Board Charter

Emico Holdings Berhad

1. INTRODUCTION

The Board of Directors of Emico Holdings Berhad (‘the Company’) recognises the importance of Corporate Governance towards the success of Emico’s business. The Board strives to follow the principles of the Malaysian Code of Corporate Governance and this Board Charter has been endorsed by the Board on 26 June 2020 and is subject to periodical review to ensure its relevance and compliance.

2. OBJECTIVES

The objectives of this Board Charter are to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities as Board members and the various legislations and regulations affecting their conduct and that the principles of good corporate governance are applied in all their dealings in respect and on behalf of the Company.

3. THE BOARD

3.1. Role of the Board

i. The responsibilities and limitations of the Board are primarily set out in the Company’s Constitutions, the Companies Act 2016, the Listing Requirements of Bursa Malaysia Securities Berhad, the Capital Market & Services Act 2007, Section 17A of the Malaysian Anti-Corruption Commission (Amendment) Act 2018 and the directors and/or shareholders’ resolutions.

ii. The Board review and approve the annual financial statement and quarterly results before announcement to Bursa.

iii. The Board review and approve related party transactions.

iv. The Board decides on matters delegated to the Board Committees and management.

v. The Board oversees the adequacy and effectiveness of the Group’s risk management and systems of internal control.

3.2. Composition and Board Balance

i. The Board is comprising of three (3) executive directors and four (4) independent non-executive directors.

ii. The composition equips the Board with the necessary skills of business, financial and technical experience to effectively lead and control the Company. The independent non-executive directors are vital for the successful direction of the Group as they provide independent professional views, advice and decisions to take into account the interest of the Group, shareholders, employees, customers, suppliers and many others of which the Group conducts business.

3.3. Appointment

i. The appointment of a new Director is a matter of consideration and decision by all members of the Board upon appropriate recommendation from the Nominating Committee.

ii. The Company Secretary has the responsibility in ensuring that the relevant procedures relating to the appointments of new Directors are properly executed.

iii. In addition to the Mandatory Accredited Programme (MAP) as required by Bursa Malaysia Securities Berhad, the Directors are also encouraged to attend structured trainings conducted by professionals which are relevant to the Company’s operations and business and also for the Directors to update themselves in relation to new developments pertaining to the laws and regulations especially recent changes to Companies Act 2016 and changing commercial risks which may affect the Board and the Company.

3.4. Re-election/Reappointment

i. One-third (1/3) of the Directors are subject to retirement by rotation yearly or at the interval of every three (3) years.

ii. The tenure of an independent director does not exceed a cumulative term limit of nine years. Upon completion of the nine years, an independent reviewed to serve on the board as an Independent director will be carried out subject to the recommendation of Nominating Committee and approval by the Board of Directors.
If the board intends to retain an independent director beyond nine years, it should justify and seek annual shareholders’ approval. If the board continues to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process.

3.5. Supply of Information

i. The Company aims to provide all Directors with timely and quality information and in a form and manner appropriate for them to discharge their duties effectively.

ii. The management is responsible in providing the Board with the required information in an appropriate and timely manner. The Managing Director, will assess the type of information required to be provided to the Board. If the information provided by the management is insufficient, the Board will make further enquiries where necessary to which the persons responsible will respond as fully and promptly as possible.

iii. All Directors have access to the advice and services of the Company Secretary in carrying out their duties and to ensure all rules, requirements and regulations are complied with.

iv. All Directors may obtain further information which they may require in discharging their duties such as seeking independent professional advice at the Company’s expense, if necessary.

v. A full agenda and comprehensive Board papers should be circulated to all Directors well in advance of each meeting.

vi. Amongst others, the Board papers should include the following:
a. Quarterly financial report of the Company;
b. Minutes of meetings of all Committees of the Board;
c. Internal Audit Report of the Company;
d. Reports on Related Party Transactions;
e. Directors’ and Substantial Shareholders’ share dealings; and

vii. Minutes of each Board meeting should be kept by the Company Secretary and should be available for inspection by any Director during office hours.

