CORPORATE GOVERNANCE REPORT

STOCK CODE : 5279

COMPANY NAME : Serba Dinamik Holdings Berhad
FINANCIAL YEAR : 31 December 2018

OUTLINE:

SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

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

SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT

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

1
SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

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

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

Practice 1.1
The board should set the company’s strategic aims, ensure that the necessary
resources are in place for the company to meet its objectives and review
management performance.
The board should set the company’s values and standards, and ensure that its
obligations to its shareholders and other stakeholders are understood and met.

Application : Applied

Explanation on : The Board is committed to high standards of corporate

application of the governance and strives to ensure that it is practiced
practice throughout the Group as a fundamental part of
discharging its responsibilities to protect and enhance
shareholders' value and raise the performance of the
Group.
In addition, the Board is collectively responsible in
promoting success of the Group in building an enduring
and profitable business admired by customers and
stakeholders whilst achieving strong returns for
shareholders.
The duties, powers and functions of the Board are
governed by the Constitution of the Group, the Companies
Act 2016, Main Market Listing Requirements (“MMLR”) of
Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and
other regulatory guidelines and requirements that are in
force.
To ensure effective discharge of its functions, the Board
entrustred on following responsibilities:
(a) to review, challenge, approve and monitor strategic
business plan, which includes overall corporate
strategy, marketing plan, human resources plan,
information technology plan, financial plan, budget,
regulations plan and risk management plan;
(b) to oversee conduct and performance of businesses
and to determine whether the businesses are being
properly managed;

2
(c) to identify principal risks and ensuring
implementation of appropriate internal controls and
risks mitigation to effectively monitor and manage
these risks;
(d) To prepare for succession planning, including
appointing, training, fixing remuneration of, and
where appropriate, replacing senior management;
(e) to oversee development and implementation of a
shareholder communication policy for the Group;
(f) to review adequacy and integrity of management
information and internal controls systems, including
systems for compliance with applicable laws,
regulations, rules, directives, and guidelines; and
(g) to ensure that appropriate policies are in place,
adopted effectively and are regularly reviewed in
light of changing circumstances.

The Board also acknowledges importance of following:

• Maintaining a sound system of internal control and a
robust risk management practice for good corporate
governance with objective of safeguarding
shareholder's investment and the Group’s assets.
For this purpose, the Board has adopted a Risk
Governance Framework; and
• The need for effective Investor Relations and
Communications with shareholders and to provide
them with all relevant information affecting the Group.
The Board has established a number of Board Committees
as follows:
a) Audit & Risk Committee (“ARC”);
b) Nomination & Remuneration Committee (“NRC”); and
c) Investment Committee (“IC”).
In discharging its duties and roles effectively, the Board is
guided by the Board Charter, which defined principles and
guidelines that are to be applied by the Board, whilst the
Board Committees are guided by its respective terms of
reference.
The Board Charter and the Terms of Reference for each
Board Committee are accessible at the Group’s website,
and are subject for review from time to time to ensure that
it is remain relevant and are up-to-date.
The Chairman of these various Board Committees will
report to the Board the outcomes of the meetings.

3
 Further to the above, the Group has adopted the Code of
Conduct for directors & employees that seeks to ensure
that they will acts ethically in performing work or services
for the Group.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

4
Intended Outcome
Every company is headed by a board, which assumes responsibility for the
company’s leadership and is collectively responsible for meeting the objectives and
goals of the company.

Practice 1.2
A Chairman of the board who is responsible for instilling good corporate
governance practices, leadership and effectiveness of the board is appointed.

Application : Applied

Explanation on : The roles and responsibilities of Chairman of the Board were

application of the clearly specified in the Board Charter.
practice
The Chairman of the Board is an Independent Non -
Executive Director who is primarily responsible for orderly
conduct and function of the Board and shall ensure its
effectiveness on all aspects of its roles.
In addition, the Chairman is responsible for representing the
Board to shareholders and is responsible for ensuring
integrity and effectiveness of governance process of the
Group.
The Chairman of the Board shall also act as Chairman at
general meetings.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

5
Intended Outcome
Every company is headed by a board, which assumes responsibility for the
company’s leadership and is collectively responsible for meeting the objectives and
goals of the company.

