Full Report Edit

BKAM3083 PERFORMANCE STRATEGY

Table of Contents

1.0 INTRODUCTION...........................................................................................................................2

2.0 OBJECTIVE OF THE STUDY.......................................................................................................3

3.0 OVERVIEW OF THE COMPANY................................................................................................4

3.1 DIGI.COM BERHAD.......................................................................................................................4

3.2 MAXIS BERHAD............................................................................................................................7

4.0 METHODOLOGY........................................................................................................................12

5.0 ANALYSIS OF FINDINGS..........................................................................................................14

CONCLUSION...................................................................................................................................45

REFERENCE......................................................................................................................................46

APPENDIX.........................................................................................................................................47

1


1.0 INTRODUCTION

On 29 March 2012, the Securities Commission (SC) released the Malaysian Code on

Corporate Governance 2012 (MCCG 2012), which is the first major deliverable of the

Corporate Governance Blueprint 2011 and supercedes the Malaysian Code on Corporate

Governance 20071. This new code on corporate governance focuses on clarifying the role of

the board in providing leadership, enhancing board effectiveness through strengthening its

composition and reinforcing its independence2. Besides, it sets out broad principles and

specific recommendations on structures and processes which companies should adopt in

making good corporate governance an integral part of their business dealings and culture. It

also encourages companies to put in place corporate disclosure policies that embody

principles of good disclosure. The objective of MCCG 2012 are to achieve excellence in

corporate governance through strengthening self and market discipline and promoting good

compliance in corporate governance culture and focusses on strengthening board structure

and composition.

The MCCG 2012 effective on 31 December 2012 whereas listed companies are required to

report on their compliance with the principles and recommendations of the MCCG 2012 in

their annual reports. Each company needs good corporate governance to ensure reduction of

risk, stimulation of performance, improved access to capital markets, ensure enhancement of

marketabilitu of goods and services, improved leadership and demonstration of transparency

and social accountability.

We will made comparisons of the two non-financial companies in Malaysia. Our group

choose Digi.Com Berhad and Maxis Berhad companies to review the disclosure of corporate

governance. Based on this two firms, we will identify either the companies are compliance or

not in the 8 broad principles followed by 26 corresponding recommendations that has been

stated on MCCG 2012. After that, we select which of the two companies are most comply

towards MCCG 2012. The company that comply most of the disclosure of corporate

governance is the company that have good corporate governance.

1 PwC Alert: Malaysian Code on Corporate Governance 20122http://www.sc.com.my/general-section/corporate-governance/

2

http://www.sc.com.my/general-section/corporate-governance/


2.0 OBJECTIVE OF THE STUDY

The objective of the study is to identify either the companies have good corporate

governance that ensures the well disclosure by effectively communicates detailed

information.

To classify the key principles of good corporate governance for listed companies

Annual Report towards their compliance accordance the Malaysian Code on

Corporate Governance 2012.

To investigate how far a company is complying with the corporate governance that

have been established.

To identify who is involved in corporate governance.

To view to what extent a company is successful.

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3.0 OVERVIEW OF THE COMPANY

3.1 DIGI.COM BERHAD

DiGi.Com Berhad is the third largest mobile operator in Malaysia. Digi is offering mobile

voice, roaming and value-added services on both prepaid and contract bases. Digi is listed on

Bursa Malaysia Securities Berhad on 18 September 2000 and is part of the global

telecommunication provider, Telenor Group. Its mobile service operations are undertaken by

its wholly-owned subsidiary, DiGi Telecommunications Sdn Bhd. Digi commenced

operations in May 1995 when it launched its fully digital GSM1800 services, the first digital

mobile communications service in Malaysia. Digi is a company who providing a

comprehensive range of affordable, convenient and easy to use wireless services to simplify

and enrich the lives of its customers. Digi create value for their customers by selecting the

most appropriate cutting edge technology so that they benefit from products and services that

give them choice, convenience and control. Digi focuses on making it easy, keeping it

relevant and providing the best deals to ensure excellent customer experience in mobile and

internet services.

Besides, Digi provides mobile voice, Internet and digital services to 11 million customers in

Malaysia. Through its mission of 'Internet for All', Digi is committed to driving Malaysia's

growth by building a mobile Internet environment that enables true connectivity, creating

socio-economic development and aiding businesses to prosper. Digi continues to be a game-

changer in the Malaysian telecommunications industry with a solid history of innovative

products and services while being a leader in progressive and responsible business practices.

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Digi vision is always 'Changing the Game' by constantly pushing boundaries, defining new

standards, and ensuring continuous improvements in all parts of our business. Digi core

values is keep promises, make it easy, be respectful and be inspiring3.

In year 2010 annual report have show that Digi total profit for the year end of the 31

December is RM 1,597,248,000. The Digi has been award two merit award in the best

innovation and the best overall winner in Corporate Social Responsibilities categories in the

year 2007. On the year 2009, Digi has been recognized by Wall Street Journal Asia as

Malaysias most admired company for innovation for the third year running. Besides that, the

Asia 200 most admired companies survey named Digi number three in the overall ranking of

Malaysias top 10 companies. For the member of board of director is include three of the

Norwegian which is Jan EdwardThygesen, Hakon Bruaset Kjol and the chairman of Digi.com

Berhad. For the other three Malaysian which is Y.Bhg. Dato Ab Halim Bun Mohyiddin,

Y.Bhg Tan Sri Datu Amar LeoMoggie and Dato Saw Choon Boon.For the management team

for DiGi Malaysia have the HenrikClausen which is the Chief Executive Officer, Khor Choo

Lin for the corporate administration, AlbernMurty for themarketing, Ole Martin Gunhildsbu

for the technology, ZaitonHjIdrus for the corporateaffairs, TerheBorge for the finance,

Christian Thrane for the strategy and business transformation, Chan Nam Kiong for the

customer and channels and the Suriahni Hamidwhich is from the human resource

development.

Digi’s philosophy for corporate responsibility is to drive sustainability into every aspect of

their organisation in a responsible manner and this includes extending the benefits of their

businessto as many as possible.DiGi are primarily provide variety of mobile communication

services which include prepaidand postpaid plans. Digi’s customer are in the range of 15 to

65 years old people.DiGi Malaysia headquarters is located at D'House, Lot 10, Jalan Delima

1/1, Subang Hi-TechIndustrial Park, 40000 Shah Alam, Selangor. Digi has also allocate

twenty branches of Digicenter through nationwide.

