Governance

Statement on Corporate Governance 2018

CORPORATE GOVERNANCE REPORT

STOCK CODE

:

5983

COMPANY NAME

:

MBM Resources Berhad

FINANCIAL YEAR

:

December 31, 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.


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 application of the practice

:

MBMR is led by its Board of Directors that has full and effective control over the business undertakings from setting the overall strategic direction, allocating resources to the Management team in order to achieve the direction as well as oversee, scrutinise and monitor the Management to ensure that all actions and decisions made are consistent with the achievement of the Company’s short term and long-term goals.[SMY(M1] 

The Board, as guided by the Company’s Board Charter, retains effective control over important policies and processes covering areas such as internal controls, risk management and remuneration of employees of the Company. The Board Charter is available on MBMR’s website at www.mbmr.com.my.

The Board also assumes the responsibilities of reviewing, approving, adopting and monitoring the implementation of the annual strategic and business plan for the Company and the Group as a whole.

To enable the Board to discharge its responsibilities in meeting the Company’s goals and objectives, the Board:-

  • Together with senior Management foster a healthy corporate governance culture which is founded on the principles of transparency, objectivity and integrity;
  • Ensure that Senior Management has the necessary skills and experience;
  • Ensure that the Company has in place effective communication channel with stakeholders; and
  • Ensure that there is a sound framework on corporate reporting, including financial and non-financial reporting.

The Board has also delegated certain of its responsibilities to the Board Committees, which operate within clearly defined Terms of Reference of respective Committees. The Terms of Reference are available on MBMR’s website at www.mbmr.com.my.

The Board has also adopted a formal Code of Conduct that applies to activities of all Directors and employees of the Group. The Code of Conduct encapsulates the Company’s values and standards and is communicated to all stakeholders through the Company’s website, www.mbmr.com.my.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The Company is led by a proven Chairman, Dato’ Abd Rahim bin Abd Halim. The Chairman has over 40 years’ managerial experience in the automotive industry which gives him baseline authority over the other members of the Board. Consequently, the Board believes that the Chairman add tremendous value to the strategic direction and adds to the depth of decisions made.

The Chairman provides leadership during Board meetings and acts as the conduit amongst members that sparks discussions and debates which ultimately results in Board decisions. He also promotes a culture of openness and debate whilst ensuring that no Director dominates the discussion.

Additionally, he ensures that decisions are taken on a sound and well-informed basis, including by ensuring that all strategic and critical issues are considered by the Board.

He also sets the agenda for meetings in advance along with the Company Secretary and deliberates all agenda items in the Board meetings.

The Chairman is also present at all Annual General Meetings and acts as the spokesperson for the Board and by extension, the Company to provide effective communication with stakeholders.

Lastly, the Chairman was also actively involved in the formation of the Board Charter and continues to review its effectiveness with the goal of creating an effective Corporate Governance system for the Company. He also takes the lead in matters of good Corporate Governance and keeps abreast with new developments through participations in seminars and training on the subject.

The responsibilities of the Chairman are contained in the Board Charter, which is available on MBMR’s website at www.mbmr.com.my.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The Chairman of the Board is Dato’ Abd Rahim bin Abd Halim whilst the President & Chief Executive Officer (“CEO”) is Dr. Muhammad Iqbal bin Shaharom. Their roles are separate and clearly defined as to foster a separation of responsibilities as leader of the Board and to ensure a balance of power and authority.  

The Chairman of the Board is responsible for leadership of the Board, ensuring that all its required functions and responsibilities are met. Whilst the CEO spearheads the business and day-to-day management of the Group and to implement the strategies directed by the Board..

The roles and responsibilities of the Chairman and CEO are provided in Item 4.6 of the Board Charter, which is available on MBMR’s website at www.mbmr.com.my.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The Board of MBMR has appointed Ms Wong Peir Chyun and Ms Wong Wai Foong from Tricor Corporate Services Sdn Bhd as its Company Secretaries. Both Company Secretaries are Members of the Malaysian Institute of Chartered Secretaries and Administrators and have been undertaking continuous professional development.

The Company Secretaries work closely with the Board and Board Committees, and play an important role in good governance by advising the Board and its Committees in compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”),Companies Act 2016 and other relevant laws and regulations.

