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Board Charter


1.  Introduction and purpose of Board Charter

The Board Charter (the “Charter”) formalizes the various roles and responsibilities of the Board, Board Committees and individual Directors of K. Seng Seng Corporation Berhad (“KSSC” or the “Company”) with the aim of streamlining and enhancing corporate governance practices towards transparency, accountability and integrity in boardroom activities. The release of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) by the Securities Commission in March 2012 and amendments to the Main Market Listing Requirements of Bursa Malaysia (“Listing Requirements”) in November 2012 on corporate governance hasten the formalization of this Board Charter.

The Charter incorporates the Principles and Recommendations (including Commentaries) of the MCCG 2012, as considered appropriate, the Listing Requirements on corporate governance, certain aspects of the Company’s Articles of Association and relevant portions of the Companies Act 1965 insofar as the duties and responsibilities of Directors are concerned. Whilst the Charter serves as a structured guide, especially for new Directors who are on-boarded, it should not be construed as an exhaustive blueprint by Directors of the Company.

2. Interpretation

2.1 In this Charter:

“Board” means the Board of Directors of the Company;

“Board Committees” means committees established by the Board from time to time including Audit Committee and Nominating Committee;

“Bursa Malaysia” means Bursa Malaysia Securities Berhad;

“Business” means the business of the Company and all its subsidiaries;

“Chairman” means the Chairman of the Board and is used in a gender-neutral sense;

“Company Secretary” means the Board secretary or the person normally exercising the functions of a Board secretary;

“Directors” means members of the Board;

“Group” means the Company and all its subsidiaries;

“Independent Director” is defined in accordance with Paragraph 1.01 of the Listing Requirements;

“Listing Requirements” means the Main Market Listing Requirements of Bursa Malaysia;

“Management” means the management personnel of the Group; and

“Shareholders” mean the shareholders of the Company.

3. Role of the Board and its principal responsibilities

3.1 The Board is collectively responsible for the proper stewardship of the Group’s business and the creation of long term shareholder value, whilst taking into account interests of other stakeholders.

3.2 The principal responsibilities of the Board are as follows:

(a) reviewing and adopting a strategic plan, as developed by Management, taking into account the sustainability of the Company’s business, with attention given to the environmental, social and governance aspects of the business;

(b) overseeing the conduct of the Company’s business, including monitoring the performance of Management to determine whether the business is being properly managed;

(c) identifying principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and mitigating measures to manage such risks;

(d) succession planning - ensuring that all candidates appointed to senior management positions are of sufficient calibre and that there are programmes to provide for the orderly succession of senior management;

(e) overseeing the development and implementation of a shareholder communication policy;

(f) reviewing the adequacy and integrity of the Group’s management information and internal control systems, ensuring there is a sound framework of reporting internal controls and regulatory compliance; and

(g) overseeing the Group’s adherence to high standards of conduct/ethics and corporate behaviour, including the Code of Ethics for Directors set out in Appendix A of this Charter.

3.3 In discharging the above responsibilities, Directors are expected to:

(a) be aware of the environment the Group is operating in;

(b) exercise diligence and avoid undeclared conflict of interest situations;

(c) understand their oversight role, including the exercise of independent and objective judgment in decision making;

(d) commit and devote sufficient time and efforts in discharging their duties responsibly;

(e) contribute actively in Board discussion and deliberations of issues by providing sound advice based on the Directors’ experience and specific expertise they bring to the Board; and

(f) attend regular training programmes in order to be apprised of changes in regulatory requirements the Group is subjected to.

3.4 To ensure the direction and control of the Company are in the hands of the Board, a formal schedule of matters reserved for the Board’s deliberation and decision is set out in Appendix B of this Charter.

4 Board structure

4.1 Board balance and composition

4.1.1 The Board shall be helmed by a Chairman, appointed by the Board, and comprise at least two (2) members or one-third (⅓) of the Board, whichever is higher, who are Independent Non-Executive Directors (“IDs”) in accordance with the Listing Requirements.

