TONWEI REFINERY | Molecular Science
Export Oriented Oil & Gas Refinery

TABLE OF CONTENTS

I. AUTHORITY AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS

II. SELECTION AND COMPOSITION OF THE BOARD OF DIRECTORS

III. BOARD STRUCTURE

IV. BOARD AND COMMITTEE OPERATIONS

V. BOARD PERFORMANCE

VI. SENIOR MANAGEMENT

 

　

CORPORATE GOVERNANCE GUIDELINES

TONWEI GROUP

 

I. AUTHORITY AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS

 

The Board of Directors, which is elected by the shareholders, is the ultimate decision-making body of the Company, except with respect to matters reserved to the shareholders. The Board of Directors selects the Chief Executive Officer and certain other members of the executive management of the Company, who are charged with managing the Company's business. The primary function of the Board of Directors is therefore oversight -- defining and enforcing standards of accountability that enable management to execute their responsibilities fully and in the interests of the Company's shareholders. Consistent with this division of authority, the primary responsibilities of the Board of Directors and its committees include:

 

A. Overseeing the conduct of the Company's business to determine whether it is being effectively managed, including through regular meetings of the outside Directors without the presence of management; evaluating the performance of the Company and its senior management; and selecting, regularly evaluating, and fixing the compensation of the chief executive officer and other members of executive management as it deems appropriate.

 

B. Monitoring fundamental operating, financial, and other corporate strategies, as well as major plans and transactions.

 

C. Providing advice and counsel to the chief executive officer and other executive management of the Company.

 

D. Overseeing management in an effort to ensure that the assets of the Company are safeguarded through the maintenance of appropriate accounting, financial and other controls, and that the business of the Company is conducted in compliance with applicable laws and regulations and the highest ethical standards; and

 

E. Evaluating the overall effectiveness of the Board of Directors, as well as selecting and recommending to shareholders qualified candidates for election to the Board of Directors.

 

These Corporate Governance Guidelines are intended to embody the principles by which the Board of Directors operates in a single, formal document. These guidelines are not intended to be a code of regulations, but rather a statement of intention. This document may be amended from time to time as conditions warrant.

 

II. SELECTION AND COMPOSITION OF THE BOARD OF DIRECTORS

 

Independence

 

The Board of Directors shall at all times meet the independence requirements of applicable law and the listing requirements of the Nigerian Stock Exchange, as such rules may be amended from time to time.

 

Selection Criteria for Board Members

 

The Governance and Nominating Committee will develop guidelines for selecting candidates for election to the Board of Directors, and periodically review and amend such guidelines as the Committee deems necessary or appropriate.

 

Term Limits

 

The Board of Directors does not believe that it should establish term limits. The Board believes that term limits have the disadvantage of causing the loss of the contribution of Directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole.

 

As an alternative to term limits, the Governance and Nominating Committee, in conjunction with the chief executive officer, will assess each Director's contributions to the Board every three years, immediately prior to the nomination of such Director for re-election to the Board. This review will also provide each Director with the opportunity to conveniently confirm his or her desire to continue as a member of the Board.

 

Retirement

 

It is the policy of the Board of Directors that no individual who would be age 70 or older (72 or older with respect to the current members) at the time of his or her election will be eligible to stand for election to the Board. The Board may, at its discretion, waive the age limitation in special circumstances.

 

Resignation - Change in Professional Responsibilities

 

It is the sense of the Board of Directors that individual Directors who change the principal occupation, position, or responsibility they held when they were elected to the Board should volunteer to resign from the Board. It is not the sense of the Board that in every instance the Directors who retire or change from the position they held when they joined the Board should necessarily leave the Board. There should, however, be an opportunity for the Board through the Nominating and Governance Committee to review the continued appropriateness of Board membership under the circumstances.

 

To facilitate the consideration by the Governance and Nominating Committee and the Board of any of the situations described in the preceding paragraph, any Director experiencing such a situation should submit a letter of resignation to the Board. After considering the impact, the Governance and Nominating Committee will recommend to the Board whether to accept the resignation.

 

Affiliations of Directors

 

It is the responsibility of each Director to advise the Corporate Secretary or the Chairman of the Governance & Nominating Committee of any affiliation with public or privately held commercial enterprises that may create a potential conflict of interest, potential embarrassment to the Company or possible inconsistency with the Company's policies or values.

 

III. BOARD STRUCTURE

 

Number of Directors

 

The Company's Articles of Incorporation provide that the Board of Directors shall have no less than 5 nor more than 15 Directors, the exact number of Directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board then in office. It is the Board's philosophy that boards of directors should not be so large as to be cumbersome, although the Board would be willing to increase its size in order to accommodate an outstanding candidate, to satisfy the staffing needs of its committees, or to facilitate a merger or other acquisition.

