The Board of Directors (the “ Board”) of Scanwolf Corporation Berhad (“SCB” or “Company”) is committed to maintaining high standards of corporate governance by adopting and applying the Malaysian Code on Corporate Governance (“Code”) throughout the Company and its group of companies (“Group”) to protect and enhance shareholders’ value as well as to support the Group’s continued growth and success.
This statement sets out the manner in which the Group has applied the principles of good governance and the extent of compliance by the Group with the best practices recommended by the Code throughout the financial year ended March 31, 2011.

 

BOARD OF DIRECTORS

The Role of the Board of Directors

 

The Board is collectively responsible for promoting the success of the Group by directing and supervising its affairs. The Board’s role is to provide entrepreneurial leadership to the Group within a framework of prudent and effective controls which enable risks to be assessed and managed. It sets the Group’s strategic direction, business policies and objectives. It further ensures that the necessary financial and human resources as well as standards of corporate governance are in place for the Group to meet its objectives and review management performance. The Board also establishes the Group’s value and standards within the organization and ensures that its obligation to its shareholders and other stakeholders are understood and met.

 

Certain responsibilities of the Board are delegated to Board Committees; namely the Nomination Committee, the Remuneration Committee and the Audit Committee (collectively referred to as “Board Committees”). The Board Committees operate within clearly defined terms of reference and have the authority to examine particular issues delegated to them and report back to the Board with their recommendations and comments. The ultimate responsibility for the final decision on all significant matters proposed by the Board Committees, however, lies with the Board as a whole.
The Group fully appreciates the pivotal role played by the Board in the stewardship and monitoring of its long term direction and achievement of business objectives; and ultimately the enhancement of shareholders’ values.

 

Board Composition and Balance

 

During the financial year under review, the Board comprises of four (4) Executive Directors and three (3) Independent Non-Executive Directors, headed by an Independent Non-Executive Chairman. The profile of each director is presented on pages 8 to 10 of this Annual Report. (Download the Annual Report)

 

The Board composition complied with the Listing Requirements of Bursa Malaysia Securities Berhad whereby at least one third of the Board must comprise of Independent Directors.

 

The Board of SCB has a good balance of Executive and Non-Executive Directors with a strong combination of appropriate skills in management, operational and decision-making process and enjoys the benefit of good balance in terms of participating minds during deliberation and discussions. The members of the Board have always acted independently in expressing their thoughts and views without any influence from any other members. This enables the Board to operate in an atmosphere of equitable power and authority, thus avoiding situations where individuals or group of individual may seek to dominate.

 

All members of the Board are individuals who are committed to business integrity and professionalism. Their extensive work experiences in various fields enable them to exercise balance and sound judgments on issues of group strategy, performance, resource planning and utilization and standards of conduct.

 

The Board is of the view that its composition fairly reflects the composition of its shareholders. There is a balance of executive, non-executive and independent non-executive directors. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders of the Company.

 

Role of Chairman and the Chief Executive Director

 

There is a clear accepted division of responsibility between the Non-Executive Chairman of SCB and its Chief Executive Director (“CED”). The positions of the Chairman and CED are held by separate persons to ensure a clear demarcation of responsibilities.

 

The Non-Executive Chairman is entrusted, along with the other members of the Board, the task of developing the Group’s overall business policies and strategic direction whilst the CED is responsible for the implementation of such policies and decisions as well as serve as a link to the Board in providing feedbacks on the business operations. The CED, in his day-to-day management of the Group, is ably assisted by the Executive Directors.

 

Board Responsibilities and Duties

 

The Board retained full and effective control over the affairs of the Group. The primary focus of the Board is on the overall strategic planning, performing periodic reviews of business and financial performance, adopting and reviewing risk management, exercising internal controls and enforcing legal statutory compliance.

 

The presence of independent non-executive directors further strengthens the Board in providing unbiased and independent views, advices and judgements as well as to safeguard the interest of the minority shareholders. The Board also contributes to the formulation of policies and decision-making through their expertise and experience.

 

Apart from the above, the Board’s more specific responsibilities include the following:-

 

• Reviewing and guiding the Group’s corporate strategy and adopting a strategic plan for the Group through the development of risk policy, annual budgets and long term business plans, reviewing major capital expenditures and acquisitions.
• Monitoring corporate performance and the conduct of the Group’s business and ensuring compliance to best practices and principles of corporate governance.
• Identifying and implementing appropriate systems to manage principal risks. The Board undertakes this responsibility through the Audit Committee.
• Ensuring the existence of and reviewing the adequacy and soundness of the Group’s financial systems, internal control systems and management systems in compliance with applicable standards and laws and regulations.
• Developing and implementing an investor relation programme as well as a shareholders’ communication policy for the Group.

