Corporate Governance

Statement on Corporate Governance

The Board of Directors (“the Board”) of Carimin Petroleum Berhad (“Carimin” or “the Company”) recognises the importance of good corporate governance practices and is committed to put in place a proper framework and implement controls that are in line with the principles of best practices as recommended by the Malaysian Code of Corporate Governance (“MCCG”).

The establishment, implementation and practice of the Principles and Recommendations of MCCG would support the business operations as well as the financial management of the Company and would invariably enhance the financial performance and shareholders’ value in the long term.

This Corporate Governance Overview Statement (“the Statement”) should be read together with the Corporate Governance Report 2018 which is available on the Group’s website, www.carimin.com, as well as via an announcement on the website of Bursa Malaysia Securities Berhad (“Bursa Securities”).

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS

1. Board’s Leadership on Objective and Goals

1.1 Strategic Aims, Values and Standards

The Board collectively leads and is responsible for the overall performance and affiairs of the Company and its subsidiaries (“the Group”) including adherence to a high standard of good governance. All Board members are expected to demonstrate good stewardship and act in a professional manner whilst upholding the core values of integrity and enterprise with due regard to their fiduciary duties and responsibilities.

The Board has the responsibility in leading and directing the Group towards realising long term objectives and as well maximizing shareholders’ value. The Board retains full and effective control of the Group’s strategic plans, implementing an appropriate system of risk management and ensuring the adequacy and integrity of the Group’s system of internal control.

To ensure the effective discharge of the Board’s functions and responsibilities, the Board delegates the day-to- day management of the Group’s business to the Management. The Managing Director (“MD”) is responsible for the implementation of the Board’s decisions, and the day-to-day operations of the Group’s business and operational efficiency. Non-Executive Directors play a vital check and balance role by challenging and scrutinising the Senior Management’s recommendations and proposals in an objective manner and bringing independent judgment to the decision making process at the Board and Board Committee levels.

Broadly, the Board assumes the following principal responsibilities in discharging its fiduciary and leadership functions:

a. Reviewing and adopting a strategic plan for the Group, including addressing the Group’s business strategies on promoting sustainability;

b. Overseeing the conduct of the Group’s business, and evaluating whether or not its businesses are being properly managed;

c. Identifying principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and mitigating measures to address such risks;

d. Ensuring that all candidates appointed to the Board are of sufficient calibre, including having in place a process to provide for the orderly succession of the members of the Board;

e. Overseeing the development and implementation of an investor relations programme and stakeholder communications policy; and

f. Reviewing the adequacy and integrity of the Group’s internal control and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

The Board has also delegated certain responsibilities to the following Committees to assist in the execution of its responsibilities:

i. Audit Committee

ii. Nomination Committee

iii. Remuneration Committee

iv. Risk Management Committee

(collectively referred to as “Board Committees”)

The Board Committees’ Terms of Reference can be assessed via the Company’s website, www.carimin.com.

The role of the Board Committees is to advise and make recommendations to the Board. However, the ultimate responsibility for the final decision on all matters lies with the Board. The Chairman of various committees provide a verbal report on the outcome of their committee meetings to the Board, and any further deliberation is made at the Board level, if required.

1.2 The Chairman and MD

The positions of the Chairman and MD are distinct and separate to ensure there is a balance of power and authority. The Chairman of the Board, Tan Sri Dato’ Kamaruzzaman Bin Shariff who is a Non-Independent Non-Executive Chairman, whereas the MD is En. Mokhtar Bin Hashim.

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 theBoard’s policies and decisions.

1.3 Qualified and Competent Company Secretary

The Board is supported by a qualified and competent Company Secretary. Our Company Secretary is a member of the Malaysian Association of Companies Secretaries and is holding a professional certificate as qualified Company Secretary under the Malaysian Companies Act 2016. She possesses over 25 years of experience in corporate secretarial practices.

The Board acknowledges that the Company Secretary plays an important role and will ensure that the Company Secretary fulfils the functions for which she has been appointed.

