CORPORATE GOVERNANCE REPORT

STOCK CODE : 9113

COMPANY NAME : Sanbumi Holdings Berhad
FINANCIAL YEAR : March 31, 2019

OUTLINE:

SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing
Requirements.

SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT

CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA
Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures)
of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is
only applicable for financial institutions or any other institutions that are listed on the Exchange
that are required to comply with the above Guidelines.

1
SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing
Requirements.

Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1
The board should set the company’s strategic aims, ensure that the necessary resources are
in place for the company to meet its objectives and review management performance. The
board should set the company’s values and standards, and ensure that its obligations to its
shareholders and other stakeholders are understood and met.

Application : Applied

Explanation on : The Board of Sanbumi Holdings Berhad is responsible for the

application of the oversight and overall management of the Company. In
practice accordance with the corporate governance framework established
for a public listed company, the Board had delegated specific
powers to the various Board Committees and to the management.
The Board Committees comprises the Audit Committee, the
Nomination Committee and the Remuneration Committee.

i. The Board meets regularly and ad hoc meetings are

held as and when required to set various policies,
strategic directions and corporate governance as well
as engaging with the management for performance
monitoring and evaluation of operational matters
requiring Board input and decision.
ii. The Board reviewed and assessed the Annual
Business Plan presented by the management and
monitored the performance via the quarterly financial
reports.
iii. The Board met and discussed with the External
Auditors as well as the Internal Auditors to ascertain
and ensure governance compliance.
iv. During the financial year under review, the Board
reviewed its Board Charter, the Terms of Reference of
the various Board Committees as well as its Statement
on Risk Management and Internal Control to ensure
that they are in line with the Malaysian Code on
Corporate Governance. These documents serve as a
reference and guide to the directors in the discharge of
their duties and responsibilities.

Explanation for : Not Applicable.

departure

2
Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

3
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2
A Chairman of the board who is responsible for instilling good corporate governance practices,
leadership and effectiveness of the board is appointed.

Application : Applied

Explanation on : Dato’ Ir Zainurin bin Karman is the Chairman of the Board. His
application of the profile is detailed in page 18 of Sanbumi’s Annual Report 2019.
practice
The Chairman is responsible for the overall leadership and
effective functioning of the Board. His key roles amongst others
are:

i. To ensure that the Board functions effectively and

independently of the management;
ii. Leading the Board in establishing and monitoring good
corporate governance practices within the entire
Sanbumi Group; and
iii. Ensuring that there are effective communication
between the Company and all its shareholders
including the various stakeholders.

His detailed roles and responsibilities are further described in the

Company’s Board Charter.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

4
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.3
The positions of Chairman and CEO are held by different individuals.

Application : Applied

Explanation on : The Chairman of the Board is Dato’ Ir Zainurin bin Karman and
application of the the Group Managing Director is Dato’ Chua Tiong Moon.
practice
Both roles are distinct and clearly defined in the Board Charter.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

5
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.4
The board is supported by a suitably qualified and competent Company Secretary to provide
sound governance advice, ensure adherence to rules and procedures, and advocate adoption
of corporate governance best practices.

Application : Applied

Explanation on : One Company Secretary is an Associate of the Malaysian Institute

application of the of Chartered Secretaries and Administrators while the other is
practice licensed by the Companies Commission of Malaysia.
The Company Secretaries play important roles in advising the
Board on governance and regulatory matters. The Company
Secretaries carry out the following tasks:
• Attend and ensure proper conduct and procedures at all Board
Meetings, Board Committee Meetings, Annual General
Meeting (“AGM”), Extraordinary General Meeting (“EGM”) and
any other meetings that require the attendance of Company
Secretary and ensure that meetings are properly convened;
• Ensure that the quarterly financial results, audited financial
statements, annual reports, circulars, etc. and all relevant
announcements are announced to Bursa Malaysia on a timely
basis;
• Ensure that deliberations at the meetings are well captured
and minuted, and subsequently communicated to the relevant
management personnel for necessary actions;
• Ensure that the Company complies with the Main Market
Listing Requirements and the requirements of the relevant
authorities;
• Inform and keep the Board updated of the latest enhancement
in corporate governance, changes in the legal and regulatory
framework, new statutory requirements and best practices;
• Keep the Directors and principal officers informed of the
closed period for trading in the Company’s shares; and
• Ensure proper record and maintenance of the Company’s
proceedings, resolutions, statutory records, register books
and documents.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

