• Tuesday , 23 May 2017

Corporate Governance Statement

The Board of Eversendai Corporation Berhad (the “Board”) is committed to upholding the practices of good corporate governance throughout the Group as prescribed in the Malaysian Code on Corporate Governance 2012 (the “Code”). The Board believes good corporate governance supports the enhancement of shareholders’ value and sustainable growth. The Board is pleased to share the manner in which the Principles of the Code have been applied within the Group in respect of the financial year ended 31 December 2015 and the extent to which the Company has complied with the recommendations of the Code during the financial year ended 31 December 2015 except where otherwise stated.

 

Board of Directors

1. Roles and Responsibilities of the Board

The Board is collectively responsible for the success of the Group. The Board’s roles and responsibilities include without limitation to the following:

  • Reviewing and adopting strategic business plan for the Group’s effective business performance;
  • Overseeing the conduct of the Group’s business to evaluate whether the business is being effectively managed;
  • Identifying principal risks and ensuring the implementation of appropriate systems to effectively manage and monitor identified risks;
  • Ensuring that all candidates appointed to senior management positions are of sufficient calibre and that there are programmes in place to enable orderly succession of senior management;
  • Ensuring effective communication with the shareholders and other stakeholders;
  • Reviewing the efficacy of the Group’s systems of internal control and of management information, including systems for compliance with applicable laws, regulations, rules, directives and guidelines;
  • Developing corporate objectives, policies and strategies;
  • Reviewing and approving acquisitions and disposals of undertakings and properties of substantial value and major investments.

 

The Board has adopted a Charter, which sets out, amongst others, the Board’s strategic intent and outlines the Board’s roles and responsibilities. The Charter is a source reference and primary induction literature for existing and prospective members of the Board.

 

The Board Charter also sets out the Code of Ethics and Conduct that the members of the Board must observe in the performance of their duties.

 

The Board Charter is subject to review periodically.

 

The Board Charter is available for reference at the Group’s website at www.eversendai.com.

 

2Board Balance and Independence

There are eight (8) members on the Board, comprising the Executive Chairman (who is also the Group Managing Director), four (4) Executive Directors and three (3) Independent Non-Executive Directors. The profiles of the members of the Board are provided for on pages xx to xx in the Annual Report.

The tenure of all three (3) Independent Non-Executive Directors is less than nine (9) years, which is in accordance with Recommendation 3.2 of the Code. The Board comprises members with diverse professional backgrounds, skills, extensive experience and knowledge in the areas of engineering, steel fabrication, information technology, finance, business, general management and strategy required for the successful direction of the Group.

With its diversity of skills, the Board has been able to provide clear and effective collective leadership to the Group and has brought informed and independent judgment to the Group’s strategy and performance so as to ensure that the highest standards of conduct and integrity are always at the core of the Group. None of the Independent Non-Executive Directors participate in the day-to-day management of the Group.

The presence of the Independent Non-Executive Directors is essential in providing unbiased and independent opinions, advice and judgements to ensure that the interests, not only of the Group, but also of shareholders, employees, customers, suppliers and other communities in which the Group conducts its business are well represented and taken into account.

Encik Mohammad Nizar bin Idris is the Senior Independent Non-Executive Director, to whom concerns relating to the affairs of the Group may be conveyed.

The Board is mindful of Recommendation 3.5 of the Code which states that if the Chairman of the Board is not an Independent Director, then the Board should comprise a majority of Independent Directors to ensure balance of power and authority on the Board. In this regard, the Nomination Committee will be tasked to identify, assess and recommend to the Board for approval suitable candidate(s) to fill in the position of Independent Director.

 

3.Roles and Responsibilities of the Chairman and Group Managing Director

 The Code recommends that there should be clear division of responsibilities at the head of the company to ensure that there is proper balance of power and authority.

Although the roles of the Chairman of the Board and the Group Managing Director are combined, the Board is of the view that there is a strong independent element on the Board and that there are adequate measures and controls to ensure that there is balance of power and authority, such that no individual has unfettered powers of decision. The more significant measures and controls are summarised below.

All Executive and Non-Executive Directors have unrestricted and timely access to all relevant information necessary for informed decision-making. The Executive Chairman encourages participation and deliberation by Board members to tap their collective wisdom and to promote consensus building as much as possible.

Matters which are reserved for the Board’s approval and delegation of powers to the Board Committees, Group Managing Director, Chief Executive Officer and Management are expressly set out in an approved framework on limits of authority. Business affairs of the Group are governed by the Group’s Discretionary Authority Limits and manuals on policies and procedures. Any non-compliance issues are brought to the attention of the Management, Audit Committee and/or the Board, for effective supervisory decision-making and proper governance.