The roles and responsibilities of the Company Secretaries include, but are not limited to the following:-

  • Attend and record minutes of all Board and Committee meetings and facilitate Board communications;
  • Advise the Board on its roles and responsibilities as well as corporate disclosures;
  • Monitor corporate governance developments and assist the Board in applying governance practices to meet the Board’s needs and stakeholders’ expectations;
  • Ensure the adherence to the Board’s and Board Committee’s policies and procedures;
  • Advise the Board on its obligatory requirements to disclose material information to shareholders in a timely manner; and
  • Manage processes pertaining to the General Meetings.

The Company Secretaries will ensure proper and timely dissemination of information to Directors. Prior to each Board meeting, the Directors receive all the necessary materials related to the meeting’s agenda, at least five business days in advance.  This enable the Directors to engage in informed discussions during the meetings.

Upon completion of each Board meeting, the Company Secretaries shall present the minutes to the Directors for review and make any necessary corrections or as soon as practicable, after the meeting is held.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The Directors may hold meetings for the despatch of business and adjourn and otherwise regulate their meetings as they think fit.

Prior to each Board meeting, the Directors receive all the necessary materials related to the meeting’s agenda, at least five business days in advance, whenever possible. This enable the Directors to obtain further explanations, where necessary, in order to be sufficiently briefed before the meeting.

Upon completion of each Board meeting, the Company Secretaries shall present the minutes to Directors for review and make any necessary corrections before approving it within one month or as soon as practicable, after the meeting is held. The Board ensures that the minutes of meetings accurately reflect the deliberations and decisions of the Board, including whether any Director abstained from voting or deliberating on a particular manner.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The Board has adopted a formal Board Charter which is publicly available on the Company’s website at www.mbmr.com.my.

This Board Charter serves as a primary reference point on governance matters for Directors.

MBMR’s Board Charter defines the composition of the Board, its duties and responsibilities of the Board, the Chairman and CEO as well as the matters reserved for the Board.

The Board Charter is subject to an annual review and more frequently, if required, to ensure it remains consistent with  the change of law, regulatory requirement, and the Company’s policy that affects the Board Charter.  The Board reviewed and approved the updated Board Charter which amended to be in line with the Companies Act 2016, amended MMLR and MCCG on 6 April 2018.

Explanation for departure

:

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

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Timeframe

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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 application of the practice

:

The Board has adopted a formal Code of Conduct which is integrated into company-wide management practices. The summary is available on the Company’s website at www.mbmr.com.my.

The Code of Conduct [YLL2] applies to all activities of the Directors and employees of the Group and helps to define how the Company runs its business by setting the highest standards of conduct throughout the Group.

The Code of Conduct is made available to all Directors and employees of the Company and compliance is mandatory. The Board encourages all stakeholders to raise concerns or complaints under the Company’s Whistle Blowing Policy regarding any violation of the Code.

The Code of Conduct is reviewed periodically by the Board and revised as and when appropriate.

 

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The Board has established a whistleblowing policy to encourage all its employees and persons who have dealings with the Group to report suspected and/or known fraud, corruption, unlawful acts, violation of the Group’s policies and instances of waste or abuse of corporate resources.

The whistleblowing policy sets out and identifies the appropriate communication and feedback channels which facilitate whistleblowing[YLL3] .

All whistleblowing cases are referred to the Audit and Risk Management Committee for review and instructions with respect to investigations and actions to be taken by the Management in such cases.

The Board reviewed the whistleblowing policy on 15 February 2018.  The policy is available on the Company’s website at www.mbmr.com.my.

Explanation for departure

:

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

Measure

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Timeframe

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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 directors.

Application

:

Applied

Explanation on application of the practice

:

In 2018, the Board comprises six (6) Directors, i.e. three (3) Independent Non-Executive Directors and three (3) Non-Independent Non-Executive Directors[YLL4] .

The independence of Directors is assessed annually via Independence Assessment and letter of confirmation of independence against a list of criteria and materiality thresholds that have been incorporated into the MBMR Board Charter. All the Independent Directors of the Company comply with the relevant criteria for independence as defined under Paragraph 1.01 of the Main Market Listing Requirements of Bursa Securities [Item 3.2 of  the Board Charter).  The Independent Non-Executive Directors constitute 50% of the Board.

The presence of  50% of Independent Directors allows for an effective check and balance function and oversight of the Board to safeguard the interest of the Company and its minority shareholders.

Explanation for departure

:

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

Measure

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Timeframe

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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 nine years. Upon completion of the nine 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 nine years, it should justify and seek annual shareholders’ approval. If the board continues to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process.

