Board Charter

Revised on 18th February 2016

  1. 1. INTRODUCTION

    As the Vision of DKLS Industries Berhad (“DKLS” or “Company”) is “To be a great company delivering responsible business solution and economic value to shareholders”, the Board of Directors (“Board”) has to ensure that the businesses and affairs of the Company and its subsidiaries (“DKLS Group”) are managed in conformity with the laws and regulations of the jurisdictions in which they operate.

    This Board Charter (“Charter”) has been adopted by the Board which collectively leads and is responsible for the success of the DKLS Group by providing entrepreneurial leadership and direction as well as supervision of the management. The Board is the ultimate decision making body.



  2. 2. BOARD STRUCTURE

  3. 2.1 Composition of the Board

    The number of Directors on the Board shall neither be less than three (3) nor be more than twelve (12) as set out in the Company’s Articles of Association.

    Independent Directors provide independent judgment, experience and objectivity without subordinated to operational considerations. They help to ensure that the interests of all shareholders are indeed taken into account by the Board and that the relevant issues are subjected to objective and impartial consideration by the Board. The Company shall have at least two (2) Directors or one-third (1/3) of the Board, whichever is the higher, who are Independent Directors. If the number of Directors is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3) must be used.

    The Board had not set the time limit for Independent Director as the Board believes that continued contribution provides benefits for the Board and the Company as a whole. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to the director’s re-designation as a Non-Independent Director. The Board must justify and seek shareholders’ approval in the event it retains as an Independent Director, a person who has served in that capacity for more than nine (9) years.

    The composition and size of the Board are reviewed from time to time to ensure its appropriateness.


  4. 2.2 Tenure of Directors

    The Nomination and Remuneration Committee reviews and recommends the criteria for appointment of new Directors. The appointment of a new Director is a matter for consideration and decision by the full Board, upon the recommendation from this committee. The Board shall obtain the expected time commitment from its members to carry out their responsibilities at the time of appointment.

    An election of Directors takes place subsequent to their appointment each year where one-third (1/3) of the Directors or if their number is not three (3) or a multiple of three (3), then the number nearest to one-third (1/3), shall retire by rotation from office and shall be eligible for re-election at each annual general meeting and that each Director shall retire from office at least once in every three (3) years and shall be eligible for re-election.

    The Directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.


  5. 2.3 Assessment and Independence of Directors

    The Board shall annually conduct a formal review of its own performance. These mechanisms act as a regular check on the composition of the Board and the appropriateness of the mix of skills, experience, expertise and diversity of the Board members for the Company.

    The Board shall also assess the independence of the Directors under the annual assessment of the Board by taking into consideration of their disclosed interests and having regard to the criteria for assessing the independence of Directors. A separate assessment for Independent Directors is also undertaken annually.



  6. 3. BOARD ROLES

  7. 3.1 Duties and Responsibilities of Directors

    The Board assumes, amongst others, the following duties and responsibilities:

    1. Perform an active role in developing the overall strategic direction and planning of the Group. In conjunction with this, the Board also reviews and approves the annual Budget of the Group for each year. On quarterly basis, the Board reviews the variance between the actual against the approved Budget;
    2. Oversee and evaluate the conduct and management of the Group’s businesses, financial and non-financial performance of the Group;
    3. Review the adequacy and integrity of the Group’s internal control system and management information system to ensure compliance with relevant laws, regulations, rules, directives, guidelines and business objectives of the Group;
    4. Identify principal business risks faced by the Group and ensure the implementation of appropriate systems and mitigating measures for risk management;
    5. Establish and oversee succession planning program for senior management and ensures that all candidates appointed are of sufficient calibre;
    6. Oversee the development and implementation of a shareholder communication policy. It ensures that timely releases of the quarterly financial results, circulars, corporate announcements and annual reports are made to its shareholders.