3http://www.digi.com.my/aboutus/corporate_overview/information.do

5


Vision, Mission and Values

Board of Directors

4http://www.digi.com.my/aboutus/corporate_overview/board_of_directors.do

6

http://www.digi.com.my/aboutus/corporate_overview/board_of_directors.do


3.2 MAXIS BERHAD

Maxis Berhad is listed on Bursa Malaysia Securities Berhad on 19 November 20095. Maxis

Berhad is a leading communications service provider in Malaysia, enabling both individual

and business customers to connect and communicate anytime, anywhere and from any

device. Maxis has over 14 million service users currently. In 1993, Maxis has obtained

license to run a nationwide GSM 900 mobile network, which is a local fixed network and an

international gateway. Maxis starts its mobile businesses in august 1995 and commenced its

fixed line and international gateway operation in early 1996.

In 1999, Maxis introduced the popular prepaid brand "Hotlink", which currently has 9.5

million customers. In 2002, Maxis purchased Timecel, a rival mobile service provider, from

TimedotCom Berhad. Prior to the purchase, Maxis offered phone numbers beginning with

012, and TimeCell 017. Now, subscribers can choose between the two. On 27 April 2007, an

offer was made to buy out Maxis and privatise the company in preparation for expansions

into the Indonesian and Indian markets. The deal was offered by Ananda Krishnan, who

pledged Maxis RM17.46 billion (US$5.1 billion) in exchange for all remaining shares of the

company. The offer is to be formally made by Usaha Tegas, a company owned by Krishnan,

on 3 May 2007, while the Kuala Lumpur Stock Exchange suspends trading of the company's

shares until 3 May6. Under the urging of Prime Minister Datuk Seri Najib Tun Razak, Maxis

announce that it will re-list the company in Bursa Malaysia on 11 November 20097.

Nowadays, Maxis is providing a full set of services on various platforms to satisfy the

demand of telecommunications for individuals,small enterprises and large organizations, such

as mobile fixed line, prepaid line and internet broadband services. Besides that, Maxis was

first telecommunication company who launched the 3G services, such as 3G connect Card,

5http://www.maxis.com.my/en/about-maxis/investors/overview.html? icid=maxisbusiness:aboutmaxis:annualreport20136E-Ling, Liaw (30 April 2007). "Malaysia's Maxis Receives Takeover Bid From Parent". The Wall Street Journal. Retrieved 30 April 2007.7http://en.wikipedia.org/wiki/Maxis_Communications

7

http://en.wikipedia.org/wiki/Maxis_Communications

http://www.maxis.com.my/en/about-maxis/investors/overview.html?icid=maxisbusiness:aboutmaxis:annualreport2013

http://www.maxis.com.my/en/about-maxis/investors/overview.html?icid=maxisbusiness:aboutmaxis:annualreport2013


PC Webmail, Video Mail and 3G prepaid. The 3G services coverage is up to 740 sites across

Malaysia and still being increased. The 3G services of Maxis enable the users to enjoy the

internet access throughout Malaysia. In addition, Maxis has the customer service centre

throughout the country, which provide conveniencies to the customers for paying bills,

signing up, and reporting problems.

Maxis high-speed network footprint is the largest in the country that enabling every

Malaysian to enjoy their extensive range of data services such as mobile Internet browsing,

social networking sites, downloading applications as well as a portfolio of integrated mobile,

fixed and enterprise solutions. Beyond connecting people with their services, Maxis are

passionate about making a positive impact to the community in which their operate in.Maxis

Corporate Responsibility efforts aim to develop and enrich their community, customers and

partners, creating a fun place to work and advocating environmentally friendly practices8.

Maxis’ vision is admired for excellence. The core values of Maxis is positive, passionate and

collaborative.

Chairman of Maxis Berhad is Raja Tan Sri Dato’ Seri Arshad Bin Raja Tun Uda which also

Independent Non-Executive Director. The others Independent Non-Executive Director is

Robert William Boyle, Dato’ Mokhzani Bin Mahathir and Hamidah Naziadin. Besides, the

Non- Executive Director is Krishnan Ravi Kumar, Dr. Fahad Hussain S. Mushayt, Dr.

Ibrahim AbdulRahman H. Kadi, Augustus Ralph Marshall, Chan Chee Beng, Alvin Michael

Hew Thai Kheam and Morten Lundal.Maxis Berhad Malaysia headquater is located at Level

8, 10-23, Menara Maxis KLCC, Off Jalan Ampang 50088 Kuala Lumpur.

Visions and Values

8https://www.linkedin.com/company/maxis-communications-bhd

8


9

Board of Directors

9http://www.maxis.com.my/en/about-maxis/our-company/vision-and-values.html

9

http://www.maxis.com.my/en/about-maxis/our-company/vision-and-values.html


10


10

10http://www.maxis.com.my/en/about-maxis/our-company/board-of-directors.html

11

http://www.maxis.com.my/en/about-maxis/our-company/board-of-directors.html


4.0 METHODOLOGY

Data Collection

The Process

We started our project by gaining a deeper understanding for the theories of corporate

governance. We also indirectly learned about how Digi and Maxis implement all the

corporate governance’s principle in reality. We have done the following step in order to

complete this report:

Choose a topic so as company and have group discussions

Firstly, our group members choose the company that we all are interested in and inform our

lecturer regarding our decision. We have chosen the telecommunication company which is

Digi and Maxis for our project. We choose both companies due to easy access to find

information. It is widely known in Malaysia and due to this matter; we can get a lot of

information regarding our issues. We divided the task equally in order to complete

successfully with the issues stated based on the syllabus. We searched more information and

read about the company detail in the internet to find the whether the company implement the

principle of corporate governance or not?

Make a research on finding the data

Secondly, we as a group has done research on the findings regarding the issues using the

internet sources, journals, articles and related books. We as a team ask the lecturer about

unclear and uncertainty issues and make reviews about the Digi Co. and Maxis Co. We work

as a team in observing and monitor from time to time to make sure that each of our group

members will know what is each member task, how to complete each tasks given, explained

if there are any uncertainty in the tasks given and help in many ways in order to run smoothly

the project.

