The Board of Directors of EURO Holdings Berhad (“the Board”) believes that good corporate governance is fundamental to ensure the long-term sustainability and good business performance of EURO Holdings Berhad and its subsidiaries (“the Group”). Therefore, the Board will continuously strive to ensure good corporate governance is implemented and carried out by Euro Holdings Berhad (“Euro” or the “Company”) as an integral part of its business culture. The Company will publish its Board Charter and all other relevant documents as required by the Malaysian Code of Corporate Governance (“MCCG”).
The Board Charter shows the commitment of the Board in employing the principles of integrity, transparency and professionalism to ensure the practice of good corporate governance that will safeguard and enhance shareholders’ value and at the same time protect the interests of its stakeholders. The Board Charter serves as a source reference providing guidance to the Board members to assist the Board in discharging its roles, duties and responsibilities in line with the principles of good governance.
The Board is collectively responsible for promoting the success of the Group by directing and supervising its affairs. The key responsibilities include the primary responsibilities prescribed under the Best Practices Provision AA I in Part 2 of MCCG. These cover a review of the strategic direction for the Group and overseeing the business operations of the Group, evaluating whether these are being properly managed.
The basic responsibility of the Directors is to exercise their business judgement to act in what they reasonably believe to be in the best interests of the Company and its shareholders.
The Board shall comprise of not less than two (2) nor more than twenty (20) Directors. At all times, the Board shall comply with the criteria of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), of having at least one third (1/3) or two of the Board members as Independent Non-Executive Directors.
The Board should include a balance of executive and non-executive directors such that the balance of skills and experience is appropriate for the requirement of the Company. The Board shall consist of individuals who possess diverse experiences, knowledge, qualifications and expertise besides having high standards of professionalism and integrity. The size of the Board should facilitate the making of informed and sound decisions.
The Independent Directors shall provide independent judgment and objectivity without being subordinated to operational considerations. The Independent Directors help to uphold the interests of all shareholders and not only the interests of a particular group, and that all relevant matters and issues are objectively and impartially considered by the Board. The view and opinions of the Independent Directors shall carry significant weight in the Board’s decision-making process.
If, on any matter discussed at a Board meeting, there are any Directors that hold differing views to those of any other Directors, the Board minutes shall clearly reflect this.
Duties and Responsibilities of the Board
The Board retains full and effective control over the affairs of the Group and the Company. This includes responsibility for determining the Group’s and the Company’s development and overall strategies direction which are as follows:-
- setting the Group’s and the Company’s corporate strategy and adopting a strategic plan which supports long-term value creation for the Group and the Company through the development of risk policy, annual budgets and long term business plans, reviewing major capital expenditures, acquisitions and disposals, as well as strategies on economic, environmental and social considerations underpinning sustainability;
- monitoring corporate performance and the conduct of the Group’s business and to ensure compliances to best practices and principles of corporate governance;
- identifying and implementing appropriate system to manage principal risks. The Board undertakes this responsibility through the Audit Committee;
- ensuring and reviewing the adequacy and soundness of the Group’s financial system, internal control system and management information system are in compliance with the applicable standards and laws and regulations; and
- ensuring a transparent Board nomination and remuneration process including management, ensuring the skills and experiences of the Directors are adequate for discharging their responsibilities whilst the calibre of the non-executive directors bring an independent judgement in the decision-making process.
Role of Chairman
There shall be clear separation between the roles of the Chairman and the Group Managing Director, to ensure an appropriate balance of role, responsibility, authority and accountability. The Chairman of the Board should be in a Non-Executive capacity and should not have an executive position or responsibility at EURO. The Non-Executive Chairman assumes an important role in encouraging a healthy debate on critical issues and brings to the Board the required level of independence and professional scepticism.
The key role of the Chairman is to ensure:-
- the smooth functioning of the Board, the governance structure and inculcating positive culture in the Board;
- guidelines and procedures are in place to govern the Board’s operation and conduct all relevant issues are on agenda for Board Meeting and all directors are able to participate fully in the Board’s activities;
- the Board debates strategic and critical issues; and
- the Board receives the necessary information on a timely basis from management avenues are provided for all the Board members to participate openly in the discussion and that he provides leadership to the Board and is responsible for the developmental needs of the Board.
