Governance:

The Board of Directors is accountable to the shareholders for the good corporate governance of the Group. China Shoto operates in an effective and efficient way, with integrity and with due regard for the interests of all stakeholders. China Shoto follows guidelines for corporate governance published by the Quoted Companies Alliance.

The Board of China Shoto is responsible for the success of the Group. The Board's role is to establish the strategic objectives and policies; oversee all aspects of the finances; continuously review performance and controls; manage risk; decide on key business transactions and manage the interests of stakeholder groups. The full Board meets at least four times per year and together with the Audit and Remuneration Committees, deals with all important aspects of the Group's affairs.
The Directors' varied backgrounds and experience give China Shoto a good mix of the knowledge and expertise necessary to manage the business effectively. Directors' respective responsibilities are shown in the following table.
Director                                   Title                                                             Board Committees
                                                                                               Audit     Remuneration    
Yang Shanji     Executive Director
Qian Shangao  Executive Director                                                   √
Zhou Yuezhang  Executive Director                                                   
Zhou Ping      Executive Director
Zhou Weigang  Finance Director
Bernard Asher   Non Executive Director                             √               √
Peter Crystal    Non Executive Director                              √               √
Li Shuang      Non Executive Director                                √

The Board meets at least four times per year and together with the Audit and Remuneration Committees, deals with all important aspects of the Group's affairs. In accordance with the Articles of Association, one third of the directors in office retire by rotation and can stand for re-election by the shareholders at each AGM. Recommendations for appointments to the Board are made by the Board as a whole after due evaluation.
The non-executive directors don’t have interests in the ordinary shares or share options of the Company. The following committees deal with the Group's affairs and provide experienced and objective advice to the Board.

The Audit Committee, which is chaired by Li Shuang and includes Bernard Asher and Peter Crystal, comprises non-executive directors only. It meets at least once annually
 

The Audit Committee receives and reviews reports from management and the Group’s auditors relating to the interim and annual financial statements, and the accounting and internal control systems in use throughout the Group. The Audit Committee will have unrestricted access to the Group’s auditors. The Audit Committee advises the Board on the appointment of external auditors and on their remuneration, and discusses the nature and scope of the audit with the external auditors.

A formal statement of independence is received from the external auditors each year.

The Remuneration Committee is chaired by Peter Crystal and includes Bernard Asher and Qian Shangao. It meets at least once annually.

It is responsible for reviewing the scale and structure of the executive directors’ and senior employees’ remuneration and the terms of their service or employment contracts, including share option schemes and bonus arrangements. The remuneration and terms and conditions of the non-executive directors will be set by the entire Board.

The Board recognises that it is accountable to shareholders for the performance and activities of the Group. China Shoto communicates with its shareholders principally through its web site and the Annual Report. Shareholders can also sign up to receive news releases directly from the Company by email.
Annual General Meetings of the Company give the directors the opportunity to report to shareholders on current and proposed operations and enable shareholders to express their views on the Group's business activities.

The Directors are responsible for establishing and maintaining the Group's internal controls and for reviewing their effectiveness. Financial, operational and compliance procedures are designed to safeguard the Group's assets and are regularly reviewed by the Board. The internal control system is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, providing reasonable, if not absolute, assurance against material mis-statement or loss.