The Board is primarily responsible for ensuring that ARK Resources Holdings Berhad (“ARK”) has an appropriate corporate governance structure to ensure the creation and protection of shareholders’ value.
The Board is also responsible for ensuring that management recognizes ARK’s legal and other obligations to all legitimate stakeholders. “Stakeholders” are groups that are likely to feel a social, environmental, economic or financial impact from ARK’s actions. They include shareholders, customers, suppliers, employees, government regulators and members of the communities where ARK operates and are affected by ARK’s activities.
ARK’s obligations to its Stakeholders require that appropriate accountability and control systems are in place.
This Board Charter explains ARK’s commitment to corporate governance. It is not an “all inclusive” document and should be read as a broad expression of principles. The Board will review and update this Charter on an annual basis.
ARK endorses the Malaysian Code on Corporate Governance 2012 issued by the Securities Commission.
2. COMPOSITION OF THE BOARD
The Board is to comprise:
- Directors with an appropriate range of skills, experience, and expertise;
- Directors who have a proper understanding of, and competence to deal with, current and emerging issues of the business;
- Directors who can effectively review and challenge the performance of management and exercise independent judgement; and
- at least one-third of the Board must be Independent Directors who meet the requirements prescribed by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
The Board should be of a size and composition that is conducive to making decisions expediently, with the benefit of a variety of perspectives and skills, and in the best interest of the Group as a whole rather than of individual shareholders or other stakeholders.
3. DUTIES AND RESPONSIBILITIES
The Board is responsible for setting the strategic direction of the ARK Group and monitoring the implementation of that strategy by the management team, including:
(A) Strategy and Planning
(B) Human Resource
- Establish overall business objectives and consider whether they continue to be appropriate in the context of business opportunities being pursued.
- Review and approve management strategies and plans designed to pursue business objectives and ensure they continue to remain prudent in the context of the objectives of the business, the economic environment, available resources and reasonable achievability of results.
- Approve and monitor the progress of major capital expenditure and acquisitions/divestitures.
- Establish procedures for the approval of all significant acquisitions and major contracts and approve all significant acquisitions and major contracts outside the ordinary course of business.
- Approve 12 months’ operational budgets and evaluate results against budgets in the context of business objectives, strategies and operations plans being pursued.
- Approve all major changes to the structure of the organization.
- Define required board competencies and number and profile of board members.
- Appoint board members.
- Approve induction program for new board members and ongoing training programs.
- Ensure easy access to internal and external sources of information and advice.
- Manage performance of the board as a whole and of the individual members.
- Appoint the Managing Director/Chief Executive Officer; review the performance of Managing Director/Chief Executive Officer and provide counseling and mentoring if and when required.
- Evaluate performance of senior management.
- Approve appointment and removal of the Company Secretary.
- Approve executive succession plans.
(D) Capital Management and Financial Reporting
- Determine remuneration of Directors to ensure that they are consistent with sustainable achievement of business objectives, prudent management of operations and prompt ongoing assessments on the risks to which the company is exposed.
- Approve remuneration and contracts of senior management members on the recommendation of the Managing Director/Chief Executive Officer.
- Approve employees’ share option schemes for submission to shareholders for approval at General Meeting and any other executive incentive schemes.
(E) Performance Monitoring
- Monitor and review the capital and solvency positions of the Group.
- Approve quarterly reports, audited financial statements and Annual Report.
- Approve dividend policy and dividend payments.
- Approve major financing arrangements.
(F) Risk Management
- Approve relevant financial and non-financial Key Performance Indicators (KPIs) to be reported by management.
- Audit Committee to conduct KPI review with Managing Director/Chief Executive Officer and senior management annually.
- Consider and approve any action/remediation plans to be implemented.
(G) Audit and Compliance
- Review major risks the Group is likely to be exposed to.
- Review risk management resources, structures and processes and consider and approve changes.
- Approve risk management strategies.
- Monitor compliance with all legal, tax and regulatory obligations
- Review and ratify systems of risk management and internal compliance and controls, codes of conduct, continuous disclosure, legal compliance and other significant corporate policies annually.
- Review the effectiveness of ARK’s’ implementation of its risk management system.
(H) Board Processes and Policies
- Appoint/re-appoint/replace the external auditors and recommend for approval by shareholders at General Meeting and fix their remuneration.
- Define the scope of the external audit function.
- Review the control environment and audit and compliance resources, structure and processes and consider and approve changes.
- Approve the scope of internal audit and compliance issues.
- Review significant audit and compliance issues and consider and approve action and remediation plans.
- Decide the role and composition of board committees.
- Approve delegated authorities.
- Define and execute a policy dealing with conflicts of interest.
- Define codes of conduct governing related-party transactions, dealings in securities by Directors and principal officers, and insider trading policy.
- Approve policies dealing with Director’s liabilities, indemnities and insurance.
