STATEMENT OF CORPORATE GOVERNANCE

The Board of Directors (“the Board”) of Theta Edge Berhad (“Company”) is committed to a corporate culture that is based on the principles and best practices of corporate governance and is practiced by the Company and its subsidiaries (“the Group”).

The Group will continue to endeavor to comply with all the key Principles and Best Practices of the Malaysian Code on Corporate Governance 2012 (“the Code”) in its effort to observe high standards of transparency, accountability and integrity. The Group believes that good corporate governance will help to realize long term shareholders value, whilst taking into account the interest of other stakeholders.

The following paragraphs describe how the Group has applied the Principles and Best Practices of the Code.

A) Roles and Responsibilities of the Board and Management

The Company is led and managed by an experienced Board comprising members with a wide range of experience in relevant fields such as management, information technology, telecommunication, finance and law. The Directors bring a broad range of skills, experiences and knowledge required to successfully direct and supervise the Group’s business activities. A brief profile of each Director is presented from page 8 to page 14 of the 2015 Annual Report.

The Board has the overall responsibility for corporate governance, strategic and corporate plan, overseeing the investments and operations, material acquisition and disposal of securities/ assets/ businesses, identifying and managing principal risks, succession planning for senior management, developing and implementing shareholders’ communication policy and internal control systems and management information systems, financial related and legal matters.

The matters above are specifically reserved for the Board’s decision to ensure the direction and control of the Group is firmly in the Board’s hand.

The Board delegates the responsibility of implementing the Group’s strategies, business plans, policies and decisions to the Management which is led by the Group Managing Director and Chief Executive Officer.

Board Charter

The Company has in place a Board Charter that sets out, among others, the responsibilities, authorities, procedures, evaluations and structures of the Board and Board Committees, as well as the relationship between the Board with its management and shareholders. More information on the Board Charter can be found on the Company’s website at www.theta-edge.com.

Code of Ethics

The Group adopts the Code of Business Ethics published by its ultimate holding company, Lembaga Tabung Haji.

Whistle Blowing Policy

The Company has yet to put in place a Whistle Blowing Policy.

Sustainability Policy

The Group is committed to operate in a sustainable manner and seek to contribute positively to the wellbeing of its stakeholders. Details of the Group’s key corporate responsibility activities in 2015 can be found in the Sustainability Report on page 17 of 2015 Annual Report.

Access to Information and Advice

Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. The Senior Management and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making.

Apart from the above, the Board members are supplied with information and reports on financial, operational, corporate regulatory, business development and audit matters by way of board reports or upon specific request to enable them to discharge their duties and responsibilities. All Directors are notified of the corporate announcements released to Bursa Malaysia Securities Berhad (“BMSB”) and any amendment to BMSB’s Main Market Listing Requirements (“Listing Requirements”). All Directors have access to the management and auditors for independent view and advice.

In furtherance of their duties, the Directors may seek independent professional advice if necessary, at the expense of the Company.

Company Secretary

The Company has appointed qualified named secretaries for the Group who possess the requisite qualification and they play a supportive role by ensuring adherence to the Company’s constitution, Board policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations from time to time.

Board Composition and Balance

The Board consists of nine (9) members comprising the Chairman, who is a Non-Independent Non- Executive Director, three (3) Independent Non-Executive Directors, four (4) Non-Independent Non- Executive Directors and one (1) Executive Director.

Recommendation 3.5 of the Code states that the Board must comprise a majority of Independent Directors where the Chairman of the Board is not an Independent Director. Although Theta does not have a majority of Independent Directors on its Board, the Board believes that the current composition is appropriate given the collective skills and experience of the Directors and Theta Group’s current size and nature of Theta’s business. Further, the Board is of the view that with the current Board size, there is no disproportionate imbalance of power and authority on the Board between the Non-Independent and Independent Directors. The Board will continue to monitor and review the Board size and composition as may be needed.

It is a mandatory practice to have the Directors concerned to declare their interests and abstain from the decision making process when a potential conflict of interest arises.

The roles of the Chairman of the Board and the Group Managing Director and Chief Executive Officer are segregated. The Chairman is primarily responsible for the proper conduct and working of the Board whilst the Managing Director and Chief Executive Officer is responsible for the day-to-day running of the business and implementation of Board’s policies and decisions.

