1. INTRODUCTION

This Board Charter sets out composition, roles and responsibilities of the Board of Directors (“Board”), Board Committees and individual directors, and matters reserved for the 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 duties and 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. BOARD STRUCTURE


2.1 Board Composition and Size

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 1/3 must apply. In any event, the number of directors shall not more than 9 in accordance with the Company’s Articles of Association.

The Board consists of qualified individuals with broad base of industry knowledge, experience and technical skill that are necessary to discharge their duties and responsibilities and to contribute effectively to the Board. The composition and size of the Board is such that it facilitates the decision-making of the Board as a whole.

The Board composition should reflect a range of skill mix and expertise that are sufficient to drive the Group in meeting its long term strategic goals. In addressing this, the Board will consider recommendation by the Nomination Committee pertaining to appointment, re-appointment and assessment of Directors.

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.


2.2 Independence of Director

An Independent Director is one who is independent from management, free from any relationship or any business relationship that could materially affect the exercise of independent judgment or the ability to act in the best interest of the Company and are willing to express his/her opinion at the Board meeting free of concern of position of any third party.

The Board, assisted by Nomination Committee, reviews the independence of each Independent Director upon appointment, annually or when any new interest or relationship develops. 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.

Annual shareholders’ approval will be sought for retention of office of an Independent Director who has a tenure of service beyond 9 years in line with the recommendation of the Malaysian Code on Corporate Governance.


2.3 Appointment of Directors

The Board is responsible in determining the appropriate size of the Board. The appointment of a new Director is the decision by full Board, upon the recommendation of the Nomination Committee.

In making this evaluation, the Nomination Committee and the Board will consider the required mix of skills, character, experience, integrity, competence, time commitment, gender diversity and other qualities, where appropriate.


2.4 Re-election of Directors

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 each 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 re-election of each Director is voted separately.

The Directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.


2.5 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 or significant commitments outside the Group. The notification shall include an indication of time that he or she will spend on the new appointment. In any event the number of directorship in public listed companies of a Director must not more than 5.


2.6 Board Diversity

The Board has delegated the power to the Nomination Committee through its Terms of Reference to recommend to the Board the appropriate Board balance and size of non-executive participation.

The Nomination Committee abides by Paragraph 2.20A of the Listing Requirements when it assesses the Board candidate to ensure the candidate has the character, experience, integrity, competence and time to effectively discharge his/her role as a Director. In addition, the Board and Nomination Committee also taking into consideration of gender, age and ethnicity diversity.


2.7 Board Committees

The Board may from time to time establish Board Committees as is considered appropriate to assist in carrying out its duties and responsibilities.

The Board has set up the following Board Committees with different functions delegated to assist the Board in carrying out its duties and responsibilities:

(i) Audit Committee;

(ii) Nomination Committee; and

(iii) Remuneration 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 are assessed, reviewed and updated as and when required and recommend the revised Terms of Reference to the Board for approval.

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. ROLES AND RESPONSIBILITIES


3.1 Role 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:

(i) objectively reviewing, adopting and monitoring the implementation of the Group’s strategic plans. The Board discharges its role in leading the Group’s corporate strategy and directions, having worked with Management to drive business growth that is in alignment with the Company’s vision and mission. The strategic plan also promotes sustainability in achieving a satisfactory balance between bottom-line growth, safeguarding the welfare of people and community as well as maintaining a harmonious environment;

(ii) overseeing the conduct of the Group’s business to ensure it is being properly managed;

(iii) identifying principal risks and ensuring implementation of appropriate internal controls and mitigation measures to achieve an appropriate balance between risks incurred and potential returns to the stakeholders;

(iv) reviewing the adequacy and the effectiveness of the management information systems, risk management and internal control systems;

(v) ensuring there is orderly succession of senior management positions by candidates 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 continuous training, appointment and performance monitoring of senior management positions; and

(vi) overseeing the development and implementation of an appropriate investor relations and communications policy which encourages shareholders’ participation at general meetings, promotes effective communication and proactive engagements with shareholders and other stakeholders.


