|CORPORATE GOVERNANCE OVERVIEW STATEMENT|
The Board of Directors of Master-Pack Group Berhad, sets this statement to provide shareholders and investors with an overview of the corporate governance ("CG") practices of the Company under the leadership of the Board during the year 2019.
This overview is prepared in accordance with Practice Note 9 of the Main Market Listing Requirements and the key CG principles in the Malaysian Code of Corporate Governance (“MCCG”) issued by Securities Commission. This CG Overview Statement is to be read with the CG report based on a prescribed format as outlined in paragraph 15.25 (2) of the Main Market Listing Requirement. The 2019 Annual Report and the CG Report is available for reference at http://www.master-pack.vn/masterpack/Master-PackGroupBerhad2019.pdf, http://www.master-pack.vn/masterpack/Master-PackCGReport2019.pdf and Bursa Malaysia Berhad's website www.bursamalaysia.com
Master-Pack Group Berhad intends to create long-term value through its core business to generate sustainable shareholder value and to protect the stakeholders’ interests. In pursuing this corporate objective, the Board of Directors of Master-Pack believes in having strong corporate governance frameworks via maintenance of a high standard of integrity, transparency, accountability and professionalism as key fundamentals in managing the business operations of the Master-Pack Group of companies.
PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS
I. Board Responsibilities
The Company adopts a simple but effectively functional governance model as follows:
The Board is committed to ensuring the Group’s vision, mission, values, culture and standards are set from the top and embedded throughout the group. The Group Executive Officer and management play an integral role in this, by promoting positive behavior, setting exemplary high standards in practice and encouraging commonly held values of integrity, respect and responsibility in the group.
The Board may exercise all powers conferred on it by the Board Charter, in accordance with the Companies Act 2016 and any other applicable legislation.
The Board Charter provides guidance to the Board in the discharge of its duties and functions which sets out, amongst others, the roles and responsibilities of the Board to ensure that each Board member acting on behalf of the Company is aware of his fiduciary duties and responsibilities, the legislation and regulations affecting his duties and the principles and practices of good corporate governance which apply to the Group.
The Board Charter had been revised and approved by the Board on 26 March 2019. The Board Charter is available on the Company’s website www.master,net.my/ir_roles.htm
The Board’s responsibilities to oversee the overall management of Master-Pack Group of companies are mentioned in Practice Note 1.1 in the Corporate Governance Report.
The Board of Directors
For the financial year 2019, the Board consists of 6 Directors, comprising a majority of Independent Non-executive Directors (4 out of 6 members). Attendance at the Board meetings held during the financial year ended 31 December 2019:
The Board is satisfied that each director has devoted sufficient time to effectively discharge his responsibilities. None of the Board members serves more than 5 listed companies.
The Board consists of only one Executive Chairman and five other Non-Executive Directors out of which four are Independent Non-Executive Directors. In view of a majority (4/6) of Independent Directors on our Board, the balance of power and authority of the Board are not compromised by the combined roles of Executive Chairman and CEO held by Dato’ Syed Mohamad bin Syed Murtaza.
The size and composition of the Board is adequate to provide a diversity of views to facilitate effective decision making and provide appropriate balance of executive, independent and non-independent directors. The biographical details of all the Directors are in the company website http://www.master.net.my/ab_bod.htm. The Boardroom diversity in gender, ethnicity and age is stated in Practice Note 4.5 of the CG Report.
Currently, the Board members come from varied educational background and each member holds different professional qualifications hence contributing to the Board a diversed knowledge and expertise. In addition, three Independent Directors do not hold directorships in any company within the Group and thus the objectivity of these Directors are not compromised.
All the six Board members possess varied experience, fair knowledge, complementary skills and are of diverse competencies as shown in the matrix of mix and skill set diversity in the annual report.
D1- Dato’ Syed Mohamad bin Syed Murtaza- Executive Chairman
D2- Mr. Chew Hock Lin – Independent and Non-Executive Director
D3- Dato’ Seri Khor Teng Tong – Independent and Non-Executive Director
D4- Encik Aminuddin bin Saad – Independent and Non-Executive Director
D5 – Puan Nazriah binti Shaik Alawdin – Non Independent and Non-Executive Director
D6 – Dr. Junid bin Abu Saham – Independent and Non-Executive Director
A Chairman of the Board is responsible for instilling good corporate governance practices, leadership and effectiveness during the Board meetings. The duties of the Chairman during the year include managing Board meetings with the assistance of the Company Secretary to set the Board agenda for each pre-scheduled Board meetings.
