HOME

INTRODUCTION

The Board of Directors (“the Board”) of Kulim (Malaysia) Berhad is pleased to present the Corporate Governance Overview Statement (“CG Overview”) which provides shareholders and stakeholders with an overview of the corporate governance practices of Kulim Group during the FY2020 with reference to the key corporate governance principles and practices as set out in the Malaysian Code on Corporate Governance 2017 (“MCCG 2017”).

The Board acknowledges the importance of good corporate governance in protecting and enhancing the interest of shareholders. As such, the Board conscientiously strives to attain high business ethics and governance in conducting the day-to-day business affairs of the Group, to build a sustainable business and discharging its regulatory role.

The Board will continue its efforts in evaluating its governance practices in response to evolving best practices and the changing needs of Kulim Group. The Board shall remain committed to attain the highest possible standards of corporate governance through continuous adoption of principles and best practices of the MCCG 2017 and all other applicable laws and regulations.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

BOARD RESPONSIBILITIES

The Board functions on the principle that all significant and material matters are addressed by the Board as it is accountable for the strategic management, performance monitoring and measurement, enterprise risk management, standard of conduct and critical business issues. The Board is responsible in determining the long-term direction and strategy of the Group, and creating value for shareholders.

Established clear functions reserved for the Board and those delegated to Management

The Board is responsible for the oversight and overall management of the Group by providing guidance and direction to the Management with regards to sustainability, strategic planning, risk management, succession planning, financial and operations to meet the expectations and obligations to the shareholders.

The Board assumed the following principal responsibilities in discharging its functions:

    1. Reviewing and adopting a strategic plan for the Group and monitoring thereof and addressing the sustainability of the Group’s business.

    The Board will review and approve the annual budget and strategic plan for the Group. It has in place an annual strategic planning process, whereby a comprehensive strategic plan will be tabled and debated at divisional level before the Management presents to the Board its recommended strategy and proposed business and regulatory plans. At this session, the Board reviews and deliberates upon both the Management’s and its own perspectives, as well as challenges the Management’s views and assumptions, to deliver the best outcomes.

Additionally, on an on-going basis, the Board will assess whether the projects, purchases and sale of equity as well as other strategic consideration being proposed at Board meetings during the year are in line with the objectives and broad outline of the adopted strategic plans.

2. Overseeing the conduct of the Group’s business including the formulation of strategy and performance objectives, control and accountability systems, corporate governance framework, risk management practices and human capital management.

At Board meetings, all operational matters will be discussed, and expert advice will be sought if necessary. The Board oversees the performance of Management through quarterly results which is tabled during the Board meeting.

The Board would then make the necessary business decisions to adapt to changing circumstances. The Management is tasked with the responsibility to keep the Board informed on all matters which may materially affect the Group and its business. The Management is also required to present and brief the Board on the quarterly report of the Group’s financial performance.

The performances of various companies and operating units within the Group represent major element of the Board’s agenda. Where and when available, data are compared against national trends and performance of similar companies.

3. Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures to manage risks.

The Group has set up Governance Management Committee (“GMC”) to assist the Board in identifying, evaluating, reviewing and managing the principal risks and compliance management system.

GMC is established primarily to assist and advise the Management Committee (“MCM”) and the Managing Director in fulfilling its corporate governance and responsibilities towards compliance with the rules and regulations, and its internal control structure.

Details on GMC and the risk management framework are set out in the Statement of Risk Management and Internal Control of this Integrated Annual Report.

4. Established and identified succession plan for the Group that provide continuity in leadership within the Group.

The Board’s responsibility in this aspect is being strongly supported by the Human Capital Management Department (“HCMD”). More importantly, after several years of continuous effort in emphasising and communicating the importance of succession planning, the subject has now become an on-going agenda being reviewed at various high-level Management and operational meetings of the Group. HCMD had assessed the performance of identified potential candidates undergoing the following leadership programmes:

  1. a. Johor Corporation Leadership Programme (“JLP”). JLP is a structured leadership programme aiming to accelerate the career of high potential Senior Executives up to Senior Manager to be developed as future leaders of Johor Corporation Group. Participants will be exposed to business challenges from different angles and will have the opportunity to share their leadership experiences.

