Corporate Governance Overview Statement

Board Responsibilities

The board charter sets out matters reserved for the Board’s decision and outlines the Board’s roles and responsibilities; it will be reviewed to align with the updated PPB Group Strategic Plan and other frameworks; and to include environmental, sustainability and governance (“ESG”) considerations. The schedule of matters for the Board’s decision includes amongst others, the overall Group strategy and direction; major policies, board and board committee appointments; approval of financial statements, corporate plans and budgets, material acquisitions and disposals of assets, and major investments.

The Board has oversight of the overall performance and control of the Group, setting and reviewing the strategic direction of the Group, and monitoring the implementation by management of that strategy. Specific responsibilities are delegated to the three main Board committees, namely the Audit, Nomination and Remuneration Committees. These committees operate within Board-approved terms of reference, and have authority to examine issues and report to the Board with their findings and recommendations.

The roles of the Chairman and Managing Director are separate. The non-executive Chairman’s responsibilities include overseeing the governance process, as well as represent the Board to shareholders. The Managing Director is responsible for overseeing the development and operations of the Group’s businesses, and implementing corporate strategies and objectives adopted by the Board.

The Board sets the minimum standards of conduct and personal behaviour; to maintain a uniform set of values and ethics within the Group, a Group-wide code of ethics and code of conduct has been adopted, and embedded in the respective Group employee handbooks. A whistle-blower policy adopted by the Company in 2015 is incorporated in the employee handbook, and has also been adopted by the respective business units throughout the Group.

Anti-bribery and corruption

The directors of PPB are committed to complying with anti-bribery and corruption laws in Malaysia and other countries in which the Group operates. The Group Anti-Bribery and Corruption (“ABAC”) Policy is applicable to all directors and employees of PPB Group as well as the Group’s business associates. The ABAC Policy was also communicated to all parties with whom the Group has business dealings, and is accessible to the public via publication on the Group entities’ corporate websites. The Group ABAC Policy may be viewed at the Company’s website: https://www.ppbgroup.com/index.php/governance-sustainability/code-policies/group-anti-bribery-and-corruption-policy

The ABAC Policy sets out PPB’s stance against bribery and corruption, managing conflicts of interest, policy on gifts, hospitality and entertainment, donations and sponsorship, handling facilitation payment requests and whistleblowing. There is also an ABAC manual to provide more detailed guidance to employees.

The Board is responsible for the oversight of the ABAC/Integrity programme, and has delegated authority and day-to-day decisions to the Group Integrity Steering Committee.

Board and Committee meetings

The meetings of the Board and Board Committees held in FY2020 and attendance record are set out below:

In exercising their duties, directors have access to information within the Company and the support of the company secretary. The company secretary also updates directors on statutory, regulatory and related governance requirements relating to the discharge of their duties and responsibilities.

Board Composition

The Board comprises a majority of independent directors; of the seven Board members, four are independent. The remainder of the Board comprises two non-independent non-executive directors, and the Managing Director.

The independent directors are able to carry out their duties and express their views unfettered by familiarity, or business or other relationships. They provide skills, competencies as well as broader views to enhance the Board’s effectiveness.

The Board has agreed that annual shareholders’ approval be sought to extend the tenure of any director who has served for more than nine years as an independent director. Dato’ Capt Ahmad Sufian @ Qurnain bin Abdul Rashid’s tenure as an independent director was further extended at the 51st Annual General Meeting (“AGM”) of the Company in 2020 until the conclusion of the next AGM, pursuant to the recommendation in the MCCG. The Nomination Committee (“NC”) and the Board are satisfied that Dato’ Sufian is able to exercise independent judgment and act in the best interests of the Company, and recommended the continuation of Dato’ Sufian’s term as an independent director beyond 12 years, for shareholders’ approval at the 52nd AGM of the Company.

The Board strives to achieve a balance and mix of skills, experience and perspectives amongst its directors, to collectively bring a range of experience, business, financial and technical expertise for effective oversight of the Group’s diversified businesses, and fulfill the Board’s duties and responsibilities.