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Submit a proposal to lecturer

Thirdly, after the discussion regarding the project as a group, we make a proposal regarding

our project and sent it to our lecturer on 15th October 2014.

Find more articles and journals to affirm our research

Moreover, we also find more articles and journals or books that are related with the topic

which is corporate governance in order to support our reseach. All findings were related to

the issues of implimentation the principle that stated in the corporate governance for Digi Co.

and Maxis Co. With these materials, we make it as our references and our guideline in order

to complete our project successfully.

Method of collecting the data

SECONDARY DATA

We used annual report, articles, texts and academic journals written by researchers who have

previously collected relevant information to support their writings, and have credibility in this

discipline .It will enable us to observe different views, some arguing for and against the

materials in order for us to be unbiased in our analysis during the course of this task.

INTERNET

Based on internet, we are searching information through website Digi Co. and Maxis Co. The

Website we visit ishttp://new.digi.com.myandhttp://www.maxis.com.my/

Analysis all data that have been collected

We gather and collect all the informations from our collection about the how far they

implementation of corporate governance’s principle in both company which is Digi Co. and

Maxis Co. Then, we analyze them in our report. We try to discuss, examine and solve all the

problems that are uncertainty as a group. Lastly, we made a conclusion on our study.

Submit final report to lecturer

Lastly, we combine all the tasks given and prepared the final project for this topic and submit

it to our lecturer on 29th October 2014.

13

http://www.maxis.com.my/

http://new.digi.com.my/


5.0 ANALYSIS OF FINDINGS

Principle 1: Establish clear roles and responsibilities

1.1) The board should establish clear functions reserved for the board and those delegated

to management.

The respective roles and responsibilities of the board and management should be clearly set

out and understood to ensure accountability of both parties. The board together with the Chief

Executive Officer (CEO) should develop the descriptions for their respective functions. In

addition, the board should develop and agree with the CEO, the corporate objectives, which

include performance targets and long-term goals of the business, to be met by the CEO.

Regular review of the division of responsibilities should be conducted to ensure that the

needs of the company are consistently met.

RECOMMENDATION DIGI.COM

BERHAD

MAXIS

BERHAD

The board should establish clear functions reserved for

the board and those delegated to management.

√ √

Maxis and Digi were complied with this requirement. Maxis have established clear functions

for the board. The Board of Maxis will be reviewed periodically to ensure that any updates on

relevant laws and regulations are duly incorporated. The Board of Maxis will be reviewing,

adopting and monitoring the implementation of a strategic business plan for the group.

Besides that, the Board of Maxis will be overseeing the conduct of the Group’s Business to

evaluate whether the business is being properly managed or not. The Board of Maxis also

will identify principal risks and ensuring the implementation of appropriate systems to

manage and mitigate the risks.

For the Digi, they also have established clear roles and responsibilities of the Board and their

management. The Board’s role is to control and provide stewardship of Digi’s business and

affairs on behalf of shareholders. By pursuing its objective of creating long-term shareholder

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value, the Board of Digi takes into account the interests of all stakeholders in their decision

making. Beyond the matters reserved for the Board’s decision, the Board has delegated the

authority to achieve the corporate objective to the Chief Executive Officer (“CEO”) in

accordance with the Rules of Procedure for the CEO. The CEO remains accountable to the

Board for the authority that is delegated to him, and for the performance of the Group. The

Board of Digi has monitors the decisions and actions of the CEO, and the performance of the

Group to gain assurance that progress is being made towards the corporate objective, within

the limits it has imposed. The CEO is supported by the DiGi Management Team (“DMT”)

comprising of 6 members.

1.2) The Board should establish clear roles and responsibilities in discharging its fiduciary

and leadership functions.

The role of the board is to review, challenge and approve management’s proposal on a

strategic plan for the company. The board brings objectivity and breadth of judgment to the

strategic planning process as they are not involved in day-to-day management of the business.

The board should satisfy itself that management has taken into account all appropriate

considerations in establishing the strategic plan for the company. The board is also

responsible for monitoring the implementation of the strategic plan by management.


BERHAD

MAXIS

BERHAD

The Board should establish clear roles and

responsibilities in discharging its fiduciary and

leadership functions.

√ √

Maxis and Digi were complied with this requirement. For the Maxis Company, there are

several matters they need approval from the Board, except where they are expressly delegated

by the Board to a Committee, the Chairman, Chief Executive Officer (CEO) or another

nominated member of the Management team. For the Digi, The Board plays an active role in

the development of Digi’s strategy. They also need approval first from the Board before they

are wanted to implement or to do a new strategy for the company.

15


For the Maxis Company, two of the requirements they need approval from the Board is

approval of strategic directions of the company, approval of annual budgets, including major

capital commitments and capital expenditure budgets.

For the Digi Company, two of the requirements are they need approval from the Board is

appointment to the positions of CEO and CFO. They also need approval of strategic,

ambitions and targets from the Board.

1.3) The Board should formalise ethical standards through a code of conduct and ensure

its compliance.

A key role of the board is to establish a corporate culture which engenders ethical conduct

that permeates throughout the company. The board needs to formalise and commit to ethical

values through a code of conduct and ensure the implementation of appropriate internal

systems to support, promote and ensure its compliance. The code of conduct should include

appropriate communication and feedback channels which facilitate whistleblowing. The

board should periodically review the code of conduct. A summary of the code of conduct

should be made available on the corporate website.


BERHAD

MAXIS

BERHAD

The Board should formalise ethical standards through

a code of conduct and ensure its compliance.

√ √

Both companies were complying with this requirement. Both companies were stated that their

ethical standards on their organizations.

Maxis were stated that the Group’s Code of Business Practice Declaration which is

periodically reviewed by the Board applies to all Directors and all employees of the Group

who are required to affirm, on a yearly basis, their commitment to observing its prescriptions.

It serves as documentation of the Directors’ and employees’ commitment to do business in a

manner that is efficient, ethical, effective and fair, and is meant to be a reference point for all

16


Directors and all levels of employees as well as for all parties that engage in business

dealings with the Group. Maxis also sets out and identify the appropriate communication and

feedback channels which facilitate whistle-blowing. By using whistle-blowing, they can call

or SMS to Ethics hotline number, email to [email protected], send letters or documents

to the Ethics Hotline Office.

