BOARD CHARTER

The Board of Directors (Board) of Parlo Berhad (Parlo or Company) is the focal point of the Company's corporate governance system. The Board is responsible for the undertaking of the Parlo group of companies' (Parlo Group or Group) business and affairs in the interest of its shareholders and other stakeholders.
The Board is accountable for good corporate governance and the highest standards of business integrity, ethics and professionalism across the Parlo Group’s activities. This Board Charter serves as a reference point to provide insights into Board of Directors’ fiduciary duties, governance structure, authority, terms of reference (TOR) of the Board Committees and Management.
1.  Board
As stipulated under Section 211 of the Companies Act, 2016, the business and affairs of the Company must be managed by, or under the direction of, the Board.

1.1 Board composition

The Board should comprise directors with a diverse set of skills, knowledge, expertise, professional experiences and backgrounds so as to effectively discharge the Board's roles and responsibilities for the benefit of the Company and its business.
The Articles of Association of the Company provides for a minimum of 3 Directors and a maximum of 10 Directors.
At least two (2) directors or one-third (1/3) of the Board, whichever is the higher, shall be Independent Directors as defined in the ACE Market Listing Requirements (AMLR) of Bursa Malaysia Securities Berhad (Bursa Securities) In aligning with the spirit of MCCG, the Company shall strive to have a Board that comprises a majority (more than half) of Independent Directors.

1.2 Independent Director

The Independent Directors provide independent judgment, experience and objectivity without being subordinated to operational considerations. They help to ensure that the interests of all shareholders are indeed taken into account by the Board and adequately protected and that the relevant issues are subjected to objective and impartial consideration by the Board.
The Board assesses the independence of the Directors annually by taking into consideration of their declarations and having regard to the criteria adopted for assessing the independence of Directors under the annual Board assessment.
The tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of nine (9) years, an Independent Director may continue to serve on the Board subject to his/her re-designation as a Non-Independent Director. In the event the Director was to remain designated as an Independent Director, the Board shall justify and obtain shareholders' approval.
In the event the Board wishes to continue to retain an Independent Director after the 12th year, the Board should seek annual shareholders' approval through a two-tier voting process as guided by the Malaysian Code of Governance 2017 (MCCG) as follows:
Tier 1: Only the Large Shareholder(s) of the Company, votes
Tier 2: Shareholders other than Large Shareholder(s) votes
Large Shareholder(s) means a person who:
  • is entitled to exercise, or control the exercise of, not less than 33% of the voting shares in the Company;
  • is the largest shareholder of voting shares in the Company;
  • has the power to appoint or cause to be appointed a majority of directors of the Company; or
  • has the power to make or cause to be made, decisions in respect of the business or administration of the Company, and to give such effect to such decisions or cause them to be given effect to.
The decision for the resolution is determined based on the simple majority of votes of Tier 1, and a simple majority of votes of Tier 2. The resolution is deemed successful if both Tier 1 and Tier 2 votes support the resolution. The resolution is deemed defeated where the vote between the two tiers differs or where Tier 1 voter(s) abstained from voting.
The Board will undertake a rigorous review to determine whether the "independence" of the director has been impaired to justify retaining an Independent Director beyond the cumulative term limit of 9 years.
The Nomination Committee and the Board regularly assess the independence of the Independent Directors taking into consideration, among others, a director's background and current activities as well as whether the director can act independently of Management. In this regard, a director is considered to be independent where they are independent of Management and free from any business or other relationship that could materially interfere with the exercise of their unfettered and independent judgement.
The composition and size of the Board shall be reviewed from time to time to ensure its appropriateness.

1.3 Appointments and re-election

The Nomination Committee ensures that all appointments of new directors and re-election of directors to the Board are proper and in compliance with the rules of the relevant authorities. Any appointment of additional director will be made as and when it is deemed necessary by the existing Board and with due consideration given to the mix of skills, expertise, experience, character, fit and proper, integrity, competence, time commitment, as well as diversity where appropriate, which the person nominated, can bring to the Board.
New Board members shall be briefed on the terms of their appointment, their duties and obligations and on the operations of the Parlo Group. Copies of the following shall be provided to the newly appointed Board members:
  • Board Charter;
  • Memorandum and Articles of Association/ Constitution;
  • Board Committees' composition and TORs;
  • Latest Business Plans;
  • Latest Annual Reports and Financial Statements;
  • Organisation Charts; and
  • Any other documents deemed necessary by the Board.
The Board should use a variety of approaches and sources to ensure that it is able to identify the most suitable candidates. This may include scouring from a director's registry and open advertisements or the use of independent search firms.
In accordance with the Company's Articles of Association, all directors who are appointed by the Board are subject to re-election by shareholders at the annual general meeting (AGM) subsequent to their appointment and 1/3 of the remaining directors are subject to re-election by rotation at each AGM thereafter. In any case, each director shall retire from office at least once in every 3 years.

