CORPORATE GOVERNANCE

OVERVIEW

The Board of Directors (“Board”) of Grand-Flo Berhad (“the Company”) is fully committed towards ensuring good corporate governance practices are implemented and maintained throughout the Company and its subsidiaries (“the Group”) as a fundamental part of discharging its duties to enhance shareholders’ values consistent with the principles and best practices as set out in the Malaysian Code on Corporate Governance (“the Code”). The Board supports the highest standards of corporate governance and the development of best practices for the Group.

The Board collectively leads and is responsible for the performance and affairs of the Group, including practicing a high level of good governance. All Board members are expected to show good stewardship and act in a professional manner, as well as upholding the core values of integrity and enterprise with due regard to their fiduciary duties and responsibilities.

This Board Charter sets out the composition and balance, roles and responsibilities, operation and processes of the Board and is to ensure that all Board Members acting on behalf of the Company are aware of their duties and responsibilities as Board Members.

1. COMPOSITION AND BALANCE OF THE BOARD

1.1 Size and Composition

The strength of the Board lies in the composition o f its members, who has a wide range of expertise, extensive experience and diverse background in business, finance and technical knowledge. The Board retains full and effective control over the Group and ensures the Group moves towards its strategic direction in establishing goals and ultimately the enhancement of long-term shareholders’ value.

The Constitution of the Company provides for a minimum of two (2) Directors. At any one time, at least two (2) or one-third (1/3) of the Board of Directors, whichever is higher, are Independent Directors.

The Board also take cognisant of the best practices recommended under the Code to have at least half of the Board composed of Independent Directors in order to foster greater objectivity in the boardroom in accordance to the good corporate governance practices.

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

1.2 Nomination and Appointments

The members of the Board are appointed in a formal and transparent practice as endorsed by the Code. The Nomination Committee is responsible for making recommendation for appointments to the Board. In discharging this duty, the Nomination Committee will assess the suitability of an individual to be appointed to the Board by taking into account the individual’s skill, knowledge, expertise, experience,
professionalism, integrity and/or other commitments.

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 Directorship or significant commitments outside the Company.

1.3 Re-election

In accordance with the Company’s Constitution, all Directors appointed by the Board are subject to re-election by the shareholders at the annual general meeting following their appointment. At least one third (1/3) of the Directors, or if their number is not three or a multiple of three, then the number nearest to one-third (1/3) are required to retire from office by rotation annually and shall be eligible for re-election at each annual general meeting.

1.4 Independence

The presence of Independent Non-Executive 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 shall appoint a Senior Independent Direct or who will also attend to any query or concern raised by shareholders.

1.5 Tenure of Independent Director

The tenure of an Independent Director shall not exceed a cumulative term of nine (9) years. However, upon completion of the nine (9) years, the Independent Director may continue to serve the Board subject to the Director’s re-designation as a Non-Independent Director. In the event the Director is to remain designated as an Independent Director, the Board shall first justify and obtain shareholders’ approval on
a year to year basis. If the Board continues to retain the Independent Director after the twelfth (12) year, the Board should seek annual shareholders’ approval through a two tier voting process.

1.6 Evaluation of the Directors and the Board’s as a whole

The Board recognizes the importance of assessing the effectiveness of individual Directors, the Board as a whole and its Committees as a whole. The Nomination Committee is given the task to review and evaluate the individual Director’s performance and the effectiveness of the Board and the Board’s Committees on an
annual basis. In assessing suitability of candidates, considerations will be given to the competencies, commitment, contribution and performance.

The Nomination Committee is required to report annually to the Board an assessment of the Board’s and its Committees’ performance. This will be discussed with the full Board. Every year, the Nomination Committee will evaluate each individual Director’s contributions to the effectiveness of the Board and the relevant Board committees.

2. ROLES AND RESPONSIBILITIES

2.1 Board Responsibilities

The Group Managing Director/Group President (“GMD/GP”) and/or Executive Directors (“EDs”) have the responsibility to manage the day-to-day operations of the business, implementation of Board policies and making strategic decisions for the expansion of the business. The Non-Executive Directors contribute their expertise and experiences to give independent judgment to the Board on issues of strategy,
performance and resources, including major policies, key directions and standards of conduct. The Independent Directors provide guidance, unbiased, fully balanced and independent views, advice and judgment to many aspects of the Company’s strategy so as to safeguard the interests of minority shareholders and to ensure that higher standards of conduct and integrity are maintained by the Group.

