2012 Annual Report - ZTE

ANNUAL REPORT 2012With respect to assets, the Company’s assets are fully independent and the Company has clear ownership ofits assets. The Company has independent production systems, supplementary production systems and ancillaryfacilities. Intangible assets such as industrial property rights, trademarks, and other non-patentable technologies areowned by the Company. The Company’s procurement and sales systems are independently owned by the Company.With respect to finance, the Company has an independent financial department. It has established an independentaccounting and auditing system and a financial management system, and maintains an independent bank account.With respect to business, the Company’s business is fully independent from the controlling shareholder. Neither thecontrolling shareholder nor its subsidiaries are engaged in any business identical or similar to that of the Company.With respect to organisation, the Board of Directors, the Supervisory Committee and other internal organizationsof the Company operate in complete independence from the controlling shareholder. There are no subordinaterelationships between the controlling shareholder (and its functional departments) and the Company (and itsfunctional departments).VIII. Establishment and Implementation of the Appraisal and Incentive Mechanism for SeniorManagementThe Company has established a performance appraisal system for senior management and an incentive mechanismlinking remuneration to the Company’s results and the individual staff member’s performance. The Remunerationand Evaluation Committee is mainly responsible for formulating and examining proposals for the managementof remuneration and performance of the Directors and senior management of the Company, conducting annualperformance appraisals for the senior management of the Company and determining the remuneration of thesenior management based on the results of the appraisal for implementation after consideration and approval bythe Board of Directors.PART II:CORPORATE GOVERNANCE REPORT PREPARED IN ACCORDANCE WITH THE REQUIREMENTSOF THE HONG KONG LISTING RULESThe Company is dedicated to improving its corporate governance standards and strives to increase its enterprisevalue by adopting stringent corporate governance practices, with a view to ensuring sustainable development,fulfilling corporate responsibilities as a listed company, and maximising value for its shareholders in the long term.The Company had fully complied with all the principles and code provisions of the Code on Corporate GovernancePractices set out in Appendix 14 to the Hong Kong Listing Rules during the period from 1 January to 31 March2012 and all the principles and code provisions of the Corporate Governance Code set out in Appendix 14 to theamended Hong Kong Listing Rules during the period from 1 April to 31 December 2012.I. Shareholders’ Rights and Investors’ Relations(I)Shareholders’ rightsThe Company adopts relevant measures to facilitate and ensure the smooth exercise of shareholders’ rights instrict compliance with relevant laws and regulations of the PRC or otherwise and in accordance with pertinentrequirements under the Articles of Association of the Company.Details of the shareholding structure of the Company are set out in the section of this report headed “Changesin Shareholdings and Information of Shareholders”.127