Practice 1.3
The positions of Chairman and CEO are held by different individuals.

Application : Applied

Explanation on : The distinct and separate roles and responsibilities of the

application of the Chairman and Group Chief Executive Officer / Managing
practice Director (“GCEO/MD”) were defined in the Board Charter.
The Board practices a clear demarcation of duties and
responsibilities between the Chairman and GCEO/MD to
ensure a balance of power and authority in the Board.
To reflect the above, positions of Chairman and GCEO/MD
are held by 2 different individuals.
The Chairman, Dato’ Mohamed Nor Abu Bakar holds
position as an Independent Non-Executive Director, whilst
GCEO/MD is Dato’ Dr. Ir. Mohd Abdul Karim Abdullah
which holds position as a Non-Independent Executive
Director.
The Chairman is primarily responsible for stewardship and
smooth functioning of the Board, whilst the GCEO/MD is
responsible for overall operations of business,
organizational effectiveness and implementation of the
Group’s strategies and policies.
The GCEO/MD also manages respective responsibilities of
divisions, departments and units within the Group.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

6
Intended Outcome
Every company is headed by a board, which assumes responsibility for the
company’s leadership and is collectively responsible for meeting the objectives and
goals of the company.

Practice 1.4
The board is supported by a suitably qualified and competent Company Secretary
to provide sound governance advice, ensure adherence to rules and procedures,
and advocate adoption of corporate governance best practices.

Application : Applied

Explanation on : The Company Secretaries are qualified and competent to

application of the act pursuant to Section 235 of the Companies Act 2016.
practice
The Company Secretaries play an advisory role to the
Board, particularly with regards to the Constitution of the
Group, Board policies and procedures and the Group’s
compliance with regulatory requirements, codes,
guidance and legislation.
The Company Secretaries ensure that discussions and
deliberations at Board and Board Committee meetings are
well documented.
The Company Secretaries constantly keep themselves
abreast of evolving capital market environment, regulatory
changes and developments in corporate governance
through continuous training.
The Board is satisfied with performance and support
rendered by the Company Secretaries to the Board in
discharging their functions.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

7
Intended Outcome
Every company is headed by a board, which assumes responsibility for the
company’s leadership and is collectively responsible for meeting the objectives and
goals of the company.

Practice 1.5
Directors receive meeting materials, which are complete and accurate within a
reasonable period prior to the meeting.
Upon conclusion of the meeting, the minutes are circulated in a timely manner.

Application : Applied

Explanation on : The Board met at least quarterly with additional meetings

application of the convened as and when necessary.
practice
The Board, Board Committees and General Meeting for the
year under review were scheduled in advance to facilitate
Directors in planning ahead and incorporating the said
meetings into their respective schedules.
Notice of the Board and Board Committees meetings were
sent to Directors via e-mail at least 7 days prior to the
respective meeting.
Agenda and papers encompassing comprehensive
qualitative and quantitative information which include
objectives, background, critical issues, implications, risks,
strategic fit, recommendations and other pertinent
information are circulated to Directors to enable an
informed decision making by the Board.
The papers were circulated to all Directors at least 5
business days prior to each Board meeting.
This enables Directors to have sufficient time to peruse the
Board papers and seek clarifications or further details from
the Management or the Company Secretaries before
each meeting.
Any Director may request matters to be included in the
agenda.
Urgent papers may be presented and tabled at meetings
under the item “Any Other Matters”.
Presentations and briefings by the Management and
relevant external consultants, where applicable, were also
held at Board meetings to advise the Board.
In this regard, relevant information is furnished and
clarifications are given to assist the Board in making a
decision.

