This Board Charter sets out composition, roles and responsibilities and processes of the Board of Directors ("Board"). It provides an overview of how the Board leads by strategic guidance and effective oversight of management. It also sets out the delegation of authority by the Board to various committees to ensure the Board members in performing their responsibilities on behalf of the Group would act in the best interests of all stakeholders.
In addition, this Board Charter also outlines the core principles of corporate governance to which the Company ascribes.
2.1 Board Composition
The composition of the Board shall be determined using the following principles:
- The Board composition must comply with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities") ("Listing Requirements"). Hence, the Company must ensure that at least 2 directors or 1/3 of the Board, whichever is the higher, are independent directors. If the number of directors of the Company is not 3 or a multiple of 3, then the number nearest to 1/3 must apply.
- The positions of Chairman and Group Managing Director / Group Chief Executive are required to be held by separate persons to ensure balance of power and authority and to maintain effective supervision and accountability of the Board and management.
- The Board considers that it should consist of qualified individuals with broad base of industry knowledge, experience and technical skill necessary to govern the Company and the Group. The Board will refer to the criteria for appointment of new directors reviewed and recommended by the Nomination Committee.
2.2 Board Independence
The roles of the Independent Non-Executive Directors are particularly important in bringing independent judgement and ensuring all issues proposed by the executive management are fully discussed and examined to take into account the long term interests, not only of the shareholders, but also other stakeholders such as the employees, customers and business associates.
In determining the independence, the Board will consider the definition of “independent director” defined under Paragraph 1.01 of the Listing Requirements and assess the corporate governance practices in the light of the changing circumstances facing the Company. As such, the Board chooses not to take a prescriptive approach to independence, but to consider the independence of each Director, on a case by case basis, by taking into consideration the following factors:
- The suitability and ability of an Independent Non-Executive Director to carry out his roles and responsibilities effectively should be based on his calibre, qualifications, experience, personal qualities and knowledge of the Group's business operation and activities.
- The ability of an Independent Non-Executive Director must be independent of management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interest of the Company.
The Nomination Committee reviews the independence of each Director on an on-going basis, in light of interests disclosed to the Board, and recommends the same to the Board for consideration.
2.3 Appointment and re-election of Directors
With in-depth knowledge of the Group’s business operations and activities, the Directors shall be in position to contribute meaningfully to the Group’s conduct of business. The Board values such knowledge and experience in addition to other qualities and will exercise discretion in the review of Board composition and appointments.
The Board is responsible in determining the appropriate size of the Board. Appointments of Directors to the Board shall be made and carried out based on the recommendation of the Nomination Committee. In making this recommendation, the Nomination Committee will consider the required mix of skills, experience, gender diversity and other qualities, where appropriate. The nomination, assessment and evaluation processes on the proposed candidates for a director or directors are set out in Appendix II in this Board Charter.
In accordance with the Articles of Association of the Company, 1/3 of the Directors for the time being, or, if their number is not 3 or a multiple of 3, then the number nearest to 1/3, shall retire from office at each annual general meeting provided always that all Directors shall retire from office once at least in every 3 years but shall be eligible for re-election. Any new or additional director appointed by the Board during the year shall hold office until the next annual general meeting and shall then be eligible for re-election. The election of each Director is voted separately.
Pursuant to Section 129 of the Companies Act, 1965, Directors who are above the age of 70 years are required to seek re-appointment from shareholders at each annual general meeting and to hold office until the conclusion of the next annual general meeting.
2.4 New Directorship
The Group values the experience Board members bring from the board of other companies on which they serve, but recognizes that those boards may also present demands on a Director’s time and availability. All Board members should notify the Chairman of the Board before accepting any new directorship outside the Group.
