36

Corporate Governance
The Code
The Board of Directors (the Board) is committed to ensuring the highest
standards of corporate governance are practiced throughout the Boustead
Heavy Industries Corporation Group of Companies (Group) as a fundamental
part of discharging its responsibilities to protect and enhance shareholders value
and the nancial performance of the Group.
Set out below is the manner in which the Group has
applied the principles of good governance and the
extent to which it has complied with the best practices
set out in the Malaysian Code on Corporate Governance
(the Code). These principles and best practices have
been applied and complied with throughout the year
ended 31 December 2008.

BOARD OF DIRECTORS
Composition of the Board
The Board currently has six (6) members, comprising
two (2) Executive Directors and four (4) Non-Executive
Directors. Three (3) of the Directors are Independent
Directors, in compliance to the Code and the Listing
Requirements of Bursa Malaysia Securities Berhad (Bursa
Securities) for one third of Directors to be independent.
The balanced combination of qualications, skills and
experiences of the Board is important to ensure the
successful direction of the Group.

Group Managing Director has the overall responsibility

for the day-to-day running of the business and
implementation of the Boards decisions.
Y. Bhg. Tan Sri Dato Che Lodin bin Wok Kamaruddin
leads the Board as the Chairman of the Company.
The Board continues to give close consideration to its
size, composition and spread of experience and expertise
that enables the Board to provide eective leadership as
well as independent judgement on business decisions,
taking into account long term interests of shareholders,
customers, suppliers and other business associates with
whom the Group conducts its business.
In accordance with the requirement of the Code, Mr.
David William Berry has been appointed as the Senior
Independent Non-Executive Director to be available to
deal with the concerns of various stakeholders in the
Company.
The Board is satised that the current Board composition
fairly reects the interests of minority shareholders
within the Group.

A brief prole of each Director is presented on pages 23

to 26 of this Annual Report.

Board Responsibilities

The Group practices a division of responsibility between

the Chairman and the Group Managing Director and
there is a balance of executive, non-executive and
independent non-executive Directors. The roles of the
Chairman and Group Managing Director are separate
and clearly dened, and are held individually by two
persons. The Chairman is primarily responsible for the
orderly conduct and working of the Board whilst the

The Board is responsible for the corporate governance

practices of the Group. It guides and monitors the
aairs of the Group on behalf of the shareholders and
retains full and eective control over the Group. The
Boards key responsibilities reect the recommendations
prescribed by the Code. These include the review of the
strategic direction for the Group and overseeing the
business operations of the Group, evaluating whether
these are being properly managed.

37

The responsibility for matters material to the Group is in the hands of the Board, with no individual having unfettered
powers to make decisions. In performing their duties, the Board has access to the advice and services of the Company
Secretaries and if necessary, may seek independent professional advice about the aairs of the Group. The Board has a
formal schedule of matters reserved to itself for decision, including the overall Group strategy and direction, acquisition
and divestment policy, approval of major capital expenditure projects and signicant nancial matters.
Board Meetings
Board meetings are held at quarterly intervals with additional meetings convened for particular matters, when necessary.
All Directors are fully briefed in advance of Board meetings on the matters to be discussed and have access to any
further information they may require. The Board may, whenever required, set up committees delegated with specic
powers and responsibilities.
The Company Secretaries are responsible to ensure the Board meeting procedures are followed and that applicable rules
and regulations are complied with.
The Memorandum and Articles of Association of the Company provides for the Chairman to have the casting vote in the
event an equality of votes arises over an issue in question.
The Board met for a total of four (4) times during the nancial year ended 31 December 2008 and the attendance of
each Director is as stated in the table below:

Name of Director

Status of Directorship

Independent

Attendance of Meetings

Y. Bhg. Tan Sri Dato Che Lodin bin

Wok Kamaruddin*

Non-Independent
Executive Chairman

No

4/4

Y. Bhg. Laksamana Madya Dato Seri

Ahmad Ramli bin Haji Mohd Nor (B)

