|CORPORATE GOVERNANCE OVERVIEW STATEMENT|
The Board of Directors of Master-Pack Group Berhad, sets this statement to provide shareholders and investors with an overview of the corporate governance ("CG") practices of the Company under the leadership of the Board during the year 2018.
This overview is prepared in accordance with Practice Note 9 of the Main Market Listing Requirements and the key CG principles in the Malaysian Code of Corporate Governance ("MCCG") issued by Securities Commission. This CG Overview Statement is to be read with the CG report based on a prescribed format as outlined in paragraph 15.25 (2) of the Main Market Listing Requirement. The 2018 Annual Report and the CG Report is available for reference at http://www.master-pack.vn/masterpack/Master-PackGroupBerhad2018.pdf, http://www.master-pack.vn/masterpack/Master-PackCGReport2018.pdf and Bursa Malaysia Berhad's website www.bursamalaysia.com
Master-Pack Group Berhad intends to create long-term value through its core business to generate sustainable shareholder value and to protect the stakeholders' interests. In pursuing this corporate objective, the Board of Directors of Master-Pack believes in having strong corporate governance frameworks via maintenance of a high standard of integrity, transparency, accountability and professionalism as key fundamentals in managing the business operations of the Master-Pack Group of companies.
PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS
I. Board Responsibilities
The Company adopts a simple but effectively functional governance model as follows:
The Board with the exception of matters requiring shareholders' approval continues to discharge the following duties and responsibilities:
a. Reviewing and approving budgetary targets in line with business strategic plans
b. Monitoring performance against budgetary targets. Where necessary, revisions to the budget are made adjusting to the economic changes and development in the market / industry.
c. Formulating and implementing the Group's Risk Management Policy and Framework
d. Comprehensively identifying, analysing and evaluating all risks in terms of consequential impact and level of likelihood.
e. Ensuring relevant internal controls or application of mechanism in place to manage, mitigate, avoid these risks were also identified
f. Formulating the Sustainability Policy and the framework for sustainable and responsible operations, activities and practices in the Group
g. Ensuring that the Group adheres to high standards of ethics and corporate behaviour guided by the Master-Pack Code of Business Conduct.
The Chairman of the Board plays a pivotal role in leading the board as well as the setting the tone from the top in determining the strategic objectives, policies of the Group in creating long term value through its core business to generate sustainable shareholder value and to protect the stakeholders' interest.
The Board Charter had been revised and approved by the Board on 23 August 2017. The Board Charter provides guidance to the Board in the discharge of its duties and functions which sets out, amongst others, the roles and responsibilities of the Board to ensure that each board members acting on behalf of the Company is aware of his fiduciary duties and responsibilities, the legislation and regulations affecting their duties and the principles and practices of good corporate governance which apply to the Group.
The Board Charter is available on the Company's website http://www.imageannex.com/ir_roles.htm The Board Charter is periodically reviewed and updated as and when deemed necessary and upon any new regulations that may have an impact on the discharge of the Board's duties and responsibilities.
The fiduciary duties, principal roles and responsibilities of the Board are broadly categorized into six sections:-
II. Risk Management and Internal Controls
III. Investor Relations and Shareholders Communications
V. Corporate Governance
VI. Succession Planning
The Board has delegated specific responsibilities to three Board Committees, namely the Audit Committee, Nominating Committee and Remuneration Committee. These Board Committees have clearly defined roles and responsibilities as set out in its respective Terms Of Reference.
The Terms of Reference of the Audit Committee (latest edition 26 March 2018), Nominating Committee (latest edition 31 March 2017), Remuneration Committee (latest 26 March 2018) and the Business Code of Conduct & Whistleblowing policy (latest edition 24 November 2017) are available in the Company's website.
The Directors' commitment in carrying out their duties and responsibilities is affirmed by their attendance at the Board meetings held during the financial year ended 31 December 2018:
This attendance confirms members of the board who hold multiple board representations are able to devote sufficient time to discharge their responsibilities adequately. None of the Board members serve more than 5 listed companies.
