The Board shall record its deliberation, in terms of the issues discussed, and the conclusions thereof in discharging its duties and responsibilities.
All Directors have the same right of access to all information pertaining to the Company whether as a full or in their individual capacity, in furtherance of their duties and responsibilities as Directors in the Company. The Management should supply accurate and complete information to the Board in a timely manner to enable the Board to discharge its duties effectively.
All Directors should have access to the advice and services of the Company Secretary.
The Board collectively, and each Director individually, has the rights to seek independent professional advice at the Company’s expenses, subject to the approval by the Board.
7. Directors’ Remuneration
Remuneration Committee is responsible to recommend the remuneration packages for the Executive Director(s) taking into consideration of the individual performance, seniority, experience and scope of responsibilities that is sufficient to attract and retain the Directors needed to run the Company successfully.
The determination of remuneration packages of Non-Executive Directors should be a matter for the Board as a whole and the individual concerned should abstain from discussing their owing remuneration. Fees payable to the Non-Executive Directors shall be a fixed sum and shall not be payable by a commission on or percentage of profits or turnover.
The Board shall determine the remuneration packages taking into consideration the recommendations of the Remuneration Committee.
8. Roles of the Chairman
The role of the Chairman and the Managing Director/ Chief Executive Officer shall be distinct and separated to ensure a balance of power and authority.
The responsibilities of the Chairman should include leading the Board in the oversight of management, amongst others, includes the following roles and responsibilities:-
Providing support and guidance to Senior Management Offices to assist and facilitate management succession planning;
Grooming and mentoring Senior Management Offices to achieve consistently high levels of professionalism and excellent performance;
Chairing the Board Executive Committee meetings;
Providing leadership to the Board and is responsible for the developmental needs of the Board;
Ensuring that guidelines and procedures are in place to govern the Board’s operation and conduct;
Ensuring the smooth functioning of the Board and the Governance structure and inculcating positive culture in the Board;
Ensuring that procedures and processes are in place to facilitate effective conduct of business by the Board;
Chairing Board meetings and ensures the following:
All relevant issues are on the agenda of Board meetings
Board debates strategic and critical issues.
Board receives the necessary management reports relating to the Company’s business on a timely basis
All directors are able to participate openly in discussions at Board meetings
Providing leadership to the Board and is responsible for the developmental needs of the Board
Chairing general meetings of the Company and provide clarification on issues that may be raised by shareholders.
9. Roles of Managing Director/ Chief Executive Officer (“CEO”)
The Managing Director/ CEO shall focus on the business operation and day-to-day management of the Company. Amongst others, the responsibilities of the Managing Director/ CEO shall include the following:-
Developing the business direction and strategies of the Company;
Ensuring that the Company business strategies and policies are effectively implemented;
Providing the direction for the implementation of short and long term business plans;
Providing strong leadership ie. Effectively communicating a vision, management philosophy and business strategy to employees;
Keeping the Board well informed of salient aspects and issues concerning the Company operations and ensuring that adequate management reports are submitted to Board members;
Responsible for the effective management of the Company’s day-to-day operations;
Ensuring that there are adequate systems and controls to safeguard the interests of the Company and all stakeholders.
10. Roles of Independent Non-Executive Directors
An Independent Director shall provide the independent judgment and opinions during Board Meeting. Amongst others, includes the following roles and responsibilities:-
Providing independent and objective views (in the case of Non-Executive Directors who are Independent Non-Executive Directors), assessment and suggestions in deliberations of the Board;
Ensuring effective check and balance in the proceedings of the Board;
Mitigating any possible conflict of interest between the policy-making process and day-to-day management of the Company;
Constructively challenging and contributing to the development of the business strategies and direction of the Company;
Ensuring that there are adequate systems and controls to safeguard the interests of the Company and all stakeholders; Ensuring that the culture of accountability, transparency, integrity, professionalism and responsible conduct is consistently adhered to in the Company.
11. Company Secretary
The appointment or removal of Company Secretary or Secretaries shall be the prerogative of the Board as a whole. The Secretary or Secretaries appointed shall be suitably qualified under the Companies Act 1965 and be competent to provide support to the Board and Committees in carrying out the responsibilities and duties,such as ensuring Board procedures are followed and the applicable rules and
regulations are complied with and all matters associated with the Board and Committees are efficiently carried out.