Executive Deputy Chairman/

Group Managing Director

No

4/4

Y. Bhg. Datuk Azzat bin Kamaludin

Non-Independent
Non-Executive Director

No

3/4

Mr. David William Berry

Independent
Non-Executive Director

Yes

4/4

Encik Ishak bin Osman**

Independent
Non-Executive Director

Yes

4/4

Encik Abd Malik bin A Rahman***

Independent
Non-Executive Director

Yes

2/2

Notes:
*
Re-designated from Non-Independent Non-Executive Chairman to Executive Chairman on 19 February 2009
** Re-designated from Non-Independent to Independent Director on 1 September 2008
*** Appointed on 1 June 2008

38

Corporate Governance

Information for the Board

The Board is provided with adequate reports in a timely
manner prior to the Board meetings to enable the
Directors to obtain further explanations, where
necessary. These reports provide information on group
performance and major operational, nancial and
corporate issues. Minutes of the Board Committees are
also tabled at the Board meetings for information and
deliberation.
The Board has approved a procedure for the
appointment of independent professional adviser in
appropriate circumstances, at the Companys expense.
Before incurring such professional fees, the Director
concerned must consult with the Executive Deputy
Chairman of the Board or with two other directors, one
of whom is Non-Executive.
Directors have access to all information within the
Company, whether as a full Board or in their individual
capacity, in furtherance of their duties.

The report of the Audit Committee is set out on pages

32 to 35 of the Annual Report.

Nominating Committee
The Board has established a Nominating Committee
consisting of the following non-executive Directors:

Y. Bhg. Tan Sri Dato Che Lodin bin Wok Kamaruddin

(Resigned as Chairman of Nominating Committee on
19 February 2009)

Y. Bhg. Datuk Azzat bin Kamaluddin Chairman

(Appointed as Chairman of Nominating Committee on 19
February 2009)

Encik Abd Malik bin A Rahman

Encik Ishak bin Osman

The functions of the Nominating Committee shall be to:

i)

Recommend candidates for all directorships;

ii)

Recommend
committees;

Appointment and re-election of Directors

In accordance with the Companys Articles of Association,
all newly appointed Directors shall retire from oce but
shall be eligible for re-election in the next Annual
General Meeting subsequent to their appointment. The
Articles further provide that at least one third of the
remaining Directors shall be subject to re-election by
rotation at each Annual General Meeting.
Directors over seventy years of age are required to
submit themselves for re-appointment annually in
accordance with Section 129(6) of the Companies Act,
1965.

BOARD COMMITTEES
Audit Committee
The Audit Committee reviews issues of accounting policy
and presentation for external nancial reporting,
monitors the work of the internal audit function and
ensures an objective and professional relationship is
maintained with the external auditors. The Audit
Committee has full access to both the internal and
external auditors who, in turn, have access at all times to
the Chairman of the Audit Committee.

appointments

to

the

Board

iii) Annually review the required mix of skills and

experience and other qualities, including core
competencies that the Non-Executive Directors
should bring to the Board; and
iv) Implement a process, to be carried out annually for
assessing the eectiveness of the Board as a whole,
the committees of the Board and for assessing the
contribution of each individual Director.
The Board has direct access to the advice and services of
the Company Secretaries who are responsible for
ensuring that all appointments are properly made and all
necessary information is obtained from Directors, both
for the Companys own records and for the purposes of
meeting the requirements of the Companies Act, 1965,
the Listing Requirements of Bursa Securities and other
regulatory requirements.
Upon appointment, each Director will receive
information on the Group which include nancial,
corporate, business and regulatory information and their
role. Information to the Board will be regularly updated
through meetings or written circulars. The Board is

39

encouraged to attend training courses at the Company's

expense to enable the Directors to eectively discharge
their duties.
All Directors of the Company have attended the
Mandatory Accreditation Programme conducted by the
Approved Organiser. The Directors will continue to
undergo other relevant training programmes to further
enhance their knowledge on a continuous basis in
compliance with Practice Note No. 15/2003 of the Listing
Requirements of Bursa Securities on the Continuing
Education Programme.

