Board Independence The Board recognises the important contributions that Independent NEDs make to good corporate governance. All Directors, regardless of their independent status, are required to act in the best interests of Bank Islam and to exercise unfettered and independent judgement. The Independent NEDs play a pivotal role in Board deliberations and decision-making by bringing fresh perspectives, scrutiny and impartiality. Board decisions are made taking into account the views of Independent NEDs which carry substantial weight. Their role is especially critical for related party transactions where independence of judgement and impartiality are essential to safeguard the interests of minority shareholders. As of the date of this Statement all Independent NEDs satisfy the following criteria: ✓ independent from Management and free from any business or other relationship which could interfere with independent judgement or the ability to act in the best interest of the Company; ✓ not involved in the day-to-day operations of the Company; ✓ declare their interests in any possible conflict of interest in any matter tabled prior to the commencement of Board meetings. In a situation where there is a conflict of interest, Directors are required to recuse themselves and abstain from deliberation and decision-making; ✓ tenure of not more than nine (9) years; and ✓ not involved in any significant business or contractual relationship with a value of above RM10 million. Under the Amendments to the MMLR of Bursa Malaysia (effected on 19 January 2022), the limit on the tenure of an independent director is twelve (12) years. As stipulated under the Board Charter, an Independent NED is subject to a maximum tenure of nine (9) years. An Independent NED who has served for nine (9) years, may, subject to the shareholder and BNM’s approval, continue to serve Bank Islam in the capacity of an Independent NED. In any event, no Independent NED will continue to serve the Board for more than twelve (12) years. An Independent NED is required to inform the BNRC of any changes in circumstances that could impact their independence status. Throughout the financial year being assessed, all Independent NEDs have confirmed and reaffirmed their independence. Additionally, they have successfully completed the annual ‘independence’ assessment and Fit and Proper evaluation to mitigate any possible conflicts of interest. Following notification, the Board conducts a review and assesses the Independent NED’s independence status, guided by the recommendations of the BNRC. Additionally, all Independent NEDs have an ongoing obligation to inform the Board of any circumstances which could impair their independence. The independence of the Directors is reviewed annually and benchmarked against best practices and regulatory provisions. The BNRC assesses the independence of the Independent NEDs through the BEE exercise and Directors’ self-declaration. The BEE takes into consideration the individual Director’s ability to exercise independent judgement at all times and to contribute to the effective functioning of the Board. Based on the BEE results, the Board is generally satisfied with the level of independence demonstrated by all Independent NEDs and their ability to act in the best interest of Bank Islam. All Directors are required to disclose, at every Board meeting, if they have any interest or any possible or potential conflict of interest on matters put forward for deliberation and approval in the meeting. The interested Director is required to recuse himself or herself and abstain from deliberation and voting to allow unbiased and free discussion and decisionmaking. The Board has revised the cooling-off period for the appointment of an Independent NED from two (2) years to three (3) years following the amendment to the MMLR of Bursa Securities whereat the definition of independent directors was enhanced. 211 1 2 3 4 5 6 7 8 9 www.bankislam.com ACCOUNTABILITY
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