Board Charter

1. Purpose

The purpose of the Board Charter is to provide a clear statement of the roles, responsibilities, processes and operations of the Board of Directors (“the Board”) of Gadang Holdings Berhad (“Company” or “Gadang”) for the benefit of both the Board and management and to ensure the practices of the Board are consistent with and reflect the Board’s commitment to best practice in corporate governance.

2. Authority

The Board derives its authority to act from the powers of the Board contained in the Memorandum and Articles of Association of the Company and the law and regulations governing companies in Malaysia. Where applicable, specific authority may only be granted upon approval of the shareholders in the general meetings.

3. Roles of the Board

3.1 Duties and Responsibilities

The Board assumes, amongst others, the following duties and responsibilities:-

  • reviewing and adopting a strategic plan for the Company and the Group.
  • zoverseeing 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 internal controls and mitigation measures;
  • succession planning, including appointing, training, fixing the compensation of and, where appropriate, replacing senior management;
  • overseeing the development and implementation of a shareholder and stakeholder communications policy for the Company; and
  • reviewing the adequacy and the integrity of the management information and internal control systems of the Company and Group, including systems for compliance with applicable laws, regulations, rules, directives and guidelines

3.2. Schedule of matters reserved for collective decision of the Board

The following are matters which are specifically reserved for the Board:-

  • Strategic/business plans and annual budget;
  • Risk management policies;
  • Financial reporting, related party transactions and capital financing;
  • New investments, divestments, corporate restructuring, including the establishment of subsidiaries or joint ventures;
  • Major capital expenditure; and
  • Appointment of new Directors, Chief Executive Officer (CEO) and other senior management positions based on recommendations of the Nomination and Remuneration Committee.

4. Relationship Between the Board and Management

Subject to the formal delegations of authority, the Board delegates responsibility for the operation and management of the Company business to the CEO and the management team. Management are accountable to the Board and are to fulfill this responsibility through the provision of reports, briefings and presentations on a regular basis throughout the year. The Chief Financial Officer and Heads of Division shall attend Board meetings by standing invitation. Non-Executive Directors may communicate with members of the senior management team at any time.

5. Position Description

5.1 Separation of functions between the Chairman and the CEO

The Board aims to ensure a balance of power and authority between the Chairman and the CEO with a clear division of responsibility between the running of the Board and the Company’s business respectively. The roles of the Chairman and CEO are distinct and separate.

5.2 Role of Chairman

The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board.

The Chairman will:

  • monitor the workings of the Board, especially the conduct of Board meetings;
  • ensure that all relevant issues for the effective running of the Company’s business are on the agenda;
  • ensure that quality information to facilitate decision-making is delivered to board members on a timely basis;
  • encourage all directors to play an active role in board activities;
  • chair meetings of members, including the Annual General Meeting; and
  • liaise with the CEO and the company secretary on the agenda for board meetings.

5.3 Role of CEO

The CEO is responsible for:

  • the development (in conjunction with the Board) and implementation of short, medium and long-term corporate strategies for the Group, preparing business plans and reports with senior management and reporting/presenting to the Board on current and future initiatives;
  • managing a team of executives responsible for all functions contributing to the success of the Group;
  • ensuring that the Group has the appropriate risk management practices and policies in place;
  • the efficient and effective operation of the Group;
  • the assessment of business opportunities which are of potential benefit to the Group;
  • bringing material and other relevant matters to the attention of the Board in an accurate and timely manner; and
  • serves as the chief spokesperson for the Group.

5.4 Role of Non-Executive Directors

The primary role of the non-executive Directors is to act as a bridge between management and stakeholders, particularly shareholders. They are to provide the relevant checks and balances on the acts of the board and management of the company, focusing on shareholders’ and other stakeholders’ interests and ensuring that high standards of corporate governance are applied.

Non-executive directors have four (4) main responsibilities, which are to:

  • advise and direct management in the development and evaluation of strategy;
  • monitor management’s strategy implementation and operational performance;
  • atisfy themselves that financial information is accurate; and
  • review to ensure that the risk management and internal control systems are robust and defensible.

6. Board Membership

6.1 Size & Composition

The Articles of Association provides that the number of Directors shall not be less than three (3) nor more than twelve (12). The Board has power under the Articles of Association to appoint a Director to fill a casual vacancy or as an additional Director.

6.2 Independence

  • At any one time, at least two (2) Directors or one third (1/3) of its Board (whichever is the higher) are independent Directors;
  • The Chairman must be a non-executive member of the Board;
  • Gadang Board Charter Page 4
  • Where the Chairman is not an Independent Director, the Board should comprise a majority of Independent Directors to ensure balance of power and authority on the Board; and
  • Pursuant to the Malaysian Code of Corporate Governance 2012, the tenure of an independent Director should not exceed a cumulative term of nine years. Upon completion of the nine years, an independent Director may continue to serve on the Board subject to the Director’s re-designation as a non-independent Director. The Board may, subject to the assessment of the Nomination & Remuneration Committee on an annual basis, recommend for an independent Director who has served a cumulative term of nine years to remain as an independent Director subject to shareholders’ approval.
  • The Board shall appoint a Senior Independent Director who will also attend to any query or concern raised by shareholders.

6.3 Appointments and Re-elections

The appointment of a new Director is a matter for consideration and decision by the full Board, upon the recommendation from the Nomination & Remuneration Committee (“NRC”). In making these recommendations, the NRC will consider the required mix of skills, experience and diversity, including gender, age and ethnicity, where appropriate, which the Directors bring to the Board.