In 2019, three employees were selected for JLP Cohort IV 2019/2020 which the programme had been completed in December 2020.

  1. b. Advance Johor Leadership Programme (“AJLP”). AJLP is a one year structured programmed which consists of intensive learning and development experience for high potential leaders across Johor Corporation Group. In 2019, three employees were selected to undergo AJLP II 2019/2020 and completed their programme in December
    2020.

5. Overseeing the development and implementation program for effective communication with shareholder and investors.

Various strategies and approaches are employed by the Group to ensure that shareholders are well informed about the Group’s affairs and development.

6. Reviewing the adequacy and integrity of the management information and internal control system of the Group including systems for compliance with applicable laws, regulations, rules, directive and guidelines.

The Board’s function in fulfilling the above responsibility is supported and reinforced through the various Committees established at both the Board and the Management’s level. Aided by an independent function of the Internal Audit Department, the active functioning of these Committees through their regular meetings and discussions would provide a strong check and balance and reasonable assurance on the adequacy of the Group’s internal controls.

Details on the Internal Audit functions are further discussed in the Board Audit and Risk Committee Report of this Integrated Report.

 

BOARD COMMITTEES

On 22 December 2020, the Board has approved for Kulim to establish four Board Committees, namely the Board Nomination and Remuneration Committee (“BNRC”), Board Audit and Risk Committee (“BARC”), Board Investment Committee (“BIC”) and Board Tender Committee (“BTC”) to assist the Board in discharging its fiduciary duties and responsibilities.

The Board Committees review and deliberate in detail the issues within their terms of references and make the necessary recommendations to the Board with regards to the matters under their review. The Board remain fully responsible for the effective control of the Company. Similar to the Board, each Board Committee is supported by the Company Secretary and has access to independent advice as required for the performance of its duties.

a) Board Nomination and Remuneration Committee (“BNRC”)

Assist the Board in nominating new candidates to the Board and Board Committees and assessing their performance and remuneration packages.

The members comprise the following non-executive directors, the majority of whom are independent directors :

Name  Designation/Directorship
YBhg. Tan Sri Dr. Ali
Hamsa
Chairman/Independent
Non-Executive Director
Fawzi Ahmad Member/Independent
Non-Executive Director
Mohd Nordin Jamaludin Member/Non-Independent
Non-Executive Director


b) Board Audit and Risk Committee (“BARC”)

Assist the Board with regards to:

    • review and report on the Group’s results, external audit procedures and internal audit function.
    • identify, assess, monitor key business risks and oversee the Risk Management activities of the Group. 

The members comprise the following non-executive directors, in which all are independent directors:


Name  Designation/Directorship
Abdullah Abu Samah Chairman/Independent
Non-Executive Director
Dato’ Sr. Hisham Jafrey Member/Independent
Non-Executive Director
Fawzi Ahmad Member/Independent
Non-Executive Director

c) Board Investment Committee (“BIC”)

Assist the Board in reviewing, monitoring, recommending and advising in existing and potential investment and funding related matters.

The members consist of the following non-executive directors, the majority of whom are independent directors:


Name  Designation/Directorship
Dato’ Sr. Hisham Jafrey Chairman/Independent
Non-Executive Director
Shamsul Anuar
Abdul Majid
Member/Non-Independent
Non-Executive Director
Kandasamy A/L Kanny Member/Independent
Non-Executive Director

d) Board Tender Committee (“BTC”)

Assist the Board in reviewing the tender papers prior to tabling to the Board.