3.1 Responsibilities of the Board
The Board has the overall responsibility for the business affairs of the Group. It devises and approves strategic plans, business development initiatives, providing direction and guidance to the management in meeting the Group’s short and long term goals. The Board assumes, amongst others, the following duties and responsibilities:
- objectively reviewing, adopting and monitoring the implementation of the Group’s strategic plans as proposed by the Management. The strategic plan includes promotes sustainability i.e. achieving a satisfactory balance on bottom-line growth, safeguarding the welfare of people and community within a harmonious state of the environment;
- overseeing the conduct of the Group’s business to ensure it is being properly managed. Also, overseeing and evaluating corporate behaviour and conduct of business of the Group;
- identifying principal risks and ensuring implementation of appropriate internal controls and mitigation measures to achieve a proper balance between risks incurred and potential returns to the shareholders;
- ensuring there is orderly succession of senior management positions of sufficient caliber. The Board delegates to the Nomination and Remuneration Committees to review succession plans and remuneration packages for the Directors. The Board also ensures there are appropriate policies for training, appointment and performance monitoring of management positions;
- overseeing the development and implementation of shareholder communications policy; and
- reviewing the adequacy and the effectiveness of the management information and risk management and internal control system.
3.2 Responsibilities of Chairman
The Chairman is elected by the Board members to provide leadership at Board level and represents the Board to the shareholders and other stakeholders. The Chairman will act independently in the best interest of the Group and is responsible for ensuring Board effectiveness and standard of conduct.
The responsibilities of the Chairman, amongst others, are as follows:
- to facilitate the effective contribution of all Directors at Board meetings and ensure the appropriate level of interaction among Board members and senior management;
- to lead the Board and ensure a balance composition of skills, knowledge and experience within the Board members;
- to promote constructive and respectful relations between Directors and senior management; and
- to chair all general meetings with the shareholders and ensure effective communication with shareholders and relevant stakeholders.
The Board has identified the Chairman as the Senior Independent Non-Executive Director to whom concerns of shareholders and other stakeholders may be conveyed.
3.3 Responsibilities of Group Managing Director / Group Chief Executive
The Group Managing Director / Group Chief Executive together with Executive Directors have overall responsibilities on the management of the Group’s businesses, policies and day-to-day operations.
The Group Managing Director / Group Chief Executive provides executive leadership and is accountable to the Board for implementation of strategies, objectives and decision of the Board within the framework of delegated authorities, values and policies.
The responsibilities of the Group Managing Director / Group Chief Executive, amongst others, are as follows:
- to develop and recommend to the Board the Group’s vision and long-term strategies, annual business plans, budgets and actions plans that reflect current business environment and trends and implementation thereof;
- to supervise and ensure an effective management team and structure, management development program and succession plans contributing to the success of the Group;
- to assess all business opportunities which are potentially beneficial to the Group; and
- to serve as chief spokesperson for the Group.
3.4 Responsibilities of Board Committees
The Board has set up the following Board Committees with different functions delegated to assist the Board in carrying out its duties and responsibilities:
- Audit Committee;
- Nomination Committee;
- Remuneration Committee; and
- Option Committee.
These Board Committees do not make decision on behalf of the Board. Each committee will have the authority to examine particular issues within its terms of reference and make the necessary recommendations to the Board for its consideration and decision making.
The Terms of Reference of the Board Committees set out in Appendices I to III respectively are reviewed as and when required.
As a matter of principle, Board Committees have access to the appropriate external and professional advice needed to assist them in fulfilling their roles.
3.5 Board Meetings
The Board shall conduct at least 4 scheduled meetings annually. Additional meetings will be held on an ad-hoc basis to deliberate on matters which required Board decision, approval, directions and attention.
A full agenda of meeting and all Board papers would be distributed in advance to ensure all Directors are well informed and have the opportunity to seek additional information, and are able to obtain further clarification from the Company Secretary or the senior management, should such a need arise. The service of other senior management or external consultants will be arranged to brief and assist the Directors whenever necessary so as to enable the Directors to make independent and informed decisions.
During Board meetings, the Non-Executive Directors will be briefed on, amongst others, major operational, financial and corporate issues, activities and performance of projects, divisional performance, business outlook, major acquisition and disposal of assets including investments and changes in the requirements of regulatory bodies.