12. Supply of Information
All the directors, including Independent Non-Executive Directors, are allowed to access to information concerning the Company or other external information as they may feel necessary. Board papers and reports which include the Group’s performance and major operational, financial and corporate information will be distributed to the Directors with sufficient time prior to Board meetings to enable Directors to obtain further explanation, where necessary, in order to be properly briefed before the meeting.
The Directors may obtain independent professional advice in furtherance of their duties, at the Company expenses, if necessary.
13. Internal Control and Risk Management
The Board is responsible to maintain a sound system of internal controls to safeguard shareholders’ investment and Group’s assets. The Board shall recognize that such system is structured to manage rather than eliminate possibility of encountering risk of failure to achieve corporate objective.
The Company outsourced its internal audit function to a consultancy firm which provides the Board with the level of assurance required on the adequacy and integrity of the system of internal control. The internal audit function adopts a risk-based approach and prepares its audit strategy and plan based on the updated risk profile of the Company.
The Audit Committee considers the report from the internal audit function and Management’s responses, before reporting and making recommendations to the Board in strengthening the risk management and internal control systems.
14. Financial Reporting
The Board is responsible to ensure that the financial statements are prepared in accordance with the Company Act, 1965 and the applicable approved accounting standards set by Malaysian Accounting Standard Board so as to present a balanced and fair assessment of the Group’s financial position and prospects. The Directors are also responsible for keeping proper accounting records, safeguarding the assets of the Company and taking reasonable steps to prevent and enable detection of fraud
and other irregularities.
15. Investor Relations and Shareholders Communication
The Board shall ensure the important information are disseminated to shareholders, stakeholders and the public at large through timely announcement of events, quarterly announcement of financial results to all shareholders in line with Bursa Malaysia objectives of ensuring transparency and good corporate governance. Additional information is available from the Company’s website [www.palettemm.com]. In addition, product information also available on the Company’s various websites.
16. Code of Ethics and Conducts
The Code of Ethics and Conducts shall be based on the following principles:-
- Conflicts of interests;
- Corporate opportunities;
- Protection of confidential information;
- Compliance with laws, rules and regulations;
- Trading on inside information;
- Compliance with this Code and reporting of any illegal or unethical behavior; and
- Waivers and amendments.
This Code of Ethics and Conducts is to be observed by all employees, officers and directors of the Group. The Board shall review the Code of Ethics and Conducts periodically to ensure it remains relevant and appropriate.
17. Corporate Social Responsibilities
The Board shall ensure the Company commits towards good corporate social responsibility participation especially the areas on the workplace, the community and the market place including the conduct of various training programmes for the human capital development, the commitment on time and effort in educating and developing the next work generation through the Palette Internship Program and to continue to invest in the R&D and places importance on innovation to enrich the quality of its product and services in ensuring customer satisfaction.
18. Review of Board Charter
The Board Charter will be reviewed periodically and updated in accordance with the needs of the Company and any new regulation that may have an impact on the discharge of the Board’s responsibilities.
This Charter shall be made available at the Company’s website at www.palettemm.com.
Appendix I
AUDIT COMMITTEE
TERMS OF REFERENCE
COMPOSITION
1. The Committee shall be appointed by the Board of Directors from amongst its members which fulfills the following requirements:
(a) shall comprise not less than 3 members;
(b) the majority shall be independent directors;
(c) all members must be non-executive directors; and
(d) at least one member:
(i) must be a member of the Malaysian Institute of Accountants; or
(ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working experience and:-
he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
he must be a member of one of the association of accountants specified in Part II of 1st Schedule of the Accountants Act 1967; or
(iii) fulfils such other requirements as prescribed or approved by the Exchange.
2. Alternate Director shall not be appointed as a member of the Committee.
3. The Committee shall select a Chairman from among their members who is an Independent Non-Executive Director.
4. In the event of any vacancy in the audit committee resulting in the non-compliance of the above, the Board shall within three (3) months appoint new members as required to make up the minimum numbers.
