The Board of Directors (“the Board”) recognize the importance of good corporate governance and is committed to ensure that good corporate governance is being practiced by the Group in order to safeguard the shareholders and relevant stakeholders’ interests as well as enhancing shareholders’ value.
All Board members are responsible to the Company for achieving a high level of good corporate governance.
This Board Charter shall constitute and form an integral part of each Director’s duties and responsibilities.
The objective of this board charter is to clearly set out the roles and responsibilities of the Board and Board Committees and the processes and procedures for convening their meetings. It serves as a reference and primary induction literature providing prospective and existing Board members and Management insights into the fiduciary and leadership functions of the Directors of DUFU.
The Board reviews its charter regularly, to keep it up to date with changes in regulations and best practices and ensure its effectiveness and relevance to the Board’s objectives.
3. Roles and responsibilities of the Board
In discharging its stewardship, the Board is constantly mindful of safeguarding the interests of the Group’s stakeholders and is ultimately responsible for the performance of the Group.
3.1.1 Ethics and Compliance
The Company’s Codes of Ethics for Directors continue to govern the standards of ethics and good conduct expected of Directors. The Directors are, collectively and individually, aware of their responsibilities to the shareholders and stakeholders for the manner in which the affairs of the Company are managed. The Board sets the Group’s values and standards and ensures that its obligations to its shareholders and stakeholders are understood and met.
The Board understands that the responsibility for good Corporate Governance rests with them and therefore strives to follow the principles and best practices stated in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”). The Board includes a narrative statement in its Company’s Annual Report on the extent of compliance with the principles and best practices in Corporate Governance pursuant to the Bursa Malaysia Securities Berhad Main Market Listing Requirements (“LR”)
The Board meets in person at least once every quarter to facilitate the discharge of their responsibilities. Members of the Management who are not Directors may be invited to attend and speak at meetings on matters relating to their sphere of responsibility.
It is the responsibility of the Board to set the vision and mission of the Company; the corporate culture of the Company. The Board also sets the goals for the management to meet and monitor their performance.
The Board assumes the following core responsibilities:-
Reviewing and adopting strategic plans for the Group;
Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed;
Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks;
Succession planning including appointing, training, fixing the compensation of and, where appropriate, replacing senior management;
Developing and implementing an investor relation programme or shareholder communication policy for the Company; and
Reviewing the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.
3.1.2 Policies and strategies
The Board has established written procedures (such as the Memorandum & Articles of Association of the Company and other documents) determining which issues require a decision of the full Board and which issues can be delegated to Board Committees or the Management.
The Company has in place its Whistleblower Policy and Procedures (“WPP”) to allow the stakeholders of DUFU to report concerns about alleged unethical behaviour, actual or suspected fraud within the Group, or improper business conduct affecting the Group and about business improvement opportunities.
Subject to the applicable laws and listing requirements, the Board reserves full decision-making powers on the following matters:
i) Conflict of interest issues relating to a substantial shareholder or a Director;
ii) Material acquisitions and disposition of assets not in the ordinary course of
iii) Investments in capital projects;
iv) Group’s annual forecast;
v) Business restructuring; and
vi) Risk management policies.
3.1.3 Internal Control
The Board oversees, reviews and monitors the operation, adequacy and effectiveness of the Group’s system of internal controls.
The Group has engaged the services of an independent professional firm (“Outsourced IA”) to provide much of the assurance it requires regarding the effectiveness as well as the adequacy and integrity of the Group’s systems of internal control.
In the first quarter of 2016, the Group has successfully set up its own Internal Audit Department (“Internal IA”) to work hand in glove with the Outsourced IA to enhance the effectiveness and thoroughness of its field work audit. The Board believes that the Internal
IA will strengthen the effectiveness of the Group’s system of internal controls. Nevertheless, the Group will continue to engage the Outsourced IA to train (by way of on-the-job training), guide and advice the Internal IA until they are ready to fully take up the important task of Internal Control.
3.2 Role of Individual Directors
Directors are expected to observe their legal, statutory and equitable duties and obligations when discharging their responsibilities as Directors. Broadly these include:
a) Acting in good faith and in the best interests of the Company as a whole;
b) acting with care and diligence and for proper purpose;
c) avoiding conflicts of interest with the Company in a personal or professional capacity; and;
d) Refraining from making improper use of information gained through the position of director and from taking improper advantage of the position of director.
Directors will keep all Board information, discussions, deliberations and decisions that are not publicly known confidential and not use information gained through the Board for their interest, or their employers’ interest.
3.3 Role of Senior Independent Director
The Board may appoint a Senior Independent Director whose role includes acting as the effective communication channel between the Company, its shareholders and the public.
