- Roles and Responsibilities of the Board
The Board comprises of competent individuals with specialised skills and knowledge providing clear and effective leadership to the Group. The Board is responsible for charting the strategic direction of the Group as well as over-seeing the conduct, performance, risk management and internal controls of the Group’s business activities. In order to ensure a constantly well-balanced Board, careful consideration is given when selecting and balancing the composition of Independent and Non-Independent Directors.
The Board has a formal schedule of matters requiring its decision as detailed below:
- Reviewing and adopting the Group’s strategic direction, as proposed by the Group Chief Executive Officer (“Group CEO”). All approved strategies will then be communicated down to respective Heads of Departments for implementation;
- Reviewing the adequacy of significant risks presented by the Audit and Risk Management Committee (“ARMC”) and in ensuring the implementation of appropriate measures to manage these risks;
- Reviewing the adequacy and integrity of the Group’s systems of internal control and management information, including ensuring that a sound risk management framework, reporting framework and systems for compliance with applicable laws, regulations, directives and guidelines are in place;
- Reviewing, approving and monitoring the implementation of the Group’s strategic business plans;
- Assessing and evaluating the Group’s business and operational performance to ensure that the Group is on track with the strategic direction as approved by the Board;
- Approving significant policies that may have a material impact on the Group’s business activities;
- Approving the Group’s annual budget which includes all major capital expenditure and all new investment activities;
- Reviewing the Group’s financial performance and position on a quarterly basis;
- Reviewing other significant matters that may have a material impact on the Group;
- Reviewing succession planning including appointments, determination of compensation levels and replacement of senior management staff; and
- Reviewing strategies promoting sustainability in ensuring that the Group operates its business through good processes and policies which are applied by competent and responsible employees.
- Board Composition and Balance
The Board currently has eight (8) members comprising:
• Two (2) Non-Independent Non-Executive Directors;
• One (1) Non-Independent Executive Director; and
• Five (5) Independent Non-Executive Directors.
This is in compliance with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”) which requires at least one third (1/3) of the Board to be comprised of Independent Directors.
A brief profile of the Directors is included in the Board of Directors – Profiles as set out on pages 16 to 21 of the Annual Report.
The Board is well-balanced and comprises highly respected professionals of various backgrounds and industries which are relevant to the Group’s business activities. The Directors’ wide-ranging experience and expertise provide the Group with the strategic thinking which is vital for the Group’s success.
The Board believes that both genders are to be given fair and equal opportunity and any new appointments to the Board shall be based solely on merit, experience, qualifications and other attributes. Currently, there are two (2) female Directors sitting on the Board, reflecting a 25% female representation on the Board.
The Board is satisfied with the level of independence demonstrated by the Directors during the financial year and their ability to act in the best interest of the Group.
The Independent Non-Executive Directors provide the necessary checks and balances in the Board’s exercise of their functions by facilitating an independent evaluation of the Board’s decisions and decision-making process. During any decision-making process, the majority view of the Board will be duly considered whereby no single Board member can dominate its decision-making process.
None of the Non-Executive Directors participate in the Group’s day-to-day management activities.
The Independent Non-Executive Directors play a pivotal role in ensuring corporate accountability and provide an essential source of impartial and professional advice and judgment to safeguard the interests of the Group and its stakeholders.
In order to achieve a balance of power and authority, there is a clear division of responsibility between the Chairman of the Board and the Group CEO, via the appointment of separate Board members to hold respective positions.
The Chairman is primarily responsible for ensuring the Board’s effectiveness, along with other areas as detailed below:
- Ensuring proper balance in the Board’s membership, subject to the approval of the shareholders and other members of the Board;
- Ensuring that all relevant issues are included in the Board meeting agendas;
- Ensuring that all Directors, both Executive and Non-Executive, are enabled and constantly motivated to play their role to the fullest of their abilities. This includes ensuring that the Board members, particularly the Non-Executive Directors, continuously receive timely and relevant information tailored to their needs, and are properly briefed on issues arising, if any, during the Board meetings; and
- Ensuring that the Executive Director constantly looks above and beyond his management function, and fully accepts his responsibilities in the area of corporate governance.
