DLMI-CG Report
DLMI-CG Report
OUTLINE:
1
SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE
Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing
Requirements.
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the
company.
Practice 1.1
The board should set the company’s strategic aims, ensure that the necessary resources are
in place for the company to meet its objectives and review management performance. The
board should set the company’s values and standards, and ensure that its obligations to its
shareholders and other stakeholders are understood and met.
Application : Applied
Explanation on : The Board has meetings each quarter with the management of the
application of the Company where the management will present the performance and
practice results of the business of the Company which is benchmarked against
the aligned annual budget. In 2017, the management and Board also
discussed sustainability topics such as market development, raw
material cost increases and how to mitigate identified risks, including
enhancing safety, overall productivity and quality issues.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
2
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the
company.
Practice 1.2
A Chairman of the board who is responsible for instilling good corporate governance
practices, leadership and effectiveness of the board is appointed.
Application : Applied
Explanation on : Dato’ Zainal is a respected Chairman who is known to always voice his
application of the views on any issues in an objective manner. He chairs the Board
practice Meetings with a spirit of inclusiveness by encouraging discussions and
eliciting the views of all his Board members. He ensures that there is a
good balance between the time allocated to governance matters and
discussions on business performance and strategies at board
meetings.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
3
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the
company.
Practice 1.3
The positions of Chairman and CEO are held by different individuals.
Application : Applied
Explanation on : The roles of the Chairman and Managing Director are separate and
application of the there is a clear division of responsibilities between them. The
practice Managing Director is primarily responsible for the day to day
management of the business and operations of the Company. The
Chairman is an independent director who has never assumed an
executive position in the Company. On 1st January 2018, Mr Tarang
Gupta succeeded Ms Saw Chooi Lee as the Managing Director.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
4
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the
company.
Practice 1.4
The board is supported by a suitably qualified and competent Company Secretary to provide
sound governance advice, ensure adherence to rules and procedures, and advocate
adoption of corporate governance best practices.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
5
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the
company.
Practice 1.5
Directors receive meeting materials, which are complete and accurate within a reasonable
period prior to the meeting. Upon conclusion of the meeting, the minutes are circulated in a
timely manner.
Application : Applied
Explanation on : For each Board Meeting, the agenda and Board papers are distributed
application of the at least seven days in advance to enable Directors to have sufficient
practice time to review the Board papers and to obtain further explanation or
clarification to facilitate the decision-making process and the
meaningful discharge of their duties.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
6
Intended Outcome
There is demarcation of responsibilities between the board, board committees and
management.
There is clarity in the authority of the board, its committees and individual directors.
Practice 2.1
The board has a board charter which is periodically reviewed and published on the
company’s website. The board charter clearly identifies–
the respective roles and responsibilities of the board, board committees,
individual directors and management; and
issues and decisions reserved for the board.
Application : Applied
Explanation on : The Board has adopted a Board Charter, which sets out the Board’s
application of the strategic intent and outlines the Board’s roles and responsibilities, the
practice vision, mission, shared values and principles, as well as the policies
and strategic development of the Company. The Board Charter
specifies clearly the roles and responsibilities of the Board, the Board
Committees, individual directors and management. The Charter will be
updated in April 2018 to incorporate changes to the Code. The Charter
is available for reference at the Company’s website at
www.dutchlady.com.my.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
7
Intended Outcome
The board is committed to promoting good business conduct and maintaining a healthy
corporate culture that engenders integrity, transparency and fairness.
The board, management, employees and other stakeholders are clear on what is considered
acceptable behaviour and practice in the company.
Practice 3.1
The board establishes a Code of Conduct and Ethics for the company, and together with
management implements its policies and procedures, which include managing conflicts of
interest, preventing the abuse of power, corruption, insider trading and money laundering.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
8
Intended Outcome
The board is committed to promoting good business conduct and maintaining a healthy
corporate culture that engenders integrity, transparency and fairness.
The board, management, employees and other stakeholders are clear on what is considered
acceptable behaviour and practice in the company.
Practice 3.2
The board establishes, reviews and together with management implements policies and
procedures on whistleblowing.