 

 

Board Meeting

 

The Board meets quarterly and also on other occasions to approve the Quarterly Reports, the Annual Report, the Business Plan and to review the progress of the operating subsidiaries in achieving their strategic goals. Meetings for the year are scheduled early in the year. The Board meeting agenda is sanctioned by the Chairman prior to issuance. Due notice is given for all scheduled meetings and additional meetings are convened on ad-hoc basis for urgent and important matters. Where appropriate, decisions are taken by way of circular resolutions in-between scheduled meetings.

 

The Board, during its meetings, reviews and approves the strategic plans, business plans, budgets, annual and quarterly financial results, key financial and operating policies, significant capital or operating expenses, organization and corporate structure, related party transactions and announcements on significant matters.
The Board receives support and guidance in discharging its duties and responsibilities from the Company Secretary. The Company Secretary is required to update the Board on the latest rules and regulations from Bursa Malaysia and all other relevant governmental authorities.

 

There were four (4) meetings held during the financial year ended March 31, 2011. All the Directors attended the four (4) meetings. In addition, the Executive Directors met regularly to discuss corporate strategy and business operations and results of the business units in the Group.

 

Board Committees

 

To ensure its effectiveness in the periodic monitoring, deliberating and safeguarding of shareholders interest, the Board has delegated certain of its responsibilities to the Board Committees which operate within clearly defined Terms of Reference to carry out their responsibilities in a supporting role to the Board. These Board Committees provide added assurance and accountability to shareholders.

 

The Board Committees, comprising of members from the Board itself, are empowered to deliberate and examine issues delegated to them and provide feedbacks to the Board with their recommendations and comments.

 

The Board Committees are as follows:-

 

• Audit Committee

The Audit Committee operates under a clearly defined terms of reference stating its roles and responsibilities in ensuring the quality and integrity of the practices of the Group.
 

The Audit Committee comprises of three (3) Board members, all of whom, including the Chairman, are independent non-executive directors. The selection of members of the Audit Committee is designed to ensure a balance in the members’ roles and responsibilities within the Committee.
 

The principal objective of the Committee is to assist the Board in ensuring the Group’s process of assessing internal controls, corporate governance and other compliance requirements of the Group have been, and are in full effect.
 

In accordance with the best practices of corporate governance, the Audit Committee presents its report on pages 26 to 29 of this Annual Report.

 

• Nomination Committee

The primary responsibility of the Nomination Committee is to ensure proper Board succession for the Group by considering and recommending eligible candidates for directorship in the Board.

 

The Nomination Committee comprises of three (3) Board members, two (2) of whom, including the Chairman, are independent non-executive directors and the other is an executive director.

 

The Committee’s duties and other responsibilities include:-

 

i.    Making appropriate recommendations to the Board on matters of renewal, extension, retirement, appointment and re-appointment of director.

 

ii.    Assessing and recommending suitable candidate for directorship and ensuring an appropriate plan for Board succession for the Group.

 

iii. ReviewingannuallythemixofskillsandexperienceandtheeffectivenessoftheBoardasawhole, the committees of the Board and contributions of each individual director to the decision making process of the Board.
During the year under review, the Nomination Committee met a once to carry out its responsibilities.

 

• Remuneration Committee

The Remuneration Committee operates in its established structure and policy given by the Board which includes the following responsibilities and duties:-

 

i.    To review and recommend to the Board the policy and framework for the directors’ remuneration and benefits including those for executive directors and key senior management personnel, ensuring that the level of remuneration and benefits are sufficiently competitive to attract, motivate and retain a team of executive directors and key management executives to manage the Group successfully and profitably.

 

ii.    Reviewing and recommending to the Board the contributions and performance of executive directors and key management executives on an annual basis to determine the level of rewards, both monetary and non-monetary, to be rewarded to them based on the Group’s financial performance.

 

iii. ToevaluateandrecommendtotheBoard,anyotherpoliciesandmattersrelatedtopaymentsto directors and key management executives as may be referred to it by the Board from time to time.

 

The Committee consists of three (3) directors of which two (2) are independent directors. The Chairman is an independent non-executive director.

 

During the year under review, the Remuneration Committee met a total of four (4) times.

 

Supply of Information

 

Every member of the Board has full and unrestricted access to senior management within the Group and is entitled to advice and services of the Company Secretary.

 

The Board members are supplied with the required and timely information which allow them to discharge their responsibilities effectively and efficiently. Prior to each meeting, every Director is given the complete agenda and a set of Board papers for each agenda to be deliberated.

 

The Directors have the consent of the Board, whether acting as full Board or in their individual capacity to take independent professional advice, where necessary, in furtherance of their duties. However, no such advice was sought by any of the Directors during the financial year.

