Board Charter

The Board Charter, is aimed at ensuring that all Directors acting on behalf of the Company are aware of their duties and responsibilities as Board members and the various legislations and regulations affecting their conduct and that the principles and practices of good corporate governance are adhered to in all their dealings for and on behalf of the Company.

Under the Board Charter, the Board sets out

  1. the Board structure and protocols;
  2. the Board’s roles and responsibilities, including the division of the responsibilities and powers between the Board and management; different committees, and between the chairman and the CEO; and
  3. processes and procedures for Board meetings.

Appended is an abridged version of the Board Charter.

1. BOARD STRUCTURE AND PROTOCOLS

Board Composition and Balance
The Board shall compose of not less than two (2) or more than eleven (11) and a majority should be non-executive Directors.

Maximum Directorship
Directors may only serve a maximum of five (5) Board directorships with public listed companies in Malaysia.

Commitment by Directors
Directors are to commit and devote sufficient time to discharge their responsibilities and update their knowledge and enhance their skills through appropriate continuing education programme.

New Directorship
A Director who desires to accept any new directorship with public listed companies should give prior notification to the Chairman.

Tenure Limit
All Directors shall retire by rotation at least once in every three (3) years. Newly appointed Director shall retire at the immediate annual general meeting following their appointment.

If the tenure of an independent Director exceeds a cumulative period of 9 years, and should the Board desire to retain such Director as an independent Director it may justify and seek annual shareholders’ approval.

Board Diversity
The Board is not establishing a diversity policy or setting any target as it is more critical that appointment of Directors should be based strictly on merits and not driven by any nationality, ethnicity or age bias.

Board Nomination, Selection and Appointment
The appointment and re-appointment of Directors shall be recommended by the Nominating Committee and approved by the Board as a whole.

When the need arises to appoint a new member, the Board will specify its requirements to the Nominating Committee (“NC”). In its search for a new member, the NC could refer to existing members of the Board to reach out to potential Board candidates, prior to engaging the services of external search firms.

In evaluating the suitability of a Board candidate, the NC will take into consideration the candidate’s character, availability of time, expertise and experience as well as any other criteria specified by the Board. The NC will, in consultation with the Chairman, shortlist suitable candidates for the Board’s consideration.

Board’s Access to Information
All Directors will have direct access to the Company Secretary and senior management at any times and access to the auditors
(with or without management’s presence). Board’s Access to Independent AdviceIn furtherance of their duties, Directors may seek independent professional advice at the Company’s expense if circumstances necessitate it.

Prior to incurring such expense, the Directors shall first consult the Chairman on the scope, nature, fees and professional firm in which advice is to be sought and obtain the relevant approvals corresponding to the quantum of the fees to be incurred.

Board Remuneration
The Board as a whole shall determine the remuneration of the Directors based on regular review and with reference to prevailing market practices of comparable companies in similar industry.

2. BOARD’S STRATEGIC INTENT

KESMI will capitalise on the strong market positioning it has created to ensure continuing leadership position.

3. BOARD’S ROLES AND RESPONSIBILITIES

3.1.1 Role of the Board
The Board is responsible for ongoing oversight of the Company and the Group. It is charged with leading and managing the Company and the Group in an effective and responsible manner.

3.1.2 Role of Individual Directors
Directors are expected to comply with their legal, statutory and equitable duties and obligations when discharging their responsibilities as Directors. Broadly these include:

  1. acting in good faith and in the best interests of the Company as a whole;
  2. acting with care and diligence and for proper purpose;
  3. avoiding conflict of interest with the Company in a personal or professional capacity; and
  4. refraining from making improper use of information gained through the position of director and from taking improper advantage.

Directors shall keep all Board information, discussions, deliberations and decisions that are not publicly known confidential and not use information gained through the Board for their interest, or their employers’ interest.

3.1.3 Role of Senior Independent Director
The Chairman shall propose to the Board for approval the appointment of a Non-Executive Director as a Senior Independent Director, to whom concerns pertaining to the Company may be conveyed by shareholders on areas that are inappropriate or cannot be resolved through the normal channels of contact with the Chairman/CEO.

3.2 Division of responsibilities and powers

3.2.1 Between the Board and management
The Board oversees the business and affairs of the Company and will assume the responsibilities and perform the duties stipulated in the Articles, Companies Act, MMLR and any applicable rules, laws and regulations including but not limited to:

  • approve interim and final financial results and statements;
  • approve interim dividend and recommendation of the final dividend;
  • approve significant changes in accounting policies;
  • appointment and removal of company secretary;
  • recommend appointment and removal of auditors;
  • approve remuneration of auditors (where shareholders have empowered the Board);
  • put forward resolutions and corresponding documentation to shareholders for approval;
  • approve announcements and circulars to shareholders;
  • approve press releases;
  • approve Board appointments and removals;
  • approve terms and conditions of Chief Executive Officer and Executive Directors;
  • approve terms of reference and membership of Board committees;
  • approve the framework for risk management and internal control system;
  • approve major investments, including mergers and acquisitions;
  • recommend to shareholders on changes relating to the Company’s capital structure or
  • its status as a public listed company;

and the following:

  1.  review and adopt the overall strategic plan for the Company and Group;
  2. oversee the conduct of the Company’s business to evaluate whether the businesses are being properly managed;
  3. monitor compliance with all relevant statutory and legal obligations;
  4. approve the annual budget of the Company and Group;
  5. approve credit facilities and borrowings of the Company;
  6. approve the opening and closure of bank accounts;
  7. identify principal risks and ensuring implementation of appropriate internal control and mitigating measures;
  8. oversee succession planning of senior management;
  9. oversee the development and implementation of a shareholder communication policy; and
  10. review the adequacy and integrity of the management information and internal control system.

The senior management, led by the CEO and guided by the approved strategic plans of the Company, shall develop the operating plans, puts such plans into actions, measures the actual results of its execution, analyses its actual performance against planned performance, implements corrective actions; amongst other duties and responsibilities:

  1. develop and implement the overall operating plans and direction of the Company and Group;
  2. ensure compliance with all relevant statutory and legal obligations;
  3. implement a proper risk management system and its associated internal controls;
  4. develop programs for better investor relations and shareholder communications;
  5. develop and implement policy and procedures to ensure adequate and integrity of the management information and internal control system; and
  6. implement effective corporate governance structures and its associated internal controls system.

3.2.2 Committees established by the Board
The Board may from time to time establish committees as it considered appropriate to assist in carrying out its duties and responsibilities. The Board has established the following committees (“the Committees”) to assist it in the discharge of its responsibilities:

  1. Audit Committee; and
  2. Nominating Committee.

The Committees operate under clearly defined terms of reference, with clear authority by the Board to deal with and to deliberate on matters delegated to them. The chairman of the respective Committees shall report to the Board on the outcome of their meetings but such reporting could be dispensed with if directors (who are non-committee members) are already invited to attend the Committees’ meetings.

3.2.3 Chairman and the Chief Executive Officer
The Chairman is responsible for the overall leadership and efficient functioning of the Board.

The CEO is responsible to the Board for the day-to-day operations of the Company.