8
 All proceedings of Board and Board Committees meetings
were duly recorded in minutes of each meeting and the
signed minutes of each meeting are properly kept by the
Company Secretaries.
Minutes of the meetings are tabled for confirmation at the
next meeting.
The Company Secretaries will communicate to relevant
Management the Board’s decisions / recommendations
via circulation of minutes of meetings or its excerpt, for
appropriate actions to be taken.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

9
Intended Outcome
There is demarcation of responsibilities between the board, board committees and
management.
There is clarity in the authority of the board, its committees and individual directors.

Practice 2.1
The board has a board charter which is periodically reviewed and published on the
company’s website.
The board charter clearly identifies the respective roles and responsibilities of the
board, board committees, individual directors and management; and issues and
decisions reserved for the board.

Application : Applied

Explanation on : The Board has a Board Charter and Terms of Reference of

application of the its Board Committees, which are subject for review and it is
practice published on the Group’s website, and clearly identify:
• Respective roles and responsibilities of the Board, Board
Committees, individual directors and management;
and
• issues and decisions reserved for the Board.
In line with Paragraph 15.08 of MMLR, the Directors
recognize the importance and value of attending
conferences, training programs and seminars in order to
keep themselves abreast with the development and
changes in the industries in which the Group operates, as
well to update themselves on new statutory and regulatory
requirements.
The Management undertake the role as the coordinator to
manage and coordinate the Directors’ continuous
development program.
In Financial Year 2018, the directors attended and
participated in programs as follows, which they considered
as useful in contributing to the effective discharge of their
duties as Directors:
• Business Transformation - Drive Impactful Performance
Results
• Board Dynamics - What are the Key Essential
Requirements
• Training for post GE14: Malaysia Capital Market Outlook
and Direction
• Preparation for the Corporate Liability on Corruption
• Module 1: Directors as gatekeepers of market
participates

10
 • Module 2A: Business challenges and regulatory
expectations - What directors need to know (Equities &
Future Broking)
• Module 2B: Business challenges and regulatory
expectations - What directors need to know (Fund
Management)
• Module 3: Risk oversight and compliance - Action plan
for Board of directors
• Insolvency Act 1967: Revamping the Bankruptcy Act
1976
• Future: PropTech 2018
• Knowledge sharing session on Fiqh Muamalat
• Khazanah Mega Trends Forum
• KPMG Tax and Business Summit

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

11
Intended Outcome
The board is committed to promoting good business conduct and maintaining a
healthy corporate culture that engenders integrity, transparency and fairness.
The board, management, employees and other stakeholders are clear on what is
considered acceptable behaviour and practice in the company.

Practice 3.1
The board establishes a Code of Conduct and Ethics for the company, and
together with management implements its policies and procedures, which include
managing conflicts of interest, preventing the abuse of power, corruption, insider
trading and money laundering.
The Code of Conduct and Ethics is published on the company’s website.

Application : Applied

Explanation on : The Group has adopted the Code of Conduct for directors
application of the & employees that seeks to ensure that they will perform
practice work or services for the Group in ethical.
The Code of Conduct is published on the Group’s website.
The Code of Conduct places significant importance in
upholding principle of discipline, good conduct,
professionalism, loyalty, integrity and cohesiveness that are
critical to success and wellbeing of the Group.
The Code of Conduct detailed policy statements on the
standards of behavior and ethical conduct expected of
each individual to whom it applies.
The Code of Conduct expressly prohibits improper
solicitation, bribery, insider trading, money laundering and
other corrupt activity by employees and directors.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

12
Intended Outcome
The board is committed to promoting good business conduct and maintaining a
healthy corporate culture that engenders integrity, transparency and fairness.
The board, management, employees and other stakeholders are clear on what is
considered acceptable behaviour and practice in the company.

Practice 3.2
The board establishes, reviews and together with management implements policies
and procedures on whistleblowing.

