|Corporate Governance Statement 2015|
|Investor Relations - Corporate Governance|
Introduction And Objective
The Board of Directors (“Board”) recognizes the importance of good corporate governance and is committed to practice the highest standards in corporate governance throughout the Group. Such commitment is based on the belief that a strong culture of good corporate governance practices is fundamental towards enhancing long term shareholders’ value, increasing investors’ confidence and protecting stakeholders’ interests.
The Board supports the Group’s adoption of best practices as propounded by the Malaysian Code on Corporate Governance 2012 (“the Code”) which sets out broad principles and specific recommendations to promote and cultivate a strong culture of good corporate governance at all levels of the Group’s businesses. The Board will continue to review and enhance the Group’s corporate governance framework to ensure its relevance and ability in meeting future challenges and to establish long term sustainable shareholders’ value.
This statement demonstrates the Board’s commitment in sustaining high standards of corporate governance and outlines how the Group has complied with the principles set out in the Code with regards to the recommendations stated under each principle for the year under review.
The Group’s Governance Model
PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES
BOARD OF DIRECTORS AND ITS COMMITTEES
Board Composition and Balance
The Board provides entrepreneurial leadership of the Group and is collectively responsible for setting policies, which ensure that the Group’s objective and performance targets are met. The Board is composed of 2 Executive Directors, 4 Independent Non-Executive Directors and 3 Non-Independent Non-Executive Directors. This Board is of the opinion that the composition is balanced and in compliance with Bursa Malaysia Securities Berhad (“Bursa Malaysia”) Main Market Listing Requirements (“Main Market LR”).
The Board composition of Executive Directors and Non-Executive Directors including the Independent Non-Executive Directors, allows for independent judgement and viewpoints on the various issues for the Board’s decision making. Together, the Directors are able to bring wide and varied legal, financial, technical and commercial experience to the Board and Committee deliberations.
There is a division of functions between the Board and the Management, whereby the former’s focus lie more on the Company’s governance; the latter on management in accordance with the direction of and delegation by the Board. Thus, the Board leads the Group and plays a strategic role in overseeing the overall activities of the Management in carrying out the delegated duties in achieving the Group’s corporate objectives and long term strategic plans of the business.
Board Duties and Responsibilities
In addition to statutory and fiduciary duties, the Board is responsible for formulating and reviewing the Group’s strategic plans and key policies, and charting the course of the Group’s business operations whilst providing effective oversight of the Management’s performance, risk assessment and controls over business operations.
The principal responsibilities of the Board include the following:
Codes and Policies
Principles of Business Conduct
The Board is committed to upholding the highest form of corporate governance, values and integrity in all its business transactions. The Principles of Business Conduct sets out the ethical standards and appropriate conduct at work adopted by the Group and is applicable to the Board / Directors and all employees in the Group.
The details of the Principles of Business Conduct is available for reference at the Company’s website www.globetronics.com.my
In adhering to good corporate governance practices and with the introduction of the Whistleblower Protection Act 2010, the Board has put in place an avenue for employees and stakeholders to report genuine concerns about unethical behavior, malpractices, illegal acts or failure to comply with regulatory requirements without fear of reprisal.
The details of the Whistleblowing Policy is available for reference at the Company’s website www.globetronics.com.my
Sustainability of Business
The Board beliefs that in addition to shareholder value maximization, the Group has a responsibility to promote business sustainability strategies that take into account its employees, stakeholders, environment and community it operates in. The corporate social responsibility programs of the Group are disclosed in pages 22 and 23 of the Annual Report.
Supply of Information to Board Members
Board Meetings are structured with a pre-set agenda which encompasses all aspects of matters under discussion. This is to enable the Directors to look at both qualitative and quantitative factors so that informed decisions are made. Board papers for the Agenda are circulated to Directors not less than 4 days before the meeting date to give Directors time to deliberate on the issues to be raised at the meeting. All proceedings of Board Meetings are minuted and signed by the Chairman of the Meeting in accordance with the provision of the Companies Act, 1965. Minutes of meetings of each committee are also circulated to the Board Members for review.
