OVERVIEW STATEMENT ON CORPORATE GOVERNANCE
CORPORATE GOVERNANCE OVERVIEW STATEMENT
The Board of Directors of Protasco Berhad (the Board) believes in good corporate governance practices in line with the principles, requirements, and best practices specified in the Malaysian Code on Corporate Governance 2017 (MCCG 2017).
THE ROLE AND RESPONSIBILITIES OF THE BOARD
The Board is aware of its accountability to the shareholders and various stakeholders of Protasco Berhad in discharging its duty and regulatory role in building a sustainability business.
The Board is responsible for delivering shareholder value over the long term, through the Group’s culture, strategy, values and governance. The Independent Directors have a particular responsibility for challenging the Group’s strategy and monitoring the performance of Executive Directors against goals and objectives.
The Schedule of Matters reserved for the Board includes various strategic, financial, operational and governance responsibilities.
The Board is supported by the Audit, Nomination and Remuneration, Employees’ Share Scheme and Risk Management Committees.
Decisions on operational matters and the day-to-day management of the business are delegated to the Group Managing Director and its senior management. This includes implementing group policy and procedures, managing client and contractor service, monitoring financial performance, and human resource management.
The Board has adopted a Board Charter which serves as a reference for the Directors.
The Board Charter sets out the roles, functions, composition, operations and processes of the Board which is intended to ensure that all the Board members are fully aware of their obligation of discharging their duties and responsibilities. The last review was carried out by the Board on 31 March 2016.
The Board Charter is available for reference at the company’s website www.protasco.com.my.
Code of Conducts
A Director’s Code of Conducts is set out as the rules and values for the Directors in conducting their duties and responsibilities to the highest ethical standards.
The Director’s Code of Conduct is available for reference at the company’s website www.protasco.com.my.
Board papers containing current and forecast results, governance, litigation and risk updates, and treasury and shareholders information are distributed in advance of the meeting to allow Directors have sufficient time for preparation. The Board received presentations from the Group Managing Director and senior management on issues within the Group.
Both company secretaries are qualified to act as company secretary under Section 235 of the Companies Act 2016. They are both Associates members of the Malaysia Institute of Chartered Secretaries and Administrators (“MAICSA”). The Company secretaries provide support to the Board in fulfilling its fiduciary duties. They are responsible in advising the Board with regards to the Company’s constitution, Board policies and procedures, and its compliance with regulatory requirements, codes, guidance and legislations as well as best practices of corporate governance. All Directors have access to the advice and services of the Company Secretaries. The Company Secretaries ensure deliberations of Board and Board Committee meetings are well documented and maintained in the statutory records at the registered office of the Company.
The Board recognises that the sustainability of the ecosystem is an integral part of sustaining its business, thus supporting a plan for promoting sustainability to be embedded in the Group’s strategies, taking into accounts the environmental, economic and social aspects in its business operations.
The Sustainability Policy is available for reference at the company’s website www.protasco.com.my.
For further information on our Group’s sustainability statement, please refer to the Sustainability Statement on pages 24 to 33 of this report.
The Company provides the Board with full assistance and gives it complete access to necessary materials and relevant information. Together with proper counsel from qualified Company Secretaries and others, these have enabled the Board to discharge its functions properly. The Directors are also encouraged in making verifications and endorsements, and seeking external guidance.
The Board encourages employees and associates to report suspected and/or known misconduct, wrongdoing, corruption and instances of fraud, waste, and/or abuse involving the resources of the Group.
A Whistleblowing Policy was established to enable employees and associates to raise their concerns without fear.
The Whistleblowing Policy is available for reference at the company’s website www.protasco.com.my.
The following channels should be used when employees and associates to raise their concerns:
Composition of the Board
The Board aims to have diversity of skills, experience, length of service, knowledge and gender. The profiles of the Directors are set out on pages 36 to 44. These demonstrate a broad range of experience, expertise and sufficient calibre to bring independent judgement on issues of strategy, performance, resources and standards of conduct, which are vital to the success of the Group.
At present, there are nine members of the Board comprising six Independent Non-Executive Directors, one Non-Independent Non-Executive Director and two Executive Directors.
Appointments and Re-Election of Directors
In compliance with the Company’s Constitution, at each Annual General Meeting (AGM), one-third (1/3) of Directors or if their number is not three, the number nearest to one-third (1/3), shall retire from office at least once in three years. The Directors to retire shall be those who have been longest in office since their last re-election or appointment.