The Group CEO is responsible for the day-to-day running of the Group’s business and ensuring that the Group’s policies and strategies as approved and adopted by the Board are implemented with the assistance of the Senior Management Team (“SMT”).
- Board Charter and Responsibilities
The Company has in place a Board Charter that sets out, amongst others, the responsibilities, authorities, procedures, evaluation and structure of the Board and Board Committees as well as relationship between the Board with its management and shareholders. The Board Charter is reviewed and updated periodically. The principal functions of the Board are as follows:
- Ensuring that the Company’s goals are clearly established, and strategies are in place for achieving them;
- Ensuring that the Group has an appropriate risk management process including adequate control environment, systems for compliance with applicable laws and regulations, and controls in areas of significant risks identified;
- Reviewing and approving major corporate strategies, plans and annual budget;
- Monitoring the performance of the corporate strategies;
- Approving capital expenditure, capital management and acquisitions/divestments;
- Monitoring the performance of management in the implementation of strategies and policies;
- Approving the recruitment, appointment, promotion, confirmation and termination of service, as well as the remuneration package, and compensation and benefits policies and the terms and conditions of Key Management Positions;
- Determining the general composition of the Board (size, skill and balance between executive directors and non-executive directors) in order to ensure that the Board consists of the requisite diversity of skills, experience, gender, qualification, and other core competencies required;
- Approving a framework of remuneration for directors, covering fees, allowances, and benefits-in-kind (directors of all boards and committees);
- Ensuring that the Board is supported by a suitably qualified and competent Company Secretary;
- Ensuring that the Board members have access to appropriate education and training programmes to keep abreast of the latest developments in the industry, and as may be prescribed by the regulatory authorities from time to time;
- Approving the Group’s financial statements (and ensuring the reliability of the same) as well as the interim dividend and recommend the final dividend to shareholders;
- Ensure that there is an appropriate succession plan for members of the Board and senior management; and
- Ensure that the Group adheres to high standards of ethics and corporate behaviour including transparency in the conduct of its business, and Directors are required to comply with the Directors’ Code of Best Practice.
To facilitate efficient management, the Board has approved authority to the management for certain specified activities through a clear and formally defined Limits of Authority (“LOA”), which is the primary instrument which governs and manages the business and operations decisions in the Group. Whilst the objective of the LOA is to empower Management, the key principle adhered to the formulation of the LOA is to ensure that a system of internal controls and checks and balances are incorporated therein.
The LOA is implemented in accordance with the Group’s policies and procedures and in compliance with the statutory and regulatory requirements. The LOA is periodically reviewed and updated to ensure relevance to the Group’s operations.
- Board meetings
The Board meets at least quarterly to, inter alia, approve the quarterly announcements to Bursa Malaysia Securities Berhad (“Bursa Securities”), statutory financial statements, the Group’s business plans, and to review the Group’s financial performance and standing. Additional meetings are convened as and when necessary to deliberate on urgent matters.
During the current financial year, five (5) Board meetings were held. The Directors attendance for the Board meetings held during the financial year was as follows:
- Mr Krishnan Menon – 5/5 (Chairman)
- Dato’ Mohd Salleh Bin HJ Harun – 5/5
- Dato’ Sri Leo Suresh Ariyanayakam – 5/5
- Dato’ Nicholas John Lough @ Sharif Lough bin Abdullah – 5/5
- Ms Karen Judith Goonting – 3/5
- Puan Mahani Binti Amat – 5/5
- Encik Mohd Rashid Bin Mohd Yusof – 5/5
- Datuk Joseph Dominic Silva – 4/5
All the Directors complied with the attendance requirement in respect of Board meetings held during the financial year ended 30 June 2019 as stipulated under Paragraph 15.05 of the MMLR of Bursa Securities.