Application

:

Not applicable - No independent director(s) serving beyond 9 years

Explanation on application of the practice

:

Explanation for departure

:

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

Measure

:

Timeframe

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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 nine years.

Application

:

Not Adopted

Explanation on adoption of the practice

:


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 application of the practice

:

The Nominating and Remuneration Committee (“NRC”) is empowered to bring to the Board recommendations as to the appointment of any new Director (Executive, Non-Executive or Independent) and member of the Senior Management team.

The NRC is guided by the Procedures of Appointment and takes into account the following:-

  • Skills, knowledge and experience of the candidate;
  • Structure of Board and its Committees; and
  • Gender Ddiversity;[YLL5] 

Although all aspects of the above mentioned criteria is explored, ultimately all appointments will be based on merit and the candidate’s fit with the Company’s corporate culture.

Explanation for departure

:

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

Measure

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Timeframe

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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

:

Departure

Explanation on application of the practice

:

Explanation for departure

:

The Board has a policy on the diversity of its members as included in the Board Charter. The Board Charter is available for viewing at the Company’s website at www.mbmr.com.my. We are still in the process of identifying suitable female board member.

Please provide an alternative practice and explain how the alternative practice meets the intended outcome.

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

Measure

:

 The Board endeavours to fulfil this requirement in the upcoming years.  [YLL6] The Board would continue to source for new female candidates as directors.[YLL7] 

Timeframe

:

Within 2 years


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 application of the practice

:

The task of identifying suitably qualified candidates for appointment of Directors of the Board is carried out by the NRC and relies on multiple channels of recommendation, including endorsement from Board members, internal promotion from Management team, major shareholders and independent search firms.

Explanation for departure

:

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

Measure

:

Timeframe

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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 application of the practice

:

The Nominating and Remuneration Committee (“NRC”) of the Company comprises the following members:-

  • En. Iskander Ismail Mohamed Ali (Senior Independent Non-Executive Director) – Chairman
  • En. Shamshin @ Shamshir Ghazali (Independent Non-Executive Director) - Member
  • En. Mustapha bin Mohamed (Independent Non-Executive Director) – Member Chairman (Appointed on 24 May 2018)
  • En. Shamshin @ Shamshir bin Ghazali (Independent Non-Executive Director) - Member
  • Mr Low Hin Choong (Non-_Independent Non-Executive Director) - Member
  • Dato Anwar bin Haji @ Aji (Independent Non-Executive Director) - Member (Appointed on 23 May 2018)

The current Chairman of the NRC [YLL8] is the Senior Independent Director, En. Mustapha bin Mohamed.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The NRC carries out an annual assessment of the effectiveness of the Board and the performance of the Board Committees against a set of criteria that encompasses a diverse set of skills and experience in the fields of accounting, business and management, marketing, risk management, information technology and finance. The assessment also includes aspects of the Board’s and Board Committees’ structure, operational conduct and its role and responsibilities.

The assessment is conducted by way of questionnaires to review the performance and effectiveness of the Board and the Board Committees as well as to promote awareness of the obligations required by members of the Board and Board Committees. The summary of the assessment is shared with the Board thereafter.

The assessment was performed on 13 February 2018.

Explanation for departure

:

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

Measure

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Timeframe

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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

:

Applied

Explanation on application of the practice

:

The remuneration of the Directors and the Senior Management is reviewed by the NRC on annual basis before recommending to the Board for approval.

The policy of the NRC is in line with the Group’s overall practice on compensation and benefits, i.e. to reward employees competitively, taking into account performance, market comparisons and competitive pressures in the industry and is reviewed from time to time.

In 2014, an external consultant was engaged by the Group to benchmark the remuneration of its directors and senior management. As a result of this exercise, a Long Term Incentive Plan was introduced.

The NRC evaluates the total remuneration package of senior management annually, against achievements of set budgets and other key performance indicators as well as the level of responsibility.

 

The NRC’s recommendations are presented to the Board for their approval.