4. CHAIRMAN AND MANAGING DIRECTOR (MD)

The Company aims to ensure a balance of power and authority between the Chairman and the MD with a clear division of responsibility between the running of the Board and the Company’s business respectively. The positions of the Chairman and MD are separately and clearly defined.

4.1. Role of Chairman

i. To ensures Board effectiveness, implementation of Board’s policies and decisions, corporate affairs and overall financial performance of the Group;

ii. To ensures the Management provides accurate, timely and clear information to members of the Board.

iii. To develops and determines the Group’s strategy and overall business and commercial objectives;

iv. To ensures orderly conduct and proceedings of meetings of the Company

v. To facilitates effective communications between the shareholders and the Directors and ensures shareholders have adequate opportunity to air their views and obtain answers to their queries.

4.2. Role of the Managing Director

i. The Managing Director leads the management in the operations and has overall responsibility over the operation units and organisational effectiveness;

ii. The Managing Director is responsible for the operations of sales and marketing divisions and expansion of the overseas market for the Group;

iii. Lead management and employees and express his clear leadership;

iv. Submit and implement acquisition/investment proposals;

v. Develop and organizational structure with the necessary succession planning

vi. Maintain a friendly environment and develop organisation culture, values and reputation in its markets;

vii. Have a good corporate sustainability program for shareholders, staff, customers, suppliers, regulatory/government bodies and Support & Contribute to communities;

viii. Ensure the executive team implements the decisions of the Board and its Committees;

ix. Assist the Chairman in drawing up the agenda for the Board meetings by providing input in relation to important strategic issues facing the business;

x. The Managing Director updates the Chairman regularly on the business and affairs of the Group and maintain a consistent dialogue with the Chairman.

5. BOARD COMMITTEES

To assist the Board in fulfilling its duties and responsibilities, the Board has established the following Committees;-

• Audit and Risk Management Committee
• Nominating Committee
• Remuneration Committee

All Board Committees have Terms of Reference which are described in (6) below and have been approved by the Board.
The Board can establish other Committees on ad hoc basis as and when required.

6. TERMS OF REFERENCE OF VARIOUS BOARD COMMITTEES

AUDIT AND RISK MANAGMENENT COMMITTEE (“ARMC” or “Committee”)

Purpose
The primary objective of the ARMC is to assist the Board in the effective discharge of its fiduciary responsibilities for corporate governance, financial reporting and internal control.

Reporting Responsibilities
The ARMC will report to the Board on the nature and extent of the functions performed by it and may make such recommendations to the Board on any audit and financial reporting matters as it may think fit.

Attendance at Meeting
The head of finance, the internal auditor and a representative of external audit shall normally attend meetings. The Company Secretary shall be the Secretary of the ARMC. Other board members or employees may be invited to brief the Committee on issues that are incorporated into the agenda.

Frequency of Meeting
The Committee will meet as frequently as the Chairman shall decide, with due notice of issues to be discussed and shall record its conclusions whilst discharging its duties and responsibilities. The ARMC should meet with the external auditors without executive board members present at least once a year.

The Chairman of the ARMC should engage on a continuous basis with senior management, such as the chairman, managing director, the internal auditor and the external auditors in order to be kept informed of matters affecting the Company.

Quorum
The quorum for a meeting shall be 3 (three) members, the majority of whom shall be independent directors.

Authority
The ARMC is authorised by the Board to investigate any activity within its terms of reference. The Committee shall have unrestricted access to both the internal and external auditors and to all employees of the Group. The internal audit function reports directly to the Committee. The ARMC may, with the approval of the Board, consult legal or other professionals where they consider it necessary to discharge their duties.