For the Digi, the Board has adopted and implemented a code of conduct which reflects

DiGi’s vision and core values of integrity, respect, trust and openness. It provides clear

direction on conducting business, interacting with the community, government and business

partners, and general work place behaviour. It also includes guidance on disclosure of

conflict of interests, maintaining confidentiality and disclosure of information, good practices

and internal controls, and the duty to report where there is a breach of the Code. Digi also had

separated to the 5 channels in order for them to conduct of an ethics. Digi was implement the

whistle-blowing policy, supplier conduct principles, anti-corruption policy, trading on insider

information and lastly compliance framework.

Digi established a whistle-blowing policy to provide an avenue for employees, suppliers,

tenants and customers to voice their grievances and raise their concerns about any

malpractices involving Digi without any fear of repercussions. Besides that, The Supplier

Conduct Principles (“SCP”) outlines the standard for ethical and business conduct expected

of suppliers and contractors in their relationship with Digi. Compliance of the SCP is

monitored through a supply chain management system.

Moreover, the policy on anti-corruption applies to the Board and employees of Digior others

with the authority to act on behalf of Digi. The policy clearly states that bribes are strictly

prohibited and staff should never offer, give, ask or accept any form of bribe. Digi has zero

tolerance towards bribery and corruption. For the trading on insider information, Notices on

the closed period for trading in Digi’s shares are sent to Directors, principal officers and

relevant employees on a quarterly basis. Digi’s Compliance framework outlines the

requirements for training and awareness, risk assessment and monitoring. It also identifies the

parties responsible for implementing the framework, establishes communication channels for

raising concerns and seeking guidance, and sets out clear investigation and disciplinary

procedures to ensure that actions taken are fair and appropriate.

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mailto:[email protected]


1.4) The board should ensure that the company’s strategies promote sustainability.

The board should formalise the company’s strategies on promoting sustainability. Attention

should be given to environmental, social and governance (ESG) aspects of business which

underpin sustainability. Balancing ESG aspects with the interests of various stakeholders is

essential to enhancing investor perception and public trust. The board should ensure the

company discloses these policies and their implementation in the annual report and the

corporate website.


BERHAD

MAXIS

BERHAD

The board should ensure that the company’s strategies

promote sustainability.

√ √

Both of the companies were complying to this requirement. Maxis were promote

sustainability with attention given to environmental, social and governance aspect of the

Group’s Business. The Board were approved Maxis’ Corporate Responsibility framework

which clearly outlines Maxis’ CR Mission, strategic pillars, philosophies and governance

structure for adoption. For the Digi, the Board is mindful of the importance of building a

sustainable business, therefore takes into consideration its environmental, social, and

governance impact when developing Digi’s corporate strategy.Digi’s Sustainability strategy

focuses on issues that are of high importance to its stakeholders, and key to its long-term

growthand success. These issues are addressed through four focusareas, namely

Empowerment through Connectivity, Ethical andResponsible Business, Climate Change and

Environment, and Best on People.

1.5) The board should have procedures to allow its members access to information and

advice.

The board should have access to all information pertaining to the company. Management

should supply accurate and complete information to the board in a timely manner to enable

the board to discharge its duties effectively.

18



BERHAD

MAXIS

BERHAD

The board should have procedures to allow its

members access to information and advice.

√ √

These to company were complying with this requirement. The Board of Maxis has

unrestricted and immediate access to Management and all information on the affairs of the

Group. At the request of the Board, the Management is obliged to supply all relevant

information relating to the business and operations of the Group and governance matters,

including customer satisfaction and quality surveys, market share and market reactions in a

timely manner to enable the Board to discharge its duties effectively. They will be prepared a

set of paper to the Board in the annual general meeting which is the Board meets at least four

times a year with additional meetings convened on an ad-hoc basis as and when the Board’s

approval and guidance are required.

For Digi Company, The Board recognises that the decision making process is highly

dependent on the quality of information provided. Therefore, every director has access to all

information on DiGi through attend the meeting. It has stated that if CEO, CFO and members

of the senior management who attend Board and Committee meetings by invitation have to

report and update on areas of the business within their responsibility to give Board members

thorough insights into the business. Board and Committee of papers are prepared for each

item in the agenda and are issued to the Directors at least seven (7) days before the Board and

Committee meetings.

1.6) The board should ensure it is supported by a suitably qualified and competent

company secretary.

The board regularly consults the company secretary on procedural and regulatory

requirements. The company secretary also plays an important role in supporting the board by

ensuring adherence to board policies and procedures. Therefore, the board should appoint a

19


suitably qualified and competent company secretary who can support the board in carrying

out its roles and responsibilities.


BERHAD

MAXIS

BERHAD

The board should ensure it is supported by a suitably

qualified and competent company secretary.

√ √

The company secretary of Maxis Company who facilitates overall compliance with the

MMLR and Companies Act 1965 and other relevant laws and regulations which is will

supported the Board of Maxis Company. In performing this duty, the Company Secretary

should carries out the task such as statutory duties as specified under the Companies Act

1965 and MMLR. Besides that, the company secretary also need to attend Board and Board

Committee meetings and ensuring that the Board meetings are properly convened and

proceedings are properly recorded.

For the Digi Company, The Company Secretaries play an advisory role to the Board in

relation to the Company’s constitution, Board’s policies and procedures, and compliance with

the relevant regulatory requirements, codes or guidance and legislations. The Board is

regularly updated and advised by the Company Secretaries who are qualified, experienced

and competent on new statutory and regulatory requirements, and the resultant implications

to Digi and the Directors in relation to their duties and responsibilities. The Company

Secretaries, who oversee adherence with board policies and procedures, brief the Board on

the proposed contents and timing of material announcements to be made to regulators.

1.7) The board should formalise, periodically review and make public its board charter.

The board charter sets out the board’s strategic intent and outlines the board’s roles and

responsibilities. The board charter is a source reference and primary induction literature,

providing insights to prospective board members and senior management. It will also assist

the board in the assessment of its own performance and that of its individual directors.

20


In establishing a board charter, it is important for the board to set out the key values,

principles and ethos of the company, as policies and strategy development are based on these

considerations. The board charter should also include the division of responsibilities and

powers between the board and management, the different committees established by the

board, and between the chairman and the CEO. The board charter should set out processes

and procedures for convening board meetings. The board should periodically review and

publish the board charter on the corporate website.


