PRINCIPLE 2

THE FIDUCIARY ROLES, RESPONSIBILITIES AND

ACCOUNTABILITIES OF THE BOARD AS PROVIDED UNDER THE
LAW, THE COMPANY’S ARTICLES AND BY-LAWS, AND OTHER
LEGAL PRONOUNCEMENTS AND GUIDELINES SHOULD BE
CLEARLY MADE KNOWN TO ALL DIRECTORS AS WELL AS TO
SHAREHOLDERS AND OTHER STAKEHOLDERS.
Recommendation 2.1
◦The Board members should act on a fully
informed basis, in good faith, with due
diligence and care, and in the best interest of
the company and all shareholders.
◦ Two elements of the fiduciary duty of board
member:
* Duty of care
* Duty of loyalty
Recommendation 2.2
◦The Board should oversee the development of
and approve the company’s business objectives
and strategy, and monitor their
implementation, in order to sustain the
company’s long-term viability and strength.
Recommendation 2.3
◦The Board should be headed by a competent
and qualified Chairperson.
◦ What does the chairperson do?
* set the agenda
* Provide information
* Encourage discussion
* Ask tough questions
* Trains new board members
* Reviews board performance
Recommendation 2.4
◦ The Board should be responsible for ensuring and
adopting an effective succession planning program for
directors, key officers and management to ensure growth
and a continued increase in the shareholders’ value.
This should include adopting a policy on the retirement
age for directors and key officers as part of management
succession and to promote dynamism in the corporation.
◦ Benefits of a good succession plan:
* It ensure the company continue to run smoothly
even when leader change
* It brings in fresh ideas and perspective
* It helps motivates and develop employees
Recommendation 2.5
◦ The Board should align the remuneration of key officers
and board members with the long-term interests of the
company. In doing so, it should formulate and adopt a
policy specifying the relationship between remuneration
and performance. Further, no director should participate in
discussions or deliberations involving his own
remuneration.
Recommendation 2.6
◦ The Board should have and disclose in its Manual on Corporate
Governance a formal and transparent board nomination and
election policy that should include how it accepts nominations from
minority shareholders and reviews nominated candidates. The
policy should also include an assessment of the effectiveness of the
Board’s processes and procedures in the nomination, election, or
replacement of a director. In addition, its process of identifying the
quality of directors should be aligned with the strategic direction of
the company.
Review of the Qualifications of All Persons Nominated:

◦ 1. Possess the knowledge, skills, experience, and particularly in the case of

non-executive directors, independence of mind given their responsibilities to
the board and in light of the entity’s business.
◦ 2. Have a record of integrity and good repute
◦ 3. Have sufficient time to carry out their responsibilities and
◦ 4. Have the ability to promote a smooth transaction
Recommendation 2.7
◦ The Board should have the overall responsibility in ensuring that
there is a system governing related party transactions (RPTs) and
other unusual or infrequently occurring transactions, particularly
those which pass certain thresholds of materiality. The policy
should include the appropriate review and approval of material or
significant RPTs, which guarantee fairness and transparency of the
transactions. The policy should encompass all entities within the
group, taking into account their size, structure, risk profile and
complexity of operations.
The Board should:

◦ 1. Create rules that cover all companies within the group

◦ 2. Review and approve important transactions to ensure they are
fair and transparent

◦ Stresses the importance of having strong policies and processes to

RPT, promoting fairness, transparency, and consistency across
group’s operations.
Recommendation 2.8
◦The Board should be primarily responsible for
approving the selection and assessing the
performance of the Management led by the Chief
Executive Officer (CEO), and control functions led
by their respective heads (Chief Risk Officer, Chief
Compliance Officer, and Chief Audit Executive).
The difference between a CEO, CRO, CCO, and CAE:

◦ 1. Chief Executive Officer – is the one responsible for making major corporate
decisions, managing overall operations, and resources of the company.
◦ 2. Chief Risk Officer – responsible for identifying, assessing, and managing
risks that could impact the organization.
◦ 3. Chief Compliance Officer – responsible for ensuring that the company
complies with relevant laws, regulations, and internal policies.
◦ 4. Chief of Audit Executive – responsible for overseeing the internal audit
function of the organization.
What the board will do:

◦ 1. Selection of Management Team

◦ 2. Assessment of Performance

◦ This is to assure the board’s crucial role in overseeing the management team,
from selecting capable leaders to regularly assessing their performance to
ensure effective governance and organizational success.
Recommendation 2.9
◦The Board should establish an effective
performance management framework that will
ensure that the Management, including the
Chief Executive Officer, and personnel’s
performance is at par with the standards set by
the Board and Senior Management.
System for evaluating performance:

