Sino Strategic International

This Corporate Governance Statement outlines Sino Strategic International Limited’s main corporate governance practices that were in place throughout the financial year ended 30 June 2009, with reference to the ASX Corporate Governance Council's Revised Corporate Governance Principles and Recommendations.

PRINCIPLE 1 - LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

The primary responsibility of the Board of Directors of the Company is to oversee the business affairs of the Company and its controlled entities (“the Group”) in order to protect and enhance the shareholders’ interest. The Board’s role is to ensure that the Group meets its obligations and responsibilities in all areas affecting all shareholders and the share market generally. The other responsibilities of the Board include:

The Chairman is responsible for leading the Board, ensuring Directors are properly briefed in all matters relevant to their roles and responsibilities, facilitating Board discussion and managing the Board's relationship with the Company's senior management.

PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

The ASX Recommendations state that the:

During the financial year, the Board comprised six Directors. The Board considered that two of the Directors, namely Mr. Man Ban Lee and Mr. Roger de Lima satisfied the criteria for independence in the ASX recommendations while the other four Directors were not considered independent during the financial year. After the balance date, Mr. Spencer M Y Chan was appointed as a director of the Company who is also considered as an independent non-executive director.

A non-executive director is considered to be independent if the director:

The Board does not currently comply with the recommendation that a majority of the Board should be independent directors. However, the Board is of the view that the Board’s current composition serves the interests of shareholders for the following reasons:

The Board will endeavour to appoint more independent directors who have relevant knowledge and skills to join the Board when the Board believes it is in the interests of shareholders to do so.

As Mr. Theodore (Teddy) Chee Tock Cheng is an Executive Chairman as well as Chief Executive Officer, the Board does not currently comply with the recommendation that the chairman of the Board be an independent director and the role of chairman and chief executive officer should not be exercised by the same individual. The Board has appointed Mr. Cheng as both Chairman and CEO because:

However, the Board acknowledges the potential shortcoming of not following the recommendations and is in the process of seeking a suitable candidate to act as an independent Chairman of the Company. When an independent Chairman is appointed, Mr. Cheng will step down as Chairman and focus on his role as the Chief Executive Officer of the Company. In the meantime, the Board recognises that as an executive chairman may not be able to provide an independent review of the performance of management, the Board has adopted the following governance polices:

Board composition
The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report and their term of office are detailed in the Directors’ report. The Company undertakes an annual board performance review and considers the appropriate mix of skills required by the Board to maximise its effectiveness and its contribution to the Company.

Retirement and re-election
In accordance with the Constitution, other than the Managing Director, at least one third of the Directors are required to retire from office by rotation at each Annual General Meeting. Such retiring directors are eligible for re-election. When a vacancy exists or an additional director is required, the Board has the power to appoint any person as a director who holds office only until the next Annual General Meeting at which time they can stand for re-election.

Nomination and appointment of new directors
The Nomination and Remuneration Committee is responsible for making recommendations of candidates for appointment as new directors to the Board as a whole for consideration. If it is necessary to appoint a new director to fill a vacancy on the Board or to complement the existing Board, a wide potential base of possible candidates is considered. If a candidate is recommended by the Nomination and Remuneration Committee, the Board assesses the qualifications of the proposed new director against a range of criteria including background, experience, professional skills, personal qualities, the potential for the candidate’s skills to augment the existing Board, and the candidate’s availability to commit to the Board’s activities. If these criteria are met and the Board appoints the candidate as a director, that director (as noted previously) must retire at the next annual general meeting and will be eligible for election by shareholders at that meeting.

Knowledge, skills and experience
All Directors are expected to maintain the skills required to discharge their obligations to the Company. Directors are provided with papers, presentations and briefings on group businesses and on matters which may affect the operations of the Group.

Board access to information and independent advice
All Directors have unrestricted access to employees of the Group and, subject to the law, access to all company records and information held by group employees and external advisers. Consistent with ASX Principle 2, each director may, with the prior written approval of the Chairman, obtain independent professional advice to assist the Director in the proper exercise of powers and discharge of duties as a director or as a member of a Board committee. The Company will reimburse the Director for the reasonable expenses of obtaining that advice.

Conflicts of interest
Directors are required to avoid conflicts of interest and immediately inform their fellow Directors should a conflict of interest arise. Directors are also required to advise the Company of any relevant interests that may result in a conflict.

Directors are required to disclose any material personal interests and the relationship of these interests to the affairs of the Company. A director is required to provide an updated notice to disclose any new material personal interests or if there is any change in the nature or extent of a previously disclosed interest. Where a matter in which a director has a material personal interest is being considered by the Board, that director must not be present when the matter is being considered or vote on the matter, unless all of the other directors have passed a resolution to enable that director to do so or the matter comes within a category of exception under the Corporations Act 2001.

