ANALYSIS OF COMPLIANCE MCCG 2012: GENTING PLANTATIONS BERHAD

PRINCIPLE 1: ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

The responsibilities of the board, which should be set out in a board charter, include management oversight, setting strategic direction premised on sustainability and promoting ethical conduct in business dealings.

Recommendation 1.1

The board should establish clear functions reserved for the board and those delegated to management.

- The Board has 7 members, comprising one Executive Director, one Non-Independent Non-Executive Director and five Independent Non-Executive Directors which are:

1 Executive Director Tan Sri Lim Kok Thay

1 Non-Independent Non-Executive Director Mr Lim Keong Hui

5 Independent Non-Executive Directors Gen. (B) Tan Sri Mohd Zahidi Bin Hj Zainuddin

Encik Mohd Din Jusoh

Lt. Gen. (B) Dato’ Abdul Ghani Bin Abdullah

Mr Quah Chek Tin

Mr Ching Yew Chye

- The Board has a formal schedule of matters specifically reserved for its decision: Overall strategic direction, annual operating plan, capital expenditure plan, material acquisitions and disposals, material capital projects and the monitoring of the Group’s operating and financial performance.

- The Board meets on a quarterly basis and additionally as required. Quarterly Meetings are scheduled in advance annually for the Directors to plan ahead of their schedules. The Board reviews the performance of the Company and its major operating unlisted subsidiaries, risk management and compliance reports and approves the quarterly results of the Group. The Board tracks the performance of the management against the annual plan submitted for each financial year.

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Recommendation 1.2

The board should establish clear roles and responsibilities in discharging its fiduciary and leadership functions.

Reviewing and adopting a strategic plan for the Group.

Overseeing and evaluating the conduct of the Group’s businesses.

Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks.

Establishing a succession plan for senior management.

Overseeing the development and implementation of a shareholder communication policy for the Company.

Reviewing the adequacy and the integrity of the management information and internal control system of the Group.

Formulation of corporate policies and strategies.

Approving key matters such as major investments and divestments, major acquisitions and disposals and major capital expenditure in accordance with the limits of authority.

Recommendation 1.3

The board should formalise ethical standards through a code of conduct and ensure its compliance.

- The Director observes the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia (CCM) which can be viewed from CCM’s website at www.ssm.com.my. (Suruhanjaya Syarikat Malaysia).

Recommendation 1.4

The board should ensure that the company’s strategies promote sustainability.

- The Group is committed to operating in a sustainable manner and seeks to contribute positively to the well-being of stakeholders. A guiding principle in Genting Plantations Berhad’s Corporate Responsibility statement has been setting out, which articulates their aspiration to achieve a balanced integration of ethical, social, environmental and economic considerations in the way to conduct the business to create sustainable long-term value for the stakeholders. Proactive engagement and constructive programmes initiated across the four pillars of Environment, Community, Workplace and

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Marketplace. The Group continued along this path in 2012, guided by a fundamental commitment to doing business in a responsible manner. Below are some of the examples of four pillars:

Environment

Adoption of well-established, internationally-recognised standards of operations.

A formal zero burning policy is strictly enforced, prohibiting open burning for land clearing or any other purposes at operating units.

Participates annually in the WWF’s Earth Hour event.

Community

Developing a good rapport based on mutual trust and respect.

Regularly holds carnivals, sports tournaments and family-oriented events to strengthen community ties.

Has a partnership with the non-profit Borneo Child Aid Society, providing funds and assistance to build and run classrooms for underprivileged children.

Workplace

To provide a working environment that is safe, healthy and conducive to continuous employee development.

Workers are rewarded fairly based on competitive remuneration schemes.

Recreational activities such as staff trips, sports activities, celebrations of major cultural and religious festivals, annual dinners and other events are held regularly.

Marketplace

Promoting responsible practices among business partners.

Good corporate governance also entails a commitment to transparency and accountability in engaging with shareholders.

Relationships with existing and prospective investors are managed through a strategic approach to investor relations.

