The Board of Directors (“the Board”) of Paos Holdings Berhad (“the Company”) is accountable and responsible for the performance and affairs of the Company and its subsidiaries (collectively “Group”). The Board is to ensure the maximization of shareholders’ value and safeguarding the stakeholders’ interests and thus all Board members are expected to show good stewardship and act in a professional manner, as well as upholding the core values of integrity and enterprise with due regard to their fiduciary duties and responsibilities.
The Board Charter sets out the composition, roles, responsibilities, operations and processes of the Board and is to ensure that all Board members are acting on behalf of the Company and are aware that their duties and responsibilities are towards the best interest of the Group.
This Board Charter would act as a source reference and primary induction literature to provide insights to prospective Board members and senior management. In addition, it will assist the Board in the assessment of its own performance and that of its individual Directors.
2. THE BOARD
2.1 Board Membership Guideline
The number of Directors shall not be less than 2 but not more than 20 as set out in the Articles of Association of the Company.
At any one time, at least 2 or 1/3 of the Board members are Independent Directors.
The composition and size of the Board are reviewed from time to time to ensure its appropriateness.
2.1.2 Appointments and Re-election
The appointment of a new Director is a matter for consideration and decision by the full Board upon the recommendation of the Nomination Committee (“NC”). In making these recommendations, the NC will consider the required mix of skills, experience and diversity, including gender, where appropriate, which the Director brings to the Board.
The Articles of Association of the Company provides that every newly appointed Director be subjected to re-election at the immediate Annual General Meeting (“AGM”). Further, one third (1/3) of the Board shall retire from office and be eligible for re-election at every AGM, and all the Directors shall submit themselves for re-election at least every three (3) years.
An Independent Director is independent of management and free of any significant business or other relationships that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgment, and who otherwise meet the criteria for independence.
The Independent Directors provide independent judgment, experience and objectivity without being subordinated to operational considerations. They help to ensure that the interests of all shareholders are indeed taken into account by the Board and that the relevant issues are subjected to objective and impartial consideration by the Board.
The Board assesses the independence of the Independent Directors annually by taking into consideration of their disclosed interests and having regard to the criteria for assessing the independence of Directors under the annual Board Assessment. A separate assessment for Independent Directors is also undertaken when any new interest or relationships develops.
The tenure of an Independent Director shall not exceed a cumulative term of 9 years. Upon completion of the 9 years, an Independent Director may continue to serve on the Board subject to the Director’s designation as a Non-Independent Director. Otherwise, the Board must justify and seek shareholders’ approval at the Company’s Annual General Meeting in the event it retains the Director as an Independent Director.
2.1.4 New Directorship
All Board members shall notify the Chairman of the Board before accepting any new directorship. The notification shall include an indication of time that will be spent on the new appointment. The Chairman shall also notify the Board if he has any new directorship or significant commitments outside the Company.
2.2 Board Role
2.2.1 Duties and Responsibilities
The Board assumes, amongst others, the following duties and responsibilities:-
(1) Adopting and reviewing the overall strategic plans for the Company and Group;
(2) Overseeing and evaluating the conduct of business of the Company and Group;
(3) Identifying principal risks and ensuring implementation of a proper risk management system to manage such risks;
(4) Establishing a succession plan;
(5) Developing and implementing shareholder communication policy for the Company; and
(6) Reviewing the adequacy and the integrity of the internal control systems and management information systems of the Company and Group, including systems for compliance with applicable laws, rules, directives and guidelines.
2.2.2 Matters Reserved for the Board
The following are matters which are specifically reserved for the Board:-
(1) Approval of major corporate plans, policies and programmes;
(2) Approval of major capital commitments;
(3) Approval of new ventures;
(4) Approval of material acquisitions and disposals of undertakings and properties; and
(5) Changes to the management and control structure within the Company and its subsidiaries (“the Group”), including key policies, delegated authority limits.
2.3 Role of Chairman
The Chairman also assumes the position of the Group’s Managing Director. The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board and has overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions. The Chairman is responsible to ensure due execution of strategic goals, effective operation within the Company, and to explain, clarify and inform the Board on matters pertaining to the Group.
The responsibilities of the Chairman, amongst others, are as follows:-
(1) Leading the Board and ensuring its effectiveness of all aspects of its role;
(2) Managing Board communications and Board effectiveness and effective supervision over management;
(3) Facilitating the effective contribution of all Directors at Board meetings;
(4) Ensuring constructive and respectful relations between Directors, and between the Board and Management;
(5) Ensuring effective communication with shareholders and relevant stakeholders.
(6) Developing the strategic direction of the Group;
(7) Ensuring that the Group’s strategies and corporate policies are effectively implemented;
(8) Ensuring that Board decisions are implemented and board directions are adhered to;
(9) Ensuring the efficiency and effectiveness of the operation for the Group;
(10)Assessing business opportunities which are of potential benefit to the Group; and
(11)Bringing material and other relevant matters to the attention of the Board in an accurate and timely manner.