Application : Applied

Explanation on : n/a
application of the
practice

Explanation for : The Board has approved Whistle-Blower Policy.

departure
The Whistle-Blower Policy is intended to directly support the
Group's Core Values, Code of Ethics and Governance
requirement.
Under the Whistle-Blower Policy, a whistleblower will be
accorded with protection of confidentiality of identity, to
the extent reasonably practicable.
Disclosure of information should initially and promptly be
made by the Whistle-Blower to 1 or more designated
independence personnel and / or independent directors
of the Group.
An employee who whistle blows internally will also be
protected against any adverse and detrimental action for
disclosing any improper conduct committed or about to
be committed within the Group, to the extent reasonably
practicable, provided that the disclosure is made in good
faith.
Such protection is accorded even if the investigation later
reveals that the whistle blower is mistaken as to the facts
and the rules and procedures involved.

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

13
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.1
At least half of the board comprises independent directors.
For Large Companies, the board comprises a majority independent director.

Application : Applied

Explanation on : The Board currently has 4 Independent Directors which is

application of the equivalent to 57% of the composition of the Board.
practice

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

14
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.2
The tenure of an independent director does not exceed a cumulative term limit of 9
years.
Upon completion of the 9 years, an independent director may continue to serve on
the board as a non-independent director.
If the board intends to retain an independent director beyond 9 years, it should
justify and seek annual shareholders’ approval.
If the board continues to retain the independent director after the 12th year, the
board should seek annual shareholders’ approval through a 2-tier voting process.

Application : Not applicable since none of the independent director(s)

serves the Board beyond 9 years’ term.

Explanation on : n/a
application of the
practice

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

15
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.3 - Step Up

The board has a policy which limits the tenure of its independent directors to 9 years.

Application : Applied

Explanation on : In line with the exemplary practice as recommended by

adoption of the the Malaysian Code on Corporate Governance 2017, the
practice Board has adopted a policy which limits the tenure of its
independent directors to 9 years, as prescribed in its Board
Charter.

16
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.4
Appointment of board and senior management are based on objective criteria,
merit and with due regard for diversity in skills, experience, age, cultural background
and gender.

Application : Applied

Explanation on : The areas of the expertise and experience of Board and

application of the Senior Management covers of Engineering, Finance and
practice Legal.
All potential candidates are first considered by the
Nomination & Remuneration Committee (“NRC”), taking
into consideration mix of skills, competencies, experience,
integrity, personal attributes and time commitment
required to effectively discharge his or her role.
Diversity in terms of age, gender and ethnicity are also
considered during the selection process.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

17
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.5
The board discloses in its annual report the company’s policies on gender diversity,
its targets and measures to meet those targets.
For Large Companies, the board must have at least 30% women directors.

Application : Applied

Explanation on : The Board composition is supported by one (1) woman

application of the director which is Independent Non-Executive Director,
practice Sharifah Irina Syed Ahmad Radzi, equivalent at 14% of
board composition.
The Board has subsequently delegated to NRC to
undertake the process to ensure it have at least 30% of
women directors.
Further to the above, the Board is in the midst of
considering recommendation from NRC on appointment
of additional woman director to the Board.
In event additional independent director is appointed to
the Board, necessary submissions to Bursa Malaysia will be
made accordingly.

Explanation for : n/a

departure
Alternative Practice: n/a

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

companies are encouraged to complete the columns below.

Measure :

Timeframe : n/a n/a

18
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.6
In identifying candidates for appointment of directors, the board does not solely rely
on recommendations from existing board members, management or major
shareholders.
The board utilises independent sources to identify suitably qualified candidates.

Application : Applied

Explanation on : The Board uses a variety of sources for identification of

application of the suitable candidates of directors.
practice
Pursuant to NRC’s Terms of Reference, NRC has the
authority to obtain the services of professional recruitment
firms to source for candidates for directorship or seek
independent advice whenever necessary.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

19
Intended Outcome
Board decisions are made objectively in the best interests of the company taking
into account diverse perspectives and insights.

Practice 4.7
The Nominating Committee is chaired by an Independent Director or the Senior
Independent Director.

Application : Applied

Explanation on : The Chairman of NRC is an Independent Non-Executive

application of the Director, Tengku Dato’ Seri Hasmuddin Tengku Othman.
practice

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

20
Intended Outcome
Stakeholders are able to form an opinion on the overall effectiveness of the board
and individual directors.