Minutes of Board meetings which include a record of the decisions and resolutions of the Board meetings are maintained by the Company Secretary. The Directors have full access to the advice and services of the Company Secretary who is responsible for ensuring that Board meeting procedures are adhered to. The Company Secretary also advises the Board on matters relating to corporate compliance with relevant laws and regulations affecting the Board and the Group, as well as best practices on governance.
- Supply of Information
The Directors have full, unrestricted and timely access to all information and direct access to the SMT to enable them to discharge their responsibilities. The Board is provided with the meeting agenda and Board papers at least five (5) working days in advance of the Board meeting date. This enables the Directors to have sufficient time to review the Board papers and seek clarification or further details from the management or the Company Secretary before each meeting to ensure preparedness for the meeting. Access to the Board papers by the Directors is done through a collaborative software which allows the Directors to securely access Board documents electronically.
Any Director may request matters to be included in the agenda, urgent papers may be presented and tabled at the meetings under supplemental agenda.
Where applicable, briefings and presentations by management or relevant external consultants are also held at Board meetings to advise the Board and provide relevant information and clarification for informed decision making by the Board.
In addition, the Directors have unrestricted access to the advice and services of the Company Secretary and are regularly updated on new statutory and regulatory requirements relating to duties and responsibilities of the Directors. All the Directors, whether collectively as a Board or in their individual capacity, may seek independent professional advice at the expense of the Company in carrying out his or their duties respectively.
- Retirement and Re-election of Directors
The Company’s Articles of Association require at least one third (1/3) of the Board members to retire by rotation at the Annual General Meeting (the “AGM”), and for all the Directors to retire once every three (3) years, of which the Directors will then be eligible to offer themselves for re-election.
At the forthcoming AGM, Dato’ Mohd Salleh Bin HJ Harun, Karen Judith Goonting and Mahani Binti Amat are due to retire pursuant to Article 84 of the Articles of Association of the Company. All the three Directors have offered themselves for re-election at the forthcoming AGM.
- Training and Development of Directors
All the Directors have complied with the Mandatory Accreditation Programme as prescribed by Bursa Securities. The Directors are also encouraged to and have attended various conferences and seminars which are conducted both in-house and by external parties, in order to enable them to effectively discharge their duties, as well as keep abreast of the industry, regulatory and other related developments.
The seminars and training courses attended by the Directors during the financial year are as listed below:
- Board Committees
In order to enhance the Board’s effectiveness as well as to comply with certain fiduciary duties, the Board has established the following committees, which operate within clearly defined Terms of Reference:
- Audit and Risk Management Committee
The Terms of Reference of the Audit and Risk Management Committee (“ARMC”) is accessible at the Company’s website at www.scicom-intl.com and summary of activities are contained in the ARMC Report as set out on pages 80 to 85 of this Annual Report.
- Nomination and Remuneration Committee
The Nomination and Remuneration Committee (“NRC”) was formed on 12 May 2010 and is responsible for proposing candidates for directorship and assessing the Directors on an ongoing basis. The composition of the NRC complies with the requirements of paragraph 15.08A of the MMLR. In addition, the NRC assesses the contribution of individual Board members, the effectiveness of the Board and the Board Committees.
The NRC is responsible in determining the remuneration of the Directors and senior management staff so as to ensure that the Company attracts, retains and motivates the Directors and senior management staff of the quality needed to manage the business of the Group effectively. The remuneration scheme is reflective of the individual Director’s and senior management staff’s experience and level of responsibilities. In addition, the remuneration for the Executive Director and senior management staff is structured to link remuneration and rewards to corporate and individual performance.
The members of the NRC are as follows:
- Karen Judith Goonting - Independent Non-Executive Director (Chairperson)
- Dato’ Mohd Salleh Bin HJ Harun – Non-Independent Non-Executive Director
- Mahani Binti Amat - Independent Non-Executive Director
The NRC met once during the financial year to review the Board’s structure, evaluation of Director’s performances and to review the remuneration of the Executive Director and senior management staff. All the members attended the meeting during the financial year.
