The Board of Directors (“the Board”) of Gagasan Nadi Cergas Berhad (“Gagasan Nadi” or “the Company” or “the Group”) acknowledges the importance of the principles and practices as set out in the Malaysian Code on Corporate Governance (“MCCG”) in managing Gagasan Nadi’s business towards its mission of sustainable growth.
Although the Company was listed on the ACE Market of Bursa Malaysia Securities Berhad on 8 January 2019, the Board nevertheless wishes to present this statement to its shareholders and stakeholders with an overview of the Company’s application of MCCG practices for the financial year ended 31 December 2018.
However, the Company was not able to apply all the principles and practices set out in MCCG pursuant to Rule 15.25 of the ACE Market Listing Requirements of the Bursa Malaysia Securities Berhad as certain practices and processes were not relevant or still being established during the financial year.
The Corporate Governance Overview Statement can be read here.
This Board Charter sets out composition, roles and responsibilities and processes of the Board of Directors (“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 responsibilities on behalf of the Group would act in the best interests of all stakeholders.
This Board Charter incorporates the Malaysian Code on Corporate Governance (“MCCG”) by the Securities Commission Malaysia in April 2017, as considered appropriate, and ACE Market Listing Requirements of Bursa Securities Berhad (“Bursa Securities”) (“Listing Requirements”) updated in July 2016 on corporate governance.
Whilst this Board Charter serves as a structured guide, especially for new Directors who are on-board, it shall not be construed as an exhaustive blueprint by Directors on corporate governance matters.
The composition of the Board shall be determined using the following principles:
- At least half (1/2) of the Board are Independent Directors as recommended by MCCG.
- 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.
- The Board considers that it should consist of qualified individuals with broad base of industry knowledge, experience and technical skill necessary to govern the Company and the Group. The Nomination Committee is, therefore, entrusted by the Board to appraise candidates for directorship, including those who retire and offer themselves for re-election, before recommending to the Board.
The roles of the Independent Non-Executive Directors are particularly important in bringing independent judgement and ensuring all issues proposed by the executive management are fully discussed and examined to take into account the long-term interests, not only of the shareholders, but also other stakeholders such as the employees, customers and business associates.
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. As such, the Board chooses not to take a prescriptive approach to independence, but to consider the independence of each Director, on a case by case basis, by taking into consideration the following factors:
- The suitability and ability of an Independent Non-Executive Director to carry out his roles and responsibilities effectively should be based on his calibre, qualifications, experience, personal qualities and knowledge of the Group’s business operation and activities.
- The ability of an Independent Non-Executive Director must be independent of management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interest of the Company
The Nomination Committee reviews the independence of each Director on an on-going basis, in light of interests disclosed to the Board, and recommends the same to the Board for consideration.
Appointment and re-election of Directors
With in-depth knowledge of the Group’s business operations and activities, the Directors shall be in position to contribute meaningfully to the Group’s conduct of business. The Board values such knowledge and experience in addition to other qualities and will exercise discretion in the review of Board composition and appointments.
The Board is responsible in determining the appropriate size of the Board. Candidates for appointment to the Board shall be forwarded to the Nomination committee for their review. In making their recommendation, the Nomination Committee will consider the required mix of skills, experience, gender diversity and other qualities, where appropriate.
In accordance with Constitution 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 every 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 election of each Director is voted on separately.
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 outside the Group.
ROLES AND RESPONSIBILITIES
Responsibilities 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:
- Promote good corporate governance culture between the group which reinforces ethical, prudence and professional behavior.
- Objectively reviewing, adopting and monitoring the implementation of the Group’s strategic plans as proposed by the Management. The strategic plan includes promotes sustainability i.e. achieving a satisfactory balance on bottom-line growth, safeguarding the welfare of people and community within a harmonious state of the environment;
- Overseeing the conduct of the Group’s business to ensure it is being properly managed. Also, overseeing and evaluating corporate behaviour and conduct of business of the Group;
- Identifying principal risks and ensuring implementation of appropriate internal controls and mitigation measures to achieve a proper balance between risks incurred and potential returns to the shareholders.’
- Ensuring there is orderly succession of senior management positions of sufficient calibre. 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 training, appointment and performance monitoring of management positions;
- overseeing the development and implementation of shareholder communications policy; and
- reviewing the adequacy and the effectiveness of the management information and risk management and internal control system.
Responsibilities 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:
to set the board agenda for the Board meetings.