2.4 Board Committees
The Board may from time to time establish Committees as is considered appropriate to assist in carrying out its duties and responsibilities. The Board delegates certain functions to the following Committees to assist in the execution of its responsibilities:-
(1) Audit Committee;
(2) Nomination Committee;
(3) Remuneration Committee; and
(4) Investment Committee
The Committees shall operate under clearly defined terms of reference. The Committees are authorized by the Board to deal with and to deliberate on matters delegated to them within their terms of reference. The Chairman of the respective Committees reports to the Board on the outcome of the Committee meetings.
2.5 Board Meetings
The Board shall conduct at least four (4) scheduled meetings annually, with additional meetings to be convened as and when necessary.
A full agenda of the meeting and all Board papers, including complicated issues or specific matters, would be distributed in advance to ensure Directors are well informed and have the opportunity to seek additional information, and are able to obtain further clarification from the Company Secretary, should such a need arise. Where necessary, the services of other senior management or external consultants will be arranged to brief and help the Directors clear any doubt or concern.
The proceedings of all meetings will be minuted and signed by the Chairman of the meeting. Minutes of all Board meetings will be circulated to all Directors and approved by the Board at the subsequent meeting. Actions on all matters arising from any meeting shall be reported at the following meeting.
Directors’ Circular Resolutions signed by all the Directors shall be as valid and effectual as if the resolutions had been passed at the meeting of the Directors.
2.6 Financial Reporting
In presenting the annual financial statements and quarterly announcements to the shareholders, including other price sensitive public reports and reports submitted to regulators, the Board aims to present a balanced and understandable assessment of the Group’s position and prospects.
The Board ensures that the financial statements is prepared in accordance with the Companies Act and applicable approved accounting reporting standards, so as to give a true and fair view of the state of affairs of the Group and the Company.
2.7 Directors’ Remuneration
The objectives of the Group’s policy on Directors’ remuneration are to ensure that the Group attracts and retains Directors of caliber and integrity to the run the Group successfully. The Executive Directors’ remuneration will be reviewed by Remuneration Committee annually and recommended for Board’s approval after taking into consideration all relevant factors including the function, workload, responsibilities, contribution and commitment of the Executive Directors.
In the case of the Non-Executive Directors, the level of remuneration reflects the contribution and level of responsibilities undertaken by the particular Non-Executive Director. The fee which is subject to the approval of the shareholders shall be fixed in sum and not by a commission or on percentage of profits/turnover.
2.8 Directors’ Training & Continuing Education
In addition to the Mandatory Accreditation Programme as required by the Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Directors shall continue to update their knowledge and enhance their skills through appropriate continuing education programmes and life-long learning. This will enable Directors to effectively discharge duties and sustain active participation in the Board deliberations.
3. COMPANY SECRETARY
The appointment and removal of the Company Secretary or Secretaries shall be the prerogative of the Board.
The Company Secretary is responsible for ensuring that Board procedures are followed, that the applicable rules and regulations for the conduct of the affairs of the Board are complied with and for all matters associated with the maintenance of the Board or otherwise required for its efficient operation.
4. SHAREHOLDER COMMUNICATION
The Board shall place great importance in ensuring the high standards of transparency and accountability in its communication to shareholders, as well as to potential investors, analysts and the public. The shareholders shall be informed of all material matters affecting the Company and Group.
The ways of communication to shareholders and investors, amongst others, are as follows:-
(a) Timely announcements and disclosures made to the Bursa Malaysia Securities Berhad, which includes quarterly financial results, material contract awarded, changes in the composition of the Group and any other material information that may affect investors’ decision making;
(b) Make available of the corporate information and/or disclosures of the Group for reference on the website; and
(c) Dialogues with financial analysts as a means of effective communication that enable the Board and Management to convey information relating to the Company’s performance, corporate strategy and other matters affecting shareholders’ interests as and when required.
The AGM is the principal forum for dialogue with shareholders. The Board also encourages shareholders to participate in the question and answer session at the AGM.
5. ACCESS TO INFORMATION AND INDEPENDENT ADVICE
The Directors may access such information and seek such independent professional advice at the Company’s expense, as they individually or collectively consider necessary, to fulfill their responsibilities and permit independent judgment in decision making.
6. CODE OF ETHICS AND CONDUCT
The Company Code of Ethics and Conduct (“the Code”) is to be observed by all Directors and employees of the Group.
The Board will review the Code regularly to ensure that it continues to remain relevant and appropriate.
7. REVIEW OF THE BOARD CHARTER
Any subsequent amendment to the Charter can only be approved by the Board. The Board Charter will be periodically reviewed 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.