Role of Group Managing Director
The Group Managing Director is directly responsible for the day-to-day operations of EURO. He must be familiar with the operations of EURO, the state of internal controls, requirements of regulations, as well as current issues and policies affecting the industry in general. He must also have the necessary knowledge and professional competence in the conduct of EURO’s business.
The key role of the Group Managing Director includes:-
- developing the strategic direction of EURO;
- ensuring that EURO’s strategies and corporate policies are effectively implemented;
- ensuring that board decisions are implemented and board directions are responded to providing directions in the implementation of short and long-term business plans;
- providing strong leadership that is, effectively communicating a vision, management philosophy and business strategy to the employees;
- keeping board fully informed of all important aspects of EURO’s operations and ensuring sufficient information is distributed to board members; and
- ensuring the day-to-day business affairs of the institutions are effectively managed.
BOARD PROCESS AND SUPPLY OF INFORMATION
Board Meetings are scheduled for every quarter with additional meetings to be convened as and when required. At least four (4) Board Meetings are held annually, each meeting being scheduled to be held within two (2) months after each quarter to consider the quarterly financial results and to review operational performance.
In convening the Board meetings, all procedures to meet the requirements of a valid Board Meeting shall follow the Company’s Constitution. All proceedings in Board Meetings are recorded as minutes and signed by the Chairman of the meeting or Chairman of the next meeting, in accordance with the provisions of the Companies Act, 1965. Minutes of the Board Meetings will include a record of the decision and resolution of the Board Meetings and are properly maintained.
Code of Conduct
The Board ensures that the Board members, employees and third parties which perform work or services for the Group will act ethically and remain above board at all times.
The Directors shall have its own Code of Conduct as follows:-
- To uphold the best interest of the Group and its stakeholders;
- To act with integrity, professionalism and in good faith;
- To meet regularly with the Group Managing Director to continuously establish and approve policies;
- To assess, question and challenge the policies and procedures with the intent to identify and initiate management action on issues;
- To keep the Board discussions and deliberations confidential;
- To observe its fiduciary duties to the Group by not making improper use of the information gained and take improper advantage of its position as Director;
- To avoid any potential conflict of interests arising from related party transactions, potential misuse of corporate assets, and privileged information;
- Not to be in competition with the Group;
- To declare any potential conflict of interest;
- To maintain sufficient detailed knowledge of the Group’s business and performance and make informed business decisions; and
- Newly appointed Directors are expected to declare their time commitment to the Board, and if they sit in other listed corporations as a Director then to obtain permission from the Chairman of the Board.
Supply of Information
The Chairman, assisted by the Group Managing Director, shall assess the type of information to be furnished at Board Meetings. All directors are given complete and timely information before each Board Meeting to be convened together with an agenda and a set of Board papers, including information on financial, operational and corporate matters. Board papers are circulated within sufficient time to enable Directors to obtain further explanation, if necessary, in order to be properly briefed before each meeting.
Board’s Access to External Independent Professional Advice
All Directors, whether as a full Board or in their individual capacity, have access to the advice of the Company Secretary and management staff. Where considered necessary, the Board may also engage the services of Independent Professional Advisors on specialized issues in furtherance of their duties.
Appointment of Directors
The Nomination Committee is responsible for recommending to the Board suitable candidate(s) for appointment as new Directors. In making these recommendations, factors such as mix of skills, experience, expertise and contribution to the Company will be considered before the recommendation for appointment of the proposed director is put forward to the Board for consideration and approval.
Re-election / Re-appointment
In accordance with the Constitution and in compliance with the MMLR, all Directors are required to retire from office once at least in each three (3) years, and shall be eligible for re-election. The Constitution also require that at least one third (1/3) of the Board of Directors shall retire at each Annual General meeting and may offer themselves for re-election.
In line with MCCG, the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. However, an Independent Director may continue to serve on the Board subject to the Director’s re-designation as a Non-Independent Director. In exceptional cases and subject to the assessment of the Nomination Committee, the Board may recommend for an Independent Non-Executive Director who has served a consecutive or cumulative term of nine (9) years to remain as Independent Non-Executive Directors subject to shareholders’ approval.