- to facilitate the effective contribution of all Directors at Board meetings and ensure the appropriate level of interaction among Board members and senior management;
- to lead the Board and ensure a balance composition of skills, knowledge and experience within the Board members;
- to promote constructive and respectful relations between Directors and senior management; and
- to chair all general meetings with the shareholders and ensure effective communication with shareholders and relevant stakeholders.
The Board has identified the Chairman as the Senior Independent Non-Executive Director to whom concerns of shareholders and other stakeholders may be conveyed.
Responsibilities 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:
- 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;
- to supervise and ensure an effective management team and structure, management development program and succession plans contributing to the success of the Group;
- to assess all business opportunities which are potentially beneficial to the Group; and
- to serve as chief spokesperson for the Group.
Responsibilities of Board Committees
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; and
ii. Remuneration and Nomination 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 set out in Appendices I and II respectively are reviewed as and when required.
As a matter of principle, Board Committees have access to the appropriate external and professional advice needed to assist them in fulfilling their roles.
3.5 Board Meetings
The Board shall conduct at least 4 scheduled meetings annually. Additional meetings will be held on an ad-hoc basis to deliberate on matters which required Board decision, approval, direction or attention.
A full agenda of meeting and all Board papers would be distributed at least five business days 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 service of other senior management or external consultants will be arranged to brief and assist the Directors whenever necessary so as to enable the Directors to make independent and informed decisions.
During Board meetings, the Non-Executive Directors will be briefed on, amongst others, major operational, financial and corporate issues, activities and performance of projects, divisional performance, business outlook, major acquisition and disposal of assets including investments and changes in the requirements of regulatory bodies.
The Chairmen of Board Committees will inform the Directors at Board meetings, of any salient matters noted by Board committees and which require the Board’s notice, direction or decision.
3.6 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.
3.7 Directors’ Remuneration
The performance of the Directors is measured by the Directors’ contribution and commitment to both the Board and the Company.
The Remuneration Committee shall review the remuneration package periodically and make recommendation to the Board for approval.
The remuneration of Executive Directors and senior management are 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 package.
The remuneration package of Non-Executive Directors are determined by the Board as a whole and are subject to shareholders’ approval.
3.8 Directors’ Training
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.
4. COMPANY SECRETARY
The appointment or removal of Company Secretary of the Board shall be the prerogative of the Board as a whole. The Secretary appointed 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.
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.
5. BOARD POLICIES
5.1 Code of Ethics and Conduct
The Gagasan Nadi Cergas Code of Ethics and Conduct is to be observed by all Directors and employees of the Group, and the core areas of conduct under the Code include the following: –
i. conflict of interest;
ii. confidential information;
iii. inside information and securities trading;
iv. protection of assets;
v. business records and control;
vi. compliance to the law;
vii. personal gifting and contribution;
viii. health and safety;
ix. sexual harassment;
x. outside interest;
xi. fair and courteous behaviour;
The Board will review the Code regularly to ensure that it continues to remain relevant and appropriate. The Code is made available for reference in the Company’s website at http://www.nadicergas.com/.
5.2 Corporate Disclosure Policies and Procedures
The Board has not formalize any corporate disclosure policy and procedure which would apply to the Company and the Group.
The disclosures made by the Company and the Group to Bursa Securities, shareholders, investors and media are handled by relevant personnel including Company Secretary and/or the designated staff in charge within the prescribed disclosure requirements under the Listing Requirements and guided by the Corporate Disclosure Guide issued by Bursa Securities.
Such disclosures would only be released to Bursa Securities, shareholders, investors and media after having reviewed and approved by senior management and/or Executive Directors and/or Group Managing Director/Group Chief Executive or the Board (where applicable).
5.3 Boardroom Diversity Policy
The Board recognizes the value of having women members of the Board and have established a gender policy of having at least one woman member on the board.
The Board has delegated the power to the Nomination Committee through its Terms of Reference to recommend to the Board the appropriate Board balance (including gender diversity) and size of non-executive participation.
The Nomination Committee abides by Paragraph 2.20A of the Listing Requirements when it assesses candidates for appointment as Directors to ensure such candidates have the character, experience, integrity, competence and time to effectively discharge his/her role as a Director.
5.4 Sustainability Policy
The Board has formalised the Company’s strategies on promoting sustainability in the conduct of the Group’s businesses.
Sustainability efforts and initiatives are embedded in the day-to-day operational activities or are organized via special programs for specific sustainability cause. By achieving a satisfactory balance on bottom-line growth, welfare safeguard of people and community within a harmonious state of the environment, such efforts are intended to benefit the shareholders, investors, operating environment, society, employees, customers, business partners, contractors, suppliers and other stakeholders.