Recommendation 1.5

Board should have procedures to allow its members access to information and advice.

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- Notice of meetings setting out the agenda and accompanied by the relevant Board papers

are given to the Directors in sufficient time to enable the Directors to peruse, obtain

additional information and/or seek further clarification on the matters to be deliberated.

Tapping into the advancement of information technology, the Company has implemented

the delivery and supply of information for Board meetings electronically.

Recommendation 1.6

The board should ensure it is supported by a suitably qualified and competent company

secretary.

- Directors have access to all information and records of the Company and also the advice

and services of the Company Secretary. The Company Secretary, Ms Loh Bee Hong, who

is qualified, experienced and competent (18 years of experiences in company secretarial

services), advises the Board on any updates relating to new statutory and regulatory

requirements pertaining to the duties and responsibilities of Directors. The Company

Secretary organises and attends all Board and Board Committee meetings and ensures

meetings are properly convened and that accurate and proper records of the proceedings

and resolutions passed are taken and maintained at the Registered Office of the Company.

Recommendation 1.7

The board should formalise, periodically review and make public its board charter.

- The Board has overall responsibility for the proper conduct of the Company’s business

and has formally adopted a Board Charter in November 2012 that clearly sets out the

respective roles and responsibilities of the Board and the management to ensure

accountability. The Board Charter is made available on the Company’s website and will

be periodically reviewed and updated to take into consideration the needs of the

Company as well as any development in rules and regulations that may have an impact

on the discharge of the Board’s duties and responsibilities.

PRINCIPLE 2: STRENGTHEN COMPOSITION

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The board should have transparent policies and procedures that will assist in the selection

of the board members. The board should comprise members who bring value to the board

deliberation.

Recommendation 2.1

The board should establish a Nominating Committee which should comprise exclusively of non-

executive directors, a majority of whom must be independent.

- Since 2002, the board has established the formal board committee namely, Nomination

Committee and Remuneration Committee. Three of the five Independent Non-Executive

Directors participate in the Nomination Committee. This committee met once during the

financial year. Nomination Committee is responsible to identify and recommend to the

Board suitable candidates for appointment to the Board and Board Committees.

Recommendation 2.2

The Nominating Committee should develop, maintain and review the criteria to be used in the

recruitment process and annual assessment of directors.

- The board should have transparent policies and procedure that will assist in the selection

of the board. The members of the Nomination Committee comprising entirely

Independent Non-Executive Directors. By establishing a Nominating Committee, it will

contribute towards ensuring that board composition meets the needs of the company.

The Nomination Committee of Genting Plantations Berhad would meet up with the

potential candidates to assess their suitability based on a prescribed set of criteria. For

example:

a.) The potential candidate are required to declare and confirm in writing their current

directorships, which he/she is not an undischarged bankrupt, or is involved in any court

proceeding by regulatory authority under any legislation.

b.) The group strictly adhered to the practice of non-discrimination of any form, whether

based on age, gender, race or religion throughout the organization.

Recommendation 2.3

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The board should establish formal and transparent remuneration policies and procedures to

attract and retain directors.

- The board should comprise members who bring value to the board deliberation. The

Board agreed that ultimately the Independent Directors themselves are the best person to

determine whether they can continue to bring independent and objective judgment to

board deliberations. The board meets on a quarterly basis and additionally as required.

During the year under review, four meetings of the board were held and all Directors

have complied with the requirement in respect of board meeting attendance.

- Meanwhile, the Remuneration Committee consists of two of five Independent Non-

Executive Directors and they met three times during the financial year. The

Remuneration Committee is responsible for making recommendations to the Board on

the remuneration packages of executive director and members of the Board Committee.

The Board as a whole, determines the level of fees of non-executive Directors and

executive Directors. Directors’ fees are approved at the Annual General Meeting by the

shareholders. Directors do not participate in decisions regarding their own remuneration

packages.