6
Timeframe : Not Applicable.

7
Intended Outcome
Every company is headed by a board, which assumes responsibility for the company’s
leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.5
Directors receive meeting materials, which are complete and accurate within a reasonable
period prior to the meeting. Upon conclusion of the meeting, the minutes are circulated in a
timely manner.

Application : Applied

Explanation on : All Directors are provided with an agenda and a set of board
application of the papers issued at least 5 business days from the date of Board
practice Meetings so as to ensure that the Directors can appreciate the
issues to be deliberated and to obtain further explanations, where
necessary. The minutes of meetings will be circulated within one
(1) month to the directors.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

8
Intended Outcome
There is demarcation of responsibilities between the board, board committees and
management.

There is clarity in the authority of the board, its committees and individual directors.

Practice 2.1
The board has a board charter which is periodically reviewed and published on the company’s
website. The board charter clearly identifies–
▪ the respective roles and responsibilities of the board, board committees, individual
directors and management; and
▪ issues and decisions reserved for the board.

Application : Applied

Explanation on : The Board has formally established a Board Charter that clearly
application of the sets out the roles and responsibilities, composition and processes
practice related to key governance activities. The Board will periodically
review the Board Charter which is published on the corporate
website: www.sanbumi.com.my The Board last reviewed the
Board Charter on 22 February 2019.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

9
Intended Outcome
The board is committed to promoting good business conduct and maintaining a healthy
corporate culture that engenders integrity, transparency and fairness.

The board, management, employees and other stakeholders are clear on what is considered
acceptable behaviour and practice in the company.

Practice 3.1
The board establishes a Code of Conduct and Ethics for the company, and together with
management implements its policies and procedures, which include managing conflicts of
interest, preventing the abuse of power, corruption, insider trading and money laundering.

The Code of Conduct and Ethics is published on the company’s website.

Application : Applied

Explanation on : All Directors and employees of the Sanbumi Group are expected
application of the to behave ethically and professionally at all times to protect and
practice promote the reputation and performance of the Group.

The Code of Conduct and Ethics was adopted by the Board on 2

July 2018 and is made available for reference on the Company’s
website at www.sanbumi.com.my

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

10
Intended Outcome
The board is committed to promoting good business conduct and maintaining a healthy
corporate culture that engenders integrity, transparency and fairness.

The board, management, employees and other stakeholders are clear on what is considered
acceptable behaviour and practice in the company.

Practice 3.2
The board establishes, reviews and together with management implements policies and
procedures on whistleblowing.

Application : Applied

Explanation on : The Group has established a Whistleblowing Policy underlining its

application of the objectives, scope of policy, Policy Statement, reporting
practice procedures and action in the Board Charter which is published on
the corporate website, www.sanbumi.com.my

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

11
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.1
At least half of the board comprises independent directors. For Large Companies, the board
comprises a majority independent directors.

Application : Applied

Explanation on : A majority of the Board comprises Independent Non-Executive

application of the Directors. Currently, there are 6 directors in the Board, out which
practice 3 are independent directors.

These Independent Directors provide independent judgment,

experience and objectivity without being subordinated to
operational considerations. They help to ensure that the interests
of all shareholders are indeed taken into account by the Board and
that the relevant issues are subjected to objective and impartial
consideration by the Board.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

12
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.2
The tenure of an independent director does not exceed a cumulative term limit of nine years.
Upon completion of the nine years, an independent director may continue to serve on the
board as a non-independent director.

If the board intends to retain an independent director beyond nine years, it should justify and
seek annual shareholders’ approval. If the board continues to retain the independent director
after the twelfth year, the board should seek annual shareholders’ approval through a two-tier
voting process.