4.1.2 The tenure of ID shall be for a cumulative term of 9 years since appointment as ID. The ID may continue to serve on the Board beyond the 9-year tenure provided the ID is re-designated as a Non-Independent Director. Where the Board is of the view that the ID can continue beyond the 9-year tenure, it must justify and seek shareholders’ approval. The Board shall also identify from amongst its members for inclusion in the Company’s Annual Report a Senior Independent Non-Executive Director to whom concerns of fellow Directors, shareholders or stakeholders may be conveyed.

4.1.3 Whilst the Company’s Articles of Association allows for no less than .....or more than ......Directors, the Board shall examine and determine its size periodically in relation to the effective running of the Company’s businesses.

4.1.4 To enhance its effectiveness, the Board shall ensure its members have the relevant skills, experience, expertise and time commitment. Accordingly, the Nominating Committee is entrusted by the Board to appraise candidates for directorship, including those who retire and offer themselves for re-election, before recommending to the Board. The Board is mindful of the need for boardroom diversity and, in this context; the Nominating Committee takes into consideration gender diversity when recommending to the Board.

4.1.5 The composition of the Board shall be guided by the Boardroom Diversity Policy, set out in Appendix C, to ensure the Board is of appropriate mix so as to optimize the performance of the Board as a whole and align the Board’s capabilities with the strategic direction of the Company.

4.1.6 Directors shall not sit on the boards of more than 5 listed issuers and before accepting any new directorship, Directors shall notify the Chairman, the notification of which shall include an indication of time that will be spent on the new appointment.

4.2 Role of Chairman

The Chairman assumes a leadership role in the Board and represents the same to shareholders of the Company. The Chairman is primarily responsible for the following:

(a) presiding at Board and shareholder meetings and ensuring the proceedings thereof comply with good conduct and practices. The Chairman may appoint his designate to chair such meetings;

(b) ensuring the adequacy and integrity of the Board governance processes;

(c) consulting with the Board promptly over any matter that gives him cause for major concern;

(d) managing Board communications and Board effectiveness;

(e) ensuring timely dissemination of notice of meeting and agenda to Directors, including relevant Board papers and information pertaining to issues scheduled for discussion and/or approval at meetings;

(f) acting as facilitator at Board meetings and ensuring that no member, whether executive or otherwise, dominates discussion. The Chairman shall also encourage Board members to participate in discussions and that relevant opinions amongst members are forthcoming, resulting in logical and understandable outcomes; and

(g) other responsibilities as assigned by the Board from time to time.

4.3 Role of Group Managing Director

4.3.1 The Group MD serves as a conduit between Management and the Board and is responsible for the effective implementation of the Company’s strategic plan and policies established by the Board, besides managing the daily operations of the Company.

4.3.2 Generally, the MD, with the assistance of other Executive Directors, is responsible to the Board for the following:

(a) achievement of Company’s goals and observance of Management authorities delegated by the Board;

(b) developing long-term strategic and short-term business plans, designed to enable the Company’s requirements for growth, profitability and return on capital are achieved;

(c) directing and controlling all aspects of the business operations in a cost effective manner;

(d) overseeing human capital with respect to key positions in the Group hierarchy and ensuring the general well-being of employees, including the determination of remuneration as well as terms and conditions of employment for Senior Management personnel and issues pertaining to discipline of all employees;

(e) representing the Group’s interest with major customers, government agencies, regulatory bodies and industries at large, to ensure general goodwill towards the Group and cooperation in planned development;

(f) assuring that the Group’s products and services are of high standards;

(g) providing assistance to members of the Board and the Board Committees, as required, in discharging their duties; and

(h) assisting the Chairman in organizing information necessary for the Board to deal with the agenda and for providing such information to Directors on a timely basis.

4.3.3 The Board shall receive the following from, or through, the Group MD at its scheduled meetings:

·        reports on the performance and activities of the Group for the period under review, including explanations for significant fluctuations over the period; and

·        where appropriate, a briefing pertaining to risk management issues, challenges faced by the Group, changes to legislations that may affect the Group’s operations, litigations and other salient events or issues affecting the Group.