Materials for the Board meetings comprising agenda, minutes of meeting, financial results, progress reports both financial and non-financial, risk management reports, recurrent related party transactions, the Group’s Code of Business Conduct, Anti-bribery and Anti-corruption policy, business regulatory updates, etc. are distributed to the Board members at least 5 to 7 working days before the scheduled meetings. This gives the Board members adequate time to go through the Board meeting materials.
The meetings calendar which provides the tentative dates for meetings of the Board, Audit Committee and Annual General Meeting was circulated to Directors on 22 November 2019 for the ensuing year to enable the Directors to plan ahead and co-ordinate their respective schedules.
The Chairman of the Board leads the meeting pace and discussion in an effective manner. He facilitates the Board Meetings to ensure no individual member dominates discussion and that relevant opinions amongst Board members are forthcoming. He also acts as a conduit ensuring smooth discussions between the senior management and the Non-executive Board members
Each Board member is entitled to obtain independent professional advice at the cost of the Company as per the Board Charter. They are given unrestricted access to the Group’s management, Company Secretary, external and internal auditors.
The Board has delegated specific responsibilities to three Board Committees, namely the Audit Committee, Nominating Committee and Remuneration Committee. These Board Committees have clearly defined roles and responsibilities as set out in their respective Terms Of Reference.
The Terms Of Reference of the Audit Committee (updated 31 March 2020), Nominating Committee (updated 31 March 2020), Remuneration Committee (latest 26 March 2018) and the Business Code of Conduct & Whistleblowing policy (updated 28 February 2020) are available in the Company’s website.
The Nominating Committee comprises exclusively of Independent Non-Executive Directors. The members are:
The Terms Of Reference of the Nominating Committee are also published on the company website www.master.net.my/ir_nomination_commitee.htm
Nominating Committee Activities
Two weeks prior to the Nominating Committee Meeting held on 22 November 2019, several evaluation forms were sent out to all the directors. The duly completed evaluation forms received from all directors were then compiled by the Company Secretary into reports and tabled before the Nominating Committee for discussion and consideration.
Review on Independent Directors
In evaluating that the Independent Directors fulfill the criteria of “Independence”, which included in the evaluation form cover a list of questions on independency, quality and value of contributions, ability to diplomatically listen and voice their views including a self-declaration of any involvement or relation which could interfere with an independent judgment or ability to act in the best interests of the company.
The Independent Directors namely Mr. Chew Hock Lin, Dato’ Seri Khor Teng Tong, Encik Aminuddin bin Saad and Dr. Junid bin Abu Saham all Independent Non-Executive Directors, were found to have fulfilled the criteria of “Independence” as prescribed under Chapter 1 of the Listing Requirements.
Mr. Chew Hock Lin, Dato’ Seri Khor Teng Tong, Encik Aminuddin bin Saad with a service length of more than twelve years are demonstrably considered independent, notwithstanding the length of service exceeding the twelve years on the Board. The three Independent Non-Executive Directors had provided confirmations of their independence to the Board.
Review on performance of the Individual Directors
Self and Peer evaluation form is to assess the contribution of each individual Board member’s contribution to the Board in terms of personality and working relationship with peers, company secretary and management, bringing his/ her knowledge and experience to the agenda discussed at the quarterly meetings, devotes sufficient time to prepare for the Board meeting, able to voice his/ her opinion in non-confrontational and comprehensive manner and effectively communicates with the shareholders at the annual general meetings.
The directors were able to devote sufficient time commitment to their roles and responsibilities as directors as none holds more than 5 directorships in public listed companies as prescribed in the Bursa Listing Requirements.