The Nomination and Remuneration Committee will assess the directors who are due for re-election at the AGM based on the result of the annual performance evaluation and will submit its recommendation to the Board for approval.
Board Performance Evaluation
The Board undertakes performance evaluation annually which comprises Board assessment, self-assessment and assessment on board committees. The Chairman of the Nomination and Remuneration Committee will be presented with the analysis of the overall performance evaluation and deliberated at the Nomination and Remuneration Committee meeting. The Nomination and Remuneration Committee will assess and identify areas which require improvement and recommend to the Board for action.
The Board considers that, notwithstanding their interests in the shares of the Company as set out in the Directors’ Interests on pages 69 to 70 of the Directors’ Report, all of the current Independent Directors are independent of the management of the Group and are free from any business or other relationship that could materially interfere with the exercise of their independent judgement.
Pursuant to the Succession Planning Policy of the Company, the tenure of Independent Director is capped at nine years of continuous service. An Independent Director will retire after nine years of continuous service.
Currently, none of the Independent Director has served the Company for more than a cumulative term of nine years of continuous service.
Chairman and Group Managing Director
The roles of Chairman and Group Managing Director are held by separate persons and have different responsibilities. The Chairman of the Board is an Independent Non-Executive Director.
During the year under review, six Board meetings were held. Details of Directors’ attendance are set out as follows:
Details of training programmes, conferences and forums attended by the Directors during the year under review are set out as follows:
The Board takes responsibility to ensure that financial statements are prepared in accordance with the regulatory requirements and applicable financial reporting in Malaysia. The Board deliberates on financial statements and ensure that the Group has used appropriate accounting policies, supported by reasonable and prudent judgment and estimates. The Audit Committee assists the Board by scrutinising the information to be disclosed. The Group’s financial statements are presented in pages 66 to 184 of this Annual Report.
THE ROLE OF AUDIT COMMITTEE (AC) IN RELATION TO FINANCIAL REPORTING
The AC plays an important part in the Company’s financial integrity for the shareholders. In general, the AC assumes the following responsibilities:
- Understand management’s responsibilities and representations
- Understand and assess the appropriateness of management’s selection of accounting principles and the most critical accounting policies
- Understand management’s judgments and accounting estimates applied in financial reporting
- Review and monitor the suitability and independence of external auditors
- Confer with both management and the external auditors about the financial statements
- Assess whether financial statements are complete and fairly present, in all material respects, the financial position of the company and that disclosures are clear and transparent
- Review earnings releases, financial statements, and other information presented with the financial statements prior to release
- Review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work
- Ensure that external audit and internal audit complement each other and that their efforts are coordinated and effective
RELATIONSHIP WITH THE AUDITORS
Through the Audit Committee, the Group has established a professional, transparent and appropriate relationship with the Group’s auditors, both internal and external, particularly in obtaining their professional advice towards ensuring full compliance with applicable accounting standards.
The Audit Committee met the external auditors twice during the year under review on 4 April 2017 and 24 November 2017 without the presence of the Executive Directors and Management to exchange independent views on matters which require the Committee attention.
The Audit Committee had assessed the suitability and independence of the external auditors. In its assessment, the Audit Committee considered several factors such as adequacy of experience, resources of the firm, the professional staff assigned to the audit, independence of Crowe Horwath and the level of non-audit services rendered by Crowe Horwath for FY2017.
Crowe Horwath confirmed that they have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements for the FY2017.
Being satisfied with Crowe Horwath’s performance, technical competency and audit independence, the Audit Committee recommended to the Board to put forth a proposal for the re-appointment of Crowe Horwath as external auditors for financial year ending 2018 at the forthcoming Annual General Meeting.
The Board acknowledges their responsibility for the Group’s system of internal controls and reviews its effectiveness regularly via the Internal Audit Department which provides support to the Audit Committee in dispensing its responsibilities with respect to the adequacy and integrity of the system of internal control within the Group. The internal audit function is independent of the operations of the Group and reports directly to the Audit Committee.
The works of the internal auditors during 2017 is set out in the Audit Committee Report on pages 50 to 51 in this Annual Report.
BOARD RISK MANAGEMENT COMMITTEE
The Board has established a Board Risk Management Committee to oversee the internal controls and risk management processes.
A Group Risk Management Committee is assisting the Board Risk Management Committee in identifying, mitigating and monitoring the risk of the Group.
The Group Risk Management Committee comprising of management staff from the Accounts & Finance Department, Group Corporate Office and Construction Division.
Significant risk matters that require the attention of the Board are reported to the Board Risk Management Committee.
