MISC Integrated Annual Report 2020

MISC’s commitment to upholding shareholders’ interests and the solid embodiment of corporate governance (CG) across the MISC Group continues to garner recognition, as MISC clinched the top spot as 2020’s winner for ‘Most Organised Investor Relations’ and ‘Most Consistent Dividend Policy’ at the Alpha Southeast Asia’s 10 th Annual Institutional Investor Corporate Awards 2020. MISC also retained its position as second runner-up in the ‘Strongest Adherence to Corporate Governance’ category. In the FTSE4Good Bursa Malaysia Index of 2020, MISC maintained the full marks in Governance for a second consecutive year and was ranked in the top 25% by Environmental, Social and Governance (ESG) Ratings amongst public listed companies in Malaysia that were assessed. 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. CG forms one of the pillars which uphold MISC’s sustainability strategy. Hence, the Board strives to ensure that MISC’s CG practices conform to the best practice recommendations of 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 12 Intended Outcomes with some deviations from the MCCG 2017 Practices. 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 prescribed in the MCCG 2017: This CG Overview Statement should be read together with the Company’s CG Report 2020 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. Principle A Board Leadership and Effectiveness Principle B Effective Audit and Risk Management Principle C Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS 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 and the individual Directors’ 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 the 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 (3) 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 three Board Committees, namely the Board Audit Committee (BAC), the Nomination and Remuneration Committee (NRC) and the recently formed Board Governance and Risk Committee (BGRC). All three Board Committees operate under their respective Terms of Reference. Nevertheless, the Board is ultimately accountable and responsible for the affairs and business of MISC. The BAC provides oversight on the financial reporting process and internal control framework and policies as well as MISC’s Whistleblowing Policy, whistleblowing management process and actions thereon. The NRC provides oversight on Board performance, Board composition and diversity, Directors’ skills and experience, Directors’ induction and continuous training programmes, remuneration of Directors, Senior Management and employees, and succession planning for the Board and Senior Management. As per our announcement to Bursa Securities on 10 December 2020, the Board had approved the establishment of the BGRC with effect from 1 January 2021, pursuant to Step Up Practice 9.3 of the MCCG 2017. The BGRC provides oversight on the risk management framework, policies and process as well as the sustainability strategy, whilst also monitoring governance practices and ensuring effectiveness of the compliance and ethics strategy. For more information on the Board Committees, please refer to their respective reports on pages 282 to 289 (for the BAC), pages 275 to 281 (for the NRC) and pages 290 to 293 (for the BGRC) of this Integrated Annual Report. CORPORATE GOVERNANCE OVERVIEW STATEMENT STAKEHOLDERS • Customers • Employees • Community • Shareholders • Environment • Regulators BOARD OF DIRECTORS BOARD GOVERNANCE & RISK COMMITTEE BOARD NOMINATION & REMUNERATION COMMITTEE BOARD AUDIT COMMITTEE ASSURANCE PROVIDERS • Group Internal Audit • External Audit • Risk Management Committee* *comprises MC Members & Senior Management BUSINESS SEGMENTS • LNG Asset Solutions • Petroleum & Product Shipping • Offshore Business • Integrated Marine Services DIVISIONS • Finance • Corporate Planning • Human Resource Management • Legal, Corporate Secretarial & Compliance PRESIDENT/GROUP CEO MANAGEMENT COMMITTEE • Marine & Heavy Engineering • Port Management & Maritime Services • Maritime Education & Training • Digital Ventures 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. /////// Business Review / Leadership / Governance / Financial Statements / Additional Information / MISC Berhad / Integrated Annual Report 2020 9 260 MISC Berhad / Integrated Annual Report 2020 9 261 / Additional Information / Financial Statements / Governance / Leadership / Business Review /////// Section Section