Access to Information and Professional Advice
All Directors have unrestricted direct access to the Company’s Senior Management and the services of the Company Secretaries who advise the Board on the compliance with the relevant laws, regulations and regulatory requirements. The Board is regularly updated and advised on statutory and regulatory requirements by the Company Secretaries who are suitably qualified, experienced and competent.
In the furtherance of its duties, the Board may where necessary, obtain independent professional advice on specific matters, at the Company’s expense.
The Board has adopted a Board Charter which sets out the principal functions, composition, roles and responsibilities of the Board and also the functions and responsibilities delegated to the Board Committees as well as to the Management of GTB and its Group. The Board Charter is a source reference and primary induction literature, providing insights to prospective Board members and senior management. Therefore, the Board Charter is reviewed periodically and updated in accordance with the needs of the Company to ensure its effectiveness. A summary of the current Board Charter is published on our website, www.globetronics.com.my
PRINCIPLE 2 – STRENGTHEN COMPOSITION
The Board is satisfied with its current composition which comprises of 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 effectively.
In discharging its duties the Board is assisted by Board Committees, namely the Audit and Risk Management Committee, Nomination Committee, Remuneration Committee and ESOS Committee. Each committee operates within its respective defined Terms of Reference (“TOR”) which have been approved by the Board.
The Board Committee periodically review and assess their respective TORs to ensure the TORs remain relevant, adequate and concise in governing the functions and responsibilities of the Committee and reflect the latest developments in the Main Market LR of Bursa Malaysia and the Code.
Audit and Risk Management Committee
The composition and TOR of this Committee together with its report are presented on pages 18 to 21 of the Annual Report.
The Committee’s responsibility, among others, is to identify and recommend the right candidate with the necessary skills, experience and competencies to be filled in the Board and Board Committees. Recruitment matters are discussed in depth by the Committee before the entire Board makes the final decision on new appointments.
Re-appointment and re-election of Directors at the Annual General Meeting (AGM) are recommended by this Committee to the Board for its approval.
The Committee will also assess and ensure all Directors receive appropriate continuous training programs in order to broaden their perspectives and to keep abreast with developments in the market place and with changes in new statutory and regulatory requirements.
The Board’s Nomination Committee comprises three Non-Executive Directors, the majority of whom are Independent. The members are:
Dato’ Iskandar Mizal bin Mahmood (Independent Non-Executive Director, Chairman)
Dato’ Syed Mohamad bin Syed Murtaza (Independent Non-Executive Director)
Dato’ Ng Kweng Moh (Non-Independent Non-Executive Director)
The Nomination Committee meets when necessary. For the financial year ended 31 December 2015, the Committee held one meeting.
The Committee continually reviews and evaluates its requirements for an appropriate mix of skills and experience to ensure the Board’s composition remains relevant and optimal. The Committee confirms that the present size and composition of the Board is appropriate to oversee the overall business of the Group.
In accordance with the Company’s Articles of Association, all Directors are subject to retire by rotation at least once every 3 years. The Directors due to retire at the forthcoming AGM are shown in the Notice of Meeting (Ordinary Resolutions 2 to 5 on page 117.
Directors over seventy years old are required to seek re-appointment annually in accordance with the Companies Act, 1965. Director seeking re-appointment at the forthcoming AGM is shown in the Notice of Meeting (Ordinary Resolutions 1 on page 117.
The Board acknowledges the importance of boardroom diversity and the recommendation of the Code pertaining to the establishment of a gender diversity policy. Hence, the Board had always been in support of a policy of non-discrimination on the basis of race, religion and gender. The Board encourages a dynamic and diverse composition by nurturing suitable and potential candidates equipped with the competency, skills, experience, character, time commitment, integrity and other qualities in meeting the future needs of the Company. Nevertheless, the Board will only set specific targets in relation to gender diversity if the situation so requires and if it is in the best interest of the Company to do so.
