MISC Annual Report 2019

2019 was a year of validation and recognition of MISC’s drive towards sound corporate governance (CG) practices. The Company was named as second runner-up in the “Strongest Adherence to Corporate Governance” category at the Alpha Southeast Asia’s 9th Annual Institutional Investor Awards for Corporates 2019 held on 17 September 2019 in Singapore. The Malaysian Institute of Corporate Governance (MICG) 2019 Report ranked MISC amongst the top ten best-scoring listed companies in corporate reporting transparency. MISC firmly believes that sound CG practices are fundamental towards winning investors’ confidence and are pre-requisites to achieving the Company’s ultimate objectives of enhancing long-term shareholder value and protecting stakeholders’ interests. Hence, the Board strives to ensure that MISC’s CG practices conform to the best practice recommendations as laid down in the Malaysian Code on Corporate Governance 2017 (MCCG 2017) and comply with the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Securities). MISC has subscribed to all twelve Intended Outcomes with some deviations on the Practices of the MCCG 2017. This CG Overview Statement seeks to provide investors and stakeholders with insights into the CG practices of MISC, specifically the following three key CG Principles as set out in the MCCG 2017: Corporate Governance Overview Statement PRINCIPLE A: Board Leadership & Effectiveness This CG Overview Statement should be read together with the Company’s CG Report 2019 which is available on our website at www.misc.com.my. Our Corporate Governance Framework The CG framework of MISC, as depicted below, is reflective of the way strategic and operational activities are managed. The compositions of the Board Committees and Management are designed based on the respective areas of knowledge and expertise. The CG framework is supplemented by the Board Charter, Terms of Reference of the respective Board Committees and the MISC Limits of Authority (LOA). MISC’s Marine & Heavy Engineering business resides in a separate listed entity within the Group with its own CG framework which is modelled based on MISC’s CG framework. Principle A Board Leadership & Effectiveness Principle B Effective Audit & Risk Management Principle C Integrity in Corporate Reporting & Meaningful Relationship with Stakeholders STAKEHOLDERS • Customers • Employees • Community • Shareholders • Environment BOARD OF DIRECTORS PRESIDENT/GROUP CEO MANAGEMENT COMMITTEE ASSURANCE PROVIDERS • Group Internal Audit • External Audit • Risk Management Committee* *comprises MC Members & Senior Management BOARD NOMINATION & REMUNERATION COMMITTEE BOARD AUDIT & RISK COMMITTEE BUSINESS SEGMENTS • LNG Asset Solutions • Petroleum & Product Shipping • Offshore Business DIVISIONS • Finance • Corporate Planning • Human Resource Management • Legal, Corporate Secretarial & Compliance Board Purpose The Board has the overall responsibility for providing oversight and stewardship to MISC in executing the Company’s objectives. The Board understands its responsibility to exercise good governance and is guided by the principles and best practices as stated in the MCCG 2017. Board Charter In discharging the Board’s duties and responsibilities effectively, the Board is guided by the MISC Board Charter, which provides the framework for the performance of the Board’s function and duties vis- à-vis Management and the Company. The MISC Board Charter outlines amongst others the Board’s roles and responsibilities, processes, functions and development, in order to attain efficiency in Board performance. The MISC Board Charter is consistent with the practices set out in the MCCG 2017. For more information on the MISC Board Charter, please visit www.misc.com.my . Board Roles and Responsibilities In discharging its fiduciary and leadership functions, the main roles and responsibilities of the Board are as follows: • Establishing a strategic plan and setting of targets for the Company in line with the Company’s vision, mission and business objectives which supports long-term value creation and includes a sustainability agenda; • Overseeing the conduct and performance of the Company and of the President/Group CEO against set goals and objectives; • Upholding, together with Senior Management, good CG culture and business conduct within the Company and its employees, which reinforces ethical, prudent and professional behaviour; • Identifying and understanding the principal risks of the Company and setting the Company’s risk appetite and ensuring the implementation of appropriate systems to evaluate, monitor and manage these risks; • Establishing an effective risk management and internal control framework, including regular review of the adequacy and the effectiveness of the framework; • Reviewing the Company’s strategic, capital or funding transactions and monitoring execution of these transactions; • Ensuring the integrity and adequacy of the Company’s financial and non-financial reporting and disclosure; • Ensuring sound succession plan and continuous development of human capital, particularly the Senior Management, and ensuring there are measures in place for the orderly succession of Board and Senior Management; and • Developing and implementing an investor relations programme and putting in place procedures to enable effective communications with the stakeholders of the Company. Matters reserved for the Board are clearly defined in the MISC LOA, which provides a clear demarcation between the responsibilities of the Board and Management. Board-reserved matters are generally divided into three categories: 1. Statutory decisions for MISC based on regulatory and statutory requirements; 2. Strategic decisions for MISC Group; and 3. Operational decisions for MISC Group that are of high importance and value. To facilitate an effective and efficient discharge of the Board’s duties and responsibilities, the Board is complemented by two Board Committees, namely the Board Audit & Risk Committee (BARC) and the Nomination & Remuneration Committee (NRC), which operate under their respective Terms of Reference. Nevertheless, the Board is ultimately accountable and responsible for the affairs and business of MISC. The BARC provides oversight on governance, financial reporting, risk management and internal control. The BARC is also responsible for the risk appetite setting for the Company in managing the key risks affecting the Company and has oversight on MISC’s whistleblowing management framework and process. The NRC provides oversight on Board performance, Board composition and diversity, Directors’ skills and experience, Directors’ induction and continuous training programmes, remuneration of Directors and Senior Management, and succession planning for the Board and Senior Management. For more information on the Board Committees, please refer to their respective reports on pages 212 to 219 (for the BARC) and pages 204 to 210 (for the NRC) of this Annual Report. • Integrated Marine Services • Marine & Heavy Engineering • Port Management & Maritime Services 191 190 OUR GOVERNANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019