Independence
A majority of the Board shall consist of independent directors. The Board defines an "independent" director in accordance with the SHENZHEN STOCK EXCHANGE requirements for independent directors. Because it is not possible to anticipate or explicitly provide for all potential conflicts of interest that may affect independence, the Board (upon recommendation of the Committee) is also responsible for making an affirmative determination that each independent director has no other material relationship with the Company or its affiliates or any executive officer of Sinocomms Systems or his or her affiliates. A relationship will be considered "material" if in the judgment of the Board it would interfere with the director's independent judgment. Independence determinations will be made on an annual basis (prior to including director nominees in Sinocomms' annual proxy statement) and, if an individual joins the Board between Sinocomms' annual meetings, at such time.
The Committee is also responsible for reviewing any recommendations of the Audit Committee with respect to financial literacy criteria and the definition of "financial expert" and for making recommendations on such issues to the Board.
Simultaneous Service on Other Boards
Absent prior approval of the Committee, no independent director may serve on the boards of more than four other public companies and no independent director who also serves as a CEO or in an equivalent position or employee director may serve on the boards of more than two other public companies.
Every director should seek the consent of the Committee (through the Chief Executive Officer) and confirm the absence of any actual or potential conflict prior to accepting any invitation to serve on any for-profit board.
Director Retirement Policy
Independent directors may not stand for re-election to the Board after reaching age 72.
The Board does not believe that directors who retire or change from the position they held when they came on the Board should necessarily leave the Board. There should, however, be an opportunity for the Committee to review the continued appropriateness of Board membership under these circumstances.
Conflicts of Interest
If an actual or potential conflict of interest develops because of a change in the business of the Company or its affiliates, or in a director's circumstances (for example, significant and ongoing competition between the Company and a business with which the director is affiliated), the director should report the matter to the Committee for evaluation and appropriate resolution.
If a director has a personal interest in a matter before the Board, the director shall disclose the interest to the full Board, shall recuse himself or herself from participation in the discussion, and shall not vote on the matter.
Policies
The Committee is charged with considering and recommending to the Board appropriate corporate governance policies for the Company.