PRINCIPLE 3 - PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

Code of Conduct
The Company has an internal code of conduct which sets out principles to guide Directors and employees in carrying out their duties and responsibilities to the highest standards of personal and corporate integrity when dealing with the Company, its customers and suppliers and the community. The code covers areas such as conduct in the workplace, business conduct, protection of the Company’s assets, confidentiality, non-solicitation of customers and employees, conflicts of interest and corporate opportunities. All Directors and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

Share trading guidelines

The Company’s securities trading policy provides that Directors and employees of the Company should not deal in the Company’s or its listed controlled entity’s shares while possessing any information which if generally available might have a material effect on the price or value of the securities. Directors and employees of the Company are advised only to deal in the Company’s or its listed controlled entity’s shares after a reasonable time gap has elapsed following the issue of an announcement to the Australian Securities Exchange, especially half-year and year end results. At this point the market will have absorbed the announcement and the information will be generally available. The policy also discourages trading on short-term considerations.

PRINCIPLE 4 - SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

The Board does not have a formal audit committee. All significant matters raised by the external auditors are dealt with by the full Board. The Chief Operating Officer, the general manager-corporate and the company secretary liaise with external auditors and ensure that the annual and half yearly statutory audit are conducted in an effective manner. The Board reviews external audit reports to ensure that any major deficiencies or breakdowns in controls or procedures have been identified and prompt remedial action is taken by management. The Board also review the consolidated financial statements and other information distributed externally and accounting policies and practices.
The Chief Executive Officer and the Chief Operating Officer have stated in writing that the Company's Financial Reports present a true and fair view in all material respects of the Company's financial condition and operational results in accordance with relevant accounting standards.
Audit recommendations, internal control matters and any other matter arising from the audit are reviewed and discussed at the Board level. Recommendations from the auditors are considered, and if deemed appropriate implemented.
The Directors review the performance of the external auditors and consider the re-appointment of the external auditors on an annual basis. An analysis of fees paid to the external auditors, including a breakdown of fees for non-audit services, is provided in the notes of the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to the Board.

PRINCIPLE 5 - MAKE TIMELY AND BALANCED DISCLOSURE

The Chief Operating Officer has been nominated as the person with primary responsibility for communications with the Australian Securities Exchange (“ASX”) and is required to be fully conversant with the ASX Continuous Disclosure Listing Rules. Each member of the Board has a responsibility to advise the company secretary of any relevant disclosure matters of which they become aware. All material information concerning the Company, including its financial situation, performance, ownership and governance are posted on the Company website to ensure all investors have equal and timely access.

PRINCIPLE 6 - RESPECT THE RIGHTS OF SHAREHOLDERS

The Board aims to ensure that shareholders are informed of all major developments through the annual report, the half-yearly report and the encouragement of full participation in the Annual General Meeting. This is achieved by way of detailed reports on the half year and annual results and through the Chairman’s address at general meetings. Copies of announcements made to the ASX are available from the websites of the ASX, www.asx.com.au, and the Company, www.sino.com.au. The Company’s external auditor attends the annual general meetings and is available to answer shareholders’ questions which are submitted in writing to the company secretary no later than five business days before an annual general meeting.

PRINCIPLE 7 - RECOGNISE AND MANAGE RISK

Risk identification and management
Consistent with ASX Principle 7, the Board is committed to the identification, monitoring and management of risks associated with its business activities and has embedded, in its management and reporting systems, a number of risk management controls. The Board acknowledges that it is responsible for the overall internal control and risk management framework, and recognises that no cost effective internal control and risk management system will preclude all errors and irregularities.
The Board has adopted a Risk Management Policy. The management of risk is the responsibility of all Directors, officers and employees of the Company. The Risk Management Policy contains the Company's risk profile and describes the policies and practices the Company has in place to manage specific business risks.

Risk management and integrity of financial reporting
In accordance with ASX Principle 7, the Chief Executive Officer and the Chief Operating Officer have provided the Board with a written statement for the year ended 30 June 2009 that:

the statement given with respect to the integrity of the financial statements (referred to under the heading “Financial reporting” in Principle 4: Safeguard Integrity in Financial Reporting) was founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
the Company’s risk management and internal compliance and control system was operating efficiently and effectively in all material respects.

PRINCIPLE 8 - REMUNERATE FAIRLY AND RESPONSIBLY

The objective of the Company's executive reward framework is to ensure reward for performance and is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for Shareholders. The Board endeavours to ensure that executive reward satisfies the following key criteria for good reward governance practices:

Competitive and reasonable;
Acceptability to shareholders;
Performance linkage/alignment of executive compensation;
Transparency; and
Capital management.

A performance evaluation for senior executives took place in the reporting period and it was in accordance with the process disclosed. Further information to Directors' and executives' remuneration is set out in the Directors report and Note 5 to the financial statements.

The Nomination and Remuneration Committee is responsible for:

reviewing and implementing remuneration policies and practices for all Directors and management;
Acceptability to shareholders;
the succession plans to maintain an appropriate balance of skills, experience and expertise on the Board; and
assessing the necessary and desirable competencies of Board members.

The Board undertakes an annual self assessment of its collective performance and its members. The Board was of the view that the Directors had the knowledge and information to discharge their responsibilities during the year. The Board assessed the performance of the executive management against pre-determined performance objectives. There are no schemes for retirement benefits other than statutory superannuation for non-executive directors.

The current committee members are Mr. Man Ban Lee and Mr. Roger de Lima. Mr. Lee, an independent director, is the chairman of the committee. No member of the committee will participate in the determination of their own remuneration.

The Board committee reviews its own performance from time to time. The performance evaluation will have regard to the extent to which they have met their responsibilities.