The members comprise the following directors, the majority of whom are independent non-executive directors:


Name  Designation/Directorship
Fawzi Ahmad Chairman/Independent
Non-Executive Director
Mohd Faris Adli Shukery Member/Managing Director
Kandasamy A/L Kanny Member/Independent
Non-Executive Director

There is a division of function between the Board and Management. The Board is duly assisted by the key management team of the Group, comprising Managing Director, Head of Divisions, and other key management of respective departments. The principal responsibilities of the Management team are as follow:

  • Developing, coordinating, and implementing business and corporate strategies for the approval of the Board;
  • Assume day-to-day responsibility to ensure Company’s conformity with relevant laws and regulations;
  • Achieve the performance targets set by the Board;
  • Communicating to the staff and implementing the strategic plan approved by the Board and any decision of the Board to ensure that the objectives of the Company that were approved by the Board are met;
  • Assisting the Board in the establishment of the Company or Group’s policies by developing such policies for the Board’s review and approval for the Company’s and Group’s adoption, and implementation of the approved policies; and 
  • Developing effective Management information and internal control systems of the Group to ensure that integrity and adequacy of the systems are intact

Schedule of Matters/Agenda Reserved for Collective Decision of the Board

The authorities of the Board are specified below. The authorities may be varied from time to time as determined unanimously by the Board.

1. Conduct of Board

  • Appointment and resignation of Directors;
  • Appointment and resignation of Company Secretaries;
  • Appointment and resignation of Board Members in Board Committees;
  • Approval of terms of references of Board Committees and amendments to such items; 
  • Appointment and resignation of Senior Management positions, including the Managing Director, their duties, and the continuation of their service; and
  • Disclosure of the corporate governance practices of the Company in the Integrated Report.

2. Remuneration

  • Approval of remuneration arrangements for Non-Executive Directors. The Non-Executive Directors whose remuneration are being deliberated by the Board should play no part in the deliberations;
  • Approval of remuneration structure and policy for Managing Director and key executives; and
  • Approval of remuneration packages for Managing Director and Senior Management.

3. Operational

  • Approval of business strategy and Group’s operational plans and budgets;
  • On-going review of performance against business strategy and Group’s operational plans, including monitoring of marketing, key risks and risk management policies and actions;
  • Approval of capital expenditure;
  • Approval of asset write-off;
  • Approval of investment or divestment in a company/business/property/undertaking;
  • Approval of investment or divestment of a capital project which represents a significant diversification from existing business activities;
  • Approval of changes in the major activities of the Company; and
  • Approval of treasury policies and Bank mandate

4. Financial

  • Approval of quarterly and annual financial statements based on recommendations of the Audit Committee;
  • Approval of the Integrated Report and Statutory Financial Statements;
  • Approval of interim dividends, recommendation of final dividends and the making of any other distribution;
  • Adoption of accounting policies;
  • Approval of corporate policies and procedures, including the Group’s system of internal control; 
  • Review of the effectiveness of the Group’s system of
    internal control; and
  • Disclosure of the state of internal controls of the Group, which is to be included in the Integrated Report.

5. Other matters to be considered including:

  • Granting of powers of attorney by the Company;
  • Entering into any indemnities or guarantees; Recommendations for the alteration of the Constitution of the Company;
  • Alteration of the accounting reference date, registered office, and name of the Company;
  • Purchase of own shares by the Company;
  • Issuance of any debt instruments;
  • Political or charitable contributions;
  • Scheme of reconstruction or restructuring; and
  • Any other significant business decision.

Segregation of Roles and Responsibilities of Chairman and Managing Director

The role and responsibilities of our Board’s Chairman and Managing Director are separate and distinct, to ensure that there is an appropriate balance of power, authority and accountability at the Board level.

The Board is led by the Chairman, YBhg. Tan Sri Dr. Ali Hamsa who is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role and setting its agenda. The Chairman is also responsible for creating an environment for open, robust, and effective debate. This include ensuring, via Company Secretary, that the Directors receive accurate, timely and clear information.

Mohd Faris Adli Shukery is the Managing Director of the Company, and are responsible for the day-to-day management of the Group’s business operations and execution of decisions of the Board. He, together with the support of the Management team, formulate business strategies and plans to achieve the Group’s vision and missions, targeted growth, turnover, and profitability to meet the stakeholders’ expectation. He is responsible for implementing the policies and decisions of the Board, and coordinating the implementation of business and corporate strategies.

Qualified and Competent Company Secretary

The Company Secretary plays an advisory role to the Board and supports the Board in fulfilling its fiduciary duties and leadership role in shaping the corporate governance practices of the Group.

The Company Secretary also facilitates the communication of key decisions and policies between the Board and Senior Management.

