KLCC PROPERTY HOLDINGS BERHAD (641576-U)
The Board of Directors (the “Board”) of KLCC Property Holdings Berhad (the “Company”) regard corporate governance as important principles and practices to be upheld, and it will continuously strive to ensure that good corporate governance is implemented and carried out by the Company and its subsidiaries (the “Group”), with the ultimate objective of adopting good governance practices as an integral part of its business culture. The Company will publish its Board Charter and all other relevant documents as required by the Malaysian Code on Corporate Governance (“MCCG”).
The Board Charter shows that the Board remains fully resolved and committed to employing the principles of integrity, transparency and professionalism to ensure the practice of good corporate governance that will safeguard and enhance shareholders’ investment and value and at the same time protect the interests of its stakeholders.
The Board shall actively strive and be collectively responsible to promote the success of the Group by directing and supervising its business and affairs.
In addition to fulfilling its commitment for increased shareholder value, the Board shall endeavour to uphold the interests of the Group’s customers, employees, suppliers and to the communities where it operates, but bearing in mind the circumstances and requirements for successful business. The Board has a formal schedule of matters reserved to itself for decisions, including the overall Group strategy and direction as well as significant financial matters. There is a clear division of responsibilities between the Chairman, Chief Executive Officer and Non-Executive Directors.
The duties, powers and functions of the Board are governed by the Articles of Association of the Company, the Companies Act 1965, and other regulatory guidelines and requirements that are in force.
Having regard to its commitments, the Board is expected to direct and supervise the management of its business by fulfilling the following responsibilities:-
Ensure that the Group‘s goals are clearly established;
Review and approve strategies, business plans and significant policies and to monitor its implementation and performance thereof;
Observe its legal and fiduciary obligations that affect the business by adopting performance appraisal measures;
Ensure a competent management by establishing policies for strengthening the performance of the Group with a view to proactively build the business through innovation, initiative, technology, new products and the development of its business capital;
Evaluate whether the business is being properly managed, ensure the solvency of the Group and its ability to meet contractual obligations, and safeguard the Group’s assets;
Ensure that the Group has appropriate business risk management process including adequate control environment, systems for compliance with applicable laws and regulations, and controls in areas of significant financial and business risks;
Establish various Board Committees and ensure their effectiveness to address specific issues, by considering recommendations of the various Board Committees and acting on their reports;
Ensure that the statutory accounts of the Company and Group are fairly stated and otherwise conform to the relevant regulations including acceptable accounting policies that result in balanced and understandable financial statements;
Ensure that there is an appropriate succession plan for members of the Board and senior management;
Ensure that the Group adheres to high standards of ethics and corporate behaviour including transparency in the conduct of its business, and Directors are required to comply with the Directors’ Code of Best Practice; and
Ensure that there is an appropriate investor relations and communications policy.
Directors should consult the Company Secretary and / or the Chairman, as required, for any clarifications on their responsibilities and duties and any dealings from which potential conflict of interest situation may arise.
The Chairman of the Board is an Independent Non-Executive Director. He is primarily responsible for the orderly conduct and function of the Board. The role of the Chairman is provided in Appendix A.
The Chief Executive Officer is responsible for the day-to-day running of the Group’s business, implementation of Board’s policies and making operational decisions. He is assisted in the management of the Group’s business by the Management. The role of the Chief Executive Officer is provided in Appendix B.
The Board shall consist of individuals who possess diverse experiences, knowledge, qualifications, and expertise besides having high standards of professionalism and integrity. The size of the Board should facilitate the making of informed and sound decisions. At all times, the Board shall have a balanced composition of Executive and Non-Executive Directors, with one-third (1/3) Independent Non-Executive Directors.
The Independent Directors shall provide independent judgment and objectivity without being subordinated to operational considerations. The Independent Directors help to uphold the interests of all shareholders and not only the interests of a particular group, and that all relevant matters and issues are objectively and impartially considered by the Board. The views and opinions of the Independent Directors shall carry significant weight in the Board’s decision-making process.
