Corporate Governance Statement
The Board of Directors of AbleGroup Berhad (“the Company”) recognizes the importance of practising good corporate governance and is fully committed to ensuring that the Company as well as its subsidiaries (“the Group”) practices the highest standard of corporate governance and transparency in line with the Malaysian Code on Corporate Governance 2012 (“Code”) to achieve the Group’s governing objective of enhancing shareholders’ value.
The application of the Code by the Group and the extent of compliance with the prescribed recommendations are reported with exceptions stated herein.
PRINCIPLE 1 : ESTABLISH CLEAR ROLES AND RESPONSIBILITIES
Clear functions of the Board and Management
The Group is controlled and led by a dynamic and experienced Board, with high personal integrity, business acumen and management skills, which is primarily entrusted with the responsibility of charting the direction of the Group.
The Board’s role is to lead and control the Group’s business and affairs on behalf of the shareholders. The Board takes into consideration the interest of shareholders under their decision ensuring that the Group’s objectives and shareholders value are met. The Board oversees the Group’s performance and operation progress towards the corporate objectives.
In line with the Code, the roles and responsibilities of the Chairman and Managing Director are separated. The responsibility of Chairman is primarily to ensure that the conduct and working of the Board is in an orderly and effective manner whilst the Managing Director manages the daily running of business and implementation of Board policies. The Managing Director is assisted by a Management Team responsible for the implementation of business plans and strategies, policies and decisions approved by the Board and communicating matters to the Board. The responsibilities and authorities of the Management Team are clearly defined.
Clear Roles and Responsibilities
There are 5 members on the Board of Directors, comprising the Managing Director and 4 Non-Executive Directors, 3 of whom including the Chairman of the Board are Independent Directors. The separation of the role of Managing Director and Chairman ensures that there is an appropriate balance of power and authority with clear divisions of responsibilities and accountability.
The majority of the Board comprises Independent Directors who are essential in providing unbiased and independent opinion, advice and judgment thus play a key role in corporate accountability. All Independent Directors act independently of Management and are not involved in any other relationship with the Group that may impair their independent judgment and decision-making. The main duties and responsibilities of the Board comprises the following:-
- Setting and reviewing the objectives, goals and strategic plan for the Group with the view to maximizing shareholder value;
- Adopting and monitoring progress of the Group’s strategy, budgets, plans and policies;
- Overseeing the conduct of the Group’s business to evaluate whether the business is properly managed;
- To consider and approve reserved matters covering corporate policies, material investment and acquisition/disposal of assets;
- Identifying principal risks and ensuring implementation of appropriate systems to manage these risks;
- Promoting better investor relations and shareholder communications;
- Reviewing the adequacy and the integrity of the Group’s internal control systems and management information system, including systems for compliance with applicable laws, regulations, rules directives and guidelines;
- Reviewing the terms of office and performance of the Audit Committee and each of its members at least once in every three (3) years to determine whether the Audit Committee members have carried out its duties in accordance with their terms of reference; and
- Succession planning, including appointing, training, fixing of compensation and where appropriate, replacing Senior Management.
The Board has delegated specific responsibilities to the Board Committees, each with defined terms of reference and responsibilities. The Board receives report of their proceedings and deliberations. Where committees have no authority to make decisions on matters reserved for the Board, recommendation would be presented to the Board for approval. The Chairman of various committees report the outcome of the committee meetings to the Board and relevant decisions are recorded in the minutes of the Board of Directors’ meetings.
The Board is satisfied with its current composition which comprises a balanced mix of skills, knowledge and experience in the business and management fields which are relevant to enable the Board to carry out its responsibilities in an effective and efficient manner.
Code of Conduct
The Company has in place a Code of Conduct which governs the conduct of all the Group employees including the Board members with the aim to cultivate good ethical conduct, amongst others.
Under the Code of Conduct, there is clearly defined guidelines on maintaining confidentiality and disclosure of information, disclosure on conflict of interest, internal control, anti-competition practices, duty to protect the Group’s assets and whistle blowing where there is a breach of Group’s policies and procedures.
The Board Charter clearly defines the code of conduct to be observed by all Directors of the Company. In the performance of Directors duties, a Director should at all times observe the following:-
- Devote reasonable time and effort to attend the Group’s duties required of him;
- At all times exercise their power for the purpose they were conferred, for the benefit and productivity of the Group;
- Avoid any conflict of interest or where necessary, to disclose immediately all contractual interests whether directly or indirectly within the Group;
- Be conscious in the process of value creation of the interest of shareholders, employers, creditors and customers of the Group;
- Be aware of the Group’s policy on corporate social responsibility; and
- Ensure adequate safety measures and provide protection to workers and employees at work places.