3.2 Role 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:

(i) to facilitate the effective contribution of all Directors at Board meetings and ensure the appropriate level of interaction among Board members and Senior Management;

(ii) to lead the Board and ensure a balance composition of skills, knowledge and experience within the Board members;

(iii) to promote constructive and respectful relations between Directors and Senior Management;

(iv) to encourage active participation and allow dissenting views to be freely expressed;

(v) to chair all general meetings with the shareholders;

(vi) to ensure effective communication with shareholders and relevant stakeholders and that their views are communicated to the Board as a whole; and

(vii) to lead the Board in establishing and monitoring good corporate governance practices in the Company.

The Board has identified the Chairman as the Senior Independent Non-Executive Director to whom concerns of shareholders and other stakeholders may be conveyed. He is also an intermediary for other directors when necessary.


3.3 Role 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:

(i) 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;

(ii) to supervise and ensure an effective management team and structure, management development program and succession plans contributing to the success of the Group;

(iii) to assess all business opportunities which are potentially beneficial to the Group; and

(iv) to serve as chief spokesperson for the Group.


3.4 Role of Individual Directors

Directors are expected to act ethically, honestly and in good faith and make decisions that are in the best interests of the Company and the Group. In instances where the interests of stakeholders conflict with each other or with those of the Company and the Group, a Director must act in the best interests of the Company and the Group.

Each Director shall exercise reasonable care, diligence and skill in the discharge of the fiduciary and statutory duties as a director of the Company. Directors with special skill and knowledge are expected to apply that skill and knowledge to matters that come before the Board.

A director owes a fiduciary duty to the Company, therefore they must always act in the best interest of the Company and should have regard to the following:

(i) act in good faith;

(ii) exercise power for a proper purpose;

(iii) exercise discretion and judgement properly;

(iv) ensure integrity of financial information;

(v) avoiding conflicts of interest with the Company in a personal or professional capacity, including improper use of the property, information, corporate opportunity or position as a director of the Company;

(vi) disclosure of and abstaining from voting on matters of material personal interest; and

(vii) ensure compliance with the Companies Act, Listing Requirements, securities legislation and any other regulatory requirements.


3.5 Role of Executive Directors

Executive Directors are employees of the Company and have a thorough knowledge of the Company’s day-to-day operations. Executive Directors run the Company and deal with the preparation of and implementation of the strategic plans and business plans of the Company as well as the Group.


3.6 Role of Non-Executive Directors

Non-Executive Directors generally focus on board matters. As they are not involved in day-to-day operations and running of the Company, they should be objective and have a more independent perspective of the business. They shall have the same access to information as the Executive Directors and should constructively challenge the Management when required to ensure the Company and the Group meets agreed goals and objectives.


The responsibilities of the Non-Executive Director, amongst others, are as follows:

(i) bring specialist knowledge, skills and expertise to the Board;

(ii) provide vital strategic support to the Board and can, in some circumstances, critically review business plans from a different perspective to Executive Directors; and

(iii) bring fresh and impartial views to the Board.


3.7 Roles of Independent Directors

The Independent Directors play an importance role of providing independent judgement and bringing objectivity to the decisions made by the Board of Directors. While they need not take part in the company’s day-to-day operations, affairs or decision making, they should ask the right questions at the right time regarding the board’s decisions.

The Board would assess the independence of Independent Directors on an annual basis.


3.8 Matters Reserved for the Board

The Board reserves full decision-making, amongst other, on the following matters:

(i) strategic business plan and direction of the Group;

(ii) authority limits for operations;

(iii) corporate structure and capital investment;

(iv) material acquisitions and disposals of undertakings not in the ordinary course of business;

(v) material corporate exercise;

(vi) audited financial statements and quarterly financial reporting; and

(vii) declaration of dividend.


4. PROCESSES OF THE BOARD


4.1 Board Meetings

The Board will normally hold at least 4 meetings in a financial year. Additional meetings will be held as and when necessary to deliberate on matters which required Board decision, approval, directions and attention.

The quorum necessary for the transaction of the business of the Directors at the Board Meeting shall be 2.

A full agenda of the Board 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 Senior Management or external parties such as auditors, solicitors and consultants may be invited to brief or give detailed explanation and clarification on relevant agenda items whenever necessary so as to enable the Directors to make independent and informed decisions.


The Director is required to abstain from deliberations and voting in respect of any matter, which may give rise to an actual or perceived conflict of interest situation.