DIRECTORS’ REMUNERATION

Non-Executive Directors *

Fees

Salaries and bonuses

Defined contribution plans

Provision for retirement gratuities

Executive Director

Fees

Salaries and bonuses

Defined contribution plans

Provision for retirement gratuities

PRINCIPLE 3: REINFORCE INDEPENDENCE

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The board should have policies and procedures to ensure effectiveness of independent

director.

Recommendation 3.1

The board should undertake an assessment of its independent directors annually.

- The Board of Genting Plantations Berhad had adopted the same criteria used in the

definition of “independent directors” prescribed by the Main Market Listing

Requirement (MMLR) but excluding the tenure prescribed by MCCG 2012.

Recommendation 3.2

The tenure of an independent director should not exceed a cumulative term of nine years. Upon

completion of the nine years, an independent director may continue to serve on the board subject

to the director’s re-designation as a non-independent director.

- The Board assesses the independence of the Directors annually by having regard to the

criteria adopted for assessing the independence of Directors. The Board would apply

these criteria upon admission, annually and when any new interest or relationship

develops. Pursuant to the Main Market Listing Requirements, at any one time, at least

two (2) or one-third (1/3), whichever is the higher, of the Board members should

comprise “Independent Directors” by MMLR.

Recommendation 3.3

The board must justify and seek shareholders’ approval in the event it retains as an independent

director, a person who has served in that capacity for more than nine years.

- Encik Mohd Din Jusoh who has been an Independent Non-Executive Director of the

Company since 12 June 1980, will continue to be an Independent Director of the

Company, notwithstanding having served as an independent director on the Board for

more than nine years. (The Board is of the view that the ability of long serving

independent directors to remain independent and to discharge their duties with integrity

and competency should not be measured solely by tenure of service or any pre-

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determined age. Therefore, the board is allow to seek shareholders’ approval for

independent directors after 9 years tenure to remain as an independent directors do not

arise in Genting Plantations Berhad.)

Recommendation 3.4

The positions of chairman and CEO should be held by different individuals, and the chairman

must be a non-executive member of the board.

- Chairman: Gen. (B) Tan Sri Mohd Zahidi bin Hj Zainuddin, an Independent Non-

Executive Director: Ensures the smooth and effective functioning of the Board.

- Chief Executive: Tan Sri Lim Kok Thay: Responsible for the vision and strategic

directions of the Group as well as initiating innovative ideas to create competitive edge

and development of business and corporate strategies.

Recommendation 3.5

The board must comprise a majority of independent directors where the chairman of the board is

not an independent director.

- 71% of the boards are Non-Independent Non-Executive Director which is five over

seven.

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PRINCIPLE 4: FOSTER COMMITMENT

Directors should devote sufficient time to carry out their responsibilities, regularly update

their knowledge and enhance their skills.

Recommendation 4.1

The board should set out expectations on time commitment for its members and protocols for

accepting new directorships.

- Directors of Genting Plantations Berhad should devote on time commitment for its

members and exposed their sufficient to carry out their responsibilities. As evidence, all

directors member retired once in every three years, but they still can re-election. They

also subject to retirement by rotation at each annual general meeting. The chairman also

notifies all the board members before accepting directorships in public and public listed

companies incorporated in Malaysia.

Recommendation 4.2

The board should ensure its members have access to appropriate continuing education

programmes.

- All the Directors should regularly update knowledge and enhance their skills through

attending themselves in courses whether in-house or external. As evidence, all the

directors have attended the Mandatory Accreditation Programme. Four out of seven

from director members also attend Seminar on the Malaysian Code on Corporate

Governance 2012, while three out of seven from director members attend Tan Sri Lim

Goh Tong Public Lecture 2012 on Macroeconomic Challenges.

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PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING

The board should ensure financial statements are a reliable source of information.

Recommendation 5.1

The Audit Committee should ensure financial statements comply with applicable financial

reporting standards.

- According to this principle, the Genting Plantation Berhad had established Audit

Committee.

