Introduction

The Board Charter is a charter of the Board of Directors of Paragon Globe Berhad
(“PGB” or “the Company”).

Purpose

  • The primary objective of the Board Charter is to set out the roles and responsibilities of the Board of Directors (“the Board”) and serves as a general statement of intent and expectation as to how the Board will discharge its duties.

Roles and Responsibilities of the Board

  • A key role of the Board as a whole assumes full responsibility of leading, guiding and monitoring the performance of the Group and exploring new opportunity for the Group’s continual business growth. To that, the Board also undertakes to work towards a balanced approach in fulfilling the Group’s key business objectives and the stakeholders’ expectations.

Board Size and Composition

The Board should comprise:

  • not more than 20 members;
  • at least two members or one-third of its members (whichever is the higher) as
    independent directors. If the number of Directors is not 3 or a multiple of 3, then the number nearest to 1/3 must be used. If a vacancy in the Board results in non-compliance with the required composition of independent directors, the vacancy must be filled within 3 months (paragraph 15.02 of the Main Market Listing Requirements);
  • members who possess the qualification, necessary skills, qualities and experience towards achieving the Company’s goals;
  • appropriate mix of knowledge, attributes and core competencies of directors; and
  • a meaningful proportion of non-executive directors with key attribute of independence. Such directors should ensure that the varied competing interests of all stakeholders are respected without sacrificing financial performance and accountability.
  • a Senior Independent Director is appointed among the Independent Directors, to whom concerns of fellow members as well as the shareholders and stakeholders may be conveyed.

Role of the Executive Chairman, Executive Directors / Chief Executive Officer, and Non-Executive Directors

Executive Chairman

  • The Chairman is elected by the Board and is responsible for the leadership and
    management of the Board and ensuring the integrity and effectiveness of the governance process of the Board and Board Committees function effectively. He oversees and evaluates the conduct and performance of the Group and undertakes to ensure efficient functioning of the Board and that procedural rules are followed and quality information to facilitate decision-making is delivered to Board members on a timely basis. He also holds the primary executive responsibility for the Group’s business performance and manages the Group in accordance with the strategies and policies approved by the Board. He leads the Executive Directors(“ED”) and Chief Executive Officer (“CEO”) in making and implementing the day-to-day decisions on the business operations, managing resources and risks in pursuing the corporate objectives of the Group. He brings material and other relevant matters to the Board, motivates employees and drives change/innovation and growth within the Group.

Executive Directors and Chief Executive Officer

  • Executive Directors and CEO oversee the day-to-day operations within their specific area of expertise or assigned responsibility. They represent the Company at the highest level and are decision makers on matters within their scope. They liaise frequently with the Chairman and with each other to lead the management to drive the Group forward.
  • They provide executive leadership and are accountable for the Board for implementation of strategies, objectives and decisions of the Board within the framework of delegated authorities, values and policies.

Non-Executive Directors

Non-Executive Directors (NEDs) are:

  • those who have no direct or indirect pecuniary interest in the Company other than their directors’ emoluments and/or their shareholdings in the Company;
  • those who are not employees of the Company and are not involved in the day-to-day running of business, but are standing as nominees for major shareholders.

NEDs would act as a bridge between Management and stakeholders, particularly
shareholders. They would provide the relevant checks and balances, focusing on
shareholders’ and other stakeholders’ interests and ensuring that high standards of
corporate governance are applied.

Senior Independent Non- Executive Director (“SID”)

The Board shall appoint among its members a Senior Independent Director. The selection of SID is based on his experience and the significant influence he has within the Board, ability to convey concerns of the Independent Directors on the Board to other members of the Board and in the event of dissention between the Chairman or Executive Directors of the Company in the execution of their duties as Independent Directors.

The SID will be expected to act as:

a. sounding board for the Chairman;

b. an intermediary for other Directors when necessary; and

c. the point of contact for shareholders and other stakeholders.

Responsibility of the Board

The Board has the overall accountability and responsibility for oversight and control of the Company’s performance and conformance capabilities, which include, inter-alia, the following:

  • reviewing and adopting a strategic business plan for the Company, aligned to ensure obligations to shareholders and stakeholders are met;
  • overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed, the Board should therefore provide entrepreneurial leadership;
  • identifying principal risks and ensuring the implementation of appropriate systems to manage these risks – the Board should appraise the Company’s major risks and oversee that appropriate risk management and internal control procedures are in place;
  • reviewing the adequacy and the integrity of the Company’s internal control systems
  • reviewing the responsibilities of each Board Committee as and when required.