Sustainability of Business
The Board is aware of the importance of business sustainability and ensures that there is a plan for promoting sustainability embedded in the development of the Group’s strategies, taking into account the impact on the environmental, social, cultural and governance aspects of business operations.
The corporate responsibility activities of the Group for the financial year under review are disclosed on pages [ ] to [ ].
Access to Information and Professional Advice
The Board recognizes the importance of providing timely, relevant and updated information in ensuring an effective decision making process by the Board. Hence, the Board is provided with quantitative and qualitative information which is pertinent to enable the board to discharge its duties effectively.
Each Board Member receives regular reports, including a comprehensive review and analysis of the Group’s performance. Board agenda together with the relevant documents and information are compiled and distributed to all the Directors prior to the Board meeting date to ensure that they have sufficient time to review and be prepared for discussion. The Managing Director and/or the representative of Management will provide comprehensive explanation of pertinent issues and recommendations for review/consideration. The issues will then be deliberated and discussed thoroughly by the Board prior to decision-making. Proceedings of Board meetings are recorded and signed by the Chairman of the meeting. Decision made and policies approved by the Board will be communicated to the Management Team for action after the meeting.
Where necessary, members of the Management Team will be invited to attend Board / Board Committee meetings to report and update on areas of the business within their responsibility to provide Board members with insights into the business, and clarify any issues raised by the Directors in relation to the Group operations. Directors are encouraged to share their views and insights in the course of deliberation and to participate in discussions.
Apart from the above, the Board members are updated on the Group’s activities and its operations on a regular basis. The Board is reminded quarterly of the closed periods for dealings in the securities of the Company based on the targeted date of announcement of the Group’s interim financial results. All Directors whether as a full board or in their individual capacity have access to all information of the Group on a timely basis in an appropriate form and quality necessary to enable them to discharge their duties and responsibilities.
The Board, whether as a full Board or in their individual capacity, may seek independent professional advice on specific issues at the Group’s expense, where necessary, to enable them to discharge their duties effectively.
Qualified and competent Company Secretary
The Board has ready and unrestricted access to the advice and the services of the Company Secretary in ensuring the effective functioning of the Board and fulfilling of its fiduciary duties. The Company Secretary support the Board to ensure that Board policies and procedures are both followed and reviewed regularly and have the responsibility in law to ensure that each Director is made aware of and provided with guidance as to their duties, responsibilities and powers. The Company Secretary advises the Board on any new statutory and regulatory requirements and changes affecting the Group including corporate governance practices and disclosures.
The Company Secretary, who is qualified, experienced and competent, organizes and attends all Board and Board Committees meetings and ensures meetings are properly convened; board proceedings and deliberations as well as resolutions are properly recorded and passed. The removal of Company Secretary, if any, is a matter for the Board to decide collectively.
The Board has adopted a Board Charter which sets out the Board’s strategic intent and outlines the Board’s roles and functions, amongst others. The Board Charter is a source of reference and primary induction literature, providing insights to prospective Board members and Senior Management.
The Board Charter is reviewed periodically and updated in accordance with the needs of the Group to ensure its effectiveness and consistency with the Board’s objectives and corporate vision. The amendment to the Board Charter requires the approval of the Board.
The latest Board Charter was reviewed and approved in April 2016.
A copy of the Board Charter is accessible on the corporate website, www.ablegroup.com.my.
PRINCIPLE 2: STRENGTHEN COMPOSITION
The Board presently comprises one (1) Managing Director, three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Directors. The profiles of the Directors are set out on pages [ ] to [ ] of this Annual Report.
The Board reflects a well-balanced composition of Executive and Non Executive Directors and has complied with paragraph 15.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), which requires that at least two (2) Directors or one-third (1/3) of the Board Members of the Company , whichever is higher, to be independent.
The composition of the Board consists of qualified individuals with broad base of knowledge, experience and skills necessary in the management and direction of the Group. It enables the Board to effectively lead and supervise the Group’s business activities which are vital to the success of the Group.
Although all Directors have equal responsibilities for the Group’s operations, the roles of these Independent Non-Executive Directors will ensure that any strategies and business plans proposed by the Managing Director and Management are fully discussed and examined to ensure the long-term interest of the shareholders as well as other stakeholders such as employees, customers and business associates.