The members of Audit Committee are:

a.) Gen.(B) Tan Sri Mohd Zahidi Bin Hj Zainuddin

b.) Encik Mohd Din Jusoh

c.) Lt. Gen. (B) Dato’ Abdul Ghani bin Abdullah

d.) Mr Quah Chek Tin

e.) Mr Ching Yew Chye

- The Audit Committee is require to ensure financial statements are reliable. Therefore, a

statement on Directors’ responsibility was made in accordance with a solution of the

Board dated 27 February 2013 in Page 122 in annual report. The statement stated the

Directors of Genting Plantations Berhad had to make sure all the financial statements

follow the Financial Reporting Standards and reviewed the accounting policies and

practices. Moreover, the statement stated the Directors have relied on the systems of risk

management and internal control to ensure that the information generated for the

preparation of the financial statements from the underlying accounting records is

accurate and reliable.

- Additionally, Tan Wee Kok, as the Chief Financial Officer had made a declaration that

all the financial statements are true and by virtue of the provisions of the Statutory

Declarations Act, 1960 in Page 122 in annual report.

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Recommendation 5.2

The Audit Committee should have policies and procedures to assess the suitability and

independence of external auditors.

- The Audit Committee also had to assess the suitability and Independence of External

Auditors. The external auditors of Genting Plantation Berhad named

PricewaterhouseCoopers. The external auditors had attended the Audit Committee

meetings for presenting their audit plan and comments on the audited financial

statements. The external auditors had disclosed their reports in page 123-124 in annual

report.

- The Audit Committee had to review the external auditors’ comments and reports for re-

appointment on following years. The external auditors had provided a confirmation to

the Audit Committee for their independence and conduct the audit engagement in

accordance with the term of all relevant professional and regulatory requirements. With

this confirmation, the Audit Committee can rely on the external auditors’ independence.

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PRINCIPLE 6: RECOGNIZE AND MANAGE RISKS

The board should establish a sound risk management framework and internal controls

system.

Recommendation 6.1

The board should establish a sound framework to manage risks.

- The Board is responsible for the Group’s risk management framework and system of

internal control and for reviewing their adequacy and integrity. While acknowledging

their responsibility for the system of internal control, the Directors are aware that such a

system is designed to manage rather than eliminate risks and therefore cannot provide an

absolute assurance against material misstatement or loss.

Recommendation 6.2

The board should establish an internal audit function which reports directly to the Audit

Committee.

- To assist the Board in maintaining a sound system of internal control for the purposes of

safeguarding shareholders’ investment and the Group’s assets, the Group has in place,

an adequately resourced internal audit department. The activities of this department

which reports regularly to the Audit Committee provide the Board with much of the

assurance it requires regarding the adequacy and integrity of the system of internal

control. As proper risk management is a significant component of a sound system of

internal control, the Group has also put in place a risk management process to help the

Board in identifying, evaluating and managing risks. The implementation and

maintenance of the risk management process is carried out by the Risk and Business

Continuity Management Committee of the Company.

- Regarding of Genting Plantations Berhad internal control system, it is designed to

manage rather than eliminate risks. The Board and the Audit Committee meet at least

every quarter to discuss matters raised by management, internal audit and the external

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auditors on business and operational matters including potential risks and control issues.

The Board has delegated the responsibilities to relevant committees established by the

Board to implement and monitor the Board’s policies on control. Those requiring the

Board’s approval are documented and designed to ensure accountability and

responsibility. Furthermore, internal procedures and policies are documented in

manuals, which are reviewed and revised periodically to meet changing business,

operational requirements and statutory reporting needs. Performance and cash flow

reports are provided to the Management and EXCO to facilitate review and monitoring

of the financial performance and cash flow position. Business or operating units present

their annual budget, which includes the financial and operating targets, capital

expenditure proposals and performance indicators for approval by the EXCO. A half

yearly review of the annual budget is undertaken by the Management to identify and

where appropriate, to address significant variances from the said budget.

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PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Companies should establish corporate disclosure policies and procedures to ensure

comprehensive, accurate and timely disclosures.