The stewardship responsibilities and duties of the Board focuses principally on strategies, financial performance and critical business decisions that may include the following: –
i.    Overseeing and evaluating the conduct and sustainability of the businesses of the Group.
ii.   Reviewing and adopting the overall strategic direction, business plans, annual budgets of the Group, including major capital commitments.
iii.  Establishing key performance indicators and succession plan.
iv.  Reviewing and approving of new ventures, major acquisitions and disposal of undertakings and properties.
v.   Identifying principal risks and ensuring implementation of appropriate systems to manage these risks.
vi.  Reviewing the adequacy and integrity of the Group’s internal control systems and management information systems.
vii. Overseeing the development and implementation of the shareholder communications policy for the Company.

The Directors are required to declare their direct and indirect interests in the Company and related companies. The Directors are also responsible to declare whether they and/or any person(s) connected to them have any potential conflict of interest in any transaction and/or in any contract with the Company and/or any of its related companies. Any Director who has an interest in any related party transaction shall abstain from the Board deliberation and voting and shall ensure that he or she and person(s) connected to him or her will abstain from voting on the related resolution.

2.1.2 Matters Reserved for the Board

In discharging its responsibilities, the Board has reserved decision making responsibility for certain key matters to ensure the control of the Company is vested with its. A schedule of Matters Reserved for the Board has been adopted and shall be reviewed and revised from time to time as necessary, as follows:-
– Annual budgets;
– Changes to the Management and Control Structure, including key policies and delegated authority limits;
– New business and ventures;
– Material acquisitions and disposals;
– Business Plans;
– Investments and divestments; and
– Corporate restructuring

2.2 Accountability and Audit
i. Financial Reporting

The Board aims to present a balanced and clear assessment of the Group’s position and prospect to the Company’s shareholders through the annual financial statements and quarterly unaudited results.

The Board considers that in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates. All accounting standards which the Board considers to be applicable have been followed, subject to any explanations and material departures disclosed in the notes to the financial statements. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy, adequacy and completeness.

ii. Internal Control and Risk Management

The Board acknowledges their responsibility in maintaining an internal control system that provides reasonable assurance of effective and efficient operations, and compliance with laws and regulations as well as internal procedures and guidelines.

Management is responsible for implementing the processes for identifying, evaluating, monitoring and reporting of risks and internal control, taking appropriate and timely corrective actions as needed, and for providing assurance to the board that the processes have been carried out.

The Audit Committee has been entrusted by the Board to ensure effectiveness of the Group’s internal control systems. The activities of the outsourced Internal Auditors are reported regularly to the Audit Committee which provides the Board with the required assurance in relation to the adequacy and integrity of the Group’s system of internal controls.

iii. Relationship with Auditors

The Board has always maintained a formal and transparent arrangement with its internal auditors and external auditors in seeking professional advice on matters relating to compliance and corporate governance.

The internal audit function of the Group is outsourced to third party. Similar to the External Auditors, Internal Auditors too have direct reporting access to the Board and the Audit Committee to ensure that issues highlighted are addressed independently, objectively and impartially without any undue influence of the management.

2.2 Responsibilities of the Chairman and Managing Director (“MD”)

The role of the Chairman and GMD/GP are distinct and separate to ensure there is balance of power and authority. The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board while the GMD/GP has overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions. The GMD/GP is accountable to the Board for the overall organisation, management, and staffing of the Company and/or Group and for the procedures in financial and other matters, including conduct and discipline.

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

i. To provide leadership to the Board.
ii. To examine the public image of the organization and establish plans and programme to improve the Group in every way.
iii. To oversee ethical business practices and adherence to the Group’s mission statement.
iv. To oversee the effective discharge of the Board’s supervisory role.
v. To facilitate the effective contribution of all Directors.
vi. To conduct and chair Board Meetings and General Meetings of the Company.
vii. To manage Board communications and Board effectiveness and effective supervision over Management.
viii. To ensure that quality information to facilitate decision-making is delivered to the Board on timely manner.
ix. To ensure Board Meetings and General Meetings are in compliance with good conduct and best practices.
x. To promote constructive and respectful relations between Board members and between the Board and the Management.
xi. Together with the GMD/GP, represents the Company and/or Group to external groups such as shareholders, creditors, consumer groups, local communities and federal, state, and local governments.

The responsibilities of the GMD/GP, amongst others, are as follows:

i. To develop and recommend to the Board, the strategic business direction, plans and policies of the Group that leads to the creation of shareholder value.
ii. To develop and recommend to the Board the operational plan and annual budget that support the Company or the Group’s long-term strategy.
iii. To ensure the efficient and effective operation of the Group.
iv. To manage the overall business and oversees the day-to-day management of the Group with all powers, discretions and delegations authorised, from time to time, by the Board.
v. To ensures continuous improvement in the quality and value of the products and services provided by the Group.
vi. To ensure that the Company or the Group achieves and maintains a satisfactory competitive positions within its industry.
vii. To formulate and oversee the implementation of major corporate policies.
viii. To report to the Board periodically on the financial positions of the Group which include forecast results as required from time to time.
ix. To reports to the Board on key performance indicators in relation to the financial results, market conditions and other developments.
x. To responsible for the financial management of the Company and/or Group and overseeing the handling of financial matters which include keeping proper accounts for prudent and economical administration, avoidance of waste and extravagance for efficient and effective use of all the resources.
xi. To serve as the chief spokesperson for the Group.
xii. To bring material matters to the attention of the Board in an accurate and timely manner.

