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Corporate Governance Statement

Corporate Governance Statement

The Board of Directors (“Board”) recognises the importance for the Company to maintain high standards of transparency, accountability and integrity in the conducts of the Company and its subsidiaries (“Group”) business and affairs. The Board adopts and applies the Principles and Best Practices as governed by the Bursa Malaysia Securities Berhad (“Bursa Securities”) ACE Market Listing Requirements (“Listing Requirements”) and Guidance Note 11 on Corporate Governance, undertakes additional measures, principles and recommendation embodied in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) and strives to adopt the substance and not merely the form behind the corporate governance prescription.

The Board delegates certain responsibilities to the Board Committees, all of which operate within the defined terms of reference to assist the Board in discharging its fiduciary duties and responsibilities. The Board Committees include the Audit Committee, Nominating and Remuneration Committee, Employees’ Share Option Committee and Risk Management Committee. The respective committees report to the Board on matters considered and their recommendation thereon for approval and decision-making.

1. THE BOARD

The Board is responsible for the Company’s overall strategic direction and objectives, its acquisition and divestment policies, financial policy, major investments and the consideration of significant financial matters.

The Board’s spectrum of skills and experience gives added strength to the leadership, thus ensuring the Group is under the guidance of an accountable and competent Board. The Board operates within a robust set of governance as set out below:

1.1 Board Charter and Code of Conduct of the Board

The Board has formally adopted a Board Charter, which provides guidance to the Board in the fulfi lment of its roles, duties and responsibilities which are in line with the principles of good corporate governance. The Board Charter provides guidance for Directors and Management on the responsibilities of the Board, its Committees and requirements of Directors and it is subject to periodical review to ensure consistency with the Board’s strategic intent as well as relevant standards of corporate governance.

The Board is also committed to conducting business in accordance with the highest standards of business ethics and complying with applicable laws, rules and regulations. The Code of Conduct of the Board provides guidance for Directors regarding ethical and behavioural considerations and/or actions as they address their duties and obligation during their appointment.

The Board Charter and Code of Conduct of the Board are made available for reference in the Company’s website, www.opcom.com.my.

1.2 Composition and Balance of the Board

The Board has six (6) members comprising two (2) Executive Directors and four (4) Non-Executive Directors. All four (4) Non-Executive Directors are Independent Non-Executive Directors, thus, this complies with Rule 15.02 of the Listing Requirements that at least one-third (1/3) of the Board is independent directors.

The Directors have wide ranging experience and all have occupied or are currently occupying senior positions in the public and/or private sectors. A brief profile of each Board member is as set out under corporate information of this website. The presence of independent directors fulfils a pivotal role in corporate accountability and the role of the independent directors is particularly important as they provide unbiased and independent views, advice and judgement.

The Executive Directors takes on primary responsibility for managing the Group’s business operations and organisational effectiveness.

1.3 Board Meeting

The Board meets regularly, at least once in every quarter, to review the Group’s operations and to approve the quarterly reports and annual financial statements. Additional meeting would be convened when urgent and important decision needs the Board’s review and consideration between scheduled meetings. During the financial year under review, four (4) meetings of the Board were held and all Directors have complied with the requirement in respect of Board Meeting attendance as

provided in the Listing Requirements. The details of Directors’ attendance are set out below :

 

Directors                                                                                Total Attendance

Tan Sri Mokhzani Mahathir                                                                 4/4

Chhoa Kwang Hua                                                                              4/4

Lt. Jen. (B) Dato’ Seri Panglima Zaini Bin Hj. Mohd Said            4/4

Abdul Jabbar Bin Abdul Majid                                                           4/4

Sven Janne Sjöden                                                                             4/4

Chan Bee Lean                                                                                    4/4

 

1.4 Supply of and Access to Information and Advice

The Board has a formal schedule of matters reserved specifically for its decision. The Directors have full and timely access to all information pertaining to the Group’s business and affairs, whether as a full Board or in their individual capacity, to enable them to discharge their duties. Prior to the Board meetings, the agenda for each meeting together with a full set of Board papers containing information relevant to the business of the meetings are circulated to the Directors. This allows sufficient time for any of the Board members to obtain further explanations or clarifications as may be needed from Senior Management and/or the Company Secretary or to consult independent advisers before the meetings.

