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STOCK CODE

:

8745

COMPANY NAME

:

Leweko Resources Berhad

FINANCIAL YEAR

:

June 30, 2018



OUTLINE:


SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.



SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company’s strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company’s values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

Application

:

Applied

Explanation on application of the practice

:

The Board leads and controls the Leweko Group in the discharge of its stewardship responsibilities by establishing the strategic direction and overseeing the risk management of the Group.

The Board recognises its duties and function by assuming the principal responsibilities as follows:

$1·         Reviewing and adopting a strategic plan for the Leweko Group;

$1·         Overseeing the conduct of the Leweko Group’s business to evaluate whether the business is properly managed;

$1·         Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks;

$1·         Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management;

$1·         Developing and implementing an investor relations programme or shareholder communications policy for the Leweko Group; and

$1·         Reviewing the adequacy and integrity of the Leweko Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2

A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

Application

:

Applied

Explanation on application of the practice

:

The Group Chairman provides leadership to the Board and the Group and ensures that the Board functions effectively, and is entrusted with the task of instilling good corporate governance practices, leadership and effectiveness of the Board.

The key responsibilities of the Chairman are as follows:

$1·         Overseeing and leading the Board ensure effective performance of the Board;

$1·         Facilitating the effective contribution of all Board members at Board meetings;

$1·         Ensuring all strategic and critical issues are considered by the Board; and

$1·         Ensuring compliance with all relevant regulations and legislation.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.3

The positions of Chairman and CEO are held by different individuals.

Application

:

Applied

Explanation on application of the practice

:

The position of the Group Chairman and the Group Managing Director are held by different individuals.

The Group Chairman’s and Group Managing Director’s roles and responsibilities are divided to ensure that there is a balance of power and authority. This balance ensures that all matters brought before the Board are fully, adequately and objectively discussed taking into account the interest of the various stakeholders including the minority shareholders.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.4

The board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practices.

Application

:

Applied

Explanation on application of the practice

:

The Board is supported by a qualified Company Secretary who is a member of The Malaysian Institute of Chartered Secretaries and Administrators.

The Company Secretary play an advisory role to the Board particularly with regards to the constitution of the Company and the Company’s compliance with regulatory requirements, rules, guidelines and legislation as well as best practices of corporate governance.

The Board has constant access to the advice and services of the Company Secretary.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.5

Directors receive meeting materials, which are complete and accurate within a reasonable period prior to the meeting. Upon conclusion of the meeting, the minutes are circulated in a timely manner.

Application

:

Applied

Explanation on application of the practice

:

The Board is supplied with information on a timely basis to enable it to effectively discharge its duties and responsibilities. As a general rule, all Board meetings’ papers are distributed at least a week before the respective Board meeting so that the Directors would have adequate time to read and understand the matters that will be discussed and deliberated at the meeting concerned. Additional information on the Group is also supplied to Directors upon specific requests.

Upon conclusion of each meeting, the minutes are prepared and circulated to the Directors for review and comments by the Company Secretary in a timely manner.

The minutes of meetings are confirmed as a correct record by the Board at the following meeting.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

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Timeframe

:

   

Intended Outcome

There is demarcation of responsibilities between the board, board committees and management.

There is clarity in the authority of the board, its committees and individual directors.

Practice 2.1

The board has a board charter which is periodically reviewed and published on the company’s website. The board charter clearly identifies–

$1§  the respective roles and responsibilities of the board, board committees, individual directors and management; and

$1§  issues and decisions reserved for the board.

Application

:

Applied

Explanation on application of the practice

:

The Board Charter sets out, amongst others, the respective roles and responsibilities of the Board, Board Committees, Directors and Management as well as the relationship between the Board and its Management.

The Board will review the Board Charter periodically and make any necessary or desirable amendments to ensure they remain consistent with the Board’s objectives, current laws and best practices.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

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Timeframe

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Intended Outcome

The board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company.