The Board has delegated specific power and responsibilities to three (3) Board Committees namely Audit, Remuneration and Nomination Committees all of which have the authority to deal with particular issues and report to the Board with recommendations. The terms of reference, function and activities undertaken by these Committees are elaborated in their respective report set out in this Annual Report.
The Board is responsible to determine the appropriate size of the Board and their appointment of new director is a matter for consideration and decision by the Board, upon the recommendation of the Nomination Committee (“NC”). The NC will consider the required mix of skills, experience, other qualities and diversity, including gender, where appropriate, which the Director should bring to the Board.
Re-election of Directors, Retirement of Directors by Rotation and Assessment of Independence of Independent Directors
In accordance with the Company’s Articles of Association, all directors who are appointed by the board are subject to re-election by shareholders at the first opportunity after their appointment. The Articles of Association also provide that at least one-third of the remaining directors be subject to re-election by rotation at each Annual General Meeting (AGM).
The Code recommends that all independent directors who have served 9 years or more be put up for re-election annually, with justification from the Board on their continued independence, relevance and contributions to the Group.
The assessment criteria for independence shall not be limited to the length of an independent director. Particular emphasis is placed on the role of independent directors to facilitate independence and objective decision makings of the Group, free from undue influence and bias. Annual assessment of the Independent directors will be undertaken in accordance with prescribed criteria by the NC and Board.
Boardroom and Workplace Diversity
The Board is committed to provide a fair and equal opportunities and nurturing diversity in the boardroom and workplace. The Board believes that while it is important to promote gender diversity, it is of the view that Board membership should be determined based on a candidate’s skills, experience, knowledge in areas identified by the Board. The Board endeavours that suitably qualified women candidates will be sought and included in the pool of candidates for evaluation in respect of new appointments to the Board.
The objective of the Group is to ensure that the Group attracts and retains Directors of the calibre needed to run the Group successfully. The Executive Directors are to be appropriately rewarded giving due regard to the corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the Non-Executive Directors concerned.
The remuneration of the Executive Directors is performance related which are if not higher are compatible to the market rate in order to attract, motivate and retain them to run the Group. The Group also reimburses reasonable expenses incurred by Directors where required, in the course of carrying out their duties as Directors. The determination of remuneration packages of Non-Executive Directors should be a matter for the Board as a whole.
Directors will abstain from discussion and voting on decisions in respect of their own remuneration. The aggregate annual Directors’ fees are to be approved by shareholders at the Annual General Meeting based on recommendation of the Board.
Details of Directors’ remuneration for the financial year ended 31 December 2015 are set out below:-
|Salaries, bonus and other emolument
Defined contribution plan
The number of Directors whose total remuneration for the financial year ended 31 December 2015 fall within the respective bands is as follows:-
Number of Directors
|Range of remuneration||
|RM1 to RM50,000
RM50,001 to RM100,000
RM100,001 to RM250,000
RM250,001 to RM300,000
PRINCIPLE 3: REINFORCE INDEPENDENCE
Annual Assessment of Independence
The Board recognises the importance of independence and objectivity in the decision-making process. The Board and its NC have upon their annual assessment, concluded that each of the 3 Independent Non-Executive Directors continues to demonstrate conduct and behaviour that are essential indicators of independence, and that each of them continues to fulfil the prescribed definition and established criteria of independence.
Tenure of Independent Directors
The Board notes the Code’s recommendation that the tenure of an Independent Director should not exceed a cumulative term of 9 years. The NC and the Board have deliberated on the said recommendation and is of the view that a Director’s independence cannot be determined solely with reference to tenure of service. The Group benefits from having long serving directors who have accumulated valuable knowledge of the Group’s operations and have shown competence in advising and overseeing the management of the Group.
The NC and the Board after having reviewed and assessed the independence of Mr. Cheong Marn Seng, who have served for a cumulative period of more than 9 years, considers him to be independent and remain unbiased, objective and independent in expressing his opinions and in participating in the decision making of the Board. He had also devoted sufficient time and attention to his responsibilities as Independent Director besides exercising due care during his tenure as an Independent Director of the Group and carrying out his duty in the best interest of the Group and shareholders.
The length of his services on the Board has not in any way interfered with his objective and independent judgment in carrying out his roles as member of the Board and relevant Committees. Furthermore, his pertinent expertise, skills and detailed knowledge of the Group’s businesses and operations enable him to make significant contributions actively and effectively to the Group’s decision making during deliberations or discussions.