Application : Applied
Explanation on : Under Compass, employees and third party stakeholders have access
application of the to the Speak-Up Procedure, which serves as an avenue for employees
practice and third party stakeholders to voice out their concerns on matters
relating to Compass. The Speak-Up Procedure clearly sets out a well-
defined process upon which Compass-related matters can be raised in
confidence and in good faith.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
9
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Practice 4.1
At least half of the board comprises independent directors. For Large Companies, the board
comprises a majority independent directors.
Application : Departure
Explanation on :
application of the
practice
Alternative:
Currently the board consists of 3 independent and 4 non-independent
directors. The Company aims to have an equal number of independent
and non-independent directors by 2020.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : The Board shall consist of an equal number of independent and non-
independent directors
Timeframe : Within 2 years
10
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Practice 4.2
The tenure of an independent director does not exceed a cumulative term limit of nine years.
Upon completion of the nine years, an independent director may continue to serve on the
board as a non-independent director.
If the board intends to retain an independent director beyond nine years, it should justify and
seek annual shareholders’ approval. If 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.
Application : Departure
Explanation on :
application of the
practice
Explanation for : Mr. Boey Tak Kong and Mr. Foo Swee Leng, two of the Independent
departure Non-Executive Directors, have served the Board for more than nine
years as Independent Directors.
Mr. Foo Swee Leng will not seek re-election at the forthcoming AGM.
As regards Mr. Boey Tak Kong, the Board has decided to seek
shareholders’ approval to retain him as an independent director via a
normal voting process.
Since January 2018, the Company has seen the following changes to
the Board:
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Board as set out above
- The specific financial expertise and governance insights that
Mr. Boey Tak Kong brings to the Board
- The search for candidates with the relevant and requisite
experience will take time.
Alternative:
Mr. Foo Swee Leng will not seek re-election at the forthcoming AGM.
The Board has decided to seek shareholders’ approval to retain Mr.
Boey Tak Kong as an independent director via a normal voting process.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : Mr Boey Tak Kong will retire at the next AGM in 2019. Thereafter, if
the Board intends to retain an independent director beyond nine
years, it will justify and seek annual shareholders’ approval. If the
Board continues to retain the independent director after the twelfth
year, the Board will seek annual shareholders’ approval through a two-
tier voting process.
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Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Explanation on :
adoption of the
practice
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Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Practice 4.4
Appointment of board and senior management are based on objective criteria, merit and with
due regard for diversity in skills, experience, age, cultural background and gender.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
14
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Practice 4.5
The board discloses in its annual report the company’s policies on gender diversity, its
targets and measures to meet those targets. For Large Companies, the board must have at
least 30% women directors.
Application : Departure
Explanation on :
application of the
practice
Explanation for : At present, due to the recent Board changes (due to global
departure restructuring of the parent company), the Board does not achieve a
30% female representation.
The Board aims to have 30% female representation within the coming
years. The Company’s prime objective, however, is to achieve a strong
Board and will select new appointment based on overall merit.
Alternative:
The Board aims to have 30% female representation within the coming
years.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : 30% of the Board comprise of female directors
15
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Practice 4.6
In identifying candidates for appointment of directors, the board does not solely rely on
recommendations from existing board members, management or major shareholders. The
board utilises independent sources to identify suitably qualified candidates.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
16
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into
account diverse perspectives and insights.
Practice 4.7
The Nominating Committee is chaired by an Independent Director or the Senior Independent
Director.
Application : Applied
Explanation on : The Chairman of the Nomination Committee is Mr. Foo Swee Leng
application of the who is an Independent Non-Executive Director.
practice
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
17
Intended Outcome
Stakeholders are able to form an opinion on the overall effectiveness of the board and
individual directors.
Practice 5.1
The board should undertake a formal and objective annual evaluation to determine the
effectiveness of the board, its committees and each individual director. The board should
disclose how the assessment was carried out and its outcome.
For Large Companies, the board engages independent experts periodically to facilitate
objective and candid board evaluations.