3.3 Processes and procedures for Board meetings
The Board will meet as frequently as it considers appropriate or when circumstances warrant. The Board will strive to meet on a scheduled basis, at least five (5) times a year.

Notice of meeting will be sent to the Directors at least seven (7) days prior to the meeting and accompanied by relevant materials, background or explanatory information.

All Directors should commit to attend Board meetings. If a Director is unable to attend the meeting physically due to unforeseen circumstances, he or she must notify the Chairman.

Proceedings of Board meetings shall be governed by the Company’s Articles.

The Company Secretary or her deputy shall attend and take minutes of all meetings. In between scheduled meetings, the Board may resolve and approve the Company’s matters through resolutions in writing circulated to all the Directors.

4. CHARTER REVIEW
The Board will review this Charter from time to time and make the necessary amendments to ensure that it remains consistent with the Board’s objectives, the needs of the Company, applicable laws and practices.

This Charter was first adopted by the Board on 10 July 2013, first amended on 11 July 2016 and last revised on 11 July 2018.

Anti–Bribery and Anti-Corruption Policy

1. ANTI-BRIBERY AND ANTI-CORRUPTION POLICY

  1. This Anti-Bribery & Anti-Corruption Policy (“Policy”) sets out the responsibilities of KESM Industries Berhad (“KESMI”) and its group of companies (“KESMI Group”), and those who work for or with the KESMI Group with regards to observing and upholding our zero-tolerance position on bribery and corruption.
  2. It also exists to act as a source of information and guidance for those working for, and with, the KESMI Group. This Policy seeks to help them recognise and deal with bribery and corruption issues, as well as understand their responsibilities when encountering such issues.

2. POLICY STATEMENT

  1. The Board of Directors of KESMI (“Board”) is committed to conducting its business in an ethical and honest manner, and will endeavour to ensure that all its business relationships and dealings are conducted professionally and with high integrity.
  2. The Board has zero-tolerance for illegal acts involving KESMI Group’s businesses, and will strictly seek to implement and enforce the systems put in place to ensure bribery and corrupt practices are prevented.
  3. The KESMI Group is committed to abide by the laws relating to anti-bribery and anti-corruption in all the jurisdictions in which we operate. We are bound by the laws and regulations of Malaysia, including the Malaysian Anti-Corruption Commission Act 2009 and the Malaysian Anti-Corruption (Amendment) Act 2018 (collectively “the MACCA”), the Main Market Listing Requirements issued by Bursa Securities, and any other laws, regulations, rules, guidelines and/or directives in regards to our conduct both at home and abroad.
  4. If KESMI or any of its group companies is found guilty of a corrupt practice or activity, we may be subjected not only to the penalties prescribed under the relevant anti-bribery and anti-corruption laws and regulations, but we will also face serious damage to our reputation which will consequently adversely affect our business prospects.
  5. It is with this in mind that the Board commits to using its best endeavours to prevent bribery and corruption in our business functions.
  6. To address these risks, the Board has taken the following steps:
  1. to implement and enforce this Policy effectively;
  2. to perform regular bribery and corruption risk assessment on our operations and review the findings;
  3. to take necessary steps to communicate and disseminate this Policy, whether through notices, training programmes, dialogues, briefings or otherwise, to all individuals operating in, or with, the KESMI Group, in particular those in areas of high risk of exposure to bribery or corrupt activities; and
  4. to regularly review and update this Policy to ensure that the KESMI Group’s business activities and dealings are free from bribery or corruption.

3. PERSONS AFFECTED BY THIS POLICY

  1. This Policy applies to all employees of the companies within the KESMI Group, no matter where our subsidiary or employees are located.
  2. This includes all individuals working within the KESMI Group, including directors, and employees (whether full-time, part-time, contract or temporary), and external parties such as consultants, contractors, sub-contractors, trainees, seconded staff, volunteers, interns, agents, representatives, sponsors, suppliers, customers, or any other person or persons associated with us (including third parties) (collectively referred to as “External Party”).

4. PENALTIES

  1. We acknowledge that bribery and corruption activities are offences under the MACCA.
  2. The general penalties for any corruption related offences are:
  1. a maximum 20 years imprisonment; and
  2. a minimum fine of RM10,000, or 5 times the value of the bribe, whichever is higher.

5. ACTS OF BRIBERY AND CORRUPTION DEFINED
5.1 What constitutes bribery and corruption are defined in the MACCA. Without generalising the meanings given in the MACCA, and for ease of reference, below are what each of these acts generally mean:

  1. Bribery refers to the act of offering, giving, promising, asking, agreeing, receiving, accepting, or soliciting something of value or of an advantage so to induce or influence an action or decision in order to gain commercial, contractual, regulatory or personal advantage.
  2. Corruption refers to dishonest behavior by those in positions of power for private gain, or for business purposes. This would include acts of receiving or giving bribes, diverting funds, defrauding investors, under-table arrangements and inappropriate giftings.
  3. Facilitation payments refer to sums of money unofficially paid to secure or expedite a routine government action by a government official.
  4. Kickbacks refer to an additional sum of money paid to a bribe-taker as a reward for a business favour or advantage given.

5.2 Bribery and corruption in any form is illegal under the MACCA. Therefore, employees MUST NOT engage in any of these activities, be it directly, passively, or through a third party (such as an agent, supplier or distributor). They MUST NOT bribe a public official or accept bribes in any degree. If uncertain about whether something is a bribe or a gift or an act of hospitality or a charitable act, they must seek further advice from the relevant employee’s immediate superior or Head of Department or Human Resource Department.