The Directors will also be notified of any corporate announcements released to Bursa Securities. They will also be notified of the prescribed requirements in dealing with the securities of the Company during closed periods as stated in the Listing Requirements.
The Chairman of the Board Committee including Audit Committee will inform the Directors at Board meetings, of any salient matters noted by the Board committee and which require the Board’s notice, direction or decision.
In accordance with the Listing Requirements, all Directors shall comply with the minimum 50% Board meetings’ attendance.
3.6 Financial Reporting
The Directors are responsible for ensuring that financial statements are drawn up in accordance with the Companies Act 1965 and the applicable approved financial reporting standards, so as to give a true and fair view of the state of affairs of the Group and the Company.
In presenting the annual audited financial statements and quarterly announcements of unaudited consolidated financial results to shareholders, the Board uses appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates to present a true and fair, a balanced and understandable assessment of the Group’s financial position and prospects. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.
3.7 Directors' Remuneration
The performance of the Directors is measured by the Directors’ contribution and commitment to both the Board and the Company.
The Remuneration Committee shall review the remuneration package periodically and make recommendation to the Board for approval.
The remuneration of Executive Directors and senior management are structured to ensure that the compensation and benefits commensurate with the level of the responsibilities, as well as taking into consideration the Company’s performance relative to the industry. Survey data on the remuneration practices of comparable companies are to be taken into consideration in determining the remuneration package.
The remuneration package of Non-Executive Directors should be determined by the Board as a whole subject to shareholders’ approval.
3.8 Directors’ Training
The Board shall continue to evaluate and determine the training needs of its Directors on an ongoing basis.
In addition to the Mandatory Accreditation Program as required by Bursa Securities, the Board shall continue to update their knowledge and enhance their skills through appropriate education programmes. Continuous education is vital for the Board to gain insight into the state of the economy, changing commercial risks, technological advances in the Company’s core businesses, latest regulatory requirements and management strategies. This will enable Directors to equip themselves with the relevant knowledge to discharge their responsibilities and duties more effectively.
The appointment or removal of Company Secretary or Secretaries of the Board shall be the prerogative of the Board as a whole. The Secretary appointed should be suitably qualified and competent in order to support the Board in carrying out its roles and responsibilities. The Company Secretary shall ensure Board proceedings are followed in compliance with relevant laws, regulations and requirements.
The Company Secretary attends all meetings of the Board and records the proceedings thereat. All minutes of the Board are signed by the Chairman as a true and correct record and are then to be entered into the minutes book and will be made available for inspection by any Director.
The Board papers will be collated and circulated to the Directors by the Company Secretary and the Company Secretary will supervise the filing and storage of all board papers.
5.1 Code of Conduct
To promote productivity and efficiency, and help to ensure a pleasant, safe, cooperative and productive working environment, the Company and its subsidiaries (“the Group”) has adopted a Code of Conduct that is included in the Employee Handbook. This handbook is freely accessible on the Group’s shared folder in emailing system. The Code of Conduct lists down examples of unacceptable conduct or performance in areas such as indiscipline, attendance and punctuality, use of property and personal actions and appearance.
5.2 Corporate Disclosure Policies and Procedures
The Board does not formalize a corporate disclosure policies and procedures which would apply to the Company and the Group.
The disclosures made by the Company and the Group to Bursa Securities, shareholders, investors and media are handled by relevant personnel including Company Secretary and/or the Corporate Communications and Investor Relations within the prescribed disclosure requirements under the Listing Requirements and guided by the Corporate Disclosure Guide issued by Bursa Securities.
Such disclosures would only be released to Bursa Securities, shareholders, investors and media after having reviewed and approved by senior management and/or Executive Directors and/or Group Managing Director/Group Chief Executive (where applicable).
5.3 Boardroom Diversity Policy
The Board members of the Company reflects that the Board recognizes the value of a woman member of the Board.
The Board has delegated the power to the Nomination Committee through its Terms of Reference to recommend to the Board the appropriate Board balance (including gender diversity) and size of non-executive participation.