BERHAD

MAXIS

BERHAD

The board should formalise, periodically review and

make public its board charter.

√

For this requirement, Maxis Company not complies with this requirement. Maxis Company

didn’t show the board should formalise, periodically review and make public its board

charter. But for the Digi, The Board is guided by the principles contained in the Code and by

the Board’s Charter and a Delegation Authority Matrix, which set out the practices and

processes in the discharge of its responsibilities. The Rules of Procedure for the Board and

the Delegation Authority Matrix are reviewed and revised, as and when required, to ensure an

optimum structure for efficient and effective decision making in the organisation.

21


Principle 2 : Strengthen composition

The board should have transparent policies and procedures that will assist in the selection of

board members. The board should comprise members who bring value to board deliberations.

2.1) The board should establish a Nominating Committee which should comprise

exclusively of non-executive directors, a majority of whom must be independent.

The Nominating Committee is charged with the responsibility to oversee the selection and

assessment of directors. An effective Nominating Committee will contribute towards

ensuring that board composition meets the needs of the company. The chair of the

Nominating Committee should be the senior independent director identified by the board.


BERHAD

MAXIS

BERHAD

2.1 The board should establish a Nominating

Committee which should comprise exclusively of non-

executive directors, a majority of whom must be

independent.

√ √

Based on recommendation 2.1, Digi company establish their members of the Group

Nomination and Remuneration Committee which are comprise of Non-Executive Directors

and Non-Independent. Thus, from 1 of the total 7 members of the Group Nomination and

Remuneration Committee are Independent Directors. While, Maxis Berhad, their members of

the Group Nomination and Remuneration Committee also comprise of Non-Executive

Directors and Non-Independent in which3 of the total 5 members of the Group Nomination

and Remuneration Committee are Independent Directors.

Based on analysis in annual report, both company, Digi and Maxis had comply with this

principle. Thus, in Digi, all members of the Committee are Non- Executive Directors except

one person who is Non-Independent Non- Executive Director which is HakkonBruasetKjol.

In Maxis also has a majority of whom are independent, where three persons are independent

while another two are Non-Executive Director whose are Dr. Ibrahim Abdulrahman H. Kadi

and Chan Chee Beng.

22


2.2) The Nominating Committee should develop, maintain and review the criteria to be

used in the recruitment process and annual assessment of directors.

The Nominating Committee’s responsibilities include assessing and recommending to the

board the candidature of directors, appointment of directors to board committees, review of

board’s succession plans and training programmes for the board. In assessing suitability of

candidates, considerations should be given to the competencies, commitment, contribution

and performance. The Nominating Committee should facilitate board induction and training

programmes. The nomination and election process of board members should be disclosed in

the annual report. The board should establish a policy formalising its approach to boardroom

diversity. The board through its Nominating Committee should take steps to ensure that

women candidates are sought as part of its recruitment exercise. The board should explicitly

disclose in the annual report its gender diversity policies and targets and the measures taken

to meet those targets.


BERHAD

MAXIS

BERHAD

2.2 The Nominating Committee should develop,

maintain and review the criteria to be used in the

recruitment process and annual assessment of

directors.

√ √

For Digi company, there also state that they develop, maintain and review the criteria to be

used in the recruitment process and annual assessment of directors. On the Terms of

Reference of the Group Nomination and Remuneration Committee is in line with this

recommendation. Furthermore, the criteria on the recruitment process and annual assessment

of Directors is contained in the Policy and Procedures Manual on Fit and Proper Test for Key

Responsible Persons.

For Maxiscompany, the Board makes clear at the outset its expectations of its new Directors

in terms of their time commitment as recommended by the Code. Moreover, the criteria on

the recruitment process and assesses the suitability of candidates, taking into account the

23


required mix of skills, knowledge, expertise and experience, professionalism, integrity,

competencies, time commitment and other qualities of the candidates, before recommending

their appointment to the Board for approval.

Based on the above assessment in 2013, the evaluation process is led by the Nomination

Committee Chairman and supported by the Company Secretary. The evaluation process is

conducted via questionnaires to review the effectiveness of the Board and its Committee. The

Nomination Committee reviews the outcome of the evaluation and recommends to the Board

on areas for continuous improvement. In Maxis, the criteria on which assessment of the

Board’s effectiveness is carried out is developed, maintained and reviewed by the NC. They

include, inter alia, Board’s and Board Committees’ composition, Board’s roles and

responsibilities, performance which comprises strategy planning and performance, risk and

human capital management, Board communications and conduct of the Board and Board

Committees.

2.3) The board should establish formal and transparent remuneration policies and

procedures to attract and retain directors.

Fair remuneration is critical to attract, retain and motivate directors. The remuneration

package should be aligned with the business strategy and long-term objectives of the

company. Remuneration of the board should reflect the board’s responsibilities, expertise and

complexity of the company’s activities.

The board should establish a Remuneration Committee to perform this function. The

Remuneration Committee should consist exclusively or a majority of, non-executive

directors, drawing advice from experts, if necessary. Companies without a Remuneration

Committee should have board policies and procedures on matters that would otherwise be

dealt with by the Remuneration Committee. Board remuneration policies and procedures

should be disclosed in the annual report.


BERHAD

MAXIS

BERHAD

2.3 The board should establish formal and transparent

remuneration policies and procedures to attract and

retain directors.

√ √

24


In Digi, the Board has established formal and transparent remuneration policies for the Board

and its Committees and the procedures for policies. Non-Executive Directors’ remuneration

reflects the experience, expertise and level of responsibilities undertaken by the Non-

Executive Director. The Board is of the view that the current remuneration level suffices to

attract, retain and motivate qualified Directors to serve on the Board. While, in Maxis, the

component parts of remuneration for the Executive Directors are structured so as to link

rewards to corporate and individual performance. In the case of Non-Executive Directors, the

level of remuneration reflects the experience, expertise and level of responsibilities

undertaken by the particular Non-Executive Director concerned. A Remuneration Framework

has been established and is subject to review every 3 years for both company.

25


Principle 3 : Reinforce independence

3.1) The Board should undertake an assessment of its Independent Directors annually.

Independent directors bring independent and objective judgment to the board and this

mitigates risks arising from conflict of interest or undue influence from interested parties.