2.3 Board Committees

The Board may from time to time establish Committees as is considered appropriate to assist in carrying out its duties and responsibilities. The Board delegates certain functions to the following Committees to assist in the execution of its responsibilities.

i. Audit Committee
ii. Nomination Committee
iii. Remuneration Committee

The role of the Board Committees is to advise and make recommendations to 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.

Each committee operates in accordance with written terms of reference approved by the Board. The Board appoints the members and Chairman of each Committee.

2.4 Company Secretary

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

The Company Secretary is a central source of information and advice to the Board and its Committees on issues relating to compliance with laws, rules, procedures and regulations affecting the Company.

The appointment and removal of the Company Secretary is a matter for the Board as a whole. The Board recognizes the fact that the Company Secretary should be suitable qualified and capable of carrying out the duties required.

All Board Members, particularly the Chairman, have unrestricted access to the advice and services of the Company Secretary for the purposes of the Board’s affairs and the business.

3. BOARD PROCESSES

3.1 Board Meetings

The Board meets at least four (4) times a year, with additional meetings to be convened whenever necessary. The Directors receive notices of meetings, typically at least five (5) working days prior to the date of the meeting, highlighting the agenda complete with a full set of Board Papers to provide sufficient details of matters to be deliberated during the meeting. Information provided is not confined to financial data but also other non-financial information, both quantitative and qualitative, which is deemed to be critical in arriving at a sound and informed decision.

Minutes of Board meetings together with decisions made by way of resolution passed are duly recorded and properly kept by the Company Secretary. The Minutes of each meeting signed by the Chairman of that meeting or by the Chairman of the next succeeding meeting shall be evidence of the proceedings that the meeting was duly convened and held.

3.2 Directors’ Training

In addition to the Mandatory Accreditation Programme as required by Bursa Malaysia Securities Berhad, the Directors are encouraged to attend relevant seminars and training programmes to equip themselves with the knowledge to effectively discharge their duties as Directors. The Board will assess the training needs of the Directors and ensure Directors have access to continuing education programme. The Board shall disclose in the Annual Report the trainings attended by the Directors.

3.3 Directors’ Remuneration

The Board through Remuneration Committee established formal and transparent Remuneration Policy.

The Directors’ remuneration is determined in accordance to the performance and their capability to the Company. The Board recognises that levels of remuneration must be sufficient to attract, retain and motivate the directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of the shareholders.

The Board will determine the level of remuneration of Board Members, taking into consideration the recommendations of the Remuneration Committee for executive Board Members and/or the GMD/GP. The remuneration of the GMD/GP and Executive Directors are structured on basis of linking rewards to corporate and individual performance. None of the Executive Directors participated in determining their
remuneration.

Non-Executive Directors will be paid a basic fee as ordinary remuneration and will be paid a sum based on their responsibilities in committees and the Board, their attendance and/or special skills and expertise they bring to the Board. The fee shall be fixed in sum and not by a commission on or percentage of profits or turnover.

3.4 Access to Information and Independent Advice

The Board has full and unrestricted access to all of the Group’s information whether as a full board or in their individual capacity to enable them to discharge their duties to their full capacity pertaining to the Group’s affairs and business.

External professional advisors, consultants and company secretary are made available to render their independent views and advise to the Board.

3.5 Investor Relations and Shareholder Communication

The Group values dialogue with investors as a means of effective communication that enables the Board to convey information about the Group’s performance, corporate strategy and other matters affecting shareholders’ interests. Investors and shareholders can also obtain information on the Group through the Company’s published Annual Reports, Quarterly Results and Announcements which are made to Bursa Malaysia Securities Berhad.

The Annual General Meeting also provides an opportunity for shareholders to seek clarifications and to raise questions concerning the Group. The Chairman and the Board members are in attendance to respond to shareholders’ queries.

The Company recognizes the importance of accountability to shareholders and effective communication between the Company and investors. The Company has established its own website at www.grand-flo.com which contains vital information concerning the Group.

4. REVIEW OF THE BOARD CHARTER

The Board will review this Charter from time to time and make any necessary amendments to ensure they remain consistent with the Board’s objectives, current law and practices. The Board Charter is made available for reference in the Company’s website.

