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BOARD CHARTER

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BOARD CHARTER
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INTRODUCTION

The Board of Directors of Tek Seng Holdings Berhad (“Tek Seng” or “the Company”) recognises the importance of corporate governance towards the success of the Group’s businesses. The Board strives to follow the principles of the Malaysian Code of Corporate Governance  and this Board Charter has been endorsed by the Board and is subject to annual review to ensure its relevance and compliance.

OBJECTIVES

The objectives of this Board Charter are to ensure that all the directors of Tek Seng acting on behalf of the Company are aware of their duties and responsibilities as Board members and the various legislations and regulations affecting their conducts and that the principles of good corporate governance are applied in all their dealings in respect and on behalf of the Company.

THE BOARD

Role of the Board

1. The responsibilities and limitations of the Board are primarily set out in the Company’s Constitution, the Companies Act, 2016, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Capital Market and Services Act 2007 and the directors and/or shareholders’ resolutions.

2.  The Board decides on matters delegated to the Board Committees and management.

3. The Board oversees the adequacy and effectiveness of the Group’s risk management and systems of internal control.

4. The Board, in discharging its fiduciary and leadership functions assumes amongst others the following roles and responsibilities:

i. Reviewing and approving material investment, acquisitions and disposals of property, plant and equipment.

ii. Reviewing and approving related party transactions.

iii. Reviewing the adequacy of the Group’s internal control policies.

iv. Monitoring compliance with relevant laws & regulations and accounting standards within the corporate and business environment.

v. Reviewing and approving annual financial statements and quarterly financial results.

vi. Developing organizational structure with the necessary succession planning.

Role of Chairman

1. The Chairman ensures Board effectiveness, monitoring the implementation of the Board’s policies and decisions, corporate affairs and overall financial performance of the Group;

2. The Chairman ensures the Management provides accurate, timely and clear information to members of the Board.

3. The Chairman determines and develops the Group's strategy and overall business and commercial objectives;

4.  The Chairman ensures orderly conducts and proceedings of meetings of the Company.

5. The Chairman is the spokesperson of the Company and he facilitates effective communications between the shareholders and the Directors and ensures shareholders have adequate opportunity to air their views and obtain answers to their queries.

6. The Chairman gives full consideration to succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the company, and what skills and expertise are therefore needed on the Board in the future.

Role of the Managing Director

1. The Managing Director leads the management in the operations and has overall responsibility over the operation units and organisational effectiveness;

2. The Managing Director is responsible for the operations of sales and marketing divisions and expansion of the overseas market for the Group;

3. The Managing Director is responsible for maintaining a friendly work environment and develops organisation culture, values and reputation in its markets;

4. The Managing Director assists the Chairman by providing his input in relation to important strategic issues facing the business;

5. The Managing Director reports to the Chairman and regularly updated the Chairman on the business and affairs of the Group.

Role of the Other Executive Directors

1. The Executive Directors assist the Managing Director in the execution of daily operation and short-midterm planning of the Group.

2. The Executive Directors provide guidance and mentoring to the management

3. The Executive Directors develops and maintain staff morale in a motivational working environment whereby all employees are motivated to achieve their goals and objectives.

4. The Executive Directors ensures the efficient and effective administration of all departments and functions.

Role of the Independent Directors (NED)

1. The Independent Directors provide the relevant checks and balances and ensuring corporate governance are applied in the Board’s decision making taking into consideration the interests of the shareholders and other stakeholders.

2. The Independent Directors provide independent views and advice taking into account the interests of the Group, shareholders and other stakeholders in which the Group conducts its business.

Role of Board Committees

The Board has established three (3) Board Committees namely the Audit & Risk Management Committee, Nominating Committee and Remuneration Committee to assist the Board in discharging its responsibilities.