As such, the NC recommended to the Board, the re-election and re-appointment of Directors for shareholders’ approval at the Annual General Meeting
The Constitution of Master-Pack Group Berhad provides that at every annual general meeting, one-third of Directors for the time being and those appointed during the year shall retire from office and shall be eligible for re-election. The Constitution further provides that each director of the Company shall retire at least once every three years but shall be eligible for re-election. The constitution of the company is available http://www.master.net.my/ir_AA_MA.htm
Review on the Board Committees
Evaluation forms for Board and Board Committees cover the Board structure, Board operations, Board roles and responsibilities, Board Chairman’s role and responsibilities and the performance of the Board Committees.
The NC was satisfied that the size and composition of Board are optimum with appropriate mix of knowledge, skills, attributes and core competencies. Therefore, no potential Board candidates were assessed during the year. The Board was able to discharge its duties professionally and effectively as well as uphold the governance standards.
The Chairman of the Board was also found to have fulfilled his role and responsibilities in leading the board as well as the setting the tone from the top in determining the strategic objectives, policies, values, culture and standard practices for the Group.
The evaluation form for the Performance of the Audit Committee as a whole assesses the understanding of the Audit Committee Terms Of Reference and the ability to objectively & responsibly perform their duties.
The results of the evaluation have shown that with the help of the external auditors and the out-source internal auditors, the Audit Committee was able to give the Board the assurance on risk management and internal control. NC also concluded that the Audit Committee as a whole and its members have carried out their duties as laid out by the Audit Committee Terms Of Reference.
Review on Trainings attended
The Board recognises the importance of attending and participating in training and development activities in order to broaden their perspectives and to keep abreast the developments in the market place, and new statutory and regulatory requirements which are required to fulfill their responsibilities.
During the year under the review, the Directors have attended relevant development and training programs according to their individual needs and enhanced their ability in discharging their duties and responsibilities.
The list of trainings attended by the directors (available at http://www.master.net.my/ab_bod.htm.) is reviewed and encouragements given to directors to attend topics where they require to further update their knowledge.
NC was satisfied that all Board members have devoted sufficient time to update their knowledge and skills including the latest change of the regulatory and statutory and professional requirements.
The NC is also responsible for assessing the suitability of any proposed candidate as a Board member and to submit their recommendations to the Board. In evaluating the suitability of candidates the NC considers the following criteria:
• skills, knowledge, expertise and experience;
• gender diversity;
• time commitment to at least attend not less than half the board meetings as well as competing time commitments if the candidate also holds other directorship ;
• consideration as to the representation of the interest groups;
• assess the desirable numbers to balance Board membership, with due consideration to the structure, development and succession planning
• in the case of candidates for the position of independent non-executive directors, the Committee should also evaluate the candidate’s ability to discharge such responsibilities as expected from independent non-executive directors.
However, during the year the size and composition of the Board is optimum and therefore new potential candidates were not considered.
The Remuneration Committee comprises exclusively of Non-Executive Directors. The members are:
The Terms Of Reference of the Remuneration Committee are also published on the company website http://www.master.net.my/ir_remuneration_committee.htm
The Remuneration Committee (‘RC”) is responsible for recommending to the Board a remuneration framework and package for the Executive Directors.
In order to retain talent, the components of the remuneration are structured to link rewards to Group financial performance and individual performance taking into consideration the complexities and the responsibilities undertaken during the period under review. There is no gender inequality in terms of remuneration package.
During the meeting, members of RC discussed the remuneration packages offered to the Executive Chairman and other Executive Directors in the Group including the additional remuneration for the newly setup subsidiary in Vietnam. The RC also ensures that the Executive Directors are amply rewarded for delivering another year of excellent financial performance in line with the Group policies which are structured to attract or retain the talents.
The RC also deliberated on the level of remuneration to be received by each Non-Executive Director. Generally the extent of responsibilities undertaken by the respective Non-Executive Director determine the level of remuneration entitled. The Executive Director / Chairman did not participate in any way on the agenda in determining his remuneration during the Board Meeting.
The details of Executive Directors’ and Non- Executive Directors remuneration is stated in Practice Note 7.1 and 7.2 of the CG Report
PRINCIPLE B : EFFECTIVE AUDIT AND RISK MANAGEMENT
Audit Committee and Risk Management & Sustainability
The Audit Committee comprises exclusively of Independent Non-Executive Directors. The members are:
Mr. Chew graduated from University of Western Australia with a Bachelor in Commerce Degree and has more than 30 years’ experience in audit and accountancy profession. He is a former partner of an international audit firm. Currently, he is a Certified Public Accountant (Malaysia), a Chartered Accountant (Malaysia) and a Fellow of Chartered Tax Institute of Malaysia.
