MISC Annual Report 2019

PRINCIPLE B: Effective Risk Management and Internal Control PRINCIPLE C: Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders Corporate Governance Overview Statement Board Audit and Risk Committee (BARC) The BARC was established with the objective of assisting the Board in fulfilling its responsibilities primarily relating to financial management, financial accounting, risk management framework and process, and internal control systems of the Group. The BARC also monitors compliance with established policies and procedures and assesses the suitability, objectivity and independence of both the external and internal audit functions. The Board has deliberated on having a separate Board Risk Committee as recommended by MCCG 2017 and concluded that the current structure of combining the audit, internal control oversight and risk management functions should remain with the BARC, until additional Independent Directors are appointed to the Board. The Terms of Reference of the BARC have been enhanced to reflect the MCCG 2017 best practices. For more information on the BARC and how it has met its responsibilities in 2019, please refer to the BARC Report on pages 212 to 219 of this Annual Report. Risk Management and Internal Control Framework The Board acknowledges its overall responsibility for continuous maintenance of a sound risk management framework and internal control to safeguard shareholders’ investment and the Group’s assets. Over and above the quarterly review by the BARC on risk events, relevant risk appetite and mitigation measures at the enterprise level, the Board reviews the status of risk management activities and the updated Risk Register. The Board also ensures that all relevant project and investment risks, including the mitigation measures, are deliberated when making such decisions. Such Project Risk Assessments encompass, amongst others, project execution risk, contract management risk, counter-party risk, operations risk, geopolitical risk, and asset integrity risk. In relation to reviewing the adequacy and integrity of the Company’s internal control systems (conducted via the BARC), the Board reviewed the reports on Related Party Transactions, Conflict of Interest oversight, Whistleblowing cases and enhanced management processes thereof, and certain improvements to internal controls as highlighted by the Group Internal Audit. For more information on MISC’s risk management and internal control practices, please refer to the BARC Report on pages 212 to 219 of this Annual Report as well as the Statement on Risk Management and Internal Control on pages 220 to 229 of this Annual Report. Investor Relations and Communication with Stakeholders The Board values its dialogue with the investing community, including both the institutional shareholders and private investors, to enhance investors’ understanding of the Group. MISC aims to continuously build and maintain transparent communication with the shareholders, potential investors and the investing community. Through the MISC Group Investor Relations programme, MISC is committed to uphold best practices in CG and ensure timely and equal dissemination of material information to its stakeholders. In 2019, MISC used the following channels/forums to communicate and engage with its stakeholders: • MISC Annual General Meeting; • Quarterly financial reports; • MISC Annual Report; • Announcements on major developments to Bursa Securities; • MISC website at www.misc.com.my; and • Analyst Briefings following the announcement of quarterly financial reports. For more information on MISC’s engagement with stakeholders in 2019, please refer to the Stakeholder Engagement section on pages 72 to 75 of this Annual Report. Integrated Reporting MISC is moving towards adopting integrated reporting based on a globally recognised framework with a view of helping our stakeholders understand how MISC creates value and to promote greater transparency and accountability on the part of the Company, in line with the MCCG 2017. The adoption of integrated reporting has been implemented on staggered basis since 2018 and certain sections of MISC Annual Report 2019 have already been prepared based on the integrated reporting framework. Conduct of Annual General Meeting (AGM) The MISC AGM is the principal forum for dialogue with our shareholders and an avenue for the Chairman and Board members to interact with the shareholders. The Chairman plays a pivotal role in accommodating constructive dialogue between shareholders and the Board. The shareholders are strongly encouraged to attend, participate, speak and vote at the Company’s AGM, and all queries posed to the Board prior to and during the AGM are responded to accordingly. The following are some measures taken by MISC to encourage attendance and participation from the shareholders at the AGM: • Shareholders who are unable to attend the AGM may appoint up to two proxies to attend, participate, speak and vote at the meeting on their behalf; • The Management Committee members and External Auditors of MISC are present at the AGM to support the Board in addressing any questions or concerns raised by the shareholders; • Questions raised by the Minority Shareholders Watch Group (MSWG) prior to the AGM are shared with the shareholders during the AGM together with the Company’s responses thereto; and • The President/Group CEO will present highlights of MISC Group’s performance prior to the formal proceedings of the AGM and responds to queries from shareholders. The AGM is scheduled in advance of any new financial year to facilitate Board members to plan and fit the year’s AGM into their schedules. In 2019, all nine Board members attended the AGM. The Notice of AGM is issued twenty-eight days prior to the AGM, as recommended by the MCCG 2017. Voting at the AGM is conducted via electronic polling, in compliance with the MMLR. The polling process is explained clearly during the AGM to ensure a smooth and pleasant voting experience by the shareholder. Poll results are verified by appointed scrutineers prior to the Chairman’s announcement of the outcome. In relation to the recommendation by MCCG 2017 for listed companies with a large number of shareholders to leverage on technology to facilitate voting in absentia and remote shareholders’ participation at general meetings, MISC will consider the recommendations subject to the availability of the technology and also its practicality to the Company. This CG Overview Statement is made in accordance with the resolution of the Board of Directors passed on 26 February 2020. 203 202 OUR GOVERNANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019