Application : Applied - Two Tier Voting

Explanation on : The Board has recommended for re-appointment of an

application of the Independent Director, namely Dato' Ir Zainurin, whose tenure
practice exceeds 12 years via a 2-tier voting process at the coming AGM
to be held on 23 September 2019.

The Board has also recommended for re-appointment of another

Independent Director, Mr Lim Thian Loong at the coming AGM on
23 September 2019 as his tenure will reach the nine years term
limit on 7 December 2019. Mr Lim Thian Loong will not be subject
to 2-tier voting.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

13
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.3 - Step Up

The board has a policy which limits the tenure of its independent directors to nine years.

Application : Not Adopted

Explanation on :
adoption of the
practice

14
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.4
Appointment of board and senior management are based on objective criteria, merit and with
due regard for diversity in skills, experience, age, cultural background and gender.

Application : Applied

Explanation on : In the best interest of the Company, the Board recognises that a
application of the Board composition comprising a mix of skills, competence and
practice diverse background will bring different and added value
dimensions to decision making.

In this regard, the Nomination Committee has been tasked to

assess and recommend to the Board, new Board appointments
as well as the appointment of Senior Management. The Terms of
Reference of the Nomination Committee is detailed at the
Company’s website, www.sanbumi.com.my

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

15
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.5
The board discloses in its annual report the company’s policies on gender diversity, its targets
and measures to meet those targets. For Large Companies, the board must have at least 30%
women directors.

Application : Applied

Explanation on : The Company does not practise discrimination in any form with
application of the regard to gender, ethnicity and age group as the Company is an
practice equal opportunity employer and all appointments and employment
are strictly based on merits and suitability. Sanbumi does not have
any target or measure to meet the 30% women directors Board
composition.

The Board is supportive of Boardroom gender diversity

recommended by the Code and will strive towards introducing
more female Board members when it reviews its Board
composition.

The Company’s Boardroom Diversity Policy can be viewed at

www.sanbumi.com.my

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

16
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.6
In identifying candidates for appointment of directors, the board does not solely rely on
recommendations from existing board members, management or major shareholders. The
board utilises independent sources to identify suitably qualified candidates.

Application : Applied

Explanation on : The Nomination Committee is responsible for evaluating and

application of the recommending suitable candidates for Directorships to the Board.
practice The responsibilities of the Nomination Committee in this regard
are outlined in its Terms of Reference.

In evaluating potential candidates, the Nomination Committee will

assess directorship suitability based on objective criteria,
including qualifications; desired competencies, skills, expertise
and experience; and time commitment to the Company.

In searching for suitable candidates, the Nomination Committee

may receive suggestions from existing Board Members,
Management and major shareholders. The Committee is also
open to referrals from external sources available, such as industry
and professional associations, as well as independent search
firms.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

17
Intended Outcome
Board decisions are made objectively in the best interests of the company taking into account
diverse perspectives and insights.

Practice 4.7
The Nominating Committee is chaired by an Independent Director or the Senior Independent
Director.

Application : Applied

Explanation on : The Chairman of the Nomination Committee is Dato’ Ir Zainurin

application of the bin Karman, a Senior Independent Director.
practice

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

18
Intended Outcome
Stakeholders are able to form an opinion on the overall effectiveness of the board and
individual directors.

Practice 5.1
The board should undertake a formal and objective annual evaluation to determine the
effectiveness of the board, its committees and each individual director. The board should
disclose how the assessment was carried out and its outcome.

For Large Companies, the board engages independent experts periodically to facilitate
objective and candid board evaluations.

Application : Applied

Explanation on : Every Board member carries out his/her own self-assessment by

application of the completing a Director’s Performance Evaluation Self-Assessment
practice Form to assess his/her own level of competencies in integrity,
commitment and ethics, governance, business acumen,
judgement and decision making, communication, strategic
perspective, teamwork and leadership. The Board members are
encouraged to provide feedback and comments to assist the
Board as a whole and its members in their performances in the
areas of competencies, conformance and/or compliance and
improve effectiveness. The Board member would identify their key
industry knowledge or skills which they could contribute to the
Company. The Nomination Committee will then evaluate the
Director’s Self-Assessment Forms at the Nomination Committee
Meeting.