The Company’s remuneration policy for Director is formulated to attract and retain individuals of the necessary calibre relevant to the achievement of the Company’s strategic achievements. The remuneration is structured to link experience, expertise and level of responsibility undertakings by the Directors.
The Remuneration Committee is entrusted with the responsibilities to make recommendations to the Board, the remuneration package for the Executive Directors. However, it is the ultimate responsibility of the entire Board to approve the remuneration of these Directors. Non-Executive Directors’ remuneration will be decided by the Board as a whole with the Director concerned abstaining from deliberation and voting on decisions in respect of his individual remuneration.
Directors’ Training and Education
The Board shall ensure compliance with Bursa Securities’ mandatory accredited programme for newly-appointed Directors and assess further training programme needs of the Directors on an ongoing basis. The Board will evaluate the Directors’ training needs and attend other relevant training programmes to further enhance their business acumen and professionalism in discharging their duties to the Group.
COMMITTEES OF THE BOARD
The Board had delegated certain responsibilities and duties to several Committees which operate within clearly defined terms and reference to assist the Board in the running of the Group. This is to allow the members of the Board Committees to deliberate and examine issues in greater details and subsequently recommend and report to the Board. The ultimate responsibility for the final decision on all matters, however, lies with the Board
The Audit Committee shall be appointed by the Board from amongst the Board members who fulfil the following requirements:-
- Composed of no lesser than three (3) members; a majority must be Independent Directors;
- Composed entirely of Non-Executive Directors who should be financially literate; and
- At least one (1) member of the Audit Committee:-
- must be a member of the Malaysian Institute of Accountants; or
- if he is not a member of the Malaysian Institute of Accounts, the member must have at
least three (3) years’ working experience and;
- the member must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or
- the member must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; and
- fulfils such other requirements as prescribed or approved by Bursa Securities.
The members of the Audit Committee shall elect a Committee Chairman from among the members, who shall be an Independent Director;
In the event of the elected Committee Chairman is not able to attend a meeting of the Audit Committee, a member of the Audit Committee shall be nominated as Committee Chairman for the meeting. The nominated Committee Chairman shall be an Independent Director;
A member of the Audit Committee who wishes to retire or resign should provide sufficient written notice to the Board so that a replacement may be appointed before the member leaves;
If a member of the Audit Committee resigns, passed away, or for any other reason ceases to be a member, which results in the number of members be reduced to below three (3), the Board shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.
The term of office and performance of the Audit Committee and each of the members shall be reviewed by the Board at least once every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.
The Audit Committee shall meet at least four (4) times a year and such additional meetings, as the Committee Chairman shall decide in order to fulfil its duties. Upon request of the Committee members, external auditors or internal auditors, the Committee Chairman shall convene a meeting of the Audit Committee to consider any matters that the auditors believe should be brought to the attention of Board or shareholders.
The Company Secretary or other appropriate senior official shall act as Secretary of the Audit Committee and shall be responsible, in conjunction with the Committee Chairman, for drawing up the agenda or circulating it, supported by explanatory documentation to the Committee members prior to each meeting and taking attendance for the Audit Committee meeting.
The Secretary shall also be responsible for keeping the minutes of Audit Committee and circulating them to Committee members and to other members of the Board.
A quorum shall consist of a minimum of two (2) Committee members and the majority of the members present must be independent directors.
The Finance Director, representatives of the external auditors and internal audit normally attend Audit Committee meetings. Other Board members may attend Audit Committee meeting upon invitation of the Audit Committee. By invitation of the Audit Committee, the Company must ensure that other directors and employees attend any particular Audit Committee meeting specific to the relevant meeting.
The Audit Committee is authorized by the Board to investigate any activity within the following terms of reference:-
- have explicit authority to investigate any matters within its terms of reference;
- have the resources which it needs to perform its duties;
- have full access to any information pertaining to the Company which it requires in the course of performing its duties;
- have unrestricted access to the Group Managing Director and any other senior management staff of the Group;
- have direct communication channels with external auditors and internal auditors;
- be able to obtain independent professional or other advice in the performance of its duties at the cost of the Company; and
- be able to convene meetings with external auditors excluding the attendance of the executive directors or management of the Company, whenever deemed necessary.