The Non-Executive Directors of the Company are independent of management and free from any business relationship which could materially interfere with the exercise of their judgment. They, particularly the Independent Non-Executive Directors, are actively involved in various Board Committees. They provide guidance, unbiased, fully balanced and independent and objective views, advice and judgment to various areas such as performance monitoring, enhancement of corporate governance and controls so as to safeguard the interest of shareholders and stakeholders and to ensure that the highest standards of conduct and integrity are maintained by the Group.

Board Committees

The Board delegated certain responsibilities to the Board Committees i.e. Audit and Risk Management Committee, Nomination Committee, Remuneration Committee and Tender Committee who operate within the approved terms of reference. The Board Committees discuss the subject matter, put forward recommendations and report to the Board for a final decision.

(a) Audit and Risk Management Committee (“ARMC”)

The primary objective of the ARMC is to assist the Board in fulfilling its responsibility relating to accounting, risk management and reporting practices of the Group. The ARMC is accorded all resources required to perform its duties, have full and unrestricted access to any information pertaining to the Group, have direct communication channels with the external and internal Auditors and is entitled to obtain any external legal or other independent professional advice as necessary. The composition of the ARMC is as follows:-

Mohamed Ridza bin Mohamed Abdulla (Chairman) (Senior Independent Non-Executive Director)

Datuk Nor Badli Munawir bin Mohamad Alias Lafti (Member) (Independent Non-Executive Director)

Dato’ Adi Azuan bin Abdul Ghani (Member) (Non-Independent Non-Executive Director)

(b) Nomination Committee

A Nomination Committee has been established by the Board and has no executive powers. The Nomination Committee comprises of exclusively Non-Executive Directors, all of whom are Independent, and is responsible for recommending appointments to the Board, Board Committees and personnel designated “Chief” and above and other strategic positions such as internal auditor, legal officer and risk officer after considering the nomination from the Chief Executive Officer, Directors and shareholders. The decision on appointment rests on the Board as a whole after considering the recommendation by the Nomination Committee.

The appointment of a committee member automatically terminates when the member ceases to be a Director. The composition of the Nomination Committee is as follows:-

Mohamed Ridza bin Mohamed Abdulla (Chairman) (Senior Independent Non-Executive Director)

Datuk Nor Badli Munawir bin Mohamad Alias Lafti (Member) (Independent Non-Executive Director)

The Board through the Nomination Committee shall periodically review its required mix of skills and experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board. The Nomination Committee meetings shall be convened at least once a year and they may invite other Board members, officers of the Company, employees and any other external parties to attend meetings or part thereof as and when necessary. Through its Chairman, the Nomination Committee reports to the Board on matters discussed at the next Board of Directors’ Meeting after each meeting. The Company Secretary is the Secretary to the Nomination Committee.

The nomination and election process of Board Members are as follows:-

Appointment of New Directors

The Board does not set specific criteria for the assessment and selection of candidate for appointment as director. Consideration would be taken on the need to meet the regulatory requirement such as the Companies Act, 1965 and the Listing Requirements, the experience, integrity, wisdom, independence of the candidate, ability to make analytical inquires, ability to work as a team to support the Board, possession of the required skill, qualification and expertise that would add value to the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.

The Nomination Committee is responsible to recommend candidate to the Board to fill vacancy arising from resignation, retirement or other reasons or if there is a need to appoint additional director with the required skill or profession to the Board in order to close the competency gap in the Board identified by the Nomination Committee. The potential candidate may be proposed by existing director, senior management, shareholders or third party referrals.

Upon receipt of the proposal, the Nomination Committee is responsible to conduct an assessment and evaluation on the proposed candidate.

The assessment/evaluation process may include among others, a review of the candidate’s resume, curriculum vitae and qualification. The Nomination Committee would also assess the candidate’s integrity, wisdom, independence, ability to make independent and analytical inquiries, ability to work as a team to support the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.

Upon completion of the assessment and evaluation of the proposed candidate, the Nomination Committee would make its recommendation to the Board. Based on the recommendation of the Nomination Committee, the Board would evaluate and decide on the appointment of the proposed candidate.

