Terms of Reference of Nomination and Remuneration Committee
The objective of the Audit and Risk Committee (“ARC”) is to assist the Board in discharging its responsibility relating to the Group’s financial reporting, as well as, to assist the Board in fulfilling its fiduciary duties in relation to governance, ethics and risk management.
2.1 The Board shall appoint the ARC members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the ARC members shall be independent directors.
The Board adopts the definition of “independent director” as defined under the Main Market Listing Requirements (“Main Market LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).
2.2 All members of the ARC shall be financially literate and at least one (1) member must be:-
(a) a member of the Malaysian Institute of Accountant (“MIA”); or
(b) if he is not a member of MIA, he must have at least three (3) years of working experience and:
• he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
• must be a member of one of the associations of the accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
(c) fulfils such other requirements as prescribed or approved by Bursa Securities.
2.3 No alternate director of the Board shall be appointed as a member of the ARC. A former key audit engagement partner of the external auditors of the Company must first observe a cooling-off period of at least two (2) years before he/she is eligible for appointment as a member of the ARC.
2.4 If a member of the ARC resigns, dies, or for any reason ceases to be a member resulting in non-compliance to the composition criteria as stated above, the Board shall fill the vacancy within three (3) months.
The members of the ARC shall elect a Chairman from amongst their number who shall not be the Chairman of the Board and who is an independent director. In the absence of the Chairman, the other members shall amongst themselves elect a Chairman who must be an independent director to chair the meeting.
The Company Secretary shall be the Secretary of the ARC and as a reporting procedure, the Minutes shall be circulated to all members of the Board.
5.1 The ARC shall meet regularly and hold at least four (4) meetings in a year, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the Chairman’s discretion. ARC meetings may be held at two (2) or more venues within or outside Malaysia using any technology that enables the members as a whole to participate for the entire duration of the meeting
5.2 Upon the request of the external auditors, the Chairman of the ARC shall convene a meeting of the ARC to consider any matter the external auditors believe should be brought to the attention of the directors or shareholders.
5.3 The Chairman of the ARC shall engage on a continuous basis with senior management, such as the chief executive officer, the chief operating officer, the head of finance, the internal auditors and the external auditors in order to be kept informed of matters affecting the Company.
5.4 The chief executive officer, the chief operating officer, the head of finance, a representative of the internal auditors and a representative of the external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the ARC.
5.5 The ARC shall be able to convene meetings with the external auditors without the presence of other directors and employees at least once a year
5.6 Questions arising at any meeting of the ARC shall be decided by a majority of votes of the members present.
5.7 A member of the ARC shall abstain from discussion or deliberation and voting on matters which give rise to an actual or perceived conflict of interest for him.
6.Resolution in Writing
A resolution in writing, signed by all the members of the ARC for the time being entitled to receive notice of a meeting of the ARC, shall be as valid and effectual as if it had been passed at a meeting of the ARC duly convened and held.
7.1 Minutes of each meeting shall be kept at the registered office and distributed to each member of the ARC and also to the other members of the Board. The Chairman of the ARC shall report on each meeting to the Board.
7.2 The minutes of the ARC meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.
In order to form a quorum for the ARC meeting, the majority of members present must be independent directors.
The ARC shall, in accordance with a procedure to be determined by the Board and at the expense of the Company:-
(a) have explicit authority to investigate any matter within its terms of reference;
(b) have full and unlimited/unrestricted access to all information and documents/resources required to perform its duties;
(c) obtain independent professional or other advice; and
(d) have direct communication channels with the external auditors and persons carrying out the internal audit function or activity.
Where the ARC is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market LR of Bursa Securities, the ARC shall promptly report such matter to Bursa Securities.
The duties of the ARC shall be:-
(a) oversee all matters relating to external audit
- to discuss with the external auditors where necessary, the audit plan, the nature and scope of the audit and ensure co-ordination of audits where more than one audit firm is involved;
- 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 management, where necessary);
- to review with the external auditors, their management letter and management’s response, the external auditors’ report and the audited financial statements before the same are presented to the Board for approval;
- to review with the external auditors, their evaluation of the systems of internal control and risk management framework of the Group,;
- to consider the appointment of external auditors taking into consideration, amongst others, the suitability, independence, experience, resource and objectivity as well as the appropriateness of their audit fees as recommended by the management;
- to assess the suitability and independence of external auditors in respect of the provision of audit and non-audit services to the Group and the Company in accordance with the terms of all relevant professional and regulatory requirements;
- to annually assess the performance of the external auditors and report to the Board on the independence of the external auditors and obtaining their assurance on the continued registration with Audit Oversight Board;
- to consider any letter of resignation of external auditors and any questions of resignation and dismissal;
- to review the level of assistance given by the employees of the Group to the external auditors; and
- to undertake continuous professional development to keep abreast of relevant developments in accounting and auditing standards, practices and rules.
(b) oversee all matters relating to internal audit
- to review and ensure that the Company and Group maintains a sound and effective system of internal controls and risk management framework
- to review the adequacy of the scope, functions, competency, experience and resources of the internal audit function;
- to ensure the internal audit is carried out objectively and is independent from the management of the Company and the functions which it audits.
- to review and approve the internal audit plan and internal audit annual budget;
- to ensure co-ordination of external audit with internal audit;
- to review major findings of internal audit reviews and management’s response and ensure that appropriate actions are taken on the recommendations of the internal audit function;
(c) review of financial statements
- to establish appropriate plans for succession at Board level and senior management level; and
- to review the training needs of the Board.
(d) review of systems of internal control and risk management
- to review the reports of respective risk management teams in relation to the adequacy and integrity of the Group’s internal control systems in mitigating risks;
to review, assess and recommend the risk management policy, procedures and risk management framework to the Board;
- to review the effectiveness of the risk management framework and to ensure that the framework adopted is based on an internationally recognised risk management framework that is able to identify, assess, manage and monitor significant financial and non-financial risks in a regular and timely manner;
- to provide guidance on the overall risk strategy for implementation and ensure that the principles and requirements of managing risk are consistently adopted throughout the Group;
- to communicate to the Board the critical risks (present & potential) the Group faces, their profile change (if any) and the management action plans to manage these risks; and
- to conduct annual review and periodic testing of the Group’s internal control and risk management framework.
(e) governance responsibilities
- to review the Group’s governance framework as guided by the Malaysian Code on Corporate Governance and other best practices in corporate governance;
- to review the Group’s policies to support the implementation of the Group’s governance framework; and
- to review and monitor the Group’s policies and practices in compliance with legal and regulatory requirements.
(f) additional duties and responsibilities
- to review any related party transactions and conflict of interest situation that may arise within the Group or the Company including any transaction, procedure or course of conduct that raises questions of management integrity;
- to verify the allocation of Employees’ Share Option Scheme (“ESOS”) and Employees’ Share Grant Scheme (“ESGS”) in compliance with the criteria as stipulated in the by-laws of the ESOS and ESGS of the Company, if any; and
- to carry out such other responsibilities, functions or assignments as may be defined jointly by the ARC and the Board from time to time.
11.Review of Committee
11.1 The Nomination & Remuneration Committee shall review the term of office and performance of the ARC and each of its members at least once a year to determine whether the ARC and its members have carried out their duties in accordance with the terms of reference and thereafter make its recommendations to the Board for consideration.
11.2 The AGC shall review its terms of reference periodically and recommend any changes it considers necessary.