Professional Documents
Culture Documents
BBCG3103
CORPORATE GOVERNANCE
MATRICULATION NO : 791016145081001
E-MAIL : arman_saad@yahoo.com
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5) SUMMARY 25
6) REFERENCE 26
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IHH Healthcare Berhad was incorporated in Malaysia under Malaysian Companies Act as a
private limited company on 21 May 2010 is a Malaysian-Singaporean private healthcare group
focused on upmarket healthcare services, and Asias largest private healthcare group. The company
operates medical clinics and provision of primary healthcare services, ownership and management
of radiology clinics, provision of diagnostic laboratory services and provision of managed care and
related services. It is headquartered in Kuala Lumpur and has activities in the private hospital and
health sector throughout Asia and the Middle East, notably in Singapore, Brunei, China, Hong
Kong, Malaysia India and the United Arad Emirates. The group has over 30,000 employees. IHH
Healthcare Berhad was incorporated in May 2010 and successfully listed concurrently on both
Bursa Malaysia and Singapore Exchange on 25th July 2012. The group comprises premium-brand
healthcare assets, collectively representing a unique multi-market investment position in the
healthcare sector.
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CORPORATE STRUCTURE
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Section A: Leadership
Main Principle
Every company should be headed by an effective board which is collectively responsible for
the long-term success of the company.
Supporting Principles
Board has been structured to ensure that correct mix of skills and experience are in place to
allow it to operate effectively.
Board meetings are scheduled regularly, with supplementary meetings held as required. An
annual rolling plan of items for discussion is reviewed and adapted regularly to ensure all
matters reserved to the Board, with other items as appropriate, are discussed.
The structure and business of the Boards is designed to ensure that the Directors focus on
the strategy, monitoring, governance and performance of AO World plc (the Company).
There is an established procedure for the preparation of each meeting which normally
includes a report on current trading and detailed papers as appropriate
There is a clear schedule of Matters Reserved for the Board for decision making which
includes; setting and reviewing the Groups long-term objectives, commercial strategy,
business plan and annual budget; overseeing the Groups operations and management;
governance and risk control issues and major capital projects.
Main Principle
There should be a clear division of responsibilities at the head of the company between the
running of the board and the executive responsibility for the running of the companys
business. No one individual should have unfettered powers of decision.
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Supporting Principles
The roles of Chairman of the Board and Chief Executive are not exercised by the same
individual.
The division of responsibilities between the two roles is set out in writing and will be
reviewed by the Board annually to ensure that it remains relevant and accurate.
The Chairman's role is to lead and manage the Board, and to play a role in facilitating the
discussion of the Company's strategy by the Board.
The Chief Executive is responsible for the day-to-day management of the Company's
operational activities, and for the proper execution of strategy, as set by the Board.
There is no dominant individual or group of individuals on the Board unduly influencing its
collective decision-making ability.
Main Principle
The chairman is responsible for leadership of the board and ensuring its effectiveness on all
aspects of its role.
Supporting Principles
With support from the Company Secretary the Chairman has full responsibility for setting
the Board's agenda.
The Chairman sets the meeting timetable, actively encourages contribution from all
Directors in Board meetings, and is responsible for ensuring that constructive interaction is
on-going between the individual members of the Board.
Main Principle
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Supporting Principles
The Chairman and Non-Executive Directors will meet during the year without the Executive
Directors being present in order to scrutinise the performance of Executive Management
and for any significant issues or problems arising to be discussed.
The Chairman encourages an open environment in Board meetings and ensures that Non-
Executive Directors are provided with adequate time and opportunity in such meetings to
give their views and challenge the Executive Directors.
The Senior Non-Executive Director acts as an intermediary between the Chairman and the
other Directors.
Section B: Effectiveness
Main Principle
The board and its committees should have the appropriate balance of skills, experience,
independence and knowledge of the company to enable them to discharge their respective
duties and responsibilities effectively.
Supporting Principles
The board should be of sufficient size that the requirements of the business can be met and
that changes to the boards composition and that of its committees can be managed without
undue disruption, and should not be so large as to be unwieldy.
The board should include an appropriate combination of executive and non-executive
directors (and, in particular, independent non-executive directors) such that no individual or
small group of individuals can dominate the boards decision taking.
The value of ensuring that committee membership is refreshed and that undue reliance is not
placed on particular individuals should be taken into account in deciding chairmanship and
membership of committees.
No one other than the committee chairman and members is entitled to be present at a
meeting of the nomination, audit or remuneration committee, but others may attend at the
invitation of the committee.