If, on any matter discussed at a Board Meeting, there are any Directors that hold differing views to those of any other Directors, the Board minutes shall clearly reflect this.
The selection of new Directors is done via nominations by the ultimate holding and/or holding company prior to approval by the Board. New Board Members are to be appointed by appropriate recommendation of the Nomination and Remuneration Committee for the Board’s consideration and decision of the full Board.
Newly appointed Directors are expected to declare their time commitment to the Board, and if they sit in other listed corporations as a Director then they are to obtain permission from the Chairman of the Board.
The number of directorships in listed corporations held by any Board Member at any one time shall comply with the Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”).
The Company Secretary shall be responsible in ensuring that all relevant procedures and compliances are fulfilled relating to the appointment of new Directors.
The Board shall ensure compliance with Bursa Malaysia Securities Berhad’s (“Bursa Malaysia”) mandatory accredited programme for newly-appointed Directors and assess further training programme needs of the Directors on an-on-going basis.
Appropriate induction programme for newly-appointed Directors shall be carried out as advised by the Company Secretary with appropriate assistance from other Senior Executive Directors.
The Board shall adopt a continuous educational and training programme to update Board Members on new developments in risks control, laws, regulations and other business and management-related subjects that may affect the company’s business and compliance requirements.
All Directors shall be subject to retirement by rotation in accordance with the Listing Requirements and the company’s Articles of Association.
The Company does not practice any form of gender biasness as both genders shall be given fair and equal treatment. Any new appointments to the Board shall be based on merits instead of fulfilling any gender quotas. This statement shall be published in the Annual Report.
The Company shall provide all Directors with timely and quality information and in the form and manner appropriate for them to discharge their duties effectively. Where necessary, the Directors at the expense of the company may consult with experts and professionals for advice.
The Board shall meet at least once every quarter throughout the year. The Chairman, assisted by the Company Secretary and Chief Executive Officer, shall assess the type of information to be furnished at Board Meetings. At each scheduled meeting, a full and comprehensive Board Paper shall be circulated to all Board Members, giving ample time for reading and preparation.
In convening the Board Meetings, all procedures to meet the requirements of a valid Board Meeting shall follow the Company’s Articles of Association. All proceedings in Board Meetings are recorded as minutes and signed by the Chairman of the meeting or Chairman of the next meeting, in accordance with the provisions of the Companies Act 1965. Minutes of the Board Meetings will include a record of the decision and resolution of the Board Meetings and are properly maintained by the Company Secretary.
The Board has adopted PETRONAS Code of Conduct and Business Ethics (“PETRONAS COBE”) that seeks to ensure that the Company’s and/or Groups’ Directors, employees and third parties which perform work or services for the Company and/or Group will act ethically and remain above board at all times, and that their individual behaviour is in line with PETRONAS’ Shared Values i.e. Loyalty, Professionalism, Integrity and Cohesiveness. PETRONAS COBE is available at PETRONAS’ corporate website.
The Directors shall have its own Code of Conduct as provided in APPENDIX C.
The Board is entitled to obtain external independent professional advice at the Company’s cost based on proper guidelines set up by the Board. An external independent advice shall exclude those of personal interests such as the Director’s personal disputes, where they do not affect the Board or Company as a whole.
The Board shall establish the following Board Committees with specific terms of reference as set out in the following respective Appendices:-
Audit Committee (APPENDIX D); and
Nomination and Remuneration Committee (APPENDIX E).
No Alternate Director can be appointed as a member of these Committees. All Board Committees shall be established in accordance with the Listing Requirements.
The Board aims to present a balanced and comprehensible assessment of the Group’s financial position and prospects, and ensures that the financial statements are a reliable source of information for shareholders and other stakeholders.
The Board ensures that there is an ongoing process for identifying and managing significant risks faced by the Group.
