CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Section 06 Governance Cahya Mata Sarawak Berhad 54 In 2015, the Board implemented an electronic-based risk management reporting system (Q-Radar) on a Group-wide basis with the aim of enhancing the efficiency of our current risk management process. With the successful roll out of Q-Radar system, the C-Radar system which aim is to cascade risk management to the staff that are not captured under Q-Radar system has been rolled out in the Cement Division and has been extended to other Divisions across the Group. Risk reports are produced by respective business divisions’ management focusing on the risks they themselves have identified. • Review the adequacy and integrity of the Group’s internal control systems The Board, via the Group Audit Committee (“Group AC”), reviews the adequacy and integrity of the Group’s internal control systems. • Succession planning The Board, via the Nomination & Remuneration Committee (“NRC”), implements and ensures effective and orderly succession planning is in place for both the Board and Senior Management of the Group. The Board is satisfied that the NRC, in its current form, effectively discharges its functions in respect of nomination and remuneration matters which are listed separately in its terms of reference (“TOR”) for clarity and thus there is no need to separate the nomination and remuneration functions. The NRC reviews the Group’s human resources plan including the succession planning framework and other initiatives such as jobs and salary review and also considers the renewal of service contracts of the Chairman, Executive Directors and key management positions and reports the progress thereof to the Board. • Oversee the development and implementation of investor relations (“IR”) programme The Board recognises the importance of a sound IR programme in its efforts to communicate effectively with the investing community and other stakeholders. Continuous engagement is made through a planned IR programme and by maintaining a dedicated and informative website focusing on providing the information required by the investing community. Among the numerous initiatives studied and approved by the Board in 2016 were: • Approved the re-establishment of the SUKUK Ijarah Programme of RM2.00 billion. • Implementation of succession planning for the Board. • Approved the CMS Sustainability Initiatives. • Revisions to the Group Limits of Authority (“LOA”) Manual to improve its effectiveness. Code of Ethics for Directors The Board continues to adhere to the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia. The Board’s own Code of Ethics is available on the Company’s website at www.cmsb.com.my . Whistleblowing Policy The Board is committed to maintaining the highest possible standards of ethical and legal conduct within the Group. In line with this commitment and in order to enhance good corporate governance and transparency, the Board has adopted a Whistleblowing Policy in 2012. This policy aims to provide an avenue for raising concerns related to possible improprieties in matters of financial reporting, compliance and other malpractices at the earliest opportunity, in an appropriatemanner andwithout fear of retaliation. The Whistleblowing Policy is available on the Company’s website at www.cmsb.com.my . Access to Information and Advice The Directors have independent access to the advice and dedicated support services of the Group Company Secretary to facilitate the discharge of their duties. The Directors may seek clarification and/or explanation from Management on issues pertaining to their respective jurisdictions or request for further information and/or updates on the Group’s operations. The Board, whether as a group or individually, may seek independent professional advice at the Company’s expense in discharging its duties. The Company has in place guidelines allowing the Board to seek independent professional advice through the Group LOA Manual. Qualified and Competent Company Secretary The Group Company Secretary is a person qualified to act as a company secretary under Section 235(2) of the Act and the Malaysian Institute of Chartered Secretaries and Administrators (“MAICSA”) Practising Scheme. The Group Company Secretary is an Associate Member of MAICSA with more than twenty (20) years of experience in company secretarial practice. The Group Company Secretary provides support to the Board in fulfilling its fiduciary duties. In this respect, the Group Company Secretary plays an advisory role to the Board on Board policies and procedures and its compliance with regulatory requirements, codes and best practices on governance relating to the Directors’ duties and responsibilities. The Group Company Secretary works closely with the Chairman in raising all compliance and governance issues which warrant the attention of the Board. The Group Company Secretary is appointed as the company secretary of the Company and all the subsidiaries in the Group and as secretary to the Board Committees. The Group Company Secretary attends all Board, including Boards of subsidiary companies, and Board Committee meetings and ensures that accurate records of the proceedings of these meetings and the decisions made Statement on Corporate Governance