Corporate Governance

HeveaBoardBerhad(275512-A)
BOARD CHARTER


1.0 INTRODUCTION

Apart from being governed by the Company’s Articles of Association (Constitution), Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Listing Requirements and provisions of the Companies Act, 2016, the Board of Directors (“Board”) is guided by the Board Charter in discharging its duties and fiduciary obligation to the Group and the Company.

The primary objective of the Board Charter is to set out the roles and responsibilities of the Board and to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities.

This Board Charter has been reviewed and adopted by the Board on 30 March 2018.

The Board will regularly review this Board Charter and the Terms of Reference of Board Committees to ensure they remain consistent with the Board’s objectives and responsibilities, and relevant laws, regulations, guidelines and standards of corporate governance.

 
2.0 BOARD SIZE AND COMPOSITION

a. The Board should comprise of individuals with character, experience, integrity, competence and time to effectively discharge their role as company Director. The composition and size of the Board is such that it facilitates the making of informed and critical decisions.

b. The number of Directors shall not be less than two (2) and not more than twelve (12). 

c. At any one time, at least half of the Board members comprise Independent Directors.

d. The Board may appoint a Senior Independent Director to whom shareholders’ concern can be conveyed if there are reasons that contact through the normal channels of the Chairman or the Managing Director have failed to resolve them.

e. The positions of Chairman of the Board and Managing Director should be held by different individuals, and the Chairman must be a non-executive member of the Board. The Chairman of the Board is not an Independent Director.
In the event that the position of Chairman of the Board and Managing Director are held by the same person, the Company shall provide explanation and justification in the Annual Report of the Company.

f. The Board shall endeavor to achieve 30% female Directors. The Board through its Nomination Committee should take steps to ensure that woman candidates are sought as part of the recruitment exercise.


3.0 POSITION DESCRIPTION

3.1 CHAIRMAN

a. The key responsibilities of the Chairman include:

i.     Providing leadership for the Board to ensure the smooth functioning of the Board, so that the Board can perform its responsibilities effectively;

ii.    Ensuring positive culture and good corporate governance practices are inculcated in the Board, Group and Company;

iii.   Setting the Board agenda and ensuring timely and necessary information is provided to the Board members;

iv.   Leading the Board meetings and acting as facilitator to ensure that no Director, whether executive or non-executive, dominates discussion, that appropriate discussion takes place and that relevant opinion among Directors is forthcoming;

v.    Facilitating effective and productive working relationships between Executive Directors and Non-Executive Directors and managing the interface between the Board and Management.

vi.   Assisting with concerns regarding the Company where it could be inappropriate for these to be dealt with by the Managing Director;

vii.  Leading and chairing general meetings of shareholders and ensuring open and constructive communication between shareholders and the Board members; and

viii. Ensuring appropriate steps are taken to provide effective communication with stakeholders and that their views are communicated to the Board as a whole.

b. The Chairman will have no casting vote if two (2) Directors form a quorum, or if there are only two (2) Directors competent to vote on the question at issue.

 
3.2 MANAGING DIRECTOR

a. The Managing Director should:

i.     be a person of high professional caliber, and unquestionable integrity;

ii.    be directly responsible for the day-to-day operations of the Company;

iii.   be familiar with the Company’s performance, the adequacy of internal controls, risk management and compliance with legal requirements as well as current matters and policies affecting the industry in general;

iv.   devote full attention and time to his duties and responsibilities and be able to direct and supervise the Company effectively and responsibly; and

v.    at all times exercise professional skill, due care and diligence when performing his function, exercising his powers or discharging his duties.

b.The key role of a Managing Director, amongst others, include:

i.     Managing the Group and Company’s operation and resources;

ii.    Ensuring that Board decisions are implemented and Board directions are responded to;

iii.   Providing directions in the implementation of short and long-term business plans;

iv.   Providing strong leadership; i.e., effectively communicating a vision, management philosophy and business strategy to the employees;

v.    Keeping the Board fully informed of all important aspects of the Company’s operations and ensuring sufficient information is distributed to Board members; and

vi.   Ensuring day-to-day affairs of the Company are effectively managed.

