Corporate Governance
The Board of Directors (the Board) reaffirms its commitment to and supports the recommendations of the Malaysian Code on Corporate Governance (the Code). The Board strives to ensure that the highest standards of corporate governance are practised to protect and enhance shareholders’ value.
During the financial year under review, the Board continued to adhere to the Principles and Best Practices of the Code including the recent revisions.The Board is pleased to report to the shareholders on its application and measures implemented to strengthen its compliance of the Code in the Statement below.
A. BOARD OF DIRECTORS
The Company is managed and led by Board members from diverse professional backgrounds with relevant experiences and expertise in financial, business and other fields.
1. Composition of the Board
As at the date of this Report, the Board consists of ten (10) members comprising:
- Four (4) Executive Directors; and
- Six (6) Non-Executive Directors of whom six (6) are independent.
This composition complies with the Listing Requirements of Bursa Malaysia Securities Berhad, which require that at least two (2) or one third (1/3) of the Board be Independent Directors.
2. Board Balance
To ensure there is balance in the Board, the Independent Non-Executive Directors provide independent views, evaluations as well as advice in Board deliberations and decisions. This ensures that the interests of the Group, shareholders, employees, customers, suppliers and other business associates are safeguarded.
The roles of the Chairman and Group Chief Executive Officer are distinct and held by two different persons. The Chairman is responsible for ensuring Board effectiveness and conduct, whilst the Group Chief Executive Officer has overall responsibility to manage the operations, organisational effectiveness and implementation of policies and decisions.
In line with the recommendations stipulated in Part 2 of the Code, the Board appointed Dato’ Chew Kong Seng @ Chew Kong Huat as the Senior Independent, Non-Executive Director to whom any concerns of shareholders can be conveyed.
3. Board Meetings
To ensure that Directors can plan ahead, Board meetings are scheduled in advance at the beginning of each year. Special Board meetings are convened as and when necessary for the Board to deliberate on matters that require expeditious decisions.
Minutes of all Board meetings are properly recorded in substantial detail and length, including issues discussed in arriving at decisions. This is in line with the Best Practices under Part 2 of the Code.
During the financial year under review, six (6) Board meetings and one (1) Annual General Meeting (AGM) were held. The summary of attendance of the Board is as follows:
|
Name of Director
|
No. of Meetings Attended |
Attendance (%) |
|
Tan Sri Datuk (Dr) Omar bin Abdul Rahman
(Resigned on 1.9.2009)
|
5/5
|
100
|
YB Sen. Dato Sri Prof Dr Mohd Effendi bin Norwawi
(Appointed on 1.9.2009) |
1/1 |
100 |
|
Yeoh Soo Ann
|
5/6
|
83.3
|
|
Efeida binti Mohd Effendi
|
6/6
|
100
|
|
Datuk Ramli bin Shamsudin
|
5/6
|
83.3
|
|
Dato’ Chew Kong Seng @ Chew Kong Huat
|
6/6
|
100
|
|
Datuk Fong Joo Chung
|
6/6
|
100
|
|
Datuk (Dr) Philip Ting Ding Ing
|
6/6
|
100
|
|
Datuk (Dr) Zainal Aznam bin Mohd Yusof
|
5/6
|
83.3
|
Dato' Marcus Kam Kok Fei
(Appointed on 25.9.2009) |
1/1 |
100 |
Datuk Dr Md Hamzah bin Md Kassim
(Appointed on 17.12.2009. No meetings held after 17.12.2009) |
N/A |
N/A |
4. Supply of Information
All Directors are provided with the necessary information relating to the business, operations and financial matters of the Company and the Group.
Board meetings are governed by a structured formal agenda for each meeting and the Company adopts the policy of circulating Board papers relating to the agenda to the Directors ahead of scheduled meetings. This ensures that Directors are given sufficient time to review and appraise the issues to be deliberated at the Board meetings.
All Directors have full and unrestricted access to the senior management within the Group and are entitled to the advice and services of the Company Secretary. Further, Directors may obtain independent professional advice relating to the affairs of the Group where necessary at the Company’s expense, in order for them to discharge their responsibilities. In line with the recommendations of the Code, the Board adopted policies on the procedures to be taken by a Director before he seeks such independent professional advice.
