1

INTRODUCTION
The Board of Directors (“the Board”) of Melati Ehsan Holdings Berhad (“the Company” or “Melati”) regard corporate governance as important to the success of Melati’s business.

Accordingly, all Board members are expected to act professionally; uphold the core values of integrity in discharging their fiduciary duties and responsibilities; ensure that the principles of good governance are practiced in its business dealings with its stakeholders; make a positive contribution to the Board performance; and to give sufficient time and attention to the affairs of the Company.

2

PURPOSE
This Board Charter sets out the role, functions, composition, operation and processes of the Board, is intended to guide all Board members in understanding their duties and responsibilities as Board members in connection with the principles and practices of the Malaysian Code on Corporate Governance (“MCCG”).

3 BOARD STRUCTURE
3.1

Composition and Board Balance
The Board shall review its composition from time to time to ensure that it consists of qualified individuals with diverse set of skills, experience and knowledge necessary and appropriate to govern the Company and facilitate objectivity in its decision making for the best interest of the Company.

The Constitution of the Company provides for a minimum of two (2) directors and a maximum of 12 directors. At any one time, at least two (2) directors or one-third (1/3) of the Board, whichever is higher, shall be Independent Directors as defined in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The tenure of an independent director does not exceed a cumulative term limit of nine years. If the board intends to retain an independent director beyond nine years, it should justify and seek annual shareholders’ approval. On the other hand, when the board continues to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process.

3.2

Appointments and Re-election
The appointment of a new Director is a matter for consideration and decision by the full Board, upon appropriate recommendation from the Nomination Committee (“NC”). In making these recommendations, the NC shall consider the required mix of skills, experience and diversity, including gender, where appropriate, which the Director bring to the Board.

Director retirement and re-election shall be carried out in accordance with the Company’s Constitution and requirements of the law. The Constitution of the Company provides that every newly appointed Director be subjected to re-election at the immediate Annual General Meeting (“AGM”) following his appointment. Further, one third (1/3) of the Board shall retire from office and be eligible for re-election at every AGM, and all the Directors shall submit themselves for re-election at least once every three (3) years.

3.3

Criteria and Sourcing
In identifying the candidates for the Board and senior management, the Board will consider the recommendations from its existing board members, management or major shareholders as well as independent sources.

Appointment of board and key senior management will be made based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender.

3.4

New Directorship
All Board members shall notify the Chairman of the Board before accepting any new directorship. The notification shall include an indication of time that will be spent on the new appointment.

The Chairman shall also notify the Board if he has any new directorship or significant commitments outside the Company.

4 ROLE AND RESPONSIBILITIES
  4.1

Responsibilities of the Board
Board should objectively discharge their duties and responsibilities at all times in the interests of the Group and to keep abreast of its responsibilities and of the conduct, business activities and development of the Group.

In meeting the goals and objectives of the Group, the Board should, amongst others:

i. Promote good corporate governance culture within the company which reinforces ethical, prudent and professional behavior;
ii. Review, challenge and decide on Management’s proposals for the Group, and monitor their implementation;
iii. Review and adopt the overall strategic plans and programmes for the Company and Group to ensure that they support long-term value creation and take into account strategies on economic, environmental and social considerations underpinning sustainability;
iv. Oversee and evaluate the conduct of business of the Company and Group to assess Management’s performance in order to determine whether the Group’s business is being properly managed;
v. Ensure that there is a sound framework for internal controls and risk management;
vi. Identify principal risks and ensuring the implementation of appropriate systems to manage these risks;
vii. Set the risk appetite within which the board expects management to operate and ensure that there is an appropriate risk management framework to identify, analyse, evaluate, manage and monitor significant financial and non-financial risks;
viii. Manage succession planning including appointing, training, fixing the compensation and where appropriate, replacing senior management;
ix. Develop and implement an investor relations programme or shareholder communication policy for the Company;
x. Review the adequacy and the integrity of the management information and internal control systems of the Company and Group; and
xi. Ensure that the measures provided in the Group’s Anti-Corruption Measures and Policies (“ACMP”) are executed.
4.2