Annual Assessment of Existing Directors

The director who is subject to re-election and/or re-appointment at the next Annual General Meeting shall be assessed by the Nomination Committee before recommendation is made to the Board and shareholders for the re-election and/or re-appointment.

Terms of Reference

1. To identify and recommend appointments as directors to the Board, Board Committees and personnel designated “Chief” and above and other strategic positions such as the heads of department for internal audit, legal and risk.

2. To assess and recommend the re-election/re-appointment of directors upon the expiry of their terms of appointment.

3. To undertake periodic performance reviews of the Board, Board Committees as well as key senior officers.

4. To consider the balance of the Board and Board Committees membership and determine the core competencies and skills required of the Board in order to discharge its duties effectively.

5. To evaluate the effectiveness of the Board and Board Committees and the contributions of each of the Directors and Board Committees members.

During the financial year under review, the Nomination Committee has carried out an assessment of the Directors, reviewed the retirement of directors by rotation eligible for re-election at the forthcoming Annual General Meeting and reviewed the independence of the Independent Directors to ensure that the Board would be able to discharge its duties and responsibilities effectively.

Re-election of Directors

In accordance with the provisions of the Articles of Association of the Company, at least one-third (1/3) of the Directors for the time being or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shall retire from office and shall be eligible for re-election at each Annual General Meeting (“AGM”). Consequently, each Director shall retire from office at least once in every three years but shall be eligible for re-election. Directors who are appointed to the Board during the year shall retire and seek re-election at the next AGM to be held following their appointments.

Directors over the age of seventy years are required to submit themselves for re-appointment annually in accordance with Section 129 of the Companies Act, 1965.

(c) Remuneration Committee

The Remuneration Committee is appointed by the Board and has no executive powers. The appointment of a committee member automatically terminates when the member ceases to be a Director. The composition of the Remuneration Committee is as follows:-

Dato’ Adi Azuan bin Abdul Ghani (Chairman) (Non-Independent Non-Executive Director)

Mohamed Ridza bin Mohamed Abdulla (Member) (Senior Independent Non-Executive Director)

Datuk Nor Badli Munawir bin Mohamad Alias Lafti (Member) (Independent Non-Executive Director)

The Remuneration Committee comprising of three (3) Non-Executive Directors, majority of whom are Independent, has the primary responsibility to provide assistance to the Board in determining, reviewing and developing a remuneration policy and reward system for the Board, personnel designated “Chief” and above and other strategic position such as internal auditor, legal officer and risk officer. The remuneration package links rewards to corporate and individual performance. A remuneration policy is presently in place to ensure the levels of remuneration are sufficiently attractive to retain Directors and Key Senior Management.

The Remuneration Committee shall meet at least once a year and may invite other Board members, officers of the Company, employees and any other external parties to attend meetings or part thereof as and when necessary. The Remuneration Committee through its Chairman shall report to the Board at the next Board of Directors’ Meeting after each meeting. The Company Secretary is the Secretary to the Remuneration Committee.

Terms of Reference

1. To review and recommend to the Board the remuneration package for Executive and Non- Executive Directors and assists the Board in ensuring that the remuneration of the Executive and Non-Executive Directors commensurate with the responsibilities and duties undertaken by the Board members.

2. To review and recommend to the Board the increment for the Group’s employees and the salary increment/adjustment of the internal auditor, legal officer, risk officer and key senior employees designated “Chief” and above.

3. The Board as a whole determines the remuneration of each Director. Directors do not participate in decision regarding their own remuneration package.

Gender, Ethnicity and Age Group Diversity Policy

The Company does not have a policy on gender, ethnicity and age group for candidates to be appointed on the Board. The Group does not practice any form of gender, ethnicity and age group for all directors and the selection criteria for appointment will be based on skills, experience and knowledge as the Group provides equal opportunity to candidates based on merit. DIRECTORS’ REMUNERATION The objectives of the Company’s remuneration policy on Directors’ remuneration is to attract, retain and motivate the Directors of the highest quality and to recognize and reward the high performing Directors for achieving the Company’s business and corporate goals.

The Remuneration Committee shall ensure that the levels of remuneration are sufficient to attract and retain Directors of the quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the executive directors. In the case of non-executive directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the non executive directors concerned.

