Introduction
The Company is fully committed to good corporate governance practices and fair dealings in all its activities. It subscribes fully to the principles and best practices promoted by the Malaysian Code of Corporate Governance (“the Code”).
This statement describes the practices that the Company had taken with respect to each of the key principles and the extent of its compliance with the Code during the financial year. The Board
The Board of Directors is elected by the shareholders and holds the ultimate decision making authority, except for matters reserved by law or by its articles of association to its shareholders. Formal processes and structures are in place to assist the Board in carrying out its responsibilities and its decisions are normally taken as a whole.
The Board oversees the business affairs of the Group. It approves strategic plans, key business initiatives as well as major investment and funding decisions. It also reviews financial performance, determines compensation and succession plans for senior management and ensures adequate internal controls. These actions are carried out directly by the Board and through Board Committees. In August 2010, the Group Executive Committee (“The Group Exco”) was formed to assist the Board in formulating strategic direction and initiatives to deliver long term shareholder value creation, oversee management performance and providing direction and guidance to management. The Group Exco comprises seven non-executive board members.
Also assisting the Board are three board committees: the Audit, Nominating and Remuneration Committees. On a day-to-day basis, the Board delegates the conduct of operating matters to its Chief Executive Officer (“CEO”), who is also a member of the Board.
1) Composition and Board Balance
The Company’s Articles of Association currently provides for a board composed of a maximum of 11 directors. The present Board comprises 11 directors, whose varied skills and vast experience are relevant to the Group’s business operations.
The mix of directors on the Board is broadly balanced to reflect the interests of major shareholders, management and minority shareholders. Of the 11 directors, 6 are nominees of the two largest shareholders and four are independent. The 11th member is the CEO. With the exception of the CEO, all directors are non-executive directors.
An independent non-executive Chairman heads the Board. Mr. Leslie Struys is the senior independent director who has been appointed to act as an additional channel of communication for corporate governance matters within the Company.
2) Board Processes and Committee Activities
During the financial year 2011, the Board held seven meetings, while the relevant Committees had three to five meetings.
The Nominating Committee is tasked with reviewing recommendations for Board appointments and Board Committees. Formed in May 2001, the Nominating Committee comprises four non-executive directors, three of whom are independent.
Proposed changes in the composition of the main Board, committees and subsidiary boards were reviewed by the Nominating Committee prior to the submission of recommendations to the Board. The Norminating Committee also reviewed and kept abreast of developments in the area of board performance assessment.
The Remuneration Committee, formed in May 2001, comprises four non-executive board members. Responsible for reviewing succession planning as well as remuneration policies and practices of the Group, this Committee also supervises and reviews the allocation of share options to employees under the Group’s ESOS scheme.
3) Access to information
A formal agenda issued by the Company Secretary in consultation with the Chairman and the CEO precedes all scheduled meetings during the year. The agenda for each meeting is also accompanied by the minutes of preceding meetings of the Board and Board Committees, reports on group financial performance, presentations by subsidiaries on their performance, industry trends, business plans including major capital expenditure and proposals, quarterly result announcements and other relevant information.
Additionally, directors are encouraged to approach management to seek clarification or obtain further information through the CEO in furtherance of their duties, including appropriate external professional consultation. All directors have direct access to the advice and services of the Company Secretaries in discharging their duties.
4) Appointments and Re-elections
Procedures relating to the appointment and re-election of directors are contained in the Company’s Articles of Association. New directors are subject to election at the Annual General Meeting (“AGM”), following their first appointment. In addition, one-third of the directors are required by rotation to submit themselves for re-election by shareholders at every AGM of the Company.
Remuneration
The Remuneration Committee is entrusted with the role of determining and recommending suitable policies in respect of salary packages for executive directors and the Group’s senior executives. The current salary packages comprise a combination of basic salary and variable performance incentives to attract and retain talent in a competitive environment. There was no change in the remuneration policies and practices during the year.
The remuneration for non-executive directors’ is based on a standard fixed fee, with the Chairman receiving a double amount in recognition of his additional responsibilities. An additional fee is also paid to non-executive directors sitting on Board committees, and where applicable, the boards of subsidiaries that are not wholly owned.
Fees payable to the Company’s directors are subject to yearly approval by shareholders at the Company’s AGM.
Directors' Training
In compliance with Bursa Malaysia Listing Requirements, all members of the Board have attended the required training programmes prescribed by Bursa Malaysia Securities Berhad.
From time to time, the directors attend training to keep abreast with current developments as well as the new statutory and regulatory requirements. In addition to this, the Group, in collaboration with external training providers, also organises internal training programmes for the directors.
Shareholder and Investor Relations
The Board recognises the need for and the importance of effective communication with shareholders and the investment community. The AGM is especially important for individual shareholders as it provides the main forum for direct dialogue with the Board. The 49th AGM of the Company was held on 19 January 2011 at Sime Darby Convention Centre. The Notice of Meeting attached to the Annual Report was distributed to the shareholders.
During the year, results briefings were conducted for investment analysts and the media. Two such briefings were held during the year. Apart from publishing the results in the print media, Bursa Malaysia Securities Berhad also provides for the Company to electronically publish all its announcements, including the full version of its quarterly results and Annual Reports. These can be accessed online through Bursa Malaysia’s Internet web-site at [http://announcements.bursamalaysia.com.my].
Accountability and Audit
1) Financial Reports
In reviewing all the published annual and quarterly financial statements during the year, the directors took due care and reasonable steps to ensure that the requirements of accounting standards and relevant regulations were fully met. Their presentation reflects a balanced assessment of the Group’s performance and prospects.
2) Internal Controls and Risk Management
The directors acknowledge their responsibility for the Group’s system of internal controls, which is designed to protect shareholders’ investments and the assets entrusted under its custody. The system was intended to provide reasonable (but not absolute) assurance against material financial mis-statement or loss. It includes formal policies and operating procedures in relation to the safeguarding of assets, maintenance of proper accounting records, reliability of financial information, compliance with applicable legislation, regulation and best practice. It also includes the identification and containment of business risks.
The Group has well-established internal audit and compliance functions. Formal procedures were in place for both internal and external auditors to report independently on their findings and make the appropriate recommendations to the Management and the Audit Committee.
3) Relationship with external auditors
The external auditors attended all the scheduled meetings of the Audit Committee during the year. These quarterly meetings enabled the exchange of views on issues requiring attention. The role of the auditors and their participation during the year are stated in the report of the Audit Committee.
4) Compliance with the Code
The Company has complied with the Malaysian Code and observed its best practices throughout the year.