Where the Audit Committee is of the view that a matter reported to the Board has not been satisfactorily resolved resulting in a breach of the MMLR of Bursa Securities, the Audit Committee shall promptly report such matter to Bursa Securities.
The duties and responsibilities of the Audit Committee are as follows:-
- Review the nomination of external auditors, audit fee and any questions of resignation or dismissal;
- Review the adequacy of existing audit arrangements, with particular emphasis on the scope and quality of the audit;
- Discuss with external auditor before the audit commences, the nature and scope of the audit;
- Approve any appointment or termination of internal auditor;
- Review the effectiveness and adequacy of scope, functions, competency and work resources of the internal audit functions and that it has the authority to carry out its work;
- Review the internal audit programme and results of the internal audit process and, where necessary, ensue that appropriate actions are taken on the recommendations of the internal audit function and to report to the Board accordingly;
- Take cognizance of resignation of internal auditor and provide the resigning internal auditor an opportunity to submit reasons for resigning;
- Review the effectiveness of the internal control and management information systems;
- Review quarterly results and year-end financial statements of the Company with both the external auditors, if applicable, and management, prior to the approval by the Board, focusing particularly on:-
- any changes in accounting policies and practices;
- major judgemental areas, significant and unusual events;
- significant adjustments arising from an audit;
- the going concern assumption; and
- compliance with applicable accounting standards, MMLR and other legal and statutory requirements.
- Review external auditors’ audit report;
- Review any management letter sent by external auditors, excluding the attendance of other directors and employees of the Company on problems and reservations arising from the audits, and any matter the external auditors may wish to discuss;
- Review the assistance given by the Company’s officers to the external auditors;
- Provide any regulatory authorities with such information concerning the Group in such form and within such time limits as the authorities may require;
- Ensure strict compliance by the Group with MMLR and all relevant legislations, guidelines and regulations issued by regulatory authorities;
- Review proposals and implement action plans to effect proposals to meet and maintain required standards and guidelines;
- Review and assess the Group’s risk management strategies, policies and risk tolerance based on the recommendation of the management so that the Group continues to meet best practices;
- Review and evaluate reports (on periodic basis) outlining the risk exposure, risk portfolio composition and risk management activities presented by the Risk Management Consultant after having reviewed and approved by Senior Management;
- Review all related-party transactions and potential conflict of interest’s situations; and
- Consider other areas as defined by the Board.
The Nomination Committee shall be responsible of nominating the appropriate Board balance and size as well as ensuring that the Board possesses the required mix of responsibilities, skills and experience. The Nomination Committee shall conduct a review of the mix of skills, experience and other core competencies for the Board on an annual basis. The Nomination Committee shall comprise of Non-Executive Directors, a majority of whom must be independent. The Committee Chairman of the Nomination Committee should be independent and identified by the Board.
In line with the Best Practices of MCCG, the Board shall set up a Remuneration Committee to assist the Board in determining the Director’s remuneration. The Committee meets at least once a year. The Remuneration Committee shall comprise of Non-Executive Directors, a majority of whom must be independent. The Chairman of the Nomination Committee should be independent and identified by the Board.
The Board can establish other Board Committees on ad hoc basis as and when require.
ACCOUNTABILITY AND AUDIT
The Directors are responsible to ensure that financial statements prepared are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
In presenting the financial statements, the Company will use appropriate accounting policies and applied them consistently, supported by reasonable judgements and estimates. The Audit Committee will review the quarterly results prior to approval by the Board before being released to Bursa Securities. By presenting the quarterly results and financial statements, the Company is mindful of the necessity to present a balanced assessment of the Group’s financial position.
The Board has an established on-going process for identifying, evaluating and managing the significant risks encountered by the Group in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed issuers. This is to ensure that all high risks are adequately addressed at various levels within the Group. Risk management is embedded in the Group’s management system and is every employee’s responsibility.
The Management has carried out a risk assessment on the Group’s operations, which covers the major aspects of its business activities. The Audit Committee Chairman reports significant risks and control issues to the Board for its consideration, as and when necessary.
The Board is ultimately responsible for the system of internal control operating throughout the Group and for reviewing its effectiveness, adequacy and integrity, including financial and operational controls, compliance with relevant laws and regulations, and risk management in order to safeguard shareholders’ investments and the Group’s assets.