Annual (re)election of directors

In accordance with the Company’s Constitution, one third of the directors retire by rotation at the AGM every year, and are subject to re-election by members.

The NC also reviews annually the training undertaken by Directors and recommends topics which are relevant or of interest to the Board to keep abreast with business and regulatory developments. In 2020, the Directors attended PPB’s annual in-house training session for directors and senior management, and the topics selected included the following:

• Harnessing Recovery Path to the Next Normal (update on economic and business conditions).
• An introduction to integrated reporting.
• Applied Resilience – Mental health and emotional capacity building for the future.

All Directors also attended an ABAC training session conducted by the Company’s Risk Management and Integrity Department.

In addition to the above, the following Directors attended other training sessions during the year, and the topics included:

The criteria for evaluation of candidates for appointment as directors (and senior management positions) include their qualification, occupation, professional and business experience, and is subject to the Company/Group’s requirements and operating environment. Prospective candidates are not discriminated based on gender, age, cultural background etc.

The Group recognises the importance of identifying and developing potential leaders and managers to fill key positions (whether on the board or senior management) in the Company and Group, from both internal and external sources. This is an on-going process based on the Group’s short and longer term needs in terms of skills, expertise, knowledge and experience.

Board evaluation
Candidates for board appointments are reviewed by the NC before recommendation to the Board. The NC is chaired by Encik Ahmad Riza bin Basir, an independent director.

The NC reviews annually the Board size and composition, as well as the mix of Directors necessary for the successful direction of the Company and Group’s businesses. This includes an annual Board assessment, an assessment of the independent directors, as well as an annual review of the Audit Committee. For the year under review, the Board is satisfied with the present number and composition of its members and is of the view that the Board had discharged its duties and responsibilities effectively. The Board assessment for 2020 covered their experience and expertise/knowledge in the following areas:

• Business knowledge
• Accounting and financials
• Corporate governance, risk management and internal controls
• Legal and regulatory
• Human capital
• Information technology knowledge
• Stakeholder engagement
• Sustainability

Gender diversity
There is presently no formal gender diversity policy. The Board is of the opinion that it is important to recruit and retain the best available talent, taking into account the mix of skills, experience, knowledge and independence, and based on the Group’s needs and operating environment. Nonetheless, the Board will endeavour to increase board gender diversity, and it will be one of the factors to be considered in evaluating prospective candidates when a board vacancy arises.

Remuneration
The Board reviews the overall remuneration of executive and non-executive directors at regular intervals to attract and retain directors with the relevant experience and expertise.

The Managing Director’s remuneration is determined after taking into account his duties and responsibilities as Managing Director of PPB, his roles in various capacities in the main business units, and the Group’s performance for the year. For non-executive directors, the remuneration reflects their roles and responsibilities, and the recommendation thereof is a matter for the Board as a whole subject to shareholders’ approval.

The details of the individual directors’ remuneration paid/payable for FY2020 on a Group and Company basis are set out below:

* Employees Provident Fund

The remuneration of the top five senior management of the PPB Group (excluding those who are also Directors of PPB) paid/payable for FY2020 on an aggregated basis in RM50,000 bands is as follows:

The Group senior management remuneration is commensurate with their duties and responsibilities, the performance of the respective company or business entity, and the operating environment. The Board is of the opinion that the disclosure of the senior management’s names and remuneration components would not be in the best interest of the Group due to confidentiality, business and personal security concerns. The above disclosure is deemed sufficient to enable stakeholders to assess senior management remuneration vis a vis the Group’s performance.

Audit Committee
The Audit Committee (“AC”) comprises entirely of independent directors; the AC Chairman is also separate from the Chairman of the Board.

The principal functions of the AC include the following:

• Ensure that the financial statements comply with applicable financial reporting standards, and assess the suitability and independence of external auditors.
• Assess the adequacy and effectiveness of the Group’s enterprise-wide risk management and internal control framework.