The Board meets at least once every quarter with additional Board Meetings to be convened as and when necessary. Materials for the board meetings comprising agenda, minutes of meeting, financial results, progress reports of the group, risk management reports, recurrent related party transactions, regulatory updates, etc. are distributed to the board members at least 5 to 7 working days before the scheduled meetings. This gives the board members adequate time for thorough deliberation of the board meeting materials.
The meetings calendar which provides the tentative dates for meetings of the Board, Audit Committee and Annual General Meeting is circulated to Directors on 23 November 2018 for the ensuing year to enable the Directors to plan ahead and co-ordinate their respective schedules.
Each Board member is entitled to obtain independent professional advice at the cost of the Company as per Board Charter. They are given unrestricted access to the Group's management, Company Secretary, external and internal auditors.
II. Board Composition
Currently, the Board consists of six members, comprising four Independent and Non-Executive Directors, one Non-independent Non-Executive Director and one Executive Chairman. The size and composition of the Board is adequate to provide for a diversity of views to facilitate effective decision making and providing appropriate balance of executive, independent and non-independent directors. The biographical details of all the Directors are in the company website http://www.imageannex.com/ab_bod.htm.
All the six Board members possess varied experience, fair knowledge, complementary skills and are of diversed competencies as shown in the matrix of mix and skill set diversity as follows:-
Currently, the Board members come from varied educational background and each member holds different professional qualifications hence contributing to the board a diversed knowledge and expertise. In addition, the four Independent Directors do not hold directorships in any company within the group and thus the objectivity of these directors are not compromised.
The Boardroom diversity in gender, ethnicity and age is stated in practice 4.5 of the CG Report.
The Nominating Committee, ("NC") will annually evaluate the effectiveness of the Board, its Committees and also the performance of the Directors. The NC is responsible for assessing the suitability of any proposed candidate as a board member and to submit their recommendations to the Board. In evaluating the suitability of candidates the NC considers the following criteria:
- skills, knowledge, expertise and experience;
- gender diversity;
- time commitment to at least attend not less than half the board meetings as well as competing time commitments if the candidate also holds other directorship ;
- consideration as to the representation of the interest groups;
- assess the desirable numbers to balance Board membership, with due consideration to the structure, development and succession planning
- in the case of candidates for the position of independent non-executive directors, the Committee should also evaluate the candidate's ability to discharge such responsibilities as expected from independent non-executive directors.
During the Financial year 2018, the Nominating Committee met once and conducted the annual assessment on the effectiveness of the Board, the Board Committees and also the individual performance of the Directors internally by way of the written questionnaire. The results indicated that the Board and the committees continue to effectively perform the responsibilities and duties tasked to them.
The NC also assessed the independence of the Independent Directors. The Independent Directors namely Mr. Chew Hock Lin, Dato' Seri Khor Teng Tong, Encik Aminuddin bin Saad and Dr. Junid bin Abu Saham fulfill the criteria of "Independence" as prescribed under Chapter 1 of the Listing Requirements.
The NC also reviewed and recommended to the Board, the re-election and re-appointment of Directors for shareholders' approval at the Annual General Meeting The Constitution of Master-Pack Group Berhad provides that at every annual general meeting, one-third of Directors for the time being and those appointed during the year shall retire from office and shall be eligible for re-election. The regulations further provide that each director of the Company shall retire at least once every three years but shall be eligible for re-election. The constitution of the company is available http://www.imageannex.com/ir_AA_MA.htm
The Boards recognises the importance of attending and participating in training and development activities in order to broaden their perspectives and to keep abreast of developments in the market place, and new statutory and regulatory requirements which would enable them to fulfill their responsibilities.
During the year under the review, the Directors have attended relevant development and training programs according to their individual needs and enhanced their ability in discharging their duties and responsibilities. The list of trainings attended by the directors is available http://www.imageannex.com/ab_bod.htm.