The existence of independent directors on the board by itself does not ensure the exercise of

independent and objective judgment as independent judgment can be compromised by,

amongst others, familiarity or close relationship with other board members.

Therefore, it is important for the board to undertake an annual assessment of the

independence of its independent directors. When assessing independence, the board should

focus beyond the independent director’s background, economic and family relationships and

consider whether the independent director can continue to bring independent and objective

judgment to board deliberations. The Nominating Committee should develop the criteria to

assess independence. The board should apply these criteria upon admission, annually and

when any new interest or relationship develops.

The board should disclose that it has conducted such assessment in the annual report and in

any notice convening a general meeting for the appointment and re-appointment of

independent directors.


BERHAD

MAXIS

BERHAD

3.1 – The Board should undertake an assessment of its

Independent Directors annually.

√ √

For Digi, the Group Nomination and Remuneration Committee undertakes assessment of all

Directors annually via the Board Effectiveness Assessment exercise. Besides that, the Board

through the Nomination Committee assesses the independence of Independent Non-

Executive Directors annually using the Level of Independence of Directors’ evaluation,

which takes into account the individual Directors’ ability to exercise independent judgment at

all times and to contribute to the effective functioning of the Board. On the other hand, the

26


assessment of the independence of each of its Independent Non-Executive Directors in Maxis

is undertaken twice a year according to set criteria as prescribed by the MMLR.

3.2) The tenure of an Independent Director should not exceed a cumulative term of nine

years. Upon completion of the nine years, an Independent Director may continue to serve

on the Board subject to the director’s re designation as a Non-Independent director.

The assessment criteria for independence of directors should also include tenure. Long tenure

can impair independence. For this reason, tenure of an independent director is capped at nine

years. The nine years can either be a consecutive service of nine years or a cumulative service

of nine years with intervals. An independent director who has served the company for nine

years may, in the interest of the company, continue to serve the company but in the capacity

of a non-independent director.


BERHAD

MAXIS

BERHAD

3.2 – The tenure of an Independent Director should not

exceed a cumulative term of nine years. Upon

completion of the nine years, an Independent Director

may continue to serve on the Board subject to the

director’s re designation as a Non-Independent

director.

√

In Digi, although term limits could help to ensure that new ideas and perspective would be

available to the Board, they pose the disadvantage of losing experienced Independent

Directors who over time have developed detailed insight in Digi’s operations and therefore,

provide an increasing contribution to the effectiveness of the Board as a whole. The Board

therefore viewed that imposing a fixed term limit for Independent Directors does not

necessarily assure their independence and objectivity.

Digi not comply on this principal as they does not have term limits for Independent Directors

as the Board believes that continued contribution provides benefit to the Board and Digi as a

whole. The Board is of the view that there are significant advantages to be gained from the

27


long-serving Directors who provide invaluable insight and possess knowledge of Digi’s

affairs.

Hence, in Maxis, they comply with this principle as recommended by the Code, the tenure of

Directorship should form also part of the assessment criteria for independence of a Director.

The relevant process and procedures have been provided for in the Board Charter and terms

of reference of the NC. In the event that shareholders’ approval is sought to enable an

independent director to retain his designation as an independent director after having served a

tenure of nine years, the NC is tasked to assess and assist the Board in recommending and

providing justification for shareholders’ consideration and approval in such instances. The

Independent Directors also meet the criteria of independence.

3.3) The Board must justify and seek shareholders’ approval in the event it retains as an

Independent Director, a person who has served in that capacity for more than nine years.

The shareholders may, in exceptional cases and subject to the assessment of the Nominating

Committee, decide that an independent director can remain as an independent director after

serving a cumulative term of nine years. In such a situation, the board must make a

recommendation and provide strong justification to the shareholders in a general meeting.


BERHAD

MAXIS

BERHAD

3.3 – The Board must justify and seek shareholders’

approval in the event it retains as an Independent

Director, a person who has served in that capacity for

more than nine years.

√ √

In Digi, based on the recommendation by the Nomination Committee, the Board

recommended that Dato’ Ab Halim bin Mohyiddin continues to act as Independent Non-

Executive Director of Digi subject to shareholders’ approval at Digi’s forthcoming 17th

AGM as he has fulfilled the criteria under the definition of Independent Director as stated in

28


the MMLR. Digi comply with this principle as following an assessment conducted by the

Board through the Nomination Committee, the Board viewed that Dato’ Ab. Halim bin

Mohyiddin who has served as an Independent Non-Executive Director of Digi for more than

9 years remains objective and independent in expressing his views and in participating in

deliberations and decision-making in the Board and the Committees. The length of his service

on the Board does not in any way interfere with his independent judgment and ability to act

in the best interests of Digi.

On the other hand, Maxis comply in the event that shareholders’ approval is sought to enable

an independent director to retain his designation as an independent director after having

served a tenure of nine years, the NC is tasked to assess and assist the Board in

recommending and providing justification for shareholders’ consideration and approval in

such instances. The Independent Directors also meet the criteria of independence.

3.4) The positions of Chairman and CEO should be held by different individuals, and the

Chairman must be a non-executive member of the Board.

There should be a separation of the positions of the Chairman and the CEO to ensure

accountability and facilities division of responsibilities between them. The chairman is

responsible in leading the board in the oversight of management, while the CEO should focus

on the business and day-to-day management of the company. It should be clearly defined in,

the board charter.


BERHAD

MAXIS

BERHAD

The positions of Chairman and CEO should be held by

different individuals, and the Chairman must be a non-

executive member of the Board.

√ √

Based on recommendation 3.4, Digi company stated in a statement of corporate governance

that there should have a clear division of responsibility between the Chairman and the CEO

to ensure that there is a balance of power and authority, such that no one individual has

29


unfettered powers over decision making. The positions of Chairman and CEO are held by

two different individuals. Mr SigveBrekke, Non-Independent on-Executive Director, as a

Chairman, is responsible to lead the Board with a keen focus on governance and compliance,

and ensuring its effectiveness. He engages directly with the CEO to monitor performance and

oversees the implementation of strategies. Besides, Mr SigveBrekke, will set agendas for the

meetings of the Board that focuses on the strategic direction and performance of Digi.

However, Mr. Henrik Clausen, as the CEO is responsible for the day-to-day management of

Digi’s operations and business as well as implementation of the Board’s policies and

decisions. Mr. Henrik Clausen is not a Board member of DiGi.Com Berhad. This is to ensure

there is a clear distinction between the roles of CEO and the Board, and to prevent conflicts

of interest.

