This Board Charter ("Charter") has been developed to emphasize PETRONAS Gas Berhad ("PGB") Board of Directors' commitment to governance. It adopts current 'best-practices', applicable rules and regulations, processes and procedures to guide the Board in the discharge of its duties and functions. This Charter will serve as a reference tool and benchmark to facilitate regular assessment of the Board's performance.
The Charter sets out the roles and responsibilities, membership, composition and operation of the Board. The powers and authorities of the Board are derived from the Articles of Association of PGB ("Articles"), the Malaysian Companies Act as amended from time to time, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("Listing Requirements").
In this Charter, a reference to PGB shall, where applicable, includes reference to PGB's subsidiaries and to PGB's jointly operated and associate companies ("PGB Group").
2. Roles and Responsibilities of the Board
2.1 The Board's primary commitment is to lead and oversee the business of PGB Group and to ensure that the conduct of PGB Group's operations promotes business sustainability, integrity and complies with relevant law, rules and regulations.
2.2 The Board's functions, roles and responsibilities are:
2.2.1 The Board's main functions:
(a) Strategy Formulation
i) Reviewing, approving and monitoring the strategic business plans, goals and key policies proposed by the Management to ensure sustainability and optimization of long term returns.
(b) Policy Making
(i) To ensure that appropriate policies are in place, adopted effectively and are regularly reviewed in light of the changing circumstances.
(ii) Policies are normally developed by the Management and where appropriate, be approved by the Board. In some situations, the Board may set the policies themselves.
(iii) In other cases, the Board may delegate much of the policy making to the CEO and the Management.
(c) Monitoring and Supervising Executive Activities
i) Identifying, continuously assessing and managing the principal risks affecting the PGB Group and the implementation of an effective system of internal controls, mitigation measures and risk management;
ii) Overseeing the conduct and the performance of the Management as well as PGB Group's businesses;
iii) Overseeing the appropriate succession plan for members of the Board and Management; and
iv) To review the adequacy and integrity of the Company's internal systems including systems for compliance with applicable laws, regulations, rules and guidelines.
(d) Providing Accountability
The Board is accountable to its members or shareholders. The Board may have some accountability towards a wider range of stakeholders affected by PGB's decision such as employees, suppliers, customers, the local community and the state/country where PGB is operating.
The Chairman is appointed from a member of the Board. The Chairman provides visionary leadership and guidance to the Board from the aspect of governance. The Chairman of the Board is a Non-Executive Director.
The role of the Chairman is summarised as below:
i) Leading the Board in setting the values and ethical standards of PGB.
ii) Chairing the board meetings and stimulating debates on issues and encouraging positive contributions from each board member.
iii) Consulting with the Company Secretary in setting the agenda for board meetings and ensuring that all relevant issues are on the agenda.
iv) Maintaining a relationship of trust with and between the Managing Director/Chief Executive Officer and Non-Executive Directors.
v) Ensuring the provision of accurate, timely and clear information to Directors.
vi) Ensuring effective communication with shareholders and relevant stakeholders.
vii) Conducting performance assessment of board members, its Committees and individual Directors, including assessment of the independence of Independent Directors.
viii) Facilitating effective contribution of Non-Executive Directors and ensuring constructive discussions at board meetings.
ix) Ensuring that all directors are properly briefed on issues arising at board meetings and there is sufficient time allowed for discussion on complex or contentious issues and where appropriate, arranging for informal meetings beforehand to enable thorough preparations.
x) Allowing every board resolution to be voted on and ensuring the will of the majority prevails.
xi) Casting his votes in accordance with the prescribed Articles of Association of PGB.
xii) Ensuring that all board members, upon taking up their office, are fully-briefed on the terms of their appointment, time commitment, duties and responsibilities, and the business of PGB.
xiii) Acting as liaison between the Board and Management, and between the Board and the Managing Director/Chief Executive Director.
2.5 Managing Director/Chief Executive Officer
The Managing Director/Chief Executive Officer (MD/CEO) is a member of the Board. He is accountable and responsible for the day to day management of PGB Group's business and the implementation of the plans, targets and policies set by the Board. He is assisted in the management of PGB Group's business by the Management.
The Managing Director/Chief Executive Officer shall be supported by the Board members in undertaking these responsibilities.