The Board Committees are governed by the following Terms of Reference respectively been approved by the Board:

i. Audit & Risk Management Committee

TERMS OF REFERENCE

Appointment / Composition:

1.  The members of the Committee shall be appointed by the Board.

2.  The Committee shall consist of not less than three (3) members of whom:

a)   all members of the Committee must be Non-Executive Directors with a majority of them  being Independent Directors;

b)   at least one (1) member of the Committee:

i)   must be a member of the Malaysian Institute of Accountants; or

ii)    if he is not a member of the Malaysian Institute of Accountants,

a)    he must have at least three (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 (1) of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967; or

iii)   he fulfils such other requirements as prescribed or approved by Bursa Securities.

c)    all members of the Committee should be financially literate.

3.  No Alternate Director shall be appointed as a member of the Committee.

4. No director who is a former key audit partner of the existing Company’s external auditor shall be a member of the Committee unless his tenure as director of the Company is above three (3) years.

5.  A quorum shall be two (2) members and composed of a majority of Independent Directors.

6. The Chairman of the Committee shall be appointed by the members of the Committee among their numbers who is an Independent Director.

7. The Board must review the term of office and performance of the Committee and each of its members at least once every three (3) years to determine whether such Committee and members have carried out their duties in accordance with their terms of reference.

8. The Board shall, within three (3) months of a vacancy occurring in the Committee which result in the number of members reduced to below three (3), appoint such number of new members as may be required to make up the minimum number of three (3) members.

Meetings

1. Meetings shall be held not less than four (4) times in a year. In addition, the Chairman of the Committee may call a meeting of the Committee if a request is made by any member or  the Company's Executive Chairman of the Group.

2. The Committee may also be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of other directors and employees of the Group, whenever deemed necessary. The Committee should meet with the External Auditors without presence of the executive directors and management at least twice a year.

3. Meeting will be attended by the members of the Committee and the quorum of the meeting is two (2) with a majority of members present must be independent directors. The Company Secretary or any representative of the Secretary shall be the Secretary of the Committee.

4. Participants may be invited from time to time to attend the meeting depending on the nature of the subject under review. These participants may include the General Managers, Division Heads and other representatives of management, where relevant

5. On a continuous basis, the Chairman of the Committee should meet with the senior management, the Internal and External Auditors in order to be kept informed of matters affecting the Company.

Authority

1.  The Committee is authorised by the Board to carry out the duties mentioned below and the Board and Management shall give all assistance that is necessary to enable the Committee to discharge its duties.

2.  The Committee shall, whenever necessary and reasonable for the performance of its duties and in accordance with a procedure to be determined by the Board and at the Company's cost:

a)   have authority to investigate any matter within its terms of reference;

b)   have the resources which are required to perform its duties;

c)   have full and unrestricted access to any information pertaining to the Company;

d)  have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity (if any); and

e)   be able to obtain independent professional or other advice.

3.   The Internal Auditors report directly to the Committee.

Functions and Responsibilities:

The functions and responsibilities of the Committee shall include the following:

1. To discuss and liaise with the External Auditors to ensure the smooth implementation of the audit plan, review and forward the evaluation of the system of internal controls and audit report to the Board;

2. To review the assistance given by employees of the Group to the External Auditors;

3. To review the effectiveness of internal control systems and the findings of the Internal Auditors, if available;

4. To review quarterly report and annual financial statements prior to the approval of the Board, focusing particularly on;

i) changes in or implementation of major accounting policy changes;

ii) significant and unusual events; and

iii) compliance with accounting standards and other legal requirements.

5. To review any related party transactions and conflict of interest situation that may rise within the Company and the Group including any transaction, procedure or course of conduct that raise questions of management integrity;

6. To assess and make recommendations concerning the appointment, re-appointment or resignation of the External Auditors and their remuneration to the Board;

7. To review the adequacy of the scope, functions, competency and resources of the Internal Audit functions and that it has the necessary authority to carry out its work;

8. To assess the performance of the Internal Auditors and to approve any appointment, resignation or termination of the Internal Auditors;

9. To review and verify the allocation of shares options granted to employees pursuant to the Employees Share Option Scheme, if any;

10. To review the statements for inclusion in the Company’s Annual Report namely Management Discussion & Analysis, Corporate Governance Report & Overview Statement, Audit & Risk Management Committee Report and Statement on Risk Management of Internal Control;

11. To consider other topics as defined by the Board.

The Committee shall report to the Board at every quarterly meeting.