The remuneration for Directors is a matter for the Board as a whole, subject to the Company’s shareholders’ approval on the Directors’ fees and benefit payable at the Company’s AGM.  Therefore, the Board is of the opinion that the fees and benefits for Independent Directors does not conflict with their obligation to bring objectivity and independent judgement on matters discussed at Board meetings   

The remuneration package for the Directors and senior management personnel of the Company comprise some or all of the following elements:

Directors’ fees, Benefits and Basic Salaries: The Board determines fees and any benefits payable to all Directors subject to the approval of shareholders at each Annual General Meeting. The non-executive members of the Board of Directors receive a fixed base fee as consideration for their Board duties. In addition, the Board members receive a fixed fee for their work on committees established by the Board. The remuneration of the Board of Directors is determined on the basis of standards in the market and reflects demands to the expected competencies and efforts in light of the scope of their work and the number of Board and Board committee meetings.

The NRC reviews and recommends to the Board for approval on the annual salaries of the key senior management personnel based on their performance for the year.

Annual Incentive Plan: The Group operates a bonus scheme for all employees and the criteria for this scheme is dependent on the financial performance of the Group.

Retirement plan: Contributions are made to the Employees Provident Fund (“EPF”), the national mandatory defined contribution plan.

Other Benefits: Other benefits include car and driver allowances as well as medical insurance coverage.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice[YLL9] 

:

The NRC is the Board’s committee that implements policies and procedures on remuneration including reviewing and recommending matters relating to the remuneration of Bboard and senior management.

The NRC comprises solely exclusively Non-Executive Directors, with a majority of them being Independent Directors. The current members are:-

  • En. Mustapha bin Mohamed Iskander Ismail Mohamed Ali (Senior Independent Non-Executive Director) – Chairman (Appointed on 24 May 2018)
  • En. Shamshin @ Shamshir bin Ghazali (Independent Non-Executive Director) - Member
  • En. Mustapha Mohamed (Independent Non-Executive Director) – Member
  • Mr Low Hin Choong (Non-_Independent Non-Executive Director) - Member
  • Dato’ Anwar bin Haji @ Aji (Independent Non-Executive Director) – Member (Appointed on 23 May 2018)

The President & CEO may, however, be invited to participate in certain meetings of the NRC to provide insights, particularly on considerations relating to the performance of the Group.

The NRC is guided by its Term of Reference which is available for public viewing via the Company’s website at www.mbmr.com.my.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

The detailed remuneration of individual directors on named basis ,is disclosed in page 30 of the Annual Report under Corporate Governance Overview Statement”.

Explanation for departure

:

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

Measure

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Timeframe

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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 five senior management’s remuneration component including salary, bonus, benefits in-kind and other emoluments in bands of RM50,000.

Application

:

Departure

Explanation on application of the practice

:

Explanation for departure

:

The Board is of the opinion that the disclosure of the detailed remuneration component of the Company’s top senior management personnel would not be in the best interest of the Group due to confidentiality.

A summary of the Company’s top five senior management’s remuneration component is disclosed in the Annual Report under the ‘Corporate Governance Overview Statement’ at pages 30 of the Annual Report 2018.

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

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice.

Timeframe

:

Others


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

:

Not Adopted

Explanation on adoption of the practice

:


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 application of the practice

:

The Company’s Audit and Risk Management Committee (“ARMC”) comprises solely non-executive directors of which two are Independent Directors and one Non-Independent Director.

The Chairman of the ARMC [YLL10] is En. Shamshin @ Shamshir bin Ghazali. The Chairman of the Board is Dato’ Abd Rahim bin Abd Halim.

There is a structure communication channels between the Board and ARMC whereby the Chairman of the ARMC reports the activities of the ARMC and escalates key issues to the Board.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice

:

For the Financial Year 2018, the Company does not have any key audit partner that has been appointed to the Audit and Risk Management Committee.

The Terms of Reference of Audit and Risk Management Committee was amended on 15 March 2018 to reflect the requirements in Practice 8.2 of the Malaysian Code on Corporate Governance that “Any former key audit partner must have observed a cooling-off period of at least 2 years before one is eligible for appointment as AC member”.

Explanation for departure

:

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

Measure

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Timeframe

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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 application of the practice[YLL11] [AC12] 

:

The Audit and Risk Management Committee (“ARMC”) has a policy of assessing the suitability, objectivity and independence of its external auditor every year via an assessment form.

During the year, one private session was held between the ARMC and the external auditor without the presence of Management Team.

 

The ARMC has also obtained written assurance from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

Further details on the ARMC’s policies and procedures in relation to engagement with the external auditor is detailed in the ARMC’s term of reference, which is available on the Company’s website at www.mbmr.com.my.

The assessment of the Company’s external auditors was done by the ARMC on 15 March 2018.