5. Duties and Responsibilities of the Board
The Board has full control over the business and affairs of the Company and the Group. Its primary responsibilities include:-
- To review and approve the business plan and overall strategic directions;
- To review the adequacy and integrity of the Company’s internal control systems and functions;
- To identify and manage principal risks areas affecting the Company; and
- To oversee the overall conduct of the business of the Group’s businesses.
6. Appointment and Re-Election of Directors
The Nomination Committee recommends suitable candidates for appointment to the Board, the appointment of which will be decided upon by the Board as a whole to ensure a balanced mix of experience and expertise amongst its members.
In accordance with the Company’s Articles of Association, one-third of the Directors are required to retire from office at each AGM. Retiring Directors can offer themselves for re-election. Directors who are over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section 129 of the Companies’ Act, 1965.
Details of Directors seeking re-election at the forthcoming AGM are disclosed in the Statement Accompanying the Notice of AGM in this Report.
7. Committees established by the Board
To assist the Board to carry out their duties and responsibilities, the Board has delegated certain functions to the following committees comprising selected members of the Board. Each committee operates within clearly defined terms of reference and makes appropriate recommendations to the Board for decisions on matters deliberated by the committee.
a. Audit Committee
The Audit Committee assists the Board in fulfilling its responsibilities relating to financial reporting of the Company and its subsidiaries.
The members of the Audit Committee are:
|
Name
|
Designation
|
Directorship
|
|
Datuk (Dr) Philip Ting Ding Ing
|
Chairman
|
Independent,
Non-Executive Director
|
|
Dato’ Chew Kong Seng @ Chew Kong Huat
|
Member
|
Senior Independent,
Non-Executive Director
|
|
Datuk (Dr) Zainal Aznam bin Mohd Yusof
|
Member
|
Independent,
Non-Executive Director
|
In line with the revised Part 2 of the Code:
- All members of Audit Committee are Non-Executive Directors with effect from 28 September 2007; and
- Two (2) meetings were held with the external auditors without the presence of Executive board members for the financial year under review.
The terms of reference of Audit Committee and summary of activities for the financial year under review are reported from pages 57 to 59.
b. Nomination Committee
The members of the Nomination Committee are:
|
Name
|
Designation
|
Directorship
|
|
Datuk (Dr) Zainal Aznam bin Mohd Yusof
|
Chairman
|
Independent,
Non-Executive Director
|
|
Datuk Fong Joo Chung
|
Member
|
Independent,
Non-Executive Director
|
|
Datuk (Dr) Philip Ting Ding Ing
|
Member
|
Independent,
Non-Executive Director
|
The Nomination Committee assists the Board in fulfilling the following functions:
- to identify and recommend suitable committee members and candidates for directorships of the Company and its subsidiaries;
- to evaluate and recommend to the Board for approval, the appointment, promotion, transfer, termination and scope of duties of the Group Chief Executive Officer, Executive Directors and Senior Management reporting to the Group Chief Executive Officer;
- to assess the effectiveness of the Board as a whole including its size, composition and contribution of each individual director; and
- to ensure an appropriate framework and plan for succession of the Board and Senior Management.
In line with Part 2 of the Code, the Board implemented an evaluation process, which was carried out by the Nomination Committee for assessing the effectiveness and competencies of the Board as a whole. Such implementation ensures a balanced Board effective in overseeing and providing guidance towards proper management and development of the Company which will, in turn, protect and enhance shareholders' value over the long term.
c. Remuneration Committee
The Remuneration Committee assists the Board in establishing and recommending the remuneration package and policy for the Executive Directors, Group Chief Executive Officer and Senior Management. The Remuneration Committee ensures that a strong link is maintained between the level of remuneration and individual performance based on agreed targets and other relevant factors.