Practice 5.1
The board should undertake a formal and objective annual evaluation to determine
the effectiveness of the board, its committees and each individual director.
The board should disclose how the assessment was carried out and its outcome.
For Large Companies, the board engages independent experts periodically to
facilitate objective and candid board evaluations.

Application : Applied

Explanation on : The Board has established an annual performance

application of the evaluation process to assess the performance and
practice effectiveness of the Board and Board Committees, as well
as the performance of each Director.
In addition, NRC assesses independence of Directors
annually based on the criteria specified in the MMLR.
The Performance Assessment for Board was adopted by
the Group in Financial Year 2018.
It was conducted internally upon completion of the
financial year and comprise of Board Evaluation.
It is designed to increase the Board’s effectiveness and
efficiency as well as to draw the Board’s attention to key
areas that need to be addressed in order to maintain
consistency of the Board’s performance regardless of its
diversity.
The assessment questionnaire is distributed to all respective
Board members and covers topics such as the contribution
and performance of Directors with regards to their
competency, time commitment, integrity and experience
in meeting the needs of the Group and suggestions to
enhance board effectiveness.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

21
Intended Outcome
The level and composition of remuneration of directors and senior management
take into account the company’s desire to attract and retain the right talent in the
board and senior management to drive the company’s long-term objectives.
Remuneration policies and decisions are made through a transparent and
independent process.

Practice 6.1
The board has in place policies and procedures to determine the remuneration of
directors and senior management, which takes into account the demands,
complexities and performance of the company as well as skills and experience
required.
The policies and procedures are periodically reviewed and made available on the
company’s website.

Application : Departure

Explanation on : -
application of the
practice

Explanation for : The Board acknowledged the non - application of Practice

departure 6.1 and has agreed for the Group to formalize policies and
procedures to determine the remuneration of directors and
senior management.
Nevertheless, the Group has undertaken a review on the
current Non - Executive Directors’ remuneration and a
benchmarking exercise was executed against selected
companies in Malaysia.
For Senior Management, NRC has a designated role as
defined in its Terms of Reference to determine the
remuneration.

Alternative Practice: n/a

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

companies are encouraged to complete the columns below.

Measure : The Directors’ Remuneration Framework & Senior

Management Remuneration Framework will be crafted
and finalised and shall be uploaded to the Group’s
website.

Timeframe : Within 2 years n/a

22
Intended Outcome
The level and composition of remuneration of directors and senior management
take into account the company’s desire to attract and retain the right talent in the
board and senior management to drive the company’s long-term objectives.
Remuneration policies and decisions are made through a transparent and
independent process.

Practice 6.2
The board has a Remuneration Committee to implement its policies and procedures
on remuneration including reviewing and recommending matters relating to the
remuneration of board and senior management.
The Committee has written Terms of Reference which deals with its authority and
duties and these Terms are disclosed on the company’s website.

Application : Applied

Explanation on : The Company has a combined Nomination &

application of the Remuneration Committee (“NRC”).
practice
Their authority and duties as well as functions are clearly
defined in the Terms of Reference as disclosed in the
Group’s website.
The NRC is responsible to recommend general
remuneration policy, framework and structure of the
Group, the directors, the GCEO/MD and the Chief Level
Officers as well as to review any changes to the same as
and when necessary.
The NRC may obtain independent professional advice and
any other information necessary in determining the
framework.

Explanation for :
departure

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

companies are encouraged to complete the columns below.

Measure :

Timeframe :

23
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into
consideration the company’s performance.

Practice 7.1
There is detailed disclosure on named basis for the remuneration of individual
directors. The remuneration breakdown of individual directors includes fees, salary,
bonus, benefits in-kind and other emoluments.

Application : Applied

Explanation on : The detailed disclosure on named basis for the

application of the remuneration of individual directors are defined in the
practice Corporate Governance Overview Statement the Annual
Report 2018.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

24
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into
consideration the company’s performance.

