PETRONAS Chemicals : PCG's 26th Annual General Meeting 24 April 2024 - Notice of 26th Annual General Meeting

CORPORATE GOVERNANCE REPORT

STOCK CODE	:	5183
COMPANY NAME	: PETRONAS CHEMICALS GROUP BERHAD
FINANCIAL YEAR	:	December 31, 2023

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 PETRONAS Chemicals Group Berhad ("PCG" or
	application of the		the "Company") is committed to high standards of corporate
	practice		governance and strives to ensure that it is practiced throughout
			the Group as a fundamental part of discharging its
			responsibilities to protect and enhance shareholders' value and
			raise the performance of the Group.
			The duties, powers and functions of the Board are governed by
			the Constitution of the Company, the Companies Act 2016 (CA
			2016), the Main Market Listing Requirements (MMLR) of Bursa
			Malaysia Securities Berhad (Bursa Securities) and other
			regulatory guidelines and requirements that are in force.
			In discharging its duties and roles effectively, the Board is also
			guided by the Board Charter, which sets out the principles and
			guidelines that are to be applied by the Board, whilst the Board
			Committees are guided by its respective Terms of Reference
			(TOR). The Board Charter and the TOR for each Board
			Committee are available on the Company's corporate website
			athttps://www.petronas.com/pcg/about-us/governance.
			The Board is entrusted with the responsibility to promote the
			success of the Group by directing and supervising the Group's
			affairs. To discharge the Board's stewardship responsibilities,
			the Board has assumed the following principal roles and
			responsibilities:
			• To review, approve and monitor the strategic business plans,
			goals and key policies proposed by the Management to
			ensure sustainability and optimisation of long-term returns.
			• To ensure that appropriate policies are in place, adopted
			effectively and are regularly reviewed.
			• To review and approve financial statements.
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• To review and manage principal risks and adequacy of the Company's internal control systems including systems for compliance with applicable laws, regulations, rules, and guidelines.
• To ensure that there is an appropriate succession plan for members of the Board and the Senior Management in ensuring the appointment of the right leaders.
• To be accountable to its shareholders and stakeholders whom may be affected by the Company's decision such as employees, suppliers, customers, the local community and the state/country where the Company is operating.
• The Board (together with the Management) takes responsibility for the governance of sustainability in the
  Company, including setting the Company's sustainability strategies, priorities, and target.

The Board is collectively responsible in promoting the success of the Group in building an enduring and profitable business admired by customers and stakeholders whilst achieving strong returns for the valuable shareholders.

The Company has adopted the PETRONAS Code of Conduct and Business Ethics (PETRONAS CoBE) that seeks to ensure that the Company's/or Group's Directors, employees and third parties which perform works or services for the Company and/or Group will act ethically and remain above board at all times, and that their individual behaviour is in line with PETRONAS' Shared Values i.e., Loyalty, Professionalism, Integrity and Cohesiveness. PETRONAS CoBE also includes appropriate communication and feedback channels which facilitate whistleblowing.

The Board acknowledges the importance of the following:

• maintaining a sound system of internal control and a robust risk management practice for good corporate governance with the objective of safeguarding the shareholder's investment and the Group's assets. For this purpose, the Board has adopted a Risk Governance Framework and Risk Management Policy.
• the need to safeguard and minimise the impact to the environment in the course of achieving the Company's objectives. The Board's agenda reflects the commitment to economic support for longer term sustainability with a focus on the positive impact on the environment, community and society.
• the need for effective Investor Relations and Communications with shareholders and to provide them with all relevant information affecting the Company, which

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can be accessed at the Company's corporate website at www.petronaschemicals.com.

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 roles and responsibilities of the Chairman of the Board have
application of the		been clearly specified in the Company Board Charter, which
practice		is available on the Company's corporate website at
		https://www.petronas.com/pcg/about-us/governance.
		The Chairman of the Board is a Non-Independent Non-
		Executive Director who is primarily responsible for the orderly
		conduct and function of the Board and ensures its effectiveness
		on all aspects of its roles.
		The Chairman of the Board shall also act as Chairman at general
		meetings.
		The role of the Chairman is summarised as follows:
		•	Leading the Board in setting the values and ethical
			standards of the Company.
		• Chairing the Board meetings and stimulating debates on
			issues and encouraging positive contributions from each
			Director.
		•	Consulting with the Company Secretary in setting the
			agenda for board meetings and ensuring that all relevant
			issues are on the meetings' agendas.
		•	Maintaining a relationship of trust with and between the
			Managing Director/Chief Executive Officer (MD/CEO) and
			Non-Executive Directors.
		•	Ensuring the provision of accurate, timely and clear
			information to Directors.
		•	Ensuring effective communication with shareholders and
			relevant stakeholders.
		• Conducting evaluation of performance of Board Members,
			its Committees and individual Directors, including
			assessment of the independence of Independent Non-
			Executive Directors.