The Group has a Compensation and Employment Manual, of which policies relating to remuneration, benefits-in-kind as well as terms of employment are structured in accordance with each management ranking. The policies are reviewed on a periodic basis.
In order to retain talent, the components of the remuneration are structured to link rewards to group financial performance and individual performance taking into consideration the complexities and the responsibilities undertaken during the period under review. There is no gender inequality in terms of remuneration package.
The Remuneration Committee ("RC") comprising directors, all whom are Non-Executive Directors; namely Mr. Chew Hock Lin (Chairman), Encik Aminuddin bin Saad and Cik Nazriah binti Shaik Alawdin are responsible for recommending to the Board a remuneration framework and package for the Executive Directors.
During the financial year 2018, the RC held two meetings to review the remuneration package of the Executive Chairman / Directors. This is to ensure that the Executive Chairman and other Executive Directors in the group of companies are amply rewarded for delivering another year of excellent financial performance. The remuneration packages offered are in line with the group policies and structured to attract or retain the talents of the Executive Chairman / Directors.
The RC recommended the remuneration package of the Executive Chairman to the Board. The RC also deliberated on the level of remuneration to be received by each Non-Executive Director. Generally the extent of responsibilities undertaken by the respective Non-Executive Director determines the level of remuneration entitled. The Executive Director / Chairman did not participate in any way on the agenda in determining his remuneration during the Board Meeting.
The details of Executive Directors' and Non- Executive Directors remuneration is stated in Practice 7.1 and 7.2 of the CG Report
PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT
I. Audit Committee
The Audit Committee comprises three Independent Non-Executive Directors. The members of the Audit Committee by names are stated in Practice 8.1 of the CG report.
During the year there were five meetings held and a summary of activities of the Audit Committee including the Internal Audit function during the year 2018 is set out on page 30 and 31 of the Annual Report.
The Company had not appointed a former key audit partner as a member of the Audit Committee.
The Board via the Nominating Committee had performed a review of the Terms of Office of the Audit Committee and had deliberated on the performance of the Audit Committee and each of its members as required by paragraph 15.20 of the Main Market Listing Requirements. At the recommendation from the Nominating Committee, the Board was satisfied on the performance Audit Committee. Members of the Audit Committee are financially literate and were able to comprehend the duties required by them.
II. Risk Management and Internal Controls Framework
The Board of Directors affirms its responsibility for maintaining a sound and effective system of risk management and internal control.
The Audit Committee is responsible to the Board for risk governance and the oversight functions are through a subcommittee, Risk Management and Sustainability Committee. The Risk Management and Sustainability Committee assessed and monitors efficacy of risk management controls and measures taken whilst the adequacy and effectiveness of the internal controls are performed by the out-sourced internal auditors. The Internal Auditors will report directly to the Audit Committee.
The Board is of the view that the system of internal control appears to be working adequately. Based on the work done by the Internal Auditors, there were no material weaknesses in the system of internal control that may affect the integrity of our financial statements.
The details of the Risk Management and Internal Control are set out on page 25 to 28 of the Annual Report.
PRINCIPLE C: INTERGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDER
I. Communication with Stakeholders
Announcements on important matters and financial results of the Company are promptly released to Bursa so that the investing public is provided with an overview of the performance and operations of the Company. The Company has established a website at http://www.imageannex.com/ir_announcements.htm. where public announcements are also posted in addition to the mandatory requirements and postings at Bursa.
The Board supports and encourages active shareholders participation at its Annual General Meeting (AGM) and any other general meetings. In accordance with the Company's Constitution, any shareholder may appoint up to a maximum of 2 proxies to attend and vote on his/her behalf in any general meeting.
At the start of the Annual General Meeting, shareholders are informed of their rights to exercise their decision making powers and the rules governing the voting procedures especially resolution to be voted by poll. Matters reserved for shareholders' approval were as tabulated in the Notice of Annual General Meeting page 19 to 23 of the 2018 Annual Report circulated to the shareholders.