 

Directors’ Training

 

The Board encourages its Directors to participate in talks, seminars, workshops and conferences to update and enhance their skills and knowledge to enable them to carry out their roles effectively and in discharging their responsibilities towards corporate governance with particular attention to operational and regulatory issues.

 

In compliance with the Listing Requirements of Bursa Malaysia Securities Berhad, all members of the Board have completed the Mandatory Accreditation Programme (MAP).

 

APPOINTMENT AND RE-ELECTION OF DIRECTORS

 

• Appointment of Directors

The Board appoints its members through a formal process that is consistent with the Company’s Articles of Association.

 

The proposed appointment of new members to the Board, as well as proposed re-appointment and re-election of directors seeking re-election at the Annual General Meeting are recommended by the Nomination Committee to the Board for approval.

 

New members of the Board are encouraged to undergo an in-house company training programme to familiarize with the operation of the Group.

 

• Re-election of Directors

In accordance with the Articles of Association of the Company, one-third of the Board of Directors shall retire from office at each Annual General Meeting and, subject to eligibility, may offer themselves for re-election.

 

Directors who are appointment by the Board during any part of the year shall hold office until the next Annual General Meeting of the Company and they shall retire and be eligible for re-election.

 

Directors’ Remuneration

 

The Board has empowered the Remuneration Committee to deliberate, examine and propose the compensation level of remuneration for directors guided by the need to attract and retain directors with the right calibre and experience to run the Group successfully.

 

The Remuneration Committee is placed with the responsibility to set the framework and benchmark values on compensation and benefits in line with market norms and industry practices. The Committee strives to ensure adoption of fair structure of compensation comparable to those organizations of similar size, market sector and business complexity.

 

Details of the Directors’ remuneration for the financial year ended March 31, 2011 are as follows:-

The number of Directors whose remuneration fell within the following bands is shown below:-

The Directors’ fees payable are subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company.

 

 

ACCOUNTABILITY AND AUDIT

 

• Financial Reporting

The Board of SCB acknowledges its responsibility to ensure that the Group’s financial statement presents a true and fair assessment of the state of affairs and are in accordance with the applicable and approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

 

The Board is also committed to provide the highest level of disclosure possible to ensure integrity and consistency of financial reports

 

The Group publishes full financial statements annually and condensed financial statements quarterly as required by Bursa Malaysia Securities Berhad Listing Requirements.

 

The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, adequacy and completeness. The Statement by the Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 103 of this Annual Report.

 

The Statement of Directors’ Responsibility is also enclosed in page 104 of this Annual Report. (Download Annual Report)

 

• Internal Control

The Board of SCB acknowledges its overall responsibility for continuous maintenance of a sound system of internal control to safeguard shareholders’ investments and Company’s assets.

 

The Internal Audit function which was outsourced, acts as support to the Board through the Audit Committee to undertake review, assess and provide feedbacks on the effectiveness of the internal control systems in place and the compliance of the operating system to such controls. The Internal Auditor reports to the Board’s Audit Committee which reviews the tasks and results of the audit assignment periodically. The Internal Auditor operates independently from the management of the Group.

 

In line with the requirement of the Bursa Malaysia Securities Berhad, a Statement on Internal Control is set out from pages 24 to 25 in this Annual Report. (Download Annual Report)

• Relationship With Auditors

The Group’s internal and external auditors continue to provide independent assurance to shareholders on the Group’s operational controls and financial statements. The Group, through the Audit Committee, has established a transparent and appropriate relationship with the auditors to meet their professional requirements.

 

The auditors are invited to attend the Audit Committee meetings as and when required apart from the scheduled meeting. During such meetings, the auditors highlight and discuss the nature, scope of the audit, internal controls and problems that may require the attention of the Board.

 

During the year under review, the Audit Committee met a total of two (2) times with the external auditors. Meetings with auditors were held without the presence of the management.

 

SHAREHOLDERS’ COMMUNICATIONS

 

The Board is continuously maintaining adequate communication with shareholders by dissemination of information on performance and strategic decisions via the distribution of Annual Reports, Circulars, Quarterly Financial Reports, press releases and announcements.

 

The Annual General Meeting (“AGM”) of the Group provides a forum for shareholders to participate effectively in the deliberation on the Group’s affairs including resolutions tabled at the AGM. All shareholders will have direct access to Board members at this AGM.

 

STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF THE CODE

 

In compliance with the Best Practices of the Code, the Board hereby provides the assurance that it has maintained a high standard of corporate governance throughout the Group and has strived to achieve the highest level of integrity and ethical standard in all its business dealings.

 

This statement is made in accordance with the resolution of the Board of Directors dated June 13, 2011.