RIGHTS OF THE AUDIT COMMITTEE
The Audit Committee shall in accordance with the procedure determined by the Board and at the cost of the Company:-
(a) have explicit authority to investigate any matter within its terms of reference;
(b) have the resources which are required to performs its duties;
(c) have full and unrestricted access to any information pertaining to the Company;
(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function;
(e) be able to obtain independent/external professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary; and
(f) be able to convene meetings with the external auditors excluding the attendance of the executive members of the Company, whenever deemed necessary.
DUTIES AND RESPONSIBILITIES
The duties and responsibilities of the Audit Committee shall be:-
1) To review the following and report the same to the Board:-
(i) The audit plan before the audit commences, the evaluation of the system of internal controls and the audit report with the external auditors.
(ii) The appointment of the external auditor, the audit fee and any question of resignation or dismissal.
(iii) The assistance given by the employees of the Group to the external auditors.
(iv) The quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on:-
• changes in or implementation of major accounting policy;
• significant and unusual events; and
• compliance with accounting standards and other legal requirements.
(v) Problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management where necessary).
(vi) The external auditors’ management letter and management’s response.
2) To do the following, in relation to the internal audit function:-
(i) review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;
(ii) review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function.
3) To review any related party transaction and conflict of interest situation that may arise within the Company and Group including any transaction, procedure or course of conduct that raises questions of management integrity.
4) To monitor the Group’s compliance with relevant laws, regulations and code of conduct.
5) To verify the allocation of options under the Employees Share Options Scheme.
MEETING
The Committee shall meet on at least four (4) occasions each year. Any member may at any time, and the head of group finance and the Company Secretary shall on the requisition of any of the members or the external auditors summon a meeting. The external auditors may request a meeting if they consider this necessary.
The quorum for a meeting shall be at least two (2) members provided that the majority number of members present must be independent directors.
Except in the case of any emergency, reasonable notice of every meeting shall be given in writing and the notice of each meeting shall be served to any member entitled personally or by sending it via fax or through post or by courier or by email to such member to his registered address as appearing in the Register of Directors, as the case may be.
In addition to the Committee members, meetings would normally be attended by a representative of the external auditors, the financial controller and head of internal audit at the invitation of the Committee. Other Board members may also attend the Audit Committee meetings only at the Committee’s invitation.
The Committee should meet with the internal/external auditors without executive board members present at least twice a year. A resolution put to the vote of the meeting shall be decided on a show of hands. In the case of an equality of votes, the Chairman shall be entitled to a second or casting vote. The minutes of meetings shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting and shall be circulated to the Committee and the Board.
The minutes of meetings shall be taken by the Company Secretary and be kept at the Company’s Registered Office.
Appendix II
NOMINATION COMMITTEE
TERMS OF REFERENCE
1. Composition
The members, including the Chairman, of the Nomination Committee shall be appointed by the Board. Its members shall comprise exclusively of non-executive directors, a majority of whom are independent and shall consist of not less than two (2) members.
The Chairman of the Nomination Committee shall be the Senior Independent Director identified by the Board.
2. Quorum of Meetings
A minimum of two (2) Nomination Committee members present in person shall constitute the quorum.
3. Frequency of Meetings
The Nomination Committee shall meet at least annually or at such other frequency as the Chairman may determine.
4. Others
Except in the case of any emergency, reasonable notice of every meeting shall be given in writing and the notice of each meeting shall be served to the Nomination Committee personally or by sending it via fax or by email or through post or by courier.
Participants may be invited by the Nomination Committee from time to time to attend the meetings depending on the nature of the subject under review.
The Company Secretary or any other person whom the Nomination Committee deed fit shall act as the Secretary of the Committee and shall be responsible for sending out notices of meetings and preparing and keeping the minutes of meetings.