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Main Principle
There should be a formal, rigorous and transparent procedure for the appointment of new
directors to the board.
Supporting Principles
The appointment of new Directors to the Board is led by the Nomination Committee who
has the responsibility for nominating candidates for appointment as Directors to the Board,
bearing in mind the need for diversity and a broad representation of skills across the Board.
B.3: Commitment
Main Principle
All directors should be able to allocate sufficient time to the company to discharge their
responsibilities effectively.
Supporting Principles
The time commitment required from each Director is stipulated within his/her letter of
appointment and discussed openly between the Chairman and relevant Director prior to
appointment.
The Nomination Committee is responsible for considering on an annual basis, whether each
Director is able to devote sufficient time to their duties.
B.4: Development
Main Principle
All directors should receive induction on joining the board and should regularly update and
refresh their skills and knowledge.
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Supporting Principles
Upon joining the Board, each Director will receive a comprehensive induction programme,
tailored to his/her specific background and requirements. New Directors will receive an
induction pack which contains information on the Group's business, its structure and
operations, Board procedures, corporate governance related matters and details regarding
Directors' duties and responsibilities
All new Directors are introduced to the Group's senior management team.
Main Principle
The board should be supplied in a timely manner with information in a form and of a quality
appropriate to enable it to discharge its duties.
Supporting Principles
The Chairman, with the assistance of the Company Secretary, ensures that the Directors
receive accurate, timely and clear information.
All Directors receive appropriate documentation in advance of each Board and Committee
meeting including detailed briefings on all matters in order to discharge their duties
effectively in considering a matter and reaching a decision on it.
The Chief Executive Officer and Chief Financial & Operating Officer provide reports to the
Board and senior management are also invited to attend Board meetings and to present on
their key area to allow the Board to meet with the next layer of management and gain a
more-in depth understand of key areas of the business.
B.6: Evaluation
Main Principle
The board should undertake a formal and rigorous annual evaluation of its own performance
and that of its committees and individual directors.
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Supporting Principles
Main Principle
All directors should be submitted for re-election at regular intervals, subject to continued
satisfactory performance
Supporting Principles
The Company's Articles of Association require a Director to be subject to election at the first
Annual General Meeting ('AGM') following his or her appointment and thereafter every
third year.
However, in accordance with the Code, all Directors will be subject to re-election at the
2014 AGM.
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Section C: Accountability
Main Principle
The board should present a fair, balanced and understandable assessment of the company's
position and prospects.
Supporting Principles
The Directors' report is set out in full in the AO World Annual Report and Accounts. This
report includes an explanation concerning the Directors' responsibility for preparing the
Annual Report and Accounts and a statement that the Directors' consider the Annual Report
and Accounts, taken as a whole, to be fair, balanced and understandable and that it provides
the information necessary for shareholders to assess the company's performance, business
model and strategy.
Main Principle
The board is responsible for determining the nature and extent of the significant risks it is
willing to take in achieving its strategic objectives. The board should maintain sound risk
management and internal control systems.
Supporting Principles
As is set out within the Risk and Uncertainties section in the Annual Report and Accounts,
the Board takes overall responsibility for risk management with a particular focus on
determining the nature and extent of the significant risk it is willing to take in achieving its
strategic objectives (risk appetite). The activities of the Audit Committee are also set out
in the Annual Report and Accounts.
The Board has overall responsibility for maintaining and reviewing the Group's systems of
internal control and ensuring that the controls are robust and effective in enabling risks to be
appropriately assessed and managed.
The Board conducts an annual review of the effectiveness of the systems of internal control
including financial, operational and compliance controls and risk management systems.
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Main Principle
The board should establish formal and transparent arrangements for considering how they
should apply the corporate reporting and risk management and internal control principles
and for maintaining an appropriate relationship with the company's auditors.
Supporting Principles
Whilst the Board sets the Group's risk appetite, it reviews the operation and effectiveness of
the Group's risk management activities through the Audit and Risk Committees, which
undertake the day-to-day oversight of the risk management framework on behalf of the
Board. The Chairman of the Audit Committee regularly provides an update on the work
carried out by the Audit Committee to the Board.
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Section D: Remuneration
Main Principle
Levels of remuneration should be sufficient to attract, retain and motivate directors of the
quality required to run the company successfully, but a company should avoid paying more
than is necessary for this purpose. A significant proportion of executive directors'
remuneration should be structured so as to link rewards to corporate and individual
performance.