As the Group is expanding and its business growing, the division of authority is constantly reviewed to ensure that Management’s efficiency and performance remain at its level best.

 

4.Whistle Blower Policy and Procedures

As part of the Company’s commitment to achieving and maintaining high standards with regards to the behaviour at work, the Company has adopted a whistle blower policy and procedures that are applicable throughout the Group.

Under the whistle blower policy, all employees and stakeholders are encouraged to report genuine concerns about unethical behaviour, malpractices, illegal acts or failure to comply with regulatory requirements without fear of reprisal.

All protected disclosures should be addressed to the Chairman of the Board or the Chairman of the Audit Committee of the Company.

 

5.Board Meetings and Supply of Information

The Board meets quarterly with additional meetings convened as and when the Board’s approval and guidance is required. Upon consultation with the Chairman and Group Managing Director, due notice shall be given of proposed dates of meetings during the financial year and agenda and matters to be tabled to the Board.

Four (4) Board meetings were held during the financial year ended 31 December 2015 and the details of attendance of each Director are as follows:

 

Director Designation Number of meetings attended  

Percentage during the Year

 

Tan Sri Nathan a/l Elumalay

Executive Chairman & Group Managing Director 4 out of 4 100%
Nadarajan Rohan Raj  

Executive Director & Chief Executive Officer – Group Structural Steel & Plant Construction

4 out of 4 100%
Narla Srinivasa Rao  

Executive Director & COO – Group Structural Steel & Plant Construction

 out of 4 100%
Narishnath a/l Nathan  

Executive Director & Chief Executive Officer, Group Oil & Gas

4 out of 4 100%
S Sunthara Moorthy a/l S Subramaniam

 

Executive Director – Corporate Affairs 4 out of 4 100%
Mohammad Nizar bin Idris

 

 

Senior Independent Non-Executive Director

4 out of 4 100%
Tan Sri Rastam bin Mohd Isa  

Independent Non-Executive Director

4 out of 4 100%
Datuk Ng Seing Liong  

Independent Non-Executive Director

4 out of 4 100%

 

The Board is supplied with and assured of full and timely access to all relevant information to honour its duties effectively. A set of Board papers (together with a detailed agenda in the case of a meeting) is furnished to the Board members in advance of each Board meeting or Directors’ Circular Resolution for consideration, guidance and where required, for decision.

In addition to board meeting update papers and reports, the Board is also furnished with ad-hoc reports to ensure that they are appraised on key business, financial, operational, corporate, legal, regulatory and industry matters; as and when the need arises.

The Directors also have direct access to the advice and services of the Head of Internal Audit & Risk and Company Secretary in addition to other members of Senior Management. The Board is constantly advised and updated on statutory and regulatory requirements pertaining to their duties and responsibilities. The Board may, at the Group’s expense, seek external and independent professional advice and assistance from experts in furtherance of their duties.

 

6.Appointments to the Board

The Nomination Committee comprising of three Independent Directors makes independent recommendations for appointments to the Board. In making these recommendations, the Nomination Committee assesses the suitability of candidates, taking into account the required mix of skills, knowledge, expertise and experience, professionalism, integrity, gender diversity, competencies and other qualities, before recommending them to the Board for appointment. The Nomination Committee will take steps to ensure that women candidates are sought for appointment to the Board.

 

7. Re-election of Directors

The Company’s Articles provide that one-third (1/3) of the Directors are subject to retirement by rotation at every Annual General Meeting but are eligible for re-election provided always that all Directors  shall retire from office at least once in three (3) years.

Pursuant to Section 129(6) of the Companies Act, 1965, the office of a director of or over the age of seventy (70) years becomes vacant at every Annual General Meeting unless he is re-appointed by a resolution passed at such an Annual General Meeting of which no shorter notice than that required for the Annual General Meeting has been given.

 

8. Training and Development of Directors

The Board is always encouraged to attend seminars, conferences and briefings in order to enhance its skills and knowledge and to keep abreast of the latest developments in the industry and marketplace.

Orientation and familiarisation programmes which include visits to the Group’s business operations and meetings with key management are, where appropriate, organised for newly-appointed Directors to facilitate their understanding of the Group’s operations and businesses. Regular talks are scheduled on various topics for the Board and these sessions are held together with Senior Management in order to encourage open discussion and comments.

Directors evaluate their training needs on a continuous basis, by determining areas that would best strengthen their contributions to the Board. Regular briefings/updates (some by external advisers) on various subjects including the following are held at Board meetings:

  • Market and industry;
  • Regulatory and legal developments;
  • Information on significant changes in business risks and procedures instituted to mitigate such risks;
  • Corporate matters or new acquisitions by the Group; and
  • New developments in law, regulations and Directors’ duties and obligations.