Matters Reserved for the Board
The following are matters which are specifically reserved for the Board:

i. Approval of financial results;
ii. Declaration of dividend and dividend policy;
iii. Related party transactions;
iv. Material acquisitions and disposition of assets not in the ordinary course of business;
v. Approval of corporate plans and programmes;
vi. Approval of new ventures and investments in capital projects; and
vii. Board and management authority levels.
4.3

Chairman and Managing Director (“MD”)
Principally, the Board shall ensure a balance of power and authority between the Chairman and MD with a clear division of responsibility between the running of the Board and the Company’s business respectively. However, the Board may consider combining the positions of Chairman and MD, when needed in the interest of the shareholders and the Group.

The responsibilities of the Chairman, amongst others, are as follows:-

i. Monitor the workings of the Board, especially the conduct of Board meetings to ensure that no Board member, whether executive or non-executive, dominates the discussion, and that appropriate discussion takes place and that relevant opinion among the Board members are forthcoming;
ii. Ensure that all relevant issues for the effective running of the Company’s businesses are on the agenda;
iii. Ensure that quality information to facilitate decision-making is delivered to Board members on a timely basis;
iv. Encourage all Directors to play an active role in Board activities;
v. Chair general meetings of shareholders and to ensure effective communication with shareholders and relevant stakeholders; and
vi. Liaise with the MD and the Company Secretary on the agenda for Board meetings;

The responsibilities of the MD, amongst others, are as follows:-

i. Acts as the conduit between the Board and the Management in ensuring the success of the Company’s governance and management functions;
ii. Has the executive responsibility for the day-to-day operation of the Group’s businesses and to ensure the efficiency and effectiveness of the operation for the Group;
iii. To supervise heads of divisions and departments who are responsible for all functions contributing to the success of the Group;
iv. To implement the policies, corporate strategies and decisions adopted by the Board;
v. To assess business opportunities which are of potential benefit to the Group; and
vi. To bring material and other relevant matters to the attention of the Board in an accurate and timely manner.
4.4

Responsibilities of Senior Independent Director (“SID”)
When the Board appoints a SID, the SID shall act as:

a sounding board for the Chairman;
an intermediary for other directors when necessary; and
the point of contact for shareholders and other stakeholders on corporate governance issues.
4.5

Independent Director
The primary responsibility of Independent Directors is to ensure effective check and balance in the Board by:

i. Bringing independent and objective judgement to the Board in order to achieve objectivity by providing an independent view and constructively challenging business strategy and direction of the group;
ii. Keeping abreast of current industry issues and ensure competency; and
iii. Mitigating risk of any possible conflict of interest and undue influence in the Board.
4.6

Board Committees
The Board may from time to time establish Committees as is considered appropriate to assist in carrying out its duties and responsibilities. The Board delegates certain functions to the following Committees to assist in the execution of its responsibilities:

i. Executive and Risk Management Committee;
ii. Audit Committee;
iii. Nomination Committee; and
iv. Remuneration Committee.

Save for the Executive and Risk Management Committee, Independent Non-Executive Directors play a leading role in these Committees. The Management and third parties are co-opted to the Committees as and when required.

The Committees shall operate under clearly defined terms of reference. The Committees are authorised by the Board to deal with and to deliberate on matters delegated to them within their terms of reference.

The Chairman of the respective Committees reports to the Board on the outcome of the Committee meetings. The ultimate responsibility for the final decision on all matters deliberated in these Committees, however, lies with the entire Board. Details of the membership and a summary of the terms of reference of each Committee appointed by the Board are published in the Annual Report.

5

BOARD MEETINGS
The Board shall conduct at least four (4) scheduled meetings annually, with additional meetings to be convened as and when necessary.

A full agenda of the meeting and all Board papers, including complicated issues or specific matters, would be distributed to all Directors on a timely basis prior to the scheduled Board meetings to ensure Directors are well informed and have the opportunity to seek additional information and clarification, should such a need arise.

Additional Board meeting can be convened at the request of any Director by giving all Directors 7 days’ notice in writing. A meeting may, with the consent of all Members, be convened with shorter notice.

