Board Charter

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Board Charter and Terms of Reference for the Board of Directors

Introduction

The Board of Directors (the “Board”) of Dagang NeXchange Berhad (“Company”) is responsible for overseeing the Company’s management and business affairs and makes all major policy decisions of the Company. This Charter and Terms of Reference (“TOR”), together with the Company’s Articles of Association, Memorandum of Association and the TOR of the Board committees, provide the authority and practices for governance of the Company.

Key values, principles and ethos of the Company

The Company aspires to the highest standards of ethical conduct: doing what it says; reporting results with accuracy and transparency; and maintaining full compliance with the law, rules and regulations that govern the Company’s business.

Good governance is one of the Company’s key doctrines. The Company is committed not only to meeting legal and regulatory governance requirements, but to having best-practice governance. The Company is however aware that good values and principles are not an end in itself, but that it facilitates the Company’s capacity to define and achieve its purposes.

Key values and principles establish how the shareholders, the Board and the Management interact in determining the direction and performance of the Company. Good governance holds the Management accountable to the Board and the Board accountable to the shareholders and other stakeholders. The Board’s fundamental approach in this regard is to ensure that the right leadership, strategy and internal controls for risk management are well in place. Additionally, the Board is committed to achieving the highest standards of business integrity, ethics and professionalism across all of the Company’s activities.

The Board shall provide central leadership to the Company, establish its objectives and develop the strategies that direct the ongoing activities of the Company to achieve these objectives. Directors shall determine the future of the Company and shall protect its assets and reputation. They will consider how their decisions relate to stakeholders and the regulatory framework. Directors will apply skill and care in exercising their duties to the Company and are subject to fiduciary duties. Directors shall be accountable to the shareholders of the Company for the Company’s performance.

The Board regards the guiding principles to be:

  • Fairness: Minority shareholders, investors and other stakeholders are treated fairly and their interests are taken into account;
  • Transparency: Disclosure of information – financial, organisational, governance and related transactions – is adequate and timely for stakeholders to assess the performance of the organisation;
  • Accountability: Senior management is accountable to the Board for achieving plans and implementing approved policies that ensure the safeguarding of assets and the financial viability of the Company. In turn, the Board is accountable to the shareholders and other stakeholders;
  • Responsibility: Clear lines of responsibility need to exist in terms of delegations of authority and which actions or decisions require Board approval or shareholder approval. Responsibility must be attributed in order to have accountability for results.

Board Principal Responsibilities

In order to ensure effective discharge of the Board’s functions, the Board will assume the following six (6) principal responsibilities:-

  • reviewing, adopting and monitoring the implementation of a strategic plan for the Company and its subsidiaries (“Group”);
  • overseeing the conduct of the Group’s business and to evaluate whether the business is properly managed. In this respect the Board must ensure that there are objectives in place against which the Management’s performance can be measured;
  • identifying principal risks and ensuring the implementation of appropriate controls and systems to monitor and manage these risks;
  • ensures succession planning including appointing, training, fixing the remuneration and where appropriate, replacing senior management;
  • overseeing the development and implementation of a shareholders’ communication policy for the Company to ensure effective communication with its shareholders and other stakeholders; and
  • reviewing the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for ensuring compliance with applicable law, regulations, rules, directives and guidelines.

Composition of the Board

  • At least two (2) directors or one third (1/3) of the total number of directors on the Board, whichever is the higher, must be independent directors.
  • If the number of directors of the Company is not three (3) or a multiple of three (3), then the number nearest one third (1/3) must be used.
  • In the event of any vacancy in the Board, resulting in non-compliance with subparagraph 4.1 above, the Board must ensure that the vacancy is filled within three (3) months.
  • The Board must comprise a majority of independent directors where the chairman of the board is not an independent director.
  • The tenure of an independent director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, an independent director may continue to serve the Board subject to the director’s re-designation as a non-independent director. Subject to obtaining the approval of the Company’s shareholders, the Board may recommend and provide strong justification in the event it retains an independent director who has served a cumulative term of nine (9) years as an independent director of the Company.

Director Qualification Standards

Each Director must have the following qualifications:

  • Education and experience that provides knowledge of business financial,governmental or legal matters that are relevant to the Company’s business or to its status as a publicly owned company;
  • An unblemished reputation for integrity;
  • A reputation for exercising good business judgment; and
  • Sufficient available time to be able to fulfil his or her responsibilities as a member of the Board and of any committees to which he or she may be appointed.

A majority of the Directors must be independent. The criteria for independence is as set out in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Board shall undertake an assessment of its Independent Directors annually.

Directors’ Responsibilities

  • The Directors will direct the management of the business and affairs of the Group.
  • Directors will use their best endeavour to prepare themselves for and to attend Board meetings and the meetings of each committee on which the Director serves.