  8. 3.2 Matters Reserved for the Board

    The following are matters which are specifically reserved for the Board’s consideration and approval:

    1. Approval of corporate plans and programmes;
    2. Approval of material investments and divestments based on recommendation of the Investment Committees;
    3. Approval of internal and external audit plan and acceptance of the audit reports;
    4. Appointment of new Directors, Managing Director and senior management positions basing on recommendation of the Nomination and Remuneration Committee;
    5. Approval of annual financial statements and the quarterly financial results prior to releasing to Bursa Securities Malaysia Berhad;
    6. Material related party transactions;
    7. Material capital acquisition and financing;
    8. Dividend recommendation;
    9. Material acquisitions and disposals of undertakings and properties, including acquisition or disposal of companies by the Group; and
    10. Major borrowings or giving of security over assets.

  9. 3.3 Chairman and Managing Director (“MD”)

    The Board ensures that its Chairman is a non-executive member of the Board.

    The roles of the Chairman and the MD are distinct and separate to ensure there is a balance of power and authority. The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board, while the MD has overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions. The MD is responsible to ensure due execution of strategic goals, effective operation within DKLS Group, and to explain, clarify and inform the Board on matters pertaining to DKLS Group.

    The responsibilities of the Chairman, amongst others, are as follows:

    1. lead the Board in the oversight of the management and ensure its effectiveness of all aspects of its role;
    2. ensure the efficient organisation and conduct of the Board’s function and meetings;
    3. facilitate the effective contribution of all Directors at Board meetings;
    4. promote constructive and respectful relations between Directors, and between the Board and Management; and
    5. ensure effective communication with shareholders and relevant stakeholders.

    The responsibilities of the MD, amongst others, are as follows:

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

  10. 3.4 Board Committee

    As part of its efforts to ensure the effective discharge of its duties, the Board has delegated certain functions to certain Committees with each operating within its clearly defined terms of reference. The Chairman of the various Committees will report to the Board on the key issues deliberated by the Committees and the outcome of the Committee meetings at the Board meetings.

    The Board has, at the date of this Charter, established the following Committees to assist the Board in the execution of its duties:

    1. Audit Committee
    2. Nomination and Remuneration Committee
    3. Investment Committee

    The Board shall also delegate specific functions to ad hoc committees on an “as needs” basis as and when necessary. The terms of reference and powers delegated to any such committee will be agreed by the Board at the time the committee is established as set out in Board resolutions.

    The Committees are authorised by the Board to deal with and to deliberate on matters delegated to them within their terms of reference.

  11. 3.5 Company Secretary

    The Company Secretary shall report directly to the Board. The Company Secretary play an advisory role and are sources of information and advice to the Board and the Committees on issues relating to compliance with laws, rules, regulations and procedures affecting DKLS Group.

    The responsibilities of the Company Secretary, amongst others, are as follows:

    1. advise the Board and Management on governance issues;
    2. ensure compliance of listing and related statutory obligations;
    3. attend Board, Committees and general meetings, and ensure the proper recording of minutes;
    4. ensure proper upkeep of statutory registers and records;
    5. assist Chairman in the preparation for and conduct of meetings;
    6. assist Chairman in determining the annual Board plan and the administration of other strategic issues; and
    7. assist in the induction of new directors and continuously update the Board on changes to the Main Market Listing Requirements, other related legislations and regulations.

    The appointment and removal of the Company Secretary shall be a matter for the Board as a whole.



  12. 4. BOARD PROCESS

  13. 4.1 Board Meetings

    The Board shall conduct at least four (4) regularly scheduled meetings annually, with additional meetings to be convened as and when necessary. A Director may at any time and the Company Secretary shall on the requisition of the Director summon a meeting of the Directors.

    A structured agenda of the meeting (unless otherwise waived by all the Directors) and all Board papers, including complicated issues or specific matters, shall be distributed in advance to ensure Directors are well informed and have the opportunity to seek additional information, and are able to obtain further clarification from Management, should such a need arise.

    The Board may invite external parties such as auditors (internal and/or external auditors), solicitors or consultants to brief and clear the Directors’ doubt or concern as and when the need arises. Such invited parties may attend part or all of the Board Meeting at the discretion of the Board.

    The quorum of Board meeting and for the transaction of the business of the Directors shall be three (3) members, present in person. Circular resolutions approved by all the Directors are as valid and effectual as if the resolutions had been passed at the meeting of the Directors duly called and convened; provided that where a Director is not present in Malaysia but has an alternate who is so present, then such circular resolution may be signed by such alternate in place of the absent Director.