Explanation for departure

:

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

Measure

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Timeframe

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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 adoption of the practice

:


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 application of the practice

:

The Board’s ARMC consists of members with a mixture of requisite financial literacy, business experience and specialised knowledge that prepares them to carry out their duties and responsibilities to the standard required.

ARMC’s chairman is a past member of the Malaysian Institute of Accountants and Chartered Institute of Management Accountants fellow , as well as a retired member of the Association of Chartered Certified Accountants.  The qualification and experience of each Audit Committee members are disclosed in the Board of Directors’ Profile on page 18 to 21 of the Annual Report 2018.

All Board members, including ARMC members, participate in training to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules. Details of the training is available on page 35 of Annual Report 2018.

Explanation for departure

:

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

Measure

:

Timeframe

:


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 application of the practice[YLL13] [AC14] 

:

The Board has established a system for Enterprise Risk Management (“ERM”) framework in 2014.

The framework applies a combination of the COSO risk management framework, ISO 31000 and TS 16949 principles, and consistent with Statement on Risk Management and Internal Control – Guidelines for Directors of Listed Issuers, and Bursa Malaysia’s Corporate Governance Guide.

Explanation for departure

:

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

Measure

:

Timeframe

:


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 application of the practice[YLL15] 

:

The Board has established a framework for the implementation of the risk management and internal control system for the Group with approved policies and parameters.

The Audit and Risk Management Committee (“ARMC”) oversees the implementation and effectiveness of the risk management framework. Risk Management is an agenda at the quarterly ARMC meetings. Focus is on extreme and high risk categories to ensure effective risk treatments are implemented within the specified timeline.

Further information is presented in the Statement on Risk Management and Internal Control at pages 36 to 40 of the Annual Report 2018.

Explanation for departure

:

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

Measure

:

Timeframe

:


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

:

Not Adopted

Explanation on adoption of the practice

:


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 application of the practice

:

The ARMC continuously evaluates the effectiveness of the internal audit. The independent internal audit function was previously outsourced to a professional service firm,.  Since August 2018, the Group has set up its in-house internal audit function, which carries out the reviews based on the approved plan.

Accordingly, the internal audit function is able to provide an objective assurance to the ARMC on the state of internal control of the Group’s operations. Furthermore, the internal audit function serves as an important source of advice for the ARMC concerning areas of weaknesses or deficiencies in internal processes to facilitate appropriate remedial measures by the Company.

The Risk Management and Compliance Unit follows up on all the key recommendations of the internal audit reviews.

Explanation for departure

:

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

Measure

:

Timeframe

:


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 application of the practice

:

The Internal Audit Function is independent of the Management and has full access to all of the Group’s entities, records and personnel.

During the financial year, the company has an in-house Internal Audit Department led by a qualified and experienced Manager with three (3) assistants to carry out its appraisal function independently from the Management, with the Head of Internal Audit who directly reports to the ARMC. 

The IA Manager, Mr. Appu Kutten, who came on board since August 2018 is a member of the Institute of Internal Auditors Malaysia (IIAM) and maintains a strong network with other Internal Audit practitioners for sharing of knowledge, auditing techniques and up-to-date auditing standards. The Manager has acquired more than 20 years of experience and exposure in auditing, covering extensive knowledge and skills from various industries.

The IA department performs its work in accordance with the International Professional Practices Framework for Internal Auditing from the Institute of Internal Auditors.

Explanation for departure

:

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

Measure

:

Timeframe

:


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 application of the practice

:

As part of the Board’s responsibility in developing and implementing an investor relations programme, formal and informal dialogues are held between senior management and analyst/fund managers throughout the year. During analyst/fund managers briefing, permissible disclosures are made to explain the Group’s performance and major development programmes.

The Annual General Meeting serves as the principal platform for shareholders and stakeholders to have a dialogue with the Board and Management on all affairs of the Company.

Aside from the analyst/fund managers’ briefings and the Annual General Meeting, the Board also encourages stakeholders to provide feedback and raise queries to the Company through other channels of communication including the use of the corporate website, by email or sending written communications to MBMR’s Company Secretaries or to the Company directly.

Explanation for departure

:

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

Measure

:

Timeframe

:


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 application of the practice

:

Explanation for departure

:

By definition, the Company is not considered a Large Company due to its market capitaliszation falls below the prescribed threshold.

Please provide an alternative practice and explain how the alternative practice meets the intended outcome.

