Directors' Fit and Proper Policy

On 22nd August 2022

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  4. Directors' Fit and Proper Policy

  1. 1. OVERVIEW

    DKLS Industries Berhad hereinafter referred as ("DKLS" or the "Company") has adopted this Directors' Fit and Proper Policy ("Policy") to formalise and internalise clear parameters in the appointment and re-election of Directors of the Company and its subsidiaries. By drawing attention to the fit and proper requirement, the Company hopes that the Board of Directors ("Board") will be in a position to demonstrate clear commitment in developing a corporate culture that thrives on objectivity, transparency, meritocracy and diversity.


  2. 2. OBJECTIVE

    2.1   The main purpose of this Policy is to establish a set of formal and transparent fit and proper requirements for the appointment and re-election of Directors of the Company and its subsidiaries.
    2.2 The objective of this Policy is to guide the Nomination & Remuneration Committee ("NRC") and the Board in their review and assessment of potential candidates for appointment as Directors as well as Directors who are seeking for re-election in the Company and its subsidiaries.
    2.3 The Policy shall be effective from 22nd August 2022 and unless varied or revoked, be adopted on a continuing basis as all Directors of DKLS and/or its subsidiaries are expected to carry themselves with highest integrity and professionalism as well as to comply with all relevant legal and regulatory obligations.


  3. 3. SCOPE AND APPLICATION

    3.1   Except as otherwise provided in this Policy, the fit and proper criteria shall apply with respect to the appointment and re-election of Directors of the Company and its subsidiaries.
    3.2 This Policy shall be read in conjunction with the following: -
    1. Malaysian Code of Corporate Governance 2021 ("MCCG");
    2. Corporate Governance Guide by Bursa Malaysia Securities Berhad; and
    3. Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("MMLR")
    3.3 At any one time, should the MMLR and MCCG be amended and the amendment affects the contents of this Policy, the amended MMLR and MCCG shall take precedence over the Policy.


  4. 4. FIT AND PROPER CRITERIA

    5. 4.1   In order to assess if a person is deemed fit and proper to hold directorship in DKLS and its subsidiaries, the Company shall have regard to the person's:
    1. Character and integrity
    2. Experience and competence
    3. Time and commitment

    Character and integrity

    In evaluating the personal qualities such as honesty, integrity, diligence, independence of mind and fairness of the Directors, the Company should consider the matters that are not limited to the following:-

    1. Probity
      • are compliant with legal obligations, regulatory requirements and professional standards; and
      • have not been obstructive, misleading or untruthful in dealings with regulatory bodies or a court.
    2. Personal Integrity
      • have not perpetrated or participated in any business practices which are deceitful, oppressive improper (whether unlawful or not), or which otherwise reflect discredit on their professional conduct;
      • service contract (i.e. in the capacity of management or director) had not been terminated in the past due to concerns on personal integrity; and
      • have not abused other positions (i.e. political appointment) to facilitate government relations for the Company in a manner that contravenes the principles of good governance.
    3. Financial Integrity and Solvency
      • manage personal debts or financial affairs satisfactorily; and
      • demonstrate ability to fulfil personal financial obligations as and when they fall due.
    4. Reputation
      • are of good repute in the financial and business community;
      • have not been the subject of civil or criminal proceedings or enforcement action, in managing or governing an entity for the past 10 years; and
      • have not been substantially involved in the management of a business or company which has failed, where that failure has been occasioned in part by deficiencies in that management.
    5. Independence
      • The Independent Directors meet the criteria of an Independent Director as specified in Item 1.1 of Practice Note 13 of the Listing Requirements (applicable to appointment and re-election of Independent Director)

    Experience and Competence

    In the means of performing their role in an effective capacity, the Directors must demonstrate the experience and competence requirements to understand the Company's nature of business, inherent risks and the management process. The Company should consider matters including but not limited to the following:

    1. Qualifications, training and skills
      • possess education qualification that is relevant to the skill set that the Directors are earmarked to bring to bear onto the boardroom (i.e. a match to the board skill set matrix);
      • have a considerable understanding on the workings of a corporation;
      • possess general management skills as well as understanding of business strategy, corporate governance, sustainability issues and board operations;
      • possess leadership capabilities and a high level of emotional intelligence;
      • have the financial literacy especially able to read and understand financial statements; and
      • keep knowledge current based on continuous professional development.
    2. Relevant experience and expertise
      • possess relevant experience and expertise with due consideration given to past length of service, nature and size of business, responsibilities held, number of subordinates as well as reporting lines and delegated authorities.
    3. Relevant past performance or track record
      • had a career of occupying a high level position in a comparable organisation, and was accountable for driving or leading the organisation's governance, business performance or operations; and
      • possess commendable past performance record as gathered from the results of the board effectiveness evaluation.

    Time and Commitment

    In assessing if the Directors are able to manage their time and willingness to be a part of the board activities either within the Company or outside, the Company should consider matters including but not limited to the following:

    1. Ability to discharge role having regard to other commitments
      • able to devote time as a board member, having factored other outside obligations including concurrent board positions held by the Directors across public listed companies and non-listed entities (including not-for-profit organisations) and should not hold more than 5 directorships each in listed issuers; and
      • devote sufficient time to the affairs of the Company in carrying out their responsibilities.
    2. Participation and contribution in the board or track record
      • demonstrate willingness to participate actively in board activities towards achievement of its mission, vision and strategies;
      • demonstrate willingness to devote time and effort to understand the businesses and exemplifies readiness to participate in events outside the boardroom;
      • manifest passion in the vocation of a director;
      • exhibit ability to articulate views independently, objectively and constructively;
      • exhibit open mindedness to the views of others and ability to make considered judgment after hearing the views of others;
      • value board and team performance and demonstrate respect for others to foster a dynamic and effective working relationship; and
      • able to develop a good working relationship with other Directors and contribute to the board's working relationship with the Company's management.


  5. 5. ASSESSMENT AND EVALUATION

    5.1   The NRC will evaluate candidates for new appointment as Directors based on the fit and proper criteria as set out in item 4 above before recommending to the Board for deliberation and approval.
    5.2 For new appointments, the candidates are required to provide personal details not limited to education background, work experience, directorships in other public listed companies, potential conflict of interest with the Company and additional relevant information.
    5.3 For re-appointment of Directors, the retiring Directors will be continuously assessed annually with diligence throughout their tenure where the NRC has the power to not recommend to the Board the reappointment of retiring Directors who do not meet the policy requirements.
    5.4 All information gathered from the assessments are confidential and shall be for the NRC's strict use and not for public disclosure.


  6. 6. REVIEW OF THE POLICY

    This Policy has been approved by the Board on 22nd August 2022. This Policy is subject to be reviewed periodically by the NRC and recommended to the Board for approval on any changes as it may deemed necessary in accordance with the needs of the Company, the MMLR, and the best practices under the MCCG.