4.3.4 The Group MD as well as the other Executive Directors shall act within all specific authorities delegated to them by the Board.

4.3.5 In discharging the above responsibilities, the Group MD and Executive Directors can delegate appropriate functions to any member of Senior Management, who shall report to the Group MD or EDs, as the case may be. All other EDs report to the Group MD concerning their respective areas of responsibilities entrusted by the Group MD.

4.4 Role of Non-Executive Directors (“NEDs”)

The roles of NEDs largely encompass the monitoring of Company performance and contributing to the development of Company strategy, clarified as follows:

(a) Strategy: Constructively challenge and contribute to the development of Company strategy;

(b) Performance: Oversee the performance of Management in meeting agreed goals and objectives and monitor the reporting of performance.

4.5 Company Secretary

4.5.1 The appointment and removal of the Company Secretary is a matter for the Board as a whole. The Company Secretary shall be suitably qualified and capable of carrying out the duties required of the post.

4.5.2 The Company Secretary is expected to provide unimpeded advice and services to the Directors, as and when the need arises, to enhance the effective functioning of the Board and to ensure regulatory compliance.

4.5.3 The primary responsibilities of the Company Secretary shall include the following:

(a) ensuring that Board procedures and applicable rules are observed;

(b) maintaining records of the Board and Board Committees and its respective meetings and ensuring effective management of the Company’s records;

(c) preparing comprehensive minutes to document Board and Board Committee proceedings and ensure conclusions are accurately recorded;

(d) timely dissemination of information relevant to Directors’ roles and functions and keeping them updated on new or evolving regulatory requirements; and

(e) carrying out other functions as deemed appropriate by the Board from time to time.

4.6 Board Committees

4.6.1 The Board shall establish Committees from time to time to assist the Board in the discharge of its duties and responsibilities. Each Committee has its own terms of reference in writing, specified by the Board, detailing its roles and responsibilities, structure and composition.

4.6.2 A number of standing Committees, with written terms of reference have been established, namely the following:

(a) Audit Committee

The Audit Committee assists and supports the Board primarily in the areas of financial reporting in liaison with the external auditors and the Group’s system of risk management and internal controls in liaison with the internal auditors. The terms of reference of the Audit Committee are attached as Appendix D of this Charter;

(b) Nominating Committee

The Nominating Committee assists the Board in matters relating to the selection and assessment of Directors. The terms of reference of the Nominating Committee are attached as Appendix E of this Charter;

(c) Remuneration Committee

The Remuneration Committee is primarily responsible for recommending to the Board the remuneration of Executive Directors and Non-Executive Directors in all its forms, drawing from outside advice if necessary. The terms of reference of the Remuneration Committee are attached under Appendix F of this Charter.

4.7 The Board’s relationship with shareholders and stakeholders

4.7.1 The Board shall maintain a communications policy that enables both the Board and Management to communicate effectively with the Company’s shareholders, stakeholders and the general public.

4.7.2 The Board shall ensure that the General Meetings of the Company are conducted in an efficient manner to enhance shareholder communications. The Board shall also provide timely and relevant information to shareholders and encourage their active participation at the meetings, taking into account the following measures:

(a) ensure that each item of business included in the notice of meeting is accompanied by a full explanation of the effects of the proposed resolution;

(b) ensure that a brief description including information such as age, relevant experience, list of directorships, date of appointments to the Board, details of participation in Board Committees and designation of Directors (Independent or Non-Independent), in respect of the Directors standing for re-election or re-appointment, is disclosed in the Annual Report;

(c) the Chairman shall provide reasonable time for discussion at the meeting. Where appropriate, the Chairman will undertake to provide the shareholder with a written answer to any significant question which cannot be answered immediately; and

(d) ensure that substantive resolutions including, but not limited to, related party transactions which require specific shareholder approval are considered by poll and announce the detailed results of the votes cast for and against each resolution. The Chairman shall also inform shareholders of their right to demand a poll vote at the commencement of the General Meeting.