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

Measure

:

Please explain the measure(s) the company has taken or intend to take to adopt the practice..Not Applicable.

Timeframe

:

Others


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 application of the practice

:

The last AGM of the Company was held on 24 May 2018 and the Notice of the AGM along with accompanying Annual Report was issued on 25 April 2018. This complied with the recommendation of MCCG to give at least twenty-eight (28) days’ notice of general  meeting to the shareholders to ensure that shareholders are given sufficient time to consider the resolutions that will be discussed and decided at the 24th Annual General Meeting

Each item of special business included in the notice of meeting will be accompanied by a full explanation on the effects of a proposed resolution.

Explanation for departure

:

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

Measure

:

Timeframe

:


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

:

Applied

Explanation on application of the practice

:

All Directors of the Company attended the most recent Annual General Meeting as noted in the minutes of the meeting and is available for viewing at the Company’s website.

Besides the usual agenda for the Annual General Meeting, the Board provides opportunities for shareholders to raise questions pertaining the business activities of the Group. All Directors and therefore the Chairs of each Board Committees are available to provide meaningful responses to questions from the shareholders during the meeting.

Explanation for departure

:

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

Measure

:

Timeframe

:


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 application of the practice

:

The Company does not have large number of shareholders i.e. the number of shareholders of the Company as at 17 May 2018 was only 3,271 shareholders. Further the Company’s Annual General Meetings have always been held in the Klang Valley which is easily accessible by most shareholders of the Company.

The Company’s 24th AGM was held on 24 May 2018 will at Bukit Kiara Equestrian & Country Resort, Dewan Berjaya, Jalan Bukit Kiara, Off Jalan Damansara, 60000 Kuala Lumpur.

Shareholders who are unable to attend the meeting in person are allowed to appoint proxy(ies) to attend, participate, speak and vote on his/her behalf at a general meeting.

The Company will be seeking the shareholders’ approval on the proposed adoption of a new Constitution which allow the Company to leverage on technology to enhance the communication with shareholders such as issuing and transmitting documents to the shareholders using technology means.  The Company would be using technology means to facilitate electronic voting (e-voting) for the conduct of poll on all resolution proposed at its forthcoming AGM [PCW(M16] for efficiency and accurate outcome of the results.

Explanation for departure

:

Please provide an explanation for the departure.

Please provide an alternative practice and explain how the alternative practice meets the intended outcome.

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

Measure

:

N/A

Timeframe

:

Choose an item.


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.

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 [SMY(M1]To consider include explanation on the implementation of the KPI/targets set (e.g. financial performance and targets, strategic performance, operation performance, etc.) to ensure that Management’s strategy and performance would align with the Company’s strategic objective.

 [YLL2]Suggest to include the core areas cover under the Code of Conduct.

 [YLL3]Suggest to disclose whether identity of the whistleblower would be protected so as to allow the whistleblower to report any wrongdoing without risk of reprisal.

Also, to disclose the whistleblowing policy is available at company’s website, if applicable.

 [YLL4]This report is reporting the compliance in 2018

 [YLL5]Under Guidance 4.4 of MCCG, age and cultural background should also be considered in the appointment of Board & Senior Management. The Company is encouraged to apply the above.

TOR for NRC pg 2 - 3(B) (1) (iii) (cc) to be amended to include age & cultural background.

 [YLL6]Suggest to remove this as the Board did not refine gender policy in FY 2018.

 [YLL7]To explain the measure taken by the Board in identifying female director, for example, the recruitment and selection process are properly structured without discrimination.

 [YLL8]Suggest to disclose how En Mustapha discharged his duties as a NC Chairman. For example, he leads the annual review of board effectiveness.

 [YLL9]To include – The Directors who are shareholders abstain from voting at general meetings to approve their fees, if applicable.

 [YLL10]Suggest to disclose how En Shamshin discharged his duties as an ARMC Chairman.

 [YLL11]To disclose if the non-audit fees are significant.

 [AC12]No non-audit fees

 [YLL13]To include how the Board identify and manage the risk. For example, the Board through ARMC, reviews the risks identified regularly and the way to mitigate the said risks.

 [AC14]Practice 9.2.

 [YLL15]To disclose that the Board has conducted annual review and periodic testing (if any) on the Company’s risk management and internal control framework.

 [PCW(M16]The Company is encourage to use e-voting at the forthcoming AGM to show that the Company recognise the usage of technology means for conducting the AGM.




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