The Sustainability Policy, which is disclosed in the Annual Report, is made available
for reference in the Company’s website at http://www.nadicergas.com/.
6. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS
6.1 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 Corporate 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 and 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 top management which includes the Group Managing Director/ Group Chief Executive and/ or Executive Directors also takes 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 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 http://www.bursamalaysia.com.
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 7887 3388, Fax: 603 7887 3355, Email: [investors]@nadicergas.com or to the Chairman or Senior Independent Non-Executive Director at email: [board]@nadicergas.com.
6.2 Annual General Meeting (“AGM”) and Extraordinary General Meeting (“EGM”)
The AGM 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 EGM concerned.
For the benefit of the shareholders who are present at the AGM and/or EGM, 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.
7. ACCESS TO INFORMATION AND INDEPENDENT ADVICE
All Directors have access to the advice and services of the Company Secretaries 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. 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.nadicergas.com/.
Adopted on 15 September 2017
TERMS OF REFERENCE OF AUDIT COMMITTEE
The Audit Committee shall be appointed by the Board of Directors from amongst the Non-Executive Directors and shall consist of not less than three members, with a majority of them being Independent Directors. The members of the Audit Committee shall elect a Chairman from among their numbers, and who shall be an Independent Director. An alternate Director shall not be appointed as a member of the Audit Committee. The Chairman of the Board shall not be the Chairman of the Audit Committee.
All members of the Audit Committee should be financially literate. At least one member of the Audit Committee:
i. shall be a member of the Malaysian Institute of Accountants; or
ii. if not a member of the Malaysian Institute of Accountants, the member shall have at least three years’ working experience and:
a. shall have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
b. shall be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
iii. fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).
The Nomination & Remuneration Committee shall review the term of office and performance of the Audit Committee and each of its members annually to determine whether the Audit Committee members have carried out their duties in accordance with the terms of reference.
2. Meetings and Minutes
Meetings shall be held at least four times a year, and at least once a year, the Committee shall meet with the external auditors and internal auditors without any executive officer of the Group being present. The Chairman may request for additional meetings if they consider it necessary.
A quorum consists of two members present, both of whom must be Independent Directors.
The Company Secretary shall act as secretary to the Audit Committee. Minutes of each meeting shall be distributed to each Board member, and the Chairman of the Committee shall report on key issues discussed at each meeting to the Board.
The Audit Committee shall have the following authority as empowered by the Board:
to investigate any activity within its term of reference;
full, free and unrestricted access to any information pertaining to the Group;
direct communication channels with the external and internal auditors, as well as all employees of the Group; and
to obtain external independent professional advice as necessary
to assess the suitability, objectivity and independence of the external auditors and to set up a policy with regards to appointment of former key audit partner as member of the audit committee.
The following are the main duties and responsibilities of the Committee collectively:
i. to review the quarterly results to Bursa Securities and year-end financial statements of the Group before submission to the Board, focusing particularly on:
a. the going concern assumption;
b. any changes in or implementation of major accounting policies and practices;
c. significant issues arising from the audit including financial reporting issues, significant and unusual events or transactions, and how these matters are addressed;
d. compliance with accounting standards, regulatory and other legal requirements; and
e. major judgmental areas.
ii. to consider the nomination and appointment of external auditors and, if found appropriate, to recommend their appointment and of their audit fee;
iii. to consider letters of resignation, if any, from the external auditors and relevant questions pertaining to their resignation or dismissal;
iv. to discuss with the external auditors, prior to the commencement of audit, their audit plan, which shall state the nature of the audit, and to ensure an effective co-ordination of audit, where more than one audit firm is involved;
v. to review with the external auditors, their evaluation of system of internal controls, their management letter and the management’s response;
vi. to review the assistance given by the employees of the Company to the external auditors;
vii. to review the following in respect of internal audit:
a. the adequacy of the audit scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its functions;
b. the internal audit plan, programme and activities including processes and systems on sustainability management and reporting;
c. the major findings of internal audit investigations and management’s responses, and ensure appropriate actions are taken on the recommendations of the internal audit function;
d. assessment of the performance of the head of the internal audit function;
e. appointment or termination of senior staff members of the internal audit function; and
f. resignations of internal audit staff members and provide resigning staff members an opportunity to submit their reasons for resignation.
