COMPLIANCE STANDARD OPERATING PROCEDURE

(SOP) 2023
 INTRODUCTION

COMPLIANCE UNDER SK MAGIC RETAILS MALAYSIA SDN BHD

Compliance in SK Magic Retails Malaysia Sdn Bhd (“SK Magic”) means complying with standards of practice not limited to laws, regulations,
policies and procedures as well as the ethical standards of quality, integrity, respect, trust and responsibility.
MISSION
Mission of SK Magic is to deeply committed to fair and ethical direct sales practices in the marketplace.
APPLICATION OF THIS SOP
For the following Sales Agent designation: GENUINE SALES
CMO : Chief Magic Officer
SMM: Senior Magic Manager
Responsibility Quality
MM : Magic Manager
JMS/MS: Junior Magic
Specialist/Magic Specialist
RM : Regional Manager Trust Integrity

EM : Engineer Manager
ME : Magic Engineer Respect

SMC : Senior Magic Care

MC : Magic Care
 DEFINITION OF IRREGULARITIES

DEFINITION OF IRREGULARITIES

As SK MAGIC RETAILS MALAYSIA SDN BHD are registered under Direct sales license, all the sales agents must meet customer
face to face for sales pitching.
Any sales that close without meeting customer face to face are consider irregular sales and there will be consequences
for agent to involved in irregular sales.

All the staff, JMS/MS/MM/SMM/CMO/RM/EM/ME/SMC/MC will be consider involved in irregularities or misconduct if found
breach any rule and regulation or SOP.
BUSINESS ETHICS
 BUSINESS ETHICS

Business Ethics is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical
problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the
conduct of individuals and entire organizations.
7 principles of ethics in business:
Integrity

Concern &
Respect Loyalty
for other
Promise-
Keeping &
Trustworthiness
Law
Honesty
Abidin
g
Fairness

With good business ethics, customer will choose SK Magic products over other brand. Good reputation and awareness will
be created if all the staff and sales agents practiced good business ethics.
 PDPA

Compliance under PDPA

PDPA will apply on all the personal information and data provided to SK
MAGIC RETAILS MALAYSIA SDN BHD.

SK MAGIC RETAILS MALAYSIA SDN BHD has registered as a data user and all
the data will be protected and will not share to third party without consent
from data owner.

All the personal data acquired from sales agent and staff will be process
according to 7 Principles of PDPA:

▪ General Principle
▪ Notice and Choice Principle
▪ Disclosure Principle
▪ Security Principle
▪ Retention Principle
▪ Data Integrity Principle
▪ Access Principle
Compliance under Regulatory:

SK MAGIC RETAILS MALAYSIA SDN BHD is an AJL holder and DSAM member thus
govern under the Direct Sales and Anti-Pyramid Scheme Act 1993.

All Sales Agent shall comply to the following:

❖ DSAM Code of Conduct
❖ Rules and Regulation (Internal)
❖ Code of Ethics (Internal)
Anti Bribery Policy:

SK Magic Retails Malaysia Sdn Bhd ("SK Magic") has implemented the Anti-Bribery and Anti Corruption Policy (ABC Policy) which
reflects SK Magic's position of zero tolerance against all forms of bribery and corruption and our commitment to lawful and
ethical conduct at all times.

The ABC Policy serves to provide guidance to all directors, employees and other stakeholders of SK Magic on how to deal with
improper solicitation, bribery and other corrupt activities in order to achieve business or personal gains for themselves or others
which may contravene the anti-corruption laws of Malaysia and other applicable foreign laws.

This ABC Policy is available at https://www.skmagic.com.my/anti-bribery-and-anti-corruption-policy/ and is to be disseminated

to all directors, employees and other stakeholders of SK Magic.
 OVERVIEW OF IRREGULAR SALES CATEGORIES

01 COMPLIANCE 02 CATEGORIES 03 CONSEQUENCES

➢ Irregularities ➢ Overpromise ➢ Warning letter

➢ Signing on behalf ➢ Termination
➢ Misleading information ➢ Commission deduction
➢ Payment on behalf ➢ Disciplinary Action
➢ Pyramid scheme ➢ Penalty Scheme
➢ Misuse information ➢ Penalty as deemed fit
➢ Fraud document by Compliance
➢ Irregular MS/AS
➢ Proxy sales
➢ Falsifying Marketing
Promotions
 DESCRIPTION OF IRREGULARITIES

NO CATEGORY DESCRIPTION EXAMPLES DISCIPLINARY ACTION

1 Overpromise • Offering promise that couldn’t be fulfil toward customer in order • Free 3 months rental • Warning letter
to persuade sales. • Product is free • Termination on repeating same mis
• Personal discount to customer which involved paying on behalf of conduct
customer • Commission deduction if there any
• Incorrect information given to customer to persuade sales. penalty/outstanding