Details of Directors’ remuneration for the financial year ended 31 December 2015 are set out as below:-

Fees (RM) Salary & Bonus (RM) Other Emoluments (RM)  Total (RM)  
Executive Directors 558,000 100,500 658500
Non-Executive Directors  222,697  – 296,500 519197

 

 

The number of Directors whose total remuneration falls within the following bands for the financial year ended 31 December 2015 is as follows:-

Number of Directors

 Range of Remuneration  Executive  Non-Executive
 RM50,000 and below 6
RM50,001 to RM100,000 1
RM100,001 to RM150,000 1
RM550,001 to RM600,000 1 0

The Board consists of nine (9) members comprising the Chairman, who is a Non-Independent Non Executive Director, three (3) Independent Non-Executive Directors, four (4) Non-Independent Non Executive Directors and one (1) Executive Director.

The Board has complied with Paragraph 15.02 of the Listing Requirements which requires at least two directors or one-third of the Board, (whichever is the higher) to be Independent Directors. The presence of Independent Directors provides objectivity and independent judgment to decision making.

The Board is aware of the recommendation 3.2 and 3.3 of the Code states that the tenure of an independent director should not exceed a cumulative term of nine (9) years and that an Independent Director may continue to serve the Board if the Independent Director is re-designated as a Non Independent Non-executive Director upon completion of nine (9) years tenure. The Board must justify the decision and seeks shareholders’ approval at general meeting if the Board intends to retain the Director as Independent after the Independent Director has served a cumulative term of nine (9) years.

The Board, on the recommendation of the Nomination Committee would like to retain Encik Mohamed Ridza bin Mohamed Abdulla (whose term of office as Independent Director of the Company will be nine (9) years cumulatively by 7 November 2016) as Independent Non-Executive Director of the Company and to hold office until the conclusion of the next AGM. The Nominating Committee and the Board are confident that Encik Mohamed Ridza bin Mohamed Abdulla can be tasked to discharge his duties and responsibilities independently and objectively notwithstanding his tenure on the Board. The Company will seek its shareholders’ approval on the retention of Encik Mohamed Ridza bin Mohamed Abdulla to continue to act as Independent Non-Executive Director of the Company until the conclusion of the next AGM.

Assessment on Independence of Directors

Criteria have been set to assess the independence of candidate for directors and existing directors based on the guidelines set out in the Listing Requirements.

On an annual basis, the Directors are required to confirm their independence by completing the independence checklist.

During the financial year, the Nomination Committee carried out an assessment of the Directors and recommended the re-election of directors at the Twenty-Third (23rd) Annual General Meeting to the Board.

The Board was satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company during the financial year ended 31 December 2015. In compliance with the Listing Requirements, all the Directors do not hold directorships more than that prescribed under the Listing Requirements. There were six [6] Board of Directors’ Meetings held during the financial year ended 31 December 2015 and the details of the attendance of the Directors’ Meetings are as follows:-

Directors Number of Board Meetings 
Attended Held
Tan Sri Dato’ Hashim bin Meon 6 6
Datuk Seri Panglima Hj Abdul Azeez bin Abdul Rahim (Resigned on 10.08.2015) 1 4
Dato’ Syed Saleh bin Syed Abdul Rahman 3 6
Mohamed Ridza bin Mohamed Abdulla 6 6
Dato’ Adi Azuan bin Abdul Ghani 6 6
Datuk Nor Badli Munawir bin Mohamad Alias Lafti 6 6
A. Shukor bin S.A. Karim 6 6
Dato’ Richard George Azlan bin Abas 6 6
Abdul Halim bin Jantan 6 6
Anis Zuhani binti Ahmad (appointed on 19.11.2015)

* There were no meetings held subsequent to Anis Zuhani binti Ahmad’s appointment

Directors’ Training

All the Directors of the Company have attended the Mandatory Accreditation Programme. Directors are encouraged to attend relevant seminars and conferences to enhance their skills and knowledge and to keep abreast with the latest developments on laws and regulations.