The Nomination Committee abides by Paragraph 2.20A of the Listing Requirements when it assesses the candidate of Directors to ensure the candidate has the character, experience, integrity, competence and time to effectively discharge his/her role as a Director.
5.4 Sustainability Policy
The Board has formalised the Company’s strategies on promoting sustainability in the conduct of the Group’s businesses.
Sustainability efforts and initiatives are embedded in the day-to-day operational activities or are organized via special programs for specific sustainability cause. By achieving a satisfactory balance on bottom-line growth, welfare safeguard of people and community within a harmonious state of the environment, such efforts are intended to benefit the shareholders, investors, operating environment, society, employees, customers, business partners, contractors, suppliers and other stakeholders.
The Sustainability Policy, which is disclosed in the Annual Report, is made available for reference in the Company’s website at http://www.mahsing.com.my.
6.1 Dialogue with Shareholders and Investors
The Board recognises and values the importance of effective and clear communication with its shareholders as well as with its potential investors and the public. It is fully committed to ensuring the highest standards of transparency and accountability in the disclosure of pertinent information relating to the Group.
In this respect, the Company will, through its Corporate Communications and Investor Relations Departments and its active investor relations programme, engage with research analysts, fund managers, shareholders and media to convey the Group’s strategies, performance, products and major developments. The forms of engagements shall include briefing sessions and site visits as well as participation in non-deal investment road shows, one-on-one meetings and press conferences with the media. The Company’s top management which includes the Group Managing Director/ Group Chief Executive and/ or Executive Directors also takes an active role in engaging stakeholders through their participation in the investor relations programme.
Other effective channels of communication employed by the Group includes making timely and informative disclosures in the interim and full year financial results announcements, Annual Report and other announcements to Bursa Securities on relevant transactions undertaken by the Group. The Board believes that timely releases of financial information and updates on other developments are important to enable shareholders and the general public to receive information on the performance and prospects of the Group on a regular basis. Shareholders, investors and members of the public are able to access such announcements on Bursa Securities’ website at www.bursamalaysia.com and other information via the Company’s website at www.mahsing.com.my. The summary of interim results is also published in at least one (1) national newspaper.
Shareholders, investors and members of the public may also forward their queries to the Company by contacting its dedicated investor relations team at Tel: 603-9221 8888, Fax: 603-9222 1288, Email: email@example.com or Jen. Tan Sri Yaacob Bin Mat Zain (R), the Chairman and Senior Independent Non-Executive Director at email: firstname.lastname@example.org.
6.2 Annual General Meeting ("AGM") and Extraordinary General Meeting ("EGM")
The AGM is the principal forum for dialogue with shareholders as it provides shareholders with an opportunity to seek clarification on the Group’s business strategy, performance and major developments. The shareholders may also seek clarification on the Group’s corporate proposals at the EGM concerned.
For the benefit of the shareholders who are present at the AGM and/or EGM, the Directors will present progress and financial performance of the Group, or proposals for which the approvals of shareholders are being sought and response to issues identified by the shareholders.
After the AGM or EGM, press conference is to be conducted to provide the members of the media with opportunities to receive further updates of information about the Group. All this shall be handled within the prescribed disclosure requirements under the Listing Requirements and Corporate Disclosure Guide.
All Directors have access to the advice and services of the Company Secretaries and senior management.
The Directors, whether as a full Board or in their individual capacity, have access to all information within the Group and may seek independent professional advice, where necessary, in the furtherance of their duties and they may do so at the Group’s cost through an agreed procedure determined by the Board.
This Board Charter will be reviewed as and when required and updated in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities.
The Board Charter is made available for reference in the Company’s website at http://www.mahsing.com.my.
TERMS OF REFERENCE OF AUDIT COMMITTEE
The Audit Committee comprises 3 members, all of whom are Independent Non-Executive Directors. One of the Audit Committee members is a member of the Malaysian Institute of Accountants.