2 Sign on behalf • Signing any document on behalf of customer with/without • Signing on rental • Warning letter
customer consent agreement/installation • Commission deduction if there any
• Sign in SFA for customer without physical meet confirmation penalty/outstanding
• Sign in SFA without meet with
customer

3 Misleading • Provide wrong information to customer to persuade sales • Product can return any times • Warning letter
information without penalty • Termination on repeating same misc
• Product can be owned after 1 onduct
year • Commission deduction if there any
penalty/outstanding

4 Proxy sales • Submit sales under other MC name without customer concern. • Submit under another MC name • Termination on repeating same misc
in order to hit the sales target. onduct
• Commission deduction if there any
penalty/outstanding
 DESCRIPTION OF IRREGULARITIES

NO CATEGORY DESCRIPTION EXAMPLES DISCIPLINARY ACTION

5 Payment on behalf • Using own account or own debit/credit card to help • Submitted own bank account, • Warning letter
customer pay on behalf as 3rd party payer debit/credit card for first payment • Termination on repeating same
• Transfer fund to customer account for first payment • misconduct
deduction
6 Pyramid scheme • Practicing pyramid marketing scheme for own interest such • Must purchase SK products • Non entitlement to commission
as recruitment and sales before join as JMS/MS • Termination
• Commission will be given on
recruitment
• No need to sell product and
only focus on recruitment to
get commission
7 Misuse information • Direct use or editing customer personal information for • Submit customer details for • Warning letter
sales key-in without permission extra unit without customer • Termination on repeating same
consent misconduct
• Submit customer debit/credit car • Commission deduction if there any
d for other customer penalty/outstanding

8 Fraud documents • Trying to fraud supporting documents • Forged payment slip or bank • Warning letter
statement as supporting • Termination on repeating same
documents misconduct
9 Irregular RS/AS • Complete MS/AS in system without attend the service • Skip RS/AS but completed in • Warning letter
system to get commission • Termination on repeating same
misconduct
10 Falsifying Marketing • Upload or share fake promotion on social media • Created flyers or picture with fake • Warning letter
Promotions promotion details • Termination on repeating same
• Sell product through e-commerce misconduct
platform without following official
promotion/price
COMPLIANCE INVESTIGATION FLOW
Compliance Investigation Flow
Junior/Magic Specialist(JMS/MS) Irregular Case Flow
JMS/MS Irregular Case Flow Chart
 JMS/MS Irregular Case Flow Chart

Compliance to filter/verify the

Report Irregular Issue to Compliance
reported issue
• Sales organization can email the • Compliance will only investigate the
complaints they receive from reported issue according to the
customer to irregular categories
[email protected] with • Compliance will not entertain issues
customer statement and evidence. that related with sales organisation
internal issue.
Magic Engineer (ME) Irregular Case Flow
 EM/ME Irregular Case Flow Chart

Flow chart 1: Irregular case flow chart

 EM/ME Irregular Case Flow Chart

01 02 03

ME /EM can email report the EM and ME can report ME will present the
irregular case to compliance suspected irregular case to installation checklist for
through compliance when they customer to check on the
[email protected] discovered pre/post contract and product details
with customer statement and installation. before installation, installation
evidence. checklist as shown in next
slide.
Customer Installation
Checklist
 Customer Installation Checklist

Rental Agreement Checklist

 Customer Installation Checklist

Outright Agreement Checklist

MC Operation Case Flow
MC/SMC Irregular Case Report Flow
 Misconduct Category Handled by Compliance

MC
MC Operation
Operation Compliance
Compliance MC Operation
MC Operation MC Operation

Decide on service
target
Handle related to
MC/SMC attitude
Handle complaint issue, internal conflict
according to the between MC
category which organisation and
Provide the stated in the working performance
complaints which Compliance SOP or eg: MC unable to
received by MC/SMC case that involved of perform service or
during service or criminal action eg: customer ‘runaway’
directly from stealing with the product
customer to
compliance team
DISCIPLINARY ACTIONS UNDER
IRREGULARITIES
 DISCIPLINARY ACTION

All the disciplinary action will be case by case basis and according to compliance investigation and findings. Disciplinary action will be decided
and announce to sales team after management approval.

There are few types of disciplinary action will be taken, details of disciplinary action will be as below:

Warning Letter

First Warning Letter Final Warning Letter

• first time involved in • repeatedly involved in

misconduct issue or misconduct issue or
irregular sales. irregular sales
• misrepresentation • fraud case and involved in
case(misleading pyramid scheme
information, overpromise)
 DISCIPLINARY ACTION

Termination
1) Termination will be happened when person involved in the situation stated below:
- involved in fraud case, pyramid scheme and irregular case with multiple customer/order/contract
- promoting competitor or join competitor while still active in SK MAGIC RETAILS MALAYSIA SDN BHD
- involved in severe misconduct(criminal/police case)
- repeating the same. Using fake promotion or recruitment scheme to persuade sales or recruit new member.