Mr. Chew Hock Lin has been assigned as the Senior Independent & Non-Executive Director, to whom concerns in relation to the Company may be conveyed at the email firstname.lastname@example.org. He is also available for shareholders to meet and view their concerns and opinions at the beginning of our Annual General Meeting.
II. Conduct of General Meetings
Master-Pack Group Berhad's AGM acts as a principal forum for interactions with shareholders. The 24th Notice of AGM was dispatched and advertised in the news Straits Times newspaper at least 28 days before the AGM date complying with the recommended MCCG best practices. All Board members understand the importance of engaging with the shareholders and were present at the 24th AGM held on 14 May 2018 at 11am in Master-Pack Sdn. Bhd., 1574 Jalan Bukit Panchor, 14300 Nibong Tebal, S.P.S. Penang. In attendance at the AGM was also the Company Secretary, the internal and external auditors.
The Chairman of the Board welcomed all shareholders and the meeting proceeded in an orderly manner. The Chairman briefed the shareholders on the Group's financial and non-financial performance for the financial year. Questions posed by the shareholders and Minority Shareholder Watchdog Group were responded by the Chairman/ Group Executive Chairman accordingly.
The voting was conducted through registered ballot papers which were tabulated by the company registrar and verified by an independent scrutineer. The AGM concluded smoothly and all resolutions were duly approved by the shareholders.
Nominating Committee Activities
The Nominating Committee was tasked by the Board in nominating suitable candidates to the Board as well as assesses the performance of all the Directors of the Company.
The Nominating Committee comprises exclusively of Non-Executive Directors and all members are Independent Directors. The members are:
Mr. Chew Hock Lin (Independent Non- Executive Director, Chairman )
Encik Aminuddin bin Saad (Independent Non-Executive Director)
Dr. Junid Bin Abu Saham (Independent Non-Executive Director
There is only one meeting held on 23 November 2018 and was fully attended by all members. The terms of reference of the Nominating Committee are also published on the company website www.imageannex.com/ir_nomination_commitee.htm.
Two weeks prior to the Nominating Committee Meeting held on 23 November 2018, several evaluation forms were sent out to all the directors. The duly completed evaluation forms received from all directors were then compiled by the Company Secretary into reports and tabled before the Nominating Committee for discussion and consideration.
The criteria included in the evaluation form for Independent Directors covers a list of questions on independency, quality and value of contributions, ability to diplomatically and convincingly listen and voice their views including an independent self-declaration of any involvement or relation which could interfere with an independent judgment or ability to act in the best interests of the company.
Self and Peer evaluation form is to assess the contribution of each individual board member抯 contribution to the board in terms of personality and working relationship with peers, company secretary and management, bringing his/ her knowledge and experience to the agenda discussed at the quarterly meetings, devotes sufficient time to be prepared for the board meeting, able to voice his/ her opinion in non-confrontational and comprehensive manner and effectively communicates with the shareholders at the annual general meetings
Evaluation forms for Board and Board Committees cover the board structure, board operations, board roles and responsibilities, Board Chairman's role and responsibilities and the performance of the Board Committees.
The evaluation form for the Performance of the Audit Committee as a whole assess the understanding of the Audit Committee Terms of Reference, objectively & responsibly performed their duties and the results of the evaluation have shown that with the help of the out-source internal auditors and external auditors were able to give the Board the assurance on risk management and internal control.
A list of trainings attended by all board members is reviewed and encouragement was given to directors to attend topics where they were required to further update their knowledge. The list of trainings attended by the board members are published on the company website www.imageannex.com/ab_bod.htm.