The members of the AC possess a mix of skills, knowledge and experience to enable them to discharge their duties and responsibilities pursuant to the AC’s terms of reference, which are available on the Company’s website. An annual self and peer evaluation of the AC is carried out and reviewed by the NC. The Audit Committee Report on pages 78 to 80 of the annual report provides more details on the AC’s functions during the year.

Risk management and internal control framework
Responsibility for ensuring a sound internal control system and reviewing the effectiveness of the system lies with the Board. The Group’s system of risk management and internal control is designed to manage, rather than eliminate, the risk of failure to achieve the Company’s corporate objectives and safeguard the Group’s assets. It therefore provides reasonable but not absolute assurance against material misstatement, fraud or loss.

A risk management and internal control framework has been established which covers the Group’s risk assessment process and internal controls, with oversight and reporting on the effectiveness of this function. There were no significant risk management and internal control failings or weaknesses which resulted in material losses or contingencies during the financial year.

The Statement on Risk Management and Internal Control set out on pages 81 and 82 of the 2020 Annual Report provides a more detailed description of the state of risk management and internal controls.

Communication with stakeholders
PPB’s Corporate Disclosure Policy (“CDP”) sets out the disclosure policies and procedures, and provides a framework to communicate effectively with stakeholders and the public generally. The policy may be viewed at the Company’s website: https://www.ppbgroup.com/index.php/governance-sustainability/code-policies/corporate-disclosure-policy

The Company seeks to provide stakeholders with timely, accurate, clear and equal access to material information on the Company’s performance and operations. The principal sources of information disseminated by the Company during the year include the annual report, quarterly investor updates, news releases and company website.

PPB’s investor relations programme is directed at both individual and institutional investors, with the objective to maintain ongoing awareness of the Company’s performance amongst shareholders, media and the investing community. Normally twice-yearly analyst briefings are held after the release of the half-yearly and final results together with media conferences. In 2020, only one session was held in view of the then Movement Control Order (“MCO”) imposed by the government arising from the Covid-19 pandemic. The Company makes every attempt to meet requests for meetings or information from the investing community.

In respect of integrated reporting <IR>, the Board has agreed to consider its adoption subject to a study by management on the feasibility, requirements etc.

Conduct of general meetings
The 51st Annual General Meeting (“AGM”) held on 12 June 2020 was conducted for the first time entirely via live streaming and online remote poll voting. This enabled shareholders to participate and vote remotely, notwithstanding the imposition of the MCO and observance of safety requirements.

The Company endeavours to issue the notice of AGM not later than 28 days before the meeting. However due to the MCO restrictions, the AGM notice in 2020 was issued 24 days before the meeting; this was above the minimum notice period (21 days) prescribed in both the Companies Act 2016 and Bursa Securities Main Market Listing Requirements.

The AGM notice sets out the resolutions to be tabled and includes explanatory notes and other relevant information on the matters to be discussed and decided at the AGM. Shareholders were able to exercise their votes either in person, or appoint a representative or proxy to attend and vote on their behalf using remote participation and voting facilities. Voting was by poll, conducted electronically and verified by an independent scrutineer.

It is the Company’s practice that all Board members including the respective chairs of the various committees attend AGMs and are available to deal with any questions on matters under their purview. At the meetings, shareholders can express their views or raise questions relating to the Group’s financial performance and business operations.

Focus Areas on Corporate Governance
The updated Group Strategic Plan covers the four main business segments, and aims to:

• align the Group’s business activities towards the achievement of its vision and objectives;
• provide a framework within which the businesses can operate and develop;
• help management monitor and actualise investments, project development plans and prospects; and
• facilitate discussion with stakeholders on the Group’s businesses.

The Board approved the updated Group Strategic Plan in 2020, which includes the 5-year strategic plans of the various business units. The strategic plans of various business units align with the Group’s objectives in response to a dynamic environment; and include ESG considerations.

This statement is made in accordance with a resolution of the Board of Directors dated 25 March 2021.