Demotion
1) If found repeating involved in cases against rules and regulations

Incentive trip
1) Irregular sales will not be considered in sales team sales performance.
- irregular sales will lead to disqualification for any incentive trip organised by SK MAGIC RETAILS MALAYSIA
SDN BHD

Achievement entitlement
1) Irregular sales will lead to disqualification for any achievement award from SK MAGIC RETAILS MALAYSIA SDN BHD
 DISCIPLINARY ACTION

Commission on hold/ deduction

1) Commission on hold
- commission will be on hold once compliance received complaint or report for other department/
customer.
-on hold commission will be release if compliance found person involved is not guilty
as show in compliance investigation flow previously.

2)Commission deduction,
- Irregular case, commission deduction for irregular case follow the penalty scheme as in the slide
after this.
PENALTY SCHEME UNDER
IRREGULARITIES
 PENALTY SCHEME FOR IRREGULAR SALES

In relation to failed collection on Customers or certain irregularities, such Penalty Scheme will be affected:

1. Product Loss Fee = (Product Price x 90%)–[(Product Price/Rental Period) x Paid Month] + Outstanding
2. Early Termination Fee = [(Rental Fee x Remaining Month) x 50%] + Outstanding

If MS is 20% If MS is 40% If MS & MM If MS & MM

Inactive 30% CMO Inactive 60% are Inactive are Inactive
100% SMM
50% 40% CMO 100%
100% SMM 60%
MM SMM
MM
SMM
MS/JMS
MS/JMS

Branch with no Branch with no

CMO CMO
 SIMULATION

SCENARIO 1 : PRODUCTMISSING
M1 M2 M3 M4 M5 M6 M7 M8

RM180 RM180 RM180 x x x x x

RENTAL: RM180/month Paid Month = 3 months Outstanding Month = 5 months

OUTRIGHT: RM6,800
Paid Amount = RM540 Outstanding Amount = RM900
QUANTITY: 5 units

PENALTY CALCULATION
Product Loss Fee = (Product Price x 90%)–[(Product Price/Rental Period) x Paid Month] +
Outstanding
= (RM6,800 x 90%)–[(RM6,800/60) x 3] + RM900
= RM6,120–RM340 + RM900 = RM7,360
Total Penalty = RM7,360 x 5 = RM36,800

RM7,360
RM11,040 CMO RM14,720 SMM RM14,720 CMO
RM18,400 SMM RM22,080 RM36,800
RM36,800 RM36,800 MM RM22,080
SMM
MM
SMM
MS/JMS MS/JMS
 SIMULATION

SCENARIO 2 : PRODUCTRETURNED

M1 M2 M3 M4 M5 M6 M7 M8

RM180 RM180 RM180 x x x x x

RENTAL: RM180/month
Paid Month = 3 months Outstanding Month = 5 months
OUTRIGHT: RM6,800
Paid Amount = RM540 Outstanding Amount = RM900
QUANTITY: 5 units

PENALTY CALCULATION
Early Termination Fee = [(Rental Fee x Remaining Month) x 50%] + Outstanding
= [(RM180 x 52) x 50%] + RM900
= RM4,680 + RM900 = RM5,580
Total Penalty = RM5,580 x 5 = RM27,900

RM5,580
RM8,370 CMO RM11,160 SMM RM11,160 CMO
RM13,950 SMM RM16,740 RM27,900
RM27,900 RM27,900 MM RM16,740
SMM
MM
SMM
MS/JMS MS/JMS
 PENALTY SCHEME FOR IRREGULAR SALES

Note to Penalty Scheme

1) The penalty scheme and/or commission deduction shall take effect on any confirmed sales effective 1 November
2020.

2) Compliance Team has the right to implement the penalty scheme and/or commission deduction without any prior
notice should any agent found guilty, upon investigation, not collaborating with the request for information, or failure
to reply within the deadline provided.

3) Any penalty and/or commission deduction implemented shall be first informed in writing. Any decision made by the
compliance team is final and conclusive.

4) Any dissatisfaction/appeal shall be made in writing to [email protected]

Rewards
 REWARDS

Reward to irregular case reporter

1) Disciplinary action will be issued to MC/SMC/ME/EM/CMO/SMM/MM if they are involved in the genuine irregular case, a reporter
for the irregular case will receive a reward from the company if the reported case is a genuine irregular case.

2) The reward will be :

- RM50.00 for every genuine case reported to the compliance team.
- Reward will be determined, and verification is done by the compliance team.

3) SMC/SMM/EM gathers the report on behalf of MC/MM/ME and sends email to [email protected]

Internal Process Flow:

Compliance will
Compliance submit reporter details
Report case to Compliance proceed
generates the report to the related
compliance for investigation and submit it for department for reward
management approval pay out.
THANK YOU