In discharging his/her duties, each Director must:
- exercise care and diligence;
- act in good faith in the best interests of ARK and its shareholders;
- not improperly use his/her position or misuse information of ARK; and
- commit the time necessary to discharge effectively his/her role as a Director.
- ensure that other commitments, including other directorships, do not interfere with their duties and responsibilities as a member of the Company’s board.
All Directors are entitled to be heard at all meetings and should bring an independent judgment to bear in decision-making. It is expected that every director will make an effort to attend each board meeting and the meeting of any committee on which the director sits. Attendance in person is preferred, but attendance by teleconference is permitted. Each director should be familiar with the agenda for each meeting, have carefully reviewed all materials distributed in advance of the meeting, and be prepared to participate meaningfully in the meeting.
At least once each year, the Directors will:
- review this Charter and approve any required amendments; and
- review the Board’s performance in the preceding 12 months.
To assist the Board in fulfilling its duties and responsibilities, the Board has established the following Committees:
(a) Nominations Committee, to assist the Board in relation to:
(b) Remuneration Committee, to assist the Board in relation to:
- Board appointments and performance
- Directors’ induction program
- Committee membership
- Senior management succession planning, appointment and termination
(c) Audit Committee, to assist the Board in relation to:
- Remuneration policies for Directors
- Remuneration policies for the CEO,CFO and senior management
- Grant of ESOS
- the reliability and integrity of information for inclusion in the Company’s financial statements
- enterprise-wide risk management
- compliance with legal and regulatory obligations
- the integrity of the Group’s internal control framework
- safeguarding the independence of the external and internal auditors
The Board may establish such committee it deems necessary or appropriate to assist in the discharge of its fiduciary duties.
With the exception of certain limited delegations contained in their respective charters, recommendations of the Committees are to be referred to the Board for approval
5. THE CHAIRMAN
The Chairman is responsible for:
- leading the Board in its responsibilities for the business and affairs of the Company and its oversight of management
- overseeing the Board in the effective discharge of its supervisory role
- the efficient organization and conduct of the Board’s function and meetings
- facilitating the effective contribution of all Directors
- briefing of all Directors in relation to issues arising at meetings
- the promotion of constructive and respectful relations between Board members and between the Board and the management
- committing the time necessary to discharge effectively his/her role as Chairman
- ensuring that there is regular and effective evaluation of the Board’s performance
In performing this role, the chair must work with senior management, manage the board, and promote effective relations with shareholders, other stakeholders and the public.
6. INDEPENDENCE OF DIRECTORS
Independent Directors are those who have the ability to exercise their duties unfettered by any business or other relationship and are willing to express their opinions at the board table free of concern about their position or the position of any third party.
The ARK Board does not believe it is possible to draft a list of criteria which are appropriate to characterize, in all circumstances, whether a Non-Executive Director is independent. It is the approach and attitude of each Non-Executive Director which is critical and this must be considered in relation to each Director while taking into account all other relevant factors, which may include those set out in paragraph 1.01 and PN13 of the Listing Requirements.
Directors are best able to determine if they have an interest or relationship which is likely to impact on their independence. As such, each Director is expected to advise the Chairman immediately if he/she believes they may no longer be independent.
Each Director must immediately disclose to the Chairman (with a copy to the Company Secretary) all information relevant for determining whether the Director is independent, including details of entities in which the Director has a direct or indirect shareholding (or other interest), or is a director.
7. ACCESS TO INFORMATION AND INDEPENDENT ADVICE
The Board and Committees must be provided with the information they need to efficiently discharge their responsibilities.
The management must supply the Board and Committees with information in a form, timeframe and quality that enables them to effectively discharge their duties. All Directors are to receive copies of Board Papers.
Directors are entitled to request and receive such additional information as they consider necessary to support informed decision-making. Any Director has the authority to seek any information he/she requires from any employee of the ARK Group and all employees must comply with such requests. It is expected that any significant issues are communicated to the Chairman, CEO, CFO or Company Secretary.
Any Director may take such independent legal, financial or other advice as they consider necessary at ARK’ cost. Any Director seeking independent advice must first discuss the request with the Chairman who will facilitate obtaining such advice and, where appropriate, dissemination of the advice to all Directors.
8. DEALINGS IN SECURITIES
The Company imposes restrictions on the trading of securities by Directors and principal officers with undisclosed price-sensitive information. All Directors must adhere to the said policy.
9. ORIENTATION AND CONTINUING EDUCATION
New directors will receive a comprehensive orientation from appropriate executives and staff regarding the business affairs of the Company. Directors are expected to remain abreast of issues and events in the sectors where the Group has an operating interest.
10. BOARD ASSESSMENT
The Board and its Committees will evaluate their own performance and effectiveness annually with the objective of continuous improvements. Generally, board performance will be measured against the following key metrics, including:
- the effectiveness with which the Board functions, including satisfaction of Board members regarding the functioning of the Board;
- the extent to which the Company carries out its responsibilities to shareholders, employees, customers, governments and the public; and
- the quality of communications between the Board and management, including satisfaction of members of management and Board members regarding this communication.