NOMINATING COMMITTEE (“NC”)
The NC is empowered by the Board to oversee the assessment of the Board as a whole, Board Committees and each individual Director, nominate to the Board the candidature of Directors and Board Committees’ members as well as review the Board’s succession plans and training programs. The NC comprises of four (4) members, the majority of whom are INEDs. Its Chairman is also an INED. The NC would meet at least once (1) annually with additional meetings convened on as and when needed basis.

The Term of Reference of NC are as follows:

(a) Considered and reviewed the Board’s present size, structure and composition of the Board as well as the
required mix of skills, experience, composition, size and competency required.

(b) Assessed and recommended to the Board for the continuation of service of the Directors who are eligible
to stand for re-election based on the schedule of retirement by rotation.

(c) Assessed the independence of the INEDs who have served in the said capacity for more than nine (9) and twelve(12) years and recommended to the Board for the continuation of service.

(d) Reviewed the term of office and performance of the ARMC.

(e) Reviewed and assessed the contribution of each Director and the effectiveness of the Board and Board
Committees.

(f) Discussed the character, experience, integrity and competence of the Directors, and MD and to ensure
they have the time to discharge their respective roles.

(g) Noted the training attended by Directors for disclosure in the CG Overview Statement for publication in
the Annual Report.

(h) Recommended for Directors to attend training or seminars particularly those in connection with updates
to regulations and financial reporting standards.

(i) Considered appointment of additional INED(s) to meet gender diversity and balance of INEDs on the
Board.

REMUNERATION COMMITTEE (“RC”)
The terms of reference for RC are as follows:
Appointment/Composition
• The RC shall be appointed by the Board of Directors.
• The RC shall consist of not less than two (2) members.
• All the members of RC are Independent Non-Executive Directors.

The members of RC are as follows:
Mr. Ng Chee Kong Chairman Independent Non-Executive Director
Mr. Wong Thai Sun Member Independent Non-Executive Director
Mr. Ng Hong Kiat @ Ng Han Kiat Member Independent Non-Executive Director
Mr. Wong Sew Yun, Member, Independent Non-Executive Director

The duties and responsibilities of RC consist of the following:

• To establish and recommend to the Board, the remuneration package for Executive Directors such as the terms of employment or contract of employment/service, benefit, pension, incentive scheme, bonuses, fees, expenses,compensation payable on termination of service of contract by the Company and/or the Group etc.

• To review and recommend to the Board the remuneration packages of Non-Executive Directors for shareholders approval at the Annual General Meeting.

• To consider other remunerations or rewards to retain and attract directors.

7. BOARD MEETINGS

i. The Board should meet in person as least once every quarter to facilitate the discharge of their responsibilities.

ii. It is expected that each Director makes every effort to attend each Board meeting and each meeting of any committee on which he/she sits.

iii. Each Director should be familiar with the agenda for each meeting, having carefully reviewed all materials distributed in advance of the meeting, and be prepared to participate meaningfully in the meeting and to discuss all scheduled items of business.

iv. Members of the management who are not directors may be invited to attend and speak at meetings on matters relating to their sphere of responsibilities.

8. GENERAL MEETINGS

i. The Company regards the AGM as an important event in the corporate calendar of which all Directors should attend.

ii. The Chairman encourages active participation by the shareholders during the AGM.

iii. The Chairman and, where appropriate, the MD shall respond to shareholders’ queries during the meeting.

9. INVESTORS RELATIONS AND SHAREHOLDER COMMUNICATION

i. The Board ensures the timely release of financial results on a quarterly basis to provide shareholders with an overview of the Company’s performance and operations in addition to the various announcements made during the year.

ii. The Company’s website provides easy access to corporate information pertaining to the Company and its activities and is continuously updated.

10. COMPANY SECRETARY

i. The Board appoints the Company Secretary, who plays an important advisory role, and ensure that the Company fulfils the functions for which he/she has been appointed.

ii. The Company Secretary is a central source of information and advice to the Board and its Committees on issues