The position of Senior Independent Director of the Company is vacant for the time being subsequent to the re-designation of Mr. Khoo Lay Tatt as Executive Director of the Company on 2 January 2016.
As the Board recognize the importance of the roles played by Senior Independent Director, the Board is currently assessing and identifying the rightful candidate to be appointed to the said position.
3.4 Role of Chairman and Chief Executive Officer
The Company practices a division of responsibilities between the Executive Chairman and the Chief Executive Officer (“CEO”). Their roles are separated and clearly defined to ensure a balance of power and authority, increased accountability and greater capacity of the Board for independent decision-making. The Chairman leads the Board and is mainly responsible for the Board’s effectiveness and conduct. He also promotes an open environment for debate and ensures effective contributions from Non-Executive Directors. The Chairman also exercises control over the quality, quantity and timeliness of information flow between the Board and Management. At a general meeting, the Chairman plays a role in fostering constructive dialogue between shareholders, Board and Management.
The CEO is responsible for implementing the policies and decisions of the Board, overseeing the day-to-day operations as well as development and implementation of business and corporate strategies and plans.
The role of CEO of the Company is currently assumed by Mr. Yeoh Beng Hooi as Acting CEO of the Company subsequent to the resignation of Mr. Yong Poh Yow as the Company’s CEO on August 27, 2015.
3.5 Board Committees
The Board has established five (5) Board Committees, namely Audit Committee, Nominating Committee, Remuneration Committee, Risk Management Committee and Investment Committee.
Please be informed that the Executive Committee has been officially abolished on 24 February 2016.
3.5.1 Audit Committee (AC)
The Principal objective of the AC is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the Group.
The duties and responsibility of the AC include the followings:-
a) to consider the appointment or re-appointment of external auditors, the audit fee and matter relating to the resignation or dismissal of auditors, if any;
b) to review with the external auditors the audit plan, their evaluation of the system of internal accounting controls, their letter to management and the management’s response;
c) to review the quarterly and annual financial statements before submission to the Board of Directors for approval, focusing particularly on:-
Changes in accounting policies and practices;
Significant and unusual events;
Significant adjustments resulting from the audit;
The going concern assumption;
Compliance with accounting standard and other legal requirements.
d) to discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of the Executive Directors and/or Management where necessary);
e) To do the followings where an internal audit function exists;
Review the adequacy of the scope, function and resources of the internal audit function and that it has the necessary authority to carry out its work;
Review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function;
Review any appraisal or assessment of the performance of members of the internal audit function;
Approved any appointment or termination of senior staff members of the internal audit function;
Review the resignation of internal audit staff members and provide the staff member the opportunity to submit his reasons for resigning; and
To consider major findings of internal investigations and management’s response.
f) to consider any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that arises questions of management integrity; and
g) to perform such other duties if any as may be agreed to by the Committee and the Board.
3.5.2 Nominating Committee (NC)
DUFU established its NC to assist the Board in recommending appointment of new Directors and assessing the effectiveness of the Board.
The NC of DUFU assumes the following core responsibilities:-
formulating the nomination, selection and succession policies for members of the Board;
review the structure, size and diversity (including without limitation, gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service) of the Board;
consider the election criteria and develop procedures for the sourcing and election of candidates to stand for election by DUFU’s shareholders (“Shareholders”) or to fill casual vacancies of Directors;
identify and nominate candidates to the Board for it to recommend to Shareholders for election as Directors;
undertake an assessment of its Independent Directors annually;
review the training needs for the Directors regularly; and
establishing a set of quantitative and qualitative performance criteria to evaluate the performance of each member of the Board, each Board Committee and reviewing the performance of the Board as a whole.
3.5.3 Remuneration Committee (RC)
The RC is responsible for, inter-alia, recommending to the Board the remuneration policy for, including the establishment of a formal and transparent methodology in determining the remuneration of Executive Directors and Non-Executive Directors and to review changes to the policy and methodology as necessary; review the existing level of remuneration of Executive Directors and to recommend their remuneration to the Board based on the Company’s and their individual performance to ensure they commensurate with the scope of responsibilities held. The Committee also ensures the level of remuneration for Non-Executive Directors are linked to their level of responsibilities undertaken and contributions to the effective functioning of the Board.
The policy practiced on Directors’ remuneration by the RC is to provide the remuneration packages necessary 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. The Directors play no part in deciding their own remuneration and shall abstain from discussing or voting on their own remuneration.