A resolution shall be considered passed by a majority of vote, each director shall have 1 vote. In case of equality of votes, the Chairman of the Board shall have a second or casting vote.

Minutes of the Board meeting shall be confirmed and signed by the Chairman of the meeting at which the proceedings are held or by the Chairman of the next succeeding meeting.

The Chairman of the Board Committees 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.

Directors are expected to strictly observe confidentiality of the Company’s information. All discussions and decisions of the Board will remain confidential unless there is a specific direction from the Board to the contrary, or disclosure is required by the law. Subject to legal and regulatory requirements, the Board will decide the manner and timing of the publication of its decisions.

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.

In accordance with the Listing Requirements, the office of a Director will become vacant if the Director is absent from more than 50% of the total Board of Directors’ meetings held during a financial year.


4.2 Financial Reporting

The Directors are responsible for ensuring that financial statements are drawn up in accordance with the Companies Act 2016 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.


4.3 Declaration of Interests

The Directors who holds any office or possesses any property where duties or interests may be created in conflict with his duties or interests as director shall declare the fact and the nature, character and extent of the conflict to the Board of Directors.

The Directors who has an interest, whether directly or indirectly, in a contract or proposed contract with the Company shall declare in writing to the Company the nature and extent of his interest in accordance with the Companies Act 2016.


The Directors who is interested directly or indirectly in a contract or proposed contract entered into or proposed to be entered into by the Company is required to abstain from deliberations and voting.


4.4 Board Nomination, Assessment and Evaluation

The performance of the Directors as a whole is assessed by the Nomination Committee on a yearly basis with due consideration to the competency, skills, commitment, contribution and performance.

The following are the nomination, assessment and evaluation processes on the Directors:

(a) New Appointment

The Nomination Committee will assess the suitability of the proposed candidate based on the criteria comprising but not limited to the following:-

  • character, skills, knowledge, expertise, experience,
  • professionalism,
  • competencies, integrity and commitment,
  • possession of the required skill, qualification and expertise that would add value to the Board,
  • understanding of the business environment
  • willingness to devote adequate time and commitment to attend to the duties/functions of the Board
  • number of other directorship held; and

In the case of Independent Directors, such candidates should have the abilities to discharge such responsibilities/functions as well as their background and other activities that qualify him or her to act as Independent Directors. The candidates must also fulfil the criteria used in the definition of “independent directors” prescribed by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Nomination Committee may consider candidates proposed by the Group Managing Director/Group Chief Executive, Directors, shareholders or senior officers of the Company or other sources such as independent search firms.

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.

The Nomination Committee should ensure that women candidates are sought as part of its appointment exercise to maintain boardroom diversity in the Company.

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.

(b) Annual assessment of existing Directors

The Director who is subject to re-election at the next Annual General Meeting shall be assessed by the Nomination Committee before recommendation is made to the Board and shareholders for the re-election. Appropriate assessment and recommendation by the Nomination Committee would be based on the yearly assessment conducted.

The annual assessment should include an evaluation based on the criteria comprising but not limited to the following:-

  • Confidence to stand up for a point of view;
  • Character and integrity in dealing with potential conflict of interest situations; and
  • Commitment to serve the Company, due diligence and integrity.

(c) Assessment on independence of Directors

Criteria have been set to assess the independence of candidate for Directors and existing Directors which should cover the following:

  • Fulfilled the criteria used in the definition of “independent directors’ prescribed by the Listing Requirements;
  • Independent of management;
  • Free from any business or other relationship which could interfere with the exercise of independence and judgement;
  • Background and other activities that qualify him or her to as independent director; and
  • Ability to advise on matters relating to transactions where conflict of interest may exist.


4.5 Directors’ Remuneration

The Remuneration Committee shall review the remuneration packages of the Executive Directors periodically and make recommendation to the Board for approval.

The remuneration of the Executive Directors is 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 packages of the Directors.

The remuneration packages of Non-Executive Directors should be determined by the Board as a whole subject to shareholders’ approval.


5. DIRECTORS’ TRAINING AND DEVELOPMENT

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.