The Company Secretary plays an advisory role in supporting the Board and Board Committees on issues relating to complying with laws, rules, procedures and regulations affecting the Company, particularly Companies Act 2016, Main Market Listing Requirements of Bursa Securities (“Listing Requirements”), MCCG, Company’s Constitution and Board Charter.

The Company Secretary manages the logistics of all Board, Board Committees and general meetings. She ensures minutes of all meetings are properly recorded and reflected the correct proceedings of the meetings, including whether any Director abstained from voting or deliberating on a particular matter. During the financial year under review, all Board and Committees meetings were properly convened and accurate and proper records of the proceedings and resolutions passed were taken and maintained in the statutory records of the Company.

The Company Secretary also keeps the Directors and Principal Officers informed of the closed period for dealings in the Company’s shares.

Overall, the Board is satisfied with the service and support rendered by our Company Secretary to the Board in the discharge of her functions.

1.4 Access to Information and Advice

The Board understands that the decision making process is highly dependent on the quality and timing of information being furnished. The Board members have full and unrestricted access to all information concerning the Group’s affairs as below:-

a. The Directors, also have access to the Internal and External Auditors of the Group, with or without Management present to seek explanations or additional information.

b. The Directors, collectively or individually, may seek independent professional advice and information, on a case to case basis, in the furtherance of their duties at the Company’s expense, so as to ensure the Directors are able to make independent and informed decisions.

c. The Audit Committee (“AC”) meets with the Management, Internal Auditors and External Auditors regularly to review their audit plans and reports, and obtain updates and observations on internal control system and financial reporting matters.

d. The Board and/or Board Committees meeting papers are prepared and circulated to the Directors and/or Board Committees at least five (5) days before the Board and Board Committee meetings.

2. Demarcation of Responsibilities

2.1 Board Charter

TThe Board also reviewed and approved the amendments to the Board Charter and the Code of Ethics and Conduct (“the Code”) for the Group to be in line with the practices in the MCCG. The Board Charter is intended to identify the role, structure and processes related to key governance activities of the Board. It also serves as a reference point for Board activities.

A copy of the Board Charter is available on the Company’s website at www.carimin.com.

Board Charter

3. Good Business Conduct and Corporate Culture

3.1 Code of Ethics and Conduct

TThe Board has adopted the Code which is incorporated in the Board Charter of the Company. The Directors continue to observe the Code based on the code of conduct expected of directors of companies as set out in the Code of Ethics for Company Directors established by the Companies Commission of Malaysia, and ensure implementation of corporate accountability standards to support and promote an ethical corporate environment and ensure the compliance of the Code.

The Board will periodically review and assess the adequacy of the Code, and make such amendments to the Code as the Board may deem appropriate. The Code is available on the Company’s website at www.carimin.com.

Whistle Blowing Policy

3.2 Whistle Blowing Policy

The Board has put in place a Whistle Blowing Policy to provide the appropriate communication and feedback channels to facilitate whistle blowing, as well as to guide and address any reports of wrongdoing under the Code of Conduct and Ethics, including communication through the Company’s website. The Whistle Blowing Policy, which is published on the Company’s website, sets out the processes for employees or members of the public to report genuine concerns about illegal, unethical or questionable practices in confidence and without the risk or reprisal.

4. Board’s Objectivity

4.1 Composition of the Board

In line with the Code, the Group is led and managed by a diverse, competent and experienced Board of Directors. The Board comprises of a mix of diverse and suitably qualified individuals who has expertise and experiences within the oil & gas and civil engineering industry. The presence of Independent Directors ensures that views, consideration, judgment and discretion exercised by the Board in decision making remains objective and independent whilst assuring the interest of other parties such as minority shareholders are fully addressed and adequately protected as well as being accorded with due consideration.

The Board currently has seven (7) members as set out in the table below:-

 

board_members

 

The Company fulfils the requirement of the Board comprising at least one-third (1/3) Independent Directors as stipulated under Paragraph 15.02 of the Listing Requirements of Bursa Securities.

There is a clear separation of functions between the Board and Management. The Board has full control of the Group and oversees its business affairs and the Management is responsible for implementing the Board’s corporate objective, policies and procedures on risk and internal control.