Practice 7.2
The board discloses on a named basis the top 5 senior management’s remuneration
component including salary, bonus, benefits in-kind and other emoluments in bands
of RM50,000.

Application : Applied

Explanation on : There are 3 Top Management of the Group consists of 2

application of the Non-Independent Executive Directors and 1 Group Chief
practice Financial Officer (“GCFO”).
The remuneration of the Non-Independent Executive
Directors is disclosed in the Group’s Annual Report for 2018.
The remuneration of GCFO inclusive of salary, bonus,
benefits in-kind and other emoluments range from
RM700,000 to RM750,000 in Year 2018.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

25
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into
consideration the company’s performance.

Practice 7.3 - Step Up

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

Application : Adopted

Explanation on : Detail of Annual Remuneration of each member of Top

adoption of the Management, for Year 2018, is as follows:
practice
• Dato’ Dr. Ir. Mohd Abdul Karim bin Abdullah, Non-
Independent Executive Director / Group Chief
Executive Officer / Managing Director of RM1,389,000,
which detailed as follows:
o Salary: RM1,200,000
o Other Emolument: RM189,000
• Dato Awang Daud Awang Putera, Non-Independent
Executive Director / Deputy Group Chief Executive
Officer of RM1,107,920. which detailed as follows:
o Salary: RM949,920
o Other Emolument: RM158,000
• Syed Nazim Syed Faisal, Group Chief Financial Offer of
RM722,500, which detailed as follows:
o Salary: RM617,500
o Other Emolument: RM105,000

26
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of
information.

Practice 8.1
The Chairman of the Audit Committee is not the Chairman of the board.

Application : Applied

Explanation on : The Chairman of the Audit & Risk Committee is Hasman

application of the Yusri Yusoff, and he is not the Chairman of the Board.
practice

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

27
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of
information.

Practice 8.2
The Audit Committee has a policy that requires a former key audit partner to
observe a cooling-off period of at least two years before being appointed as a
member of the Audit Committee.

Application : Applied

Explanation on : The policy was incorporated in the Terms of Reference of

application of the the ARC.
practice
Similar requirement was extended to professionals who
have dealings with the Group.

Explanation for n/a

departure
: n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

28
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of
information.

Practice 8.3
The Audit Committee has policies and procedures to assess the suitability, objectivity
and independence of the external auditor.

Application : Applied

Explanation on : The ARC is responsible for assessing capabilities and

application of the independence of external auditor and to make
practice subsequent recommendations to the Board on
appointment, re - appointment or termination of the
external auditor.
Under its Terms of Reference, the ARC reviews the
suitability, and independence of external auditor of the
Company.
The review process covers assessment of the
independence of external auditor, evaluation of their
performance, quality of work, audit fees and adequacy of
resources.
During the year under review, ARC met with the external
auditors namely KPMG PLT twice in the absence of the
Management.
In relation to this, ARC noted the assurance provided by
External Auditor confirming their independence throughout
the financial year under review.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

29
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of
information.

Practice 8.4 - Step Up

The Audit Committee should comprise solely of Independent Directors.

Application : Not Adopted

Explanation on : n/a
adoption of the
practice

30
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of
information.

Practice 8.5
Collectively, the Audit Committee should possess a wide range of necessary skills to
discharge its duties.
All members should be financially literate and are able to understand matters under
the purview of the Audit Committee including the financial reporting process.
All members of the Audit Committee should undertake continuous professional
development to keep themselves abreast of relevant developments in accounting
and auditing standards, practices and rules.

Application : Applied

Explanation on : The members of ARC are financially literate i.e. have the
application of the ability to read and understand fundamental financial
practice statements, including a Group’s balance sheet, income
statement, statement of cash flow and key performance
indicators.
The qualification and experience of the individual ARC
members are disclosed in the Director’s Profile in the
Group’s Annual Report 2018.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

31
Intended Outcome
Companies make informed decisions about the level of risk they want to take and
implement necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and
managed.

Practice 9.1
The board should establish an effective risk management and internal control
framework.