The Articles of Association of the Company provides that any new director so appointed shall be subject to re-election at the next annual general meeting (“AGM”) to be held immediately following the appointment. Further, at every AGM, one third (1/3) of the Board shall retire from office and be eligible for re-election and that all Directors shall submit themselves for re-election once every three (3) years.

A director over 70 years of age is required to submit himself/herself for re-appointment annually in accordance with Section 129 of the Companies Act, 1965.

6.4 New Directorship

All Board members shall notify the Chairman of the Board before accepting any new directorship. The notification shall include an indication of time that will be spent on the new appointment. The Chairman shall also notify the Board if he has any directorship or significant commitments outside the Company.

6.5 Induction

The Board is to develop an induction procedure for new members, to make sure new members are adequately acquainted with the Board’s purpose, responsibilities and practices. Induction of Directors may include, but not limited to, the following:-

  • provision of a copy of this Charter, recent board minutes, relevant company policies, most recent annual and interim reports to shareholders and information on the time commitment needed, as well as specific information about the Group;
  • meetings with relevant management; and
  • site visits to major operating locations.

7. Performance

7.1 Remuneration

The Board will consider for adoption a remuneration policy established by the Remuneration Committee designed to enhance corporate and individual performance. The level of remuneration will be designed to attract and maintain talented and motivated Directors and employees. The maximum amount of annual fees to be paid to non – executive Directors will be established by the Company constitution and any changes will be required to be approved by ordinary resolution of the members.

7.2 Continuing Professional Education

Directors are expected to undertake any necessary continuing professional education to enable them to discharge their duties. Management will brief the Board on changes in the legislative, regulatory or industry framework which impact the Company but this is not a substitute for the Directors’ own efforts.

7.3 Performance Assessment

The Board recognises that regular reviews of its effectiveness and performance are key to the improvement of the governance of the Company. The Board reviews and evaluates its own performance and the performance of its Committees on an annual basis against both measurable and qualitative indicators.

8. Stakeholder Liaison

The Company encourages effective communication with stakeholders and has strategies in place to effect this. The Company stakeholders include members, employees, Government funding bodies and the community. The full Board is required to attend the Company’s Annual General Meeting.

9. Board Committees

The Board may from time to time establish appropriate Committees to assist it in the discharge of its responsibilities. However, the Board will not delegate any of its decision making authority to those Committees.

The Board has established the following Committees:

  • Audit Committee; and
  • Nomination and Remuneration Committee.

Each formally constituted Committee will have a written Terms of Reference, approved by the Board. Formal minutes of each Committee meeting will be prepared and circulated to each of the Directors within the time frame set out in the relevant Committee’s Charter, together with a clear list of recommendations and/or other matters and issues for the consideration of the full Board at the next Directors’ meeting.

Membership of Board Committees will be based on the needs of the Company, relevant legislative and other requirements and the skills and experience of the individual Directors.

Membership of the Audit Committee and Nomination & Remuneration Committee will be restricted to the Non-Executive Directors. The specific requirements of each Committee are set out in its Terms of Reference.

The Board has sole responsibility for the appointment of Directors to Committees and expects that, over time, the Directors will rotate on and off various Committees taking into account the needs of the Committees and the experience of the individual Directors.

The role, function, performance and membership of each Committee will be reviewed on an annual basis as part of the Board’s self-assessment process.

10. Meetings

Board meetings are held regularly (at least 4 times a year to coincide with key dates in the financial reporting), as determined annually in advance by the Board. The agenda for each meeting is dictated by the needs of the Company and the matters set out in the annual agenda for attention at a particular meeting.

An additional Board meeting can be convened by a Director, or the Company Secretary at the request of any Director at any time by giving all Directors seven days notice in writing. A meeting may, with the consent of all Directors, be convened with less notice.

The Articles of Association of the Company provides that the quorum for the Board’s meetings shall be two (2) members. A quorum must be present at all times during the meeting.

11. Declaration of Interests

Directors are required to take all reasonable steps to avoid an actual, potential or perceived conflict of interests with the Company’s interest. Directors must comply with the requirements of the Companies Act, 1965 and the Code of Conduct – Conflicts of Interest with respect to the disclosure of actual, potential or perceived conflicts of interest.

12. Independent Professional Advice to Directors

In the furtherance of a director’s duties to the Company, the director may obtain independent professional advice at the reasonable cost of the Company if the Chairman gave approval before the advice was obtained (or if the Chairman refused to give approval, the Board gave approval before the advice was obtained).

13. Code of Conduct

The Directors are required to observe the following at all times:-

  • A director must act honestly, in good faith and in the best interest of the Company as a whole.
  • A director has to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office.
  • A director must use the powers of office for a proper purpose, in the best interests of the Company as a whole.
  • A director must recognise that the primary responsibility is to the Company’s shareholders as a whole but should, where appropriate, have regard for the interests of all stakeholders of the Company.
  • A director must not make improper use of information acquired as a director.
  • A director must not take improper advantage of the position of director.
  • A director must not allow personal interests, or the interest of any associated person, to conflict with the interests of the Company.
  • A director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken by the Board of Directors.
  • Confidential information received by a director in the course of the exercise of their duties as a director of the Company remains the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the Company, or the person from whom the information is provided, or is required by law.
  • A director should not engage in conduct likely to bring discredit upon the Company.
  • A director has an obligation, at all times, to comply with the spirit, as well as the letter, of the law and with the principles of this Code of Conduct.

14. Review of the Board Charter

The Board will regularly review this Charter and the Terms of Reference of its Committees and make any necessary or desirable amendments to ensure they remain consistent with the Board’s objectives, current law and best practice.