The current remuneration policy of the Group is summarised as follows:-
a) The Directors’ salary for Executive Directors are set at a competitive level for similar roles within comparable markets, reflect the performance of the director, skills and experience as well as responsibility undertaken.
b) Directors’ Fees are based on a standard fixed fee and are subject to approval by its shareholders at the AGM.
c) Meeting Allowance – All the Directors’ are entitled to a fixed amount of allowance paid in accordance with the number of meeting attended during the year.
d) Benefits-in-kind – only Executive Directors of the Group are entitled to benefits-in-kind provided by the Group.
e) The RC may obtain independent professional advice in formulating the remuneration package of its Directors.
3.5.4 Risk Management Committee (RMC)
The RMC is formed to assume the following functions:-
a) To oversee the risk management activities of the Group and to assist the Board in fulfilling its responsibility for identifying significant risks and ensuring the implementation of appropriate systems to manage the overall risk exposure of the Group.
b) Advises the AC and the Board on areas of high risk and the adequacy of compliance and control procedures throughout the organization.
3.5.5 Investment Committee (IVC)
The IVC is formed to review, deliberate and approve the acquisition or disposal of investments or assets of the Group subject to the terms and conditions as set out in the Standard Operating Procedures of DUFU, amongst others:-
a) All Non-Operating Transactions;
b) All Operating Transactions that exceed RM2,000,000 or more.
c) To review, deliberate all Transactions that exceed RM5 million or more or a minimum of 5% of Dufu NTA (based on the latest Quarterly Results announced to Bursa) whichever is lower. Thereafter, the Chairman of IVC shall propose to the Board to either reject or approve the said Transactions
d) To decide on the necessary steps (eg. Open tender procedures, appointing minimum of 5% of Dufu NTA (based on the latest Quarterly Results announced to Bursa) whichever is lower. Thereafter, the Chairman of IVC shall propose to the Board to either reject or approve the said Transactions approved professionals, etc) to be taken before deliberation and making its proposal to the Board for decision. Upon deciding on the steps to be taken, the IVC shall instruct the Finance Department to take the necessary actions as advised by the IVC.
Since the suspension and subsequent abolishment of Executive Committee on 24 February 2016, the IVC has assumed and replaced part of the functions of the defunct Executive Committee.
4. Composition and Board balances
4.1 Size and composition
The Board currently has six (6) members comprising an Executive Chairman, two (2) Executive Directors, and three (3) Independent Non-Executive Directors. This composition complies with Para 15.02 of the Bursa Securities Main Market Listing Requirements (“Main LR”) whereby the Company must have at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, who are Independent Directors.
In the event of any vacancy in the Board resulting in the non-compliance with the above, the Company must fill the vacancy within three (3) months. The Board is of the opinion that the interests of shareholders of the Company are fairly represented by the current Board composition and its size constitutes an effective Board of the Company.
The presence of the three (3) Independent Non-Executive Directors is essential in providing guidance, unbiased, fully balanced and independent views, advice and judgement to many aspects of the Group’s strategy so as to safeguard the interests of minority shareholders and to ensure that high standards of conduct and integrity are maintained by the Group.
The Board’s composition represents members from diverse skills and with their wide spectrum of experience, professionalism and other relevant qualities required to well manage the business, with the aim to meet the current and future needs of the Board composition.
As the Company also share the view and believe in promoting economic empowerment of women for business and sustainable development, the Board is pleased to appoint Ms. Joyce Wong Ai May as one of our Independent, Non-Executive Director on 3 March 2016. We believe that Ms. Joyce Wong will contribute positively to the growth of the Group at large and further enhance and support the Corporate Governance Reformation Agenda by strengthening the adequacy and effectiveness of the Group’s system of internal controls.
4.2 Nomination and appointments
The appointment of a new director is a matter for consideration and decision by the full Board. Nominating Committee (NC) is responsible to give full consideration to succession planning for directors.
Upon the appointment of a new director, the Company Secretary advises the said Director of his/her principal duties and responsibilities and explains the restrictions to which he or she is subject to in relation to price-sensitive information and dealings in the Company’s securities. Thereafter, all Directors are provided with appropriate briefings on the Company’s affairs and up-to-date Corporate Governance materials published by the relevant bodies.
The Company has adopted an induction programme for newly appointed directors. The induction programme aims at communicating to the newly appointed directors, the Company’s vision and mission, its philosophy and nature of business, current issues within the Company, the corporate strategy and the expectations of the Company concerning input from Directors.
The Company has adopted educational / training programmes to update the Board in relation to new developments pertaining to the laws and regulations and changing commercial risks which may affect the Board and/or the Company.
In accordance with the Company’s Articles of Association (“AA”), all Directors are subject to re-election by shareholders at the Annual General Meeting (“AGM”) following their appointment. At least one-third (1/3) of the remaining Directors shall retire from office at each AGM at least once in every three (3) years, but shall be eligible for re-election.