A risk management structure outlines the responsibilities of the Risk Management Unit established under the KLCC Group Enterprise Risk Management Governance Framework (“ERM”). The ERM Governance Framework serves to inform and provide the foundation to Directors, senior management, line management, executives and non-executives in indentifying, evaluating and developing processes and systems for managing risks within the Group. In implementing the ERM, the Group shall be guided by PETRONAS Risk Governance Framework.
The Management has carried out a risk assessment review on the Company’s and Group’s operations, which covers all aspects of its business activities. The risk profiles including its tolerance level thereof, and risk registers are shared by the Risk Management Committee with the Audit Committee. The Chairman of the Audit Committee reports the significant risks and controls issues to the Board for its consideration, as and when necessary.
The internal audit function provides assurance on the efficiency and effectiveness of the internal control systems. The adequacy and effectiveness of the internal control is assessed by adopting a systematic approach in reviewing the Group’s business and operational control, risk management and governance process.
The internal audit function is undertaken by the Group Internal Audit Division of KLCC (Holdings) Sdn. Bhd. It adopts a risk-based approach and prepares its audit strategy and plans based on the updated risk profile of the Company.
Its objectives are to independently review the system of internal control as established by the Management, the adequacy of such internal control system and make appropriate recommendations for improvement. The Management shall carry out internal audit according to the audit plan or as required, and findings from the internal audit shall be communicated to the Audit Committee for review and endorsement.
The Audit Committee considers the report from the internal audit function and the Management's responses before reporting and making recommendations to the Board to strengthen the risk management and internal control systems.
The Board shall take reasonable steps to encourage shareholders participation at general meetings by serving notices for meetings as required by law and regulation, and disclosing all relevant information so that they could vote accordingly. To facilitate greater shareholder participation, the Board may consider adopting electronic voting.
The Board would encourage poll voting on substantive resolutions and make an announcement of the detailed results showing the number of votes cast for and against each resolution. The Chairman of the meetings shall inform the shareholders of their right to demand a poll vote at the commencement of the general meeting.
The Board acknowledges the need for effective investor relation and communication with shareholders and to provide them with all relevant information affecting the Company; as such, it adopts an open and transparent policy. The Board shall also endeavor to ensure timely release of information to shareholders.
The Annual Report has comprehensive and timely information pertaining to the Group, while various disclosures on quarterly financial results that provide investors with up-to-date financial information can be found on the Company’s corporate website.
As a corporate citizen, the Board is cognizant of the need to formulate strategies that promote sustainability and stakeholders’ interests through internal policies, which are, among others:-
Employees are invaluable assets of the Company and play a vital role in helping the Company achieve its vision and mission. The Board endeavors to provide a conducive working environment and adopts a comprehensive and documented policies and procedures regarding Occupational Safety and Health.
The Board acknowledges that the Company should play an important role in contributing towards the welfare of the community in which it operates, and shall continuously identify opportunities to support charitable causes and initiatives in community development projects.
The Board acknowledges the need to safeguard and minimize the impact to the environment in the course of achieving the Company’s objectives. The Board’s agenda reflects the commitment to economic support for longer term sustainability with a focus on the positive impact on the environment, community and society.
In promoting good corporate governance, the Board Charter sets out the principles and guidelines that are to be applied by the Board and the Board Committees, as well as identifying their roles, responsibilities and functions in the Company and/or Group.
The Board Charter shall be made public in the Company’s corporate website and disclosed in its Annual Report.
ROLE OF THE CHAIRMAN
The role and responsibilities of the Chairman include:-
Leading the Board in setting the values and ethical standards of the Company;
Chairing the Board Meetings and stimulating debates on issues and encouraging positive contributions from each Board Member;
Consulting with the Chief Executive Officer and Company Secretary in setting agenda for Board Meetings and ensuring that all relevant issues are on the agenda;
Maintaining a relationship of trust with and between the Executive and Non-Executive Directors;
Ensuring the provision of accurate, timely and clear information to Directors;
Ensuring effective communication with shareholders and relevant stakeholders;
Arranging evaluation of performance of Board Members, its Committees and individual Directors, including assessment of the independence of Independent Directors;
Facilitating effective contribution of Non-Executive Directors and ensuring constructive discussions at Board Meetings.