1.4 Directors' Fit and Proper Policy

All Board members are required to have the necessary qualities, competencies and experience that allows them to perform their duties and carry out the responsibilities required of the position in the most effective manner.

1.5 Directors' training

All Board members have attended the Mandatory Accreditation Programme (MAP) as prescribed by Bursa Securities under Rule 15.08 of the AMLR. Nevertheless, Board members are encouraged to attend seminars and/or training programmes organised by the relevant authorities and/or professional bodies to broaden their knowledge and to keep abreast with the changes in relevant laws and regulations as well as the business environment. This will enable the directors to effectively discharge their duties and sustain active participation in Board deliberations. The Board shall assess the training needs of the directors from time-to-time and disclose in the Annual Report the trainings attended by the directors.

1.6 Board meeting

The Board will normally hold meetings at least 4 times in each financial year and will hold additional meetings as the situation requires.

The directors will use their best endeavours to attend Board meetings. Directors are expected to participate fully and constructively in Board discussions and other activities. The Board ensures that its decisions, as well as issues deliberated on before arriving at those decisions, are properly documented and implemented.

A full agenda of the meeting and all board papers will be distributed in advance to ensure that the directors are well informed, have the opportunity to seek further information and have access to the Management and employees of the Parlo Group on the matters to be deliberated, so as to be properly prepared at the meetings. The Board may invite the Management, employees or any other person to attend meetings of the Board or of any board committees to assist in the discussion and examination of the matters under consideration by the Board or board committees.

1.6.1 Board Meeting Procedures

  • (a)The conduct of Directors will be consistent with their duties and responsibilities i.e., to act in the best interest of the Company. The Board will be disciplined in carrying out its role, with the emphasis on strategic issues and policy.
  • (b)Board discussions will be open and constructive, recognising that genuinely held differences of opinion could bring greater clarity and lead to better decisions. The Chairman will, nevertheless, seek a consensus in the Board but may, where considered necessary, call for a vote. All discussions and their record will remain confidential unless there is a specific direction from the Board to the contrary, or disclosure is required by law. Subject to legal or regulatory requirements, the Board will decide the manner and timing of the publication of its decisions.
  • (c)The Executive Directors will attend Board meetings to discharge their Board responsibilities. At Board meetings, the Board's responsibilities supersede all executive responsibilities.
  • (d)The Board has the sole authority over its agenda and exercises this through the Chairman or Secretary of the Board. Any Director may, through the Chairman or the Secretary, request the addition of an item to the agenda.
  • (e)The Board will normally hold meetings at least four (4) times in each financial year and will hold additional meetings as the situation requires. At each meeting, the Board will consider:
    • the quarterly financial statements for announcement to authorities;
    • relevant financial and operational report(s) from the Management;
    • public announcements;
    • specific proposals for capital expenditure and acquisitions, if any; and
    • major issues and opportunities for the Company, if any.
    In addition, the Board will, at intervals of not more than one (1) year-
    • review the following year's business plan and approve the annual budget;
    • approve the annual financial statements;
    • consider and, if appropriate, declare or recommend the payment of dividends;
    • review Board composition, structure and succession;
    • review the Company's audit requirements;
    • review the performance of, the necessity for and composition of Board committees;
    • undertake Board and individual Director evaluations;
    • review Directors' remuneration; and
    • review risk assessment policies and controls and compliance with legal and regulatory requirements.
  • (f)Directors are entitled to have access to all relevant company information and to Management at all reasonable times.
  • (g)In setting policies, the Board will not reach specific decisions unless it has considered the general principles upon which they are founded, and in reaching other specific decisions, the Board will consider the policies against which the decisions are made.

1.7 Financial reporting

In presenting the annual audited financial statements and quarterly report announcements to the shareholders, the Board aims to present a balanced and meaningful assessment of the Parlo Group's financial performance and position as well as prospects of the business.

