Corporate Governance Overview Statement
This statement is to provide shareholders and investors with an overview of the application of the Principles set out in the Malaysian Code on Corporate Governance (“MCCG”) by MB World Group and should be read together with the CG Report 2017 of MB World Group (“CG Report”) which accompanies this Annual Report and is also available on MB World Group’s website at www.mbworld.com.my.
The CG Report provides the details on how MB World Group has applied each Practice as set out in the MCCG during the financial year ended 2017 (“FY2017”). Other than Practice 4.1, 7.2 and 12.3, the Board is of the view that MB World Group has substantially complied with the recommendations of MCCG.
PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS
I. Board Responsibilities
The roles and responsibilities of the Board and Management, the Board Committees and the individual Directors are set out in the Board Charter which is accessible through MB World Group’s website. The Board Charter will be reviewed on an annual basis.
The Board has enhanced its Board Charter and adopted new policies and made it available together with other existing policies on MB World Group’s website at www.mbworld.com.my as follows:-
• Whistle Blowing Policy.
• Code of Business Conduct and Ethics.
• Board Policy on Time Commitment.
• Corporate Disclosure Policy.
• Shareholders Communication Policy.
• Continuing Education Policy.
• Gender Diversity Policy (adopted on 28 March 2018).
• Policy Framework on Remuneration of Directors (adopted on 28 March 2018).
It is the primary governance responsibilities of the Board to lead and control MB World Group Berhad and its subsidiaries (“the Group”). The Board’s responsibilities in respect of the stewardship of the Group include planning for the strategic direction, development and control of the Group and initiating to embrace the responsibilities listed in the MCCG. While the Board sets the strategic plan and policies, the Executive Directors are responsible for making and implementing the operational and corporate decisions while the Independent Non-Executive Directors ensure corporate accountability by providing unbiased and independent views, advice and judgment and challenging the Management’s assumptions and projections in safeguarding the interests of shareholders.
The Board has defined the roles and responsibilities for the Board and its Directors. In discharging their fiduciary responsibilities, the Board during its Board meetings deliberates and reviews the financial performance of the Group, the execution of strategic plans by the Executive Directors, the principal risks faced by the Group and the effectiveness of management mitigation plan, the appraisal of Executive Management and Senior Management succession plan as well as the integrity of management information and systems of internal control of the Group.
The day-to-day management of the business operations of the Group is led by the Executive Directors and a team of Senior Management Executives. The Board is also kept updated on the Group’s strategic direction initiatives, significant operational and regulatory challenges faced by the Group during its meetings.
The Board is headed by an Independent Non-Executive Chairman with a wealth of experience garnered from both the public and private sector. The roles of the Independent Non-Executive Chairman is defined and set out in the Board Charter and is further explained in the CG Report.
The positions of the Chairman and the Executive Management are separately held ensuring balance of power, accountability and division of roles and responsibilities of the Board and the Management of the Group’s business and operations. The Board has developed descriptions for responsibilities of the Board Chairman, Executive Directors, the individual Board Members as well as the Chief Financial Officer designate. The roles and responsibilities of the Chief Financial Officer is currently carried out by the Executive Director in charge of corporate finance and administration. The details of these responsibilities are articulated in the Board Charter which is accessible from MB World Group’s corporate website at www.mbworld.com.my.
The Board maintains specific Board Committees namely the Audit Risk Management Committee (“ARMC”) and the Nomination and Remuneration Committee (“NRC”). The ARMC and Board are further assisted by a newly established Sustainability & Risk Management Committee (“SRMC”), a sub-committee of the ARMC. These Committees ensure greater focus, objectivity and independence in the deliberation of specific board agenda. The Board has defined the terms of reference for each Committee and the Chairman of these respective committees would report to the Board during the Board meetings on significant matters and salient matters deliberated in the Committees.