The Remuneration Committee consists of :
Mr. Yeow Teck Chai (Independent Non-Executive Director, Chairman)
Dato’ Iskandar Mizal bin Mahmood (Independent Non-Executive Director)
Mr. Ng Kweng Chong (Non-Independent Executive Director)
The Remuneration Committee is responsible for recommending to the Board the remuneration framework for Directors as well as the remuneration packages of Executive Directors. The policy practiced on Directors’ remuneration by the Remuneration Committee is to provide the remuneration packages needed to attract, retain and motivate Directors of the quality required to manage the business of the Group and to align the interest of the Directors with those of the shareholders.
Information prepared by independent consultants and survey data on the remuneration practices of comparable companies are taken into consideration in determining the remuneration packages for Executive and Non-Executive Directors.
None of the Executive Directors participated in any way in determining their individual remuneration. Executive Directors’ remunerations are linked to their respective performance and subject to the approval of the Board.
The Board as a whole determines the fees for the services of Non-Executive Directors, on the recommendation of the Remuneration Committee once every 2 years and subject to the approval of shareholders in the AGM.
The Committee meets when necessary. For the financial year ended 31 December 2015, the Committee held one meeting.
The Company’s framework on Directors’ remuneration has the underlying objectives of attracting and retaining the Directors of high caliber needed to run the Group successfully. In the case of the Executive Directors, the various components of the remuneration are structured so as to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration reflects the expertise, experience and level of responsibilities undertaken by a particular Non-Executive Director concerned. Where applicable, the Board also takes into consideration any relevant information provided by independent consultants or from survey data.
The Non-Executive Directors are paid a meeting allowance for each Board meeting they attend. Similarly, members of Board Committees are also paid a meeting allowance for each Committee meeting they attend.
The appropriate Directors’ remuneration paid or payable or otherwise made available from the Company and its subsidiaries for the financial year under review are presented in the table below :
a) Aggregate remuneration of Directors categorized into appropriate components:
b) The number of Directors of the Company whose total remuneration falls within the following bands:
Details of the Directors’ remuneration are set out in applicable bands of RM50,000 which comply with the Bursa Malaysia Main Market LR.
Employee Share Options Scheme (“ESOS”) Committee
This Committee has the power to administer the ESOS in such manner as it shall in its discretion deem fit; including such powers and duties conferred upon it under the By-Laws of the ESOS. The Committee ensures that the ESOS Scheme and its relevant allocation is administered in accordance with the By-Laws.
The ESOS Committee consists of :
Ms Lam Voon Kean (Independent Non-Executive Director, Chairwoman)
Dato’ Syed Mohamad bin Syed Murtaza (Independent Non-Executive Director)
Mr. Ng Kok Khuan (Non-Independent Non-Executive Director)
The Committee meets when necessary. For the financial year ended 31 December 2015, the Committee held two meetings.
PRINCIPLE 3 – REINFORCE INDEPENDENCE
Assessment of Independent Directors
The Board recognizes the importance of independence and objectivity in the decision making process. The Board and its Nomination Committee in their annual assessment concluded that each of the four Independent Non-Executive Directors continues to demonstrate conduct and behavior that are essential indicators of independence. Each of them continues to fulfill the definition and criteria of independence as set out in Bursa Malaysia Main Market LR.
Tenure of Independent Directors
The Board is of the opinion that the composition is balanced and in compliance with the Bursa Malaysia Main Market LR. None of the Independent Directors have served a cumulative term exceeding nine years as recommended by the Code.
Composition of the Board
There are 9 members on the Board that consists of 2 Executive Directors and 7 Non-Executive Directors. 4 of the members are Independent Directors who are essential in providing unbiased and independent opinion, advice and judgement and thus play a role in corporate accountability. All Independent Directors act independently and are not involved in any other relationship with the Group that may impair their independent judgement and decision making.
PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS
The Board recognizes the need for the directors to spend sufficient time and efforts in carrying out their responsibilities, thus each director is expected to commit sufficient time in attending meetings for the Board, Board Committees as well as external trainings to enhance their professional skills.