Practice 3.1

The board establishes a Code of Conduct and Ethics for the company, and together with management implements its policies and procedures, which include managing conflicts of interest, preventing the abuse of power, corruption, insider trading and money laundering.

The Code of Conduct and Ethics is published on the company’s website.

Application

:

Applied

Explanation on application of the practice

:

All Directors, the management and staff are expected to conduct themselves with the highest ethical and professional standards at all times.

A summary of the Code of Ethics and Conduct are set out in the Board Charter.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

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Timeframe

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Intended Outcome

The board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company.

Practice 3.2

The board establishes, reviews and together with management implements policies and procedures on whistleblowing.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

The Board intends to establish and implement a whistleblowing policy to the Group in the coming financial year with a view of strengthening its existing internal control systems and work culture policies in its commitment of promoting good business conduct as well as maintaining healthy corporate culture.

The Group’s current internal controls, work culture and “open-door” concept adopted by the Group supports a clear and open communication between the Board, management and employees which in turn promotes good business conduct and healthy corporate culture.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.1

At least half of the board comprises independent directors. For Large Companies, the board comprises a majority independent directors.

Application

:

Applied

Explanation on application of the practice

:

The Board of Directors comprises of five (5) members out of three (3) are Independent Non-Executive Directors. The composition of three (3) Independent Non-Executive Directors meets the one-third requirement for independent directors to be appointed to the Board under the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The presence of three (3) Independent Non-Executive Directors making up more than one-third of the total number of directors fulfils the pivotal role in ensuring that there is Board balance and independence. The roles of these Independent Non-Executive Directors are particularly important in ensuring that the strategies proposed by the management are fully deliberated upon, and take into account the long term interest of the shareholders, employees, customers, suppliers and the community at large in which the Group conducts its business.

Each of the Independent Non-Executive Directors is considered independent of management and free of any relationship that could materially interfere the exercise of their independent judgment.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.2

The tenure of an independent director does not exceed a cumulative term limit of nine years. Upon completion of the nine years, an independent director may continue to serve on the board as a non-independent director.

If the board intends to retain an independent director beyond nine years, it should justify and seek annual shareholders’ approval. If the board continues to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process.

Application

:

Applied - Annual shareholders' approval for independent directors serving beyond 9 years

Explanation on application of the practice

:

The Nomination Committee and the Board have evaluated the independence of the Independent Non-Executive Director, Mr. Seou Lim Khoon, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years and concluded that throughout his tenure, he has remained independent in his views and in exercising judgment in deliberations at Board/Board Committee meetings, without being influenced by operational consideration and has always acted in the best interest of all shareholders.

The Nomination Committee and the Board recommend Mr. Seou Lim Khoon to act as the Independent Non-Executive Director and the relevant motion on the subject matter will be presented to the shareholders for approval at the forthcoming Annual General Meeting of the Company.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.3 - Step Up

The board has a policy which limits the tenure of its independent directors to nine years.

Application

:

Not Adopted

Explanation on adoption of the practice

:

 

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.4

Appointment of board and senior management are based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender.

Application

:

Applied

Explanation on application of the practice

:

The Board recognises diversity in the boardroom as a critical element for efficient functioning of the Board and good governance practices. The Board also believes that diversity leads to the consideration of all facets of an issue and, consequently, better decisions and performance. Hence, the Nomination Committee in making recommendations for appointment of Board members and senior management, due consideration is not only given to the required mix of skills, knowledge, expertise experience, professionalism, integrity, competencies and time commitment but also gives due regards for other qualities, including diversity in gender, age, cultural background and ethnicity. The final decision as to who shall be appointed is the responsibility of the Board after considering the Nomination Committee’s recommendation.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.5

The board discloses in its annual report the company’s policies on gender diversity, its targets and measures to meet those targets. For Large Companies, the board must have at least 30% women directors.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

The Board is aware of the importance of Boardroom diversity and is supportive of the recommendation of the Malaysian Code on Corporate Governance, 2017 to the establishment of boardroom and workforce gender diversity policy. However, the Company does not have a policy of boardroom diversity, including gender, ethnicity and age diversity. The Company will provide equal opportunity to candidates with merit. Nonetheless, the Board will give consideration to the gender diversity objectives.

