a well-informed basis.