The Company Secretary of the Company has professional credential and is qualified to act as a Company Secretary under Section 235(2) of the Companies Act 2016.

The Secretary whose appointment and removal are subjected to the Board’s approval, is required to attend all Board and Board Committees’ meetings.

Access to information

The Board has direct access to the advice and service of the Company Secretary and has full unrestricted access to information in relation to the Group’s business and affairs.

The Chairman, assisted by the Company Secretary takes responsibility in ensuring that the Directors receive all notices, agendas and minutes of the previous meetings and supplied with pertinent information well in advance of each meeting. The agenda for each meeting shall be circulated at least seven working days before each meeting to the Board Members and all those who are required to attend the meeting. Written materials including information requested by the Board from the Management and/or external consultants shall be received together with the agenda for the meetings. The Managing Director, in consultation with the Chairman, would decide on the agenda, and accordingly structure and prioritise the respective matters based on their relevance and importance, to enable quality and in-depth discussion of the matters. All decisions and conclusions of the Board meetings are to be duly recorded and minutes are kept by the Company Secretary.

The Board recognises the importance of providing timely, relevant and up-to-date information in ensuring an effective decision-making process by the Board. In this regard, the Board is provided with not just quantitative information but also those of qualitative nature that is pertinent and of quality that are necessary to allow the Board to effectively deal with matters that are tabled in the meeting.

Board Charter

The duties and responsibilities of the Board of Directors are clearly defined in the Board Charter which regulates how business is to be conducted by the Board, in accordance with the principles of good Corporate Governance.

The Board Charter addresses, which include amongst others, the Board responsibilities, Directors’ Code of Ethics, composition of Board, responsibilities of Chairman and Managing Director, the establishment of Board Committees, meetings, remuneration, accountability and audit, Company Secretary, conflict of interests and access to independent professional advice.

The Board Charter will adopt any changes to the MCCG 2017, the Companies Act 2016 or any other relevant rules and regulations from time to time for best practices.

ACCESS TO INDEPENDENT PROFESSIONAL ADVICE

In discharging Directors’ duties, each member of the Board is entitled to obtain independent professional advice at the cost of the Company.

If a member considers such advice is necessary, the member shall first discuss it with the Chairman and having done so, the member shall bring this matter up to the Board. The reason(s) for seeking independent professional advice and the proposed cost involved should be presented to the Board for approval. Once Board’s approval is obtained, the member is free to proceed.

The member should provide proper notice to the Company Secretary of the intention to seek independent advice and shall provide the name(s) of the professional advisors that he/she intends to contact, together with a brief summary of the subject matter for which professional advice is to be sought. The Company Secretary shall provide written acknowledgement of acceptance of notification. If one or more Directors seek to appoint one or more advisors, the Chairman should take steps to facilitate discussions to arrive at a consensus. Fees for the independent professional advice will be borne by the Company but approval from the Board will be required.

The above restriction shall not apply to Managing Director acting in furtherance of his executive responsibilities and within his delegated powers.

For the purpose of this section, independent professional advice shall include legal, accounting, or other professional financial advice. Independent professional advice shall exclude any advice concerning the personal interests of the Directors (such as with respect to their contracts or disputes with the Company), unless these are matters affecting the Board as a whole and have the unanimous agreement of the Board.

ACCESS TO THE MANAGEMENT

Board members must have complete unimpeded access to the Company’s Management. Board members must have unrestricted access to information pertaining to the Company including the Company’s auditors and consultants.

In accessing its rights to information and the Management, Board members must use judgement to ensure that such access is not distracting the operations of the Company and that such contact, be copied to the Managing Director and Chairman.

Furthermore, during deliberations, the Board should encourage the Management when necessary, to bring managers into Board meetings who:

  • Can provide additional insight into the items being discussed because of personal involvement in these areas; and/or
  • Have potential for future senior managerial positions that Senior Management believes could be enhanced by exposure to the Board.

BOARD COMPOSITION

The composition of the Board will reflect the duties and responsibilities to discharge and perform as representative of the interests of the shareholders. The composition of the Board shall reflect as much as possible or practicable, proportional representation of investments in the Group. Directors are not required to hold any qualification share.