Recommendation 7.1

The board should ensure the company has appropriate corporate disclosure policies and

procedures.

- The Board observes the Corporate Disclosure Guide issued by the Bursa Securities

which can be viewed from Bursa Securities’ website at www.bursamalaysia.com as well

as adhering to and complying with the disclosure requirements of the MMLR.

- The disclosure policies and procedure must be accurate. Five Independent Non-

Executive Directors had provided an annual confirmation of his independence to the

Board based on its policy on criteria in line with prescribed by the MMLR.

- The Group acknowledges the importance of timely and equal dissemination of material

information to the shareholders, investors and public at large. The Company holds

separate quarterly briefings for fund managers, institutional investors and investment

analysts after each quarter’s announcement.

Recommendation 7.2

The board should encourage the company to leverage on information technology for effective

dissemination of information.

- The Group maintains a corporate website at www.gentingplantations.com which

provides information relating to annual reports, press releases, quarterly results,

announcements and investor presentations. In line with the MCCG 2012, the Board

Charter, Memorandum and Articles of Association of the Company and other relevant

and related documents or reports relating to Corporate Governance would be made

available on the aforesaid website. 16

PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

From the MCCG 2012, the board should strengthen the relationship between company

and shareholders in principle 8. Strengthen here means the board reinforce the stronger

connection between company and shareholder in order to increase their understanding

towards the company. This is because shareholders known as company owners. They

have the potential to get the profit if the company does well, but it is also comes with the

potential to lose if the company does poorly on their governance. Usually, shareholders

do not play a major role in running the company. The board of directors and executive

management will perform that function. The right of shareholders including attend the

corporation’s annual meeting to learn about the company’s performance, vote on who sits

on the board of directors and others. They can also listen to the meeting electronically via

conference call and vote by proxy through the mail or online. Besides that, shareholders

help to consult the company’s corporate governance policies.

Recommendation 8.1

The board should take reasonable steps to encourage shareholder participation at general

meetings from the recommendation 8.1 in MCCG 2012. They can inform their shareholders to

attend the company general meeting through a phone call or

- As a guide, Genting Plantations Berhad is therefore, has involved the participation with

shareholders in the Company’s Annual General Meeting. This is because the board

should cooperate with the company to disclose all relevant information to shareholders

to enable them to exercise their rights. The current minimum notice period for notices of

meetings is as prescribed in procedure for dealings under chapter 14 of Main Market

Listing Requirements (MMLR) and the Board is of the view that it is adequate.

However, the board notes the recommendation of the MCCG 2012 to serve notices for

meetings earlier than the minimum notice period and will endeavour to meet this

recommendation for future meetings.

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Recommendation 8.2

The board should encourage poll voting.

- The rights of shareholders in the company including the right to demand for a poll are

found in the Articles of Association of the Company and a copy has been made available

on the Company’s website. Poll voting is vote by the owners directed by the Chair of the

Board of the meeting and usually involves each entitled owner to vote as per their share

of the unit factors. At the Thirty- Fourth Annual General Meeting of the Company held

on 12 June 2012, the Chairman had notified the shareholders of their right to demand a

poll vote at the commencement of the Annual General Meeting. The Board has taken the

requisite steps to look into adopting electronic voting to facilitate greater shareholder

participation at general meetings. The Board also has to ensure accurate and efficient

outcomes of the voting process.

Recommendation 8.3

The board should promote effective communication and proactive engagements with

shareholders.

- Board members and senior management are encouraged to have constructive

engagements with shareholders about performance, corporate governance, and other

matters affecting shareholders’ interests. For this reason, shareholders are encouraged to

participate in the proceedings and ask questions about the resolutions being proposed

and the operations of the Group. The Board has identified Encik Mohd Din Jusoh with

email address of din.jusoh@genting.com to which concerns may be conveyed. Direct

engagement with shareholders helps to provide a greater appreciation of the company’s

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objectives, quality of its management and challenges, and also making the company

aware of their shareholders expectations and concerns.

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