Loading...

Corporate Governance

The Board of Directors of Petrol One Resources Berhad believes in upholding the standards of corporate governance in conducting the affairs of the Company and its subsidiaries (“Group”) with integrity, transparency and professionalism.

This Statement on Corporate Governance outlines the manner on how the Group has applied the Principles and Recommendations set out in the Malaysian Code on Corporate Governance 2017 (“MCCG”) during the FY2017 to protect and enhance long term shareholders value and stakeholder’s interests.


THE BOARD OF DIRECTORS

The Board

The Board is entrusted with creating and building sustainable value for the shareholders of the Company. The duties and responsibilities of the Board include charting of the Group’s overall strategic plans and financial objectives, overseeing and evaluating the conduct and performance of the Group, engaging in leadership succession planning, adopting practical risk management and internal control system for the Group, promoting sustainability of business in the Group from the aspects of environmental, social and governance, and developing and implementing an effective investor relations and shareholder communications programme for the Company.

Presently, there are 7 Directors on the Board, comprising 2 Executive Directors and 5 Non-Executive Directors, 4 of whom are Independent. The composition of the Board is well-balanced and represents a good mix of skills, knowledge and experience that will contribute to the positive performance of the Group.

All the Directors have equal responsibility for the Group’s operations and corporate accountability. Matters that are material to the Group are reserved to the Board for determination, with no individual or a company of individuals dominates the Board’s decisionmaking process. The presence of the Independent Directors is essential so as to bring independent and objective judgment to the Board’s deliberations.

The Board is chaired by the Senior Independent Non-Executive Chairman who leads the Board and acts as a direct liaison between the Board and the Management of the Company. The Chief Executive Officer, who is also one of the Executive Directors, heads the Management team to manage the Company and its business within the level of authority determined by the Board. The separation of the positions of the Chairman and Chief Executive Officer promotes accountability and facilitates division of responsibilities between them.

The Board Charter that is published on the Company’s corporate website, outlines the roles, responsibilities, processes and functions of the Board and serve as a source of reference for the Board members on their business conduct. The Board observes the “Code of Ethics for Company Directors” issued by the Companies Commission of Malaysia to uphold the standard of ethical behaviour for its Directors. All Board members are expected to conduct themselves with the highest professional integrity in the manner as prescribed in the Company’s “Directors’ Code of Conduct” in discharging their duties and responsibilities.

Peter Thomas Phelan has been identified to act as the Senior Independent Non-Executive Director to whom concerns relating to the Company and the Group can be conveyed. Any inquiries, complaints or grievances may also be directed to the Senior Independent Director or any other Board Member of the Company.

With regard to boardroom diversity, although the Group is operating in the oil & gas industry which has been traditionally maledominated, the Board admits that gender diversity in leadership is key to business success and strives to achieve parity for female in decision-making roles. Having said that, future Board membership and senior management recruitment would still be highly dependent on each candidate’s skills, competencies, experience, commitment and other qualities regardless of gender, age and ethnicity.

Board Commitment

The Board meets on a regular and scheduled basis, at least 4 times a year with additional Board meetings be convened where necessary. During the FY2017, the Board convened 5 meetings and the attendance of the Directors is as follows :

The Company Secretaries record the Board’s deliberations, in terms of issues discussed, and the conclusions by the Board in the discharge of its duties and responsibilities.

All Directors are required to devote sufficient time to carry out their responsibilities. Acceptance of new directorship by any director shall be made known to the Chairman of the Board by indicating the quantum of time that will be spent on his new appointment.

The Chairman shall also notify the Board if he has any new directorship or significant commitments outside the Company.

Supply of Information

The Company takes necessary steps to ensure that quality and useful information be delivered to its Board members to facilitate their decision-making. Relevant Board papers are disseminated to all the Directors prior to the meetings in a timely manner to enable the Directors to review the materials and obtain additional information or clarification prior to the meetings.

Directors also have unfettered access to the information within the Group, to seek advice from independent professional advisers at the Group’s expense, and access to the advice and services of the Company Secretaries who ensure that Board procedures and applicable rules and regulations are complied with. The Company Secretaries also constantly attend training programmes to keep in touch with the latest development in the field.