Supporting Principles
The Board delegates responsibility for setting appropriate levels of remuneration for its
Executive Directors to the Remuneration Committee.
As is clearly explained within the Annual Statement by the Chairman of the Remuneration
Committee in the Annual Report and Accounts, ensuring an appropriate alignment of
interests between Executive Directors and shareholders through remuneration is a key goal
of the Remuneration Committee, and an underlying principle for its decision-making.
D.2: Procedure
Main Principle
There should be a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual directors. No director
should be involved in deciding his or her own remuneration.
Supporting Principles
The activities of the Remuneration Committee and an explanation of how it aligns executive
remuneration with shareholder interests, is set out of the Remuneration Committee report in
the Annual Report and Accounts.
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Main Principle
Supporting Principles
The Board recognises and values the importance of meeting the Company's shareholders to
obtain their views, and has established a programme to communicate with shareholders,
based on its financial reporting calendar.
Meetings will be held with major shareholders following both the full-year and half-year
results. Normally, these meetings are with the Chief Executive Officer and the Chief
Financial and Operating Officer. The whole Board is briefed on the outcome of these
meetings and any issues raised are discussed.
The board should use the AGM to communicate with investors and to encourage their
participation.
Supporting Principles
All of the Directors aim to attend the AGM and value the opportunity of welcoming
individual shareholders and other investors to communicate directly and address their
questions.
In addition to the mandatory information required, a full, fair and balanced explanation of
the business of all general meetings is sent in advance to shareholders.
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The Board is primarily responsible for oversight and the overall governance of the
Group. It carries out its mandate by providing strategic guidance, implementing
succession planning, effectively monitoring management goals and ensuring overall
accountability for the Group's growth. The Board is responsible for ensuring that the
Group's internal controls, risk management processes and reporting procedures are
firmly in place.
The Board is guided by the Board Charter, documented Terms of Reference ("TOR")
and Limits of Authority ("LOA"), which clearly define the matters that are
specifically reserved for the Board, Board Committees and outline the manner in
which the day-to-day management of the Company is to be delegated to the
Managing Director ("MD").
The following roles and responsibilities, which are to be discharged in the best
interests of the IHH-Healthcare in pursuance of regulatory and commercial
objectives:
reviewing and adopting the strategic direction of the Group
overseeing and evaluating the conduct of the Group's businesses
identifying principal risks and ensuring the implementation of appropriate
systems to manage these risks
establishing succession plans
establishing and implementing a good investor relations programme and
shareholders' communication policy; and
reviewing the adequacy and the integrity of the Group's internal control
systems and management information systems.
Board Meetings
At the Board meetings, the MD provides a comprehensive explanation of significant
issues relating to the Group's business while the Chief Financial Officer presents the
results of the Group's financial performance. The Chairmen of the Board
Committees would inform the Directors at Board meetings, of any significant issues
noted and/or deliberated by the relevant Board Committees and which require the
Board's attention and approval for implementation. Management is also invited to
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present proposals and answers queries raised by the Board on a needs basis.
Management takes immediate action on all matters arising from the Board meeting
and updates the Board on the status of these matters at the next Board meeting or if
deemed urgent via circulation of memorandum.
Ethical Standards
The Group has implemented a Code of Conduct ("the Code") which dictates the
ethics and standard of good conduct expected of every Executive Director and
employee.
IHH and certain major operating subsidiaries have implemented a Whistleblowing
Policy that seeks to engender an environment where integrity and ethical behaviour
are fostered and any malpractice or impropriety within the Group is exposed. This
Whistleblowing Policy enables employees to raise concerns internally and at a high
level and to disclose information on activities, which they believe reflect instances of
malpractice or impropriety.
Promoting Sustainability
The Board is cognisant of the need to adopt sustainable practices. In view of the
Group's geographically expansive operations, the Board is embarking on a holistic
review of the Company's sustainable practices and formulating a strategic
methodology for the production of a comprehensive sustainability report going
forward.
Access to Information and Advice
The Directors have access to all information within the Group. Through the regular
Board meetings, the Board receives updates on the development and business
operations of the Group. Minutes of the respective Board Committees' meetings are
presented to the Board at the meeting. The Board may seek, at the Group's expense,
external and independent professional advice and assistance from experts in
furtherance of their duties.
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Company Secretaries
The Company Secretaries of the Group are experienced, competent and
knowledgeable, play an important role in advising the Board on issues relating to
corporate compliance with the relevant laws, rules, procedures and regulations
affecting the Board and the Group, as well as best practices of governance.