The sound operation of the Company depends critically on its Managing Director. Thus, he must be able to devote his full attention and time to be able to discharge his duties and responsibilities effectively and diligently.

As the Managing Director is directly responsible for the day-to-day operations of the Company, he must be familiar with the operations of the Company, the state of internal controls, requirement of regulations, as well as current issues and policies affecting the industry in general. He must also have the necessary knowledge and professional competence in the conduct of the Company’s business.

In the absence of the Managing Director, the Executive Director who is fully acquainted with the Company’s affairs is the person who will be directly responsible for the overall running of the Company.  


3.3 EXECUTIVE DIRECTOR

a. An Executive Director should:

i.     be responsible for the day-to-day activities of the Group and Company’s business units and organisational effectiveness; and

ii.    implement Board policies and decisions.

 
3.4 INDEPENDENT NON-EXECUTIVE DIRECTOR

a. An Independent Non-Executive Director should declare to the Company annually that he complies with the criteria below:

i.     He is independent of management and free from any business or other relationship, which could interfere with the exercise of independent judgement or the ability to act in the best interest of the Company;

ii.    Is not an Executive Director of the Company or any related corporation of the Company;

iii.   Has not been within the last two (2) years and is not an officer (except as a Non-Executive director) of the Company;]

iv.   Is not a major shareholder of the Company;

v.    Is not a family member of any Executive Director, officer or major shareholder of the Company;

vi.   Is not acting as a nominee or representative of any Executive Director or major shareholder of the Company;

vii.  Has not been engaged as an adviser by the Company or its related companies under such circumstances as prescribed by the Exchange or is not presently a partner, Director (except as an Independent Director) or major shareholder, as the case may be, of a firm or corporation which provides professional services to the Company under such circumstances as prescribed by the exchange; or

viii.Has not engaged in any transaction with the Company or its related companies under such circumstances as prescribed by the Exchange or is not presently a partner, Director or major shareholder, as the case may be, of a firm or corporation (other than subsidiaries of the Company) which has engaged in any transaction with the Company or its related companies under such circumstances as prescribed by the Exchange.

b. An Independent Non-Executive Director should:

 i.     provide and enhance the necessary independent judgement and objectivity to the Board;

ii.     ensure effective checks and balances on the Board;

iii.    mitigate any possible conflict of interest between the policy-making process and the day-to day management of the Company;

iv.    constructively challenge and contribute to the development of business strategy and direction of the Company;

v.     ensure that the interest of the shareholders, and not only the interest of a particular faction or group, are indeed taken into account by the Board in its decision-making; and

vi.    ensure that adequate systems and controls to safeguard the interest of the Company are in place.


3.5 NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

a. A Non-Independent Non-Executive Director should:

i.     constructively challenge and contribute to the development of business strategy and direction of the Company; and

ii.    provide checks and balances, focusing on shareholders and stakeholders’ interest and ensure high standards of corporate governance are applied.
 

4.0 BOARD APPOINTMENT

4.1Nomination and appointment

The Company should ensure that the Directors and the Managing Director are of high caliber, sound judgement, high integrity and credibility as they are entrusted by the shareholders to manage and conform effectively.

The appointment of a new Director is a matter for consideration and decision of the full Board.

All nominations of candidates for the positions of Director and Managing Director must be submitted to the  Nomination Committee for consideration. The Nomination Committee shall review base on the “Fit and Proper” standards as detailed hereunder before recommending the candidates to the Board for approval:

Age
▪ There is no maximum age limit.

Work Experience
▪ Five (5) years or more preferably in relevant industry.
▪ Has been in senior management position.
▪ Good track record of managing a successful and profitable organisation.

Qualification
▪ Degree, professional qualification or equivalent or with the requisite years of relevant working experience.