Ensuring that, in determining policy-related matters, the following are carried out:-
All directors are properly briefed on issues arising at Board Meetings;
There is sufficient time allowed for discussion on complex or contentious issues and where appropriate, arranging for informal meetings beforehand to enable thorough preparations;
Allowing every Board Resolution to be voted on and ensuring the will of the majority prevails;
Casting his votes in accordance with the prescribed Articles of Association of the Company;
Together with the Chief Executive Officer, representing the Company and/or Group to external groups such as major shareholders, creditors, consumer groups, and other stakeholders;
Ensuring that all Board Members, upon taking up their office, are fully-briefed on the terms of their appointment, time commitment, duties and responsibilities, and the business of the Group; and
Acting as liaison between the Board and Management, and between the Board and the Chief Executive Officer.
ROLE OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer has executive responsibilities for the day-to-day operations of the company’s business and shall implement policies, strategies and decisions approved by the Board. He shall be accountable and responsible for the management functions of the Company and/or Group including conduct and discipline, and for its results and performance thereof.
The Board shall delegate through the Chief Executive Officer its authority in carrying out the Company’s business policies and the Chief Executive Officer shall be supported by the Board Members in undertaking these responsibilities.
The role of the Chief Executive Officer can be summarised as follows:-
With Regard to the Board and Company:-
to develop and recommend to the Board a long-term strategy and vision for the Company and/or Group that leads to the creation of long-term prosperity and shareholder value;
to develop and recommend to the Board the operational plan and budget that support the Company’s and/or Group’s long-term strategy;
to foster a corporate culture that promotes ethical practices, encourages individual integrity and the fulfillment of the Company’s corporate social responsibilities;
to maintain a positive and ethical working environment that is conducive to attracting, retaining and motivating a diverse work-force at all levels.
With regard to the Management and business operation:-
to recommend suitable management structure and operating authority levels which include delegations of responsibilities to the management;
to ensure an effective management team below the level of the Chief Executive Officer and to develop an active succession plan;
to formulate and oversee implementation of major corporate policies;
to be accountable to the Board for the financial management and reporting, including forecasts and budgets of the Company and/or Group;
to make reports to the Board periodically on its financial positions, key performance indicators, market conditions and business development from time to time;
to ensure continuous improvement in quality and value of the Company’s products and services;
to serve as spokesperson for the Group; and
to refer to Board Committees on matters as requested from time to time.
CODE OF CONDUCT FOR DIRECTORS
To uphold the best interest of the Company and/or Group and its stakeholders;
To act with integrity, professionalism and in good faith;
To meet regularly with the Chief Executive Officer to continuously establish and approve policies;
To assess, question and challenge the policies and procedures with the intent to identify and initiate management action on issues;
To keep the Board discussions and deliberations confidential;
To observe its fiduciary duties to the Company and/or Group by not making improper use of the information gained and take improper advantage of his position as a Director;
To avoid any potential conflict of interests arising from related party transactions, potential misuse of corporate assets, and privileged information;
Not to be in competition with the Company;
To declare any potential conflict of interest;
To maintain sufficient detailed knowledge of the Company’s and/or Group’s business and performance and make informed business decisions;
Newly appointed Directors are expected to declare their time commitment to the Board, and if they sit in other listed corporations as a Director then to obtain permission from the Chairman of the Board.
AUDIT COMMITTEE TERMS OF REFERENCE
The Committee shall be appointed by the Board of Directors amongst the Directors of the Company who fulfill the following requirements:
the Committee must be composed of no fewer than 3 members; a majority of the Committee members must be Independent Directors;
the Committee must be made up entirely of Non-Executive Directors who should be financially literate; and
at least one member of the Committee:
must be a member of the Malaysian Institute of Accountants; or
if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years' working experience and:
he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).