Matters reserved for the Board

The following are matters reserved for collective decision of the Board which may be varied from time to time as determined by the Board:-

  • Limits of Authority including any amendments thereto.
  • Strategic Business Plan.
  • Annual Budget/Plan.
  • Audited and Quarterly Financial Statements.
  • New business activities in non-traditional areas within the objects of the Company.
  • Interim Dividends.
  • Appointment of Board committees and approval of TOR of Board Committees.
  • Appointment and/or removal of Company Secretary and Chief Financial Officer.
  • Appointment or removal of External Auditors and determine the Auditors’ remuneration.
  • Changes to share capital and/ or debt structure in relation to macro structure such as debt equity ratio setting, overall debt amount – does not pertain to individual debt facilities, unless amount is over limit of the operating Company’s limits of authority, Investments or divestments in non-core related activities, outside the objects of the Group
  • Approve any acquisition or expenditure in excess of RM5 million.
  • Related Party Transactions (“RPTs”) in excess of RM250,000.
  • Mandated recurrent RPTs where the actual transaction value exceeds the mandate by RM250,000.
  • Opening or closing of bank accounts.
  • Authorised Signatories for the operation of bank accounts including any amendments thereto.
  • Terms of Appointment of Chief Executive Officer, Executive and non-Executive Directors.
  • Formation/dissolution of company.
  • Changes in group structure e.g. acquisition and disposal of subsidiaries, issuance of new share capital.
  • Changes in group compensation structure, collective agreement or personnel policies.
  • Recommendations for the alteration of Memorandum and Articles of Association.
  • The giving of any guarantee (with the exception of bank guarantee in connection with the operating business) or indemnity or the creation or issue of any debenture, mortgage, charge or other security or interest over its assets by the Company.

Director Access to Management and Independent Advisors

Directors shall have access to management and, as necessary and appropriate, to the Group’s independent advisors, in order to keep themselves fully informed of the Group’s affairs and to enable them to make sound business judgements.

Directors’ Remuneration

The Remuneration Committee will recommend to the Board for approval, the appropriate remuneration to be paid to Directors within any limitations imposed by shareholders.

Non-Executive Directors will be paid a basic fee as ordinary remuneration and will be paid additional remuneration as members of the Board’s committees, as Chairman or Vice Chairman of a Board’s committee and for any special service as a member. The Chairman will be paid a level of fees appropriate to his office. Those remuneration will be reviewed annually by the Remuneration Committee in consultation with an independent advisor (if necessary).

Executive Directors will not receive fees but will be paid as employees of the Company in accordance with their contracts of employment with the Company.

Induction of Newly Appointed Directors and Continuing Education

On their first appointment, Non-Executive Directors will go through an induction programme aimed at deepening their understanding of the Company, the business, the environment and markets in which the Company operates. As part of the programme, Directors will receive a folder of essential Board and Company’s information and will meet key Management.

The Company will make available to each new Director an opportunity to discuss the Group and its business with senior executives and inform each new Director of company policies which affect Directors, including this Board Charter.

The Company will make available to the Directors, at the Company’s cost, professionally conducted programs regarding director responsibilities and other matters related to service on the Board.

Division of Roles between Chairman of the Board and Executive Director/ Chief Executive Officer

There must be clear division of the roles and responsibilities of the Chairman of the Board, the Executive Director (“ED”) / Chief Executive Officer (“CEO”) to ensure that there is a balance of power and authority. The Chairman of the Board is responsible for ensuring the Board’s effectiveness and conduct as described below whilst the ED/CEO has overall responsibility over the business units and day-to-day management of the Company, organisational effectiveness and implementation of Board policies, strategies and decisions. The position of Chairman and ED/CEO shall be held by different individuals, and the Chairman must be a non-executive member of the Board.

In respect of running the Board, the Chairman is responsible for the following:-

  • provides leadership and stewardship to the Board by helping the Board to fulfil the goals.;
  • the balance of membership, subject to Board and shareholders’ approval;
  • ensures adequate lead-time for effective study and discussion of business under consideration and that the Board resolution is put to a vote to ensure that it is the will of the majority and not that of the dominant owner that prevails.
  • ensuring that all Directors are enabled and encouraged to play their full part in the Board’s activities. This includes ensuring that the Directors, especially the Non-Executive Directors receive timely, relevant information tailored to their needs and they are properly briefed on issues arising at Board meetings; and ensuring that the Executive Director looks beyond his executive function and accepts his full share of responsibilities of governance.

The responsibilities of the ED/CEO amongst others, are as follows:-

  • to develop and implement corporate strategies for the Group;
  • to regularly review the heads of divisions and departments who are responsible for all functions contributing to the success of the Group;
  • to ensure the efficiency and effectiveness of the operation for the Group;
  • to assess business opportunities which are of potential benefit to the Group; and
  • to bring material and other relevant matters to the attention of the Board in an accurate and timely manner.

Independent Non-Executive Directors

The responsibilities of the Independent Non-Executive Directors include the following:-

  • to provide independent and objective views, advice and judgment to ensure that the interests of the Group, shareholders and stakeholders are well taken into account;
  • to bring impartiality and scrutiny to Board deliberations and decision-making, and also serve to stimulate and challenge the Management in an objective manner;
  • to constructively challenge and contribute to the development of the business strategies and direction of the Group.