Application : Applied

Explanation on : The Group has a risk management framework and internal

application of the control systems in place to ensure the smooth running of
practice the business with the aim to manage the risks and control
of the Group’s business and financial affairs economically,
efficiently and effectively to be able to seize profitable
business opportunities in a disciplined way while avoiding
or mitigating risks that could cause loss, reputational
damage or business failure.
Further information on risk management framework and
internal control are disclosed in the Statement of Risk
Management and Internal Control in the Group’s Annual
Report 2018.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

32
Intended Outcome
Companies make informed decisions about the level of risk they want to take and
implement necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and
managed.

Practice 9.2
The board should disclose the features of its risk management and internal control
framework, and the adequacy and effectiveness of this framework.

Application : Applied

Explanation on : The key features of the Group’s risk management and

application of the internal control framework, which cover its adequacy and
practice effectiveness are disclosed under the Statement on Risk
Management and Internal Control in the Group’s Annual
Report 2018.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

33
Intended Outcome
Companies make informed decisions about the level of risk they want to take and
implement necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and
managed.

Practice 9.3 - Step Up

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

Application : Applied

Explanation on : The function of Risk is undertake by the ARC which was

adoption of the formed by the Board and the members were appointed by
practice the Board from amongst the Board members.
The ARC comprises of 3 members, which all of them are
Non-Executive Directors and the Chairman of ARC is
designated as a Senior Independent Non-Executive
Director.
The primary responsibilities of the ARC are to assist the Board
to fulfil its oversight responsibilities in areas such as an entity's
financial reporting, internal control systems, risk
management systems, internal audit function and external
audit functions.
The functions and authority of the ARC extends to the
Group and all its subsidiaries as well as joint venture and
associate companies.

34
Intended Outcome
Companies have an effective governance, risk management and internal control
framework and stakeholders are able to assess the effectiveness of such a
framework.

Practice 10.1
The Audit Committee should ensure that the internal audit function is effective and
able to function independently.

Application : Applied

Explanation on : The Group has engaged Salihin Consulting Group Sdn. Bhd.
application of the (“SALIHIN”), as Internal Auditor to undertake a Risk Based
practice Internal Audit Consultancy.
SALIHN’s key functions are to assist the Group in
accomplishing its goals by bringing a systematic and
disciplined approach to evaluate and improve the
effectiveness of risk management, control and
governance processes within the Group.
SALIHIN maintains its impartiality, proficiency and due
professional care, as outlined in its Internal Audit Charter,
by having its plans and reports directly under the purview
of the ARC.
The ARC has full access to internal auditors and receives
reports on all audits performed.
SALIHIN performs independent audits in diverse areas within
the Group including overall governance and control,
operations, projects, accounting and financial activities, in
accordance with the risk - based annual audit plan as
approved by the ARC.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

35
Intended Outcome
Companies have an effective governance; risk management and internal control
framework and stakeholders are able to assess the effectiveness of such a
framework.

Practice 10.2
The board should disclose:
§ whether internal audit personnel are free from any relationships or conflicts of
interest, which could impair their objectivity and independence;
§ the number of resources in the internal audit department;
§ name and qualification of the person responsible for internal audit; and
§ whether the internal audit function is carried out in accordance with a
recognised framework.

Application : Applied

Explanation on : The internal audit function of the Group is headed by

application of the Ahmad Izwan Adnan who is the Executive Director of
practice SALIHIN.
He is a Chartered Accountant with Malaysian Institute of
Accountants (“MIA”), a member of Institute of Internal
Auditors (“IIA”) Malaysia and a member of Malaysian
Institute of Corporate Governance Malaysia.
He holds a Bachelor’s Degree in Accountancy from
International Islamic University Malaysia.
All internal audit activities for the financial year under
review were performed in house by 4 designated internal
auditors from SALIHIN of diverse backgrounds and
disciplines such as accounting and finance, business
administration and management, engineering and
information technology.
SALIHIN undertakes that the designated internal auditors
are competent and adequately equipped in executing
their duties and responsibilities by having structured
development program and providing sufficient and
relevant trainings.
In addition, the Group adopts the Standards and Principles
outlined in the International Professional Practices
Framework of The Institute of Internal Auditors (“IIPPF”) and
Committee of Sponsoring Organization of the Treadway
Commission (“COSO”) Internal Control Framework, a
comprehensive, structured and widely used auditing
approach, in conducting the audit activities.
Based on the COSO Framework, all aspects of controls are
given emphasis in order to ensure risk is well managed and
mitigated.