5 Board procedures

5.1 Board meetings

5.1.1 Meetings shall be conducted at least on a quarterly basis. The Company Secretary shall prepare and distribute to all Directors in advance a timetable for the meetings for the year. The Company Secretary shall work together with the Chairman in developing the meeting agenda.

5.1.2 Except in the case of emergencies, 5 days notice of every Board meeting will be provided in writing. In addition to notices sent through the post/ by hand, notices may also be sent via facsimile, electronic mail or by any means of telecommunication in permanent written form.

5.1.3 The Chairman of the Board - or in his absence, a Director from amongst the Board members appointed - shall preside at all meetings.

5.1.4 Board members are required to attend Board meetings. However, other senior officers may be invited to attend meetings for particular items within their responsibility. The Board may also invite external parties such as the auditors, solicitors and consultants as and when the need arises. Questions arising at any meeting of the Directors shall be decided by a majority of votes.

Resolutions of the Directors at a meeting or adjourned meeting of the Directors shall be adopted by a majority of votes of all Directors present. In the event matters requiring Board’s decision arise between meetings, such matters shall be resolved through circular resolution which shall be supported by relevant papers setting out details of the subject matters. The Board members may obtain more information from Management and express their view points by facsimile, electronic mail or any other means of telecommunication before arriving at a decision on the subject matter. All such resolutions shall be submitted for confirmation at a meeting of the Board following the passing of the circular resolutions.

5.1.5 The Directors may participate in a meeting of the Directors by means of telephone and video conference or by other means of communication. The physical presence of Director(s) is not compulsory and participation in the meeting in the aforesaid manner shall be deemed to constitute presence in person at such meeting. The Directors participating in any such meeting shall be counted in the quorum for such meeting. All resolutions agreed upon by the Directors in such a meeting shall be deemed to be as effective as a resolution passed at a meeting in person of the Directors duly convened and held. All information and documents must be made equally available to all participants prior to, at, or during the meeting.

5.1.6 Pursuant to regulatory requirements, a Director shall abstain from deliberation and voting on contracts or proposed contracts or arrangements in which the Director has direct/ indirect interests.

5.2 Agenda

The Chairman, in conjunction with the Company Secretary, shall assess the type of information needed to be supplied to the Board and the contents of the agenda. The agenda shall include, amongst others, matters specifically reserved for the Board’s decision. The Board shall record its deliberation, in terms of the issues discussed, and the conclusions thereof, in discharging its duties and responsibilities.

5.3 Meeting papers

5.3.1 To allow sufficient time for Directors to consider the relevant information, Board papers and agenda items are to be circulated at least 5 days, or a shorter period where unavoidable, prior to the meeting. Where there is a need to table a report, a brief statement of findings and/ or recommendations is prepared.

5.3.2 Minutes are prepared following a Board meeting. The draft minutes will be tabled at the following meeting for confirmation and signing.

5.4 Access to information

All Directors shall have unrestricted access to Management and to information pertaining to the Company, including access to the Company auditors and consultants, relevant to the furtherance of their duties and responsibilities as Directors of the Company.

5.5 Independent professional advice

5.5.1 In discharging the Directors’ duties, each member of the Board is entitled to obtain independent professional advice at the cost of the Company.

5.5.2 Where such advice is considered necessary for the discharge of his duties and responsibilities as Director and, for the benefit of the Company, such Director shall first discuss it with the Chairman and, having done so, shall be free to proceed, where appropriate.

6 Directors’ training

6.1 Directors are required to undergo the mandatory accreditation programme under the auspices of Bursa Malaysia. In addition, Directors are required to attend relevant training courses/ seminars at periodic intervals to keep themselves updated on developments pertaining to the oversight function of Directors as well as technical matters, for example, financial reporting standards, tax budgets, etc.

The Nominating Committee shall decide on the continuous education training programme for Directors.

6.2 All trainings attended by Directors shall be disclosed in the Annual Report. In special circumstances, valid justifications for non-attendance at any training by Directors for the financial year shall also be disclosed.

