Corporate Governance // Chi-Med
Corporate Governance

Statement of compliance with the UK Corporate Governance Code

Note: The London Stock Exchange recently published guidance for AIM companies in relation to the September 2018 Corporate Governance Changes.  The guidance states that it is acceptable for the AIM Rule 26 website compliance statement to incorporate by reference (for example disclosures that are provided in a clearly delineated corporate governance section of the annual report) provided that the material is freely available and the statement clearly indicates where interested parties can read or obtain a copy of that material (for example, the relevant pages or section of the annual report or the URL for the relevant web page). We have applied this approach (i.e. incorporation by reference to the Company's annual report) in respect of certain sections in this statement. Click here to access the guidance.

Hutchison China MediTech Limited ("Company")

The Company strives to attain and maintain high standards of corporate governance best suited to the needs and interests of the Company and its subsidiaries (the "Group") as it believes that effective corporate governance practices are fundamental to safeguarding shareholder interests and enhancing shareholder value. Accordingly, the Company has adopted corporate governance principles that emphasise a quality board of Directors (the "Board"), effective internal controls, stringent disclosure practices, transparency and accountability. It is, in addition, committed to continuously improving these practices and inculcating an ethical corporate culture.

The Company has applied the principles and provisions of the UK Corporate Governance Code published by the Financial Reporting Council on 17 June 2016 (the "Code").  This statement sets out in broad terms how we comply at this point in time. We will provide updates as circumstances change. A full version of the Code is available from the Financial Reporting Council website at www.frc.org.uk.

It is noted that a revised UK Corporate Governance Code was published on 15 July 2018 which applies to accounting periods beginning on or after 1 January 2019. The Company expects to report against this revised code in 2019.

The Company's explanations for departures from certain provisions of the Code for the year ended 31 December 2017 are set out below:

  • B.1.2 (Composition of the Board) - During the year ended 31 December 2017, the Board comprised three executive directors[1], the executive Chairman, two non-executive directors[2] not regarded as independent and four independent non-executive directors[3]. Accordingly, during the year ended 31 December 2017, the composition of the Board did not, at any time, comply with provision B.1.2 of the Code which states that, except for smaller companies, at least half the board, excluding the chairman, should comprise non-executive directors determined by the board to be independent. The Board considers that, despite this non-compliance, the Board has an appropriate balance of skills, knowledge and experience to enable it to discharge its duties and responsibilities effectively.
  • B.2.1 (Nomination Committee) - The Company has considered the merits of establishing a nomination committee but is of the view that it is in the best interests of the Company that the Board collectively reviews, determines and approves the structure, size and composition of the Board as well as the appointment of any new Director, as and when appropriate. The Board is tasked with ensuring that it has a balanced composition of skills and experience appropriate for the requirements of the business of the Group and that appropriate individuals with relevant expertise and leadership qualities are appointed to the Board to complement the capabilities of existing Directors. In addition, the Board as a whole is also responsible for reviewing the succession plan for Directors, including the Chairman of the Board. A recent example of this nomination process working well in practice was the selection and appointment of new Directors which took place in 2017 which involved the entire Board including the outgoing Directors. The Board, being of a small enough size, was able to select, interview and determine independent non-executive directors (“INEDs”) to be replaced with full participation of the Board. The process let the Board not only have good interaction and knowledge of each of the four new INEDs but also enabled the incumbent Directors to have a better understanding of the Board dynamics amongst themselves. The process was well conducted and received, and a good learning experiences for the entire Board.
  • B.6.2 (Evaluation) - The Board considers that its internally-led evaluation has resulted in a number of recommendations that have improved the way the Board and the Committees function. For this reason, an externally led evaluation was not considered necessary but the Board will consider the engagement of an external service provider at an appropriate juncture.
  • B.2.1 (Remuneration Committee) - The Remuneration Committee comprises three members, two of whom are independent non-executive directors, and is chaired by the executive Chairman. Accordingly, the composition is not in compliance with provision D.2.1 which stipulates that the company chairman may also be a member of, but not chair, the committee if he or she was considered independent on appointment as chairman. Given Mr. To’s knowledge on the remuneration and specialised market conditions of the Company's business, the Board historically took the view that it is in the best interests of the Company that Mr. To acts as the chair of the remuneration committee. Mr. To has agreed to stand down as chair of the Remuneration Committee with effect from 28 September 2018 with Mr. Paul Carter taking his place as chair. As such, the Company will be compliant with provision D.2.1 from 28 September 2018.

The information in this statement was last reviewed on 27 September 2018. This statement incorporates by reference the disclosures set out in the Company's Corporate Governance Report found on pages 49 to 60 of the Company's 2017 Annual Report. This can be accessed here.


[1] Inclusive of Dr Weiguo Su who was appointed on 27 March 2017.

[2] Exclusive of Mr Shiguro Endo who resigned on 1 February 2017.

[3] Inclusive of Mr Paul Carter and Dr Karen Ferrante who were both appointed on 1 February 2017, Mr Graeme Jack who was appointed on 1 March 2017 and Professor Tony Mok who was appointed on 12 October 2017; and exclusive of Professor Christopher Huang and Mr Christopher Nash who both resigned on 1 February 2017, and Mr Michael Howell who resigned on 1 March 2017.