The members of the Committee shall elect a Chairman from amongst themselves who shall be an Independent Director.
No Alternate Director shall be appointed as a member of the Committee.
In the event of any vacancy in the Committee resulting in the non-compliance of the Bursa Securities Main Market Listing Requirements pertaining to the composition of the audit committee, the Board of Directors shall within 3 months of that event fill the aforesaid vacancy.
The terms of office and performance of the Committee and each of its members must be reviewed by the Board of Directors at least once every 3 years to determine whether the Committee and its members have carried out their duties in accordance with their terms of reference.
Meetings shall be held not less than 4 times a year.
Upon the request of the external auditors, the Chairman of the Committee shall convene a meeting to consider any matter the external auditors believe should be brought to the attention of the Directors or shareholders.
The Committee shall, when necessary, meet with the external auditors in separate sessions to discuss any matters without the presence of any Executive Directors and Management.
To form a quorum, the majority of the Committee members present must be Independent Directors.
The Company Secretary or, in his absence, another person authorised by the Chairman of the Committee, shall be the Secretary of the Committee. He shall draw up the agenda in consultation with the Chairman of the Audit Committee, and circulate such minutes and agenda papers well in advance of the meeting.
The Head, Accounts and Finance Division, Head of Internal Audit and a representative of the external auditors shall normally attend meetings.
Other Directors and employees may attend any particular meeting only at the Committee's invitation, specific to the relevant meeting.
The minutes of each meeting shall be circulated to all members of the Board.
The Committee shall regulate its own procedure, in particular:
the calling of meetings;
the notice to be given of such meetings;
the voting and proceedings of such meetings;
the keeping of minutes; and
the custody, production and inspection of such minutes.
The Committee in performing its duties shall, in accordance with a procedure to be determined by the Board of Directors:
have the authority to investigate any matter within its terms of reference;
have the resources which are required to perform its duties;
have full and unrestricted access to any information pertaining to the Company and authority to seek any information it may require from the Company’s and/or Group’s employees;
have direct communication channels with the external auditors, person(s) carrying out the internal audit functions or activities and senior management;
be able to obtain independent advice, whether professional or otherwise, pertaining to any matter within its terms of reference which the Committee considers necessary at the expense of the Company; and
be able to convene meetings with the external auditors, the internal auditors or both while excluding the attendance of other directors and employees of the Company, whenever deemed necessary.
The Committee shall, amongst others, perform the following functions:
the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on:
the going concern assumption;
major changes in or its implementation thereof in accounting policies;
significant and unusual events; and
compliance with accounting standards and other legal requirements.
any related party transaction and conflict of interest situation that may arise within the Company or the KLCCP Group including any transaction, procedure or course of conduct that raises questions of the integrity, transparency and professionalism of the management.
with the external auditors:
the audit plan;
evaluation of the system of internal controls;
the audit report to ensure that appropriate and prompt remedial action on major deficiencies and procedures that are identified is taken by the Management;
Management Letter and the Management's response; and
the level of cooperation given by the Company and the KLCCP Group's employees to the external auditors.
the independence and objectivity of the external auditors and their services rendered, including non-audit services and professional fees, so as to ensure a proper balance between objectivity and value for money.
To monitor the Management's risk management practices and procedures and review the adequacy and integrity of internal control systems, including enterprise risk management, management information system, and the internal auditors’ and/or external auditors’ evaluation of the said systems.
In respect of the appointment of external auditors:
to review whether there is reason (supported by grounds) to believe that the current external auditors is not suitable for reappointment;
to consider the nomination of a person or persons as external auditors and the audit fee; and
to consider any question of resignation or dismissal of the external auditors.
In respect of the internal audit function:
to review the adequacy of the scope, functions, competency and resources of the internal auditors and whether it has the necessary authority to carry out its work;
to review the internal audit programmes, processes or investigations as well as the results of the same that were undertaken, and whether or not appropriate actions have been taken based on the recommendations of the internal auditors;
to review any appraisal or assessment of the performance of members of the internal audit function;
to approve any appointment or termination of senior staff members of the internal audit function; and
to inform itself of any resignation of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
To direct and where appropriate, supervise any specific projects or investigation considered necessary and review investigation reports on any major defalcations, frauds and thefts.