7 Directors’ external commitments and conflict of interest

7.1 A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the Director’s interest in accordance with the Companies Act, 1965. The Director concerned shall not participate in deliberations and shall abstain from casting votes in any matter arising thereof unless as otherwise provided for in the Companies Act, 1965.

7.2 Should there be an actual, potential or perceived conflict of interest between the Company or a related corporation and a Director, or an associate of a Director such as a spouse or other family members, the Director involved shall make full disclosure and act honestly in the best interest of the Company.

7.3 Directors shall devote sufficient time to carry out their responsibilities. The Board shall obtain this commitment from its members at the time of appointment. Each Director is expected to commit at least 5 days per year for attending meetings of the Board or Board Committees.

7.4 The Company Secretary shall facilitate the Directors’ annual independence and conflict of interests declarations, which will allow the Directors to perform an annual self-declaration on independence (i.e. for Independent Non-Executive Directors) and conflict of interest (i.e. for all Directors).

8 Directors’ Remuneration

8.1 NEDs will be paid a fee for acting as Directors of the Company, subject to approval by shareholders, and meeting allowances for their attendances at meetings.

8.2 The remuneration of EDs shall be decided by the Board with the individual Director concerned abstaining from discussing his individual remuneration. The amount of remuneration payable shall be determined with reference with the Group’s performance.

9 Board and member assessment

The Nominating Committee is entrusted by the Board to review the performance and effectiveness of the Board and Board Committees, including individual Directors, annually, with the assessment report, together with a report on the Board balance covering the required mix of skills, experience and other qualities of Board members for discussion at the full Board.

 

10 Corporate disclosures

10.1 The Board shall have relevant corporate disclosure policies and procedures to ensure comprehensiveness, accuracy and timeliness of information disclosed. These policies and procedures shall ensure compliance with the relevant disclosure requirements as enumerated in the Listing Requirements.

10.2 The Company shall consider the use of information technology in communicating with stakeholders, including a dedicated section for Investor Relations on the Company’s website. This section shall provide information such as, amongst others, the Board Charter and the Annual Report of the Company.

This Charter shall be kept in the custody of the Board Chairman. Changes to the Charter, if needed, shall require approval of the Board.

-----------------------------------------------END OF BOARD CHARTER-------------------------------------------------

Appendix A

DIRECTORS’ CODE OF ETHICS

The Directors shall observe the Directors’ Code of Ethics as follows:

(i) Compliance at all times with this Code of Ethics, the Board Charter and regulatory requirements expected to be adhered to by Directors of the Company;

(ii) Observe high standards of corporate governance, in particular the practices set out in the Malaysian Code on Corporate Governance 2012, the Main Market Listing Requirements of Bursa Malaysia, the Companies Act, 1965 and the Capital Markets and Services Act, 2007;

(iii) Adhere to the principles of selflessness, integrity, objectivity, accountability, openness, honesty and leadership;

(iv) Act in good faith and in the best interest of the Company;

(v) Not misuse information gained in the course of duties for personal gain or for any other purpose, nor seek the opportunity of the service as Directors to promote private interests or those of connected persons, firms, businesses or other organizations;

(vi) Ensure the Company’s resources are safeguarded and that the Company conducts its operations economically, efficiently and effectively at all times;

(vii) Directors shall not accept positions in Board Committees or working groups where a conflict of interest is likely to arise, without first declaring their interest at Board meeting;

(viii) Directors shall declare any personal, professional or business interests that may conflict with their responsibilities as Directors of the Company;

(ix) Directors shall adhere to the regulatory requirements pertaining to trading in the Company’s shares, including insider trading.

--------------------------------------------------END OF APPENDIX A-----------------------------------------------------

Appendix B

FORMAL SCHEDULE OF MATTERS RESERVED FOR THE BOARD

The following summarizes the list of matters reserved for the Board’s deliberation and decision:

1. Board structure

(a) Appointment and recommendation for removal of Directors.