For Maxis, there also state that there should have distinct roles and responsibilities of the

Chairman of the Board and the CEO to ensure there is a clear and proper balance of power

and authority. Besides, the Chairman should not previously a CEO of the Company. Raja

Tan Sri Dato’ Seri Arshad Bin Raja TunUda, Independent Non-Executive Director, as a

Chairman is responsible to ensure the effective conduct of the Board and all Directors, both

Executive and Non- Executive. Mr Arshad also should encourage participation and

deliberation by all Board members to enable the wisdom of all the Board members to be

tapped and to promote consensus building as much as possible. Mr Morten Lundal are

responsible over the Group’s operational and business units, organisational effectiveness and

implementation of Board policies, directives, strategies and decisions.

Digi and Maxis comply with this principle. There is a clear division of responsibility between

the Chairman and the CEO to ensure that there is a balance of power and authority, such that

no one individual has unfettered powers over decision-making. Based on the annual report,

the positions of Chairman and CEO are held by two different individuals in both by the

company. Besides that, the Chairman for DiGi and Maxis also non-executive members of the

Board, which shows that both companies, comply with the recommendation 3.4.

30


3.5) The Board must comprise a majority of Independent Directors where the Chairman of

the Board is not an Independent Director.

Recommendation 3.5 stated that if the Chairman is not independent, then the majority of the

board should be independent, however, the Chairman can either be Independent or Non-

Independent. A chairman who is an independent director can provide strong leadership by

being able to ensure the board’s priorities more objectively. If the Chairman is not an

Independent director, then the board should comprise a majority of Independent directors to

ensure balance of power and authority on the board.


BERHAD

MAXIS

BERHAD

The Board must comprise a majority of Independent

Directors where the Chairman of the Board is not an

Independent Director.

√

The Board of DiGi.com Berhad, chaired by SigveBrekke, comprises 7 Directors, four are

Non-Independent Non-Executive Director and another three are Independent Non-Executive

Director. The Independent Non-Executive Directors are only 43% of the Board, where the

Chairman of the Board is regarded as a Non-Independent director pursuant to

recommendation 3.5 of the MCCG 2012. The Board of Maxis Berhad, chaired by Raja Tan

Sri Dato’ Seri Arshad Bin Raja TunUda, that comprises 11 Directors, four of them is an

Independent Non-Executive Director, six is Non-Executive Director and one is an Executive

Director who is also the CEO. The Independent Non-Executive Directors are only 37% of the

Board and the Chairman of Maxis Berhad is an Independent Director. Therefore, both of the

companies did not comply with the recommendation 3.5 of MCCG 2012. Digi and Maxis

Berhad does not comprise a majority of Independent Directors. The company Independent

Directors are below 50% of the Board.

31


Principle 4: Foster commitment

The Director should devote sufficient time to carry out their responsibilities, regularly update

their knowledge and enhance their skills.

4.1) The Board should set out expectations on time commitment for its members and

protocols for accepting new directorships.

In recommendation 4.1, stated that the Directors should devote sufficient time to carry out

their responsibilities. The board should obtain this commitment from its members at the time

of appointment. Directors should notify the chairman before accepting any new directorship.

The notification should include an indication of time that will be spent on the new

appointment.


BERHAD

MAXIS

BERHAD

The Board should set out expectations on time

commitment for its members and protocols for

accepting new directorships.

√ √

Digi company complied with recommendation 4.1 by incorporated towards the attendance

record of the Directors at Board of Directors and Board Committee meetings and in terms of

Protocol appointment of Director. The Board is satisfied with the level of time commitment

given by the Directors towards fulfilling their roles and responsibilities as Directors of

DiGi.com Berhad and Maxis Berhad. This is shown by the attendance record of the Directors

at Board of Directors and Board Committee meetings for financial year 2013 in the annual

report. In terms of protocol for appointment of Director of DiGi, Directors are to notify the

Chairman before accepting any new directorships notwithstanding that the Main Market

Listing Requirement (MMLR), that allows a Director to sit on the boards of five (5) listed

issuers. The notification includes an indication of time that will be spent on the new

appointment as Director. This information will be shared with the Board together with the

quarterly update by individual Directors on their directorships and shareholdings in DiGi to

show its members’ commitment in devoting sufficient time to carry out their responsibilities.

32


Besides, meetings for the year are scheduled at the end of the preceding year to enable the

Directors to plan ahead and ensure that the Board and its Committee meetings are accounted

for in their respective schedules. It provides the scheduled dates for meetings of the Board

and Board Committees, and the Annual General Meeting, as well as the closed periods for

dealings in securities based on the targeted dates of announcements of the Company’s

quarterly results.

For Maxis, the Board meets at least four times a year, with additional meetings convened on

an ad-hoc basis as when the Board’s approval and guidance are required. Upon consultation

with the Chairman and the CEO, the notice given of the proposed dates of meetings during

the financial year, and standard agenda and materials will be tabled to the Board. Besides,

meetings are set before the beginning of the year to allow Directors to plan ahead and to

maximise their participation. In terms of accepting new directorships, all Board members will

notify the Chairman of the Board before made any decision. The notification includes an

indication of time commitment required under the new appointment as recommended by the

MCCG 2012. Therefore, it show that Maxis also complied with recommendation 4.1, by

incorporated towards the attendance record of the Directors at Board of Directors and Board

Committee meetings and all Board members will notify the Chairman of the Board before

accepting new directorships.

4.2) The Board should ensure its members have access to appropriate continuing

education programmes.

In recommendation 4.2, stated that the Directors should devote sufficient time to update their

knowledge and enhance their skills through appropriate continuing education programmes

and life-long learning to ensure Directors to sustain their active participation in board

deliberations.

33



BERHAD

MAXIS

BERHAD

The Board should ensure its members have access to

appropriate continuing education programmes.

√ √

For both of the company, which is Digi and Maxis, the Board takes a strong view of the

importance of continuing education for its Directors to ensure they are equipped with the

necessary skills and knowledge to meet the challenges of the Board.