 

Board Leadership

 

The Board of Directors has no formal policy on separation of the position of Chairman of the Board and Chief Executive Officer, but generally believes that separation of the roles is unnecessary under normal circumstances. In fact, combining these roles will serve the Company exceptionally well in the future.

 

The function of the Board in monitoring the performance of the senior management of the Company is fulfilled by the presence of non-management Directors who have a substantive knowledge of the Company and its business.

 

Board Committees

 

The standing committees of the Board of Directors will be the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee.

 

From time to time, the Board may also designate ad hoc committees in conformity with the Company's By-Laws. Board committees will receive their authority exclusively through delegation from the Board. The Audit Committee, the Compensation Committee and the Governance and Nominating Committee will each have a written charter that sets forth the responsibilities of, and other legal requirements applicable to, the committee. Each charter will be approved by the full Board.

 

The Governance and Nominating Committee, in consultation with the Chairman of the Board and the Chief Executive Officer, is responsible for recommending to the Board the assignment of Directors to Board committees. Consideration will be given to rotating committee members periodically, but rotation will not be mandatory. All standing committees will consist of non-management Directors, and shall also at all times meet the independence requirements of applicable law and the listing requirements of the Nigerian Stock Exchange.

 

The committee chairperson, in consultation with the committee members, will determine the frequency and length of committee meetings. Attendance at any committee meetings by persons other than the committee members shall be at the discretion of the committee chairperson.

 

IV. BOARD AND COMMITTEE OPERATIONS

 

Orientation

 

The Company will arrange for each new Director to participate in an orientation process that includes reviewing materials regarding the Company's business and operations and meetings with key personnel.

 

Continuing Education

 

The Board of Directors believes that each Director should: (a) maintain leadership and expertise in the areas that caused the Board to select that Director for membership; (b) develop and maintain a broad, current knowledge of all of the Company's businesses and critical issues affecting the Company; and (c) develop and maintain a broad, current knowledge about corporate directors' responsibilities, including general legal principles applicable to directors' activities in fulfilling those responsibilities.

The Company, in an effort to encourage Directors to obtain a current understanding of best practices and procedures, will from time to time provide to the non-management Directors a list of approved educational seminars. The Company will reimburse a Director's reasonable expenses incurred in attending one of the approved seminars per year. A Director attending such a seminar shall make seminar materials available to the other Directors and report any significant findings to the full Board of Directors or an appropriate committee.

 

Frequency of Meetings

 

The Board of Directors shall meet on at least a quarterly basis. The Chairman of the Board shall, in consultation with management, prepare an annual schedule of the regular meetings of the Board and the Board's standing committees. This schedule shall be presented to the full Board for approval.

 

Meeting Agenda

 

The Chairman of the Board, in consultation with the appropriate members of management, and subject to input from the other members of the Board of Directors, will establish the agenda for each Board meeting.

The chairperson of each committee, in consultation with the other members of the Board and the appropriate members of management, will establish and/or approve the agenda for each committee meeting.

 

Unless otherwise provided in the charter of a committee, topics that are typically addressed by a committee may be addressed instead by the full Board, as determined by the chairperson of the relevant committee in consultation with the Chairman of the Board.

 

Meeting Material Distributed in Advance; Other Information

 

In general, voluminous information that is important to the Board's or committee's understanding of the matters to be discussed at each meeting will, to the extent practicable, be distributed in writing to the Board or committee members a reasonable amount of time before the Board or committee meets so that meeting time may be conserved and discussion time focused on questions that the Directors have about the materials. Directors are expected to review meeting materials prior to the meeting. Management will seek to ensure that the information is complete and accurate, while making every attempt to see that this material is as concise as possible.

 

Meeting Attendance

 

Directors are expected to attend each meeting of the Board of Directors and of each committee of which the Director is a member. Directors are expected to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Although the Company's By-Laws authorize members of the Board and committee members to participate in and act at a meeting through the use of telephonic or other communication equipment, the personal attendance of Directors at such meetings is preferred. All decisions of the Board or any committee shall be determined by an affirmative vote of the majority of members in attendance. A quorum of the Board or the committee, as the case may be, shall be established when a majority of the members are present or otherwise participating. Any action to be taken at any meeting of the Board or any committee may be taken without a meeting, if all members of the Board or the committee, as the case may be, consent thereto in writing and such writing or writings are filed with the meeting minutes.