Personal Background
▪ A person of good character and high integrity and credibility.
▪ Not a bankrupt and has never been engaged in deceitful/oppressive/improper business practices.
▪ Has not been engaged/associated or had conducted himself in a manner which may cause doubt on his fitness, competence and soundness of judgement.
▪ Has not contravened any provision made by or under any written law to be designed for protecting members of the public against financial loss due to dishonestly, incompetence or malpractice.
▪ Has not been convicted whether within or outside Malaysia of any offence.

Competencies
▪ Business acumen
▪ Product knowledge
▪ Visionary
▪ Strategic agility
▪ Proven leadership ability
▪ Financial knowledge
▪ Market and global awareness
▪ IT awareness
▪ Human Resource Management skills

Directorship
▪ Prior to 1 June 2013
Shall not hold more than ten (10) directorships in listed companies and not more than 15 directorships in non-listed companies.
▪ On and after 1 June 2013
Shall not hold more than five (5) directorships in listed companies.

 Directors should notify the Chairman of the Board before accepting any new directorship, including an indication of time that will be spent on the new appointment.

 The Chairman shall also notify the Board if he has any new directorship or significant commitments outside the Company.

4.2 Re-election

All Directors (including the Managing Director) are subject to retirement by rotation in accordance with the Company’s Articles of Association (Constitution).

4.3 Retention/Re-designation of an Independent Director with cumulative term of more than nine (9) years 

The tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to the Director’s re-designated as a Non-Independent Director.

If the Board desires to retain an Independent Director beyond nine (9) years, upon recommendation of the Nomination Committee, it should justify and seek annual shareholders’ approval.

If the Board continues to retain the Independent Director after the twelve (12) years, the Board should seek annual shareholders’ approval through a Two-tier Voting Process.

Further, the long serving Independent Director is required to declare to the Company annually that he complies with the criteria as stated in item 3.4(a) above.

 
5.0 BOARD RESPONSIBILITIES

The Board should assume, amongst others, the following key responsibilities:

i.     Establishes strategic goals, determines strategic direction and significant policies;

ii.    Reviews, adopts and approves the Group and Company’s key operational initiatives, major investments, annual budget and funding decisions;

iii.   Ensures that the Group and Company’s capabilities and resources are sufficient to achieve strategic goals and objectives, and manage uncertainties;

iv.   Oversees and monitors the Group and Company’s performance and achievement of strategic goals and objectives;

v.    Ensures good corporate governance practice and incorporate it as the Group and Company’s culture;

vi.   Oversees the business conduct and code of ethics of the Group and Company;

vii.  Oversees the system of risk management, internal control system and regulatory compliance;

viii. Responsible for corporate sustainability;

ix.  Oversees succession plans within the Group and Company; and

x.   Reports to, and communicates with shareholders and stakeholders.

Whilst supportive of Management, the Board should emphasise on the following areas:-

 1) Business performance 

• Ensures that the strategic goals and direction of the Group and the Company are aligned with the changing business environment by conducting a constant review to ensure that the Group and Company is in the right path and direction in achieving the goals and objectives;
• Oversees the conduct of the Group and Company’s business and Management performance to evaluate whether the business is being properly managed;
• Reviews and decides on Management’s proposals and monitors its implementation by Management; and
• Challenges Management with questions based on informed knowledge and gives constructive advice to Management.

 2) Board and Senior Management performance, and succession plan

• Ensures that the Board members and Senior Management have the necessary skills and experience to perform their duties;
• Ensures the Board and Senior Management have access to information, advice and appropriate continuing education programmes; 
• Ensures there is a formal and transparent remuneration policy and procedures to attract and retain talents; and
• Reviews the procedures for appointment of Board members, Managing Director and Senior Management and ensures that measures are in place to provide for the orderly succession of Board, Managing Director and Senior Management. 

 3) Good corporate governance culture

• Promotes good governance culture within the Group and Company;
• Reviews and monitors Management’s ethical conduct and regulatory compliance;
• Plays a critical role in ensuring sound and prudent policies and practices of the Group and the Company; and
• Be capable of effectively achieving good governance and protecting the interest of shareholders. 

