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Terms of Reference

This Terms of Reference sets out the matters concerning the governance of the Nomination and Remuneration Committee (“NRC” or the “Committee”).

 

1. Purpose

  1. The purpose of the NRC is to assist the Board of Directors (“Board”) in ensuring that the appointment and remuneration of Board members and Senior Management of Chemical Company of Malaysia Berhad (“CCMB” or the “Company”) and its subsidiaries (collectively referred to as the “Group”) are underpinned by robust processes and procedures.
  2. In the exercise of its functions, it is understood that the NRC is not delegated with decision-making powers but shall report its recommendations to the Board for decision. The existence of the NRC does not diminish the Board’s ultimate statutory and fiduciary responsibility for the decision-making relating to the functions and duties of the Committee.

 

2. Composition

  1. Size
    1. The Committee shall comprise at least three (3) members.
  2. Membership
    1. All the Committee members shall be Non-Executive Directors, with majority being Independent Directors (paragraph 15.08A(1) of Main Market Listing Requirements by Bursa Malaysia Securities Berhad and Guidance on Practice 6.2, Malaysian Code on Corporate Governance)
  1. Chairman of the committee
  1. The Chairman of the Committee shall be an Independent Director or the Senior Independent Director (Practice 4.7, Malaysian Code on Corporate Governance); and
  2. The Chairman of the Committee shall not be the Chairman of the Board.
  1. Secretary of the committee
  1. The Secretary of the Committee shall be the Company Secretary.

 

3. Appointment of members

  1. The Board shall determine the appointment of NRC members;
  2. Members shall be appointed based on their ability to devote time, character, integrity, competence and experience relevant to their duties of NRC; and
  3. The members serving the Committee shall be refreshed at appropriate and regular intervals. In order to ensure that the entire Committee is not replaced at any one time and the change does not affect the composition in terms of compliance with legislative promulgations, such change of members shall be done on a progressive basis.

 

4. Performance evaluation

  1. The effectiveness of the NRC as a Board Committee (including skills mix and contribution of members) shall be assessed annually. The assessment shall be facilitated using a self and peer rating assessment model and the outcome of the assessment shall be discussed with the Chairman of the Board, led by the Chairman of the NRC.

 

5. Duties of the Chairman of the Committee

  1. The key duties of the Chairman of NRC shall include the following:
  1. Lead the succession planning and appointment of Board members, including the future Chairman and CEO (Guidance to Practice 4.7, Malaysian Code on Corporate Governance);
  2. Lead the annual review of Board skill sets matrix and Board effectiveness evaluation, ensuring that performance of the Board, each individual Board Committee and Director (including Independent Directors) is independently assessed (Guidance to Practice 4.7, Malaysian Code on Corporate Governance); and
  3. Lead the development and administration of a fair and transparent procedure for setting policy on remuneration of Directors and Senior Management.

 

6. Duties of the Committee

  1. The duties of the committee in relation to nomination function are to:
    1. Set and approve Group’s nomination policy including ensuring that the appointment of Board and Senior Management members is based on the candidate’s character, experience, integrity, competence and ability to devote time, with due regard for diversity in skills, experience, age, cultural background and gender (paragraph 2.20A of Main Market Listing Requirements by Bursa Malaysia Securities Berhad and Practice 4.4, Malaysian Code on Corporate Governance);
    2. Recommend candidates for directorships in the Group. In carrying out this function, the NRC shall utlise independent sources (e.g. search firms, directors’  registry) to identify suitably qualified candidates, apart from recommendations of existing Board members, Management or major shareholders (Guidance to Practice 4.6, Malaysian Code on Corporate Governance);
    3. Recommend Directors to be appointed to the Board Committees;
    4. Recommend to the Board on whether Directors retiring by rotation should be put forth for re-election;
    5. Watch for indicators of entrenchment amongst long-serving Independent Directors and  review the suitability of Independent Directors for re-election in accordance with the Company’s policy; and
    6. Ensure that an appropriate succession framework and plan is in place for Board and Management.
  1. The duties of the committee in relation to the evaluation process are to:
    1. Ensure that prior to the appointment of new Directors and Senior Management members, a complete evaluation is performed based on the Group’s policy to assess the candidates’ ability to discharge their duties effectively. The evaluation shall consider the dimensions of character, experience, integrity, competence and time (paragraph 2.20A of Main Market Listing Requirements by Bursa Malaysia Securities Berhad);
    2. Undertake a formal and objective annual evaluation to determine the effectiveness of the Board, Board Committees and each individual Director, including Independent Directors based on a predetermined criteria (Practice 5.1 of Malaysian Code on Corporate Governance); and
    3. Supervise and assess Senior Management’s performance to determine whether the business is properly managed by overseeing key performance indicators that are monitored by the Managing Director (Guidance to Practice 1.1 of Malaysian Code on Corporate Governance).
  2. The duties of the committee in relation to induction and training programmes are to:
    1. Oversee the development of induction programme for new Directors; and
    2. Evaluate and determine on a continuous basis the training needs of the Directors, in which the subject matter of training must be one that aids the Director in the discharge of his/her duties as a Director [paragraph 15.08(2) of Main Market Listing Requirements by Bursa Malaysia Securities Berhad].
  3. The duties of the committee in relation to remuneration function are to:
    1. Review policies and procedures to determine the remuneration of Directors and Senior Management, which take into account the demands, complexities and performance of the Group as well as skills and experience required;
    2. Review and recommend to the Board the remuneration package of Executive Directors;
    3. Review and recommend to the Board the annual increment and bonus package for non-unionised employees of the Company;
    4. Review and recommend to the Board on any new Employees’ Share Options Scheme of the Group and/or amendments to the existing scheme; and
    5. Oversee the qualitative and quantitative disclosures of remuneration made in the annual report and notice to general meetings, pursuant to legislative promulgations.