The members of the Remuneration Committee are:
|
Name
|
Designation
|
Directorship
|
|
Datuk Fong Joo Chung
|
Chairman
|
Independent,
Non-Executive Director
|
|
Efeida binti Mohd Effendi
|
Member
|
Non-Independent,
Executive Director
|
|
Dato’ Chew Kong Seng @ Chew Kong Huat
|
Member
|
Senior Independent,
Non-Executive Director
|
8. Directors’ Training
The Directors constantly participate in trainings, seminars and conferences to keep themselves abreast with changes and new development, both in the legal and commercial aspects. Some of the programmes and courses attended by the Directors as well as papers presented by them during the financial year under review include the following:
- Mandatory Accreditation Programme for Directors of Public Listed Companies;
- Revised Code of Corporate Governance;
- Corporate Governance Summit 2009;
- Governance and Sustainability Reporting: Is there a Link?;
- Internal Auditing: Assurance and Value Creation;
- Financial Instruments: Recognition, Measurement, Disclosure & Presentation;
- The National Accountants Conference 2009;
- High Performance Green Buildings, Malaysia;
- Financial Institutions Directors' Education (FIDE) Programme: Modules 1,2 and 4;
- Petronas Group audit Forum;
- Talk on Doing Better Deals;
- Corporate Governance Week organised jointly by Securities Commission and Bursa Malaysia Securities Berhad;
- Briefing on FRS 139 and 112;
- Audit Committee Roundtable Discussion: Economic Downturn and Risk Oversight: Reassessing Risking the Wake of Market Turmoil;
- Briefing on Regional Stock Markets;
- Ernst & Young Tax Seminar; and
- Corporate Responsibility Overview and Identifying CR Risks and Opportunities for Companies.
B. DIRECTORS’ REMUNERATION
Policies and Procedures
The Remuneration Committee recommends the remuneration package for the Executive Directors to the Board for approval. The Executive Directors will abstain from deliberation and voting on decisions in respect of their own remuneration.
Directors are paid yearly fees which are determined by the Board and approved at the AGM. Attendance allowances are also paid to the Non-Executive Directors for each Board or committee meeting they attend.
The aggregate remuneration of Directors for the financial year ended 31 December 2008 are categorised into appropriate components as follows:
|
Description of Payment
|
Executive Directors (RM)
|
Non-Executive Directors (RM)
|
|
Salaries / Allowances & Other Emoluments
|
1,604,402
|
86,000
|
|
Fees
|
80,000
|
268,412
|
|
Defined contribution plan
|
152,700
|
-
|
|
Estimated money value of benefits-in-kind
|
127,090
|
21,250
|
| Total |
1,964,192
|
375,662
|
The number of Directors whose remuneration falls into each successive band is as follows:
|
Range of Remuneration
|
Executive Directors
|
Non-Executive Directors
|
|
Below RM50,000
|
- |
2
|
|
RM50,001 – RM100,000
|
- |
4
|
|
RM150,001 – RM200,000
|
1 |
1
|
|
RM200,001 – RM250,000
|
-
|
- |
|
Above RM350,000
|
3
|
- |
| Total |
4
|
7
|
C. SHAREHOLDERS
Communication with Shareholders and Investors
The Company recognises the importance of effective communication with shareholders, investors and the public in general. In this respect, the Company keeps shareholders, investors and the public informed through announcements, releases of quarterly financial results, annual reports, circulars and general meetings. In line with the recommendations under the Code, a shareholders’ communication policy was implemented to handle the process of handling queries from its shareholders.
Annual General Meeting (AGM)
The AGM is the principal forum for communication with shareholders. The notices of the AGM and annual reports are sent out to shareholders at least twenty-one (21) days before the AGM. Details of any special business are included in an explanatory statement to provide relevant information on matters involved.
D. ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board aims to present a clear, balanced and comprehensive assessment of the Group’s financial position and prospects. The financial statements for each financial year and quarterly results are prepared in accordance with the Companies Act, 1965 and applicable Financial Reporting Standards.
The Board is assisted by the Audit Committee to oversee the Group’s Financial Reporting processes and the accuracy, adequacy and completeness of its financial reporting.
Internal Control
The Board of Directors recognises the pivotal role of a strong internal control system in keeping the Group on course towards its goal of maximising shareholders’ value. To this extent, the need for a strong internal control environment has been ingrained into the culture of the Group by the Board and Management.
The effectiveness of the Group’s system of internal control is reviewed periodically by the Audit Committee. The Group’s Statement on Internal Control is set out on page 61.
Whistle Blowing Policy
As part of its commitment to uphold the highest standards of ethics, integrity and accountability, the Board has during the financial year approved to adopt a Whistle Blowing Policy. This is essentially a mechanism to enable the employees to disclose internally any serious malpractice or misconduct without fear of reprisal. This policy provides a safe and acceptable platform for employees to channel their concerns about illegal, unethical or improper business conduct affecting the Group.
Relationship with External Auditor
Through the Audit Committee, the Group has established a transparent relationship with the external auditor in seeking professional advice and ensuring compliance with the laws and regulations. The external auditor also highlights to the Board of any material deficiency pertaining to the system of internal control and compliance issues of the Group.