This Board Charter is reviewed and updated on 22 November 2018 by the Board.

INTRODUCTION

In line with good corporate governance practices, Grand-Flo Berhad (“Grand-Flo” or “the Company”) has adopted the following Code of Ethics and Conduct for Directors, Management and Employees of the Company and its subsidiaries (“the Group”). The Code is established to promote the corporate culture which engenders ethical conduct that permeates throughout the Group. All Directors, Management and Employees of the Group shall be referred to as “Officer(s)” therein.

OBJECTIVE

The objective of the Code of Ethics and Conduct is to enhance the standards of corporate governance and corporate behavior to achieve a standard of ethical behavior to the Officers based on trustworthiness and values that can be accepted and to ensure the spirit of social responsibility and accountability of the Group is in line with the relevant legislation, regulations and guidelines governing it.

CODE OF ETHICS AND CONDUCT

The Code of Ethics and Conduct is to be observed by all Directors and Employees of the Group and the core areas of conduct include the following:-

i.  Compliance at all times with the Code of Ethics and Conduct and the Board Charter.

ii. Observe high standards of corporate governance at all times.

iii. Adhere to the principles of selflessness, integrity, objectivity, accountability, openness, honesty and leadership, including fair dealing and the ethical handling of conflicts of interest.

iv. Not misuse information gained in the course of duties for personal gain or for political purposes.

v.  Uphold accountability and act in good faith and in the best interests of the Company and the Group.

vi. Ensure the protection of the Company’s legitimate business interests, including corporate opportunities, assets and confidential information.

vii. Ensure full, fair, accurate, timely and understandable disclosure.

viii. Declaration of any personal, professional or business interests that may conflict with responsibilities.

REVIEW OF THE CODE

The Code of Ethics and Conduct will be reviewed from time to time and make any necessary amendments to ensure the information remains relevant and appropriate. The Code of Ethics and Conduct is made available for reference in the Company’s website.

This Code of Ethics and Conduct was reviewed and updated on 22 November 2018 by the Board.

INTRODUCTION

This Remuneration Policy (“the Policy”) sets out the criteria to be used in recommending the remuneration of Directors and/or Senior Management of Grand-Flo Berhad (“the Company”) and is made in line with the best practices recommended under the Malaysian Code on Corporate Governance.

OBJECTIVE

The Policy sets out the remuneration principles and guidelines for the Board of Directors (“Board”) and the Remuneration Committee to determine the remuneration of Directors and/or Senior Management of the Company, which takes into account the demands, complexities and performance of the Company as well as skills and experience required.

PRINCIPLES

The Policy is guided by the following key principles in remunerating the Directors of the Company:
(i) fees payable to Directors who hold non-executive office in the Company shall be paid by a fixed sum and not by a commission on or percentage of profits or turnover;

(ii) 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;

(iii) 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 the remuneration of the latter; and

(iv) salaries and other emoluments payable to Directors who hold an 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 include incentives or commission on percentage of turnover or profit.

REMUNERATION STRUCTURE

The tables below set out the main components and operation of the remuneration structure 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

Component of payParticulars
Basic SalaryA fixed salary will be paid for performing the scope of duties and responsibilities and will be reviewed based on the individual performance and achievements of the Company/the Group and comparable market rate within the industry.
Bonus/IncentiveAnnual bonus/incentive will be paid to reward, retain and motivate the individual and will be depend on the performance of the Company/the Group and the personal contribution of the individual to the achievement of those results.
Other BenefitsOther benefits which include contribution of EPF, SOCSO, medical fees, medical or health insurance, motor vehicle, driver, handphone, commission, travelling and entertainment claims, amongst others, will be provided based on the Group’s human resource policy in the context of market practices from time to time.

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

Component of payParticulars
FeesA fixed retainer sum will be paid for their contribution to the Board and the Company. The fixed fee is determined based on the following factors:
– On par with the rest of the market;
– Reflect the qualifications and contribution required in view of the Group’s complexity;
– The extent of the duty and responsibilities; and
– The number of Board meetings and Board Committees’ meetings.
Meeting allowance and other benefits

A reasonable special meeting allowance may be paid on per trip basis with the condition that attendance is a prerequisite for such remittance.

Other benefits which include flight tickets, accommodation, travelling expenses, amongst others, incurred in the course of performing his duties or other things required of him as a Director of the Company.