The Nominating Committee is satisfied that:-
i. The size and composition of Board are optimum with appropriate mix of knowledge, skills, attributes and core competencies.
ii. The Board was able to discharge its duties professionally and effectively as well as uphold the governance standards in their conduct, and that of the Board.
iii. The Audit Committee as a whole and its members have carried out their duties as laid out by the Audit Committee Terms of Reference.
iv. The directors were able to devote sufficient time commitment to their roles and responsibilities as directors as none hold more than 5 directorships in public listed companies as prescribed in the Bursa Listing Requirements.
v. Dato' Seri Khor Teng Tong, Mr. Chew Hock Lin and Encik Aminuddin Bin Saad all Independent Non-Executive Directors, with a service length of more than nine years; are demonstrably considered independent irrespective of their length of service exceeding the nine year term on the Board. The three Independent Non-Executive Directors had provided confirmations of their independence to the Board.
vi. All Board members have devoted sufficient time to update their knowledge and skills including the latest change of the regulatory and statutory and professional requirements.
With the assistance of Audit Committee in reviewing the financial results, the Board aims to present quality financial reporting
showing a balanced and understandable assessment of the Company's financial position and prospect via the Audited Financial Statements and quarterly financial reports on timely basis. In compliance with the Bursa Main Listing Requirement, the quarterly financial statements is announced to the public via the Bursa Link and the company's website not later than 2 months after the end of each quarter of the financial year. The Company's financial statements are prepared in accordance with applicable approved accounting standards pronounced by Malaysian Accounting Standards Board and other relevant or governing authorities.
Statements of Directors' Responsibility for Preparation of Audited Financial Statements
The directors are responsible for ensuring that a true and fair view of the state of affairs of the Company and the Group at the end of the financial year and of the results and cash flows of the Company and the Group for the financial year and these are reflected in the Audited Financial Statements, as set out in pages 41 to 90 of the 2018 Annual Report. The directors are required to ensure these Audited Financial Statements are prepared in accordance with applicable approved accounting standards in Malaysia, provisions of Companies Act, 2016 and Bursa Securities Listing Requirements. (Refer also to write-up on "Financial Reporting" above.)
Risk Management Framework and Internal Controls
The Board acknowledges its responsibility for maintaining the Group's risk management framework and system of internal controls and for reviewing the effectiveness of these systems. The Statement of Risk Management and Internal Controls provide an overview on the state of risk management and internal control system within the Group. Please refer to page 25 to 28 of the 2018 Annual Report. The Company has adopted a formalised risk management policy and keeps a Risk Register. As such the nature and extent of risks the Board and management are willing to take in achieving its strategic objectives are monitored accordingly.
Sustainability Policy Statement
The Sustainability Statement explicitly provides a framework for sustainable and responsible operations, activities and practices throughout the Master-Pack Group. Please refer to the Company website www.imageannex.com/ir_sustainability_policy_statement.htm
The Group's Sustainability Report is explained on www.imageannex.com/ir_corporate_social.htm. and page 11 to 18 of the 2018 annual report. Master-Pack Group, as a responsible corporate entity, is conscious of our obligations towards the economy, environment, and society in which we operate.
Relationship with Auditors
The Board has always maintained formal and transparent relationships with the Company's auditors and the management is responsive to the auditors' enquiries and their recommendations. The Audit Committee meets up with the external auditors at least three times a year to discuss their audit plan, audit findings and the Group's financial statement. There were two meetings held without the presence of the Executive Directors and the management.
In addition, the external auditors also attended the Annual General Meeting and are available to answer shareholders' questions on the conduct of the statutory audit and the preparation and contents of their report. The Audit Committee is responsible for yearly review of the auditors' performance and recommends for their re-appointment to the Board. The Audit Committee takes into consideration the importance of the external auditor's independence and objectivity and therefore adopts a strong view that all non-audit services shall be limited and approved, only when necessary. This is to ensure that the independence of the external auditors are not in any way impaired. The group audit fee and non-audit fee paid to External Auditors for the financial year 2018 amounts to RM128,000 and RM2,000 respectively.
Save as disclosed above, the Board is satisfied that throughout the financial year ended 31 December 2018, the Company has applied the principles and recommendations of the corporate governance set out in the Code, where necessary and appropriate.
The Corporate Governance report can be viewed in the Company's website, www.imageannex.com
This statement was approved by the Board of Directors on 26 March 2019.
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