The role of the Managing Director/Chief Executive Officer is summarised as follows:
i) With regard to the Board and PGB:
a) To develop and recommend to the Board the long-term strategy and vision for PGB and/or Group that leads to the creation of long-term prosperity and stakeholder value.
b) To develop and recommend to the Board the operational plan and budget that support PGB's and/or Group's long-term strategy.
c) To foster a corporate culture that promotes ethical practices, encourages individual integrity and the fulfillment of PGB's corporate social responsibilities.
d) To maintain a positive and ethical working environment that is conducive to attracting, retaining and motivating a diverse work-force at all levels.
ii) With regard to the Management and business operation:
a) To recommend suitable management structure and operating authority levels which include delegations of responsibilities to the management.
b) To ensure an effective management team below the level of the Managing Director/Chief Executive Officer and to develop an appropriate succession plan.
c) To formulate and oversee implementation of major corporate policies.
d) To be accountable to the Board for the financial management and reporting, including forecasts and budgets of PGB.
e) To make reports to the Board periodically on its financial positions, key performance indicators, market conditions and business development from time to time.
f) To ensure continuous improvement in quality and value of the PGB's products and services.
g) To serve as spokesperson for PGB.
h) To refer to the Board Committee on matters as requested from time to time.
3. Board Membership
3.1 Attributes and Composition
As per PGB's Diversity Policy, the Board is to ensure that the mix and profiles of our Board members, in terms of age, ethnicity and gender, provide the necessary range of perspectives, experience and expertise required to achieve effective stewardship and management. A truly diverse and inclusive board will leverage differences in thought, perspective, knowledge, skill, regional and industry experiences, cultural and geographical background, age, ethnicity and gender which will ensure that the Company retains its competitive advantage.
The Board believes in transparent policies and procedures that will assist in the selection of Board members. The Board comprises of members who bring value to Board deliberations.
The Independent Directors shall provide independent judgment and objectivity without being subordinated to operational considerations. The Independent Directors are to uphold the interests of all stakeholders and not only the interests of a particular group, and that all relevant matters and issues are objectively and impartially considered by the Board. The views and opinions of the Independent Directors shall carry significant weight in the Board's decision-making process.
If there are any Directors that hold differing views on any matter discussed at a Board Meeting, the Board minutes shall clearly reflect this.
The Board regularly assesses its performance and that of individual Directors on an annual basis. In addition, the Board regularly assesses the independence of the independent directors and their ability to bring unbiased and objective judgment to the Board's deliberations.
3.2 Board Appointment
The appointment of a new Director is made upon recommendation from the Nomination Committee whose primary responsibilities are to evaluate, assess and recommend candidates for Board approval.
All Directors are expected to commit to their responsibility to PGB Group, including in the exercise of their fiduciary and leadership roles. The Directors shall consult the Chairman before accepting new directorship in any other public listed company.
3.3 Induction and Training for Board Members
Each newly appointed Director is provided with a Director's dossier to serve as an induction literature to assist their understanding of the Company's expectations, business and operations. In addition to the mandatory accredited programme, the Board shall assess further training needs of the Directors on an on-going basis.
4. Board Committees
4.1 The Board may from time to time establish Committees as it considers appropriate to assist in carrying out its duties and responsibilities and to allow detailed deliberation on specific issues. The Board currently delegates certain functions to the following Committees to assist in the execution of its responsibilities:-
(i) Board Audit Committee.
(ii) Nomination & Remuneration Committee.
4.2 The Committees shall operate under its respective Terms of Reference. The chairman of the respective Committees reports to the Board on the outcome of the Committee meetings and minutes of Committee meetings are made available to all Directors.
5. Directors' Remuneration
Directors' remuneration is generally determined at levels which would continue to attract and retain Directors of high caliber and with the required competence.
The Board is assisted by the Nomination & Remuneration Committee in assessing and recommending suitable remuneration for the Directors.
6. Board Process
6.1 Board Meetings
The Board meets every quarter with additional meetings convened as and when urgent issues and/or important decisions are required to be taken. Notwithstanding the scheduled Board meeting, any Director may, at any time, and the Company Secretary shall, on the requisition of a Director, convene a meeting of the Directors.
Board Meetings are conducted in accordance with the Listing Requirements, the Articles and the Malaysian Companies Act as amended from time to time.
The Management and external consultants may be invited to attend Board meetings to present or report on matters relating to their areas of responsibility.
6.2 PETRONAS Code of Conduct and Business Ethics
The Board has adopted the PETRONAS Code of Conduct and Business Ethics ("CoBE") that seeks to ensure ethical behaviours and conduct by the Directors, all PGB Group's employees and external parties liaising with PGB Group. This Board Charter shall be read in conjunction with CoBE.
6.3 Access to Advice
All Directors have access to the advice and services of the Company Secretaries. The Board is entitled to obtain external independent professional advice on matters relating to PGB Group's business and operations, at PGB Group's expense.
7. Integrity of Reporting
7.1 The Board aims to present a fair and balanced evaluation of the PGB Group's financial position, performance and prospects by ensuring that the financial treatment of the accounts of PGB Group is in compliance with the applicable law, regulations and reporting standards.
7.2 The Board ensures the effectiveness of PGB Group's risk management and system of internal controls to manage financial and health, safety and environment risks. The Board is assisted by the Board Audit Committee in overseeing the integrity of the financial reporting process, risk management and system of internal controls and over PGB's internal and external audit scope.