The Chairman of the Audit Committee is not the Chairman of the Board which is held by Dato’ Syed Mohamad bin Syed Murtaza. The Company had not appointed a former key audit partner as a member of the Audit Committee and this practice has been incorporated in the latest updated Audit Committee Terms of Reference.
Collectively the Audit Committee members possess a wide range of necessary skills including the attributes of financial literacy to discharge their duties as indicated in the skills matrix above.
The Board via the Nominating Committee had deliberated on the performance of the Audit Committee and each of its members as required by paragraph 15.20 of the Main Market Listing Requirements. At the recommendation from the Nominating Committee, the Board was satisfied that members of the Audit Committee were able to perform their duties according to the Audit Committee Terms Of Reference.
A summary of activities of the Audit Committee including the Internal Audit function during the year 2019 is set out on the Audit Committee Report of the Annual Report.
Risk Management & Sustainability and Internal Controls Framework
The Board of Directors of Master-Pack Group Berhad affirms its responsibility for maintaining a sound and effective system of risk management framework and internal control system of the Group. The Group's system of risk management and internal control is designed to meet the Group’s needs in order to manage the risks associated with financial, operational, governance and regulatory compliance.
The Risk Management & Sustainability Committee comprising Independent Directors assist the Audit Committee to focus on risk management and internal controls. The Risk Working Committee comprising heads of Department led by the Executive Director as tasked by the Risk Management & Sustainability Committee had comprehensively conducted an evaluation of all risks and recorded it in the Risks and Opportunity Register. The accompanying internal controls in place to manage, mitigate or avoid each identified risks were also tabulated in the Risk and Opportunity Register.
During the year 2019, the Risk Management and Sustainability Committee reviewed the Risk Management and Sustainability Policy, assessed and monitored efficacy of risk management process, internal controls and measures taken as well as reports arising from risk management activities. The adequacy and effectiveness of the internal controls are performed by the out-sourced internal auditors, external auditors and third party auditors from SIRIM. The Internal Auditors report directly to the Audit Committee.
The Board is of the view that the system of internal control appears to be working adequately. Based on the work done by the Internal Auditors, there were no material weaknesses in the system of internal control that may affect the integrity of our financial statements.
The Statement of Risk Management and Internal Controls provide an overview on the state of risk management and internal control system within the Group. The details of the Risk Management and Internal Control are set out on page 25 to 28 of the Annual Report.
Sustainability Policy Statement
The Sustainability Statement explicitly provides a framework for sustainable and responsible operations, activities and practices throughout the Master-Pack Group. Please refer to the Company website http://www.master.net.my/ir_sustainability_policy_statement.htm
The Group’s Sustainability Report is explained on http://www.master.net.my/ir_corporate_social.htm and page 11 to 18 of the 2019 Annual Report. Master-Pack Group, as a responsible corporate entity, is conscious of our obligations towards the economy, environment, and society in which we operate.
PRINCIPLE C: INTERGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDER
Communication with Stakeholders
Announcements on important matters and financial results of the Company are promptly released to Bursa so that the investing public is provided with an overview of the performance and operations of the Company. The Company has established a website at http://www.master.net.my/ir_announcements.htm. where public announcements are also posted in addition to the mandatory requirements and postings at Bursa.
For the forthcoming 26th AGM to be held on 4 June 2020, the Notice of AGM shall be posted out on 6 May 2020. This complies with Malaysian Code on Corporate Governance that at least 28 days prior notice to the meeting is given to shareholders as compared to at least 21 days’ notice required by Section 316 of the Companies Act 2016.
The Board supports and encourages active shareholders participation at its Annual General Meeting (AGM) and any other General Meetings. In accordance with the Company’s Constitution, any shareholder may appoint up to a maximum of 2 proxies to attend and vote on his/her behalf in any General Meeting. The notes to the Notice of AGM also provide information to the shareholders regarding the details of the AGM, their entitlement to attend the AGM and their rights to appoint 2 proxies.