The Nominating Committee is responsible for coordinating and overseeing the annual Board evaluation process in accordance with the charter of that Committee.
- The Audit Committee shall be appointed by the Board from among their number and shall
consist of at least three members, all of whom shall be Non-Executive Directors, with a
majority of them being Independent Directors.
- At least one member of the Audit Committee:-
- must be a member of the Malaysian Institute of Accountants; or
- if he is not a member of Malaysian Institute of Accountants, he must have at least
three years’ working experience; and
aa. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
bb. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
- he must fulfill such other requirements as prescribed or approved by BMSB.
- No alternate director shall be appointed as a member of the Audit Committee.
- The Audit Committee shall elect among their numbers a Chairman who shall be an Independent Non-Executive Director. In his absence, the members present shall elect one amongst themselves to be the Chairman of the meeting.
- Any vacancy in the Committee resulting in the non-compliance with requirements on composition of audit committee and the election of an independent chairman of the audit committee, must be filled within three (3)months
The Audit Committee is authorized by the Board to investigate any activity of the Group within
its terms of reference and they shall be provided with the resources that are required to
perform their duties. The Audit Committee has full and unrestricted access to any information
pertaining to the Group and can communicate directly with the external and internal auditors.
In discharging their duties, the Audit Committee is entitled to obtain external legal or other independent professional advice, if required.
The Audit Committee shall meet at least four times a year.
The quorum for a meeting shall be at least two members where a majority of members present must be Independent Directors.
Questions arising at any meeting shall be determined by a majority of votes. The Chairman of the Committee, or the Secretary, on the requisition of any member, the Internal Auditor or the External Auditors, shall any time summon a meeting of the Committee by giving reasonable notice unless all the members of the Committee waive notice of a meeting. Notice of a meeting may be given in writing or by any other means of communication.
The Executive Directors shall normally attend the meetings but may be asked to leave a meeting as and when deemed necessary by the Audit Committee. A representative of the external auditors shall attend the meeting to discuss and finalise matters relating to the annual financial statements and such other matters as may be deemed necessary by the Audit Committee.
The Chairman of the Committee shall be entitled, where deemed appropriate, to invite any other person to a meeting of the Committee at which that person’s expertise may be required having regard to the subject matter to be discussed.
The Company Secretary is the Secretary to the Audit Committee.
Minutes of the meetings shall be duly entered into the books provided for the purpose of all resolutions and proceedings of all meetings of the Audit Committee. The minutes shall be formally tabled to the Board for noting and action. All recommendations of the Committee shall be submitted to the Board for approval.
The duties of the Audit Committee shall be to review and report the same to the Board:-
- Nomination and appointment of the external auditors, audit fee and question of resignation or dismissal of the external auditors;
- The external auditors’ audit plan and report, areas of concern arising from the audit and any other matters as the external auditors may wish to discuss (without the presence of the management, if necessary);
- The quarterly and annual financial statements before submission to the Board for approval, focusing particularly on:
- changes in or implementation of major accounting policies and practices;
- significant adjustments arising from the audit;
- going concern assumption; and
- compliance with applicable approved accounting standards in Malaysia and
- The adequacy of the scope, functions, competency and resources of the Internal Audit Function and that it has the necessary authority to carry out its work;
The audit plan and work program of the Internal Audit Function;
- For the quarterly results and year end financial statements, the Committee shall review them before the approval by the Board, focusing particularly on :-
- Changes in or implementation of major accounting policy;
- Significant matters highlighted including financial reporting issues, the provisions of the Companies Act, 1965 and other legal requirements; significant judgments made by management ,significant and unusual events or transactions, and how these matters are addressed; and
- Compliance with accounting standards and other legal requirements; and going concern assumption.
- Findings of the internal audit work and management action taken on the recommendations of the Internal Audit Function;
- Appraisal or assessment of the performance of members of the Internal Audit Function;
- Appointment of senior staff members of the Internal Audit Function or the outsource of the Internal Audit Function;
- Termination of senior staff members of the Internal Audit Function or the outsource of the Internal Audit Function;
- Being informed of any resignation of internal audit staff members or the outsource of the Internal Audit Function and to provide the resigning staff member or the outsource of the Internal Audit Firm an opportunity to submit his/her reasons for resigning;
- Extent of co-operation and assistance given by the employees to the external and internal auditors;
- To review and recommend the risk management policies and strategies and assists the Board in fulfilling its corporate governance, management and statutory responsibilities in order to manage the overall risk exposure of the company and its group of companies.
- Reviewing the Strategic Risk Register and evaluating and endorsing the effectiveness of systems for assessing and managing risk, including information risk.
- The propriety of any related party transaction and conflict of interest situation that may arise within the Group; and
- Any other functions as directed by the Board.