A formal invitation to join the Group as a Board member would be extended by the Chairman after approval from the Board. The Chairman should ensure that all Board members, when taking up office, are fully briefed on the terms of their appointment, duties and responsibilities. New members will also be briefed on the operations of the Group to increase their understanding of the business, environment and markets in which the Group operates. The new members will be given a copy of the Board Policy Manual, which consists of the following information:

  • Group Organisation;
  • Board Organisation;
  • Board Responsibilities;
  • Board Procedures;
  • Board’s and Director’s Evaluation; and Additional information including the latest business plan and budget, the latest Integrated Reports and accounts, and minutes from previous three Board of Directors’ meetings and applicable Committee Meetings.

The new members will be required to meet key members of the Management. Members are expected to keep themselves abreast of changes and trends in the business and with the Group’s business environment and markets, and changes and trends in the economic, political, social, legal and regulatory climate that could affect the business of the Group.

In addition, the Constitution provide that the office of any Director shall become vacant if such Director:

  • Becomes bankrupt;
  • Be found to be lunatic or of unsound mind;
  • Ceases to be a Director under the provisions of the Companies Act 2016;
  • Be convicted of any sizeable offences; and
  • By notice in writing given to the Company, resigns from his office;
    – is removed by ordinary resolution of the Company subject to the provisions of Article 104; and
    – is absent for more than 50% of the total Board of Directors’ meeting held during a financial year.

As at the date of this Statement, the Board has eight members, comprising of a Non-Executive Chairman, a Managing Director and six Non-Executive Directors, of which four are Independent Non-Executive Directors. The size and composition of the Board are adequate to provide for a diversity of views and the effectiveness stewardship of the Company.

Managing Director

  • Mohd Faris Adli Shukery

Independent Non-Executive Directors

  • YBhg. Tan Sri Dr. Ali Hamsa (Chairman)
  • Dato’ Sr. Hisham Jafrey
  • Abdullah Abu Samah
  • Fawzi Ahmad
  • Kandasamy A/L Kanny

Non-Independent Non-Executive Directors

  • Mohd Nordin Jamaludin
  • Shamsul Anuar Abdul Majid

There were several changes to the Board composition. Mohd Nordin Jamaludin and Shamsul Anuar Abdul Majid were appointed to the Board as Non-Independent Non-Executive Directors (“NINED”) on 10 July 2020. On the same date, the Board accepted the resignation of Wan Su Ali as NINED and Idham Jihadi Abu Bakar as Non-Independent Executive Director (“NIED”). Abdullah Abu Samah and Fawzi Ahmad were appointed as Independent Non-Executive Directors (“INED”) on 1 January 2021. Meanwhile, Dr. Radzuan A. Rahman had resigned as INED on 31 December 2020.

Zulkifly Zakaria had resigned from the Board as Executive Director on 15 September 2020. Mohd Faris Adli Shukery was appointed to the Board as Managing Director on 1 October 2020.

On 1 March 2021 YBhg. Tan Sri Dr. Ali Hamsa was appointed as Chairman/Independent Non-Executive Director, replacing Datuk Anuar Ahmad who had resigned on the same date.

INDEPENDENT NON-EXECUTIVE DIRECTOR

The presence of INED provides a pivotal role in corporate accountability. The role of the INED is particularly important as they provide independent and objective view, advice and judgement, and ensure strategies proposed by the Management are thoroughly discussed and evaluated, and that the long-term interests of stakeholders are considered. The INED do not participate in operation of the Group in order to uphold their objectivity and fulfil their responsibility to provide check and balance to the Board.

Currently, we have five INED in the Board which are in line with Practice 4.1, that recommend the Board to have at least half of the Board independent.

The Board is presently of the view that there is no necessity to fix a maximum tenure limit for INED as there are significant advantages to be gained from the long-serving Director who possesses tremendous insight and knowledge of the Company’s businesses and affairs.