At the start of the Annual General Meeting, shareholders are informed of their rights to exercise their decision making powers and the rules governing the e-polling voting procedures including the resolutions to be voted. Matters reserved for shareholders’ approval were as tabulated in the Notice of Annual General Meeting page 19 to 23 of the 2019 Annual Report circulated to the shareholders.
Mr. Chew Hock Lin has been assigned as the Senior Independent & Non-Executive Director, to whom concerns in relation to the Company may be conveyed at the email email@example.com. He is also available for shareholders to meet and view their concerns and opinions at the beginning of our Annual General Meeting.
Conduct of General Meetings
Master-Pack Group Berhad’s AGM acts as a principal forum for interactions with shareholders. The 25th Notice of AGM was dispatched and advertised in the News Straits Times newspaper at least 28 days before the AGM date complying with the recommended MCCG best practices. All Board members understand the importance of engaging with the shareholders and were present at the 25th AGM held on 24 May 2019 at 6pm in Master-Pack Sdn. Bhd., 1574 Jalan Bukit Panchor, 14300 Nibong Tebal, S.P.S. Penang. In attendance at the AGM was also the Company Secretary, the internal and external auditors.
The shareholders attending the AGM were registered and provided with wrist bands tag with e-polling devices
The Chairman of the Board welcomed all shareholders and the meeting proceeded in an orderly manner. The meeting was presided over by the Chairman and the proceedings were carried out by the Company Secretary. The Chairman briefed the shareholders on the Group’s financial and non-financial performance for the financial year. Questions posed by the shareholders and Minority Shareholder Watchdog Group were responded by the Chairman/ Group Executive Chairman accordingly.
After each resolution is read by the Company Secretary, shareholders were asked to vote via the e-polling devices provided. The poll results of each resolution were shown on the screen and read out to all the shareholders before the proceeding with the next resolution until all resolutions were concluded. The AGM concluded smoothly and all resolutions were duly approved by the shareholders.
With the assistance of Audit Committee in reviewing the financial results, the Board aims to present quality financial reporting showing a balanced and understandable assessment of the Company’s financial position and prospect via the Audited Financial Statements and quarterly financial reports on timely basis. In compliance with the Bursa Main Listing Requirements, the quarterly financial statements were announced to the public via the Bursa Link and the company’s website not later than 2 months after the end of each quarter of the financial year. The Company’s financial statements were prepared in accordance with applicable approved accounting standards pronounced by Malaysian Accounting Standards Board and other relevant or governing authorities.
Statements of Directors’ Responsibility for Preparation of Audited Financial Statements
The directors are responsible for ensuring that a true and fair view of the state of affairs of the Company and the Group at the end of the financial year and of the results and cash flows of the Company and the Group for the financial year and these are reflected in the Audited Financial Statements, as set out in pages 41 to 90 of the 2019 Annual Report. The directors are required to ensure these Audited Financial Statements are prepared in accordance with applicable approved accounting standards in Malaysia, provisions of Companies Act, 2016 and Bursa Securities Listing Requirements. (Refer also to write-up on “Financial Reporting” above.)
Relationship with Auditors
The Board has always maintained formal and transparent relationships with the Company’s auditors and the management is responsive to the auditors’ enquiries and their recommendations. The Audit Committee meets up with the external auditors at least three times a year to discuss their audit plan, audit findings and the Group's financial statement. There were two meetings held without the presence of the Executive Directors and the management.
In addition, the external auditors also attended the Annual General Meeting and are available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and contents of their report. The Audit Committee is responsible for yearly review of the auditors’ performance and recommends for their re-appointment to the Board. The Audit Committee takes into consideration the importance of the external auditor’s independence and objectivity and therefore adopts a strong view that all non-audit services shall be limited and approved, only when necessary. This is to ensure that the independence of the external auditors is not in any way impaired. The Group audit fee and non-audit fee paid to External Auditors for the financial year 2019 amounts to RM128,000 and RM2,000 respectively.
Save as disclosed above, the Board is satisfied that throughout the financial year ended 31 December 2019, the Company has applied the principles and recommendations of the corporate governance set out in the Code, where necessary and appropriate.
The Corporate Governance report can be viewed in the Company's website, http://www.master.net.my
This statement was approved by the Board of Directors on 31 March 2020.
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