(b) Appointment and removal of Company Secretary.

(c) Establishment of Board Committees, their members and the specific terms of reference.

2. Board remuneration

(a) Recommendation of Directors’ fees for Non-Executive Directors to be approved by shareholders.

(b) Approval of remuneration packages, including service contracts, for Executive Directors.

3. Company’s operations

(a) Review and approval of Company’s strategic plan and annual budget (including capital expenditure budget).

(b) Approval of capital expenditure exceeding prescribed thresholds based on the formalized limits of authority.

(c) Approval of investment or divestment in a company, business, property or undertaking.

(d) Approval of investment or divestment of a capital project which represents a significant diversification from the Company’s existing business activities.

(e) Approval of major changes in the activities of the Company.

(f) Approval of treasury policies and bank mandates of the Company.

(g) Approval of limits of authority for the Company.

4. Financial

(a) Approval of financial statements and their release (including financial reports for announcement to Bursa Malaysia Securities Berhad or the Securities Commission).

(b) Approval of Directors’ Report, Corporate Governance Statement and Statement on Risk Management and Internal Control for inclusion in the Company’s Annual Report.

(c) Approval of interim dividends for payment and the recommendation of final dividend or other distribution for shareholders’ approval.

(d) Adoption of accounting policies in line with applicable approved accounting standards such as the Malaysian Financial Reporting Standards.

(e) Review the effectiveness of the Group’s system of risk management and internal controls via the Audit Committee.

5. Others

(a) Granting of power of attorney by the Company.

(b) Entering into any corporate guarantee and indemnity issued by the Company.

(c) Recommendation for the changes in the Company’s Memorandum and Articles of Association.

(d) Change in financial year end.

(e) Recommendation for purchase of own shares by the Company.

(f) Recommendation for issue of debt instruments.

(g) Any other matters requiring the Board’s approval under the limits of authority adopted by the Company and Group.

--------------------------------------------------- END OF APPENDIX B-------------------------------------------------------

Appendix C

BOARDROOM DIVERSITY POLICY

Purpose

The Boardroom Diversity Policy (the “Policy”) sets out the approach to diversity on the Board of Directors (the “Board”) of K. Seng Seng Corporation Berhad (”KSSC” or the “Company”).

Scope of application

The Policy applies solely to the Board and does not extend to cover diversity in the Company’s recruitment practices of non-Board personnel

Policy statement

The Board strongly advocates boardroom diversity as a truly diverse Board will include and make good use of differences in the skills, regional and industry experience, background, race, gender and other qualities of Directors. These differences will be considered in determining the optimum composition of the Board and when possible, should be balanced appropriately.

The Company’s goals and core principles are taken into consideration in the development of this Policy. The Company’s strategic intent for boardroom diversity is the attraction, retention and development of a diverse team of skilled people towards the delivering of the Company’s strategy. The Policy is centred on the following initiatives:

(1) Identifying and creating the right balance of skills and industry experience, background and gender of Directors;

(2) Retaining Directors based on performance and merit, in the context of skills, time commitment and experience, in order for the Board to be effective; and

(3) The Board’s Nominating Committee to review and assess the Board composition and mix and make recommendations on the appointment of new Directors. The Committee is tasked with the following responsibilities:

(a) to appoint members based on merit and free of prejudice, whilst simultaneously considering a broader sense of diversity and its advantages, when reviewing Board composition;

(b) to consider the mix of skills, experience, independence, knowledge and the diversity representation of the Board, as part of the annual performance evaluation of the effectiveness of the Board, Board Committees and individual Directors; and

(c) to develop measurable objectives to implement the Policy and for monitoring progress towards the achievement of these objectives.

Measurable Objectives

On an annual basis, the Nominating Committee will discuss the measurable objectives for achieving diversity on the Board and recommend them to the Board for adoption.

Monitoring and Reporting

Disclosure will be made in the corporate governance section of the KSSC’s Annual Report. The Annual Report will include a summary of this Policy, the measurable objectives set for implementing the Policy and progress made towards ac