 4) Risk management and internal control

• Continuous oversight risk management, internal controls and compliance matters involving the Company;
• Establishes an internal control function;
• Understands the principal risks of the Group and Company’s business and sets a risk appetite;
• Establishes sound risk management framework and procedures to identify, analyse, evaluate and mitigate/manage significant financial and non-financial risks associated with the Group and Company’s businesses.

5) Corporate sustainability

• Commits to the Group sustainability in evolving global environment, social and governance (ESG) aspect of business which underpins sustainability.
• Adopts various measures and good practices to promote sustainability. 

6) Communication with stakeholders

• Promotes effective communication and proactive engagement with shareholders and stakeholders;
• Encourages the application of information technology in communication with shareholders and stakeholders and dissemination of information;
• Ensures there is appropriate corporate disclosure policies and procedures; and
• Takes reasonable steps to encourage shareholders’ participation at general meetings of the Company.     

 6.0 KEY MATTERS RESERVED FOR BOARD 

a. The Board shall have the authority to approve transactions or activities which are beyond the individual discretionary powers of Senior Management or management committees delegated by the Board as per the Approving Authority Limits stipulated in the relevant policy manuals of respective operating units subject to the provision of the Articles of Association (Constitution) of the Company.

b. The Key Matters Reserved for Board’s deliberation and approval including but not limited to the following:

i.     Approval of strategic goals, strategic direction and significant policies;
ii.    Approval of corporate plan and programmes;
iii.   Approval of key operational initiatives, major investments, major acquisition and disposals, new businesses, material agreements, corporate proposals, major capital expenditures, annual budgets and funding decisions;
iv.   Approval of annual and quarterly financial results;
v.    Authority levels;
vi.   Appointment and succession planning for Board, Managing Director and Senior Management; and
vii.  Approval of Board and Senior Management remuneration policies.

 7.0 BOARD COMMITTEES

a. The Board should establish and delegate certain duties to specialised Board Committees to oversee critical or major functional areas and to address matters which require detailed review or in-depth consideration. 

Independent Non-Executive Directors paly a leading role in Board Committees. The Management and third parties are co-opted to the Board Committees as and when required.

b. The following Board Committees are established and operate within their specific Terms of Reference:

 i.     Nomination Committee

To provide a formal and transparent procedures on recruitment exercise on Director  appointment and election, and annual assessment of effectiveness of the Board Committees and the Board as a whole, and the performance of individual Directors and Key Senior Management.

ii.     Remuneration Committee

To provide a formal and transparent procedure for developing remuneration policy for Directors and Key Senior Management, and ensuring that compensation is competitive and consistent with the Group and Company’s culture, objectives and strategy.

iii.    Audit Committee

To provide independent oversight of the Group and Company’s financial reporting and risk management and internal control framework and ensure checks and balances within the Group and Company, and to ensure financial statements comply with applicable financial reporting standards.

To review and assess the suitability and independence of External Auditors.

Duties and functions of the above-mentioned Committees are provided in their respective Terms of Reference.


8.0 BOARD PROCEDURES

a. The conduct of Directors will be consistent with their duties and responsibilities to the Company and, indirectly, to the shareholders. The Board will always act within any limitations imposed by the Company’s Articles of Association (Constitution), provisions of the Companies Act, 2016, relevant laws and guidelines on its activities;

b. Directors will use their best endeavours to attend Board meetings. Directors are expected to participate fully, and constructively in Board discussions and other activities and to bring the benefits of their particular knowledge, skills and abilities to the Board;

c. Directors who are not able to attend a meeting will advise the Chairman at an earlier date as possible to confirm in writing to the Secretary.

d. Board discussions will be open and constructive, recognising that genuinely held differences in opinion could bring greater clarity and lead to better decisions. The Chairman will, nevertheless, seek a consensus of the Board but may, where considered necessary, call for a vote.

e. All discussions and their records will remain confidential unless there is a specific direction from the Board to the contrary, or disclosure is required by law. Subject to legal and regulatory requirements the Board will decide the manner and timing of the publication of its decisions;

f. Directors are expected to strictly observe confidentiality of the Group and Company’s information; and

g. Directors are required to inform the Board of potential conflict of interest that may have in relation to particular items of business or transaction. Subject to provisions of relevant laws and guidelines, these Directors shall abstain from deliberation and determination of those matters.