The Audit Committee and the Remuneration Committee each

carry out its evaluation with the view to maximize the performance
of the individual committees in the interest of the Company. Each
Chairman of the committee will complete the assessment forms
which cover the purpose, composition and process of the
respective committees. The Nomination Committee will evaluate
both committees at the Nomination Committee Meeting.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

19
Intended Outcome
The level and composition of remuneration of directors and senior management take into
account the company’s desire to attract and retain the right talent in the board and senior
management to drive the company’s long-term objectives.

Remuneration policies and decisions are made through a transparent and independent
process.

Practice 6.1
The board has in place policies and procedures to determine the remuneration of directors
and senior management, which takes into account the demands, complexities and
performance of the company as well as skills and experience required. The policies and
procedures are periodically reviewed and made available on the company’s website.

Application : Applied

Explanation on : The Board has in practice policy and procedures to determine the
application of the level of remuneration of its Director which enables the Group to
practice attract, retain and motivate Directors with relevant experience and
expertise needed and after considering the recommendations of
the Remuneration Committee to assist in managing the Group
effectively.

Executive Directors are remunerated based on their roles and

levels of responsibilities, Group’s performance and market
conditions whilst the remuneration of Non-Executive Directors is
determined in accordance with their experience, level of
responsibilities assumed in the Board Committees and the Board,
their special skills and expertise that they bring to the Board. The
Directors do not participate in decisions regarding their own
remuneration packages. The Senior Management is remunerated
in accordance with the respective qualifications, skills, experience
and levels of responsibilities.

The policy and procedures shall document and made available on

the Company’s website upon the finalisation of the same.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

20
Intended Outcome
The level and composition of remuneration of directors and senior management take into
account the company’s desire to attract and retain the right talent in the board and senior
management to drive the company’s long-term objectives.

Remuneration policies and decisions are made through a transparent and independent
process.

Practice 6.2
The board has a Remuneration Committee to implement its policies and procedures on
remuneration including reviewing and recommending matters relating to the remuneration of
board and senior management.

The Committee has written Terms of Reference which deals with its authority and duties and
these Terms are disclosed on the company’s website.

Application : Applied

Explanation on : The Terms of Reference is available on the Company’s website

application of the www.sanbumi.com.my
practice

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

21
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into consideration the
company’s performance.

Practice 7.1
There is detailed disclosure on named basis for the remuneration of individual directors. The
remuneration breakdown of individual directors includes fees, salary, bonus, benefits in-kind
and other emoluments.

Application : Applied

Explanation on : In line with the best corporate governance practise, the detailed
application of the disclosure on named basis for the remuneration of individual basis
practice has been made in the Company’s Annual Report 2019. The said
detailed disclosure is set out in the Corporate Governance
Overview Statement on page 36 of the Annual Report 2019.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

22
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into consideration the
company’s performance.

Practice 7.2
The board discloses on a named basis the top five senior management’s remuneration
component including salary, bonus, benefits in-kind and other emoluments in bands of
RM50,000.

Application : Departure

Explanation on : Not Applicable.

application of the
practice

Explanation for : The Company takes cognisance of the Malaysian Code on

departure Corporate Governance recommendations. However, the Board is
of the view that Sanbumi is a small Company and it needs to take
into consideration internal harmony and confidentiality concerns.

The Board ensures that the remuneration commensurate with the

Company’s performance and in line with the industry to retain and
motivate the personnel to lead and run the Company successfully.
No excessive remuneration is paid to any personnel.

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : The Company has disclosed the aggregate remuneration
(including salaries, wages and other emoluments) paid to the staff
including senior management staff in note 25 on page 117 of the
Annual Report 2019.

Timeframe : Not Applicable.

23
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior
management is commensurate with their individual performance, taking into consideration the
company’s performance.

Practice 7.3 - Step Up

Companies are encouraged to fully disclose the detailed remuneration of each member of
senior management on a named basis.