Application : Departure
Explanation on :
application of the
practice
Alternative:
Internally conducted annual assessment on Board effectiveness.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : To carry out a review on Board effectiveness using external
consultants on a periodic basis.
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Intended Outcome
The level and composition of remuneration of directors and senior management take into
account the company’s desire to attract and retain the right talent in the board and senior
management to drive the company’s long-term objectives.
Remuneration policies and decisions are made through a transparent and independent
process.
Practice 6.1
The board has in place policies and procedures to determine the remuneration of directors
and senior management, which takes into account the demands, complexities and
performance of the company as well as skills and experience required. The policies and
procedures are periodically reviewed and made available on the company’s website.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
19
Intended Outcome
The level and composition of remuneration of directors and senior management take into
account the company’s desire to attract and retain the right talent in the board and senior
management to drive the company’s long-term objectives.
Remuneration policies and decisions are made through a transparent and independent
process.
Practice 6.2
The board has a Remuneration Committee to implement its policies and procedures on
remuneration including reviewing and recommending matters relating to the remuneration of
board and senior management.
The Committee has written Terms of Reference which deals with its authority and duties and
these Terms are disclosed on the company’s website.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
20
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into consideration
the company’s performance.
Practice 7.1
There is detailed disclosure on named basis for the remuneration of individual directors. The
remuneration breakdown of individual directors includes fees, salary, bonus, benefits in-kind
and other emoluments.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
21
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into consideration
the company’s performance.
Practice 7.2
The board discloses on a named basis the top five senior management’s remuneration
component including salary, bonus, benefits in-kind and other emoluments in bands of
RM50,000.
Application : Departure
Explanation on :
application of the
practice
The Company follows its remuneration based on the global RFC policy
with combination of Malaysian and International employees.
Alternative:
Details of the members of senior management will be shared general
terms and on an aggregated basis only
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : The Alternative is sufficiently transparent and allows stakeholders to
assess the reasonableness of remuneration paid to members of senior
management.
22
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into consideration
the company’s performance.
Explanation on :
adoption of the
practice
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Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of information.
Practice 8.1
The Chairman of the Audit Committee is not the Chairman of the board.
Application : Applied
Explanation on : The Chairman of the Audit Committee is Mr. Boey Tak Kong who is an
application of the Independent Non-Executive Director and he is not the Chairman of the
practice Board.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
24
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of information.
Practice 8.2
The Audit Committee has a policy that requires a former key audit partner to observe a
cooling-off period of at least two years before being appointed as a member of the Audit
Committee.
Application : Applied
Explanation on : The terms of reference of the Audit Committee states clearly that a
application of the former key audit partner of the External Auditors shall be subject to a
practice minimum two (2) year cooling-off period before being appointed as a
member of the Audit Committee.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
25
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of information.
Practice 8.3
The Audit Committee has policies and procedures to assess the suitability, objectivity and
independence of the external auditor.
Application : Applied
Explanation on : In August 2017 the Audit Committee had a meeting with the Messrs.
application of the PricewaterHouse Coopers (PWC), the External Auditors where PWC
practice presented the annual audit plan for FY 2017. In that meeting, PWC
highlighted the key focus areas, methodology and new accounting
standards. The External Auditor also briefed the Audit Committee on
their team members and the resources allocated to the Company.
After discussion and deliberation, the Audit Committee approved the
audit plan. The Company also sought the confirmation of
independence from the External Auditors.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
26
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of information.
Explanation on :
adoption of the
practice
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Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and
recommendations. The company’s financial statement is a reliable source of information.
Practice 8.5
Collectively, the Audit Committee should possess a wide range of necessary skills to
discharge its duties. All members should be financially literate and are able to understand
matters under the purview of the Audit Committee including the financial reporting process.
All members of the Audit Committee should undertake continuous professional development
to keep themselves abreast of relevant developments in accounting and auditing standards,
practices and rules.
Application : Applied
Explanation on : The members of the Audit Committee are all financially literate and
application of the have a full understanding of the financial reporting process and the
practice financial matters discussed. The members also attend training on new
rules or standards relating to the accounting standards, tax rulings or
corporate governance changes. The Chairman of the Audit Committee
plays an active role in updating the other members on such new
developments.