The Executive Director does not participate in any way in determining his own remuneration package. The remuneration and benefits of the Non-Executive Directors is determined by the NRC with the individual Directors concerned abstaining from deliberating and voting on their own remuneration. The Company pays its Directors annual fees, which are approved by the shareholders. The NRC reviews the performance of the Managing Director and considers the bonus and increment for the financial year
The summary of activities undertaken by the NRC during the financial year are:
- Reviewed and recommended SMT’s remuneration and benefits for the financial year ended 30 June 2019;
- Reviewed and recommended the payment of Directors’ fees and other benefits payable to the Directors for the financial year ended 30 June 2019;
- Reviewed the effectiveness of the Board, Board Committees and individual Directors and make appropriate recommendation to the Board; and
- Reviewed and recommended the retirement and re-election of Directors at the forthcoming Annual General Meeting in accordance with the Company’s Constitution.
- Board Members Appointment Process
The NRC considers and recommends new appointments to the Board. In discharging this duty, the NRC will address the suitability of an individual by taking into consideration the individual’s skills, knowledge, expertise and experience, professionalism and integrity.
- Re-Appointment and Re-Election of Directors
In accordance with the Constitution of the Company, at least one third of the Directors shall retire from office each year at the Annual General Meeting and all Directors shall retire from office once at least in each three (3) years but shall be eligible for re-election.
The Companies Act 2016 has removed the age limit and the re-appointment of Director who is over 70 years to be subject to shareholders' approval at each Annual General Meeting.
- Board Gender Diversity
The Board currently does not adopt any policy on boardroom diversity, such as gender and age. The Board is of the view that while it is important to promote diversity, the normal selection criteria of a Director, based on effective blend of competences, skills, experience and knowledge in areas identified by the Board, should remain a priority so as not to compromise on capabilities, experience and qualification. The Board is nevertheless committed to maintain the current level of female representation.
- Board Effectiveness Evaluation
The NRC is responsible to assist the Board to assess the effectiveness of individual Directors, the Board and the Board committees. The Board effectiveness evaluation is performed annually with the objective to enhance its effectiveness, strength and to identify areas that need improvement.
The assessment is divided into four (4) sections as follows:
- Board and Board Committees Evaluation
- Assessment of Character, Experience, Integrity, Competence and Time Commitment
- Assessment on Mix of Skill and Experience
- Evaluation of Level of Independence of an Independent Director
The main criteria set out in the abovementioned sections are as follows:
- Skills and experience of individual Directors.
- Roles and responsibilities of the Board and individual Directors.
- Time commitment in deliberation and participation in the Board and Board committee’s meetings.
- The level of independency for the Independent Directors’ participation and deliberation on issues put before the Board.
During the financial year ended 30 June 2019, the effectiveness evaluation was conducted on the Board, Board Committees and individual Directors. The review was based on a Board evaluation process that had been established with the assistance of the Company Secretary in order to determine the effectiveness of the Board as a whole, its committees and the contributing performance of each individual director.
The results of the evaluation were summarised by the Company Secretary and discussed by the NRC which were then reported to the Board. The Board reviewed the results of the evaluation and is satisfied with the current composition of Board members and believes that it is well balanced with the right mix of high-calibre individuals with the necessary skills and qualifications, credibility and independence to discharge its duties and responsibilities effectively.
- Directors’ Remuneration
The Board has in place policies and procedures to determine the remuneration of Directors considering the need for the Group to attract and retain the right talent with the necessary skills and experience required by the Board to function effectively.
The Board is responsible for determining the remuneration scheme for its individual members. The annual fees payable to Non-Executive Directors are presented to the shareholders at the AGM for their approval. The Executive Director however, does not participate in any way when determining his remuneration package.
A summary of the Directors’ remuneration comprising remuneration received/receivable only from the Company for the financial year ended 30 June 2019, distinguishing between the Executive and Non-Executive Directors is as shown below:
The amount of remuneration received by each Director of the Company comprising remuneration received/ receivable only from during the financial year was as follows:
Salary and Benefits of Executive Director
- Employees Code of Conduct
The Group’s Employee Engagement Team conducts regular engagement, dialogue and training programs to inculcate the core values as the Corporate Culture of the Group.