In this respect, the Board proposes to retain Mr. Cheong Marn Seng as Independent Director of the Company and will table the relevant proposal to retain him as Independent Director for shareholders’ approval at the forthcoming AGM of the Company, in accordance with the Code. As the tenure of the other two (2) Independent Directors of the Company was less than 9 years, shareholders’ approval will not be sought at the AGM to retain them as Independent Directors. The Board, through the NC will continue to review, evaluate and assess whether the Independent Directors can continue to act in the best interests of the Group and bring independent and professional judgment to Board’s deliberations and decision.
PRINCIPLE 4 : FOSTER COMMITMENT
Directors are expected to dedicate sufficient time and attention to carry out their responsibilities. In this regard, annual meetings timetable is prepared and circulated to the Board to provide the proposed scheduled date of meetings of the Board and Board Committees to enable the Directors to plan ahead and manage their time.
The Board Charter sets out a policy where a director shall notify the Chairman before accepting any new directorship and indicate the time to be spent on the new appointment.
The current Directors are expected to devote sufficient time in the discharge of their duties and responsibilities as they hold less than five (5) directorships in listed issuer, in compliance with paragraph 15.06 of the Listing Requirements.
The Board meets on a quarterly basis with additional meetings held whenever necessary. There were four (4) board meetings held during the financial year ended 31 December 2015 and the attendance record is as follows:-
|Mr Yeoh Chong Keat||4/4|
|Mr Wong Heang Fine||3/4|
|Dato’ Lim Kim Huat||4/4|
|Mr Loi Heng Sewn||4/4|
|Mr Cheong Marn Seng||4/4|
The Board acknowledges the fact that continuous education is vital for the Board members to gain insight and keep abreast with the state of economy, manufacturing, technological advances in the core business, latest regulatory developments and management strategies.
The Training Programmes attended by Directors during the financial year ended 31 December 2015 are summarised as follows:-
|Date of Training||Subject|
|5 & 7 January 2015||GST training|
|25 & 26 August 2015||National Tax Conference 2015|
|5 November 2015||2016 Budget Seminar|
During the financial year under review, the Board via the NC has undertaken an assessment of training needs of each Director and concluded that all the trainings attended by the Directors during the financial year ended 31 December 2015 are relevant and would serve to enhance their effectiveness in the Board.
The Board will evaluate the training needs of its members on a continuous basis and determine the relevant programmes, seminar and briefings that will enhance their knowledge and enable them to discharge their duties effectively.
PRINCIPLE 5 : UPHOLD INTEGRITY IN FINANCIAL REPORTING
Compliance with Applicable Financial Reporting Standards
The Board aims to present a balanced, insightful and timely assessment of the Group’s financial position, performance and prospects by ensuring quality financial reporting through the annual audited financial statements and quarterly financial results to its stakeholders, in particular, shareholders, investors and the regulatory authorities.
The Board is responsible for ensuring that appropriate accounting policies have been consistently applied and that the financial statements comply with the applicable financial reporting standards and the relevant provisions of laws and regulations.
The Audit Committee assists the Board in reviewing the information for disclosure to ensure the quality of financial reporting and adequacy of such information, prior to submission to the Board for approval.
The statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out in the Financial Statements section of this Annual Report.
As required by the Companies Act, 1965, the Directors are responsible for ensuring that the financial statements of the Group are prepared in accordance with the requirements of the applicable approved accounting standards in Malaysia, provisions of the Companies Act, 1965 and the Listing Requirements, and give a true and fair view of the financial position of the Group at the end of the financial year.
Related Party Transactions (“RPT”) / Recurrent Related Party Transactions (“RRPT”)
The Group has in place guidelines and appropriate procedures for RPT/RRPT to ensure that the Group meets its obligation under the Listing Requirements. All RPT/RRPT are reviewed by the Audit Committee and the same will be reported to the Board.
A director with any interest, direct or indirect (“Interested Director”) must abstain from deliberating and voting, whether at Audit Committee or Board level, on the relevant resolution in respect of the RPT/RRPT. The Interested Director must ensure that persons connected with him abstain from voting on the resolution in respect of the RPT/RRPT.
The Company had obtained shareholders’ mandate in respect of RRPT at the last AGM of the Company; pursuant to the Listing Requirements, the Company will seek shareholders’ approval for the renewal of such mandate at the forthcoming AGM of the Company.