The Group practices non-discrimination in any form, whether based on age, gender, ethnicity or religion, throughput the organisation. Currently, the Board does not comprise of any female director. In line with the country’s aspiration target of 30% representation of women on the board of companies, the Board may consider appointing females onto the Board in future to bring about a more diverse perspective.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.6

In identifying candidates for appointment of directors, the board does not solely rely on recommendations from existing board members, management or major shareholders. The board utilises independent sources to identify suitably qualified candidates.

Application

:

Applied

Explanation on application of the practice

:

The Nomination Committee is responsible for making recommendations on any nomination for appointment of new directors to the Board and to Committees of the Board. The Nomination Committee considers candidates for directorship proposed by the Executive Directors and, where practicable, by any other senior executive and any director and shareholder or any suitable qualified candidates from independent sources.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.7

The Nominating Committee is chaired by an Independent Director or the Senior Independent Director.

Application

:

Applied

Explanation on application of the practice

:

The Nomination Committee is chaired by Dato’ Haji Roshidi bin Haji Hashim, the Independent Non-Executive Chairman.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Stakeholders are able to form an opinion on the overall effectiveness of the board and individual directors.

Practice 5.1

The board should undertake a formal and objective annual evaluation to determine the effectiveness of the board, its committees and each individual director. The board should disclose how the assessment was carried out and its outcome.

For Large Companies, the board engages independent experts periodically to facilitate objective and candid board evaluations.

Application

:

Applied

Explanation on application of the practice

:

The Board Nomination Committee is tasked with conducting annual assessment on the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Directors.

The evaluation on the Board effectiveness is divided into the following three core areas:

●     Value Creation

●     Performance Management

●     Stakeholder Relationship

The process assessed the competencies of each Director in the areas of integrity and ethics, governance, strategic perspective, business acumen, judgment and decision making, teamwork, communication and leadership. The Nomination Committee also assessed the independence of its independent directors based on required mix skills and criteria of independence.

The results of the evaluation were summarised and discussed by the Nomination Committee which were then reported to the Board with recommendations. The results of the evaluation concluded that the good mix of age, qualifications, skills, experience and core competencies as well as the time commitment from the current Board have enable the Board and Board Committees to function effectively and efficiently.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

The level and composition of remuneration of directors and senior management take into account the company’s desire to attract and retain the right talent in the board and senior management to drive the company’s long-term objectives.

Remuneration policies and decisions are made through a transparent and independent process.

Practice 6.1

The board has in place policies and procedures to determine the remuneration of directors and senior management, which takes into account the demands, complexities and performance of the company as well as skills and experience required. The policies and procedures are periodically reviewed and made available on the company’s website.

Application

:

Applied

Explanation on application of the practice

:

The Remuneration Committee’s primary responsibilities are to recommend to the Board from time to time, the remuneration package and terms of employment of each Executive Director and senior management of the Group. The Remuneration Committee ensures that the Directors are remunerated or rewarded for the contributions or individual level of responsibilities so as to ensure that the Group attracts and retains the right calibre of Directors needed for the successful performance of the Group.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

The level and composition of remuneration of directors and senior management take into account the company’s desire to attract and retain the right talent in the board and senior management to drive the company’s long-term objectives.

Remuneration policies and decisions are made through a transparent and independent process.

Practice 6.2

The board has a Remuneration Committee to implement its policies and procedures on remuneration including reviewing and recommending matters relating to the remuneration of board and senior management.

The Committee has written Terms of Reference which deals with its authority and duties and these Terms are disclosed on the company’s website.