The Board ensures that the financial statements are prepared in accordance with the provisions of the Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards and the requirements of the CA 2016, so as to give a true and fair view of the financial position, performance and cash flows of the Group and Company. The Board is assisted by the Audit Committee to oversee the Group's financial reporting processes and the quality of its financial reporting.

1.8 Directors' remuneration

The remuneration of the Executive Directors is linked to their individual performance and that of the Parlo Group. The remuneration of the Non-Executive Directors comprises a basic fee, additional fee if he/she is a chairman/chairperson of board committees and other benefits-in-kind, if any.

In determining the remuneration packages of Executive and Non-Executive Directors, the Board takes into consideration, among others, information and/or data obtained from the internal surveys undertaken by the Board and the Management to ensure that said packages are competitive with market rates.

The fees and benefits payable to the directors are subject to the approval of the shareholders.
2.  Roles and Responsibilities

2.1 Duties and responsibilities of the Board

The Board is responsible to provide direction and supervise the Management of the business and affairs of the Company and the Parlo Group. The responsibilities of the Board include the following:
  • (a)Oversee management and to ensure that Shareholder long-term interests are served. Through oversight, review and counsel, the Board establishes and promotes Parlo's business and organizational objectives, provides leadership to Parlo, oversees business affairs and integrity, work with management to determine the vision, mission and long-term strategy of the Company;
  • (b)Having regard to its role, the Board will direct and supervise the Management of, the Business and affairs of the Company, in particular:
  • promoting good corporate governance culture within the Group which reinforces ethical, prudent and professional behavior;
  • reviewing, challenging and deciding on Management's proposals for the Group and monitoring its implementation by Management;
  • reviewing and adopting a strategic plan for the Company, including establishing Company Goals and ensuring that the strategies promote sustainability and support long-term value creation;
  • establishing policies for strengthening the performance of the Company including ensuring that Management is proactively seeking to build the Business through innovation, initiative, technology, new products and the development of its business capital;
  • identifying principal risks and ensuring the implementation of appropriate systems to manage these risks;
  • set the risk appetite within which the Board expects Management to operate and ensure that there is an appropriate risk management framework to identify, analyse, evaluate, manage and monitor significant financial and non-financial risks;
  • succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management;
  • reviewing the adequacy and the integrity of the Company's internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines;
  • deciding on whatever steps are necessary to protect the Company's financial position and the ability to meet its debts and other obligations when they fall due, and ensuring that such steps are taken;
  • ensuring that the Company's financial statements are true and fair and conform to any applicable laws and/or regulations; and
  • ensuring that the Company adheres to high standards of ethics and corporate behaviour.
  • (c)In the normal course of events, day-to-day management of the Company will be in the hands of Management and under the stewardship of the Chief Executive Officer (CEO) of the Company.
  • (d)In overseeing the conduct of the Group's Business, the Board shall ensure that an appropriate financial planning, operating and reporting framework as well as an embedded risk management framework is established. Elements of this combined framework include the Business Plan, the budget, financial statements and risk management reports.

2.2 Key responsibilities of the Chairman include:

  • Providing leadership to the Board in setting the direction and policies of the Group;
  • Advising on the strategic plans for medium to long-term growth of the Group;
  • Supporting and guiding Management in achieving corporate objectives;
  • Advising CEO and Management on new businesses and to explore Merger & Acquisition opportunities;
  • Advising CEO and Management of good Investor Relation with effective communication on the Group's performance and strategic plans;
  • Representing the Board to shareholders and to chair and to ensure the efficient organisation and conduct of the Board and/ or meeting of the shareholders;
  • Leading Board meetings and discussions;
  • Maintaining regular dialogue with the CEO overall operational matters and consulting with the remainder of the Board promptly over any matters that gives him/ her cause for major concern;
  • Ensuring that Executive Directors look beyond their executive function and accept their share of responsibilities in governance; and
  • Performing other responsibilities assigned by the Board from time to time.