Application : Not Adopted

Explanation on :
adoption of the
practice

24
Intended Outcome
There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations.
The company’s financial statement is a reliable source of information.

Practice 8.1
The Chairman of the Audit Committee is not the Chairman of the board.

Application : Applied

Explanation on : The Chairman of the Board is Dato’ Ir Zainurin bin Karman and
application of the the Audit Committee Chairman is Mr Lim Thian Loong who is an
practice Independent Non-Executive Director.

Hence, the Chairman of the Board and the Chairman of the Audit
Committee are 2 separate and distinct individuals.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

25
Intended Outcome
There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations.
The company’s financial statement is a reliable source of information.

Practice 8.2
The Audit Committee has a policy that requires a former key audit partner to observe a cooling-
off period of at least two years before being appointed as a member of the Audit Committee.

Application : Applied

Explanation on : The policy on observation of a cooling-off period of at least 2 years

application of the for a former key audit partner prior to the appointment as an Audit
practice Committee member is incorporated in the Terms of Reference of
Audit Committee.

Presently, no member of the Audit Committee are former key audit

partners of Sanbumi’s external auditors.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

26
Intended Outcome
There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations.
The company’s financial statement is a reliable source of information.

Practice 8.3
The Audit Committee has policies and procedures to assess the suitability, objectivity and
independence of the external auditor.

Application : Applied

Explanation on : The Audit Committee has evaluated the performance of Crowe

application of the Malaysia PLT based on the following during the FY2019:-
practice
a) tenure;
b) independence and objectivity;
c) technical competency;
d) audit quality and adequacy of resources.

As part of the review process, the Audit Committee has sought

and reviewed the Management’s comments and feedbacks on the
performance of the External Auditors. The Audit Committee
conducted 2 private sessions with the External Auditors, without
the presence of the Executive Directors and the Management.
This review process ensures that critical issues, if any, are
objectively brought up to the attention of the Audit Committee. For
further details, please refer to the Audit Committee Report on
page 49 of the Annual Report 2019.

The Company adopted the External Auditors Assessment Policy

which is available on the Company’s website.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

27
Intended Outcome
There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations.
The company’s financial statement is a reliable source of information.

Practice 8.4 - Step Up

The Audit Committee should comprise solely of Independent Directors.

Application : Adopted

Explanation on : The Audit Committee comprises 3 members, all of which are

adoption of the Independent Non-Executive Directors.
practice

28
Intended Outcome
There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations.
The company’s financial statement is a reliable source of information.

Practice 8.5
Collectively, the Audit Committee should possess a wide range of necessary skills to
discharge its duties. All members should be financially literate and are able to understand
matters under the purview of the Audit Committee including the financial reporting process.

All members of the Audit Committee should undertake continuous professional development
to keep themselves abreast of relevant developments in accounting and auditing standards,
practices and rules.

Application : Applied

Explanation on : The Chairman of the Audit Committee, Mr Lim Thian Loong, is a

application of the graduate member of the Chartered Institute of Management
practice Accountants (CIMA), London. He is also a member of the
Chartered Global Management Accountants (CGMA), Malaysian
Institute of Accountants (MIA) and the Chartered Tax Institute of
Malaysia (CTIM).

Mr Leow Chan Khiang is a Chartered Accountant. He is member

of MIA and ACCA. Dato' Ir Zainurin bin Karman has corporate
and/or business background. All AC members are financially
literate.

It is Sanbumi’s policy that all members of the Audit Committee

undertake continuous professional development to ensure that
they are kept informed and updated of the latest developments. In
addition to the Mandatory Accreditation Programme as required
by the Bursa Malaysia Securities Berhad, the members continue
to update their knowledge and skills by way of on the job training,
attendance of various workshops, seminars and briefing sessions.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

29
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.1
The board should establish an effective risk management and internal control framework.