GOVERNANCE OF REMUNERATION

i. The Remuneration Committee shall assist the Board in implementing the Policy on the remuneration packages for Directors of the Company. The Remuneration Committee also seeks to ensure that the remuneration packages commensurate with the expected responsibility and contribution by the Directors and subsequently furnishes their recommendations to the Board for adoption.

ii. The evaluation of remuneration packages (including annual increment to the base salary) of the Senior Management shall be reviewed by the Group Managing Director/Group President (“GMD/GP”). Whereas, for Directors who hold an Executive office in the Company (including the GMD/GP), their remuneration packages (including annual increment to the base salary) shall be reviewed and evaluated by Remuneration Committee and then tabled to the Board for consideration.

iii. Directors and/or Senior Management of the Company may be accorded with Directors and Officers liability insurance in respect of any liability (civil or criminal) arising in the course of discharging their duties as Directors and/or Senior Management of the Company provided that such liabilities were occasioned in good faith and not as a result of negligence, default or breach of duty. The premium paid for such insurance shall be borne by the Company and does not form part of the benefits given to the Directors and/or Senior Management of the Company as part of their remuneration packages.

iv. The fees and/or benefits payable to the Directors including any compensation for loss of employment of a Director or former Director of the Company shall be approved at the general meeting pursuant to the Companies Act 2016.

v. Salaries, bonus, benefits and other emoluments payable to Executive Board Members pursuant to an employment contract or a contract of service need not be determined by the Company in general meeting but such salaries may include a commission on or percentage of turnover or profit.

vi. All handphone, travelling, entertainment claims, motor vehicles or other expenses incurred by Senior Management and/or Directors in discharging their duties relating to the ordinary course of business of the Company and/or its subsidiaries shall be reimbursed accordingly. All claims and reimbursements must be accompanied with the claims receipts and shall be submitted to the Accounts/Finance Department for processing on a timely manner.

REVIEW AND DISCLOSED

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

ii. The Board shall disclose the Policy in the annual report of the Company.

iii. The Policy is made available for reference on the Company’s website.

This Policy is adopted by the Board on 22 November 2018.

1. COMPOSITION

i. The Audit Committee (“AC” or “Committee”) shall be appointed by the Board of Directors (“Board”) from among its members and shall comprise not less than three (3) members, whereby all members must be Non-Executive Directors and financially literate with a majority of them being Independent and Non-Executive Directors, and at least one (1) member of the Committee: –
a. must be a member of the Malaysian Institute of Accountants; or
b. if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and: –
o he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
o he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
c. fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad.

ii. Alternate Director shall not be appointed as a member of the Committee.

iii. The Committee shall elect a Chairman from among its members and the elected Chairman shall be an Independent Director. The Chairman of the Committee is not the Chairman of the Board.

iv. The former key audit partner, if any, shall observe a cooling-off period of at least two years before being appointed as a member of the Committee.

v. In the event, the elected Chairman is not able to attend a meeting, the remaining members present shall elect one of themselves as Chairman for the meeting. The elected Chairman shall be an Independent Director.

vi. If the event of any vacancy in an AC member resulting in the non-compliance with paragraph 1(i) above, the Board shall fill the vacancy within three (3) months.

vii. The Nomination Committee shall review the term of office and performance of the Committee and each of its members annually to determine whether the AC and its members have carried out their duties in accordance with the Terms of Reference.

2. MEETINGS

i. Frequency of meetings
a. Meetings shall be held not less than four (4) times a year. However, additional meetings may be called at anytime depending on the scope of activities of the Committee. In the event issues requiring the Committee’s decision arise between meetings, such issues may be resolved through written resolutions of the Committee. Such written resolution in writing shall be valid and effectual if it is signed or approved by letter, facsimile or any electronic means by a majority of the Committee members.
b. Other Board members, senior management, internal and external auditors may be invited to attend meetings.
c. Prior notice shall be given for all meetings.

ii. Quorum
The minimum quorum for the meeting is two (2) members of the Committee, a majority of members present must be Independent and Non-Executive Directors.

iii. Secretary
The Company Secretary shall be the secretary of the Committee. The Secretary shall circulate the notice and minutes of the Committee to all members of the Committee.

iv. Minutes of the Committee Meeting
Every meeting of the Committee must be recorded either by the Company Secretary or any other person approved by the Committee to take minutes and such minutes must be signed by the Chairman of the Meeting as evidence that the meeting was duly convened and held.