36
Explanation for : n/a
departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

37
Intended Outcome
There is continuous communication between the company and stakeholders to
facilitate mutual understanding of each other’s objectives and expectations.
Stakeholders are able to make informed decisions with respect to the business of the
company, its policies on governance, the environment and social responsibility.

Practice 11.1
The board ensures there is effective, transparent and regular communication with its
stakeholders.

Application : Applied

Explanation on : The Board recognizes the importance of effective dialogue

application of the with shareholders and investors.
practice
The Group believes that communication with the
shareholders is a 2 - way process.
The Group take into consideration views and feedback it
receives from all the shareholders.
In the past year, the GCEO/MD, the Group Chief Financial
Officer and other members of Management, conducted
regular dialogues with both shareholders and analysts.
This resulted in better understanding of the Group’s
financial performance and operations.
Press releases, announcements to Bursa Malaysia, media
conference of post AGM, analyst briefings and quarterly
results of the Group are also made available and this
serves to promote accessibility of information to the
shareholders and all stakeholders.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

38
Intended Outcome
There is continuous communication between the company and stakeholders to
facilitate mutual understanding of each other’s objectives and expectations.
Stakeholders are able to make informed decisions with respect to the business of the
company, its policies on governance, the environment and social responsibility.

Practice 11.2
Large companies are encouraged to adopt integrated reporting based on a
globally recognised framework.

Application : Departure

Explanation on : n/a
application of the
practice

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : The Group shall adopt integrated reporting based on a

globally recognised framework.

Timeframe : Within 2 years. n/a

39
Intended Outcome
Shareholders are able to participate, engage the board and senior management
effectively and make informed voting decisions at General Meetings.

Practice 12.1
Notice for an Annual General Meeting should be given to the shareholders at least
28 days prior to the meeting.

Application : Applied

Explanation on : For its 2nd AGM held on 14 May 2018, the Group dispatches
application of the the notice to shareholders, 32 days before the AGM, well in
practice advance of the above requirement and 21-day
requirement under the Companies Act 2016 and the Main
Market Listing Requirements of Bursa Malaysia Securities
Berhad.
The additional time given to shareholders to allow them to
make the necessary arrangements to attend and
participate in person or through corporate representatives,
proxies or attorneys.
More importantly, it enables the shareholders to consider
the resolutions and make an informed decision in
exercising their voting rights at the general meeting.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

40
Intended Outcome
Shareholders are able to participate, engage the board and senior management
effectively and make informed voting decisions at General Meetings.

Practice 12.2
All directors attend General Meetings.
The Chair of the Audit, Nominating, Risk Management and other committees
provide meaningful response to questions addressed to them.

Application : Not Applied

Explanation on : The 2nd Annual General Meeting held on 14 May 2018 was
application of the attended by 6 of 7 directors.
practice Tengku Dato’ Seri Hasmuddin Tengku Othman was absence with
apologise.

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

41
Intended Outcome
Shareholders are able to participate, engage the board and senior management
effectively and make informed voting decisions at General Meetings.

Practice 12.3
Listed companies with a large number of shareholders or which have meetings in
remote locations should leverage technology to facilitate:
§ including voting in absentia; and
§ remote shareholders’ participation at General Meetings.

Application : Applied

Explanation on : The Company’s AGM held within the capital city limits and
application of the not in remote location.
practice

Explanation for : n/a

departure
n/a

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

companies are encouraged to complete the columns below.

Measure : n/a

Timeframe : n/a n/a

42
SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT
CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance

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

43