The main role of the senior independent director is to act as a sounding board for the Chairman. In the event the Board is undergoing a period of stress, and/or there is perceived conflict of interest involving the Chairman, the senior independent director is expected to provide leadership and advice to the Board.

The senior independent director shall act as a point of contact for shareholders and other stakeholders with concerns which have failed to be resolved or would not be appropriate through the normal channels of the Chairman and/or Chief Executive.

Division of Roles between the Board and the Board Committees and between the Board and the Management

The Board may from time to time establish committees as is considered appropriate to assist in carrying out its duties and responsibilities. The Board delegates certain functions to the following committees to assist in the execution of its responsibilities:-

  • Audit Committee;
  • Nomination Committee;
  • Remuneration Committee; and
  • Procurement and Tender Committee
  • (collectively the “Committees”)

The Committees shall operate under their respective TORs. The Committees are authorised by the Board to deal with and to deliberate on matters delegated to them within their TORs. The Chairman of the respective Committees reports to the Board on the outcome of the Committee meetings and such reports or minutes will be included in the Board papers.

Although the Board has granted discretionary authority to these Committees to deliberate and decide on certain operational matters as set out in their respective TOR, the ultimate responsibility for final decision on all matters lies with the Board.

There must be clear division of the roles and responsibilities of the Board and the Management to ensure that there is a balance of power and authority.

The responsibilities of the Management include the following:

  • Planning: generating plans of action for immediate, short term, medium term and long term periods;
  • Organising: organising the resources, particularly human resources, in the best possible manner. Assembling and coordinating financial, physical, information and other resources needed to achieve the Company goals;
  • Directing: stimulate high performance by employees, communicating and coordinating with employees to lead and enthuse them to work effectively together to achieve the goals and targets of the Company;
  • Controlling: setting performance standards that indicate progress towards long-term goals of the Company. Evaluating the progress against the goals and targets of the Company and ensuring proper and timely execution of the same. Periodically review, evaluate and monitor performance.

Proceedings at Board meetings

The proceedings of board meetings are set out in the Company’s Articles of Association which include and are not limited to the following:

  • The Directors may meet together for the despatch of business at such time and place, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting of the Directors shall be determined by a majority of votes. Subject to subparagraph 14.3 below, in case of an equality of votes, the Chairman shall have a second or casting vote.
  • The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed at any other number shall be two (2).
  • A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. Where two (2) Directors form a quorum, the chairman of a meeting at which only such a quorum is present or at which only two (2) directors are competent to vote in the question at issue, shall not have a casting vote.
  • A member of the Board, or of a committee of the Board, may participate in a meeting of the Board or the committee by way of tele-conferencing or video conferencing as may be required in the circumstances. A participant shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly. The meeting shall be deemed to take place where the largest group of those participating is assembled or, if there is no such group, where the chairman of the meeting then is.
  • A Director may, and the secretary at the request of a Director shall, at any time summon a meeting of the Directors. Notice of a Board meeting is deemed to be duly given to a Director if it is given to him personally or by electronic communication to an address given by him to the Company for that purpose or sent in writing to him at his last-known address or another address given by him to the Company for that purpose. A Director may waive the requirement that notice be given to him of a Board meeting, either prospectively or retrospectively provided that the waiver is made and signed by the member in writing. A Director absent or intending to be absent from Malaysia may request that notices of Board meetings during his absence be sent in hard copy form or by electronic communication to him at an address given by him to the Company for that purpose. If no request is made (and/or if no such non-Malaysian address is given) it is not necessary to give notice of a Board meeting to a Director who is absent from Malaysia.

Management Succession

As part of their role in directing the management of the business and affairs of the Group, the Directors will be responsible for (a) ensuring that the Group’s management has the capabilities to cause the Group to operate in an efficient and businesslike fashion, and (b) reviewing the qualifications of persons proposed as additional members of the Group’s management or replacements for members of the Group’s management.

If there is a vacancy in a senior management position, other than that of ED/ CEO, the Board will receive and review the recommendation of the ED/CEO to fill that vacancy.

If it is anticipated that the ED/CEO will leave the Company at a specified future date, the Board will ensure that the process of selecting a successor ED/CEO will take place in a manner that is likely to create a smooth transition between chief executive officers.

If there is an unanticipated departure of the ED/CEO, the Board will oversee the (a) selection of a temporary ED/CEO to serve until a permanent replacement is selected, and (b) selection of the permanent replacement for the ED/CEO.

Annual Performance Evaluation of the Board, Board Committees and Individual Directors

The Board, through the Nomination and Corporate Governance Committee, conducts an annual self-evaluation on its effectiveness as a whole, each individual Director and the different committees established by the Board.

Code of Conduct

The Board shall formalise and commit to ethical values through the maintenance of a code of conduct and ensure the implementation and ensure compliance with the code of conduct.

Review of Board Charter

This Charter shall be periodically reviewed and may be amended by the Board as it deems appropriate.