3. FUNCTIONS

The functions of the Committee are to review the following and report the same to the Board:-
i. To review, assess and monitor the performance, suitability, objectivity and independence of the internal and external auditors.

ii. To consider any matters concerning the appointment and re-appointment, the audit fee and any questions of resignation or dismissal of external auditors; and further ensure the suitability, objectivity and independence of external auditors.

iii. To review with the external auditors:
a. Their audit plan, scope and nature of the audit of the Group;
b. Their evaluation and findings of the system of internal controls; and the audit reports on the financial statements;
c. The management letter and management’s response with regard to problems and reservations arising from their audits;
d. the assistance given by the management and staff of the Group to the external auditors; and
e. any other matters that the external auditors may wish to discuss (in the absence of management where necessary).

iv. To review the assistance given by the management and employees of the Group to the external auditors.

v. To review and assess the adequacy of the internal audit scope, functions, competency, experience and resources of the internal audit functions of which the internal auditors should report directly to the Committee and ensure that the internal auditors are able to undertake its activities independently and objectively, and that it has the necessary authority to carry out its works.

vi. To review the internal audit plan, processes, the results of the internal audit assessments, or investigation undertaken and whether or not appropriate action is taken on the recommendations.

vii. To review the adequacy and effectiveness of the Group’s internal control systems and risk management framework as evaluated, identified and reported by the management, internal or external auditors as well as to review the appropriate and timely corrective actions undertaken to ratify the same.

viii. To review the quarterly and year end financial statements of the Group, before the approval by the Board of Directors, focusing particularly on:-
(a) any changes in or implementation of major accounting policy changes;
(b) significant matters highlighted including financial reporting issues, significant judgement made by management, significant unusual events or transactions, and how these matters are addressed; and
(c) compliance with accounting standards and other legal requirements.

ix. To review any related party transactions and conflicts of interest situations that may arise within the Company or Group including any transactions, procedures or course of conduct that raises questions of management integrity.

x. To review the appointment, resignation or dismissal of external auditors.

xi. To carry out such other functions or assignments as may be delegated by the Board from time to time.

4. AUTHORITY

The Committee is authorised by the Board to investigate any activity within its term of reference at the cost of the Company: –
i. To secure full and unrestricted access to any information pertaining to the Company and its subsidiaries;

ii. To communicate directly with the external and internal auditors and all employees of the Group;

iii. To seek and obtain independent professional advice and to secure the attendance of outsiders with relevant experience and expertise as it considers necessary; and

iv. To convene meetings with the external and internal auditors or both excluding the attendance of other directors and employees of the company, whenever deemed necessary.

5. COMMUNICATION TO THE BOARD

i. The minutes of each Committee meeting shall be tabled to the Board for notation.

ii. The Committee may from time to time submit to the Board its recommendation on matters within its purview, for the Board’s decision.

iii. Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Committee must promptly report such matter to Bursa Securities.

6. PUBLICATION OF TERMS OF REFERENCE

This Terms of Reference shall be made available on the Company’s website.

This Terms of Reference was reviewed and updated on 22 November 2018 by the Board.

OBJECTIVE

The principal objectives of the Nomination Committee (“Committee”) are as follows:-

i. To recommend to the Board of Directors (“Board”), suitable candidate(s) to be appointed as Director(s) (either as an executive, non-executive or independent non executive director);

ii. To evaluate and consider, before making any recommendations, candidate(s) proposed by the existing Board members, senior management or major shareholders;

iii. To evaluate and consider suitable candidate(s) to fill seats on the Committee;

iv. To assess annually the effectiveness of the Board and the Committee as a whole and the performance of the Directors of the Company; and

v. To review and assess the independence of the Independent Directors of the Company.

COMPOSITION OF MEMBERS

The Board shall elect the Committee members from amongst themselves, comprised exclusively of non-executive Directors, a majority of whom must be Independent Director.

CHAIRMAN

The Committee shall elect a Chairman from amongst its members and the elected Chairman of the Committee shall be approved by the Board. The Chairman of the Committee shall be an Independent Director.

In the event, the elected Chairman is not able to attend the Committee meeting, a member of the Committee shall be nominated as Chairman for the meeting.

MEETING OF THE COMMITTEE

i. Meetings
The Committee may meet together for the despatch of business, adjourn and otherwise regulate their meetings, at least once a year or more frequently as deemed necessary. In the event issues requiring the Committee’s decision arise between meetings, such issues shall be resolved through written resolution. Such written resolution in writing shall be valid and effectual if it is signed or approved by letter, facsimile or any electronic means by a majority of the Committee members pursuant to the Constitution of the Company.

For the Committee’s meetings (except in the case of an emergency), reasonable notice shall be given in writing to all the members of the Committee. Other Board members and senior management may be invited to attend the Committee meetings.

ii. Quorum
A minimum of two (2) members shall form the quorum.

iii. Secretary of the Committee
The Company Secretary shall be the secretary of the Committee.

iv. Minutes of the Committee Meeting

Every meeting of the Committee must be recorded either by the Company Secretary or any other person approved by the Committee and such minutes must be signed by the Chairman of the Meeting as evidence that the meeting was duly convened and held.