viii. to monitor any related party transactions and situations where a conflict of interest may arise within the Company or Group, including any transaction, procedure or course of conduct that raises questions of management integrity, and to ensure that the Directors report such transactions annually to the shareholders via the annual report;
ix. to review the reports in relation to the adequacy and integrity of the Group’s internal control system and to review the results of the annual review done on the system of internal control and the risk management framework;
x. to discuss problems and reservations arising from the interim and final external audits, and any matters the external auditors and/or internal auditors may wish to discuss (in the absence of management, where necessary);
xi. to review all prospective financial information provided to the regulators and/or to the public;
xii. to oversee any periodic or ad-hoc audit or assurance activities with respect to sustainability management and reporting processes;
xiii. to report promptly to the stock exchange on any matter reported by it to the Board of Directors, which has not been satisfactorily resolved resulting in the breach of the Listing Requirements of Bursa Securities;
xiv. to conduct an annual assessment on the suitability, objectivity and independence of the external audit firm; and
xv. to consider other matters as may be directed by the Board from time to time.
TERMS OF REFERENCE OF NOMINATION COMMITTEE
Members of the Nomination Committee (“NC”) shall be appointed by the Board of Directors from amongst the Non-Executive Directors and shall consist of not less than three members, with a majority of them being Independent Directors.
The Board of Directors shall review the term of office and performance of the NC and each of its members annually to determine whether the NC members have carried out their duties in accordance with the Terms of Reference.
2. Meetings and Minutes
Meetings shall be held at least once a year or as and when the NC deems necessary to fulfil its responsibilities. The quorum shall be two thirds of the members of the NC, of which a majority of members must be Independent Directors.
The Company Secretary shall act as secretary to the NC. Minutes of each meeting shall be distributed to each Committee Member, and the Chairman of the NC shall report on key issues discussed at each meeting to the Board.
The NC shall have the following authority as empowered by the Board:
to make decision on matters which fall within the duties and responsibilities of the NC; and
to have sufficient resources in order to carry out its duties, including obtain independent professional advice on any matters within its Terms of Reference.
The following are the main duties and responsibilities of the NC collectively: –
i. to review, consider and recommend to the Board candidates to be on the Board of the Company and its subsidiaries, including Committees of the Board;
ii. to review, consider and recommend to the Board candidates for the positions of Senior Management of the Company;
iii. to review the Board composition and determine the mix of gender, skills, experience and other relevant qualities, including core competencies of the whole Board and Senior Management, on an annual basis;
iv. to review succession planning for the Board and Senior Management;
v. to assess the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director and each member of the Board Committees as well as their training needs on an annual basis;
vi. to establish and review the criteria to be used in the annual assessment of the Board, Board Committees and each individual Director and each member of the Board Committees, including assessment of the independence of independent Director; and
vii. to consider such other functions as may be agreed to by the NC and/or the Board of Directors.
The term “Senior Management” shall mean management staff report directly to the Group Managing Director.
TERMS OF REFERENCE OF REMUNERATION COMMITTEE
Members of the Remuneration Committee (“RC”) shall be appointed by the Board of Directors from amongst the Non-Executive Directors and shall consist of not less than three members, with a majority of them being Independent Directors.
The Board of Directors shall review the term of office and performance of the RC and each of its members annually to determine whether the RC members have carried out their duties in accordance with the Terms of Reference.
6. Meetings and Minutes
Meetings shall be held at least once a year or as and when the RC deems necessary to fulfil its responsibilities. The quorum shall be two thirds of the members of the RC, of which a majority of members must be Independent Directors.
The Company Secretary shall act as secretary to the RC. Minutes of each meeting shall be distributed to each Committee Member, and the Chairman of the RC shall report on key issues discussed at each meeting to the Board.
The RC shall have the following authority as empowered by the Board:
to make decision on matters which fall within the duties and responsibilities of the RC; and
to have sufficient resources in order to carry out its duties, including obtain independent professional advice on any matters within its Terms of Reference.
The following are the main duties and responsibilities of the RC collectively: –
viii. to establish and review from time to time the scheme of service and employment of staff in the Group;
ix. to establish and review the remuneration of non-executive Directors;
x. to establish and review the remuneration packages of Executive Directors and Senior Management of the Group having regard to among others, the Group’s operating results and individual performance;
xi. to review and approve annual salary increments and bonuses of Executive Directors, Senior Management and staff of the Group; and
xii. to consider such other functions as may be agreed to by the RC and/or the Board of Directors.
The term “Senior Management” shall mean management staff report directly to the Group Managing Director.