Application

:

Applied

Explanation on application of the practice

:

The Remuneration Committee carried out its duties in accordance with its terms of reference which can be obtained from the Company’s website at www.leweko.com

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

Practice 7.1

There is detailed disclosure on named basis for the remuneration of individual directors. The remuneration breakdown of individual directors includes fees, salary, bonus, benefits in-kind and other emoluments.

Application

:

Applied

Explanation on application of the practice

:

The details of the remuneration breakdown of individual directors of the Company during the financial year ended 30 June 2018 are set out on page 21 of the Annual Report 2018.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

Practice 7.2

The board discloses on a named basis the top five senior management’s remuneration component including salary, bonus, benefits in-kind and other emoluments in bands of RM50,000.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

The remuneration which includes salary, bonus, benefits-in-kind and other emoluments paid to the top five senior management’s during the financial year 30 June 2018 was not disclosed on a named basis due to the competitive nature of the human resource market.

The Board is of the view that the remuneration paid to key senior management during the financial year ended 30 June 2018 disclosed in the band of RM250,000 would satisfy the accountability and transparency aspect of the Company.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

Intended Outcome

Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

Practice 7.3 - Step Up

Companies are encouraged to fully disclose the detailed remuneration of each member of senior management on a named basis.

Application

:

Not Adopted

Explanation on adoption of the practice

:

 

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.1

The Chairman of the Audit Committee is not the Chairman of the board.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

The Chairman of the Audit Committee is currently still the Chairman of Board. The Nomination Committee is still identifying a potential candidate for the appointment as Chairman to the Audit Committee.

Please provide an alternative practice and explain how the alternative practice meets the intended outcome.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.2

The Audit Committee has a policy that requires a former key audit partner to observe a cooling-off period of at least two years before being appointed as a member of the Audit Committee.

Application

:

Applied

Explanation on application of the practice

:

The Audit Committee recognises the need to uphold independence of its external auditor and that no possible conflict of interest whatsoever should arise. Currently, none of the members of the Audit Committee of the Company were former key audit partners of the external auditors appointed by the Group. The Company will observe a cooling-off period of at least two (2) years in the event any potential candidate to be appointed as a member of the Audit Committee was a key audit partner of the external auditors of the Group.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.3

The Audit Committee has policies and procedures to assess the suitability, objectivity and independence of the external auditor.

Application

:

Applied

Explanation on application of the practice

:

The Audit Committee is responsible for the development, implementation and monitoring of the Company’s policy on external auditor. The Audit Committee reserves oversight responsibility for monitoring the auditor’s independence, objectivity and compliance with ethical, professional and regulatory requirements.

The Audit Committee is also responsible for the re-tendering selection process and recommends the appointment, reappointment and removal of the Company’s external auditor and considers the risk associated with the change of the external auditors in its risk evaluation and planning.

The Audit Committee also reviews and set the terms, areas or responsibility and scope of the audit as set out in the external auditor’s engagement letter, the overall work plan for the forthcoming year together with the associated fee proposal and cost effectiveness of the audit, the external auditors’ independence, any major issues which arises during the course of the audit and their resolution, key accounting and audit judgment, the level of errors identified during the audit, the recommendations made to the management by the auditor and management’s response and the auditors overall performance.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.4 - Step Up

The Audit Committee should comprise solely of Independent Directors.

Application

:

Adopted

Explanation on adoption of the practice

:

The Audit Committee comprises solely of three (3) Independent Non-Executive Directors.


Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.5

Collectively, the Audit Committee should possess a wide range of necessary skills to discharge its duties. All members should be financially literate and are able to understand matters under the purview of the Audit Committee including the financial reporting process.

All members of the Audit Committee should undertake continuous professional development to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules.

Application

:

Applied

Explanation on application of the practice

:

The members of the Audit Committee of the Company had complied with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad of which at least one (1) member with the requisite accounting qualification.