To review the procedures in place to ensure that the Group is in compliance with the Companies Act 1965, Bursa Securities Main Market Listing Requirements and other legislative and reporting requirements.
If the Committee is of the view that any matter which it had reported to the Board of Directors has not satisfactorily resolved resulting in a breach of the Bursa Securities Main Market Listing Requirements, the Committee must promptly report such matters to Bursa Securities.
To carry out such other functions as may be agreed to by the Committee and the Board of Directors.
TERMS OF REFERENCE OF NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee of the Company shall comprise exclusively of Non-Executive Directors, a majority of whom must be independent. The Chairman of the Nomination and Remuneration Committee should be the Senior Independent Director identified by the Board. The Company Secretary shall be the Secretary of the Nomination and Remuneration Committee meeting.
The purpose of the Nomination and Remuneration Committee is to assess the suitability of candidates to be appointed to the Board. In making such assessment, consideration should be given to the candidate’s competency, commitment, contribution and performance. The Nomination and Remuneration Committee should facilitate the new Board Member’s induction and training programmes. The nomination and election process of Board Members should be disclosed in the Company’s Annual Report. In carrying out its functions, the Nomination and Remuneration Committee adheres to the policies and procedures set by the Company’s ultimate holding/holding company.
The Nomination and Remuneration Committee will also assess the senior management succession planning taking into account the challenges and opportunities facing the Company and what skills and expertise are therefore needed in the near future.
3. Meetings and Quorum
The Nomination and Remuneration Committee shall meet at least once a year. The presence of the majority of the Independent Non-Executive Directors shall form the quorum of the meeting.
4. Roles and Functions
To assess and recommend new appointments to the Board and Board Committee;
To develop, maintain and review the criteria to be used in the recruitment process and annual assessment of Directors including the criteria to assess their independence;
To review the succession plans for Directors and senior management and to ensure and maintain an appropriate balance of skills, experience etc. necessary for the Company’s business;
To evaluate the re-appointment of any Non-Executive Director at the conclusion of their specific term of office;
To assist the Board in reinforcing its independence:
where the tenure of an Independent Director has exceeded a cumulative term of nine (9) years, then to provide relevant justifications when seeking shareholders’ approval in the event the Committee’s recommendation is to retain the individual as an Independent Director serving more than nine (9) years;
To regularly review the structure, size and composition (including skills, knowledge, experiences and so on) of the Board and make recommendations to the Board for any changes required;
To review and recommend suitable training programmes for the Board members including board induction and training for new directors;
To establish a formal and transparent remuneration policy to be adopted by the Board and the policy shall also include procedures to attract and retain Executive Directors;
To recommend to the Board the remuneration packages for senior management and executive staff, which is aligned to the property industry, and to review changes thereto as necessary;
In establishing the remuneration package for Directors, to be fair and aligned with the business strategy and long-term objectives of the Company, and should reflect the Board’s responsibilities, expertise and the complexity of the Company’s activities;
To ensure that no Director other than the Chief Executive Officer and Executive Directors shall have a service contract with the Company;
To undertake a formal independent review of the Directors’ remuneration once in every three (3) years;
Provided that the units in KLCC Real Estate Investment Trust and the ordinary shares in the Company remains stapled to each other, where necessary, to consult and cooperate with the nomination and remuneration committee of KLCC REIT Management Sdn Bhd (“KLCC REIT Management”) in respect of matters relating to (a) the nomination and remuneration policy of the Company and KLCC REIT Management and (b) the carrying out of the Nomination and Remuneration Committee’s roles and functions to ensure consistent approaches taken by the Nomination and Remuneration Committee of the Company and the nomination and remuneration committee of KLCC REIT Management.