5. Functions of the Nomination Committee
The Nomination Committee should:-
a. Recommend to the Board, candidates for all directorships to be filled by the shareholders or the Board after considering the candidates' -
- skills, knowledge, expertise and experience;
- professionalism;
- integrity; and
- in the case of candidates for the position of independent non-executive directors, to evaluate the candidates' ability to discharge such responsibilities/functions as expected from independent non-executive directors;
b. Consider, in making its recommendations, candidates for directorships proposed by the Chief Executive Officer and within the bounds of practicability, by any other senior executive or any director or shareholder;
c. Assess and recommend to the Board, directors to fill the seats on Board Committees.
d. Undertake an annual review of the required mix of skills, experience and diversity (including gender diversity) and other qualities of Directors, including core competencies which Non-Executive Directors should bring to the Board and to disclose this forthwith in every Annual Report;
e.Assist the Board to introduce a criteria and to formulate and implement a procedure to be carried out by the Nomination Committee
annually for assessing the effectiveness of the Board as a whole, the Board Committees and for assessing the contributions of each individual Director;
f. To ensure that the Directors to retire by rotation to be in accordance with the Articles of Association of the Company;
g. To ensure that the process carried out in the evaluation and assessment be properly documented.
h. To conduct assessment of the independent directors who have served the Board for a period of nine (9) years and above and to recommend to the Board whether the independent director should remain independent or be re-designated.
i. To review the induction and training needs of Directors.
j. To report to the Board on Board and key management succession planning.
6. Variation
The above Terms of Reference may be determined and/or varied by the Company's Board of Directors at any time and from time to time.
Appendix III
REMUNERATION COMMITTEE
TERMS OF REFERENCE
1. Composition
The members, including the Chairman, of the Remuneration Committee shall be appointed by the Board. Its members shall comprise exclusively or majority of non-executive Directors and shall consist of not less than 2 members.
2. Quorum of Meetings
A minimum of two (2) Remuneration Committee members present in person shall constitute the quorum.
3. Frequency of Meetings
The Remuneration Committee shall meet at least annually or at such other frequency as the Chairman may determine.
4. Others
Except in the case of any emergency, reasonable notice of every meeting shall be given in writing and the notice of each meeting shall be served to the Remuneration Committee personally or by sending it via fax or by email or through post or by courier.
Participants may be invited by the Remuneration Committee from time to time to attend the meetings depending on the nature of the subject under review.
The Company Secretary or any other person whom the Remuneration Committee deem fit shall act as the Secretary of the Committee and shall be responsible for sending out notices of meetings and preparing and keeping the minutes of meetings.
5. Functions of the Remuneration Committee
The Remuneration Committee should:-
a. Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of individual directors;
b. To structure the component parts of the Executive Directors' remuneration so as to link rewards to corporate and individual performance; whereas, in the case of Non-Executive Directors, the level of remuneration should reflect the experience and level of responsibilities
undertaken by the particular Non-Executive Director concerned;
c. Ensure the levels of remuneration are sufficient to attract and retain the directors needed to run the Company successfully. The determination of remuneration packages of Non-Executive Directors, including Non-Executive Chairman is a matter for the Board as a whole. The individuals concerned shall abstain from discussion of their own remuneration.
6. Variation
The above Terms of Reference may be determined and/or varied by the Company's Board of Directors at any time and from time to time.
Appendix IV
OPTION COMMITTEE
TERMS OF REFERENCE
1. Composition
The members, including the Chairman, of the Option Committee shall be appointed by the Board. Its members shall consist of not less than 2 members.
2. Quorum of Meetings
A minimum of two (2) Option Committee members present in person shall constitute the quorum.
3. Frequency of Meetings
The Option Committee shall meet at least annually or at such other frequency as the Chairman may determine.
4. Others
Except in the case of any emergency, reasonable notice of every meeting shall be given in writing and the notice of each meeting shall be served to the Option Committee personally or by sending it via fax or by email or through post or by courier.
Participants may be invited by the Option Committee from time to time to attend the meetings depending on the nature of the subject under review.
The Company Secretary or any other person whom the Option Committee deed fit shall act as the Secretary of the Committee and shall be responsible for sending out notices of meetings and preparing and keeping the minutes of meetings.
5. Functions of the Option Committee
The Option Committee should:-
a. assist the Board of Directors in discharging its responsibilities relating to the implementation of the ESOS in accordance with the relevant laws and regulations including the By-Law;
b. carry out functions relating to the Scheme assigned by the Board of the Company.
6. Variation
The above Terms of Reference may be determined and/or varied by the Company's Board of Directors at any time and from time to time.