Board Charter

(1) OVERVIEW

The Board of Directors (the “Board”) of Eng Kah Corporation Berhad (the “Company”) is led and directed by an experienced Board who has the overall responsibilities to oversee its business matters.  The Board includes members of a wide range of experience and expertise in business, legal, financial and technical aspects, which are relevant for managing the Group professionally and effectively.

(2) BOARD STRUCTURE

2.1 Role

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

• Setting strategic aims and managing relevant resources for the Group to achieve its objectives;

• Evaluating and adopting relevant strategic plans and focus on sustainability of the business of the Group ;

• Evaluating, overseeing and managing major business matters of the Group ;

•  Evaluating and identifying principal business risk and implementing appropriate systems to manage and mitigate these risks ;

• Evaluating and approving relevant business ventures as well as acquisitions and disposal of assets of the Group ;

• Evaluating and implementing succession plan, including employing and training of relevant key personnel of the Group and reviewing management performance ;

• Evaluating the adequacy and integrity of the Group’s internal control mechanism and management information systems ;

• Evaluating, developing and implementing relevant investor relations programs and shareholders communication policy.

The Group’s Chairman & Managing Director is assigned with the authorities and responsibilities to implement policies as approved by the Board, as well as to oversee the Group’s day-to-day business operations, and to monitor the aspects of good corporate governance, leadership and effectiveness of the Board.  Executive Directors are assigned with the responsibilities to oversee the sales & marketing, production and administrative functions of the Group.

The Group’s Independent Directors are assigned with the responsibilities to provide independent views, judgments and advices in order to safeguard the interest of shareholders.

The Board has also set-up Audit Committee, Nominating Committee and Remuneration Committee with clearly defined responsibilities to assist the Board in carrying out its functions and responsibilities effectively.

2.2 Board Composition And Balance

The Board presently has seven Directors comprising three Executive Directors, one Non-Independent Non-Executive Director and three Independent Non-Executive Directors. More than one-third of the Board comprises Independent Non-Executive Directors. Independent Non-Executive Directors are equal Board members and provide a balanced and independent views as well as unbiased judgments to the Board in order to safeguard the interest of shareholders.

Although the positions of Chairman and Managing Director are held by the same Board member, but more than one-third of the Board is Independent Non-Executive Directors, who provide a check and balance in the Board and no individual can dominate the Board on decision-makings.

The Board reviews annually its performance, as well as the performance of Board Committees and individual Directors based on a set of predetermined criteria that is facilitated by the Company Secretary.  The Board is satisfied that the composition of the Board and its Board Committees have satisfied the criteria required and Board members posses the relevant knowledge, experience and skills in carrying out their duties and responsibilities.

The Board has also reviewed its size and composition and is satisfied that its current size and composition is effective for proper functioning of the Group.

2.3 Appointments And Re-elections

The Constitution of the Company has stated that all the Directors are subject to retirement from office and at least one third of the Board shall retire once every three years by rotation at each Annual General Meeting (“AGM”) but shall be eligible for re-election.

The Company Secretary shall ensure that all the relevant information is obtained and all the legal and regulatory requirements are met by the Company before the appointments of directors are made.

2.4       Access To Information And Advice

All the Directors have direct access to professional services of Company Secretary as well as other professional advisors to assist Directors in carrying out their duties.

Prior to Board meetings, all the Directors are furnished with agenda and Board papers on matters requiring considerations and discussions.  All the Directors have full access to information on issues to be discussed in meetings. The Management provides further information, when necessary, during meetings to facilitate the Directors in decision making.

2.5       Directors’ Training

Besides attending the Mandatory Accreditation Programme as required by Bursa Malaysia Securities Berhad (“Bursa Securities”), the Company has been conducting In-House Training Programme (“IHTP”) for Directors.  The purpose of the IHTP is for all the Directors to have better understanding on the business operations of the Group.  The IHTP covers the functions of accounting & finance; production; internal control; research & development as well as others with regard to the group’s business operations and functions.  The IHTP is a programme to facilitate the Board in decision making as well as formulating strategic policy for the Group.  If necessary, Directors will also attend other relevant training programmes to further enhance their knowledge and skills.

The Company Secretary also ensures that all the Directors are provided with information pertaining to their scope of responsibilities under the rules and regulations, and are kept informed by any changes in relevant rules and regulations with regard to the responsibilities of Directors.

(3) BOARD COMMITTEES

The Board has established the following committees to assist the Board in carrying out its responsibilities:-

1. Nominating Committee
2. Remuneration Committee
3. Audit Committee

NOMINATING COMMITTEE 

Terms of Reference 

Composition 

1. The Nominating Committee members shall be appointed by the Board from amongst the Directors of the Company, majority of the members are Independent Non-Executive Director.
2. The Nominating Committee shall have at least three (3) members.

Quorum

Two (2) members shall form a quorum for meetings.

Chairman

The Chairman shall be an Independent Non-Executive Director.

 Secretary 

The Company Secretary or any other person appointed by the Nominating Committee shall be the Secretary of the Nominating Committee.

Meetings and Minutes 

1)   The Nominating Committee shall meet at least once a year or as and when necessary.