9.0 AUTHORITY

The Board shall within its terms of reference:

a. Have complete, adequate and timely information prior to Board meetings and on an ongoing basis;

b. Have the resources required to perform its duties;

c. Have full and unrestricted access to any information pertaining to the Group and the Company;

d. Have the authority to form management / sub-committee(s) if deemed necessary and fit;

e. Have the authority to delegate any of its responsibilities to any person or Committee(s) if deemed fit;

f. Have direct communication channels with employees, senior management personnel and relevant external parties;

g. Have full access to the professional advice and services of the Company Secretary; and

h. Be able to obtain independent professional or other advice.

 
10.0 COMPANY SECRETARY

a. The Board may appoint Company Secretary for such terms and remuneration as it thinks fit.

b. The Company Secretary is accountable to the Board.

c. The Company Secretary must be competent and qualified to act as Company Secretary pursuant to the requirements of the Companies Act, 2016.

d. The Directors have full access to the professional advice and services of the Company Secretary, who:

i.     plays an advisory role on corporate disclosure, ensures  Board procedures, applicable governance practices, company laws, securities regulations and listing requirements are complied with, and assists the Board in applying the MCCG Practices to meet the Board’s needs and stakeholders’ expectations;

ii.    provides effective support to the Board and Board Committees to facilitate their discussion and proceedings of the Board and Board Committees meetings and ensures that deliberations are well documented in minutes;

iii.   ensures proper processes and proceedings are in place in general meeting and annual general meeting and ensures that the proceedings in particular the questions raised by shareholders and Board and Management’s response  are correctly minuted;

iv.   facilitates annual assessment and evaluation on the effectiveness of the Board as a whole and the Committees of the Board;

v.    facilitates the selection and recruitment process on appointment of new Director by ensuring that the necessary information are properly compiled to ease the Nomination Committee and Board’s review;

vi.   facilitates the orientation of new directors and director training and development; and

vii.  facilitate shareholders’ communication and engagement on corporate governance issues. 

 
11.0 MEETING

Subject to the Company’s Articles of Association (Constitution), the Companies Act, 2016, Listing Requirements and relevant laws and guidelines, the following should be observed by the Board:

a. The Board shall meet on a quarterly basis, but in any event, no less than once in every three (3) months, or whenever deemed necessary;

b. Individual Directors must attend at least 50% of the Board meetings held in each financial year or such other percentage as may be prescribed by the Listing Requirements;

c. The quorum of the meetings shall be met pursuant to the Articles of Association (Constitution) of the Company;

d. The Board is also allowed to carry out the resolution by way of circulation;

e. The participation of the Director can be facilitated by means of video or telephone conferencing;

f. The Head of the respective division units, relevant management personnel, and where necessary the external professional or consultants may be invited to attend the Board meetings;

g. The Company Secretary shall be appointed as Secretary of the Board meeting and minutes of meetings shall be taken and documented; and

h. Notice of meeting should be sent to the Directors least seven (7) days prior to the meeting.

Meeting materials should be supplied to the Directors at least five (5) days, or a shorter period where unavoidable, prior to the meeting.

 
12.0 REMUNERATION OF DIRECTORS

a. The Company aims to set remuneration at levels which are sufficient to attract and retain Directors that are needed to run the Company successfully, taking into consideration all relevant factors including the function, workload and responsibilities involved, but without more than is necessary to achieve this goal.

b. The level of remuneration for Director is recommended by the Remuneration Committee in accordance with the Company’s Articles of Association (Constitution), and after giving due consideration to the Directors’ performance and the compensation levels for comparable positions among other similar industry.

c. The remuneration of the Executive Directors will be determined based on the performance of the Group and the Company and the achievement of the goals, including quantified organisational targets, key performance indicators and personal achievement.

d. The remuneration of Non-Executive Directors should reflect the contribution and level of responsibilities undertaken by them.