  14. 4.2 Access of Information

    The Directors shall have full and unrestricted access to all information within the Company whether as full Board members or in their individual capacity, in furtherance to their duties. The Directors have also full and unrestricted access to the advice and services of the Senior Management, Company Secretary, Internal Auditor and External Auditor.

    The Directors acknowledge that confidential information received in the course of exercise of the Board duties remains the property of DKLS Group, whether it relates to DKLS Group or another entity. It will not be disclosed unless either the Chairman of the Board or any other person so authorised in writing by the Board or the disclosure is required by law.

  15. 4.3 Directors’ Training and Continuing Education

    The Directors shall continuously update their knowledge and enhance their skills through appropriate continuing education programmes and life-long learning. This will enable Directors to effectively discharge duties and sustain active participation in the Board deliberations. Each director shall attend at least one (1) seminar/course/workshop every financial year. In addition, the Directors shall be updated by the Company Secretary on the latest statutory, corporate and regulatory developments of relevance to their duties and responsibilities as Directors of the Company.

    The Board shall assess the training needs of the Directors from time to time.



  16. 5. FINANCIAL REPORTING

    In its financial reporting to the shareholders and other interested parties by means of the annual financial statements and quarterly results announcements, the Board aims to present a balanced and understandable assessment of the Group’s financial position and prospects.

    The Board ensures that the financial statements is prepared in accordance with the Companies Act and applicable approved accounting reporting standards, so as to give a true and fair view of the state of affairs of the Group and the Company.



  17. 6. INVESTOR RELATIONS AND SHAREHOLDERS COMMUNICATION

    The Board shall maintain an effective communication policy that enables both the Board and the Management to communicate effectively with the shareholders and other stakeholders.

    The shareholders shall be informed of all material business matters affecting the state of affairs of the Company through the Annual Report and general meetings convened by the Company. The release of financial results on a quarterly basis and business acquisitions and disposals by way of public announcements will provide the shareholders and the investing public with an overview of DKLS Group’s performance, operations and directions. In addition, nominees of the Company’s substantial shareholders sit on the Board will provide a platform for interactions and direct communication between the members of the Board, Management and shareholders.

    The general meetings are the principal forum for dialogue with shareholders of the Company. The Board will ensure that the general meetings are conducted in an efficient manner and serve as a channel for shareholders’ communication. These include the supply of comprehensive and timely information to shareholders and the encouragement of active participation in the question and answer session at the general meetings to ensure a high level of accountability and discussion of the Company’s strategy and goals. At each general meeting, the Directors, including the MD, are available to provide responses to questions from the shareholders during the meeting.

    The Board shall appoint a Senior Independent Non-Executive Director who will also attend to any query or concern raised by shareholders. At all times, the shareholders may communicate their queries through the Company Secretary.



  18. 7. DKLS CODE OF ETHICS AND CONDUCT

  19. The DKLS Code of Ethics and Conduct (“the Code”) is to be observed by all the Board members and personnel of the Group, and the core areas of conduct under the Code include the following:-

    1. Compliance with laws and regulations;
    2. Conflict of interest;
    3. Confidential information;
    4. Insider trading;
    5. Protection of properties, business records and control;
    6. Business courtesies and gifts;
    7. Health and safety;
    8. Fair and courteous behaviour; and
    9. Misconduct

    The Board will review the Code regularly to ensure that it continues to remain relevant and appropriate. The Code is made available for reference in the Company’s website at www.dkls.com.my.



  20. 8. REVIEW OF THE CHARTER

    This Charter has been adopted by the Board on 12 November 2012.

    The Board shall be reviewed the Charter annually to ensure its relevance in assisting the Board in discharging its duties with the changes in the Main Market Listing Requirements and the corporate laws and regulations that may arise from time to time and to remain consistent and relevance with the Board’s objectives and responsibilities. Any subsequent amendments to the Charter can only be approved by the Board.

    The Charter is made available for reference in the Company’s website at www.dkls.com.my.


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