6. PERMISSIBLE AND NON PERMISSIBLE ACTS
6.1 Gifts, Entertainment and Hospitality

  1. In general, the Board encourages the use of good judgement, discretion and moderation when giving, or accepting gifts, hospitality or entertainment in business settings. Notwithstanding this, the Board prohibits solicitation of gifts, hospitality, entertainment or favours of any value or kind, from persons or firms with which KESMI or any of its group companies actually or potentially does business with. Employees of the KESMI Group must not also act in any manner that would place any vendor, supplier or customer in a position where he or she may feel obligated to make a gift, provide hospitality or entertainment or personal favours to do business or continue to do business with the KESMI Group.
  2. Nevertheless, the Board recognises that certain gestures of hospitality and goodwill may prompt gift giving and entertainment practices, whether given to or received from third parties. In such instances, the giving or receiving of gifts or provision of hospitality or entertainment MUST meet the following requirements:
    i. it is not made with the intention of exerting influence on the party to whom it is being given, obtaining or rewarding the retention of a business or business advantage, or as an explicit or implicit exchange for favours or benefits;
    ii. it is not made with the suggestion that a return favour is expected;
    iii. it is in compliance with the relevant laws and regulations relating to anti- bribery and anti-corrupt practices;it is given in the name of the relevant company of the KESMI Group, and not in an individual’s name;
    iv. it does not include cash or a cash equivalent;
    v. it is appropriate for the circumstances, for example, festive gifts or gifts solicited for company annual dinners, or as contributions to the company annual sports events, or for the purpose of social interaction (through sports or games or meals), or as a small gesture of gratitude to a company for helping with a large project upon completion;
    vi. it is of an appropriate type and value and given at an appropriate time, taking into account the reason for the gift;
    vii. it is given or received openly, and not secretly; the matter having, prior to the act, been properly reported or disclosed, and approved by the relevant KESMI Group company’s Head of Operations and Head of Finance, and ultimately the General Manager and/or Chief Executive Officer of the KESMI Group, where required;
    viii. it is not selectively given to a key, influential person with a clear intention of directly influencing that person;
    ix. it is not above a certain excessive value, the value of which is typically pre-determined and approved by the relevant KESMI Group company’s policy for such matters; and
    x. it is not an offer to, or acceptance from, a government official or representative or politician or political party, without the prior approval of the relevant KESMI Group company’s Head of Operations and Head of Finance, and ultimately the General Manager and/or Chief Executive Officer of the KESMI Group, where required.
  3. Where it is inappropriate to decline the offer of a gift (i.e. when meeting with an individual of a certain religion or culture who may take offence), the gift may be accepted so long as it is declared to, and approved by the relevant KESMI Group company’s Head of Operations and Head of Finance, who will assess the circumstances, and ultimately the General Manager and/or Chief Executive Officer of the KESMI Group, where required.
  4. The Board also recognises that the practice of giving and receiving business gifts varies between countries, cultures, regions and religions, so definitions of what is acceptable and not acceptable will inevitably differ for each.
  5. Accordingly, as good practice, if in doubt, disclosure to, or prior approval of the relevant KESMI Group company’s Head of Operations and Head of Finance, and/or the General Manager and/or Chief Executive Officer of the KESMI Group, where required, ought to be made, or sought, regarding gifts, hospitality or entertainment offered or given or received. Gifts, hospitality or entertainment offered, given or received from vendors or suppliers should nevertheless always be disclosed.
  6. The intention behind a gift being given or received, or hospitality gestures being provided should always be considered. If there is any uncertainty, the advice of the employee’s immediate superior, or Head of Department or the Human Resource Department should be sought.  

6.2 Facilitation Payments and Kickbacks

  1. The Board recognises that facilitation payments and kickbacks are forms of bribery. Therefore, no employee is to accept, or make, any form of facilitation payments of any nature.
  2. Similarly, kickbacks are categorically not allowed to be made or accepted.
  3. The Board recognises that, despite its strict policy on facilitation payments and kickback, employees may face a situation where avoiding a facilitation payment or kickback may threaten his or her personal security. Under these circumstances, the employee must do the following:
    i. immediately report the incident to his or her immediate superior;
    ii. create a record of the amount required to be made or received; and
    iii. ask for a receipt, detailing the amount and reason for the payment.6.3 Political Contributions
  1. Unless otherwise approved by the Board, no contributions, whether in cash, kind or by any other means, shall be made to support any political parties or candidates, so as to avoid any perception that such payments are being made as an attempt to gain an improper business advantage.
    Whilst employees may personally make political contributions, KESMI will not make any reimbursement for these personal political contributions to its employees.

6.4 Donations and Sponsorships

  1. The Board accepts (and indeed encourages) acts of donating to charities – whether through services, knowledge, time, or direct financial contributions (cash or otherwise) – and agrees to appropriately disclose all charitable contributions it makes, if required by relevant laws or regulations. In doing so, the Board will ensure that all charitable donations made are legally and ethically under the relevant laws and regulations, and that donations are not offered or made without the approval of the relevant KESMI Group company’s Executive Director.
  2. Employees must be careful to ensure that charitable contributions are not used to facilitate and/or conceal acts of bribery.

6.5 Procurement Process

  1. KESMI Group has processes and adheres to systems of internal controls around supplier and vendor selections. These selections must never be based on receipt of any gifts, payments, favours or hospitality treatments. If a supplier or vendor selection is formal, structured invitation for the supply or purchase of goods and services (“tender”) will be set out, and it is important to ensure that the tender process is transparent and void of corrupt practices, and that documentation supporting the tender processes is maintained accurately.
  2. A tender process, where appropriate and/or applicable, includes an invitation for other parties to make a proposal, on the understanding that any completion for the relevant contract must be conducted in response to the tender. Neither should any party have an unfair advantage, nor any separate or prior close-door negotiations for the contract. All bidding processes must be transparent and open to all qualified bidders, and shall be open for scrutiny, and chosen on the basis of price and quality.
  3. Due diligence of new suppliers in a selection process should include enquiries into the vulnerability of the KESMI Group to corruption or bribery risk(s) dealing with such potential suppliers.

6.6 Examples of Bribery and Corruption

  1. Please see attached in Schedule 1 for scenarios that may be deemed as acts of bribery and corruption. This is not an exhaustive list.
  2. It is incumbent on an employee to seek clarification from his or her immediate superior, or Head of Department, or Human Resource Department, if he or she is in doubt if an act or potential act would tantamount to bribery or corruption.

7. EMPLOYEE RESPONSIBILITIES

  1. All employees of the KESMI Group must ensure that they have read, understood, and agree to familiarise and comply with the information contained within this Policy, and with any training or other anti-bribery or anti-corruption information given or initiatives undertaken by KESMI on matters relating to this Policy.
  2. All employees and those under the control of the KESMI Group are equally responsible for the prevention, detection, and reporting of bribery and other forms of corruption that he or she becomes aware of. They are to avoid any activities that could lead to, or imply, a breach of this Policy and the relevant laws and regulations governing anti-bribery and anti-corruption activities, so as not to expose themselves nor the KESMI Group to the risk of liability under the MACCA or any other similar laws in jurisdictions where the KESMI Group operates its businesses.
  3. If an employee has reason to believe or suspect that an instance of bribery or corruption has occurred or will occur in the future, that will violate the provisions of this Policy or anti-bribery or anti-corruption laws and regulations, he or she MUST report this to the relevant KESMI Group company’s Executive Director or the Chairman of KESMI’s Audit Committee as soon as is practicable, in accordance with the Whistle-Blower Policy. If an External Party wishes to make a similar report, the External Party may use the applicable channel of reporting as set out in Whistle-Blower Policy.
  4. If any employee breaches this Policy, he or she will face disciplinary action, and could face dismissal for gross misconduct, in addition to the ramifications of applicable laws and regulations in respect of his or her illegal actions. KESMI also reserves the right to seek recourse against such employee in the event that the illegal act(s) of the employee, notwithstanding KESMI’s best efforts to mitigate such incidents, results in a liability for KESMI or any of the group companies under the relevant laws or regulations governing anti-bribery and anti-corruption activities.

8. PROTECTION

  1. Employees who refuse to accept or offer to engage in bribery or corrupt acts, or those who raise concerns or who report another’s potential act(s) of bribery or corruption, are sometimes worried about the potential repercussions.
  2. Under the Whistle-Blower Policy, the Board assures all employees of the KESMI Group that it will support anyone who raises concerns in good faith under this Policy, even if investigation and due inquiry into the matter find that it was a mistake or unfounded.
  3. The Board will further ensure that no one suffers any detrimental treatment as a result of refusing to accept or offer a bribe or other corrupt activities, or because they reported a concern relating to act(s) or potential act(s) of bribery or corruption.
  4. Detrimental treatment refers to dismissal, disciplinary action, or unfavourable treatment in relation to the concern raised.
  5. If an employee has reason to believe that he or she has been subjected to detrimental treatment as a result of a concern raised or a refusal to accept a bribe, his or her immediate superior, or Head of Department, or KESMI’s Human Resource Department must immediately be notified.
  6. Please refer to the Company’s Whistle Blower Policy for further information on how to report violations or suspected violations of this Policy.