Non-Executive Directors are entitled to Directors’ Fees as ordinary remuneration and shall be a fixed sum and not payable by a commission or percentage of profits or turnover. They will also be paid a sum based on their responsibilities in Board Committees and for their attendance at meetings.

The Directors’ Fees and benefits of Non-Executive Directors are subject to approval of shareholders. 

e. Non-Executive Directors are entitled to participate in the company’s Employee share Options Scheme (ESOS) subject to approval at a general meeting. Non-Executive Directors who participate in the ESOS are prohibited to sell, transfer or assign the shares within one (1) year from the date of offer of such shares.

f. No Director other than Executive Directors shall have a service contract with the Company.

g. A formal independent review of the Directors’ remuneration is undertaken no less frequently than once every three (3) years.

 
13.0 CORPORATE REPORTING AND RELATIONSHIP WITH STAKEHOLDERS

The Board should ensure that there is an effective, transparent and regular reporting and communication with its stakeholders in particular shareholders and investors on the performance and major developments in the Group and Company.

13.1 Communication with stakeholders

The channels of reporting and communication with the stakeholders, amongst others, could be as follows:-

i.     Timely disclosure of material information through Bursa Securities’ formal announcement platform;
ii.    Publication on the Company’s corporate website;
iii.   Leverage on information technology such as electronic mail, social media for dissemination of information.
iv.   Organising investor, analyst and media briefing;
v.    Establishing an investor relations function;
vi.   Direct engagement with shareholders at general meetings and annual general meetings.

13.2 Conducting of General Meetings

General Meeting and Annual General Meeting (“AGM”) are one of the principal forums for dialogue with shareholders.

The Board should ensure the following:

i.     General Meeting should be conducted in accordance with the Company’s Articles of Association (Constitution), Companies Act, 2016, Listing Requirements and good governance practices.

ii.    Notice for a General Meeting should be given to the shareholders at least fourteen (14) days before the meeting or at least twenty-one (21) days where special resolution is to be proposed.

iii.   Notice for an AGM should be given to the shareholders at least twenty-eight (28) days prior to the meeting.

iv.   Ensures full information or further explanation is disclosed in the Notice of the meeting beyond the minimum content stipulated on the Listing Requirements to facilitate full understanding and to enable informed decision by the shareholders.

v.    Ensures suitability of venue and timing of meeting and undertake other measures to encourage shareholders’ participation in the meetings.

vi.   Leverages technology to facilitate shareholders’ participation at the meetings.   

vii.  Provides opportunities for shareholders to raise questions pertaining to the business activities of the Group through a Questions and Answers session before the resolutions are put for voting.

viii. All Directors are available to provide responses to questions from the shareholders during these meetings.

ix.  All resolutions set out in the notice of the general meeting and AGM are to be voted by poll.

 
13.3 Corporate disclosure 

Communicating with shareholders and parties outside the Company requires careful management, particularly where disclosure of information is concerned. 

The Board should ensure that:

a. Equal access to material information 

Price sensitive information about the Group and the Company is not disclosed in its dealing with journalists, analysts and fund managers, and dialogues with shareholders until after the relevant information has been formally announced to Bursa Securities. 

b. Prohibition of selective disclosure

The Company should ensure that journalists, analysts and fund managers do not obtain non-public material information when they visit or engage with the Company.

When responding to questions from journalists, analysts and fund managers, or when commenting on their reports, the Company can provide any information, as long as it does not include any undisclosed material information.

The Company must immediately announce to Bursa Securities any non-public material information which has been inadvertently disclosed during the dialogues or when responding to questions or when commenting on draft reports from journalists, analysts or fund managers.

Whenever the Company becomes aware of a rumour or report, the Company should consult with its Directors, major shareholders and such other persons familiar with the matter, to ascertain whether the rumour or report contains undisclosed material information; and immediate disclosure is required to clarify, confirm or deny the rumour or report. 


14.0 BENEFICIAL INFLUENCE ON COMMUNITY

The Board has a continuing responsibility to the community to ensure that the Company’s activities are conducive towards promoting the economic well-being of its community and are in line with the governance economic objectives.