The Board meets on a scheduled basis (at least 5 times a year) and has formal schedule of matters reserved for its meetings. Additional meetings may be convened when necessary should major issues arise that need to be resolved between scheduled meetings. Relevant management personnel are invited to Board meetings to report and apprise the Board on operations and other developments within their respective purview.
Where the Board is considering a matter in which a Director has an interest, such Director will abstain from all deliberations and decision making on the subject matter. In the event any Directors are unable to attend Board meetings physically, the Company’s Articles of Association allow for such meetings to be conducted via telephone, video conference or any other form of electronic communication.
For the financial year ended 31 December 2015, five Board meetings were held.
Details of each Director’s meeting attendances during the financial year are as follows:
Directors’ Continuing Development
The Board oversees the training needs of its Directors. Directors are regularly updated on the Group’s businesses and the competitive and regulatory environment in which they operate. Directors, especially newly appointed ones, are encouraged to visit the Group’s operating centre to have an insight on the Group’s various operations which would assist the Board to make effective decisions relating to the Group.
All Directors have completed the Mandatory Accreditation Program prescribed by Bursa Malaysia. Directors are also encouraged to attend various external professional programs relevant and useful in contributing to the effective discharge of their duties as Directors.
For the year under review, the Directors attended the following conference seminars and training programs:
PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING BY THE COMPANY
The Board, guided by the Audit and Risk Management Committee, recognizes the importance of reviewing financial information to be disclosed to ensure its accuracy, adequacy, transparency and compliance with the appropriate accounting standards and the financial statements give a true and fair view of the state of affairs of the Company and the Group.
Directors’ Responsibility Statement
In respect of the preparation of the audited financial statements, the Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and Group and their results and cash flows for that year. In preparing the financial statements for the financial year ended 31 December 2015, the Directors have:
The Directors are responsible for ensuring that proper accounting records are kept and which disclose with reasonable accuracy the financial position of the Company and Group to enable them to ensure that the financial statements comply with the Companies Act, 1965. They have an overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company, to prevent and detect fraud and other irregularities.
Suitability and Independence of External Auditors
The Audit and Risk Management Committee met the external auditors twice during the year under review without the presence of the Executive Directors and Management to allow the Audit and Risk Management Committee and the external auditors to exchange independent views on maters which require the Committee’s attention. Through the Audit and Risk Management Committee, the Company has established a transparent and professional relationship with the auditors. The suitability and independence of external auditors are also consistently reviewed by the Audit and Risk Management Committee. A summary of the activities during the year under review is set out on page 21 of the Annual Report.
PRINCIPLE 6 – RECOGNISE AND MANAGE RISKS
Sound Risk Management Framework
The Board assumes responsibility for the effective stewardship and management of the Company with the strategic objective to build and deliver long term shareholder value whilst meeting the interests of shareholders and stakeholders. The Board provides strategic direction and formulates appropriate corporate policies to ensure the Group’s resources and profitability are optimized. The Board is also responsible for assessing the integrity of the Group’s financial information and the adequacy and effectiveness of the Group’s internal control and risk management processes.
Internal Audit Function
The Board recognizes the importance of risk management and internal controls in the overall management process. The Group’s Statement on Risk Management and Internal Control which provides an overview of the Group’s risk management and state of internal controls is set out on pages 34 and 35 of the Annual Report.
PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
Corporate Disclosure Policy
The Company is committed to a policy which provides accurate, balanced, clear, timely and complete disclosure of corporate information to enable informed and orderly market decisions by investors. In this respect, the Company follows the Corporate Disclosure Guide and Best Practices as proposed by Bursa Malaysia.
Material information will in all cases be disseminated broadly and publicly via Bursa Malaysia, and other means. Copies of the full announcement are supplied to the shareholders and members of the public upon request. Interested parties can also obtain the full financial results and the Company’s announcements from the Company’s website at www. globetronics.com.my and also the Bursa Malaysia’s website.
PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN THE COMPANY AND ITS SHAREHOLDERS
GTB values good communications with shareholders and investors. Its commitment, both in principle and practice, is to maximize transparency consistent with good governance, except where commercial confidentiality dictates otherwise.