Formal Schedule of Matters that are Reserved for the Board's Deliberation and Decision-Making

The formal schedule of matters that would be reserved for the Board’s deliberation and decision-making include, amongst others, the following:

Setting of Authority Limits

  • The Board should set authority limits which are relevant to the business operations of the Company.

Strategy Setting, Implementation and Supervisory

  • The Board should review the Group’s (including associates where relevant) strategic direction, including the approval of corporate exercises or restructuring plans.

Board Processes in Meetings

  • There should be a meaningful review of outstanding major action items from previous meetings.
  • A candid discussion of current issues, which may significantly affect the business of the Company, should be encouraged. These issues include but not limited to the following:
    • risk management matters;
    • major economic and industry trends;
    • adverse publicity/rumours concerning the Company and/or its subsidiaries;
    • changes in regulatory requirements in the industry/business that the Company operates in; and
    • monitoring of Management’s performance.

Monitoring of Financial Performance

  • The Board should conduct a review of the Company’s performance, i.e. financial results and operations of the current quarter, year-to-date and annual budgets.
  • There should be a discussion and approval of capital expenditure and/or disposal of capital items sanctioned over and above delegated levels, i.e. where the amount involved exceeds a predetermined threshold given to Management.
  • The Board should ensure proper procedures are put in place and that the financial statements (including quarterly/year-end announcements) of the Group (comprising the Company and its subsidiaries) are reviewed for integrity and approved for timely lodgement with, and/or release to the authorities and the Stock Exchange.

Risk Management and Internal Control

  • The Board must actively identify, assess and monitor key business risks to safeguard shareholders’ investments and Company’s assets, including the relevant measures deployed by Management to address the said risks.
  • The Board must understand the principal risks of the business that the Company is engaged in and recognise that business decisions require the incurrence of risk. Board of Directors must ensure that there is in place systems that effectively monitor and manage these risks with a view to the long term viability of the Company.
  • A periodic review of the Company’s internal control systems and risk management process, including the procedures thereof, should be carried out.

Remuneration Review

  • The Board should review for approval recommendations from the Remuneration Committee on remuneration packages of Executive Chairman and Executive Directors and also to recommend director fees of Non-Executive Directors for shareholders’ approval at the Annual General Meeting of the Company.

Conduct of Board Meetings

  • Board meetings should be conducted in a manner where all directors feel encouraged to share their views and partake in discussions.
  • The notice of Board and Committee meetings, full agenda and the supporting meeting papers should be given in advance to the respective members to facilitate their deliberations and decision making during each meeting.
  • The quorum of meeting shall not be less than two.
  • Minutes of meeting shall be properly documented by the Company Secretary and shall remain confidential. The Board should review the minutes to ensure completeness and accuracy.

Board Committees

  • The Board has delegated specific responsibility to its three committees namely Audit, Nomination and Remuneration Committees, all of which have terms of reference to govern their respective responsibilities. The Board Committees will deliberate and examine issues within their defined terms of reference and report to the Board with their recommendation.

Audit Committee

  • The key function of the Audit Committee is to assist the Board to oversee the Group’s financial reporting process for quarterly results and annual financial statements to ensure correctness and adequacy before the release thereof to the Authorities and the Stock Exchange. The Audit Committee also assists in assessing the risks and control environment of the Group, evaluating the internal and external audit processes and reviewing any conflict of interest situations and related party transactions.

Nomination Committee

  • The Nomination Committee is charged with the responsibility of proposing suitable new nominees for appointment as Directors and to fill the seats on Board Committees wherever necessary. It will also carry out the process of assessing the effectiveness of the Board as a whole, the Board Committees and the contribution of each individual Director annually.
  • The Board shall upon the recommendation of the Nomination Committee, justify and seek shareholders’ approval in the event it desires to retain a Director who has served as an independent director for more than 9 years.