Suitability and Independence of External Auditors
Through the Audit Committee, the Group has established a transparent and professional relationship with the external auditors. The Audit Committee met the external auditors at least twice during the year under review without the presence of the Executive Directors and Management to allow the Audit Committee and the external auditors to exchange independent views on matters which require the Committee’s attention, to review the scope and adequacy of the audit process, the annual financial statements and their audit findings. Additional meetings will be held between the Audit Committee and the external auditors when deemed necessary
In addition, the external auditors are invited to attend the AGM of the Company and are available to answer shareholders’ questions relating to conduct of the statutory audit and the preparation and contents of their audit report.
The services provided by the external auditors include statutory audit and non-audit services. The terms of engagement for the services rendered by the external auditors are reviewed by the Audit Committee and approved by the Board. The Audit Committee also reviews the proposed fees for non-audit services and subsequently recommends to the Board for approval. In their review, the Audit Committee ensures that the independence and objectivity of the external auditors are not compromised. The Audit Committee’s annual assessment to review and monitor the suitability and independence of the external auditors is guided by the prescribed evaluation criteria in accordance with the Listing Requirements and the policies and procedures adopted by the Board for the assessment of the external auditors. Written assurance would be obtained from the external auditors to confirm that they have been independent throughout the conduct of the audit engagement in accordance with the terms of the relevant professional and regulatory requirements.
The external auditors have confirmed that there were no circumstances and relationship that may impair their independence and that the ethical requirements have been complied with. In compliance with the requirements of the Malaysian Institute of Accountants, the external auditors rotate their audit partners assigned to the Group every five years.
The details of the statutory audit, audit-related and non-audit fees paid/ payable in 2015 to the external auditors are set out below:-
|Fees paid/ payable to Baker Tilly Monteiro Heng||Group Total (RM’000)|
|Ø||Non-audit services *||7|
* The non-audit services paid/ payable to Baker Tilly Monteiro Heng were in respect of their review of Statement on Risk Management and Internal Control and other services. The provisions of these services by the external auditors to AbleGroup were cost effective and efficient due to their knowledge and understanding of the operations of the Group, and did not compromise their independence and objectivity.
A summary of the activities of the Audit Committee during the year under review is set out in the Audit Committee Report on pages 20 to 23.
The Board acknowledges its overall responsibility for maintaining a sound system of internal controls that provides reasonable assessment of effective and efficient operations, internal financial controls, procedures and guidelines that compliance with relevant laws and regulations.
The Group has an Internal Audit Department (“IAD”) which assists the Audit Committee in the discharge of its duties and responsibilities. Its role is to review and provide independent and objective reports on the organisation’s management, records, accounting policies and control to the Board. The internal audit reviews include evaluation of the key processes where significant risks are identified, assessed and managed.
The internal audit function is conducted in a manner that is consistent with and meets the Standards for the Professional Practice of Internal Auditing and Code of Ethics of the Institute of Internal Auditors Malaysia.
The Head of Internal Audit reports directly to the Audit Committee and findings and recommendations are communicated to the Board through the AC.
The effectiveness of the systems of internal controls of the Group is reviewed periodically by the Audit Committee.
Further details of the Group’s system of internal controls are set out on page [ ] of this Annual Report.
PRINCIPLE 8 : STRENGTHEN RELATIONSHIP BETWEEN GROUP AND SHAREHOLDERS
Relationship with Shareholders and Investors
The Board values dialogue with its shareholders and investors through the maintenance of an open communication policy with investors and shareholders alike. In ensuring effective communication, the various means and forums such as press releases, public announcements on quarterly basis, annual report, disclosures to the Bursa Malaysia Securities Berhad and other Group activities are made.
The Board has not identified a senior independent director as the Board believes that all concerns of shareholders can be effectively conveyed to the Chairman or Managing Director.
At each Annual General Meeting and/or Extraordinary General Meeting, the Managing Director and, where appropriate, the Chairman are available to respond to shareholders’ questions during the meetings.
The Group maintains a website at www.ablegroup.com.my to enable shareholders to access to the Group’s information, products and services, financial results as well as the Company’s announcements made to Bursa Securities.
Annual General Meeting
The Annual General Meeting of the Company provides the principal forum for dialogue and interaction between the Board and the shareholders. The participation of shareholders, both individuals and institutional at general meetings on clarifications of pertinent and relevant information is encouraged.
The Board has adopted the best practice of informing shareholders at the general meeting on their voting rights, in line with the recommendation under the Code.
The Code states that the Board should encourage poll voting for substantive resolution. The Board is of the opinion that currently the number of shareholders and level of attendance at general meetings do not warrant the introduction of poll voting for substantive resolution. The Group will introduce electronic voting when appropriate.