2.3 Role of CEO

  • (a)The position of the CEO, in essence, is to ensure the effective implementation of the Group's Business Plan and policies established by the Board as well as to manage the daily conduct of the business and affairs to ensure its smooth operation.
  • (b)The CEO, in association with the Chairman, is accountable to the Board for the achievement of the Group's mission, goals and objectives.
  • (c)CEO is responsible to the Board for the following:
  • responsible for the overall direction and management of the Group's entire operations to achieve profit and investment objectives;
  • preparing strategic plans and direction for the Group;
  • determining and implementing medium and long-term business plans to optimise returns to all stakeholders;
  • ensuring corporate compliance and governance with relevant authorities for the time being in force;
  • managing all business units (including but not limited to Sales and Marketing, Services and Support, Finance and Logistics, Information & Communications Technology, Human Resource and Corporate Services) in meeting the expectations of principals and customers;
  • enhancing the business processes to increase operational efficiencies; and
  • developing managers for succession planning and training employees for higher productivity.
  • executive management of the Group's Business Ownership, inter alia, the development of a strategic plan; an annual operating plan and budget; performance benchmarks to gauge management performance and the analysis of management reports;
  • developing long-term strategic and short-term profit plans, designed to ensure that the Group's requirements for growth, profitability and return on capital are achieved;
  • directing and controlling all aspects of the business operations in a cost-effective manner;
  • effectively oversee the human resources of the Group with respect to key positions in the Group's hierarchy and recruitment of senior management staff, determination of remuneration as well as terms and conditions of employment for senior management and issues pertaining to discipline;
  • ensures that the Group's Financial Reports present a true and fair view of the Group's financial condition and operational results and are in accordance with the relevant accounting standards;
  • assures the Group's corporate identity, products and services are of high standards and are reflective of the market environment;
  • ensures compliance with governmental procedures and regulations;
  • coordinates business plans with the businesses heads, coordinates management issues through the Board, and oversees divisional function groups and cost containment process in consultation with the Chief Financial Officer;
  • assists the Chairman in organising information necessary for the Board to fulfil the objectives and in providing this information to Directors on a timely basis.

2.4 Delegation to committees

The Board may from time-to-time establish committees as it considers necessary or appropriate to assist it in carrying out its responsibilities.

The Board shall, as a minimum, establish the following committees and shall adopt charters setting out matters relevant to the authority, responsibilities, membership and operation of those committees:
  • Audit & Risk Management Committee
    Audit & Risk Management Committee assists in fulfilling the Board's stewardship accountability to its Shareholders and financial stakeholders. An Audit & Risk Management Committee shall provide assurance to the Board with quality and reliable financial information and are responsible for the accuracy and integrity of the Group's financial reporting. The Audit & Risk Management Committee also

    oversees the Company's risk management framework and ensures that appropriate risk management processes are in place and applied.

    The Audit & Risk Management Committee has established a policy that requires a former key audit partner to observe a cooling-off period of at least two (2) years before one is eligible for appointment as a member of the Audit & Risk Management Committee.

    The positions of the Chairman of the Board and the Audit & Risk Management Committee are held by different individuals.
  • Nomination Committee
    The Nomination Committee oversees matters relating to the nomination of new Directors, annually reviews the required mix of skills, experience fit and proper and other requisite qualities of Directors as well as the annual assessment of the effectiveness of the Board as a whole, its Committees and the contribution of each individual Director as well as identify candidates to fill board vacancies, and nominating them for approval by the Board.
  • Remuneration Committee
    The Remuneration Committee is primarily responsible for recommending to the Board the remuneration of Executive Director and Non-Executive Directors in all its forms, drawing from outside advice if necessary.

    The Board may also delegate specific functions to ad-hoc committees as and when required.

    The powers delegated to these committees are set out in their respective TOR as approved by the Board. The Chairman of the respective committee reports to the Board on the outcome of the committee meetings and such reports or minutes will be included in the Board papers.

2.5 Duties and responsibilities of the Company Secretary/(ies)

  • (a)The appointment and removal of the Company Secretary/(ies) shall be a matter of the Board as a whole. The Board recognises that the Company Secretary/(ies) should be suitably qualified, competent and capable of carrying out the duties required.

    The duties and responsibilities of the Company Secretary/(ies) include the following:
  • Manage the logistics of all Board and committee meetings, attend and record minutes of all Board and committee meetings;
  • Advise the Board on its roles and responsibilities;
  • Facilitate the orientation of new directors and assist in director training and development;
  • Advise the Board on corporate disclosures and compliance with company and securities regulations and AMLR;
  • Manage processes pertaining to the AGM;
  • Monitor corporate governance developments and assist the Board in applying governance practices to meet the Board's needs and stakeholders' expectations; and
  • Serve as a focal point for stakeholders' communication and engagement on corporate governance issues.
3.  Relationship with Management
Directors may delegate their powers as they consider appropriate. However, the ultimate responsibility for strategy and control rests with the directors as guided by the Executive Directors.