9. TRAINING AND COMMUNICATION

  1. It is one of the requirements of the KESMI Group that all new employees receive instructions on this Policy as part of the induction process. Employees will further receive regular, relevant training on how to adhere to this Policy, and where deemed necessary, will be asked annually to formally accept that they will comply with this Policy.
  2. This Policy and the Board’s zero-tolerance stance on bribery and corruption activities in the KESMI Group business operations and dealings will be clearly communicated and emphasised to all suppliers, contractors, business partners, and other third parties at the outset of any business relationships with such parties, and as appropriate thereafter.
  3. The Board will ensure that relevant anti-bribery and corruption training will be provided to all levels of employees where it is felt that knowledge on how to comply with this Policy and with the relevant laws and regulations on the matter needs to be enhanced, and where there is a high risk or potential risk of facing bribery or corruption in undertaking their responsibilities.

10. RECORD KEEPING

  1. The KESMI Group will maintain detailed and accurate records, financial or otherwise, and have appropriate internal controls in place to act as evidence for all payments made to, or payments received from third parties.
  2. All expense claims relating to gifts, hospitality, entertainment, donations or charitable contributions incurred, or any matters of value accepted or given, must be submitted, together with the necessary documentations, for approval by the relevant KESMI Group company’s Head of Operations and Head of Finance, and/or the General Manager and/or Chief Executive Officer of the KESMI Group, where required.
  3. All accounts, invoices, memoranda and other documents and records relating to business dealings with third parties, such as customers, suppliers, vendors, distributors and agents, must be prepared and maintained with strict accuracy and completeness. No accounts must be kept off the records or off the books to facilitate or conceal improper payments.

11. MONITORING AND REVIEWING

  1. KESMI’s Audit Committee is responsible for monitoring the effectiveness of this Policy, and will regularly review the suitability, adequacy and effectiveness of the implementation this Policy.
  2. Internal control systems and procedures that will also include a corruption risk assessment programme, which are designed to prevent bribery and corruption, or to mitigate the risks relating thereto, are subject to regular reviews and audits, including an external audit that is required to be conducted once every 3 years.
  3. Employees are encouraged to offer their feedback to KESMI’s Head of Operations and Head of Finance on how this Policy may be improved. Any need for improvements will be applied as soon as possible.

12. AMENDMENT
KESMI may, from time to time, amend this Policy to improve its effectiveness in combatting bribery and corruption, or to comply with the relevant laws and regulations governing bribery and corruption. This Policy was approved by the Board on 10 March 2020.

SCHEDULE 1
EXAMPLES OF BRIBERY AND CORRUPT ACTS
The following are examples of possible scenarios that may arise for an individual while working for KESMI or any of its group companies. Such activities may be deemed as illegal under the anti-bribery and anti-corruption laws and regulations. Accordingly, any employee who becomes aware of, or is suspicious of, such activities or potential activities, must report the same to his or her immediate superior or the Head of Department or Human Resource Department.

The list below is not intended to be exhaustive and is for illustration purposes only:

  1. where you become aware of a third party or potential third party who deals, or is seeking business association, with the KESMI Group (“Third Party) engages in, or has been accused of engaging in, improper business practices;
  2. where you learn that a Third Party has a reputation for paying bribes, or requiring that bribes be paid to them, or has a reputation for having a “special relationship” with government officials or similar public offices;
  3. where a Third Party insists on receiving a commission or fee payment before committing to sealing a contract, or agreeing to carry out a government function or process;
  4. where a Third Party requests payments in cash and/or refuses to sign a formal commission or fee agreement, to provide an invoice or receipt for payments made;
  5. where a Third Party requests that payments be made to a dubious account offshore or to a location different from where the Third Party resides or conducts business;
  6. where a Third Party requests unexpected additional fees or commission to facilitate services rendered;
  7. where a Third Party demands lavish entertainment or gifts before commencing or continuing contractual negotiations or provision of services;
  8. where a Third Party requests that a payment is made to “overlook” potential legal violations;
  9. where a Third Party send an invoice that appears to be non-standard or customised;
  10. where a Third Party insists on using side letters or refuses to put terms agreed in writing;
  11. where an invoice is received for a commission payment that appears to be exorbitant relative to the service to be provided;
  12. where a Third Party requires the use of an agent, intermediary, consultant, distributor or supplier that is not typically used by or known to the KESMI Group; or
  13. where a Third Party offers an unusually generous gift or lavish hospitality.

Whistle - Blower Policy

A PURPOSE

  1. KESM Industries Berhad (“KESMI”) and its subsidiary companies (“the Group”) are committed to comply with all applicable legal and regulatory requirements relating to the conduct of the Group’s businesses in areas including but not limited to financial reporting, accounting, internal accounting controls, and auditing matters, and policies. In line with this commitment, the Group requires its employees to likewise maintain and exercise similar high standards of ethical conduct in the performance of their work and dealings for the Group.
  2. The Group’s internal controls, operating procedures and governance policies are intended to detect and to prevent or deter improper conduct. However, even the best systems of control cannot provide absolute safeguards against irregularities. Intentional and unintentional violation of laws, regulations, policies and procedures may occur and may constitute improper conduct.
  3. For the purpose of the maintenance of integrity within the Group, this policy therefore establishes and governs the process through which employees or to any person (“External Parties”) who become aware of, or reasonably believes that, a person who has engaged in, or is engaging, or is planning to engage in violations or improper conduct, can confidently notify the relevant authorities under the Whistleblower Protection Act 2010, or the authorised persons of the Group as set out in Section 2.1 of this policy, of the alleged violations or improper conduct. This policy aims to :-
    – encourage employees to feel confident in raising genuine concerns about Possible Improprieties (as defined below);
    – provide ways for employees to raise those concerns and get feedback on any action taken as a result;
    – reassure employees that if they raise any concerns without malice, in good faith and reasonably believe them to be true, they will be protected from possible reprisals or victimisation.
  4. This policy is not intended to be used where other more appropriate procedures area are available, for examples Discipline and Grievance Procedures, etc.

B SCOPE OF THE POLICY

  1. This policy applies to any person including all directors, employees of the Group (whether full time, part-time, contract or temporary) and External Parties such as consultants, contractors, sub-contractors, trainees, seconded staff, volunteers and interns, as well as agents, representatives, sponsors, suppliers, customers, or any other person or persons associated with the Group (including third parties). Unless otherwise specified, the aforementioned persons are collectively referred to as “the Whistle-Blower”) in this policy.
  2. Possible Improprieties mean wrongdoing or misconduct that include but are not limited to:-
  • violations of laws and regulations applicable to the Group;
  • unethical behaviour, practices or omissions thereof that would undermine or breach the Group’s internal controls and/or operational, management and governance procedures, codes and/or policies;
  • giving, solicitation or acceptance of bribes;
  • conduct of corrupt activities;
  • acts that adversely affect the interests and values of shareholders and stakeholders of the Group, including compromising the health and safety of any employee
  • nauthorised disclosure or sale of the Group’s information;
  • falsification of reports or documents;
  • fraud, theft, embezzlement or misuse of the Group’s assets;
  • improper or undesirable personal behaviour or misdeeds which seriously impacts the Group’s business or reputation;
  • sexual or other forms of harassment in the workplace; and
  • attempts to cover any of the aforesaid.

