China Food Company Plc (“China Food” or the “Company”) believes that high standards of corporate governance are essential to its growth, driving performance, and maximising long-term shareholder value. While the Company is not subject to the Corporate Governance Code applicable to companies listed on the Official List, the Company is committed to observing high standards of corporate governance.

In this section, we describe the Company’s corporate governance processes and activities with reference to the principles of the Quoted Companies Alliance’s Corporate Governance Guidelines.

The main features of the Company's corporate governance procedures are as follows:

The Board

The Board effectively leads the Group, provides strategic direction, sets the values and standards for corporate governance and oversees the business affairs of the Group. The Board meets regularly to review the Group’s operations and performance. Additional meetings are convened to discuss matters that require urgent consideration. The Board has defined a schedule of matters specifically reserved for its decision and delegates certain powers to the Board committees and to the executive directors, collectively and individually.

The Board comprises four directors, including the Chairman, two executive directors, and one independent non executive director. The Board considers the size and composition of the Board appropriate for the scope and nature of the Group’s operations. The members of the Board have core competencies in various fields including accounting, finance, business management and strategic planning.

Committees of the Board

The Board has two established Committees for Audit and Remuneration.

The Audit Committee, chaired by John McLean, meets with the Company’s external auditors present. Its roles mainly include the review of the financial statements, internal controls and the scope and cost of the audit, and to receive reports from the external auditors. The Committee has full access to, and the co-operation of Management, as well as full discretion to invite any Director or executive officer to attend its meetings.

The Remuneration Committee, chaired by Clifford Halvorsen is responsible for making recommendations to the Board on remuneration policy for directors, including the setting of directors’ salaries and incentive arrangements. The Committee is also responsible for recommending the granting of share options to employees.

Relations with Shareholders

The Board considers it important to communicate a balanced and understandable assessment of the group's performance and prospects to all investors. The Board maintains frequent contact with institutional investors through regular meetings. The Annual General Meeting ("AGM") is regarded by the Board as an important opportunity to meet and communicate with individual shareholders. Shareholders are given ample time and opportunity at the company's AGM to express their views and put forward their questions to directors or management concerning the Group. The Board welcomes the views of all shareholders, and other stakeholders, which in the first instance should be communicated to the Chairman.

Internal Control

The Board is ultimately responsible for the Group’s system of internal control, including financial, operational, compliance control and risk management, and for reviewing and monitoring its effectiveness. The system of internal control is designed to manage and minimise risk, rather than eliminate it. In pursuing these objectives internal controls can only provide a reasonable and not absolute assurance against material misstatement or loss.

The external auditors, who are engaged to express an opinion on the Group financial statements, also consider the systems of internal financial control to the extent necessary to express that opinion. External auditors report the results of their work to management, including executive members of the Board and the Audit Committee.

The Board has adopted the Share Dealing Code for the purpose of compliance with Rule 21 of the AIM Rules and takes steps to ensure compliance with that rule by the Group’s employees.

Takeover Code

The Company complies with the requirements of the Corporate Governance Code for Small and Mid-Sized Quoted Companies 2013 published by the Quoted Companies Alliance from time to time, to the extent the directors consider it appropriate given the Company's size and nature.

The Company is subject to the City Code on Takeovers and Mergers, as published by the Panel on Takeovers and Mergers and updated from time to time.

Last updated 07 Aug 2014