The Board only considers directors to be independent where they are independent of management and no material business relationship that could significantly interfere with the exercise of their unfettered and independent judgement.
The Independent Directors are to provide shareholders with an independent voice on the Board and reduce accusations of self-interest in the behaviour of executives.
The NC played an important role to assist the Board in assessing the independence of Non-Executive Directors of the Company on an annual basis. Based on the assessment conducted by the NC, the Board is generally satisfied with the level of independence demonstrated by all the Independent Directors of the Company and their ability to act in the best interest of the Company.
4.5 Tenure of Independent Directors
Notwithstanding the recommendation of the MCCG 2012, the Board is presently of the view that there is no necessity to fix a maximum tenure limit for Directors as there are significant advantages to be gained from the long-serving Directors who possess tremendous insight and knowledge of the Company’s businesses and affairs. Similarly, the Board does not set a time-frame on how long an Independent Director should serve on the Board, mainly for the following reasons:-
The ability of a Director to serve effectively as an Independent Director is very much dependent on his caliber, qualification, credentials, experience and personal qualities, particularly his integrity and objectivity, and has no real connection to his tenure as an Independent Director.
NC conducts an annual assessment of Independent Directors in respect of inter alia their skills, experience and contributions, and whether the Independent Directors are able to discharge their duties with unbiased judgement. Furthermore, the NC also reviews the Directors Profile of Independent Directors and assesses its family relationship, interest of shareholdings in the Company and related party transactions with the Group (if any).
4.6 New Directorship
The Directors are expected to have ability to commit sufficient time to the Group in fulfilling their roles and responsibilities and Company’s affairs. This is evidenced by the attendance record of the Directors at Board meetings. Any Director shall notify the Chairman before accepting any new directorship and the notification shall include the indication of time that will be spent on the new appointment.
5.1 Directors’ assessment
The Company has in place its procedures and criteria for appointment of new directors. All candidates for appointment are first considered by the NC, taking into account the mix of skills, competencies, experience, professionalism and other relevant qualities required to well manage the business, with the aim to meet the current and future needs of the Board composition. The NC also evaluates the candidates’ character and ability to commit sufficient time to the Group. Other factors considered for appointment of Independent Director will include the level of independence of the candidate.
The NC will also be reviewing the composition of respective Board Committees of the Company to ensure its effectiveness in functioning.
The NC has also established a set of quantitative and qualitative performance criteria to evaluate the performance of each member of the Board, each Board Committee and reviewing the performance of the Board as a whole. The criteria for assessment of Directors shall include attendance record, intensity of participation at meetings, quality of interventions and special contributions.
5.2 Directors’ Training and Development
In addition to the mandatory programmes as required by Bursa Securities, the Directors are mindful that they should continue to attend training programmes to enhance and update their skills and knowledge where relevant, as well as to keep abreast with the changing regulatory and corporate governance developments The Board shall disclose in the Annual Report the trainings attended by the Directors.
6.1 Board meetings
The Management is responsible for providing the Board with the required information in an appropriate and timely manner. The Chairman, assisted by the Company Secretary, assesses the type of information required to be provided to the Board. If the information provided by the Management is insufficient, the Board will make further enquiries where necessary to which the persons responsible will respond as fully and promptly as possible.
A full agenda and comprehensive Board papers are circulated to all Directors in advance of each Board meeting. The agenda should strike a balance between long- and short-term issues.
Board papers include:
Quarterly financial report and report on the Company’s cash and borrowing positions;
Minutes of meetings of all Board Committees of the Board;
Reports on Related Party Transactions and Recurrent Related Party Transactions;
A current review of the operations of the Group.
The Board meets on a quarterly basis with additional meetings held whenever necessary to formulate and adopt strategic business plan for the Group.
7. Access to Information and Independent Professional Advice
The Board may seek independent professional advice at the Company’s expense on specific issues to enable it to discharge its duties in relation to matters being deliberated. Individual Directors may also obtain independent professional or other advice in furtherance of their duties, subject to the approval of the Chairman or the Board, depending on the quantum of the fees involved.
The Directors have individual and independent access to the advice and dedicated support services of the Company Secretaries in ensuring the effective functioning of the Board. The Directors may seek advice from the Management on issues under their respective purview. The Directors may also interact directly with the Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them.
8. Review of the Board Charter
The Board will review this Charter from time to time and at least once a year, to make it up-to-date and consistent with the Board’s objectives and responsibilities as well as the governance model of the Group.
Any updates to the Principles and practices set out in this Charter will be available on the Company website.
The Board charter has been adopted by the Board on 18 April 2016.