FUNCTIONS

The functions of the Committee are as follows

i. To review the size, structure, balance and composition of the Board and the Board Committees.

ii. To recommend and nominate suitably qualified candidates for the Board in terms of appropriate balance of skills, expertise, attributes and core competencies, taking into consideration the character, experience, integrity, competence and time commitment prior to the appointment.

iii. To evaluate the required mix of skills, experience, core competencies, diversity of the Board, the Board Committees and the contribution and performance of the individual Directors for the effective and efficient functioning of the Board and the Board Committees.

iv. To appraise each individual Director including Independent Non-Executive Directors as well as the Group Managing Director/Group President in terms of his experience, knowledge, credibility and credentials, and assess their effectiveness and contribution in carrying out their obligations and duties as a Board member of the Company. All assessments and evaluations carried out by the Committee in the discharge of all its functions should be properly documented.

v. To examine the ability of each Director to contribute to the effective decision-making process of the Board and ensure that the Board is functioning actively, efficiently and effectively in all its decision making.

vi. To review annually, the term of office and performance of the Audit Committee and each of its members whether such Audit Committee and each of its members to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.

vii. To evaluate annually the effectiveness of the Board as a whole, the Board Committees as a whole for assessing the contribution to the effectiveness on the decision-making process of the Board.

viii. To recommend to the Board concerning the re-election/re-appointment of Director to the Board pursuant to the Company’s Constitution.

ix. To carry out such other functions or assignments as may be delegated by the Board from time to time.

REPORTING RESPONSIBILITIES

i. The Committee Chairman shall report to the Board on its proceedings after each meeting on all matters within the scope of its duties and responsibilities.

ii. The Committee shall make whatever recommendations to the Board it deems appropriate, on any area within its terms of reference and/or where action or improvement is needed.

iii. The Committee shall report to the Board on its activities, based on its Terms of Reference.

PUBLICATION OF TERMS OF REFERENCE

This Terms of Reference shall be made available on the Company’s website.

This Terms of Reference was reviewed and updated on 22 November 2018 by the Board.

OBJECTIVE

The principal objectives of the Remuneration Committee (“Committee”) are to attract and retain high caliber Executive Directors needed to run and manage the Company successfully and to assist the Board of Directors (“Board”) in its responsibilities in assessing and reviewing the remuneration packages of the Executive Directors, Non-Executive Directors and Senior Management of the Company.

2. COMPOSITION OF MEMBERS

The Board shall elect the Committee members from amongst themselves comprised exclusively of Non-Executive Directors, a majority of whom must be Independent Director.

3. CHAIRMAN

The Committee shall elect a Chairman from amongst its members and the elected Chairman of the Committee shall be approved by the Board. The Chairman of the Committee shall be an Independent Director.

In the event, the elected Chairman is not able to attend the Committee meeting, a member of the Committee shall be nominated as Chairman for the meeting.

4. MEETING OF THE COMMITTEE

i. Frequency
The Committee may meet together for the despatch of business, adjourn and otherwise regulate their meetings, at least once a year or more frequently as deemed necessary. In the event issues requiring the Committee’s decision arise between meetings, such issues may be resolved through written resolutions of the Committee. Such written resolution in writing shall be valid and effectual if it is signed or approved by letter, facsimile or any electronic means by a majority of the Committee members pursuant to the Constitution of the Company.

For the Committee’s meetings (except in the case of an emergency), reasonable notice shall be given in writing to all the Members of the Committee.

Other Board members and Senior Management may be invited to attend the Committee meetings.

ii. Quorum
A minimum of two (2) members shall form the quorum.

iii. Secretary of the Committee
The Company Secretary shall be the secretary of the Committee.

iv. Minutes of the Committee Meeting
Every meeting of the Committee must be recorded either by the Company Secretary or any other person approved by the Committee to take minutes and such minutes must be confirmed by the Committee at the next succeeding Committee meeting.

The Minutes of each meeting signed by the Chairman of that meeting or by the Chairman of the next succeeding meeting shall be evidence of the proceedings that the meeting was duly convened and held.