Annual General Meetings (“AGM”)
The AGM is the principal forum for dialogue and interaction with the shareholders of the Company. The Board encourages shareholders’ active participation at the Company’s AGM and endeavours to ensure all Board Members, Senior Management and the Group’s External Auditors are in attendance to respond to shareholders’ enquiries. At the AGM, the Board presents the performance of the Group as contained in the Annual Report and shareholders present are given the opportunity to present their views or to seek more information.
Resolutions tabled and passed at the Meeting are released to Bursa Malaysia on the same day. Shareholders have the right, as provided for in the Articles of Association of the Company, to request for poll voting.
The Company has consistently published its Annual Report in a timely manner that enables the shareholders to review it prior to AGM. The Notice of AGM with a softcopy of the Annual Report (CD-ROM) which contains comprehensive reports on Group’s financial performance, insights, outlooks and directions is circulated at least 21 days prior to the AGM, The full version of the Annual Report is available online at the Group’s website, www.globetronics.com.my and a printed full version will be provided to shareholders upon request within 4 market days.
The Board recognizes the importance of keeping shareholders and investors informed of the Group’s businesses and corporate developments. The Board’s primary contact with major shareholders is via the Chief Financial Officer and Corporate Manager, who have regular dialogue with institutional investors and deliver presentations to analysts periodically.
For the financial year ended 31 December 2015, the management held and/or attended five strategic & successful offshore road-shows / investors meeting and conducted more than thirty meetings with fund managers and investment bankers in Hong Kong, Singapore, Taiwan, United States of America, Kuala Lumpur and Penang.
The Group’s website, www.globetronics.com.my also serves as a forum to communicate with shareholders and investors and to provide information on the Group’s business activities. Information such as disclosures made to Bursa Malaysia (including interim and full year financial results, Annual Report and other announcements on relevant transactions undertaken by the Group) and the Group’s business activities can be obtained from the website. Requests for information on the Company can be forwarded to the same website.
Announcements made by the Company to Bursa Malaysia are also accessible from www.bursamalaysia.com.
As there may be instances where investors and shareholders may prefer to express their concerns to an independent director, the Board has appointed Dato’ Syed Mohamad Bin Syed Murtaza as the Independent Non-Executive Director to whom concerns may be directed. At all times, investors and shareholders may contact the Company Secretaries for information on the Company.
COMPLIANCE WITH THE CODE
The Board is of the view that the Group has, in all material aspects applied the principles and complied with the recommendation of the Code save for the fact that currently the Chairman and CEO are both Executive Directors in the Group. However the Board is of the view that there are sufficient Independent Directors on the Board with wide boardroom experience and expertise to provide the necessary check and balance.
The Nomination Committee and the Board are aware of the requirements of the Code and efforts are being made to address this.
The Statement of Corporate Governance was approved by the Board of Directors on 31 March 2016.
The following information is provided in accordance with Paragraph 9.25 of Bursa Malaysia Securities Berhad Main Market Listing Requirements as set up in Appendix 9C.
Utilisation of Proceeds Raised from Corporate Proposals
There were no proceeds raised from corporate proposals.
There was no share buy back programme implemented by the Company during the year.
Options, Warrants or Convertible Securities
The Company did not issue any options, warrants or convertible securities during the financial year under review.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)
The Company did not sponsor any ADR or GDR programme during the financial year under review.
Sanctions and/ or Penalties
There were no material sanctions and/ or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.
There was a total of RM 12,500 of non-audit fees paid to the external auditor by the Company during the financial year under review.
Variation in Results
There were no material variances between the financial results for the financial year ended 31 December 2015 and the unaudited financial results previously announced by the Company.
There was no profit guarantees given by the Company during the financial year.
There were no material contracts entered into by the Company and/ or its subsidiaries involving directors’ and major shareholders’ interests either still subsisting at the end of the financial year ended 31 December 2015 or entered into since the end of the previous financial year.