The Group does not have a Chief Executive Officer (“CEO”) presently and the day-to-day management of the Group is carried out and performed by the MD and Executive Director (“ED”) jointly and collectively with each ED placed in charge of a portfolio of specific responsibility within the Group broadly segregated as follows:-

• Construction, Hook-up & commissioning, topside major maintenance (“CHUCTMM”) Division;

• Marine Division;

• Civil Engineering Division; and

• Project services, Corporate Finance & Financial Reporting and Human Resource & Administration

4.2 Tenure of Independent Directors

The MCCG recommends that the tenure of an Independent Non-Executive Director shall not exceed a cumulative term of nine (9) years. The Company does not have tenure limits for Independent Directors and the Board is of the opinion that the ability of an Independent Director to exercise his independence and objective judgment in Board deliberations shall not be a function of his length of service as an Independent Director.

However, if the Board intends to retain a Director who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, the Board must justify its decision and seek the shareholders’ approval at a general meeting.

During the financial period under review, none of our Directors has served the Board as an Independent Director of the Company for a cumulative term of more than nine (9) years.

4.3 New Appointment to the Board

The members of the Board are appointed in a formal and transparent practice as endorsed by the Code. The Nomination Committee (“NC”) scrutinises the candidates and recommends the same for the Board’s approval.

In discharging this duty, the NC will assess the suitability of an individual by taking into account the individual’s mix of skill, functional knowledge, expertise, experience, professionalism, integrity and/or commitments that the candidate shall bring to complement the Board.

In searching suitable candidates, the NC may receive suggestions from existing Board members, Management and major shareholders. The NC is also open to referrals from external sources available or independent search firms.

All Board members shall notify the Chairman of the Board before accepting any new directorship in other companies. The notification shall include an indication of time that will be spent on the new appointment. The Chairman shall also notify the Board if he has any new directorships or significant commitments outside the Company.

In accordance with the Company’s Constitution, one-third (1/3) of the Directors for the time being, or if their number is not multiple of three (3), the number nearest to one-third (1/3), shall retire at the Annual General Meeting (“AGM”), and be eligible for re-election provided that all Directors shall retire at least once in every three (3) years.

Directors who are appointed by the Board in the course of the year shall be subject to re-election at the next AGM to be held following their appointment.

4.4 Diverse Board and Senior Management Team

The Group is an equal opportunity employer and does not practice discrimination of any form, whether based on age, gender, ethnicity throughout the organisation.

Appointment of Board and Senior Management are based on objective criteria, merit and besides gender diversity, due regard are placed for diversity in skills, experience, age, integrity and cultural background. Please refer to the Profiles of Directors and Key Senior Management as disclosed in this Annual Report for further information.

4.5 Gender Diversity

The Board recognises that gender diversity and equitable representation at Board and Senior Management level are essential element of good governance, and is a critical attribute of a well-functioning board and maintaining a competitive advantage. It enhances decision-making capability and a diverse Board is more effective in dealing with organisational changes.

The Company takes cognisant of the best practices recommended under the MCCG to have at least thirty percent (30%) female Directors.

In line with the MCCG and in view of the gained attention of boardroom diversity as an important element of a well functioned organisation, the Board has established a Gender Diversity Policy which provides a framework for the Company to improve its gender diversity at Board level. The objectives/principles and measures as set out in our Gender Diversity Policy are summarised below:

4.6 Nomination Committee

The NC of the Company comprises the following members, all being Non-Executive Directors and majority of whom are Independent Directors:-

 

committe_members

 

The Terms of Reference of the NC is published on the Company’s website at www.carimin.com.

The NC meets as and when required. The NC met once in the financial year ended 30 June 2018 (“FYE 2018”) and the activities undertaken by the Committee were as follows:

a. Conducted an annual assessment of the effectiveness of the Board and Board Committees as a whole in respect of the financial year ended 30 June 2017;

b. Carried out the assessment and rating of each Director’s performances against the criteria as set out in the annual assessment form. The performance of Non-Executive Directors was also carefully considered, including whether he/she could devote sufficient time to the role.

c. Reviewed and assessed the term of office and performance of the Audit Committee and each of its members for the financial year ended 30 June 2017;

d. Reviewed and assessed the independence of each Independent Director; and

e. Reviewed and recommended to the Board, the re-election of the Directors who were due for re-election by rotation at the Fifth AGM of the Company.