Senior Management personnel are invited to attend Board meetings to report on their areas of responsibility when necessary, to furnish the Board with detailed explanations and clarifications on issues that are tabled and/or raised at the Board meetings. External advisers may be invited to attend Board meetings at the expense of the Company when necessary.

At all times, all members of the Board have direct and unrestricted access to the Senior Management and the Company Secretary of the Company for information relating to business and affairs of the Group.

1.5 Training

The Directors attended courses, seminars, conferences and talks to enhance their skill sets and knowledge to enable them to carry out their duties and discharge their responsibilities as directors of the Company. Additionally, the Directors kept themselves updated with the changes in the business and regulations through sharing and discussion in official Board meetings and unofficially through small group discussions among the Directors.

1.6 Appointment and Re-election

With the recommendation of MCCG 2012 in regard to the setting up of a nominating committee and the amendments to the Listing Requirements in line with the MCCG 2012, the Board had on 30 May 2013 established a Nominating and Remuneration Committee (“NRC”), combined the role of both the nominating committee and the previous remuneration committee into one (1) committee given the current size of the Board.

The NRC, which comprises wholly of Non-Executive and Independent Directors are as follows:-

 

Chairman :                 Abdul Jabbar Bin Abdul Majid

     (Independent Non-Executive Director)

Members :                  Lt. Jen. (B) Dato’ Seri Panglima Zaini Bin Hj. Mohd Said

     (Independent Non-Executive Director)

     Sven Janne Sjöden

    (Independent Non-Executive Director)

The NRC is empowered by the Board through clear defined terms of reference to oversee amongst others, reviewing the Board composition and making recommendations to the Board for appointments of new Directors by evaluating and assessing the suitability of candidates as Board member or Board Committee member by giving due consideration to the required mix of skills, knowledge, expertise and experience, professionalism and integrity that the proposed Directors shall bring to the Board, reviewing the remuneration packages of the Executive Directors and Senior Management.

The NRC is also responsible for the annual review of the required mix of skills and experience and core competency which Non-Executive Directors should bring to the Board and the annual assessment of the effectiveness of the Board as a whole, the Board Committees, the performance of each existing Director and its Independent Directors.

1.6 Appointment and Re-election (Cont’d)

In accordance with the Company’s Articles of Association, at every Annual General Meeting (“AGM”) one-third of the Directors are subject to retirement by rotation such that each Director shall retire from office once in every three (3) years or, if their number is not three (3) or a multiple of three (3), the number nearest to one third shall retire from office such that each Director shall retire from office once in every three (3) years and if there is only one (1) Director who is subject to retirement by rotation, he shall retire. All Directors who retire from office shall be eligible for re-election. Further, pursuant

to Section 129(6) of the Companies Act, 1965, Directors over the age of 70 are required to offer themselves for re-election at every Annual General Meeting.

The director who is subject to re-election and/or re-appointment at the next AGM shall be assessed by the NRC before recommendation is made to the Board and shareholders for the re-election and/or re-appointment. Appropriate assessment and recommendation by the NRC would be based on the yearly assessment conducted.

Criteria have been set to assess the independence of candidate for directors and existing directors based on the guidelines set out in the Listing Requirements. On an annual basis, the Directors are required to confirm their independence by completing the independence checklist.

The Company does not have term limits for Independent Directors as the Board believes there are significant advantages to be gained from the long-serving Directors who possess tremendous insight and in-depth knowledge of the Company’s business and affairs. The MCCG 2012 recommends that the tenure of an independent director should not exceed accumulative term of nine (9) years, however, the independent director may continue to serve on the board subject to board’s justification as per the Listing Requirements.