The Board is supported by two (2) External Company Secretaries. Both Company Secretaries of MB World Group are qualified to act as Company Secretary under Section 235 of the Companies Act 2016, of which one is a Fellow Member and the other, an Associate Member of the Malaysian Institute of Chartered Secretaries & Administrators. The Company Secretaries provide the required support to the Board in carrying out its duties and stewardship role, providing the necessary advisory role with regards to the Company’s constitution, Board’s policies and procedures as well as compliance with all regulatory requirements, codes, guidance and legislation.
II. Board Composition
MB World Group is led and managed by a diverse, competent and experienced Board of Directors with a mix of suitably qualified and experienced professionals having wide and varied expertise in the fields of business, property development, accounting and taxation. This enables the Board to carry out its responsibilities effectively and ensures accountability. The current Board is drawn from different ethnic, cultural and socio-economic background with their age ranging from 23 years to 67 years to ensure that different viewpoints are considered in the decision making process.
The profile of each Director is set out in pages 19 to 22 in Annual Report.
The Board acknowledges the importance of diversity to ensure the mix and profiles of the Board members, in terms of age, ethnicity and gender, ability to provide the necessary range of perspectives, experiences and expertise required are well balanced in order to achieve effective board stewardship. The Board had adopted a Gender Diversity Policy which is made available at MB World Group’s website. The Board currently includes two Executive Directors of female gender.
During the FY2017, the Board through its NRC conducted an annual review of the Board’s size, composition and balance and concluded that the Board’s dynamics are healthy and effective. The present members of the Board possess the appropriate skills, experience and qualities to steer the Group forward. The NRC is also satisfied that the existing structure, size, composition, current mix of skills, competence, knowledge, experience and qualities of the existing Board members are appropriate to enable the Board to carry out its responsibilities effectively.
The Board will continue to monitor and review the Board size and composition and will nominate new members as and when the need arises.
The Board takes cognizance of the recommendation for at least half of the Board to comprise independent directors and although the Board has not made any decision at this juncture, going forward, the Board will be reviewing and deliberating on the merits of the recommendation vis a vis, the Group’s size, structure and dynamics during the coming financial year.
The Board has also adopted the best practices for assessing the independence of Independent Directors annually and the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. When the Board retains an Independent Director who has served in that capacity for more than nine (9) years, the Board would justify its decision and seek shareholders’ approval.
The re-election of Directors provides an opportunity for shareholders to renew their mandate conferred to the Directors.
The Constitution of the Company provides that all directors shall retire by rotation once in every three (3) years or at least one-third (1/3) of the Board shall retire but shall be eligible to offer themselves for re-election at the Annual General Meeting (“AGM”).
The above provisions are adhered to by the Board in every AGM. Information on Directors standing for re-election are outlined in the Profile of Board of Directors covering their details of profession, directorships in other public companies and shareholdings in the Company and their attendance of the Board meetings are set forth on pages 19 to 22 in Annual Report.
At the forthcoming 2018 AGM, Ms Cindi Sim and Mr Chong Jiun Shyang are due to retire by rotation under Article 109 of the Constitution and being eligible have offered themselves for re-election. Following the NRC’s review on the performance of the two Directors and having noted their significant and valued contributions to the Board, the NRC has recommended their re-election to the Board and the Board has concurred with such recommendation and is recommending that shareholders re-elect the said Directors at the forthcoming 2018 AGM.
In compliance with the provision of Paragraph 15.08A(3) of the Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”), the activities of the NRC for the FY2017 are set out in Practices 4.4, 4.6 & 5.1 of the CG Report.
The NRC and Board are mindful of the need to remunerate and retain its Directors to ensure that their commitment remains and therefore their remuneration package is directly linked to their performance, service, seniority, experience and scope of responsibilities.
The NRC is responsible to establish, recommend and constantly review a formal and transparent remuneration policy framework and terms of employment for the Board to attract and retain directors which should be aligned with the business strategy and long-term objectives of the Group taking into consideration that the remuneration of the Board should reflect the Board’s responsibilities, expertise and complexity of the Group’s activities.