The Board will be supplied by Management with information in a form, time frame and quality that will enable the Board to discharge its duties effectively. Directors are entitled to request for additional information at any time when they consider appropriate.

Any abstention, due to any reason whatsoever including but not limited to conflict of interest must be indicated to the Chairman/Chairperson at the time the matter is being considered and recorded in the minutes.
4.  Shareholders Relationship
The Board is aware of Parlo's commitment to enhancing long-term shareholders' value through regular communication with all its shareholders, regardless of individual shareholders and institutional investors (hereinafter referred to as the Shareholders).

The Board adopts the following measures with regards to communication with the Company's shareholders:
  • Timely announcements to Bursa Securities;
  • Establishment of a Corporate Website;
  • Timely despatch of Annual Reports;
  • Conduct of Annual General Meetings/General Meetings with ample notices; and
  • Appointment of designated contact persons for shareholders' communication purposes.
C  nduct of General Meetings:
  • (a)Notice of AGM should be given to the shareholders at least 14 days (ordinary resolution) / 21 days (special resolutions) prior to the AGM.
  • (b)All Directors should commit to attending all General Meetings of the Company in order to provide an opportunity for the Shareholders to effectively engage with each Director.
  • (c)The Chairman of the Board Committees should provide meaningful response to questions addressed to them.
  • (d)All votings on resolutions in all general meetings would be conducted via poll voting.
5.  Stakeholders Management
The Board endeavours to provide and maintain ongoing engagement and communication with shareholders, public, media, government bodies and other stakeholders in order to build trust and understanding between the Company and its stakeholders. In this regard, the Parlo Group ensures that the dissemination of material information is timely, clear, complete and accurate.

The Group employs various communication channels to promote effective dissemination of information such as announcements released on Bursa Securities via BURSA LINK, press releases and analyst briefings as well as on the Company's website at http://www.parlogroup.com.

As a socially-responsible corporate citizen, the Board is committed to social and environmental sustainability. This fundamental Corporate Responsibility is advocated by the Board and intensively nurtured and practiced by the Management with a firm commitment to three (3) major stakeholders:

Employees
The Board acknowledges that the employees are invaluable assets of the Company and play a vital role in achieving the Company Goals.
The Board is committed to ensure the Management to build a company where employees are happy to work, confident and take pride as part of the Company.

Customer
The Board is committed to ensure that the Management place the highest regards in relation to the safety and quality of products. Management to ensure its products and services are in order to achieve the highest customer satisfaction.

Environment
The Board is committed to ensure that the Management preserve and enhance the society's quality of life by improving the Company's activities in order to sustain the environment in all areas of the Company's operations.
6.  Code of Conduct and Ethics
The Board has adopted a Code of Conduct and Ethics (Code) which sets forth the values, expectations and standards of business ethics. The Code is adopted to maintain the highest level of integrity, ethical conduct of the Board, Management and employees of the Parlo Group.

The Board will review the Code as and when necessary to ensure that it remains relevant and appropriate. The Code can be viewed on the Company's website at http://www.parlogroup.com.
7.  Whistleblowing Policy
The Parlo Group is committed to achieving and maintaining the highest standard of work ethics, integrity and accountability in the conduct of its business in line with the Group's Code and good corporate governance practices.

The whistleblowing policy provides an avenue for the employee/officer or stakeholder to report or disclose through established channels, concerns about any violations of the Code, unethical behaviour, malpractices, illegal acts or failure to comply with regulatory requirements that is taking place/has taken place/may take place in the future.

Any concerns raised will be investigated and a report and update are provided to the Board, through the Audit & Risk Management Committee.
8.  Review of The Board Charter
The principles of this Board Charter are:

  • Kept under reviewed and updated as practices on the MCCG and further guidelines on the MCCG or AMLR are issued by the regulatory authority; and
  • Applied in practice having regard to their spirit and general principles rather than to the letter alone.

This Board Charter is to be reviewed by the Board as and when required to ensure that it remains relevant to the Board's objectives and responsibilities and relevant standards of corporate governance.

This Board Charter is approved and adopted by the Board of Directors of Parlo and shall be effective from 22 April 2024 and the Board Charter is made available at the Company's website at http://www.parlogroup.com.