The Company Secretaries are responsible for advising the Directors of their
obligations and duties to disclose their interest in securities, disclosure of any
conflict of interest in a transaction involving the Group, prohibition on dealing in
securities and restrictions on disclosure of price-sensitive information.
Board Charter
To ensure that all Directors acting on behalf of the Company are aware of their
fiduciary duties and responsibilities as Board members and to ensure that all
Directors understand the various legislations and regulations affecting their conduct
and that they apply principles and practices of good corporate governance in all their
dealings in respect of and on behalf of the Company.
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SUMMARY
The United Kingdom (UK) Corporate Governance (formerly the Combined Code) sets
standards of good practice in relation to board leadership and effectiveness, remuneration,
accountability and relations with shareholders. The Code contains broad principles and more
specific provisions. Listed companies are required to report on how they have applied the main
principles of the Code, and either to confirm that they have complied with the Code's provisions or
- where they have not - to provide an explanation. Some of the provisions of the Code require
disclosures to be made in order to comply with them.
The OECD Principles describe the basic elements of an effective corporate governance
framework for corporations that seek to attract capital from equity investors:
Promoting transparent and efficient markets
Protecting and facilitating the exercise of shareholders rights
Ensuring the equitable treatment of all shareholders
Recognising the rights of stakeholders
Ensuring that timely and accurate disclosure is made
Ensuring the strategic guidance of the company
The Sarbanes-Oxley Act 2002 introduced major changes to the regulation of corporate
governance and financial practice. Also known as the "Public Company Accounting Reform and
Investor Protection Act" (in the Senate) and "Corporate and Auditing Accountability,
Responsibility, and Transparency Act". The Sarbanes-Oxley Act is arranged into eleven sections
was enacted as a reaction to a number of major corporate and accounting scandals.
There is clarity regarding the roles and responsibilities of the board, individual members, the
chief executive officer and the minister. Appropriate instruments are established that describe
responsibilities for the board collectively and for individual members conforming to the public
sector principles in Part 2 of the Public Sector Management Act 1994 (PSM Act). Processes exist
to ensure these are known and understood. IHH should establish corporate disclosure policies and
procedures to ensure comprehensive, accurate and timely disclosures. The board should have
internal corporate disclosure policies and procedures which are practical and include feedback from
management. These policies and procedures should ensure compliance with the disclosure
requirements as set out in the Bursa Malaysia Listing Requirements. In formulating these policies
and procedures, the board should be guided by best practices. IHH need to consider wider usage of
information technology in communicating with stakeholders including establishing a dedicated
section for corporate governance on their website.
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REFERENCE
Abdul Rahman, R. (2009). Effective Corporate Governance. Universiti Teknologi MARA,
Shah Alam: University Publication Centre (UPENA).
Abdul Wahab, E.A., How, J.C.Y., & Verhoeven, P. (2007). The Impact of the Malaysian
Code on Corporate Governance: Compliance, Institutional Investor and Stock Performance.
Journal of Contemporary Accounting & Economics, Vol.3, No.2, 106-129.
Che Haat, M.H., Abdul Rahman, R., & Mahenthiran, S. (2008). Corporate governance,
transparency and performance of Malaysian Companies. Managerial Auditing Journal,
Vol.23, No.8, pp.744-778.
Gaa, J.C. (2009). Corporate Governance and the Responsibility of the Board of Directors for
Strategic Financial Reporting. Journal of Business Ethics (2009) 90: 179-197.
Hamid., Azmi.(2008), Corporate Governance Structures of GLCs and NGLCs and Firm
Performance, PhD Thesis, Exeter University, UK.
Ismail, H., Iskandar, T.M., & Rahmat, M.M. (2008). Corporate Reporting Quality, Audit
Committee and Quality of Audit. Malaysian Accounting Review, Vol.7, No.1, 2008.
Mohamad Ariff, A., Ibrahim, M.K., & Othman, R. (2007). Determinants of firm level
governance: Malaysian evidence. Corporate Governance, Vol.7, No.5, pp.562-573.
Klapper & Love. (2004). Corporate Governance, Investor Protection and Performance in
Emerging Markets, Journal of Corporate Finance, Vol 10(5), pp703-728.
Mohamad Ishak M.I., Hartini J. & Noriza M.S. (2004). The Disclosure of Corporate
Compliance Program: A Study on the Board of Directors in the Bursa Malaysia Public-
Listed Companies, Proceedings UIBMC 2004, pp250-263.
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