Collectively, the members of the Audit Committee have the relevant financial and commercial experience; and have carried their duties in accordance with the Terms of Reference of the Audit Committee. The Audit Committee will undertake the relevant training programmes to keep themselves abreast of the latest development in accounting and auditing standards, statutory laws, regulations and best practices to enable them to effectively discharge their duties.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.1

The board should establish an effective risk management and internal control framework.

Application

:

Applied

Explanation on application of the practice

:

The Board firmly believes that risk management must be embedded within the daily operations and operating units of the Group, that is, from strategy formulation through to business planning and processes. The Board is of the opinion that only by understanding risks, can the decision makers be able to evaluate the impact of a particular action or decision on the achievement of corporate objectives.

The Board has adopted an Enterprise Risk Management Framework across the Group and has directed management to implement all aspects of this framework so that a risk adverse culture and risk management awareness can be instilled at all operational levels. The Board acknowledges that the implementation of the framework is an on-going process and considerable effort and commitment are required of management to do so as management has the responsibility to manage risks, implement effective internal controls and ensure compliance with the relevant laws and regulations without impeding the achievement of business objectives.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.2

The board should disclose the features of its risk management and internal control framework, and the adequacy and effectiveness of this framework.

Application

:

Applied

Explanation on application of the practice

:

The Group’s system of internal control is based on a clear definition of responsibilities and the delegation of authority to the various Board and Management Committees, all of which act in accordance with their respective formal terms of reference. The Board has also taken all possible measures to ensure that its operations are in compliance with regulations imposed by authorities.

The Group’s system of internal control is also based on a framework of regular management information and administrative procedures, the most pertinent of which are described below:

$1·         The Board reviews the operational and financial performance of the Group every quarter and management meetings are conducted at operational level on a monthly basis.

$1·         Operating expenditure is approved in accordance with formal limits of authority.

$1·         All legal contracts and documents are vetted by reputable firms of solicitors.

$1·         The compensation and remuneration packages of Executive Directors and senior management are reviewed by the Remuneration Committee.

$1·         The findings and recommendations for improvement in the Group’s system of internal control are reported to the Audit Committee by both the external and internal auditors. All minutes of the proceedings of the Audit Committee are tabled to the Board for review.

In order to ensure that the Group’s system of internal control is operating as envisaged, the Group’s internal auditors carried out independent review on the adequacy and integrity of the Group’s system of internal controls and reports to the Board through the Audit Committee on the effectiveness of the Group’s system of internal control.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.3 - Step Up

The board establishes a Risk Management Committee, which comprises a majority of independent directors, to oversee the company’s risk management framework and policies.

Application

:

Not Adopted

Explanation on adoption of the practice

:

 

Intended Outcome

Companies have an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework.

Practice 10.1

The Audit Committee should ensure that the internal audit function is effective and able to function independently.

Application

:

Applied

Explanation on application of the practice

:

The Group has outsourced the internal audit function to an independent professional firm, which is independent of the activities and operations of the Group. The Internal Auditors work within the scope of an audit plan, which has been approved by the Audit Committee, to review and test the adequacy and effectiveness of the internal controls of the Group. The External Auditors will, in the course of their statutory audit, conduct a review of the internal control procedures and highlight any internal control weaknesses which have come to their attention. All such findings and recommendations made by the Internal and External Auditors are reported to the Audit Committee. Any significant issues are discussed at the Audit Committee meetings.

The Internal Auditors will follow up on all its recommendations to ensure that management has implemented them in a timely and appropriate fashion. The Internal Auditors support the Audit Committee in its role to assess the effectiveness of the Group’s overall system of internal controls. The assistance provided by the Internal Auditors is primarily accomplished through their appraisals of the financial and operational controls, policies and procedures established by management, and their reviews for compliance by the Group’s operating entities with these established controls, policies and procedures. The Internal Auditors reports directly to the Audit Committee.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Companies have an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework.