Terms of reference of Audit Committee are:
Meetings and Minutes
In assisting the Board to effectively discharge its fiduciary responsibilities for corporate governance, timely and accurate financial reporting and development of sound internal controls, Audit Committee meetings which shall be held not less than 4 times a year will be attended by an Executive Director, representatives from management team and the Group Internal Auditors. The External Auditors are also invited to participate in all Audit Committee meetings.
The Chairman of the Audit Committee would engage on a continuous basis with senior management such as the Group Managing Director/Group Chief Executive and the Executive Directors in order to be kept informed of matters affecting the Group. Attendance of other Directors and employees at any particular Audit Committee meeting will be at the invitation of the Audit Committee.
A quorum shall consist of 2 members and the majority of the members present must be Independent Directors.
The Company Secretary shall be the Secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to the Audit Committee members prior to each meeting.
The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee and circulating them to the Audit Committee members and to the other members of the Board. The Chairman of the Audit Committee shall report key issues discussed at each meeting to the Board.
The Audit Committee is authorised by the Board to investigate any activity within its terms of reference and shall have unrestricted access to both the Internal and External Auditors and to all employees of the Group. The Audit Committee is also authorised by the Board to obtain external legal or other independent professional advice as necessary.
The Audit Committee is also authorised to convene meetings with the External Auditors and Internal Auditors separately, at least 2 times a year without the presence of the executive members of the Board and other employees in order to have unfettered access to information that it may require.
The duties of the Audit Committee shall be as follows:
- Oversee all matters relating to external audit:
Review of systems of internal control and risk management:
- discuss with the External Auditors where necessary, the nature and scope of the audit and ensure co-ordination of audits where more than one audit firms are involved;
- discuss problems and reservations arising from the interim and final audits and any matter the auditors may wish to discuss;
- review with the External Auditors, their evaluation of the system of internal controls, their management letter and management’s response;
- consider the nomination and appointment of the External Auditors as well as the appropriateness of their audit fees as recommended by the management; to commensurate with their experience and resources (both the firm and the persons assigned), the firm's audit engagements, the number and experience of supervisory and professional staff assigned, size and complexity of company being audited;
- assess the suitability and independence of the External Auditors in respect of the provision of non-audit services to the Group and the Company and in accordance with the terms of all relevant professional and regulatory requirements;
- consider any letter of resignation of the External Auditors and any questions of resignation and dismissal; and
- review the level of assistance given by the employees of the Group to the External Auditors.
To review the reports of the respective Risk Management Teams in relation to the adequacy and integrity of the Group’s internal control systems in mitigating significant risks.
Oversee all matters relating to internal audit:
Review of financial statements:
- to review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work;
- to review and approve the internal audit plan;
- to ensure co-ordination of external audit with internal audit;
- to consider major findings of internal audit reviews and management’s response and ensure that appropriate actions are taken on recommendations of the internal audit function;
- to review any assessment of the performance of the staff of the internal audit function;
- to approve any appointment or termination of senior staff member of the internal audit function; and
- to keep itself informed of resignations of internal audit staff members and provide resigning staff member an opportunity to submit his/ her reasons for resigning.
To review the quarterly and year-end financial statements of the Group before submission to the Board, focusing particularly on:
Additional duties and responsibilities:
- any changes in accounting policies and practices;
- significant issues and adjustments arising from audit;
- going concern assumption;
- compliance with the applicable approved accounting standards and regulatory requirements; and
- compliance with the Listing Requirements and other legal requirements.
- to consider any related party transactions and conflict of interest situation that may arise within the Group or the Company including any transaction, procedure or course of conduct that raises questions of management integrity. They are also required to ensure that the Directors report related party transactions annually to shareholders via the Annual Report;
- where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee must promptly report such matter to Bursa Securities; and
- to carry out such other responsibilities, functions or assignments as may be defined jointly by the Audit Committee and the Board from time to time.
TERMS OF REFERENCE OF NOMINATION COMMITTEE
The Nomination Committee comprises 3 members and exclusively of Non-Executive Directors. Majority of its members, including the Chairman, must be Independent Non-Executive Directors.