During the financial year under review, the Directors participated in various programmes to enhance their understanding of specific industry and market issues and trends and to improve their effectiveness in the boardroom. These sessions have also been attended by invited members of the senior leadership team, with the objective to improve board management dynamics.

The training programmes, seminars and/or conferences attended by the Directors during the financial year are as stated on page 52 and 53 of our 2015 Annual Report.

 

9. Company Secretary 

The Company Secretary takes charge of ensuring overall compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”) and Companies Act, 1965, and other relevant laws and regulations. In performing this duty, the Company Secretary shall carry out, among others, the following tasks:

  • Ensuring that all appointments to the Board and Committees are properly made;
  • Maintaining records for the purposes of meeting statutory obligations;
  • Ensuring that obligations arising from the MMLR or other regulatory requirements are met; and
  • Facilitating the provision of information as may be requested by the Directors from time to time

 

10. Board Committees

The Board delegates certain responsibilities to the respective Committees of the Board which operate within clearly-defined terms of reference. These Committees have the authority to examine particular issues and report to the Board with their proceedings and deliberations. On Board reserved matters, Committees shall deliberate and thereafter state their recommendations to the Board for its approval.

During Board meetings, the Chairmen of the various Committees provide summary reports of the decisions and recommendations made at the respective Committee meetings and highlight to the Board any further deliberation that is required at Board level. These Committee reports and deliberations are incorporated into the minutes of the Committees and Board meetings.

The Company has three (3) principal Board Committees:

(a)   Audit Committee

The composition, terms of reference and a summary of the activities of the Audit Committee are set out separately in the Audit Committee Report.

 

(b)   Nomination Committee

The Nomination Committee of the Board consists of the following Independent Non-Executive Directors:

  • Mohammad Nizar bin Idris (Senior Independent Non-Executive Director and Chairman of the Nomination Committee);
  • Datuk Ng Seing Liong; and
  • Tan Sri Rastam Mohd Isa.

The Nomination Committee has been entrusted with the responsibility of proposing and recommending new nominees to the Board and the Board Committees as well as assessing Directors on an on-going basis.

The functions of the Nomination Committee include:

  • formulating the nomination, selection and succession policies for members of the Board and Board Committees; and
  • reviewing and recommending to the Board:

(i)     the optimum size of the Board;

(ii)    the required mix of skills, knowledge, expertise, experience and other qualities, including core competencies of Non- Executive Directors; and

(iii)   appointment to, and membership of, other Board committees.

In addition, the Nomination Committee has the function of assessing:

  • the transparency of procedures for proposing new nominees to the Board and Committees of the Board;
  • the effectiveness of the Board as a whole and the contribution of each individual Director and Board Committee member; and
  • whether the investments of the minority shareholders are fairly reflected through Board representation.

The Nomination Committee meets as and when necessary and can also make decisions by way of circular resolutions. The Nomination Committee had, for the financial year, reviewed and deliberated on the proposed re-nomination of the directors who are retiring at the Thirteen Annual General Meeting of the Company. The Nomination Committee had also, in accordance with Recommendation 2.1 of the Code, deliberated on the proposed appointment of the Senior Independent Non-Executive Director as the Chairman of the Nomination Committee.

 

(c)   Remuneration Committee

The Remuneration Committee of the Board consists of the following Directors:

  • Tan Sri Rastam Mohd Isa (Independent Non-Executive Director and Chairman of the Remuneration Committee);
  • Mohammad Nizar bin Idris (Independent Non-Executive Director);
  • Nadarajan Rohan Raj (Executive Director and Chief Executive Officer, Group Structural Steel and Plant Construction).

The Remuneration Committee is entrusted with the following responsibilities:

  • Recommending to the Board the policy and framework for Directors’ remuneration as well as the remuneration and terms of service of the Executive Directors;
  • Evaluating the performance and reward of the Executive Directors, including ensuring performance targets are established to achieve alignment with the interests of shareholders of the Company, with an appropriate balance between long and short term goals;
  • Designing and implementing an evaluation procedure for Executive Directors; and
  • Reviewing, on a yearly basis, the individual remuneration packages of Executive Directors and making appropriate recommendations to the Board.

The Remuneration Committee meets as and when necessary and can also make decisions by way of circular resolutions. The Remuneration Committee had, for the financial year, reviewed the remuneration packages of the Executive Directors of the Company.

 

Directors’ Remuneration

The objectives of the Group’s policy on Directors’ remuneration are to attract and retain Directors of the calibre needed to run the Group successfully. In Eversendai Corporation Berhad, the component parts of remuneration for the Executive Directors are structured so as to link rewards to corporate and individual performance. In the case of Independent Non-Executive Directors, the level of remuneration reflects the experience, expertise and level of responsibilities undertaken by the Independent Non-Executive Directors.

