Corporate Governance Compliance Analysis
Mercator Lines (Singapore) Limited, FY 2011
Code of Best Practice
The Board of Directors
a. Clearly accepted division of responsibility,
no one person with absolute power.
b. Should meet regularly, retain full and
effective control and monitor their
executive directors.
c. Should have a formal schedule for
decision making.
Company’s relevant disclosure
Certain functions of the Board have been
delegated to various Board Committees to
ensure efficient discharge of responsibilities.
These Committees are the Executive
Committee, Audit Committee, Compensation
Committee and Nominating Committee.
The Board meetings are scheduled quarterly for
the purpose of, inter alia, approving the release
of the Group’s financial results. Adhoc and non-
scheduled Board meetings are also held, apart
from the scheduled Board meetings, whenever
the Board’s guidance or approval is required for
specific activities of the Company and/or to
provide important business updates.
Comply or not? Explain.
From the company’s disclosure, there are
several points clearly indicates that the
company is in compliance with the code of
best practice.
The first compliance identified is there is clear
accepted division of responsibilities among
the Board. From the disclosures we learned
that the responsibilities divided to 4
Committee; Executive, Audit, Compensation
and Nominating Committee.
By the fact that the delegation also
considered experiences and appropriate skills
and each Chairman of the Committee is an
independent director, added the certainty
that the risk of one individual have unlimited
power of decision can be eliminated.
The next compliance identified is the Board
did meet regularly to rule and monitor the
Company’s operation. The meeting held for
each Committee as well for all Board of
Directors.
The meeting held for Audit, Nominating and
Compensation Committee during the year
were four (4) times, three (3) times and three
(3) times respectively. Where the Board
meeting held in five (5) times during the year.
d. Should include non-executive directors. The Board comprises of seven Directors with a
majority of six Nonexecutive Directors and one
Executive Director. Three of the Non-executive
Directors are independent.
In related disclosures, there is also other
compliance evidence identified; the Board
has a formal schedule of matters specifically
reserved for determine the decision
regarding Company’s operation. Proven that
the Board indeed direct and control the
Company.
The meetings are well scheduled in advance
through consultation with the Board
members and it is legally permitted that the
Board are able to attend the meeting through
video conferencing or by teleconferencing.
These matters indicate the strong willingness
to gather all the Board members in the
meeting in order to have discretions from all
Board members which would result a better
decision.
Six (6) members of the Board are the non-
Executive directors, whose role is to provide
unbiased and independent views as well as to
provide advice and judgment to take care of
the interest of the Company, shareholders,
employees and customers.
One (1) member of the non-executive
directors is the director of the parent
Company, Mercator International Pte. Ltd.
And the two (2) others are Executive
Chairman and Managing Director
respectively, of the Company’s ultimate
parent Mercator Lines Limited, India.

e. Should have an access to the advice and
services of the Company Secretary.
f. Should be an agreed procedure for
directors to take independent
professional advice.
The Board members have unrestricted,
independent access to the Company’s CEO,
senior management, the Company Secretary
and the Internal and External Auditors via
telephone,
e-mail and personal meetings.
Board members are aware that they can take
professional advice, if necessary.
This information able to describe their
expertise to perform their roles and also
shown the calibre of the non-executive
directors is suffice.
With the number of the non-Executive
directors and its sufficient calibre, it is
possible to be concluded another Company’s
compliance of the code of best practice.
In addition, the independency of the said
three (3) directors was taken into care.
Annually, each Director is required to submit
a Confirmation of Independence Form based
on the guidelines provided in the Code and as
per the additional factors governing the
independence under the best practices and
guidelines provided in the ACGC Guidebook.
For FY2011, Nominating Committee has
determined that three Directors are
independent. They are Mr Huang Yuan
Chiang, Mr John Walter Sinders Jr. and Mr
Arul Chandran.
The compliance identified from the related
disclosures is that the Board have access to
the advice and services of the Company
Secretary, who is responsible to the Board for
ensuring the
Board procedures are followed and that
applicable rules and regulation are complied
with.
One of the Company Secretaries attends all