BOARD DIVERSITY

The size and composition of the Board provides for a diversity of views, the desired level of objectivity and independence in Board deliberations and decision making. The Directors of the Group are persons of high integrity and calibre who come from diverse backgrounds with expertise and skills, such as accounting, plantations, economics, taxation and legal.

The appointment of Senior Management are based on objective criteria, merit and with due regard for diversity in skills, experience, length of service and knowledge of the Group and cultural background.

FOSTER COMMITMENT OF THE DIRECTOR

The Director dedicated sufficient time to carry out their responsibilities in Board representations. The dates of the meetings of the Board for each financial year were fixed in advance for the whole year to ensure all Director’s members dates are booked and also to facilitate Management’s planning for the whole financial year. During the FY2020, five Board Meetings including two Special Board Meetings have been held.

The Board is satisfied with the level of time commitment given by the Directors in the discharge of their roles and responsibilities as the Directors of the Company as evidenced by their attendance at the respective meetings, during the FY2020, set out as below:

  299th BOD
10/05/2020
300th BOD
16/08/2020
SPECIAL BOARD
10/09/2020
301st BOD
08/11/2020
SPECIAL
BOARD
22/12/2020

 

TOTAL


Datuk Anuar Ahmad / / / / / 5/5
Mohd Faris Adli Shukery N/A N/A N/A / / 2/5
Dr. Radzuan A. Rahman / / / / / 5/5
Dato’ Sr. Hisham Jafrey / / / X / 4/5
Kandasamy A/L Kanny / / / / / 5/5
Mohd Nordin Jamaludin / / / / / 5/5
Shamsul Anuar Abdul Majid / / / / / 5/5 


DIRECTORS’ TRAINING

The Board is provided with opportunities to update and refresh their knowledge throughout the year, ensuring that they can fulfil their role as members of the Board and Committees effectively. In financial year 2020, the Directors attended various training programmes on issues relevant to the Group.

Training programmes, seminars and briefings attended by the Directors during the year were, among others:

  • Mandatory Accreditation Programme for Directors of Public Listed Companies;
  • IFRS Annual update for Partners;
  • COVID-19 Auditing Considerations;
  • IFRS update on Rent Concession; and
  • Anti-Money Laundering Seminar 2020.

REMUNERATION

The Board believes that the levels of remuneration offered by the Group are sufficient to attract Directors, with sufficient experience and talents, to contribute to the performance of the Group. Comparison with similar position within the industry is made to arrive at a fair rate of remuneration. The Board will determine the level of remuneration paid to members.

The details of the remuneration of each Director paid by the Company during the FY2020 are as follows:

  Salary Allowance/
Others
Emolument
Bonuses Benefits
in-kind

 

Total


RM '000

Executive Director
Zulkifly Zakariah 247 384 19 18 667
Managing Director
Mohd Faris Adli Shukery 105 65 1 5 175
Independent Non-Executive Directors
Datuk Anuar Ahmad - 13 - - 13
Dato' Sr. Hisham Jafrey - 15 - - 15
Dr. Radzuan A.Rahman - 16 - - 16
Kandasamy a/l Kanny   12 - - 12
Non-Independent Non-Executive Directors
Ahamad Mohamad - 9 - - 9
Idham Jihadi Abu Bakar 105 25 - - 130
Mohd Nordin Jamaludin - - - - -
Shamsul Anuar Abdul Majid - - - - -
Grand Total 457 539 20 23 1,037


CODE OF ETHICS

The Code of Ethics sets forth the standard of conduct and culture required for all employees of the Group. It sets out the ethical standards of conduct that all employees are expected to comply with, in their dealings with colleagues, customers, shareholders, suppliers, competitors, the wider community and the environment.

Among others, it also requires the employees to ensure the following:

  • Maintaining full and accurate company’s records;
  • All assets and properties of the company will be used only for the benefit of the company;
  • Always deal with customers and suppliers based on merit and fairness;
  • Engage competitors in a fair manner and not to engage in any unfair or illegal practice in order to gain an unfair advantage;
  • Always act to ensure a workplace environment that is free from harassment and discrimination;
  • Deal with all team members with respect, courtesy and fairness;
  • Engage competitors in a fair manner and not to engage in any unfair or illegal practice in order to gain an unfair advantage; and
  • Adhere to the Group’s Code of Ethics

The Board has set up guidelines which are designed to legalise acceptable behaviours for the committee members to increase confidence in the Group, by showing that the Board members are committed in the following basic ethical guidelines in the course of discharging its duties that cover:

  • Corporate Governance;
  • Relationships: Shareholders, Employees, Creditors, Customers; and
  • Social Responsibilities and Environment.