Terms of reference of Nomination Committee are:
- to consider, in making its recommendation to the Board, candidates for all directorships/board committees, in respect of their character, skills, knowledge, expertise, experience, professionalism, integrity and time commitment; and in the case of Independent Non-Executive Directors, their abilities to discharge such responsibilities/functions as expected from an Independent Non-Executive Director;
- to assist the Board in reviewing on an annual basis the required mix of skills, experience and other qualities of the Directors of the Board/Board Committees;
- to review the Board’s succession plan, in recommendation the appropriate board balance (including gender diversity) and size of non-executive participation;
- to facilitate Board’s induction and training programs in areas which Directors could improve on; and
- to facilitate annual assessment of the effectiveness of the Board as a whole, the performance and contribution of each individual Director and Board Committee member including Independent Non-Executive Directors as well as the Group Managing Director/Group Chief Executive.
The following are the nomination, assessment and evaluation processes on the Directors:
- New Appointment
The Board does not set specific criteria for the assessment and selection of director candidate. However, the consideration would be taken on the need to meet the regulatory requirements such as Companies Act, 1965 and Listing Requirements, the achievement in the candidate personal career, integrity, wisdom, independence of the candidate, ability to make independent and analytical inquiries, ability to work as team to support the Board, possession of the required skill, qualification and expertise that would add value to the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.
The Nomination Committee is responsible for recommending identified candidate to the Board if there is vacancy arises from resignation, retirement or any other reasons or if there is a need to appoint additional director with the required skill or profession to the Board in order to close the competency gap in the Board identified by the Nomination Committee.
Upon receipt of the proposal, the Nomination Committee is responsible for conducting assessment and evaluation on the proposed candidate.
The assessment/evaluation process may include, at the Nomination Committee’s discretion, reviewing the candidate resume, curriculum vitae and other biographical information, confirming the candidate’s qualifications and conducting legal and other background searches as well as formal or informal interview at the Nomination Committee’s discretion. The Nomination Committee would also assess the candidate’s integrity, wisdom, independence, ability to make independent and analytical inquiries, ability to work as team to support the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.
Upon completion of the assessment and evaluation of the proposed candidate, the Nomination Committee would make its recommendation to the Board. Based on the recommendation of the Nomination Committee, the Board would evaluate and decide on the appointment of the proposed candidate.
The Chairman of the Board would then make an invitation or offer to the proposed/potential candidate to join the Board as a director. With the acceptance of the offer/invitation, the candidate would be appointed as director of the Company.
- Annual assessment of existing Directors
The director who is subject to re-election and/or re-appointment at next Annual General Meeting shall be assessed by the Nomination Committee before recommendation is made to the Board and shareholders for the re-election and/or re-appointment. Appropriate assessment and recommendation by the Nomination Committee would be based on the yearly assessment conducted.
- Assessment on independence of Directors
Criteria have been set to assess the independence of candidate for Directors and existing Directors which are in line with the Listing Requirements.
TERMS OF REFERENCE OF REMUNERATION COMMITTEE
The Remuneration Committee comprises 3 members. Majority of its members must consist of Non-Executive Directors.
Terms of reference of Remuneration Committee are:
- to study and periodically review remuneration packages of all Executive Directors; and
- to make recommendations to the Board on all elements of remuneration and terms of employment for Executive Directors.
The remuneration package of Non-Executive Directors, should be determined by the Board as a whole subject to shareholders’ approval. The level of remuneration is determined after considering pay range of comparable companies.
Individual Directors do not participate in the decisions regarding their individual remuneration.
TERMS OF REFERENCE OF OPTION COMMITTEE
The Option Committee comprises 3 members, majority of its members are Independent Non-Executive Directors.
The Option Committee was established to administer the implementation of Employees’ Share Option Scheme (“ESOS”) and is vested with such powers and duties as are conferred upon it by the Board and the By-Laws of the ESOS. In addition, the Option Committee may, for the purpose of administering the ESOS, make rules and regulations or impose terms and conditions which the Option Committee may in its discretion consider to be necessary or desirable for giving full effects to the ESOS.