1. Remuneration Procedures

The Remuneration Committee recommends to the Board the policy and framework of the Directors’ remuneration and the remuneration package for the Executive Directors. In recommending the Group’s remuneration policy, the Remuneration Committee may receive advice from external consultants. It is nevertheless the ultimate responsibility of the Board to approve the remuneration of these Directors.

The determination of the remuneration packages of Independent Non-Executive Directors (whether in addition to, or in lieu of, their fees as Directors), is a matter for the Board as a whole. Individual Directors do not participate in decisions regarding their own remuneration packages.

 

2. Directors’ Remuneration

Directors’ remuneration for the Group is determined at levels which enable the group to attract and retain Directors with the relevant experience and expertise to manage the group effectively.

The details of the remuneration of Directors during the financial year are set out below.

 The aggregate remuneration of the Directors categorised into appropriate components are as follows:

 

Executive Directors

(RM’000)

Non-Executive Directors

(RM’000)

Total

(RM’000)

Fees 216 216
Allowances 2,319 38 2,357
Salaries and other emoluments 9,320 9,320
Bonus, incentives and others 410 410
Employees Provident Fund 268 268
Benefit- in-kind (estimated value) 302 302
     Total 12,619 254 12,873

 

Details of the Directors’ remuneration for the financial year ended 31 December 2015 are disclosed in the financial statements, as set out on page 108 of this Annual Report.

 

Shareholders and Other stakeholders

1Shareholders and Investor Relations

The Board believes that the Group should be transparent and accountable to its shareholders and investors.

In ensuring this, the Company has been actively communicating with its shareholders and stakeholders through the following medium:

  • Release of financial results on a quarterly basis;
  • Press releases and announcements to Bursa Securities and subsequently to the media;
  • Meetings with institutional investors; and
  • Briefing for analysts on a quarterly basis.

The Group’s website www.eversendai.com is upgraded and updated from time to time to provide current and comprehensive information about the Group.

The following are the primary contact persons:

 

For Investor Relations matters:

Meera Selvaratnam

Corporate Communication Manager

Eversendai Corporation Berhad

Contact details:

Tel no.: +603-7733 3300

Email: ir@eversendai.com

 

For Finance related matters:

William Chan

Chief Financial Officer

Contact details:

Tel no.: +603-7733 3300

Email: william@eversendai.com

 

The Group also has in place a Corporate Disclosure Policy, which emphasises on comprehensive, accurate, balanced, clear and timely disclosure of material information to enable informed and orderly decisions by the shareholders and investors.

2. Annual General Meeting (“AGM”)

The AGM is the principal forum for dialogue with all shareholders who are encouraged and are given sufficient opportunity to enquire about the Group’s activities and prospects as well as to communicate their expectations and concerns. Shareholders are also encouraged to participate in the Question and Answer session on the resolutions being proposed or about the Group’s operations in general. Shareholders who are unable to attend are allowed to appoint proxies in accordance with the Company’s Articles to attend and vote on their behalf. The Chairman and the Board members are in attendance to provide clarification on shareholders’ queries. Where appropriate, the Chairman of the Board will endeavour to provide the shareholders with written answers to any significant questions that cannot be readily answered during the AGM. Shareholders are welcome to raise queries by contacting the Company at any time throughout the year and not only at the AGM.

Each notice of a general meeting, which includes any item of special business, will be accompanied by a statement regarding the effect of any proposed resolution in respect of such special business. Separate resolutions are proposed for substantially separate issues at the AGM.

 

 Accountability and Audit

1. Financial Reporting

The Board is committed to providing a clear, balanced and comprehensive account on the financial performance and position of the Group through quarterly and yearly announcements of its results as well as through its comprehensive annual report.

 

2. Statement of Directors’ Responsibility in respect of the Financial Statements

 Company law requires the Directors to prepare financial statements for each financial year which gives a true and fair view of the state of affairs of the Company and of the Group and of the results and cash flows of the Company and the Group for that period.

In preparing the financial statements, the Directors have applied suitable accounting policies and applied them consistently. The Directors have also ensured that all applicable accounting standards have been followed in the preparation of the financial statements.

 

3. Internal Control

 The Board has overall responsibility for the system of internal control which includes financial controls, operational and compliance controls and risk management.

 

The Statement on Risk Management and Internal Control is set out on pages 58 to 61 of this Annual Report.

 

4. Relationship with the Auditors

 The Board, through the Audit Committee, maintains a transparent and professional relationship with the internal and external auditors. The Audit Committee has been explicitly accorded the authority to communicate directly with both the internal and external auditors. From time to time, the auditors would highlight to the Audit Committee and the Board on matters that require the Board’s attention.