All employees are required to read, understand and abide by the Code and the Code will be reviewed from time to time by the Board. The Code describes measures put in place to handle issues relating to:
- Conflicts of interest;
- Corrupt practices which include the offering and acceptance of gifts and/or other forms of benefits;
- Unlawful and unethical behaviour;
- Protection and proper use of company assets; and
- Compliance with laws, rules and regulations.
- Qualified and Competent Company Secretary
The Company Secretaries are appointed by the Board and attend all Board and Board Committee meetings. They are responsible for providing Directors with advice on compliance and corporate governance issues.
The Board has unrestricted access to the advice and services of the Company Secretaries. The Company Secretaries plan an advisory role to the Board in relation to the Company’s constitution, Board’s policies, procedures and compliance with the relevant regulatory requirements including codes or guidance and legislations.
- Financial Reporting
The Board aims to convey a balanced and understandable assessment of the Group’s performance and prospects in its quarterly announcements, annual reports and other public reports to the shareholders. The Board retains the responsibility for the preparation of the Group’s and Company’s financial statements. The Directors are required by the Companies Act, 2016 to prepare the Group’s and the Company’s statutory financial statements with all material disclosures, to ensure the accuracy and completeness, in compliance with MASB approved accounting standards in Malaysia for Entities Other Than Private Entities, as well as the rules and regulations under the said Act. In order to properly achieve this, the ARMC assists the Board in over-seeing the Group’s financial reporting process and the quality of its financial reporting.
The Statement by Directors pursuant to Section 251(2) of the Companies Act 2016, in relation to the preparation of the financial statements is set out on page 171 of the Annual Report.
- Risk Management and Internal Controls
The Board continues to maintain and review its risk management process and internal control procedures to ensure a sound system of risk management and internal control to safeguard shareholder’s investments and the assets of the Company and the Group.
In discharging its duties in ensuring the effectiveness of the Group’s systems of risk management and internal control, the Board has entrusted this responsibility to the ARMC. The scope and results of the ARMC’s review are detailed in the Statement on Risk Management and Internal Control as set out on pages 72 to 79 of the Annual Report.
- Relationship with Auditors
The Board, through the ARMC, has a professional and transparent relationship with both the Group’s internal and external auditors.
The internal auditors report directly to the ARMC and has unrestricted access to the ARMC. The internal auditors are tasked to independently review the effectiveness of the risk management process and internal controls of the Group.
The ARMC has appointed an Outsourced Professional Internal Audit firm. The Internal Audit firm conducts regular reviews on the Business Unit operations based on an annually approved Internal Audit Plan. Ad-hoc audits are also commissioned by the ARMC as and when necessary.
The objective of the Internal Audit function is to provide a disciplined approach to evaluate and improve the effectiveness of risk management, internal controls and governance processes and serves as source of independent advice to the ARMC on the state of the internal controls and the results of the risk mitigating strategies and to recommend appropriate improvements.
The internal auditors attend the ARMC meeting quarterly to present their audit observations, recommendations and report on the status of corrective actions implemented by Management. The minutes of the ARMC meetings are tabled to the Board for information and serve as useful references, particularly if there are pertinent issues that any Director wishes to highlight or seek clarification on.
The ARMC and the Board place great emphasis on the objectivity and independence of external auditors in providing relevant and transparent reports to the shareholders. The ARMC undertakes an assessment on the independence of the external auditors annually.
The Board has obtained assurance from the external auditors on their independence in discharging their duties throughout the conduct of the audit engagement.
The external auditors attend the ARMC meeting twice during the financial year to discuss their audit plans, fees, audit findings and their review of the Company and the Group financial statements.
Disclosure of non-audit fees is included under Additional Compliance Information as set out on page 178 of the Annual Report.
Other facets of the relationship between the ARMC and both the internal and external auditors are elaborated in the ARMC Report as set out on pages 80 to 85 of the Annual Report.