6. BOARD POLICIES


6.1 Code of Conduct and Ethics

The Code of Conduct and Ethics is applicable to all Directors, management and employees of the Group. The principles of the Code of Conduct and Ethics have been guiding the Directors, management and employees of the Group to exercise reasonable judgement when conducting the Group’s business. It also serves as a set of guiding principles for all employees in carrying out their duties and responsibilities.


6.2 Remuneration Policy

The Company aims to set a fair and equitable remuneration packages to attract, retain and motivate Directors and Senior Management to align with business strategy and long term objective of the Group.

The Remuneration Policy ensures the Executive Directors and key senior executives are offered with an appropriate level of remuneration that commensurate with their contributions, performance and responsibilities of their position.


In consultation with the Chairman of the Board and Group Managing Director, as appropriate, the Remuneration Committee shall recommend the policy and remuneration packages for the Executive Directors and the key senior executives for approval of the Board. The Remuneration Committee is responsible to implement the policies and procedures on the remuneration approved by the Board.

The following criteria are to be considered by the Remuneration Committee in developing the remuneration packages (including salary, bonus, benefits-in-kind and other emoluments) of the Executive Directors and key senior executives:

(i) The Company’s performance indicators via revenue, profit before tax, profit after tax, earnings per share, and etc;

(ii) The complexity of the Group’s business and the individual’s responsibilities and ensure the package should also be aligned with the business strategy and long-term objectives of the Company; and

(iii) The responsibility, performance and achievement of the Executive Directors and key senior executives.

The remuneration packages (including salary, bonus, benefits-in-kind and other emoluments) of the Executive Directors and key senior executives are structured to ensure that the compensation and benefits commensurate with the level of the responsibilities, individual performance and experience, as well as taking into consideration the Company’s performance relative to the industry. The remuneration packages are also structured to ensure that the base salary element is competitive and fair to attract, motivate and retain experienced and knowledgeable individuals of the calibre needed to support the Company’s plans in line with its overall objective of delivering long-term value to its shareholders.

Survey data on the remuneration practices of comparable companies are to be taken into consideration in determining the remuneration packages of the Directors.

The Remuneration Committee is responsible for reviewing of the remuneration packages of Directors and making recommendation on the same to the Board for annual approval. It is the responsibility of the Board as a whole to approve the remuneration packages of Directors and key senior executives, except that Director’s fees shall be approved by the shareholders at general meetings.

The annual directors’ fee for Non-Executive Directors should be determined by the Board as a whole, subject to shareholders’ approval. For the Non-Executive Directors, the review of the Directors’ fee should remain appropriate to each director’s contribution, by taking into account the level of expertise, time commitment and responsibilities undertaken. The Non-Executive Directors only receive directors’ fees.

No Director shall participate or vote on the deliberations and decisions concerning his own remuneration and benefits.


Any amendment to the Remuneration Policy shall be deliberated by the Remuneration Committee, and any recommendation for revisions of the Remuneration Policy shall be presented to the Board for approval.


7. ACCESS TO INFORMATION AND INDEPENDENT ADVICE

All Directors have access to the advice and services of the Company Secretary 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.


8. COMPANY SECRETARY

The appointment or removal of Company Secretary shall be the prerogative of the Board as a whole. The Company Secretary 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.

All Directors have access to the advice and services of the Company Secretary, particularly relating to procedural and related statutory obligations, as well as updates on regulatory requirements such as the listing rules, codes, guidelines and relevant legislation.

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 Company Secretary also assists the Chairman in the preparation for and conduct of meetings.

The Board papers will be collated and circulated to the Directors by the Company Secretary. The Company Secretary will supervise the filing and storage of all board papers.


9. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS


9.1 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 Strategic 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, 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 Senior Management which includes the Group Managing Director/ Group Chief Executive and/ or Executive Directors shall also take 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 the 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 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: ir@mahsing.com.my or the Chairman of the Board at email: chairman@mahsing.com.my.


9.2 General Meeting

The general meeting 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 general meeting concerned.

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 general meeting, press conference is to be conducted to provide the members of the media with opportunities to receive further updates of information about the Group. Disclosure made to shareholders, investors and media are handled within the prescribed disclosure requirements under the Listing Requirements and guided by Corporate Disclosure Guide issued by Bursa Securities.


10. REVIEW OF THE BOARD CHARTER

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.