The NRC had undertaken a review and assessment of the level of independence of the independent directors of the Board and based on the assessment, the Board is satisfied with the level of independency demonstrated by the Independent Directors, i.e. they are independent of management and free from any business dealing or other relationship with the Group that could reasonably be perceived to materially interfere with their exercise of unfettered and independent judgment. Therefore, it has determined at the assessment carried out that Lt. Jen. (B) Dato’ Seri Panglima Zaini Bin Hj. Mohd Said and Abdul Jabbar Bin Abdul Majid, who both have serve the Board for more than nine (9) years, remain objective and independent in expressing their views and in participating in deliberation and decision making of the Board and Board Committees. The length of their service on the Board does not in any way interfere with their exercise of independent judgement and ability to act in the best interest of Opcom Group. Lt. Jen. (B) Dato’ Seri Panglima Zaini Bin Hj. Mohd Said and Abdul Jabbar Bin Abdul Majid have been demonstrably independent in carrying out their roles as members of the Board and Board Committees, notably in fulfilling their roles as Chairman of the Audit Committee and NRC.

The Board has a strong commitment to increasing the representation of women and people from cultural and linguistically diverse background. In addition, the Board support broad diversity principles across the full range of diversified groups of people. The Group is committed to creating a supportive, flexible and fair work environment where difference among employees is respected. The aim is to provide a workplace that is free from all forms of discrimination and harassment and where all employees are given equal opportunities.

The summary of the activities of the NRC during the financial year are as follows:

  • Reviewed the mix of skill and experience and other qualities of the Board;
  • Accessed the effectiveness of the Board as a whole, the Board committees and the Directors;
  • Discussed the Company Directors’ retirement by rotation;
  • Discussed the re-appointment of the Company’s Independent Directors who have served the Company for more than nine (9) years;
  • Reviewed the Company’s Directors’ meeting allowances; and
  • Reviewed the Employment Contract of the Senior Management.

 

1.7 Directors’ Remuneration

The aggregate remuneration of the Directors for the financial year ended 31 March 2015 is as follows:

                         

Remuneration                                              Executive                  Non-Executive

                                                                         Directors                    Directors

                                                                          (RM)                            (RM)

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Fees                                                                 66,000                         114,000

Salaries                                                           315,833                        –

Allowances                                                      85,750                         48,000

Bonus                                                                –                                   –

Benefits-in-kind                                               99,976                         –

Total                                                                  567,559                      162,000

The number of directors who served during the financial year whose remuneration falls into the following bands:

 

Executive                  Non-Executive

Band of Remuneration                                      Directors                    Directors

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Less than RM50,000.00                                   –                                  4

RM200,001.00 to RM250,000.00                    –                                  –

RM250,001.00 to RM300,000.00                    2                                  –

Total                                                                     2                                   4

 

The determination of the remuneration of the Non-Executive Directors will be a matter to be determined by the Board as a whole on the recommendation of the Chairman and Executive Director. Non-Executive Directors receive a fixed annual fees, as applicable, and allowances for attending Board and Board committee meetings.

The Board has established a policy and procedure to facilitate the NRC to review, consider and recommend to the Board for decision the remuneration package of the Executive Director and Senior Management and is to be reviewed by the Board as required.

2. AUDIT COMMITTEE

As of financial year ended 31 March 2015, the Company has in place an Audit Committee which comprises thee (3) independent Non-Executive Directors. The role of the Audit Committee is to oversee the processes for preparation and completion of the financial data. The Audit Committee reviews financial reports, risk management, related party transactions, situations of potential conflict of interests and the internal controls of the Group.

3. SHAREHOLDERS

3.1 Dialogue between the Company and Investors

The Company strives to maintain an open and transparent channel of communication with its shareholders, institutional investors and the investing public at large with the objective of providing as clear and complete a picture of the Group’s performance and position as possible. Such information is communicated on a timely basis through the following channels:

  • The various disclosures and announcements on Bursa Securities website including quarterly and annual results;
  • The website developed by the Group known as www.opcom.com.my;
  • The yearly annual report; and
  • Participating in investor forum with research analysts, fund managers and investors.

3.2 General Meeting

The Annual General Meeting (“AGM”) is the principal forum for dialogue with shareholders. The Company values feedback from its shareholders and encourages them to actively participate in discussion and deliberations. AGM is held yearly to consider the ordinary business of the Company and any other special businesses. Each item of special businesses included in the notice is accompanied by a full explanation of the effects of the proposed resolution. During the annual and other general meetings, shareholders have direct access to Board members who are on hand to answer their questions, either on specific resolutions or on the Company generally. The Chairman ensures that a reasonable time is provided to the shareholders for discussion at the meeting before each resolution is proposed.