The Board is accountable for ensuring the existence and effectiveness of the internal control and provides leadership and direction to the management on the manner the Company controls its businesses, the state of internal controls and its activities. In developing the internal control systems, consideration is given to the overall control environment of the Company, assessment of financial and operational risks and an effective monitoring mechanism.
The Board has the authority to assess the state of internal control as it deems necessary, including the right to request for information and clarification from the management as well as to seek inputs from the Audit Committee, external auditors, internal auditors and other experts as the expense of the Company.
Internal Audit Function
The outsourced Internal Auditors review the Group’s system of internal controls to identify and address related internal control weaknesses. The internal auditors independently review the risk identification procedures and control processes implemented by the management. Any significant weaknesses identified during the reviews together with the improvement measures to strengthen the internal controls will be reported to the Audit Committee. Internal auditors also tests the effectiveness of the internal control on the basis of an internal audit strategy and a detailed annual internal audit plan will be presented to the Audit Committee for approval.
Investor Relations and Shareholders Communications
Recognizing the importance of transparency and the need for timely dissemination of information to shareholders and other stakeholders, the Board is committed to ensure that the shareholders and other stakeholders are well informed of all important issues and major developments of the Company and the information is communicated to them through the following documents:-
- Annual Report;
- Various disclosures and announcements made to Bursa Securities including the Quarterly Reports and Annual Financial Statements;
- Circulars to Shareholders;
- Shareholders may obtain the Company’s latest announcements via the Bursa Securities’ website at www.bursamalaysia.com; and
- The Company’s investors relation site via the Company’s website at www.euroholdings.com.my
Annual General Meeting (“AGM”)
Notice of AGM which is contained in the Annual Report is sent out at least twenty-one (21) days prior to the date of the meeting. There will be commentary by the Chairman at the AGM regarding the Company’s performance for each financial year and a brief review on current business conditions. At each AGM, a platform is available to shareholders to participate in the question and answer session. Extraordinary General Meetings (“EGM”) are held when required.
RELATIONSHIP WITH OTHER STAKEHOLDERS
As a corporate citizen, the Board is cognizant of the need to formulate strategies that promote sustainability and stakeholders’ interests through internal policies, which among others are:
Employees are invaluable assets of the Company and play a vital role in helping the Company achieve its vision and mission. The Board endeavours to provide a conducive working environment and adopts a comprehensive and documented policies and procedures regarding Occupational Safety and Health. The Group conducts frequent occupational and safety awareness programmes to create better awareness and continuously improve on work safety measures.
It is the policy of the Group that its employees are competent on the basis of appropriate education, training, skills and experience. Continuous performance enhancement and development of employees’ competencies remain the Group’s primary focus in the area of human capital development.
The employees are also provided with medical benefits, adequate insurance and leave compensation programmes which commensurate with their rank and level of employment.
The Group remains committed to the role as an environmental steward in creating and providing sustainable solutions along our value chains to meet the needs of the customers in an environmentally sound and sustainable manner. This is achieved through continuous improvements in the environmental performance in all the activities as the Group strives to reduce environmental impacts of the manufacturing operations. These activities aim to minimise resources used and wastes, prevention of pollution in all forms, use of non-hazardous materials, recycling and re-use of materials.
The Group is committed to promote a healthy and friendly environment to the community. It is the Group’s policy to comply with laws governing plant operations, maintenance and improvement relating to environment standards, housekeeping and storage methods, noise level management, emission standards, etc.
The Group also remains steadfast and consistent in supporting the local community by participating in and supporting various community services and activities.
REVIEW OF BOARD CHARTER
The Board Charter shall be reviewed by the Board annually to ensure its relevance in assisting the Board to discharge its duties with the changes in the corporate laws and regulations that may arise from time to time and to remain consistent with the Board’s objectives and responsibilities.
APPLICATION OF THE CHARTER
In promoting good corporate governance, the Board Charter sets out the principles and guidelines that are to be applied by the Board and the Board Committees, as well as identifying their roles, responsibilities and functions in the Company and/or Group.
The Board Charter shall be made public in the Company’s corporate website.