◦ 1. Performance Management Framework

◦ -should set up a clear and efficient system for assessing how well the
management team, CEO, and other employees are performing.
◦ 2. Ensuring Standards are Met
◦ -meeting the standards ensures that everyone is working towards the
company’s goals and objectives.
Recommendation 2.10
◦ The Board should oversee that an appropriate
internal control system is in place, including
setting up a mechanism for monitoring and
managing potential conflicts of interest of
Management, board members, and shareholders.
The Board should also approve the Internal Audit
Charter.
◦INTERNAL AUDIT CHARTER
Oversight Responsibility
◦ -functions, risk management, compliance and internal
audit
Reviewing:
◦ Human resources policy
◦ Conflict of interest
◦ Compensation program
◦ Management succession plan
Recommendation 2.11
◦ The Board should oversee that a sound enterprise
risk management (ERM) framework is in place to
effectively identify, monitor, assess and manage key
business risks. The risk management framework
should guide the Board in identifying units/business
lines and enterprise-level risk exposures, as well as
the effectiveness of risk management strategies.
ENTERPRISE RISK
MANAGEMENT
◦ Identify
◦ Assess
◦ Prioritize
◦ Mitigate
Risk management policy
◦Navigate
◦Capitalized
◦Safeguard
Risk Tolerance
◦The specific maximum risk that the company is
willing to take on for each type of risk
Recommendation 2.12
◦ The Board should have a Board Charter that
formalizes and clearly states its roles,
responsibilities and accountabilities in carrying out
its fiduciary duties. The Board Charter should serve
as a guide to the directors in the performance of
their functions and should be publicly available and
posted on the company’s website.
Board Charter
◦ Roles
◦ Responsibility
◦ Composition
◦ Authority
◦ Functioning
◦ Guides directors how to discharge their function
◦ Standards for evaluating performance of the board
◦ Contains the roles and responsibilities of chairman
PRINCIPLE 3
BOARD COMMITTEES SHOULD BE SET UP TO THE EXTENT
POSSIBLE TO SUPPORT THE EFFECTIVE PERFORMANCE OF THE
BOARD’S FUNCTIONS, PARTICULARLY WITH RESPECT TO AUDIT,
RISK MANAGEMENT, RELATED PARTY TRANSACTIONS, AND
OTHER KEY CORPORATE GOVERNANCE CONCERNS, SUCH AS
NOMINATION AND REMUNERATION. THE COMPOSITION,
FUNCTIONS AND RESPONSIBILITIES OF ALL COMMITTEES
ESTABLISHED SHOULD BE CONTAINED IN A PUBLICLY
AVAILABLE COMMITTEE CHARTER.
Publicly Available Committee
Charter
Recommendation 3.1
◦The Board should establish board committees
that focus on specific board functions to aid in
the optimal performance of its roles and
responsibilities.
PARTICIPATION OF:
◦ Audit Committee
◦ Corporate Governance Committee
◦ Board Risk Oversight Committee
◦ Related Party Transaction Committee
Types of Board Committee
◦Depends on the SIZE, RISK PROFILE, and
COMPLEXITY of the Operation.
Recommendation 3.2
The Board should establish an Audit Committee to enhance its oversight
capability over the company’s financial reporting, internal control system,
internal and external audit processes, and compliance with applicable laws
and regulations. The committee should be composed of at least three
appropriately qualified non-executive directors, the majority of whom,
including the Chairman, should be independent. All of the members of the
committee must have relevant background, knowledge, skills, and/or
experience in the areas of accounting, auditing and finance. The Chairman of
the Audit Committee
should not be the chairman of the Board or of any other committees.
Recommendation 3.3
◦ The Board should establish a Corporate Governance
Committee that should be tasked to assist the Board in the
performance of its corporate governance responsibilities,
including the functions that were formerly assigned to a
Nomination and Remuneration Committee. It should be
composed of at least three members, all of whom should
be independent directors, including the Chairman.
Recommendation 3.4
◦ Subject to a corporation’s size, risk profile and complexity of operations,
the Board should establish a separate Board Risk Oversight Committee
(BROC) that should be responsible for the oversight of a company’s
Enterprise Risk Management system to ensure its functionality and
effectiveness. The BROC should be composed of at least three members,
the majority of whom should be independent directors, including the
Chairman. The Chairman should not be the Chairman of the Board or of
any other committee. At least one member of the committee must have
relevant thorough knowledge and experience on risk and risk
management.
Recommendation 3.5
◦ Subject to a corporation’s size, risk profile and
complexity of operations, the Board should establish a
Related Party Transaction (RPT) Committee, which
should be tasked with reviewing all material related party
transactions of the company and should be composed of
at least three non-executive directors, two of whom
should be independent, including the Chairman.
Recommendation 3.6
◦ All established committees should be required to have
Committee Charters stating in plain terms their
respective purposes, memberships, structures, operations,
reporting processes, resources and other relevant
information. The Charters should provide the standards
for evaluating the performance of the Committees. It
should also be fully disclosed on the company’s website.
Thank you for
listening!