The Board takes note of the recommendation by the MCCG 2012 on the adoption of electronic voting and encourage poll voting to facilitate greater shareholders’ participation. The shareholders are informed of their rights to demand a poll vote prior to the commencement of general meeting and the Board will ensure that any vote of shareholders taken at the general meeting on the resolution approving related party transactions is taken on a poll. Announcement will also be made on the detailed results showing the number of votes cast for and against each resolution.

4. ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

The Board aims to present a fair, balanced and meaningful assessment of the Group and the Company’s financial performance and prospects. This is achieved primarily through the announcements of quarterly financial results and annual financial statements to Bursa Securities and the circulation of annual report to the shareholders. The Audit Committee assists the Board by reviewing the financial information to be disclosed, to ensure completeness, accuracy and adequacy prior to release to Bursa Securities.

4.2 Statement of Directors’ Responsibility for Preparing the Financial Statements

The Directors are required by the Companies Act, 1965 to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year. In preparing the financial statements, the Directors have ensured that the applicable approved accounting standards in Malaysia, the provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Securities have been applied. In preparing the financial statements, the Directors have:

  • Selected suitable accounting policies and applied them consistently;
  • Made judgments and estimates that are prudent and reasonable;
  • Ensured that all applicable accounting standards have been followed; and
  • Prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having made enquiries that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.

The Directors have responsibility for ensuring that the Group keeps accounting records which disclose with reasonable accuracy the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Directors have overall responsibility for taking reasonable steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

4.3 Internal Control

The Board acknowledges its overall responsibility for maintaining a sound system of internal control and the need to review its effectiveness regularly in order to safeguard the Group’s assets and therefore shareholders’ investments in the Group. This system, by its nature, can only provide reasonable but not absolute assurance against material misstatement, fraud or loss.

Currently, the Group does not maintain an Internal Audit Department but had outsourced its internal audit function to Baker Tilly Monteiro Heng Governance Sdn. Bhd., who reports directly to the Audit Committee, to ensure independent reviews be carried out on the adequacy and integrity of the Group’s system of internal controls. The Board considers the system of internal controls instituted throughout the Group sound and sufficient. The total cost incurred for the Internal Audit activities of the Group for the financial year under review was RM50,000.00. The Statement on Risk Management and Internal Control furnished on pages 39 and 41 of the Company’s 2015 Annual Report provides an overview on the state of internal controls within the Group.

4.4 Relationship with the Auditors

Through the Audit Committee, the Board has established and maintained a formal and transparent relationship with the Group’s external and internal auditors. A summary of the activities of the Audit Committee during the financial year is set out under the Audit Committee Report on pages 42 to 46 of the Company’s 2015 Annual Report.

5. SUSTAINABILITY POLICY

The strategies to promote sustainability and its implementation can be found at the Company’s website at www.opcom.com.my.

6. COMPLIANCE WITH THE MCCG 2012

The Board strives to ensure that the Group complies with the Principles and Best Practices of the Code. The Board will endeavour to improve and enhance procedures in the Group to ensure compliance from time to time. The Group has complied with the Best Practice of the Code during the financial year ended 31 March 2015.

7. STATEMENT ON MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’INTEREST

There was no material contract entered into by the Group involving the directors’ or major shareholders’ interest during the financial year ended 31 March 2015.

8. RISK MANAGEMENT COMMITTEE

Risk Management Committee holds monthly meetings. This Committee regularly reviews all risks including financial, operation and market risks and ensures risks and controls are kept updated to reflect current business situations and ensure relevance at any given time. Steps are taken to eliminate outdated and irrelevant risks and identify new and vulnerable risks, for which new controls will be effected. The Management, in keeping with good corporate governance practices, takes a serious view of ensuring that the Group is always on alert of any situation that might adversely affects its assets, income and ultimately, its profits.

9. RECURRENT RELATED PARTY TRANSACTION

The recurrent related party transactions of a revenue or trading nature of Opcom Holdings Berhad (“Opcom”) and its subsidiaries (“Opcom Group”) made during the financial year ended 31 March 2015 pursuant to the shareholders’ mandate is set out on page 36 to 38 of the Company’s 2015 Annual Report.