4.7 Attendance of Board and Board Committees’ Meetings

The Board schedules at least four (4) meetings in a financial year with additional meetings to be convened where necessary. During the FYE 2018, the Board met five (5) times where they deliberated and approved various reports and issues, including quarterly financial results of the Group for the announcement to Bursa Securities as well as discussed on the business plans and strategies, major investments, strategic decisions as well as the Group’s financial performance.

The number of meetings held and attended by each members of the Board and the Board Committees during the FYE 2018 are as follows:-

 

meeting_board

 

To facilitate the Directors’ time planning, the meetings calendar was prepared in advance of each new year by the Company Secretary. The calendar provides the Directors with scheduled dates for meetings of the Board and Board Committees as well as the AGM. The closed periods for dealings in securities by Directors and Principal Officers based on the scheduled dates of meetings for making announcements of the Group’s quarterly results were also provided therein.

The Board is satisfied with the level of time commitment given by the Directors of the Company towards fulfilling their duties and responsibilities. This is evidenced by the attendance record of the Directors as set out herein above.

Prior to the meetings, all members are provided with the agenda and meeting papers containing information relevant to the business of the meeting, typically at least five (5) working days prior to the date of the meeting, to enable them to obtain further explanations, where necessary, in order to be properly briefed before meetings. The meeting papers provide sufficient details of matters to be deliberated during the meeting which includes information on financial, operational and corporate matters of the Group and the information provided therein is not confined to financial data but includes also non-financial information, both quantitative and qualitative, which is deemed critical for the Directors’ knowledge and information in arriving at a sound and informed decision.

The Notice of Board meetings are sent to the Directors via email at least seven (7) days prior to the dates of meetings.

Where necessary, Senior Management and/or external professionals may be invited to attend these meetings to clarify and/or explain matters being tabled. In the event a potential conflict of interest situation arises, the Director concerned is to declare his interest and shall abstain from any deliberation and participation in respect of such resolution pertaining to the transaction.

Records of the deliberation, issues discussed and conclusion were recorded by the Company Secretary who attends all the meetings. The minutes will then be circulated to all Directors for their confirmation before it is signed by the Chairman of the meeting. Minutes of Board meetings together with decisions made by way of circular resolution are duly recorded and properly kept by the Company Secretary. In ensuring adherence to board policies and procedures, the Board consults the Company Secretary on procedural and regulatory requirements.

4.8 Directors’ Trainings

The Board acknowledges that continuous education is essential for the Directors to keep abreast with the dynamic environment in which the Group operates and that continuous education is vital for the Board members to gain insight into the state of economy, technological advances, regulatory updates and management strategies to enhance the Board’s skills and knowledge in discharging its responsibilities.

During the FYE 2018, the Directors have attended the training programmes, seminars and conferences as follows:-

 

meeting_board

 

5. Level and Composition of Remuneration

5.1 Remuneration Committee (“RC”)

The RC of the Company is principally responsible for assessing and reviewing the remuneration policy and packages for the Directors of the Company. The RC also seeks to ensure that the remuneration packages commensurate with the expected responsibility and contribution by the Directors and subsequently recommending to the Board for adoption.

The RC comprise of the following members:-

 

rc_board

 

5.2 Remuneration Policy

The Board has established a formal remuneration policy as a guide for the Board and the RC to determine the remuneration of Directors and Senior Management of the Company, which take into account the demands, complexities and performance of the Company as well as skills and experience required.

The Remuneration Policy is made available on the Company’s website at www.carimin.com.

Remuneration Policy

The Board recognises that levels of remuneration must be sufficient to attract, retain and motivate the Directors with the desirable qualities to manage the business of the Group.

Each Director shall abstain from the deliberation and voting on matters pertaining to their own remuneration.