The Directors are required to adhere to the Code of Ethics which is contained in the Board Policy Manual, comprising important aspects as follows:

  • Members must represent non-conflicted loyalty in the interests of the Group;
  • Members must avoid conflict of interest with respect to their fiduciary responsibility;
  • Members may not attempt to exercise individual authority over the Group except as explicitly set forth in the Board Policy; and
  • Members will respect the confidentiality, appropriate to issues of a sensitive nature.

The Directors have the duty to declare immediately to the Board of their interests in any transaction to be entered into, directly or indirectly, with the Company/Group. The interested director shall abstain from all deliberations and decision making of the Board on the transaction.

WHISTLE-BLOWING POLICY

This Policy covers any information or complaints received related to an “improper conduct”, committed or about to be committed. Kulim assures that all information and identity of the informant or whistle-blower will be processed confidentially and securely.

The objectives of the Policy are as follows:

  • Provide a channel for secure reporting against improper conducts;
  • Provide assurance to the whistle-blower that he/she will be protected from retaliation or reprisal; and
  • Ensure that any complaints received will be processed, proper action to be taken and ends with a systematic and effective action.

This policy encourages informant or whistle-blowers to disclose their identity or how they can be contacted. However, anonymous information will be entertained and considered for action subject to the decision of the Board Audit and Risk Committee. Kulim views retaliation or reprisal against the informant or whistle-blower seriously. Kulim provides assurance that all disclosures are protected with confidentiality and he/she would be protected against retaliation in any form under this policy.

Other than make a report to the Kulim’s whistle-blowing channel, any employees or person who wants to disclose or report any improper conduct is free to lodge a report to any enforcement agency, if they choose to do so. Employees or any person who discloses improper conduct to any enforcement agency shall be protected under the Whistleblower Protection Act 2010.

Kulim’s Whistle-blowing Policy is published on the Group’s website.

ISO 37001: 2016 ANTI BRIBERY MANAGEMENT SYSTEM

Kulim has signed JCorp’s Corporate Integrity Pledge on 15 November 2018 and remains committed to uphold the integrity principles and creating a business environment that is free from corruption through the establishment of Integrity Unit in November 2019.

In ensuring that Kulim is free from corruption in the conduct of its business and in its interactions with its business partners and the authorities as well as complying to the Section 17A of the Malaysian Anti-Corruption Commission (Amendment) Act 2018 on corporate liability, Kulim is in the progress to be certified for ISO 37001:2016 Anti-Bribery Management System (“ABMS”), one of the tools for fighting corruption and as a defense in meeting the requirement of “adequate procedures”. The process for certification commenced in November 2019 and is expected to be certified in
the second quarter of 2021.

KULIM Anti-Bribery and Corruption Plan has been developed and will be continuously reviewed to translate the framework to key deliverable areas to achieve the anti-bribery and corruption objectives. The achievement against the objectives shall be monitored and reviewed periodically by:

  1. Reviewing anti-bribery and corruption related policies and procedures.
  2. Conducting integrity and ABMS awareness programs annually.
  3. Promoting ABMS amongst all business associates and obtain their commitment.
  4. Conducting ABMS performance evaluation annually.

On 10 September 2020, Kulim’s Board of Directors have approved the new and revised six anti-bribery and corruption policies that will set out the Group’s position on corruption in all its forms and provide guidance on how to act when subjected to potential acts of corruption that might confront the Group in its day-to-day operation.

Apart from the commitment made by the Board, Kulim has successfully obtained the cooperation and commitment on anti-bribery and corruption from its employees and business associates through the declaration made on Employees’ Asset, Conflict of Interest and Anti-Bribery and Corruption pledge. The declaration will be continuously practiced for the existing and new employees, and business associates. A Bribery Risk Assessment was conducted to identify and evaluate the exposures within the Group, and mitigation plans have subsequently been developed and implemented during the year.