Non-Executive Directors
a. Should bring an independent judgment to
bear on issues of strategy, performance,
resources, key appointments and
standard of conduct.
b. Majority should be independent of
management and the Company.
Three of the Non-executive Directors are
independent.
The criterion of independence is based on the
definition given by the Code.
Board and Committee meetings and prepares
the minutes of the meetings. The
appointment and removal of the Company
Secretaries are subject to approval of the
Board.
Before the meeting the Board members are
provided with complete, accurate and
adequate management information.
All the operational and financial reports of
the Group’s performance and prospects
including disclosure documents are furnishes
timely by the Management. By the agenda for
the Board and Committee Meetings are sent
to the Board in advance, the Board was able
to learn the information before the meeting
held and have sufficient time to take
professional advice.
Point (a) and point (b); comply.
Given the fact that the three (3) non-
executive directors were not independent, it
and the other three were independent (refer
to point (d) above), it is quite fair to conclude
that the non executive directors able to give
independent judgment for the Company.
The factor that supports this conclusion is the
numbers of the independent directors, with
three (3) independent directors; it is believed

c. Should be appointed for specified terms
and re-appointment should not be
automatic.
d. Should be selected through a formal
process.
The Company has a formal and transparent
process for the appointment and
reappointment of Directors through the
recommendations of Nominating Committee.
that these directors are able to balance the
non-independent directors in giving views,
judgment or decision.
Even though the independent directors
number is the same with the non-
independent directors, which means that the
independent directors is not majority, but the
equal number believed to balance the
decisions making process in the views that in
decision making process the independent
judgment and views will be the equal
numbers with the possibly non-independent
judgment . This will be more or less influence
the decision taken.
The two points also considered complied by
the Company.
Cited the disclosures, it was states that
according to the Articles of Association of the
Company, at each Annual General Meeting
(“AGM”) one-third of the Directors retire and
are eligible for re-appointment.
With further disclose that one director was
retire and subject to re-election and one of
the director was subject to re-appointment, it
was clear that the non-executive director was
appointed for specified terms and not
automatically re-appointed.
All the procedures regarding term and re-
appointment were ruled in the Companies

Executive Directors
a. Their services contracts should not
exceed three years without shareholders’
approval.
b. Full and clear disclosures of directors’
total remunerations and those of the
chairman and highest-paid UK directors.
Mr. Shalabh Mital appointed on August 18,
2005.
Mr Shalabh Mittal and Mr John Walter
Sinders Jr. shall retire from offi ce by rotation,
being one-third and longest in offi ce and
submit themselves to re-election at the
Company’s forthcoming AGM, to be held on
July 28, 2011.
Page 29-30 of the annual report discloses the
full and clear directors’ remunerations.
Act. It means that the selection process
through a formal process.
In addition to that, the Nominating
Committee’s chairman is independent, this
should add a positive compliance views
regarding the appointment of the non
executive directors.
From the information of the date of
appointment it was clear that the executive
director was appointed for over than three
years.
Since the Articles of Association of the
Company stated that at each Annual General
Meeting (“AGM”) one-third of the Directors
retire and are eligible for re-appointment.
And further disclose that the executive
director was subject to re-elected in the next
AGM, it is clear from the process explained,
that even though the services contract of the
executive directors is exceeding three years
but it is approved by the shareholder in the
AGM.
This point is considered partially complied by
the Company.
From the disclosure it was clear that the
remuneration of the directors and the
chairman was disclose properly.