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• Ensuring that all Directors are properly briefed on issues arising at Board meetings and there is sufficient time allowed for discussion on complex or contentious issues and where appropriate, arranging for informal meetings beforehand to enable thorough preparations.
• Allowing every Board resolution to be voted on and ensuring the will of the majority prevails.
• Casting his votes in accordance with the prescribed PCG's Constitution.
• Ensuring that all Board members, upon taking up their office, are fully briefed on the terms of their appointment, time commitment, duties and responsibilities, and the business of PCG.
• Acting as liaison between the Board and Management, and between the Board and the MD/CEO.

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	:	Applied
Explanation on	:	The distinct and separate roles and responsibilities of the
application of the		Chairman and MD/CEO are provided in the Board Charter, which
practice		is available on the Company's corporate website at
		https://www.petronas.com/pcg/about-us/governance.
		The Board practices a clear demarcation of duties and
		responsibilities between the Chairman and MD/CEO to ensure a
		balance of power and authority in the Board. The positions of
		Chairman and MD/CEO are held by two different individuals. The
		Chairman of the Company is Datuk Ir. (Dr.) Abdul Rahim Hashim,
		who is a Non-IndependentNon-Executive Director whilst the
		CEO of the Company who is also the Managing Director is
		Mazuin Ismail. Mazuin Ismail was appointed on 1 January 2024
		in place of Ir. Mohd Yusri Mohamed Yusof due to Top
		Management mobility within PETRONAS.
		The Chairman is primarily responsible for the stewardship and
		smooth functioning of the Board, whilst the MD/CEO is
		responsible for the overall operations of the business,
		organisational effectiveness and the implementation of the
		Group's strategies and policies. Given the Company's synergetic
		business operational integration with Petroliam Nasional Berhad
		(PETRONAS), it is in the best interest of the Company that the
		Chairman is a Non-IndependentNon-Executive Director.
		The MD/CEO also manages the respective responsibilities of the
		divisions and departments in the Company, and he is assisted in
		the management of the business by the Senior Management. The
		Senior Management ensures that effective systems, controls and
		resources are in place to execute business strategies and
		decisions taken by the MD/CEO and/or the Board.
Explanation for	:
departure

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

Measure:

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Timeframe:

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 1.4

The Chairman of the board should not be a member of the Audit Committee, Nomination Committee or Remuneration Committee

Note: If the board Chairman is not a member of any of these specified committees, but the board allows the Chairman to participate in any or all of these committees' meetings, by way of invitation, then the status of this practice should be a 'Departure'.

Application	:	Applied
Explanation on	:	The Chairman of the Board, Datuk Ir. (Dr) Abdul Rahim Hashim,
application of the		who is a Non-IndependentNon-Executive Director, is neither a
practice		member of any of the Board Committees nor participate in any of
		the Board Committees' meetings.
		The Board Committees' TOR and Board Succession Planning
		Framework and selection criteria stipulate clearly that the Board
		Chairman shall not be appointed as a member of any Board
		Committees.
		The profile of Datuk Ir. (Dr) Abdul Rahim Hashim is available on
		page 72 of the PCG Integrated Report 2023 (PCG IR 2023) and
		the	Company's	corporate	website	at
		https://www.petronas.com/pcg/about-us/board-members.
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 1.5

The board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practices.

Application	:	Applied
Explanation on	:	The Board is supported by two company secretaries, Azira
application of the		Marini Ab Rahim and Mek Yam @ Mariam Hassan, who are
practice		qualified under Section 235 of the CA 2016. Their profiles are
		available on page 77 of the PCG Integrated Report 2023 (PCG
		IR 2023) and the Company's corporate website at
		https://www.petronas.com/pcg/about-us/board-members.
		Both act as advisors to the Board, particularly with regard to the
		corporate governance, Company's Constitution, policies and
		procedures and its compliance with regulatory requirements,
		codes, guidelines and legislations. Each Director is able to
		communicate directly with the Company Secretaries on all
		matters relating to the functioning of the Board.
		The Company Secretaries ensure that discussions and
		deliberations at the Board and Board Committee meetings are
		well documented and subsequently to ensure action items
		remain as matters arising in the minutes of meetings until they
		are resolved and completed.
		The Company Secretaries in keeping abreast with the evolving
		regulatory changes and developments in corporate governance
		and other relevant laws/regulations have attended various training
		during financial year 2023. The list of trainings attended by the
		Company Secretaries is available on page 89 of the PCG IR 2023.
		In this regard, both the Company Secretaries are qualified and
		competent in their roles. The Board is satisfied with the
		performance and support rendered by the Company Secretaries
		to the Board in discharging their functions.
Explanation for	:
departure

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

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Measure:

Timeframe:

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