(Note: The above list is not exhaustive.)

C PROCEDURES

  1. Guidelines
    1.1 To ensure that the whistle-blowing process is effectively carried out without adding unnecessary costs to the Group, a Whistle-Blower must consider the following before sounding the alarm on any of the Possible Improprieties:
    i. there must be facts to support the case;
    ii. the motive must be right, i.e. it is made without malice or to pursue a personal grievance; and
    iii. other channels have failed or been ineffective in addressing the case.

1.2 Accordingly, the procedures for the submission, receipt, treatment and retention of a complaint or concern set out below, shall be fully complied with.

2. Submission of Complaints or Concerns
2.1 A Whistle-Blower who is an employee should raise his/her complaint or concern relating to any of the Possible Improprieties with:

  1. the executive directors of the operating company (“ED”) within which the Whistle-Blower works; or
  2. the Chairman of the Audit Committee (“AC”) of KESMI (in case it involves the Directors);

The contact details of the abovementioned persons may be obtained from the Human Resource Department. Alternatively, the Whistle-Blower, other than an employee, may report any Possible Improprieties via email to cosec@kesmi.com, or directly to the relevant government, regulatory authority or enforcement agency in Malaysia as prescribed by the Whistleblower Protection Act 2010.

2.2 The Whistle-Blower must raise his/her alleged claim relating to any Possible Improprieties in writing and as soon as possible but not later than 21 consecutive calendar days after becoming aware of the same. He/She must also provide the following details:

  1. his/her particulars: name, department/company, contact number and e-mail address (if available);
  2. type of violation (i.e. financial reporting, legal, internal controls, etc.)
  3. description of the alleged claim;
  4. identification of parties/departments involved; and
  5. identification of others who might have knowledge about the alleged claim (if available).
    The report of any such Possible Improprieties (“Whistle-Blower Report”) shall not be attended to if the above-mentioned particulars are not stated. The requirement to provide such information is
    i. to allow for proper assessment of the alleged improper conduct. Accordingly, the Whistle-Blower Report should be factual rather than speculative and should contain as much specific information as possible; and
    ii. to facilitate appropriate follow-up questions and investigations, which will not be possible unless the source of the information is identified.

2.3 The ED or the Chairman of AC (as the case may be) may inquire in respect of the Whistle-Blower Report and may, in their reasonable discretion, determine not to commence any investigation if the report contains only unspecified or broad allegations of the Possible Improprieties without appropriate informational support.

3. Treatment of Complaints or Concerns
3.1 Upon receipt of the Whistle-Blower Report, the ED or the Chairman of the AC will:

  1. determine whether the report is a credible complaint or concern;
  2. when appropriate, acknowledge to the Whistle-Blower the receipt of the complaint or concern.

3.2 The ED or the Chairman of AC shall appropriately and expeditiously investigate each credible complaint or concern. In this regards, if the circumstances so suggest, may:

  1. conduct its own investigation or review;
  2. instruct a senior executive or a committee of managerial personnel to investigate into the matter and prescribe the scope and time limit therefore.
  3. instruct the Internal Auditor or External Auditor to conduct further investigations or review (subject to the approval of the AC);
  4. engage such third parties as the AC may determine, to take remedial action, to commence or conduct further investigations or review, as deemed appropriate;
  5. report the matter to the authorities if there is reason to believe that a crime has been committed; and/or
  6. take any other action as the AC may determine is in the best interest of the Group.

3.3 They shall have the right to call for any information or document and examination of any employee of the Group or other person(s), as they may deem appropriate for the purpose of conducting investigation.

3.4 The AC shall have right to outline detailed procedure for an investigation.

3.5 Where the AC has designated a senior executive or a committee of managerial personnel for investigation, they shall adhere strictly to the scope and procedure outlined by AC for investigation.

3.6 The AC shall have the authority to engage outside legal, accounting or such other professional services, as it deems necessary to conduct the investigation in accordance with its terms of reference and this Policy.

3.7 Confidentiality will be maintained to the fullest extent possible, under prevailing laws and regulations, consistent with the need to conduct an adequate review. Notwithstanding this, every effort will be made to protect the Whistle Blower’s identity in accordance with the Whistleblower Protection Act 2010, even if the allegations prove to be unfounded or mistaken, save where:

  1. it is required by law, or by the order or directive of a court of law, regulatory body or such other body that has the jurisdiction and authority of the law to require such identity to be revealed.
  2. it is determined that the Whistle-Blower was frivolous, in bad faith, or in abuse of the provisions of this Policy and stipulated procedures and lodged with malicious or mischievous intent; or
  3. the identity of the Whistle-Blower is already public knowledge.

3.8 All credible complaints or concerns will be investigated to a resolution, with a report prepared after completion of investigation. The AC shall ensure that the ED or such person who has been instructed by the AC to investigate the matter takes prompt and appropriate action when and as warranted, including where appropriate,

  1. informing the Whistle-Blower of the likely timeline for a final response;
  2. recommending any remedial, disciplinary or legal action to be taken, where necessary;
  3. reporting any violation to the relevant regulatory authorities; and
  4. notifying the Whistle Blower of actions taken or reason(s) should it be decided that no action is to be taken.

D. PROHIBITION ON RETALIATION

  1. In accordance with the protection accorded to whistle-blowers under the Whistleblower Protection Act 2010, a Whistle-Blower should feel confident and assured to report any complaint or concern on any of the Possible Improprieties situations or to assist in investigations of such alleged matters. The Group will not tolerate retaliation or discrimination or detrimental action of any kind by or on behalf of the Group against a Whistle-Blower making a genuine and good faith complaint of, or assisting in the investigation of such matters.
  2. However, a person who files a complaint or provides information which he or she knows to be false or report information without good faith, reasonable belief in the truth and accuracy of such information, is frivolous or is in abuse of this Policy, with malicious or mischievous intent, will not be protected by this Policy and may be subject to administrative and/or disciplinary action, including but not limited to the termination of employment or other contract, as the case may be.

E. REGISTRATION AND RETENTION OF COMPLAINTS

  1. The AC shall maintain or cause to be maintained a Complaints Log relating to the complaints, tracking their receipts, investigation and resolution.
  2. The AC shall approve making the Complaints Log available for inspection upon any request by investigation authorities.
  3. The Group shall retain all documents and records regarding any complaint for a period of five (5) years.

F. COMPLIANCE WITH THIS POLICY

  1. A Whistle-Blower must follow the procedures outlined in this Policy and give their full cooperation with any investigation initiated pursuant to this Policy.