Continuous Professional Development

All the members of the Board have attended the Mandatory Accreditation Programme (MAP) conducted by Bursatra Sdn Bhd. During the FY2017, the Board members had devoted substantial amount of time and attention on the business operation and formalisation of regularisation plan to regularise the Company’s Practice Note 17 status. They have sacrificed their training opportunities and will make great efforts to attend more training programmes which they consider to be relevant and useful in order for them to effectively discharge their duties. The following were some training programmes duly attended by the Directors :

Apart from that, the Directors also receive regular updates on the governance and compliance matters from the Company’s Internal Auditors, External Auditors and Company Secretaries during the Audit Committee meetings and Board meetings. The Directors shall continue assess their own training needs and constantly attend relevant trainings and education programmes in order to keep themselves abreast of the latest developments in the business environment.

Appointment and Election of Directors

The Company’s Articles of Association provides that at every annual general meeting, 1/3 of the Directors, including the Managing Director, shall retire from office provided always that all Directors shall retire at least once in every 3 years. A retiring Director shall be eligible for re-election. A director who is appointed during the year is subject to retirement and re-election by shareholders at the next annual general meeting held following his appointment.

MCCG recommends that the tenure of an Independent Director shall not exceed a cumulative term of 9 years. Upon completion of the 9 years, the Independent Director may continue to serve the Board subject to the Director being re-designated as a nonindependent Director. However, the Board shall provide justifications and seek shareholders’ approval in the event it proposes to retain an independent director who has served the Board in that capacity for more than 9 years.

Board Committees

Board committees may be established from time to time to assist the Board in the execution of its responsibilities. These committees shall operate under their defined terms of reference and have the authority delegated by the Board to deal with matters within theirpurview. Presently, the Audit Committee and Nomination and Remuneration Committee duly appointed by the Board are actively playing their role in the governance structure of the Group.

(i)

Audit Committee (“AC”)

The primary task of the AC is to oversee the Company’s financial reporting and to assure the Board that the financial information issued publicly by the Company is of quality and reliable. Review of the Group’s corporate governance practices, risk management and internal control, internal and external audit processes, conflict of interest and related party transactions are also the duties of the AC. The composition and activities undertaken by the AC during the FY2017 are detailed in the Audit Committee Report of this Annual Report.

(ii)

Nomination and Remuneration Committee ("NRC")

The NRC shall assist the Board in identifying and nominating directors, evaluating the performance of the Board as a whole, Board committees and individual directors including the independence of Independent Directors, considering succession planning to ensure leadership effectiveness and continuity, discussing the training needs and programmes for the Directors, reviewing and proposing fair and reasonable remuneration packages to attract, retain and motivate directors.

The NRC consists of 2 members, both of whom are Independent Non-Executive Directors. During the FY2017, the NRC members met once with the following record of attendance :

Guided by a set of appropriate assessment documents, the NRC carried out an annual evaluation on the performance of the Board and its Audit Committee based on the specific criteria, covering areas such as the composition and structure of the Board and Audit Committee, their principal duties and responsibilities and the Board and Audit Committee process and governance, For individual Directors assessment, the assessment criteria include time commitment, contribution to interaction, role and duties, competency and integrity and assessment of independence of those independent Non-executive Directors. All the findings and recommendations were reported to the Board for further consideration and the Board was satisfied with the overall performance of its individual Directors, the Audit Committee and the Board as a whole. The Board also concluded that all the present Independent Non-Executive Directors are able to exercise strong independent judgement and provide balance check to the Board with their unbiased views in all Board deliberations.

The NRC also reviewed the Directors’ remuneration particularly the Directors’ fees for the Non-Executive Directors in respect of the FY2016. After taking into consideration the financial condition of PETONE Group as well as the annual performance and contribution of the Non-Executive Directors, the NRC recommended the payment of a directors’ fee of RM180,000 to the Non-Executive Directors, of which has been accepted by the Board and the same was approved by the shareholders at the Company’s 21st AGM. Overall performance of the NRC was being assessed at Board level and the result was satisfactory to the Board.