Each Board Members shall attend at least half of the total Board meetings held in each financial year or such other percentage as may be prescribed by the Listing Requirements.

Heads of the respective division units and relevant Management personnel may be invited to attend the Board meetings as and when the need arises.

To facilitate robust Board discussions, the Company Secretary should ensure that Directors are provided with sufficient information and time to prepare for Board meetings. Board meeting papers are, to the extent feasible, provided/made available at least 7 days prior to each meeting to all members of the Board so that they have sufficient time to read and understand the information and obtain further information, clarification or explanation, if needed.

All meeting minutes shall be confirmed by the Board Members to ensure that the minutes of meetings accurately reflect the deliberations and decisions of the Board.

Where necessary, the services of other senior management or external consultants will be arranged to brief and help the Directors clear any doubt or concern.

6

FINANCIAL REPORTING
In presenting the annual financial statements and quarterly announcements to the shareholders, including other price sensitive public reports and reports submitted to the authorities, the Board aims to present a balanced and understandable assessment of the Group’s position and prospects.

The Board ensures that the financial statements are prepared in accordance with applicable approved Financial Reporting Standards and the provisions of the Companies Act 2016 so as to give a true and fair view of the financial position and state of affairs of the Group and the Company.

The Company’s practice is to announce to Bursa Securities its quarterly financial results as early as possible within two months after the end of each quarterly financial period.

7

REMUNERATION
Effective remuneration approach is important to attract, retain and motivate Directors to run the Company successfully.

The Remuneration Committee is delegated with the responsibility by the Board to implement the remuneration policies and procedures and recommend to the Board the remuneration packages of the Executive Directors and Non-Executive Directors in all its forms, drawing from outside advice as appropriate.

The remuneration packages of the Executive Directors are structured to link rewards to corporate and individual performance whilst the remuneration of Non-Executive Directors shall reflect the contribution and level of responsibilities undertaken by these Directors.

All Board Members will be paid a fee as remuneration. Directors’ fees which are subject to the approval of the shareholders, shall be fixed in sum and not be commission or on percentage of profits and revenue.

8

PERFORMANCE APPRAISAL
Regular reviews of directors’ effectiveness and performance are important for governance improvement of the Board. The Board reviews and evaluates individual directors’ performance, its own performance and the performance of its Committees at least annually. When assessing its performance, the Board shall also evaluate its performance vis-à-vis the provisions in this Board Charter. The Board shall disclose how the assessment is carried out and its outcome.

All Board related performance appraisal shall be administered and conducted by the Nominating Committee who shall then report back to the Board. Based on the result of appraisal, the Nominating Committee should assist the Board to undertake assessment of the training needs of each Board Member and recommend the appropriate educational/training programmes to the respective Board members to equip themselves with the relevant knowledge.

9

DIRECTORS’ TRAINING & CONTINUING EDUCATION
In addition to the Mandatory Accreditation Programme as required by Bursa Securities, the Directors shall continue to update their knowledge and enhance their skills through appropriate continuing education programmes. This will enable Directors to effectively discharge duties and sustain active participation in the Board deliberations.

The Board shall assess the training needs of the Directors from time to time.

Company Secretary, Internal and External Auditors may brief the Board on changes in the legislative, regulatory or industry framework which impact the Company. However, such briefings are not a substitute for the director trainings for seeking continuous knowledge of the changes in the market regulations.

10

COMPANY SECRETARY
The Board appoints the Company Secretary, who plays an important advisory role, and ensures that the Company Secretary fulfils the functions for which he/she has been appointed. The removal of the Company Secretary shall be a matter for the Board as a whole.

The Company Secretary is accountable to the Board through the Chairman of the Board and Committees on all governance matters.

The Company Secretary is responsible for ensuring that Board procedures are followed, that the applicable rules and regulations for the conduct of the affairs of the Board are complied with and for all matters associated with the maintenance of the Board or otherwise required for its efficient operation.

The Board members have unlimited access to the professional advice and services of the Company Secretary.