A summary of the remuneration of the Directors for the

nancial year ended 31 December 2008, distinguishing
between Executive and Non-Executive Directors in
aggregate, with categorisation into appropriate
components and the number of Directors whose
remuneration falls into each successive band is as
follows:

Executive
Directors
(RM)

Non-Executive
Directors
(RM)

Total
(RM)

36,000

165,000

201,000

183,000

183,000

10,380

10,380

5,000

23,000

28,000

234,380

188,000

422,380

Executive
Directors

Non-Executive
Directors

Total

RM0 RM50,000

RM200,000
RM250,000

Total

Fees

Remuneration Committee
The Board has established a Remuneration Committee
consisting of the following Directors:

Y. Bhg. Tan Sri Dato Che Lodin Bin Wok Kamaruddin

Chairman

Encik Ishak bin Osman

Encik Abd Malik bin A Rahman

Salary & Bonus

Employee
Provident Fund
Contribution
Meeting Allowance

The terms of reference for the Committee are to:

i)

ii)

Total

Directors Remuneration

Recommend to the Board the level of remuneration

sucient to attract and retain directors;
Recommend to the Board, the remuneration of
Executive Directors in all its forms, drawing from
outside advice as necessary;

iii) Recommend to the Board, the level remuneration of

Non-Executive Directors to reect the experience
and level of responsibilities undertaken by the
particular Non-Executive Director concerned; and
iv) Review the level of remuneration of senior executive
management team.
Components of remuneration are structured so as to
link rewards to corporate and individual performance, in
the case of the Executive Director. In the case of NonExecutive Directors, the level of remuneration reects
the experience and level of responsibilities undertaken
by the particular Non-Executive Director.

40

Corporate Governance

INVESTOR AND SHAREHOLDER RELATIONS

The Group recognises the importance of timely and
thorough dissemination of information to shareholders.
In this regard, the Group strictly adheres to the
disclosure requirements of Bursa Securities and the
Malaysian Accounting Standards Board. The Annual
Report has comprehensive information pertaining to the
Group, while various disclosures on quarterly and annual
results provide investors with nancial information.
The Annual General Meeting is the principal forum for
dialogue with the shareholders. Notices of the Annual
General Meeting and the Annual Reports are sent to
shareholders at least twenty-one (21) days before the
date of the Annual General Meeting.

Before the nancial statements were drawn up, the

Board has taken the necessary steps to ensure that the
Group had adopted all the applicable accounting policies
consistently, and that the policies are supported by
reasonable and prudent judgements and estimates. All
accounting standards, which the Board considers to be
applicable, have been followed, subject to any
explanations and material departures disclosed in the
notes to the nancial statements.
The role of the Audit Committee in reviewing and
reporting of the nancial information of the Group is
outlined in the Report of the Audit Committee in the
Annual Report.

Relationship with the Auditors

At each Annual General Meeting, the Board encourages
shareholders to participate in the question and answer
session pertaining to the business activities of the Group.
The Group Managing Director is available to respond to
shareholders questions during the meeting. Where
appropriate, the Chairman will undertake to provide a
written answer to any signicant question, which cannot
be readily answered. The Share Registrar is available to
attend to matters relating to shareholders interests.

The Board has established a formal and transparent

relationship with the external auditors. The appointment
of the external auditors is subject to the approval of
shareholders at the Annual General Meeting whilst their
remuneration is determined by the Board. The roles of
both the external and internal auditors are further
described in the Audit Committee Report.

Statement of Internal Control

ACCOUNTABILITY AND AUDIT
Financial Reporting
In presenting the annual nancial statements and
quarterly announcements of results to the shareholders,
the Board aims to present a balanced and
understandable assessment of the Groups position and
prospects.

The information on the Groups internal control is

presented in the Statement on Internal Control in the
Annual Report.