Directors’ Remuneration

The Board ensures that the level of remuneration is sufficient to attract and retain Directors needed to run the Group successfully. The component parts of remuneration have been structured to link rewards to corporate and individual performance for Executive Directors whilst Non-Executive Directors’ remuneration reflects their experience and level of responsibilities.

Details of Directors’ remuneration paid and/or payable for the FY2017 are as follows :

i.

Aggregate remuneration for the Board

ii.

Remuneration band for the Board


The details of remuneration of each individual Director are not provided in this Annual Report as the Board considers such information to be private and confidential.

SHAREHOLDERS AND INVESTORS RELATIONSHIP

Corporate Disclosure

The Board recognises the importance of timely dissemination of information to shareholders and other interested parties to ensure that they are well informed of all major developments of the Group. The Board is guided by the corporate disclosure framework under Bursa Malaysia Securities Berhad Main Market Listing Requirements and the “Corporate Disclosure Guide” issued by Bursa Malaysia Securities Berhad when releasing the Group’s material and price-sensitive information. Such information is communicated through various disclosures and announcements to Bursa Malaysia Securities Berhad, including but not limited to the quarterly financial results, annual reports and where appropriate, circulars and press releases. This information may be assessed from the website of Bursa Malaysia Securities Berhad at www.bursamalaysia.com. In addition, interviews conducted from time to time by local journalists with the Management of the Group are reported in the local newspapers and information on the Group and its business activities is available at the Company’s website at www.petrolone.com.my.

Shareholders’ Communication

The Board views the general meeting as an ideal platform to communicate with its shareholders. Notice of general meeting, which sets out the business to be transacted at the meeting, is being advertised and circulated to the shareholders within the statutory period. Items of special business included in the notice of general meeting will be accompanied by an explanation of the proposed resolution to facilitate the shareholders in considering the use of their votes. Shareholders are encouraged to take part in the Company’s general meetings to exercise their legitimate rights and interests and solicit input from the Board pertaining to the matters of the Group. Resolutions set out in the notice of general meeting are decided by poll with the voting results being announced at the meeting. An article governing electronic voting as recommended by MCCG has been incorporated in the Memorandum and Articles of Association of the Company to make electronic voting a reliable and effective voting solution for the Company.


ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board has taken reasonable steps to provide a fair and balance assessment of the Company’s financial performance and prospects. In this respect, the Audit Committee assists the Board to oversee the Company’s financial reporting process and the quality of the financial reports.

Risk management and Internal Control

The Directors acknowledge their responsibility to maintain a reasonable sound risk management and system of internal controls covering financial, operational and compliance to safeguard shareholders’ investments and the Group’s assets. The Board also seeks regular assurance on the continuity and effectiveness of the risk management and internal control system through independent review by the Internal and External Auditors. The Statement on Risk Management & Internal Control in this Annual Report (duly reviewed by the External Auditors) provides an overview of the state of risk management and internal control within the Group.

Relationship with External Auditors

The Audit Committee and the Board have established formal and transparent arrangements to maintain an appropriate relationship with the External Auditors, M/s Baker Tilly Monteiro Heng. The External Auditors constantly highlight to the Audit Committee and the Board on the audit issues that require their attention. On the other hand, the External Auditors also provide non-audit services to the Group in line with the compliance requirements to review the Statement on Risk Management & Internal Control, FOREX and the realised and unrealised profit position, as well as on specific request make by the Company to review its quarterly results prior to their announcements (if applicable). Such non-audit services are being closely reviewed and monitored by the Audit Committee and the Board to ensure that the arrangement does not impair the independence and objectivity of the External Auditors in the audit engagement. Upon recommendation of the Board, appointment or re-appointment of external auditors is being decided by the shareholders in general meeting.

CORPORATE SOCIAL RESPONSIBILITIES

The Company acknowledges its corporate social responsibilities and aims to operate as an ethical and responsible business entity in the industry by focusing on the following key areas :

The Group will continue to play its role in upholding its corporate social responsibilities and practices in years to come.

In conclusion, the Board considers that the Principles and Recommendations set out in the MCCG have been substantially implemented throughout the FY2017. The Board will continue to take steps to enhance its corporate governance practices and structures to achieve an optimal governance framework.

This Statement on Corporate Governance is made in accordance with a resolution passed by the Board on 30 October 2017.