The tables below set out the main components and structure of the remuneration packages of Directors and Senior Management of the Company:-

(I) Remuneration structure for the Senior Management and/or Directors who hold an Executive role in the Company

 

rc_board1

 

II) Remuneration structure for the Directors who hold a Non-Executive role in the Company:-

 

rc_board2

 

The Remuneration Policy is guided by the following key principles in remunerating the Directors of the Company:-

a. fees payable for Directors who hold non-executive role in the Company shall be paid by a fixed sum and not by commission on or percentage of profits or turnover;

b. fees and/or benefits (including meeting allowance) payable to Directors are subject to annual shareholders’

approval at a general meeting, where notice of the proposed fees and/or benefits has been given in the notice convening the meeting;

c. fees payable to an alternate Director (if any) shall be agreed upon between himself and the Director nominating him and shall be paid out of their remuneration of the latter; and

d. salaries and other emoluments payable to Directors who hold executive office in the Company pursuant to a contract of service need not be determined by the Company in general meeting but such salaries and emoluments may not include a commission on or percentage of turnover.

The Board will review this policy from time to time and make any necessary amendments to ensure that it remains consistent with the Board’s objectives, current law and practices.

5.3 Details of Remuneration of the Directors and Senior Management

The Directors’ fees and/or benefits payable to Non-Executive Directors of the Company are subject to the approval of shareholders of the Company. The remuneration of the Directors of the Company and the Group for the FYE 2018 are as follows:-

The Company

 

the_company

 

The Group

 

the_group

 

The details of the remuneration of the top five (5) Senior Management of the Group for the FYE 2018 are as follows:-

 

rr_group

 

Due to confidentiality and sensitivity of the remuneration package of Senior Management as well as security concerns, the Board opts not disclose the Senior Management’s remuneration components on named basis in the bands of RM50,000.00.

The Board is of the view that the disclosure of the Senior Management’s remuneration components would not be in the best interest of the Company given the competitive human resources environment as such disclosure may give rise to recruitment and talent retention issues. The Board is of the opinion that the disclosure of Senior Management’s aggregated remuneration on unnamed basis in the bands of RM50,000 is adequate.

6. Effective and Independent Audit Committee

The Audit Committee (“AC”) comprises of three (3) members, all of whom are Non-Executive Directors. The AC is chaired by Pn. Yip Jian Lee, Independent Non-Executive Director who is not a Chairman of the Board.

 

cm_board

 

Majority of the AC members are financially literate, whilst the Chairman of the AC is a member of the Malaysian Institute of Accountants. The AC has full access to both the Internal and External Auditors who, in turn, have access at all times to the Chairman of the AC.

A cooling-off period of at least two (2) years will be observed by the AC, in the event of any potential candidate to be appointed as a member of the AC was former key audit partner.

The objectives of the AC are, amongst others, to provide additional assurance to the Board by giving an objective and independent review of the Group’s financial, operational and internal control procedures. The AC is also tasked with reinforcing the independence of the Company’s Internal and External Auditors, thereby ensuring that the auditors have autonomy and independence in their audit process.

Members of the AC and the activities carried out during the financial year under review are as set out in the AC Report in this Annual Report.

The term of office and performance of AC and its members are reviewed by the NC annually to determine whether such AC members have carried out their duties in accordance with the Terms of Reference.

The AC plays a crucial role in assisting the Board to scrutinise the information for disclosure to stakeholders to ensure accuracy, adequacy, validity and timeliness of the financial statements.

The Board has, during the financial period under review, established the Internal and External Auditors Assessment Policy together with an annual assessment form to review, assess and monitor the performance, and independence of the Internal and External Auditors of the Company.

7. Risk Management and Internal Control Framework

7.1 Effective Risk Management and Internal Control Framework

The Board affirms its overall responsibility for maintaining sound systems of risk management and internal controls to ensure that risks faced by the Group are identified, assessed and managed to tolerable levels determined by the Board so that shareholders’ investments and the Group’s assets are safeguarded.