c. Executive director’s pay should be subject
to recommendation of a remuneration
committee.
Reporting and Controls
a. Board’s duty to present a balanced and
understandable assessment of the
Company’s position.
b. Ensure the objectivity and professional
relationship with the auditors.
Compensation Committee has a written Term
of Reference that describes the responsibilities
of the members. The principal duties of
Compensation Committee include:
To recommend to the Board in consultation
with the Chairman, a comprehensive
remuneration policy, framework and guidelines
for remunerating members of the Board and
Key Managerial Personnel, deciding specific
remuneration packages for each of the
Executive Directors and the CEO.
The Board provides a balanced assessment of
the Company’s performance, its position and
prospects to the shareholders and investors
through release of the Company’s quarterly
and full year financial results.
the Audit Committee also meets the
External Auditors and the Internal Auditors
with and without the presence of management.
However there is no sufficient disclosure
about pension contributions and explanation
about performance measurement.
The Compensation Committee comprises of
four Non-executive Directors, which three of
them are independent.
From the disclosures, it can be concluded that
the executive director’s remuneration is
recommended by the remuneration
committee.
The above explanation, sufficient to support
to state that the Company complied this
point of code of best practice.
With the quarterly financial reports available
for investors in the SGX and the Company’s
website, it is proven that the board did
provides a balanced assessment of the
Company’s performance, its position and
prospects to the shareholders and investors.
The meetings with the auditor without
management presence substantially
represents the objective relationship with the
auditors, since in this kind of meeting, the
committee can obtain full and transparent
information about all relevant matters

c. Board should establish an audit
committee of at least 3 non-executive
directors.
d. The directors should explain their
responsibility for preparing accounts.
e. Should report on the effectiveness of the
Company’s system of internal control.
The Audit Committee comprises of the
following members, all of whom are Non-
executive Directors and the majority of whom,
including the Chairman are independent.
Page 41 of the annual report is the director
statement.
Audit Committee reviews annually, the
adequacy of the Company’s internal controls,
operational and compliance control and risk
management policies and systems established
by the management.
without any interference. This would
maintained professional relationship with the
auditors.
In addition the internal audit also submits
reports directly to the committee, this line
reporting is important to maintain the clear
and transparent views of the report.
In the section ‘The Board of Directors’ there is
explanation that the Company did established
audit committee. From the disclosures, it is
noted that all the members of the audit
committee (three (3) members) were non-
executive directors.
Even though there is no explicit statement in
the director statement stated the directors’
responsibility for preparing accounts, but in
the message implicitly stated in the all over
governance report. In order to that, we
choose to believe that the Company in this
point complies with the code of best practice.
The Company did established systems to
ensure the effectiveness of the internal
control which was tested by the internal audit
and the result reported to the committee.
During the year, the Company had
outsourced to perform internal audit function
under review. The scope of Internal Audit is
reasonably comprehensive to enable the
effective and regular review of all
 operational, financial and related activities.
The internal audit coverage extends to areas
viz., Enterprise Risk Assessment, Fleet Marine
maintenance, Vendor management, MIS and
Audit on Compliance of various Statutory
regulations.

The mentioned fact can be considered as the

real commitment of the committee to assess
and report the effectiveness of internal
controls.

f. Should report that the business is a going The financial statements have been prepared The management has prepared the financial
concern. on a going concern basis. statements on a going concern basis, and the
auditor did not have opinion if it was wrong.
So we can conclude that the management
has prepared the financial statements on a
going concern basis.

The role of auditors

a. Auditor should examine interim No information disclose about this matter. There is no sufficient information to conclude
statements. the Company’s compliance with the code of
best practice in this point.

b. Disclosure of auditors’ non audit fee Page 81 of the annual report stated that there
are no non-audit fees paid to the auditors of It is clear that the Company in this point
the Company. complies with the code of best practice.

c. Rotating of audit partners. The audit partner was appointed on October There is no sufficient information to conclude
2007. the Company’s compliance with the code of
best practice in this point.

d. Auditors should report on directors’ No information disclose about this matter. In actual as stated in the Independent Auditor
 statement on the effectiveness of their report, the auditor considers internal control
system of internal controls. relevant to the entity’s preparation of
financial statements that give a true and fair
view in order to design audit procedures that
are appropriate in the circumstances.

However, since the report not available in

this annual report, then there is no sufficient
information to conclude the Company’s
compliance with the code of best practice in
this point.

e. Auditors should be given statutory No information disclose about this matter. As this matter is the wide-country rules, we
protection to report suspicion of fraud believed that this matter was regulated in
freely. others legal document and should be
assessed separately.

f. Accounting profession should continue its No information disclose about this matter. We believed that the compliance about this
efforts to improve its standards and matter has to be assessed separately from
procedures – strengthening the value and this assignment as this is out of the scope.
independence of auditors.