Application : Applied

Explanation on : The Board has established the appropriate control environment

application of the and risk management framework, processes and structures and
practice continually reviewing the adequacy and integrity of the said
systems.
In this regard, the Board has adopted a formal Statement on Risk
Management and Internal Control which is set out on page 54 of
the Company’s Annual Report 2019.
The Board is responsible towards the overall effectiveness of the
Sanbumi Group’s risk management and internal control systems.
The Audit Committee as an independent party is delegated to
review and determine the levels of different categories of risk and
to also provide assurance to the Board on the effectiveness of the
internal control systems and risk management in the Group.
The daily running of the business is entrusted to the Group
Managing Director and Senior Management team. This close-to-
operations management style enables timely identification and
reporting of significant matter.
The Audit Committee is also supported by the Group’s internal
audit function which has been outsourced to IBDC (Malaysia) Sdn
Bhd, an independent professional firm, who will provide an
independent assessment on the adequacy and effectiveness of
the internal control systems operating within the Group.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

30
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.2
The board should disclose the features of its risk management and internal control framework,
and the adequacy and effectiveness of this framework.

Application : Applied

Explanation on : Risk management in particular the assessment, monitoring and

application of the reviews of the various risk factors impacting the Group is a key
practice process continuously undertaken by the management team, with
the Audit Committee assuming a key oversight role as delegated
by the Board.

The Board is also updated regularly and measures including pre-

emptive measures to mitigate foreseeable risks will be considered
and put to the Board for decision if necessary.

Further details on the management and reporting of risks as well

as controls in place to mitigate and manage those risks are
provided in the Statement on Risk Management and Internal
Control included as page 54 of the Annual Report 2019.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

31
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a
foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.3 - Step Up

The board establishes a Risk Management Committee, which comprises a majority of
independent directors, to oversee the company’s risk management framework and policies.

Application : Not Adopted

Explanation on :
adoption of the
practice

32
Intended Outcome
Companies have an effective governance, risk management and internal control framework
and stakeholders are able to assess the effectiveness of such a framework.

Practice 10.1
The Audit Committee should ensure that the internal audit function is effective and able to
function independently.

Application : Applied

Explanation on : The internal audit function of the Group is outsourced to an

application of the independent professional firm, IBDC (Malaysia) Sdn Bhd and
practice reports directly to the Audit Committee.

The internal auditors carry out internal audits on the Group based
on a risk plan approved by the Audit Committee. Audit findings are
then circulated to the Audit Committee for their review and further
action if necessary.

During the year, the Audit Committee also reviewed the

performance of the internal auditors and evaluated their suitability
and independence before making recommendation to the Board
for their re-appointment and remuneration.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

33
Intended Outcome
Companies have an effective governance, risk management and internal control framework
and stakeholders are able to assess the effectiveness of such a framework.

Practice 10.2
The board should disclose–
▪ whether internal audit personnel are free from any relationships or conflicts of interest,
which could impair their objectivity and independence;
▪ the number of resources in the internal audit department;
▪ name and qualification of the person responsible for internal audit; and
▪ whether the internal audit function is carried out in accordance with a recognised
framework.

Application : Applied

Explanation on : The Group’s internal audit function is outsourced to an

application of the independent professional firm IBDC (Malaysia) Sdn Bhd (IBDC).
practice The Audit Committee had evaluated the firm and concluded that
the audit personnel assigned to the Group were adequate to carry
out the work and did not have any relationships or conflicts of
interest with the Sanbumi Group.

The team from IBDC are led by:-

Mr Yeoh Chin Hoe IIAM Chartered Audit Committee Director

(Director-In- (No. 0039)
Charge) Fellow of Association of Chartered
Certified Accountants (ACCA)
Member of Malaysian Institute of
Accountants (MIA)
Member of Malaysia Institute of Certified
Public Accountants (MICPA)
Master Degree in Business
Administration (General Management)

Ms Khoo Wuan Ru IIAM Associate Member (No. 211254)

(Consultant) Bachelor of Science (BSc), Economics
and Finance

Ms Kanagaa IIAM Associate Member (No. 211256)

Balasubramaniam Bachelor of Accounting and Finance
(Associate (Hons.)
Consultant)

The Internal auditor carried out the internal audits of the Group
based on a risk based plan approved by the Audit Committee
which meet the objectives of the internal audit framework relevant
and applicable to the industry.