The roles and responsibilities of the Company Secretary include, but not limited to the following:

i. Advise the board on its roles and responsibilities;
ii. Monitor corporate governance developments and assist the Board in applying governance practices to meet the compliance needs and stakeholders’ expectations;
iii. Facilitate the orientation of new Directors and assist in Director training and development;
iv. Update the Board on regulatory requirements and disclosures requirements, and assist in understanding of regulations such as securities regulations, listing requirements and companies act;
v. Manage board and board committee meeting logistics, attend and record minutes of board and board committee meetings as well as facilitate board communications;
vi. Manage processes pertaining to the general meetings; and
vii. Serve as a focal point for stakeholders’ communication and engagement on corporate governance issues.
11

INVESTOR RELATIONS AND SHAREHOLDER COMMUNICATION
The Board shall place great importance in ensuring the high standards of transparency and accountability in its communication to shareholders, as well as to potential investors, analysts and the public. The shareholders shall be informed of all material matters affecting the Company and Group. The ways of communication to shareholders and investors, amongst others, are as follows:

i. The Board will leverage its corporate website to report its financial results and material developments to the Exchange, its shareholders and other stakeholders in an open, timely and comprehensive manner;
ii. The Board will provide the media an opportunity to receive an update from the Board on the proceedings at the meetings and to address any queries or areas of interest of the media through press conference after each Company’s AGM and/or Extraordinary General Meeting; and
iii. The Board will meet with its stakeholders through appropriate platform and channel to inform and obtain feedback from stakeholders.

The AGM is the principal forum for dialogue with shareholders that provides an important opportunity for effective communication with, and constructive feedback from, the Company’s shareholders. The Chairman should encourage shareholders to participate in the question and answer session at the AGM. Where necessary, the Chairman shall provide a written answer to any significant question that cannot be readily answered at the meeting.

12

RELATIONSHIP WITH OTHER STAKEHOLDERS

  12.1

Employees
The Board acknowledges that the employees are invaluable assets of the Company and play a vital role in achieving the vision and mission of the Company.

The Company adopts comprehensive and documented policies and procedures with respect to occupational safety and health with the objective of providing a safe and healthy working environment for all employees.

  12.2

Environment
The Board acknowledges the need to safeguard and minimise the impact to the environment in the course of achieving the Company’s vision and mission.

The Company adopts comprehensive and documented policies and procedures as part of its commitment to protect the environment and contribute towards sustainable development.

The Company supports initiatives on environmental issues.

  12.3

Social Responsibility
The Board acknowledges that the Company should play a vital role in contributing towards the welfare of the community in which it operates.

The Company adopts comprehensive and documented policies and procedures towards responsible marketing and advertising of its products and services.

The Company supports charitable causes and initiatives on community development projects.

13

ACCESS TO INFORMATION AND INDEPENDENT ADVICE
The Directors, collectively or individually, may seek independent professional advice and information in the furtherance of their duties at the Company’s expense, so as to ensure the Directors are able to make independent and informed decisions.

All Board Members shall have full and unrestricted access to:

  i. Complete, adequate and timely information of the Group; and
  ii. The resources required to perform their duties.
14

GENERAL MEETING
The Board will ensure that notice for Annual General Meeting (“AGM”) is given to the shareholders at least 28 days prior to the meeting. Notice for other meetings such as Extraordinary General Meeting will be conducted in accordance to the provision in the constitution. The Chairs of the Audit Committee, Nominating Committee and other committees provide meaningful response to questions addressed to them.

The Board will leverage technology to facilitate voting in absentia and remote shareholders’ participation at general meetings when appropriate systems are available, proven, feasible and suitable for the Company to adopt this practice.

15

CODE OF ETHICS AND CONDUCT
The Code of Ethics and Conduct (“the Code”) is to be observed by all Directors and employees of the Group. The Board will review the Code regularly to ensure that it continues to remain relevant and appropriate.

16

REVIEW OF THE BOARD CHARTER
The Board shall review this Charter annually and update in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities. Changes of the provisions in the Charter shall be adopted by the Board with a formal resolution.

17

PUBLICATION OF BOARD CHARTER
This Charter shall be available to all Board Members and Key Senior Management. A copy of this Charter and terms of reference of the Board Committee shall be published on the Group’s website.