5. FUNCTIONS

The functions of the Committee are as follows:

i. To review and recommend to the Board the appropriate remuneration packages for the Group Managing Director/Group President (“GMD/GP”), Executive Director(s), Non- Executive Directors and Senior Management of the Company, with or without other independent professional advice or other outside advice.

ii. To formulate policies, guidelines and set criteria for remuneration packages for the Directors and Senior Management of the Company.

iii. To ensure that the Directors are fairly and appropriately remunerated according to the general market sentiments or conditions.

iv. To determine the composition of the various types of components of remuneration such as basic salary, bonus and other benefits in kind for the GMD/GP and Executive Director(s) of the Company.

v. To ensure all necessary actions are taken expediently by the Board to offer appropriate rewards, benefits, compensation and remuneration and to ensure that the levels of remuneration are sufficiently attractive to retain Directors and structuring the remuneration packages to link rewards to the individual performance.

vi. To ensure that all remuneration packages and benefits given to the Directors are in compliance with the Company’s Remuneration Policy and any other laws, rules, requirements, regulations and guidelines set by the relevant authorities and the Board from time to time.

vii. To review and if deemed appropriate, endorse for the Board’s approval, the annual bonus / incentive and salary increment framework for the Group, as recommended by the GMD/GP, including the total quantum of payment.

viii. Any other function that may be delegated by the Board which would be beneficial to the Company and ensure the effective discharge of the Committee’s duties and responsibilities.

ix. To carry out such other functions or assignments as maybe delegated by the Board from time to time.

6. PUBLICATION OF TERMS OF REFERENCE

This Terms of Reference shall be made available on the Company’s website.

This Terms of Reference was reviewed and updated on 22 November 2018 by the Board.

INTRODUCTION

Grand-Flo Berhad (“Grand-Flo” or “Company”) and its subsidiaries (“the Group”) are committed to the highest standard of corporate governance and business integrity.

In recognizing the above mentioned values, the Group provides avenue for all employees of the Group and members of the public to raise concerns or disclose any improper conduct within the Group and to take appropriate action to resolve them effectively.

OBJECTIVE

The intended objectives of this policy are:

i. To provide avenues for employees to raise genuine concerns or allegation through the appropriate channels upon discovery of possible misconduct
ii. To ensure the protection to individual who reports the concern or allegation in good faith in accordance with the procedure
iii. To encourage and develop a culture of openness, accountability and integrity
iv. To enable Management to be informed at an early stage about acts of misconduct.

SCOPE OF THE POLICY

This policy is designed to facilitate the whistle blower to report or disclose through established channels, concerns about any violations of the Code of Ethics and Conduct of the Group, including, but not limited to fraud, bribery, sexual harassment, criminal breach of trust, conflict of interest, misuse of confidential information or other acts of wrong doing.

ACTING IN GOOD FAITH

The Group expects all parties to act in good faith and have a reasonable belief that the information and any allegations in it, are sustainably true and not acting for personal gain. Any anonymous whistleblower will not be entertained. However, the Group reserves its right to investigate into any anonymous disclosure. If allegations are proven to be malicious, parties responsible may be subject to appropriate action, up to and including legal action, where applicable.

CONFIDENTIALITY

The identity of whistle blower will be kept confidential. Consent of whistle blower will be sought should there be a need to disclose identity for investigation purposes.

PROTECTION

The Group assures the whistleblower who raises issues of concern that he/she will be protected from any adverse impact on their employment or relationship with the Group as a result of his/her reporting, provided the report is made in good faith and without malice. Any party that retaliates against whistleblower who has reported allegations in good faith may be subject to appropriate action, up to and including legal action, where applicable.

ACTION

All reports will be investigated promptly by the person receiving the report or disclosure. If required, assistance from other resources within the Group can be sought. Upon completion of investigation, appropriate course of action will be recommended to the Audit Committee of the Company (“AC”) for their deliberation. Decision taken by the AC will be implemented immediately. Where possible, steps will also be implemented to prevent similar situation arising.

REVERTING TO COMPLAINANT

The Group reserves the right not to inform the whistle blower of the precise action plan and/or the outcome of the investigation as this may infringe a duty of confidentiality owned to someone else.

WHISTLE BLOWING CHANNEL

The established channels for whistle blowing reporting are as follows:
a) Any concern should be raised with the immediate superior. If for any reason, it is believed that this is not possible or appropriate, then the concern should be reported to the Group Managing Director /Group President (“GMD/GP”). The channel of reporting to the GMD/GP is as follows:

By Email :derricktan@grand-flo.com

By Mail: Strictly Confidential
Grand-Flo Berhad
3-5, Block D2, Jalan PJU 1/39, Dataran Prima,
47301 Petaling Jaya, Selangor, 
Malaysia.

Attention: The Group Managing Director/Group President

b) If for any reason, it is believed that reporting to management is a concern or not possible or appropriate, then the concern should be reported to the Chairman of Audit Committee (“AC”). The channel of reporting to the AC Chairman is as follows:

By Mail:
Strictly Confidential
Grand-Flo Berhad
Third Floor, No 79 (Room A),
Jalan SS21/60, Damansara Utama,
47400 Petaling Jaya, Selangor.

Attention: The Audit Committee Chairman

DISCLAIMER

Grand-Flo reserves the right to amend this policy from time to time.