The Statement on Risk Management and Internal Control as set out in pages 60 to 63 of this Annual Report.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee meets as and when necessary and ensures that the main Board appointments, including the composition of the Board Committee, due consideration of both external and internal candidates is given prior to making recommendations to the Board, review the performance of the Directors and Board Committees and to review Executive Directors’ remunerations.
The Board has during the year appointed a female director. The Board understands the benefits of boardroom diversity and that all appointments are made on merit, regardless of gender. The Board is constantly looking for suitable female candidates to be appointed to the Board.
A summary of the Nomination and Remuneration Committee’s activities during the year is set out below:
Details of the Directors’ Remuneration for the financial year ended 31 December 2017 are as follows:
Top five Senior Management’s Remuneration for the financial year ended 31 December 2017 are as follows:
EMPLOYEES’ SHARES SCHEME COMMITTEE
Employees’ Shares Scheme Committee was established with delegated authority to assist the Board to administer the scheme in accordance with the Employees’ Shares Scheme By-Laws and the Main Market Listing Requirements.
The Employees’ Shares Scheme Committee also oversees the Management’s implementation of the scheme with regard to the eligibility of the employees to participate in the scheme, shares grant, option offers, offer date, basis of allotment, exercise of option and option allocations as well as dispute and termination issues in relation to the scheme in line with the Employees’ Shares Scheme By-Laws.
The Employees’ Shares Scheme Committee shall within the duration of the scheme, grant shares or make offers to any eligible employee whom the Committee may in its discretion select to subscribe for new Protasco shares.
To ensure quality disclosure, the Company has a corporate disclosure policy to ensure accurate, clear and timely disclosure of material information and take reasonable steps to ensure that the general public has access to such information. The Company is committed to communicate the Company’s strategy, operational performance, financial results, and other materials developments to Bursa Malaysia, analysts, investors, shareholders, and other stakeholders in a timely, open, comprehensive manner.
The Corporate Disclosure Policy is available at www.protasco.com.my
GROUP CORPORATE WEBSITE
The Board is committed to leverage on information technology for effective dissemination of information on a timely manner. Protasco’s corporate website (www.protasco.com.my) provides easy access to information about the Group. Information available on the corporate website includes Protasco’s corporate profile, individual profiles of senior management, share and dividend information including investor presentations, financial results, annual reports and corporate news.
In addition, stakeholders can obtain regulatory announcements made by Protasco to Bursa Malaysia at www.bursamalaysia.com.
The Company’s annual report provides a comprehensive report on the Group’s operations and financial performance for the year under review. It provides full disclosure and is in compliance with the relevant regulations to ensure greater transparency. The annual reports are also printed in summary form together with a digital version of the annual report in CD-ROM format. An online version of the Annual Report is also available on Protasco’s corporate website.
ANNUAL GENERAL MEETING (AGM)
The AGM is the main delivery channel for dialogue with all shareholders. They are encouraged and are given ample opportunities to enquire about the Groups’ activities and prospects as well as to communicate their expectations and concerns.
The notices of AGM are sent out to shareholders at least 28 days before the date of the meeting exceeding the 21 days requirement under the Companies Act 2016 and Listing Requirements.
Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. Shareholders can also contact the Company with their queries.
Shareholders are encouraged to be aware of their rights with regards to the convening of general meetings, appointment of proxies, demand for poll voting and access to information. The details of the shareholder’s rights are available at www.protasco.com.my.
In line with the listing requirements on strengthening good Corporate Governance Practice, the Company had conducted voting in General Meeting via electronic poll voting method. An independent party is appointed to carry out the polling.
The Company’s Investor Relations Department plays an important role in conducting regular dialogues and discussions with shareholders, fund managers, journalists and financial analysts to update them on business performance, operations and corporate developments as well as obtaining feedback and discuss matters of common interests.
In addition, the Company issues timely release of its financial results and other mandatory announcements and responds promptly to enquiries from investors, regulators, the public and financial analysts.
The Company has a dedicated website, www.protasco.com.my, designed to assist its stakeholders. The Company has subscribed to Bursa Malaysia website linking service so that the Company’s announcements made to Bursa Malaysia can be retrieved concurrently from both websites.
Contact Person: Han Long Kong, Director, Investor Relations Department
Tel : 603-8738 3388
Fax : 603-8926 4008
Email : firstname.lastname@example.org
This statement is prepared in compliance to the Main Market Listing Requirements (MMLR) and it is to be read together with the CG Report 2017 of the Company (CG Report) which is available at Protasco Berhad’s website, www.protasco.com.my.