G. DISSEMINATION OF THIS POLICY

  1. The Human Resource Department shall make available a copy of this Policy to all persons concerned including the latest update of the contact details of the ED or the Chairman of the AC.

H. CONSISTENCY WITH LAWS AND REGULATIONS

  1. This Policy shall be read in conjunction with the Whistleblower Protection Act 2010, the Malaysian Anti-Corruption Act 2009, the Malaysian Anti-Corruption (Amendment) Act 2018, the rules of stock exchange, the Companies Act 2016, and/or Capital Market and Services Act 2007 (“CMSA”) or any other relevant laws, regulations, rules, directives or guidelines that may, from time to time, prescribe or issue on the receipt, retention and/or treatment of complaints regarding Possible Improprieties and/or such other improper conduct governed by this policy.
  2. In the event that any policy or procedure stipulated is inconsistent or in conflict with any of the aforementioned laws, regulations, rules, directives or guidelines or any part thereof, then such laws, regulations, rules, directives or guidelines shall prevail to the extent of such inconsistency or conflict.

I. MAINTAINING THIS POLICY
The AC will be responsible for the maintenance, regular review and updating of this Policy. Any revisions, amendments and alterations to this Policy can only be implemented when approved by the Board of Directors of KESMI.

Approved by the Board on 10 March 2020.

Terms Of Reference Of The Audit Committee

1. COMPOSITION
The Committee shall be appointed by the Board from amongst the Directors of the Company and shall comprise exclusively of Non-Executive Directors of not less than three (3), of which the majority shall be Independent Directors of the Company; and at least one member of the Committee:

  1. must be a member of the Malaysian Institute of Accountants;
  2. if he/she is not a member of the Malaysian Institute of Accountants, he/she must have at least three (3) years’ working experience and
    i) he/she must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
    ii) he/she must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or
  3. fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).

In the event that a member of the Committee resigns, dies or for any other reason ceases to be a member resulting in non-compliance of any of the requirements above, the Board, shall, within three (3) months of that event, appoint such number of new members as may be required to fill the vacancy.

The following persons shall not be eligible for appointment as member of the Committee:

  1. alternate Director; and
  2. any former key audit partner who have not observed a cooling off period of at least two (2) years before appointment.

2. REVIEW OF COMMITTEE AND MEMBERS
The Committee and the appointment and performance of its members shall be subject to annual review by the Nominating Committee to determine whether the Committee and its members have carried out their duties in accordance with this Terms of Reference.

3. CHAIRMAN
The members shall elect a Chairman from among their number who shall be an Independent Director.

4. SECRETARY
The Company Secretary or his or her nominee shall be the Secretary of the Committee. In his or her absence, the Chairman shall appoint the Secretary.

5. MEETINGS
The Committee shall meet at least four (4) times a year.

The notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed shall be forwarded to each member of the Committee and any other persons who may be required to attend, at least seven (7) days prior to the date of the meeting.

In addition, the Committee Chairman may convene a meeting of the Committee if requested to do so by any member, or the internal or external auditors to consider any matter within the scope and responsibilities of the Committee or at the Committee Chairman’s discretion.

Meetings of the Committee shall be held at any place within or out of Malaysia.

Members of the Committee may participate in a meeting of the Committee by means of telephone or other electronic means and all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

The Committee may establish any regulations from time to time to govern its administration.

6. ATTENDANCE AT MEETINGS
The quorum for meetings of the Committee shall consist of two (2) members of which the majority present must be Independent Directors.

In the absence of the Committee Chairman and/or appointed deputy, the remaining members present shall elect one of their number to chair the meeting.

The head of finance, the head of internal audit, and a representative of the external auditors shall normally attend meetings. The Committee may invite other Board members or any person to be in attendance to assist it in its deliberations. However, at least once a year the Committee shall meet with the external auditors without executive Board members present whenever deemed necessary.

7. RESOLUTIONS IN WRITING
A resolution in writing signed whether in original or by facsimile, by the requisite members of the Committee who are sufficient to form a quorum, shall be as valid and effectual as if it had been passed at a meeting of the Committee duly convened and held. Any such resolution may consist of several documents in like form, each signed by one or more members.

8. AUTHORITY AND RIGHTS
The Committee is authorised by the Board to investigate any activity within its terms of reference and shall:-

  1. have authority to investigate any matter within its terms of reference;
  2. have the resources which are required to perform its duties;
  3. have full and unrestricted access to any information pertaining to the Company and its subsidiaries;
  4. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
  5. be able to obtain independent professional or other advice and to secure the attendance of outsiders with relevant experience and expertise, if it considers this necessary. In practice, should any expenditure in connection therewith be expected to exceed RM30,000 in total, the Committee should consult with the Chairman of the Board, or the Board, before proceeding;
  6. be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of the executive members of the Committee, other directors and employees of the Company, whenever deemed necessary.
  7. have the authority to report any matter to Bursa Securities if it is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements (“MMLR”) of Bursa Securities.

9. DUTIES
The functions of the Committee are to assist the Board to fulfil its responsibilities in relation to the Group’s financial reporting and to examine the adequacy of the Group’s internal control systems and corporate governance.

The duties of the Committee shall be:

  1. to discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management where necessary).
  2. to review the external auditor’s management letter and management response.
  3. review the following and report the same to the Board:-c_column_te
    1. with the external auditor, the audit plan, scope and nature of audit for the Company and of the Group, and ensure co-ordination where more than one audit firm is involved;
    2. with the external auditor, his evaluation of the system of internal controls of the Company and of the Group;
    3. with the external auditor, his audit report, and any matter the external auditor may wish to discuss (in the absence of management where necessary);
    4. the assistance given by the employees to the external and internal auditors;
    5. adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;the internal audit programme, processes, results of the internal audit assessments, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal auditor;
    6. the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on:-
      i. changes in or implementation of major accounting policy or practice changes;
      ii. significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;
      iii. significant audit adjustments arising from the audit;
      iv. the going concern assumption; and
      v. compliance with accounting standards, stock exchange and other legal requirements.
    7. any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity;
    8. i.any letter of resignation from the external auditors of the Company; and
    9. whether there is reason (supported by grounds) to believe that the Company’s external auditor is not suitable for re-appointment.

     

  4. review procedures established to address allegations raised by whistleblowers, to ensure independent investigation is conducted and follow-up action is taken and highlighted to the Committee.
  5. review the process for communicating the Code of Conduct to the staff, and for monitoring compliance.
  6. obtain regular updates from Management regarding compliance matters.
  7. review the effectiveness of anti-corruption measures taken.
  8. consider the major findings of internal investigations and management’s response.
  9. recommend the nomination of a person or persons as external auditor and must consider the following:-
    a. adequacy of the experience and resources of the accounting firm;
    b. the persons assigned to the audit;
    c. the accounting firm’s audit engagements;
    d. the size and complexity of the Group companies’ being audited; and
    e. the number and experience of supervisory and professional staff assigned to the particular audit.
  10. convene a meeting of the Committee to consider any matter the external auditor believes should be brought to the attention of the directors or shareholders.
  11. ensure that the Committee Chairman attends the Annual General Meetings to respond to any shareholder questions on the Committee’s report and activities; and
  12. to verify, on an annual basis, the allocation of options under a share scheme for employees to ensure compliance with the allocation criteria determined by the Option Committee and in accordance with the ByLaws of the relevant Option Scheme.
  13. to undertake such other responsibilities as may be agreed to by the Board, or as may be required by law or the MMLR of Bursa Securities.