The Integrity Unit is responsible for continually promoting good governance, strengthening integrity, monitoring compliance, and dealing with improper conduct.

 



PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

FINANCIAL REPORTING

The Board is committed to ensure that the financial statement of the Group present a balanced, clear and meaningful assessment of the financial performance and prospects of the Group.

The Board Audit and Risk Committee (“BARC”) is entrusted with the responsibility of reviewing the integrity and reliability of the Group’s financial statements as well as ensuring that these financial statements comply with the relevant accounting and regulatory requirements prior to recommending for the Board’s approval.

The Statement of Responsibility by Directors in respect of the preparation of the annual audited financial statements of the Company and the Group is presented in the Integrated Report.

RELATIONSHIP WITH EXTERNAL AUDITORS

The BARC has established a formal and transparent relationship with the external auditors. During the year 2020, the BARC had met with external auditors once without the presence of the Management to discuss the Group’s audited financial statements for the year ended 31 December 2019 and any matters arising from the audit.

The services provided by the external auditors included statutory
audit and non-audit services. The terms of engagement for the services rendered by the external auditors were reviewed by the BARC and approved by the Board.

INTERNAL AUDIT FUNCTION

The internal audit function is carried independently by Internal Audit Department. They review, assess and highlight significant risks that may have impact on the Group’s operations. The Internal auditors adhere to the International Standard for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors.

All audit reports detailing the audit findings and recommendations are provided to Management with their response on the actions to be taken.

The summary of activities of the Internal Audit function during the year are set out in the BARC Report.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board acknowledges its responsibilities in an effective internal control system for the Group, covering not only financial controls but also controls relating to operational, compliance and risk management.

The Governance Management Committee (“GMC”) assists the Board to oversee the risk management matters relating to the activities of the Group. The GMC reviews the risk management framework and processes to ensure that they remain relevant for use, and monitors the effectiveness of risk treatment/mitigation plans for the management and control of the key risks.

The overview of the state of internal control and risk management within the Group is set out in the Statement on Risk Management and Internal Control in this Integrated Report.

PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

Our Board is committed to disclose information in an adequate and timely manner, whether financial, organisational, governance or transactions related, to enable our stakeholders to assess our Group’s performance.

COMMUNICATION WITH STAKEHOLDERS

The Group has been using the following formal channels to communicate with shareholders and stakeholders :

a) Integrated Report

The Integrated Report remains a major channel of communication disclosing information not only on the Group’s business, financials, and additional information such as the Group’s mission and vision, operation performance, outlooks and Senior Management team. The Board also places great importance on the contents of the Integrated Report to ensure the accuracy of the information as the Integrated Report is a vital source of information.


Integrated Reports of the Company are available to be viewed online on the Company’s website.

b) Audited Financial Statements

The Board is fully accountable in ensuring the Audited Financial Statements are prepared in accordance with the Companies Act 2016 and the Malaysian Financial Reporting Standards (“MFRS”) so as to present a true and fair view of the Group and Company’s state of affairs, results and cash flows as at the end of the accounting period.

In preparing the Audited Financial Statements, the Directors are satisfied that the applicable MFRS and provisions of the Companies Act 2016 have been complied with, and reasonable and prudent judgements and estimates have been made.

c) Sustainability

The Board recognises that the Company’s stakeholders are increasingly interested in understanding its approach and performance in embedding sustainability in the organisation.

The Group has published a Sustainability Report which disclose the Group’s efforts and initiatives in managing its material economic, environmental, and social risks and opportunities.

The reporting is guided by the Global Reporting Initiative (“GRI”) standard. The Sustainability Statement is on pages 133 to 153 of the Integrated Report.

RELATED PARTY TRANSACTIONS

All related party transactions entered by the Group were made in the ordinary course of business and on the same terms as those prevailing at the time for comparable transactions with other persons or charged based on equitable rates agreed between the
parties.

Details of the transactions entered by the Group during the FY2020 are set out on pages 143 to 147 of this report.