The Chairman of the Audit Committee, Mr. Boey Tak Kong is also
active in providing technical training for the Malaysian Institute of
Accountants, the Malaysian Institute of Chartered Secretaries &
Administrators, Malaysian Institute of Corporate Governance and
Malaysian Investor Relations Association Berhad.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
28
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and managed.
Practice 9.1
The board should establish an effective risk management and internal control framework.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
29
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and managed.
Practice 9.2
The board should disclose the features of its risk management and internal control
framework, and the adequacy and effectiveness of this framework.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
30
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and managed.
Explanation on :
adoption of the
practice
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Intended Outcome
Companies have an effective governance, risk management and internal control framework
and stakeholders are able to assess the effectiveness of such a framework.
Practice 10.1
The Audit Committee should ensure that the internal audit function is effective and able to
function independently.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
32
Intended Outcome
Companies have an effective governance, risk management and internal control framework
and stakeholders are able to assess the effectiveness of such a framework.
Practice 10.2
The board should disclose–
whether internal audit personnel are free from any relationships or conflicts of
interest, which could impair their objectivity and independence;
the number of resources in the internal audit department;
name and qualification of the person responsible for internal audit; and
whether the internal audit function is carried out in accordance with a recognised
framework.
Application : Applied
Explanation on : In every Audit Committee the Internal Auditors updates on the its
application of the annual audit plan which includes the nature and scope of the internal
practice audit. The Audit Committee when reviewing and discussing the said
plan seeks to ensure that the internal audit plan is aligned with the
external audit plan.
In September 2017, the Internal Audit Manager had resigned and left
the Company. The Audit Committee Chairman had interviewed several
candidates and Miss Snowy Khoo has been appointed as the new
Internal Audit Manager. Miss Snowy Khoo has over 10 years of
internal and external audit experience and she is a Fellow of
Association of Chartered Certified Accountants, United Kingdom.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
33
Intended Outcome
There is continuous communication between the company and stakeholders to facilitate
mutual understanding of each other’s objectives and expectations.
Stakeholders are able to make informed decisions with respect to the business of the
company, its policies on governance, the environment and social responsibility.
Practice 11.1
The board ensures there is effective, transparent and regular communication with its
stakeholders.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
34
Intended Outcome
There is continuous communication between the company and stakeholders to facilitate
mutual understanding of each other’s objectives and expectations.
Stakeholders are able to make informed decisions with respect to the business of the
company, its policies on governance, the environment and social responsibility.
Practice 11.2
Large companies are encouraged to adopt integrated reporting based on a globally
recognised framework.
Application : Departure
Explanation on :
application of the
practice
Explanation for : The Annual Report adopts the format of an integrated report where it
departure communicates comprehensive information of the financial results,
management and discussion analysis on the operations of the
Company, governance and sustainability measures and activities. The
Company shall seek to adopt the framework over time.
Alternative:
Integrated reporting as set out above.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : Integrated Reporting based on the framework
35
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively
and make informed voting decisions at General Meetings.
Practice 12.1
Notice for an Annual General Meeting should be given to the shareholders at least 28 days
prior to the meeting.
Application : Applied
Explanation on : The Company will provide 28 days prior notice for the coming AGM in
application of the 2018.
practice
36
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively
and make informed voting decisions at General Meetings.
Practice 12.2
All directors attend General Meetings. The Chair of the Audit, Nominating, Risk Management
and other committees provide meaningful response to questions addressed to them.
Application : Applied
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
37
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively
and make informed voting decisions at General Meetings.
Practice 12.3
Listed companies with a large number of shareholders or which have meetings in remote
locations should leverage technology to facilitate–
including voting in absentia; and
remote shareholders’ participation at General Meetings.
Application : Applied
Explanation on : The Company holds its meetings in places easily accessible by its
application of the shareholders. There is no necessity for remote shareholder
practice participation.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
38
SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES
PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA
MALAYSIA
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