Corporate Governance

The following investor information is disclosed for the purposes of Rule 26 of the AIM Rules for Companies.

The Board recognises the importance of sound corporate governance and intends, where practicable for a company of West China Cement’s size and stage of development, to comply with the Combined Code. The Directors have appointed an audit and remuneration committee comprising the non-executive director and the Chairman of the Company. Any new non-executive directors appointed by the Company will be invited to join the audit and remuneration committees. Whilst one of the non-executive directors has a small holding of Ordinary Shares and both non-executive directors have been granted options over small numbers of Ordinary Shares, the Board considers the non-executive directors to be appropriate to act as members of the audit and remuneration committees.

The Board

The Board intends to comply, and to procure compliance, with Rule 21 of the AIM Rules relating to dealings in the Company’s securities by the Directors and other applicable employees. To this end, the Company has adopted a code for directors’ dealings appropriate for a company whose shares are admitted to trading on AIM and will take all reasonable steps to ensure compliance by the Directors and any relevant employees. The form of this code is substantially the same as the model code contained in the rules of the Official List.

The committee of supervisors

As required by PRC company law, a committee of supervisors has been established in respect of both Yaobai Cement and Lantian Cement. In each case, this committee comprises three supervisors, two of whom are appointed by the relevant company’s shareholders while the other one is elected by its employees. The directors and senior management of Yaobai Cement and Lantian Cement are prohibited from holding the position of supervisor. The key powers and responsibilities of the committee of supervisors in respect of each of Yaobai Cement and Lantian Cement are as follows:

(a) examining the financial position of the company;

(b) supervising the conduct of the directors and senior management and, if necessary, reporting to shareholders any misconduct that they feel may be damaging to the company;

(c) offering shareholders the right to propose the dismissal of a director or senior manager; and

(d) bringing an accusation of misconduct against a director or member of senior management, who has breached any PRC law, regulation or the company’s articles of association that may be damaging to the company.

In addition, the Board has resolved to ratify the appointment of an additional non-executive director should, in the opinion of the non-executive directors and the Company’s Nominated Adviser (as they may be from time to time), such further appointment be in the best interests of the Company and/or its shareholders.

The Chairman has the power to veto any transaction between the Company and any Related Party (as the term is defined in the AIM Rules), and any proposal for the appointment of any additional executive directors.

The remuneration committee

The remuneration committee will determine the terms and conditions of service of the executive Directors, including the remuneration and grant of options to executive Directors under any share option plans and arrangements adopted by the Company. The audit committee will have primary responsibility for monitoring the quality of internal control and ensuring that the financial performance of the Company is properly measured and reported on and for reviewing reports from the Company’s auditors relating to the Company’s accounting and internal controls.

Statement of Directors’ responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements are required to give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the company and of the group for that period. In preparing these financial statements the directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.