During the FY2017, the NRC had reviewed the Director’s fees and benefits and the Executive Directors’ remuneration for the financial year ending 31 December 2018 (“FY2018”) and recommended to the Board for approval.
PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT
I. Audit Risk Management Committee
The Board has opted to combine the functions of Risk Management Committee with the functions of the Audit Committee (“AC”) on 28 March 2018 and the AC has been appropriately renamed as the Board’s Audit Risk Management Committee (“ARMC”).
The ARMC of MB World Group comprises wholly of Independent Non-Executive Directors. The ARMC Chairman, Mr. Chong Jiun Shyang, is a member of the Malaysian Institute of Accountants. He is not the Chairman of the Board.
The ARMC is authorised by the Board to investigate any activity within its Terms of Reference. It shall have full and unrestricted access to any information pertaining to the Group. The ARMC is authorised to seek any information it requires from any employee and all employees are directed to cooperate with any request made by the ARMC.
The detailed Terms of Reference of the ARMC outlining the composition, duties and functions, authority and procedures of the ARMC are published and available on MB World Group’s website at www.mbworld.com.my.
MB World Group has always recognised the need to uphold independence. None of the members of the current Board was a former key audit partner within the cooling-off period of two (2) years. Hence, no such person being appointed as a member of the ARMC. The ARMC has amended the Terms of Reference of the ARMC to include the requirements for former key audit partner to observe a cooling-off period of at least 2 years before being appointed as a member of the ARMC.
The ARMC carried out an assessment of the performance and suitability of Messrs Crowe Horwath the External Auditors based on the quality of services, sufficiency of resources, adequate resources and trained professional staff assigned to the audit. The ARMC is generally satisfied with the independence, performance and suitability of Messrs Crowe Horwath based on the assessment and is recommending to the Board and shareholders for approval for the re-appointment of Messrs Crowe Horwath as External Auditors for the FY2018.
The assessment of Performance of ARMC is conducted annually. The NRC evaluated and assessed the performance and effectiveness of the ARMC. The evaluation process amongst others considered whether the Committees had met its purpose, whether its composition was appropriate, and whether it had the necessary authority and processes to carry out its functions and fulfill its obligations.
II. Risk Management and Internal Control Framework
During FY2017, the Board and ARMC were assisted by the Executive Directors and its Finance Department to maintain its risk management system, which is reviewed and updated constantly to safeguard shareholders’ investments and the Group’s assets.
The Group’s internal audit function has been outsourced to an external consultant which reports directly to the ARMC.
The internal audit function currently reviews and appraises the risk management and internal control processes of the Group. The Statement on Risk Management and Internal Control set out on pages 33 to 34 in Annual Report provides an overview of the Group’s approach to ensure the effectiveness of the risk management and internal processes within the Group.
Going forward, the Board has restructured its risk management and internal control processes with the establishment of the ARMC and the SRMC.
PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS
I. Communication with Stakeholders
MB World Group is committed to upholding high standards of transparency and promotion of investor confidence through the provision of comprehensive, accurate and quality information on a timely and even basis.
The Board has in place the Shareholders Communication Policy and Corporate Disclosure Policy the details of which are available on MB World Group’s website at www.mbworld.com.my.
II. Conduct of General Meetings
As stated earlier, the Board recognises the importance of communications with its shareholders and will take additional measures to encourage shareholders’ participation at general meetings as recommended by the MCCG.
This includes the Chairman highlighting to shareholders and proxy holders, their right to speak up at general meetings, the conduct of poll voting for all resolutions tabled at general meetings and a review of the performance of the Group during the AGMs.
To ensure effective participation of and engagement with shareholders at the AGM in 2017, all Directors, including members of ARMC and NRC, attended and participated in said AGM.
In line with the best CG practice, the Notice of the 19th AGM and Annual Report are sent out to shareholders at least 28 days before the date of the meeting to allow sufficient time for shareholders to consider the proposed resolutions to be tabled at the AGM.
This CG Overview Statement was approved by the Board of Directors of MB World Group on 28 March 2018.