 

7. Meetings

  1. Meeting frequencies and calling of meetings
    1. The Committee shall meet at least twice a year, or as frequently a the circumstances dictate; and
    2. Additional meetings shall be scheduled as considered necessary by the Committee or Chairman of the NRC. The Chairman of the Committee shall call for a meeting if requested to do so by the Chairman of the Board or requested by another member of the Committee.
  2. Quorum and participation
    1. The quorum for the Committee shall be two (2) members and one of whom shall be an Independent Director.
    2. In the event the Chairman is unable to be present for a meeting, the members who are present at the meeting can appoint a Chairman among themselves to chair the meeting;
    3. Each individual Committee member shall attend at least 50% of the Committee meetings held during the financial year;
    4. The Committee may request other Directors, members of Management, counsels or consultants to attend the Committee meetings by invitation if necessary; and
    5. The meetings shall convene in a face-to-face manner. If a member is unable to be present at the meeting venue, his/her participation through tele/video-conferencing or other appropriate means may be permitted.
  3. Notice on meetings and information flow
    1. Notice of the Committee’s meeting shall be sent to all members in a timely manner, which should include the date, time, venue and the agenda of the meeting (Paragraph 4- notice on meetings, Third Schedule of Companies Act 2016);
    2. The NRC meeting agendas shall be developed by the Chairman of the NRC and the Secretary in consultation with Management;
    3. The Chairman of the NRC together with the Company Secretary shall ensure that sufficient information such as the agenda and accompanying meeting materials for each meeting are circulated at least five (5) business days before each meeting to the Committee members and all those who are invited to attend the meeting, where applicable (Guidance to Practice 1.5, Malaysian Code on Corporate Governance).
  4. Voting
    1. A matter put to vote at the Committee meetings shall be decided by a simple majority of the votes cast and in the event of an equality of votes, the Chairman of the meeting has the casting vote. A member of the Committee who has an interest or is involved directly or indirectly in any matter under consideration by the meeting, shall not participate in the voting process.
  5. Meeting minutes
    1. The Committee shall cause minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the Committee (Paragraph 13, Third Schedule of Companies Act 2016);
    2. The minutes 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 if so signed, shall be conclusive and contemporaneous evidence without any further proof of the facts thereon stated;
    3. All members should ensure that the meeting minutes accurately reflect the deliberations and decisions of the Committee, which includes any dissenting comments made as well as abstention of the members (Guidance to Practice 1.5, Malaysian Code on Corporate Governance); and
    4. The reproduction of any parts of the meeting minutes shall only be performed through or by the Secretary with the approval of the NRC Chairman.
  6. Reporting and disclosure
    1. The reports and confirmed minutes(where available) of each Committee meetings shall be tabled and presented to the Board during the subsequent Board meeting to keep them informed and updated on the key issues deliberated by the Committee, clearly demonstrating the Committee’s decisions which necessitate Board’s approval or ratification.
    2. The NRC must provide, in the Company’s annual report, a statement about its activities in the discharge of its duties for the financial year (paragraph 15.08A of Main Market Listing Requirements by Bursa Malaysia Securities Berhad).
    3. The NRC shall oversee the disclosures made in the accompanying materials of the resolution in the notice to General Meetings on the election or re-election of a Director. This includes the justification provided to recommend or not to recommend the candidate’s appointment.

 

8. Authority

  1. Unless otherwise provided by or subject to any applicable laws or legislative requirements, the Committee shall have the permission to obtain resources needed to fulfil its duties and responsibilities as set out in this Terms of Reference based on an agreed-upon procedure and at the expense of the Group, such as:
  2. to obtain professional and independent advice from external advisors with relevant knowledge and experience, either through the Group Managing Director or Company Secretary’s office, when it is deemed necessary; and
  3. full and unrestricted access to information concerning the Group.

 

9. Review and amendments of the Terms of Reference

  1. This Terms of Reference has been approved by the Board. The Board shall review this Terms of Reference periodically and make amendments when necessary; and
  2. The Secretary of the Committee shall ensure that the provisions of this Terms of Reference continue to comply with legal requirements and corporate governance enumerations applicable to the Group and, if necessary, shall suggest amendments to the Terms of Reference for consideration by the Board.

 

 

 

Last updated : 20 Sep 2018

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