- Communication between the Company and its Investors and Other Stakeholders
There is continuous communication between the Company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations. Stakeholders can make informed decisions with respect to the business of the Company, its policies on governance, the environment and social responsibility.
The Board acknowledges the importance of on-going engagement and communication with stakeholders and ensures that communication is timely, regular, transparent and effective.
The Group has established a dedicated section for Investor Information on the Group’s website at www.scicom-intl.com where shareholders as well as members of the public may access the latest information on the Group. Information is also communicated through the following channels:
- Various disclosures and announcements to Bursa Securities including quarterly results;
- Press releases and announcements to Bursa Securities and to the media;
- Publication of the Group’s Annual Report; and
- Annual General Meetings.
Annual Report is a vital source of information for shareholders, investors and the general public. Information on the Group’s business performance, financials and its management are disclosed in the Annual Report. The contents of the Annual Report are continuously enhanced to consider the latest development in corporate governance and regulatory requirements.
While the Group endeavours to provide as much information as possible to its shareholders, the Group is mindful of the legal and regulatory frameworks governing the release of material and price sensitive information.
The notice of the AGM together with the Annual Report are sent to every shareholder at least 21 days before the meeting. An online version of the Annual Report is also available on the Group’s corporate website.
- Announcements to Bursa Securities
Announcements on quarterly financial results, circulars and other general announcements are made via Bursa LINK in full compliance with regulatory authorities’ disclosure requirements and is also made available on the Group’s corporate website.
- Investor Relations
The Board recognises the importance of keeping shareholders and investors informed of the Group’s business and corporate developments. The Board’s primary contact with major shareholders is via the Executive Director/Chief Executive Office and the Chairman, who have regular dialogue with institutional investors and deliver presentations to analysts periodically.
The objective is to provide updates on the Group’s financial performance, corporate developments as well as to address issues that the institutional investors and analysts may have with respect to the business or operations of the Group.
- Company Website
The Corporate website for the Group can be accessed by the public at www.scicom-intl.com. It archives all corporate and financial information made to the public, such as the quarterly announcement of the financial results of the Group, announcements and disclosures made pursuant to the disclosure requirements as set out in the MMLR and other corporate information on the Group.
The corporate information section is also on the website where information such as profile of Directors, Board Charter, Code of Conduct and Terms of Reference for ARMC and NRC are made available to the shareholders and public.
- Annual General Meeting & Communication with Stakeholders
The Annual General Meeting (“AGM”) is the principal forum for dialogue and communication and offers an opportunity for the Board and the SMT to interact with the shareholders. During the AGM, the Chairman, other Board members, SMT and Group’s external auditors are available to respond to any questions and queries as raised by the shareholders. Where appropriate, the Chairman will endeavour to provide the shareholders with written answers to any significant questions which cannot be readily answered during the AGM.
Shareholders are encouraged to participate in the proceedings and pose questions about the resolutions proposed and the Group’s business operations and to raise questions with regards to the Group as well as to discuss any other important matters with the Board.
During the AGM, there is a presentation by the Group CEO on the Group’s financial performance. The Chairman will also invite shareholders to raise questions pertaining to the audited financial statements and other items for adoption at the meeting before putting the resolution to vote.
The AGM and general meetings serve as principal forums for our shareholders to engage directly with the Board and SMT. As recommended by the MCCG, the notice of AGM will be despatched to shareholders at least twenty-eight (28) days before the AGM, to allow shareholders to have additional time to go through the Annual Report and make the necessary attendance and voting arrangements.
Focus Areas and Future Priorities
The Board understands that succession planning is important for the continuity of the Group’s business operations, hence, formulating a succession planning framework for its Board and Key Senior Management is critical. The Board would ensure that the succession planning aligns with the human resource policies and strategies of the Company and only high calibre personnel with the relevant skills and experience are appointed to the Board and management position of the Company.
This Statement is made in accordance with the Board’s approval at its meeting held on 28 August 2019.
Corporate Governance Overview Statement