Remuneration Committee

  • The primary objective of the Remuneration Committee is to assist the Board in developing and establishing competitive remuneration policies and packages accorded to the Directors to ensure that the Executive Directors’ level of remuneration commensurate with their experience, level of responsibilities, achievement and contribution to the Group. As for the Non-Executive Directors, to ensure it is consistent with their commitment, participation and contribution to the Group.

Risk Management Committee

  • The responsibilities of the Risk Management Committee are to oversee the Company’s risk management matters and also to review the effectiveness of the risk management framework in identifying and managing risks and internal processes which include but not limited to ensuring the adequacy of risk management policy and infrastructure to facilitate the implementation of action plans for risk management.

Directors' Training and Development

  • All newly appointed Directors must complete the mandatory Accreditation Programme as required by the Bursa Malaysia Securities Berhad, and shall continue to update their knowledge and enhance their skills through appropriate continuing education programmes to enable them to effectively discharge duties and sustain active participation in the Board deliberations.
  • The Board will assess the training needs of the Directors from time to time and will ensure Directors have access to continuing education programme.

Board Remuneration

  • The remuneration of the Executive Chairman, Executive Directors is structured on the basis of linking rewards to corporate and individual performance. For Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by each Director. They receive a basic fee and an attendance fee for attending meetings.
  • The Board as a whole resolve on the fees for the Non-Executive Directors with individual Directors abstaining from decisions in respect of their individual remuneration. The fees payable to the Non-Executive Directors are subject to the approval of shareholders.

Board Evaluation

  • The Nomination Committee is entrusted by the Board to review the performance and effectiveness of the Board and Board Committees, including individual Directors, annually, with the assessment report, together with the summary on the Board balance covering the required mix of skills, experience and other qualities of Board members for discussion at the Board meeting.
  • Company secretaries are authorised to collate the results of the evaluation process before tabling to the chairman of Nomination Committee and Board, to ensure integrity and independence of the appraisal process.

Decision Making

  • All strategic decisions are made at Board meetings after due deliberations and where appropriate decisions are also made by way of circular resolutions in between of scheduled meetings.

Access to Information and Independent Professional Advice

  • The Board shall have unrestricted access to all Company information, documents, records and property.
  • The Board will ensure that every Board member has access to independent professional advice, both inside and outside the Company, as and when they consider necessary, in order for them to properly perform their duties.

Whistleblowing Policy

  • The Board should establish, review and together with Management implement appropriate policies and procedures on whistleblowing.
  • The oversight of the whistleblowing functions is under the purview of the Risk Management Committee who shall ensure that all reported violations are properly investigated. The Risk Management Committee is also responsible for reviewing the effectiveness of the actions taken in response to all concerns raised.

Reporting

  • The Company aims to present a clear and balanced assessment of the Company’s financial position and prospects for its financial statements and quarterly announcements to the shareholders, including other price sensitive public reports and reports submitted to regulators.
  • The Board will ensure that the financial statements are prepared in accordance with the Companies Act and the applicable approved accounting standards set out by the Malaysian Accounting Standards Board so as to present a true and fair view of the state of affairs of the Group.

Relationship with Shareholders and Investors

  • The Board is committed to ensure that shareholders are well-informed of all major developments affecting the state of affairs of the Group through timely dissemination of information on the Group’s performance and major corporate developments via appropriate channel of communication which includes distribution of annual reports, relevant circulars to shareholders, press releases (where appropriate), quarterly performance results and corporate announcements to Bursa Securities.
  • The Annual General Meeting is the principal forum for dialogue and interaction with shareholders wherein shareholders are encouraged to attend and participate. Directors, the Financial Controller and the External Auditors will be present to respond to the queries and to provide explanation on the issues raised thereat.

Corporate Social Responsibility

  • The Group undertakes its corporate social responsibility conscientiously by doing business in a responsible manner, for the shareholders, employees and business partners at large.

Code of Ethics

  • The Board adheres to the Code of Ethics for Company Directors issued by the Companies Commission of Malaysia. All Directors and employees are expected to behave ethically and professionally at all times to protect and promote the reputation and performance of the Company. The Group communicates the Code of Ethics to its Directors upon their appointment.

Review of Board Charter

  • The Board will regularly review the Board Charter to ensure they remain consistent with the Board’s objectives, responsibilities and the relevant standards of corporate governance.