2)   The Minutes of each meeting shall be properly recorded, maintained and circulated in a timely manner.

Duties and Responsibilities 

1. To identify suitable candidate(s) with relevant expertise and experience and recommend to the Board as candidate(s) for directorship(s);
2. To nominate Director(s) for re-election purposes;
3. To recommend candidates to fill the seats for Board’s committees;
4. To review the Board’s structure, size and composition in order to establish an effective Board;
5. To develop, maintain and review for recruitment purposes and annual assessment of Directors.
6. Any other relevant matters.

REMUNERATION COMMITTEE 

Terms of Reference 

Composition 

1. The Remuneration Committee members shall be appointed by the Board from amongst the Directors of the Company, majority of the members are Independent Non-Executive Director.
2. The Remuneration Committee shall have at least three (3) members.

Quorum

Two (2) members shall form a quorum for meetings.

Chairman

The Chairman shall be an Independent Non-Executive Director.

Secretary 

The Company Secretary or any other person appointed by the Remuneration Committee shall be the Secretary of the Remuneration Committee.

Meetings and Minutes 

1)   The Remuneration Committee shall meet at least once a year or as and when necessary.

2)   The Minutes of each meeting shall be properly recorded, maintained and circulated in a timely manner.

Duties and Responsibilities 

1. To establish a formal and transparent remuneration policies and procedures to attract and retain Directors and Senior Management
2. To review, periodically, the remuneration policies and procedures for Directors and Senior Management.
3. To recommend to the Board, the remuneration of Executive and Non-Executive Directors and Senior Management, taking into consideration the qualifications, experience and level of responsibilities.
4. Any other relevant matters.

Details of the Audit Committee are published in the Company’s Annual Report.

(4) FINANCIAL REPORTING

The Board has the responsibility to present a clear and understandable assessment of the Group’s position and prospects in its quarterly reports to Bursa Securities and annual reports to shareholders.

The Audit Committee assists the Board in reviewing the information to be disclosed to ensure its accuracy, adequacy and completeness as well as comply with applicable approved accounting standards in Malaysia.

(5) ASSESSMENT OF SUITABILITY AND INDEPENDENT OF EXTERNAL AUDITORS

The Audit Committee has always maintained a transparent relationship with the external auditors in seeking professional advice and ensuring that the financial statements of the Group are prepared in accordance with the applicable approved accounting standards in Malaysia.

The Audit Committee has set the criteria to assess the suitability and independence of external auditors.  The Audit Committee has reviewed and assessed the external auditors in terms of independence, performance, competency and integrity, and recommended their re-appointment to the Board, upon which the shareholders’ approval will be sought at the AGM.

(6) RECOGNISE AND MANAGE RISKS

6.1       Sound Framework To Manage Risks

The Board acknowledges the importance of good corporate governance and is committed to maintain a sound system of internal control in order to safeguard the Group’s assets.

The Board has established a risk management framework and the Audit Committee continuously reviews the adequacy and effectiveness of the risk management processes within the Group.

6.2       Internal Audit Unit

The Board has established an internal audit unit that reports to the Audit Committee.  Its role is to provide the Audit Committee with regular assurance on the continuity, integrity and effectiveness of the internal control system through regular monitoring and reviewing of the internal control framework and management processes.

(7) STRENGTHEN THE RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

The AGM is a platform for dialogue and interaction with shareholders.  The Company has always taken the initiative to communicate and engage with shareholders especially during AGM.  Shareholders are always encouraged to enquire issues and discuss matters which are relevant to the business operations of the Group at the AGM.

Notice of AGM together with the Company’s annual report are served to shareholders of the Company at least 28 days before the meeting and shareholders who are unable to attend will have the right to appoint proxy to attend and vote on their behalf.

The Company also organizes analysts briefing as well as meetings with fund managers and investors in response to requests from institutional investors, analysts and public investors.

(8) COMPANY SECRETARY

The Board is supported by qualified and competent Company Secretary who is responsible to advise and ensure that proper Board procedures are followed and in compliance with the relevant rules and regulations.

The Company Secretary plays an advisory role in all the Board meetings and ensures that all the meetings are properly convened and conducted.  All the records and minutes of Board meetings are properly recorded and maintained.

(9) CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Group always believes that apart from achieving its corporate objectives, it is also important to recognize that CSR is an ongoing commitment and it is necessary for the Group to emphasise on elements affecting its shareholders and other stakeholders, employees as well as environment and market place.

The Group has been incorporating CSR practices into its day-to-day business operations.  At the market place, the Group is committed to ensure that highest standards of corporate governance are practiced, and shareholders’ value shall be further enhanced through open and transparent business practices that are based on ethical values.

The Group is also committed to carry out its social responsibility at the workplace for employees, and recognize that it is important to provide a safe and conducive working environment for employees.  In addition, employees are employed under fair and equitable terms.  Furthermore, employees are also given equal opportunities with regard to their career advancement.  They are also given opportunities to participate in career training and development, for them to be equipped with relevant skills, knowledge as well as experience and add value to the organization when carrying out their duties.

The Group also understands the responsibility to care for environment while carrying out its business operations.  As such, the Group always takes into consideration factors in regards to safety and environment in its decision makings.