10. REPORTING PROCEDURE
10.1 The Secretary shall be responsible for keeping the minutes of meeting of the Committee, circulating them to the members, the Board and the senior management staff who attended the meeting, and for ensuring compliance with MMLR of Bursa Securities. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

10.2 The Committee shall submit a report to the Board as at the end of each financial year within three (3) months from the said date to the Board for inclusion in the Company’s annual report. The report of the Committee shall comprise paragraphs 15.15(3)(a) to (e) of the MMLR of Bursa Securities.

11. REVIEW OF TERMS OF REFERENCE
11.1 The Committee will review this Terms of Reference from time to time and make the necessary amendments to ensure it remains consistent with the Board’s objectives, the needs of the Company, applicable laws and practices, principles of the Malaysian Code on Corporate Governance 2017 and MMLR of Bursa Securities.

11.2 This Terms of Reference may be made available on the website of the Company.

11.3 This Terms of Reference was reviewed and approved on 11 July 2018.

Terms Of Reference Of The Nominating Committee

1. MEMBERSHIP
1.1 The Committee shall be appointed by the Board from amongst the Directors of the Company and shall comprise exclusively of Non-executive Directors, majority of whom are independent (as determined by the Board).

1.2 The Chairman of the Committee shall be the Senior Independent Director appointed by the Board from time to time.

1.3 In the event that a member of the Committee resigns, dies or for any other reason ceases to be a member resulting in non-compliance of any of the requirements above, the Board shall, within three (3) months of that event, appoint such number of new members as may be required to fill the vacancy.

2. REVIEW OF COMMITTEE AND MEMBERS
2.1 The Committee and the appointment and performance of its members shall be subject to annual review by the Board to determine whether the Committee and its members have carried out their duties in accordance with this Terms of Reference.

3. SECRETARY
3.1 The Company Secretary or his or her nominees shall be the Secretary to the Committee. In his or her absence, the Chairman shall appoint the Secretary.

4. QUORUM
4.1 The quorum for meetings of the Committee shall consist of two members.

5. MEETING AND ATTENDANCE
5.1 The Committee shall meet at least one time a year.

5.2 The notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed shall be forwarded to each member of the Committee and any other persons who may be required to attend, at least seven (7) days prior to the date of the meeting.

5.3 The Chairman of the Committee shall preside over the Committee meetings and in the absence of the Chairman and / or appointed deputy, the remaining members present shall elect one of their numbers to chair the meeting.

5.4 Members of the Committee may participate in a meeting of the Committee by means of telephone or other electronic means and all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

5.5 The Committee may invite other Board members or any person to attend all or part of any meeting as and when appropriate and necessary.

5.6 The Committee Chairman attends the Annual General Meetings to respond to any shareholder’s questions on the Committee’s report and activities.

6. MINUTES OF THE MEETING
6.1 The Secretary shall minute the proceedings and resolutions of all committee meetings, including the names of those present and in attendance.

6.2 Draft minutes of committee meetings shall be circulated promptly to all members of the Committee. Once approved, minutes should be circulated to all other members of the Board.

6.3 A resolution in writing signed whether in original or by facsimile, by the requisite members of the Committee who are sufficient to form a quorum, shall be as valid and effectual as if it had been passed at a meeting of the Committee duly convened and held. Any such resolution may consist of several documents in like form, each signed by one or more members.

7. FUNCTIONS AND DUTIES
7.1 Propose new nominees for appointment to the Board.

7.2 Review the character, experience, integrity, commitment, competency, qualification and track record of the proposed new nominees for appointment to the Board. In the case of nominees for the position of Independent Non-Executive Directors, to evaluate the nominee’s ability to discharge such responsibilities/functions as expected from Independent Non-Executive Directors.

7.3 Review the structure, size and composition (including evaluating the mix and balance of the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes deemed necessary.

7.4 Recommend to the Board the continuation (or not) in service of Directors who are due for retirement by rotation.

7.5 Monitor and evaluate, on an annual basis, the effectiveness of the Board and its committees and develop appropriate procedures for individual evaluations.

7.6 Assess annually the independence of Independent Non-Executive Directors.

7.7 Ensure that orientation and education program me are provided to new Directors.

7.8 Consider succession planning in the course of its work, taking into account the challenges and opportunities facing the Company and what skills and expertise are needed on the Board in the future.

7.9 Undertake such other responsibilities as may be agreed to by the Board, or as may be required by law or the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

8. AUTHORITY
8.1 The Committee is authorised to seek any information it requires from the management of the Company in order to perform its duties.

8.2 The Committee is authorised to obtain, at the Company’s expense, independent professional or other advice on any matters within its Terms of Reference, if it considers this necessary. In practice, the Committee should first consult with the Chairman of the Board and obtain the approval of the Board should any expenditure in connection therewith be expected to exceed RM30,000 in total, before proceeding.

9. REPORTING PROCEDURES
9.1 The Chairman of the Committee shall report to the Board from time to time, its recommendations for consideration and implementation.

9.2 The actual decision as to who shall be appointed to the Board shall be the responsibility of the full Board after considering the recommendations of the Committee.

9.3 The Committee shall submit a statement about the activities of its discharge of its duties during the financial year, within three (3) months following the end of the financial year, to the Board for inclusion in the Company’s annual report. The statement of the Committee shall comprise paragraphs 15.08A(3) of the MMLR of Bursa Securities.

10. REVIEW OF TERMS OF REFERENCE
10.1 The Committee will review this Terms of Reference from time to time and make the necessary amendments to ensure it remains consistent with the Board’s objectives, the needs of the Company, applicable laws and practices, principles of the Malaysian Code on Corporate Governance 2017 and MMLR of Bursa Securities.

10.2 This Terms of Reference may be made available on the website of the Company.

10.3 This Terms of Reference was reviewed and approved on 11 July 2018.

Code Of Conduct And Ethics

1.0 Purpose of the Code
This Code of Conduct and Ethics (“Code”) is a general overview of various policies, procedures and guidelines that KESM Industries Berhad (“KESMI”) and its group of companies (“KESMI Group”) has in place, which is in line with the Electronic Industry Citizenship Coalition (“EICC”) values, standards and procedures, to ensure that:

  1. working conditions at KESMI Group are safe;
  2. employees are treated with respect and dignity;
  3. business operations are conducted ethically and responsibly; and
  4. interactions between employees, between employees and management, and between employees and third parties, are ethically conducted with highest standards of integrity and fairness. In this context, third parties include, without limitation, actual and potential customers, distributors, suppliers, competitors, agents, and investors.

This Code must be read together with all other related and applicable policies, procedures and guidelines that have been promulgated by KESMI Group in relation to the matters set out above, including but not limited to KESMI’s Anti-Bribery and Anti-Corruption Policy (“ABAC Policy”) and the Whistle-Blower Policy.