For the year under review, the training programmes and seminars attended by the Directors were as follows:

1) 5th Distinguished Board Leadership Series: “Beyond Compliance to Growth – Board’s Strategy in

2) AFN Asia Forum 2015

3) Audit World 2015

4) BNM-FIDE Forum Dialogue with Governor, BNM

5) Echelon Asia Summit

6) Impact of the New Accounting Standard on Banks – What Directors Should Be Aware Of Attended Held Cultivating Real Growth within a Conducive Governance Environment”

7) Innovation & Growth in Uncertain Times

8) Managing Corporate and Sovereign Credit Risk in a Global Environment

9) Synergy & Crowd Funding Forum

10) Trouble in Boardroom

Financial Reporting

The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annual reports and quarterly reports. The quarterly financial results were reviewed by the ARMC and approved by the Board of Directors prior to submission to BMSB. The Directors’ Responsibility Statement for the preparation of financial statements is set out below.

Relationship with Auditors

The Company’s independent external auditors fill an essential role for the shareholders by enhancing the reliability of the Group’s financial statements and giving assurance of that reliability to users of the financial statements.

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the external auditors in seeking professional advice and ensuring the compliance with the relevant regulations and applicable approved accounting standards in Malaysia. The external auditors attend ARMC meetings when necessary and have direct access to the ARMC and internal auditors for independent discussion.

Directors’ Responsibility Statement for the Annual Audited Financial Statements

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which have been made out in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 as to give a true and fair view of the state of affairs and the results and cash flows of the Company and the Group for the financial year.

In preparing the financial statements of the Group for the year ended 31 December 2015, the Directors have adopted appropriate accounting policies and applied them consistently, made prudent and reasonable judgments and estimates and ensured the applicable accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been followed. The financial statements have been prepared on a going concern basis. The Directors acknowledge and are responsible for ensuring that proper accounting records are kept to reflect the reasonable accuracy of the financial position of the Company and the Group and to ensure the financial statements comply with all relevant rules and regulations.

The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Statement on Risk Management and Internal Control

The Board has an overall responsibility in maintaining a sound internal control system that provides reasonable assurance of effective and efficient operations and compliance with internal procedures and guidelines. The Statement on Risk Management and Internal Control is set out on pages 38 to 41 of 2015 Annual Report.

Corporate Disclosure Policy

The Group acknowledges the importance of timely and equal dissemination of material information to the shareholders, investors and public at large. The Board observes the Corporate Disclosure Guide issued by the BMSB which can be viewed from BMSB’s website at www.bursamalaysia.com as well as adhering to and complying with the disclosure requirements of the Listing Requirements.

Recognizing the importance of timely dissemination of information to shareholders and other stakeholders, the Board is committed to ensuring that the shareholders and other stakeholders are well informed of major developments of the Company and the information is communicated to them through the following:-

(i) The Annual Report;

(ii) The various disclosures and announcements made to BMSB including the Quarterly Results

(iii) Briefings to the Company’s key investors or other investment community in order to provide

(iv) The website at www.theta-edge.com which shareholders as well as members of the public and Annual Results; and them a better understanding of the Group’s operations and explanation to any concern highlighted. are invited to access for the latest information on the Group.

The Company’s AGM serves as a principal forum for dialogue with shareholders. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Extraordinary General Meetings are held as and when required.

At the commencement of the AGM after the calling of the Meeting to order, the Chairman would remind the shareholders, proxies and corporate representatives on their rights to demand for a poll in accordance with the provisions of the Articles of Association of the Company for any resolutions. The Chairman is also aware that he can demand for a poll for substantive resolutions tabled at the shareholder’s meeting.

The Board also encourages shareholders to communicate through other channels and has identified En Mohamed Ridza bin Mohamed Abdulla as the Senior Independent Non-Executive Director to whom concerns from the public may be conveyed. En Mohamed Ridza bin Mohamed Abdulla can be contacted via the following channel:-

c/o

Theta Edge Berhad
Bangunan C, Peremba Square
Saujana Resort, Section U2
40150 Shah Alam
Selangor Darul Ehsan

 

STATEMENT ON COMPLIANCE WITH BEST PRACTICES OF THE CODE

Pursuant to Paragraph 15.25 of the Listing Requirements, the Board is satisfied that the Company has complied with the Code during the financial year with regard to the recommendations supporting the Principles except as otherwise stated.

This statement is made at the Board of Directors’ Meeting held on 10 March 2016.