The Directors are responsible for the Group’s system of internal controls. The internal control covers the financial and non-financial aspects including risks assessment. It also encompasses compliance and operational controls, as well as risks management matters. The Group has formalised Standard Operating Procedures (“SOP”) and Financial Authority Limit which take into consideration the adequacy and integrity of the system of internal control.

The review and assessment of the Company’s internal control and risk management framework are conducted as and when required. Further details on the features of the risk management and internal control framework, and the adequacy and effectiveness of this framework, are disclosed in the Statement on Risk Management and Internal Control in this Annual Report.

7.2 Internal Audit Function

The Group has also established an internal audit function which is outsourced to a professional service firm, Axcelasia Columbus Sdn. Bhd. They report directly to the AC. The Internal Auditors (“IA”) are precluded from providing any services that may impair their independence or conflict with their role as IA.

To ensure that the responsibilities of IA are fully discharged, the AC evaluated the performance of the IA for the FYE 2018 upon such evaluation criteria as set out in its Annual Assessment Form (“IA Annual Assessment Form”) amongst others, the following were some of the criteria reviewed by the AC:-

a. Adequacy of resources and experience of the internal audit firm;

b. Quality processes of the internal audit firm;

c. Competency of the engagement team;

d. Governance and independence;

e. Internal audit fee, scope and planning; and

f. Internal audit reports and communications

The details of the internal audit function and activities are as set out in the AC Report of this Annual Report.

8. Continuous Communication between the Company and Stakeholders

The Board is committed to provide effective communication to its shareholders and general public regarding the business, operations and financial performance of the Group and where necessary, information filed with regulators is in accordance with all applicable legal and regulatory requirements. Shareholders will receive regular communication from the Company through the release of quarterly reports to Bursa Securities and annual reports. n addition, the Company will communicate other information to the shareholders by way of press releases or announcement to Bursa Securities as and when necessary.

The Board has put in place a Corporate Disclosure Policy to promote comprehensive, accurate and timely disclosures pertaining to the Company and the Group’s matters to regulators, shareholders and stakeholders.

The Board has also established a dedicated section on the Company’s website at www.carimin.com for corporate information on the Company’s announcements, financial information, annual reports and quarterly reports which are accessible to public. The website acts as a key communication channel for the Company to reach its shareholders and general public.

The Investor Relations section on the Company website enhances the investor relations function, shareholders and the general public may direct their enquiries by contacting the Company’s Investor Relations which is available at the website www.carimin.com.

9. Encourage Shareholders Participation at General Meetings

The Company dispatched its notice of AGM and related papers to shareholders at least twenty eight (28) days before the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed.

The AGM serves as the principal forum for direct interaction and dialogue between the shareholders, the Board and the management. The AGM provides an opportunity for the shareholders to seek and clarify any issues and to have a better understanding of the Group’s performance and matters concerning the Group. During the AGM, the MD also provided shareholders with a brief overview of the Company financial year’s performance and operations. Shareholders are encouraged to actively participate in the question and answer session. The Board, Senior Management and the External Auditors will be present to answer and provide appropriate clarifications at the meeting.

At the AGM and/or other general meetings, all resolutions put forth for shareholders’ approval at the meeting were voted on by poll of which the votes shall be validated by an independent scrutineer appointed by the Company. The outcome of all resolutions proposed at the general meeting is announced to Bursa Securities at the end of the meeting day.

A summary of key matters discussed at the AGM, if any, will be published on the Company’s website for the shareholders’ information.

It has always been the Company’s practice to maintain good relationship with its shareholders. Major corporate developments and happenings in the Company have always been duly and promptly announced to the shareholders, in line with Bursa Securities’ objectives of ensuring transparency and good corporate governance practices.

The Company’s financial performance, major corporate developments and other relevant information are promptly disseminated to shareholders and investors via announcements of its quarterly performance, annual report, corporate announcements to Bursa Securities and press conferences. Further updates of the Company’s activities and operations are also disseminated to shareholders and investors through dialogue with analysts, investor relations and the media.

The Company’s website www.carimin.com also contains all announcements made to Bursa Securities, as well as the contact details of the designated contact to cater to any queries.