Practice 10.2

The board should disclose–

$1§  whether internal audit personnel are free from any relationships or conflicts of interest, which could impair their objectivity and independence;

$1§  the number of resources in the internal audit department;

$1§  name and qualification of the person responsible for internal audit; and

$1§  whether the internal audit function is carried out in accordance with a recognised framework.

Application

:

Applied

Explanation on application of the practice

:

The outsourced Internal Audit firm appointed by the Wen Tai Consulting Sdn Bhd, an independent professional internal audit service provider and the consultancy is managed by professionally qualified and experienced staff. For each internal audit review, an internal audit personnel led by Mr. Tee Er Wee, who is a Fellow Member of the Association of Chartered Certified Accountants (ACCA) will be assigned by Wen Tai Consulting Sdn. Bhd. to undertake a review in accordance to the internal audit plan approved by the Audit Committee. The internal auditors are free from any relationships or conflict of interest which could impair their objectivity and independence.

The Internal Audit function adopts an Internal Audit framework with processes based on the standards recommended by the International Professional Practices Framework of the Institute of Internal Auditors.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations.

Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility.

Practice 11.1

The board ensures there is effective, transparent and regular communication with its stakeholders.

Application

:

Applied

Explanation on application of the practice

:

The Board recognises the importance of shareholders’ and investors’ communications and as a matter of policy, reports on a timely basis all material information in relation to the Group. The Group also communicate with the general public through its annual reports, quarterly and other corporate announcements to Bursa Malaysia Securities Berhad as well as press interviews and conferences. In addition, briefings for and dialogues with institutional shareholders and financial analysis have been conducted from time to time to discuss the Group’s past performance and the general market conditions for businesses in which the Group is involved.

In this respect, the Board ensures that all information sought was disseminated in strict adherence with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations.

Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility.

Practice 11.2

Large companies are encouraged to adopt integrated reporting based on a globally recognised framework.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

Not applicable.

Please provide an alternative practice and explain how the alternative practice meets the intended outcome.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

Intended Outcome

Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

Practice 12.1

Notice for an Annual General Meeting should be given to the shareholders at least 28 days prior to the meeting.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

The Board is mindful of the sufficient notice and time to be given to shareholders to allow the shareholders to make necessary arrangements to attend and participate the AGM.

The Companies Act, 2016 and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad provided that the notice convening an annual general meeting shall be given to all shareholders at least twenty-one (21) days before the meeting.

The notice of Annual General Meeting together with a copy of the Company’s Annual Report for the financial year ended 30 June 2018 will be dispatched to shareholders at least twenty-one (21) days before the meeting as required under the Companies Act, 2016 and Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Notice of Annual General Meeting, which sets out the business to be transacted at the Annual General Meeting, is also published at least in a major local newspaper.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

Intended Outcome

Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

Practice 12.2

All directors attend General Meetings. The Chair of the Audit, Nominating, Risk Management and other committees provide meaningful response to questions addressed to them.

Application

:

Applied

Explanation on application of the practice

:

The Board members in attendance at general meetings will provide explanation to all shareholders’ queries and shareholders are encouraged to participate in discussions and to give their views to the Directors.

The Chair of the Audit, Nomination and Remuneration Committees in attendance at general meetings will also provide meaningful responses to questions.

Explanation for departure

:

 
 
Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

 
Timeframe

:

   

Intended Outcome

Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

Practice 12.3

Listed companies with a large number of shareholders or which have meetings in remote locations should leverage technology to facilitate–

$1§  including voting in absentia; and

$1§  remote shareholders’ participation at General Meetings.

Application

:

Departure

Explanation on application of the practice

:

 
Explanation for departure

:

This is not applicable to the Company since the Company do not hold meetings in remote locations. The Company’s Annual General Meeting have always been held in a non-remote location easily accessible to shareholders as well as general public.

Please provide an alternative practice and explain how the alternative practice meets the intended outcome.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Choose an item.

 

SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.