Explanation for : Not Applicable.

departure

34
Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

35
Intended Outcome
There is continuous communication between the company and stakeholders to facilitate
mutual understanding of each other’s objectives and expectations.

Stakeholders are able to make informed decisions with respect to the business of the
company, its policies on governance, the environment and social responsibility.

Practice 11.1
The board ensures there is effective, transparent and regular communication with its
stakeholders.

Application : Applied

Explanation on : The Board believes that stakeholders’ engagement is the basis of

application of the good corporate governance and important for our business
practice economic sustainability. One of the key stakeholders are our
shareholders.
At our annual AGM, all shareholders are invited to raise questions
to the members of the Board. The Board provides the necessary
explanation to address the questions from the shareholders.
The Company keeps shareholders informed by announcements
and timely release of quarterly financial results through Bursa
Link, press releases, annual report and circular to shareholders.

Any query and concern regarding the Group may be conveyed to

Dato’ Ir. Zainurin bin Karman, the Senior Independent Non-
Executive Director at:-

Telephone number : 04-390 3699

Facsimile number : 04-390 3636

The Company encourages employees and stakeholders to report

any improper conduct on the part of employees, management,
directors and vendors in particular with respect of their obligation
to the Company’s interest. Employees and stakeholders who have
been aggrieved or have concerns to raise can raise them through
the grievance procedure or to the Audit Committee Chairman.
The Company’s website also serves as a forum to communicate
with stakeholders and to provide information on the Group’s
business activities.

Explanation for : Not Applicable.

departure
Not Applicable.

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.

36
Measure : Not Applicable.

Timeframe : Not Applicable.

37
Intended Outcome
There is continuous communication between the company and stakeholders to facilitate
mutual understanding of each other’s objectives and expectations.

Stakeholders are able to make informed decisions with respect to the business of the
company, its policies on governance, the environment and social responsibility.

Practice 11.2
Large companies are encouraged to adopt integrated reporting based on a globally
recognised framework.

Application : Departure

Explanation on :
application of the
practice

Explanation for : Not applicable as the Company is not a Large Company as

departure defined by the Malaysian Code on Corporate Governance 2017.

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

38
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively
and make informed voting decisions at General Meetings.

Practice 12.1
Notice for an Annual General Meeting should be given to the shareholders at least 28 days
prior to the meeting.

Application : Applied

Explanation on : The Notice of the 50th AGM which is dated 31 July 2019 is
application of the despatched to all shareholders on the same day. The 50th AGM
practice will be held on 23 September 2019.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

39
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively
and make informed voting decisions at General Meetings.

Practice 12.2
All directors attend General Meetings. The Chair of the Audit, Nominating, Risk Management
and other committees provide meaningful response to questions addressed to them.

Application : Applied

Explanation on : All directors attended the AGM on 7 September 2018. Senior

application of the management and the Group’s External Auditors were in
practice attendance to respond to shareholders’ enquiries.

Explanation for : Not Applicable.

departure

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure : Not Applicable.

Timeframe : Not Applicable.

40
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively
and make informed voting decisions at General Meetings.

Practice 12.3
Listed companies with a large number of shareholders or which have meetings in remote
locations should leverage technology to facilitate–
▪ including voting in absentia; and
▪ remote shareholders’ participation at General Meetings.

Application : Departure

Explanation on :
application of the
practice

Explanation for : The Company has been holding its AGMs at its registered office.
departure
The Company does not conduct meetings in remote location.
However, it is currently not cost effective nor practical for the
Company to leverage on technology to facilitate shareholders
voting in absentia or having remote shareholders’ participation in
general meetings.

Alternative practice: Shareholders are allowed to appoint any

person(s) as their proxies to attend, participate and vote in his
stead at a general meeting.

Large companies are required to complete the columns below. Non-large companies are encouraged
to complete the columns below.
Measure :

Timeframe :

41
SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT
CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures)

of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is
only applicable for financial institutions or any other institutions that are listed on the Exchange
that are required to comply with the above Guidelines.

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