KESM Industries : Corporate Governance Report 2022

CORPORATE GOVERNANCE REPORT

STOCK CODE	:	9334
COMPANY NAME	:	KESM Industries Berhad
FINANCIAL YEAR	:	July 31, 2022

OUTLINE:

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B - DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

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SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company's strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company's values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

Application	:	Applied
Explanation on	:	The Board of Directors (the "Board") sets the strategies of the
application of the		Company and its group of companies (collectively the "Group"),
practice		ensures that the Group is led and managed in an effective and
		responsible manner in accordance with standards of corporate
		governance practices promulgated by relevant laws, rules and
		regulations, policies, standards and guidelines applicable to the Group.
		In order to ensure the effective discharge of its duties and
		responsibilities, the Board is governed by a board charter ("Board
		Charter") and other internal guidelines that have been established by
		the Board, which clearly sets out the roles, powers and responsibilities
		of members of the Board, including matters reserved for the Board's
		consideration and approval, and those which the Board may delegate
		to relevant Board Committees, the Executive Directors and the
		Management. The Board Committees comprise the Audit Committee
		("AC") and the Nominating Committee ("NC"), which terms of
		reference are also encapsulated in the Board Charter. An abridged
		version of the Board Charter is available on the Company's website at
		www.kesmi.com.
		Amongst the steps taken by the Board to satisfy its functions and
		responsibilities are:
		(1) reviewing, approving and adopting the overall strategic plan for
		the Group, after deliberating with the senior management to
		ensure that the strategic plan is aligned to market requirements
		and is customer-centric. The management, led by the Executive
		Directors, develops the operating plans, puts them into actions,
		monitors actual results against planned performance and
		implements corrective actions and ensures compliance with all
		relevant statutory and legal obligations, as well as ensuring that
		proper risk management and internal control systems are in place;
		2

1. conducting periodical reviews of the Group's strategies and business focus concurrently with the regular financial results reporting, performances and policies, and monitoring compliance with all relevant statutory and legal obligations to promote a good corporate governance culture which reinforces ethical, prudent and professional behaviour;
2. promoting sustainability strategies to support long term value creation which also takes into consideration economic, environmental and social considerations;
3. reviewing, with the assistance of the AC, the adequacy and integrity of the Group's internal control and enterprise risk management, as well as the financial and non-financial reporting responsibilities;
4. overseeing the succession plans for the management, through the Executive Directors, by ensuring that the appointed management staff has the necessary skills and experience. The NC assists the Board to oversee the selection of candidates for proposed Board appointments and the assessment of the performance of the Board, Board Committees as well as individual Directors. The Board through the NC, comprise individuals with the appropriate mix of skills and experience, to ensure a proper balance between executive and independent directors; and
5. updating stakeholders with the performance and results of the Group through engagements, press interviews and timely public releases of the relevant information which are also available on
   KESMI's website.

Explanation for	:
departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure:

Timeframe:

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Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2

A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

Application	:	Applied
Explanation on	:	The Board is led by its Executive Chairman ("Chairman"), who is
application of the		responsible for instilling good corporate governance practices,
practice		leadership and effectiveness of the Board. To this end, the Chairman
		takes on the role for creating an environment that enables open,
		robust and effective discourse between the Board members, as well as
		between the Board and management, and with the stakeholders of
		the Company. Additionally, with the help of the Company Secretary,
		the Chairman sets the board agendas for meetings, and ensures that
		the directors receive accurate, timely and clear information.
Explanation for	:
departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure:

Timeframe:

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Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.3

The positions of Chairman and CEO are held by different individuals.

Application	:	Departure
Explanation on	:
application of the
practice
Explanation for	:	The Board Chairman is Mr Samuel Lim, who is also the Company's
departure		CEO.
		The Board has taken the view that given the nature and size of the
		Group's businesses, it is in the best interests of the Company to vest
		both roles on the same individual, Mr Samuel Lim. His deep
		knowledge of the products, experience of the business, wide contacts
		in the industry and visionary leadership, will ensure there is effective
		management and continued success of the Group, in meeting its
		obligations and goals. The combined roles thus provide the Group,
		with a strong and consistent leadership, and allows for more effective
		planning and expeditious execution of the business strategies.
		To ensure that intended outcome of this Practice 1.3 is met, the
		Chairman/CEO always abstains from all deliberations and voting on
		matters, which he is directly or deemed interested, and the Board
		ensures that all related party transactions involving the Chairman/CEO
		are appropriately dealt with in accordance with the provisions of the
		Main Market Listing Requirements ("MMLR"). Moreover, the Senior
		Independent Non-Executive Director, Tuan Haji Zakariah Bin Yet, is
		available to deal with concerns regarding the Company where it would
		be inappropriate for these to be dealt with by the Chairman/CEO.
		Additionally, the Board comprises sufficient independent directors
		who are capable of exercising independent judgements for the Board
		to enhance responsible, fair and objective deliberations at Board
		meetings and to ensure that the objectives and goals of the Company
		are met.
		Furthermore, in view of Mr Samuel Lim's performance,
		professionalism and objectivity in discharging his responsibilities, the
		Board fully supports the retention of his combined roles as Board
		Chairman and CEO.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

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