The Code may be amended or updated, from time to time, to cater to any changes to applicable laws and regulations, or to KESMI Group’s needs and requirements, and the relevant affected parties will be informed accordingly.

2.0 Application and Implication of the Code
The Code applies to all directors and employees of KESMI Group, including part-time employees, employees on probation, employees on temporary contracts and trainees (collectively “Employees”). Every Employee shall be responsible for complying with the Code, and acknowledges that any non-compliance of the Code may subject him/her to disciplinary action under KESMI Group’s purview, to the extent of termination of the employment, and/or legal action under applicable laws and regulations. It is also the responsibility of the Employee to report any instances of non-compliance, or unlawful or unethical behaviour, or disputes that he/she becomes aware of. Employees can be assured that all matters so reported shall be treated and dealt with in strict confidence in accordance with the Whistle-Blower Policy. If an Employee is uncertain if the Code is applicable to him/her, or to a situation that is not expressly covered by the Code, the Employee is responsible to seek clarification with his/her immediate superior or Head of Department, or the Human Resource Department.

3.0 The Code
3.1 Workplace Environment and Culture
KESMI Group recognises the standards by the international community that is committed to maintaining the human rights of employees and respect them. In so doing, KESMI Group promulgates principles of equal opportunity, non-discrimination and fair treatment when dealing with its employees, such as in the areas of wages and benefits, the working conditions of the employees, and the recognition of employees to have freedom of association. Additionally, KESMI Group’s policies in this area denounce and prohibit harsh and inhumane treatment of employees including any sexual harassment, sexual abuse, corporal punishment, mental or physical coercion or verbal abuse of any employee, nor any threat of such treatment.

3.2 Workplace Health and Safety
KESMI Group further recognises that a safe and healthy work environment enhances the quality of products and services, consistency of production, and morale of Employees. Accordingly, KESMI Group has developed procedures and practices that will ensure, amongst others, occupational safety, emergency preparedness, industrial hygiene, machine safeguarding, as well as, adequate sanitation, food and housing for relevant Employees.

3.3 Environmental Responsibility
KESMI Group is committed to ensure that it minimises the adverse impact that its manufacturing operations may have on the environment and natural resources, whilst protecting public health and safety. KESMI Group has established standards and practices with regards

  1. the requisite environmental permits and licences to be obtained for operations, and the reporting obligations therefrom;
  2. prevention and resource conservation;
  3. safe usage and handling of hazardous substances;
  4. management, discharge and disposal of wastewater and solid waste generated from operations, industrial processes and sanitation facilities;
  5. identification, monitoring and treatment of air emissions; and
  6. compliance to applicable laws and regulations in respect of prohibition or restriction of specific hazardous substances to be used.

3.4 Management Information Systems
KESMI Group has adopted a management system that is based on EICC’s values. This seeks to ensure that KESMI Group’s policies, procedures, reporting systems and practices relating to the ethical conduct of the KESMI Group’s operations are continually reviewed for compliance with the relevant laws and regulations; for identification of, and mitigation of operational risks; for continual improvement; and for protection and use of KESMI Group’s assets and resources.

3.5 Intellectual Property Rights and Confidentiality
Ownership of intellectual property rights over any inventions, breakthroughs, software, technical or trade secrets developed by Employees in the course of their work shall remain absolutely with KESMI Group. Employees are required to protect the KESMI Group’s confidential information and guard them against unauthorised disclosure or use at all times, notwithstanding termination, unless such disclosure or use has been permitted by the Company or required by law.

The confidentiality obligation also extends to, amongst others, information relating to business plans, budgets, product designs, customer and supplier lists and information, and other related matters.

3.6 Conflict of Interest
Conflict of interest occurs when Employees’ personal interests interfere, in any form, with KESMI Group’s overall business interests. Subject to applicable laws and regulations, Employees are required to fully disclose any circumstances likely to give rise to conflicts of interests. Any conflicts of interest involving oneself or other persons, whether related directly or indirectly to that person, must be reported immediately to the Employee’s immediate superior or Head of Department or the Human Resource Department. If an Employee is uncertain if he or she may have a potential or actual conflict of interest, the Employee is obliged to immediately seek clarification from the Employee’s immediate superior or Head of Department or the Human Resource Department.

3.7 Gifts and Other Benefits
Giving and accepting of gifts and other benefits may help establish business partnerships, and enhance mutual business relationships and understandings. Notwithstanding this, and subject to the ABAC Policy, Employees are prohibited from giving or accepting gifts and/or other benefits if the gift or receipt of the same would exert undue influence on objective and fair business decision on KESMI Group, or improperly influence the normal business relationship with any supplier or customer.

3.8 Bribery and Corruption
All business dealings are to be conducted in an ethical, professional and honest manner and with high integrity. Employees must impress upon business partners on the high business ethics that KESMI Group subscribes to, and shall therefore refrain from providing or accepting bribes, facilitation of payments, kick-backs, or from being involved in any corrupt practices in any of their business dealings or transactions that may contravene any applicable anti-bribery or anti-corruption laws and regulations. Employees are to immediately report any such incidents of improper conduct or attempted incidents, or any other such unethical practices or improper conduct, and KESMI Group ensures that no reprisal action shall be taken against any Employee due to the refusal to accept or offer a bribe or participate in any such corrupt or unethical activities, or due to the Employee reporting a concern relating to act(s) or potential act(s) of bribery or corruption in accordance with the ABAC Policy.

3.9 Insider Trading
Employees who are in possession of market sensitive information, whether directly or indirectly, are not allowed to trade in the securities of KESMI or another listed company, if that information has not been made public. Employees are also not allowed to share the same with any third party that might result in the Employee breaching insider trading laws.

3.10 Money Laundering
Money laundering is an unethical method of masking the proceeds from illegal activities as legitimate. All Employees have a responsibility to ensure that they do not undertake or participate in any such illegal activities that may affect the legitimate business purposes and funds of KESMI Group. Any known or suspected money laundering activities involving the KESMI Group must be immediately reported to the Employee’s immediate superior, Head of Department or the Human Resource Department.

3.11 Whistle Blower Policy
KESMI has in place the Whistle-Blower Policy which imposes a responsibility on Employees to report any known or suspected violations against local laws, regulations, guidelines, or KESMI Group’s policies, procedures, and practices. This action should be viewed as protecting the reputation and credibility of KESMI Group and its Employees.

The Whistle-Blower Policy sets out the procedures to facilitate the ability of an Employee to raise concerns about illegal, unethical or questionable practices in confidence and without the risk of reprisal.

4.0 Continuing Obligation
KESMI Group is committed to conducting its business operations and practices with the highest level of integrity and ethical values, in accordance with this Code and its adopted policies, standards, guidelines, and all applicable laws, rules and regulations. KESMI will continually review, and where necessary amend, the Code to ensure that these values are not compromised.

Employees have a continuing obligation to keep themselves abreast with the provisions of this Code and the related policies, practices and guidelines, and ensure compliance with the applicable laws, rules and regulations relating to their job responsibilities.

This Code of Conduct and Ethics was adopted by the Board on 10 March 2020.