 

Minutes

 

The Secretary of the Company shall record minutes of all meetings of the Board of Directors and its standing committees. In the absence of the Secretary, the Chairman of the Board or the committee, as the case may be, may designate any Assistant Secretary, Director or outside counsel to record such minutes.

 

Attendance of Non-Directors at Board Meetings

 

The Chairman of the Board will select members of senior management to attend Board or committee meetings. The Chairman of the Board will select senior managers who either can provide additional insight into the items being discussed because of personal involvement in those areas or are managers with future potential whom the Chairman of the Board believes should be given exposure to the Board.

 

Executive Sessions

 

The non-management Directors will meet in regularly scheduled executive sessions without management. Executive sessions of the non-management Directors will be presided over by a non-management Director recommended by the Governance and Nominating Committee and approved by the Board of Directors. Upon reasonable notice to the other Directors, any non-management Director may call for one or more additional executive sessions of the non-management Directors.

 

Participation in Strategic Discussions

 

The full Board of Directors should engage in discussions on strategic issues and ensure that there is sufficient time devoted to Director interchange on these subjects.

 

Committee Reports

 

The chairperson of each committee shall report on the activities of the committee to the Board of Directors following committee meetings, and minutes of the committee meetings shall be distributed to all Directors for their information.

 

Access to Management and Employees

 

Directors have complete access to the Company's management and employees. The Board of Directors believes that any such contact should be reasonable in frequency and length and should not be distracting to the business operations of the Company.

 

Independent Advice

 

The Board of Directors and any Board committee has the authority to seek legal or other expert advice from a source independent of management, including the authority to approve the advisor's fees and terms of retention.

 

Board Interaction with Third Parties

 

The Board of Directors believes that management speaks for the Company. The chief executive officer is responsible for establishing effective communications with constituencies of the Company, including shareholders, employees, suppliers, customers, and communities in which the Company operates. This policy does not preclude Directors from meeting with members of these constituencies, but it is suggested that any such meetings be held with management present.

 

Notwithstanding the foregoing, non-management Directors will communicate directly with any interested party that wishes to make their concerns known to the non-management Directors, without management present.

 

V. BOARD PERFORMANCE

 

Evaluations

 

The Governance and Nominating Committee will be responsible for coordinating an annual evaluation of the performance of the Board of Directors and each of its standing committees. This evaluation will be discussed with the full Board.

 

Ethical Standards

 

Members of the Board of Directors, while acting in such capacity, shall comply with any applicable provisions of the Company's code of "Ethical Standards and Responsibilities".

 

Conflict of Interest/Recusal

 

A Director's business or personal relationships may occasionally give rise to material personal interest on a particular issue that conflicts, or appears to conflict, with the interests of the Company. The Board of Directors, after consultation with counsel, will determine on a case-by-case basis whether an actual or apparent conflict of interest exists. The Board will take appropriate steps to identify such potential conflicts to ensure that all Directors voting on an issue are disinterested with respect to that issue. In appropriate cases, the

Director with a conflict will recuse himself or herself from the discussion and the voting process at the Board or committee meeting in question.

 

Board Compensation

 

The Board of Directors believes that the Company should compensate non-management

Directors for their service on the Board at a level that will attract Director candidates who satisfy the Company's selection criteria for board members. The Compensation Committee will periodically review the compensation arrangements in effect for the non-management members of the Board of Directors and recommend to the Board any changes deemed appropriate.

 

Other Board Memberships

 

Non-management Directors are encouraged to limit the number of other boards on which they serve, taking into account the impact of such other Directorships on attendance at, and the quality of participation in, meetings of the Board of Directors. Members of the Board of Directors should advise the Chairman of the Board and the chairperson of the Governance and Nominating Committee in advance of accepting an invitation to serve on another board.

 

VI. SENIOR MANAGEMENT

 

Executive Officer Evaluations

 

The Compensation Committee will oversee the evaluation of the performance of the executive officers of the Company. The evaluation should be based on the performance of the Company as well as the individual's accomplishment of short-term and long-term strategic objectives, development of management and other criteria determined by the Compensation Committee. These evaluations should be used by the Compensation Committee in the course of its deliberations when considering the compensation of executive officers.

 

Succession Planning

 

The Compensation Committee is responsible for the periodic review of succession plans for the Chief Executive Officer and other executive officers and will periodically report to the Board of Directors on these matters.

 

Outside Board Memberships

 

The Chief Executive Officer, President and Chief Operating Officer will seek the approval of the Board of Directors before accepting any outside board memberships, and in no event shall any of these officers serve on more than one other public company's board. Other executives of the Company shall not serve.