For Digi, all the existing Directors has completed the Mandatory Accreditation Programme

(MAP). The Board continues to evaluate and determine the training needs of its members to

assist them in the discharge of their duties as Directors. The Company Secretary arranges for

the Directors’ attendance at the training programmes, which are conducted either in-house or

by external service providers. Digi are complied with recommendation 4.2. From the Annual

Reports, shows that the Company Secretary arrange for the Directors’ attendance at the

training programmes, which are conducted either in-house or by external service providers.

Same goes to Maxis, all Directors have attended and completed the Mandatory Accreditation

Programme (MAP) that had been prescribed by Bursa Malaysia. The Board has taken steps to

ensure that its members have ongoing access to appropriate continuing education programs.

The Company Secretary facilitates the organisation of internal training programmes and

keeps Directors informed of relevant external training programmes. All of the Directors have

undergone training during the financial year. Both of Directors of Digi and Maxis embrace

recommendation of 4.2 of the MCCG 2012 by attending conferences, briefings and

workshops to regularly update their knowledge and enhance their skills. Maxis also complied

with recommendation 4.2. In the Annual Reports, the Company Secretary facilitates the

organisation of internal training programmes and keeps Directors informed of relevant

external training programmes.

34


Principle 5: Uphold integrity in financial reporting

The board should ensure financial statements are a reliable source of information.

5.1) The Audit Committee should ensure financial statements comply with applicable

financial reporting standards.

In recommendation 5.1, stated to ensuring the company’s financial statement is a reliable

source of financial information, the board must recognise the value of an effective Audit

Committee. The Audit Committee must ensure that the company’s financial statements

comply with applicable financial reporting standards as this is integral to the reliability of

financial statements. Therefore, in recommendation 5.1, shows that the Audit Committee are

responsible towards their duties.


BERHAD

MAXIS

BERHAD

The Audit Committee should ensure financial

statements comply with applicable financial reporting

standards.

√ √

The Audit Committee of Digi and Maxis ensures that shareholders are provided with a

balanced and meaningful evaluation of the company’s financial performance, position and

future prospects, through the issuance of the Annual Audited Financial Statements as well as

corporate announcements of significant developments affecting the company in accordance

with Bursa Securities Main Market Listing Requirements.

The Audit and Risk Committee Chairman, Dato’ Saw Choo together with all Audit and Risk

Committee members meets on a quarterly basis, to review the integrity and reliability of

Digi’s financial statement in the presence of both external and internal auditors, prior to

recommending towards the Board’s approval.

35


At Maxis, Robert William Boyle, as a Chairman of the Audit Committee and as a member of

the Remuneration and Nomination Committees, together with all members of the Committee

responsible to review the integrity and reliability of Maxis’s financial statement in the

presence of both external and internal auditors, prior to recommending towards the Board’s

approval. All members of an Audit Committee financially literate, interpret and understand

financial statements in order to effectively discharge their duties and responsibilities as

members of the Committee. They also responsible for ensuring that the financial statements

provide a true and fair view of the financial position of the Group and the Company as at 31

December 2013 and of their financial performance and cash flows for the financial year

ended 31 December 2013.

Digi and Maxis comply the recommendation of 5.1 accordance to Directors’ Responsibility

Statement in relation to financial reporting standards that tabled to the Audit Committee

during the presentation of annual Audited Financial Statements.

5.2) The Audit Committee should have policies and procedures to assess the suitability and

independence of external auditors.

The Audit Committee responsible to review and monitor the suitability and independence of

external auditors. The independence of external auditors can be impaired by the provision of

non-audit services to the company. Besides, the Audit Committee should establish policies

governing the circumstances under which contracts for the provision of non-audit services

can be entered into and procedures that must be followed by the external auditors. Therefore,

to provide support for an assessment on independence, the Audit Committee should obtain

written assurance from the external auditors confirming that they are, and have been,

independent throughout the conduct of the audit engagement in accordance with the terms of

all relevant professional and regulatory requirements.


BERHAD

MAXIS

BERHAD

The Audit Committee should have policies and

procedures to assess the suitability and independence

of external auditors.

√ √

36


Audit Committee of Digihas place policies covering the provision of non audit services,

which are designed to ensure that such services do not impair the external auditors’

independence or objectivity. The external auditors provide mainly audit related services to

Digi. In March 2014, the Audit Committee assessed the independence of Messrs Ernst &

Young (EY) as external auditors of Digi as well as reviewed the level of non-audit services to

be rendered by Ernst and Young to Digi for financial year 2013. The Audit Committee was

satisfied with Ernst and Young’s technical competency and audit independence. During the

year, Ernst and Young charged DiGi RM304,000 (2012: RM311,000) for audit and

RM54,000 for nonaudit services (2012:RM53,000). DiGi complied with this recommendation

through the establishment of procedures to assess the suitability, independence and

performance of the external auditors. Besides, the Audit Committee obtains written assurance

from the external auditors which is Messrs Ernst & Young (EY) through the Independence

Auditor’s Report.

Apart from that, the Audit Committee of Maxis also has place procedures to assess the

suitability by reviewed with the external auditors, their terms of engagement, proposed audit

remuneration and the audit plan for the financial year to ensure that their scope of work

adequately covers the activities of the Group, reviewed the results and issues arising from the

external auditors’ review of the quarterly financial results and audit of the year end financial

statements and the resolution of issues highlighted in their report to the Committee, reviewed

the independence, suitability, objectivity and cost effectiveness of the external auditors before

recommending their re-appointment and remuneration to the Board, reviewed the level of

compliance of the external auditors with the Maxis External Audit Independence policy and

obtained written assurance from the external auditors confirming that they are, and have

been, independent throughout the conduct of the audit engagement. On February 2014, the

Audit Committee assessed the independence of Messrs PricewaterhouseCoopers (PwC) as

external auditors of Maxis as well as reviewed the level of non-audit services to be rendered

by PricewaterhouseCoopers to Maxis for financial year 2013. The Audit Committee was also

satisfied with the PricewaterhouseCoopers technical competency and audit independence.

For Maxis, it also complied through out procedures to assess the suitability, independence

and performance of external auditors have been established. And the Audit Committee obtain

written assurance from the external auditors, which is PricewaterhouseCoopers, through

Independence Auditor’s Report. Therefore, it shows that both of the company comply with

the recommendation of 5.2 in MCCG 2012.

37


Principle 6 : Recognise and manage risks

6.1) The board should establish a sound framework to manage risks.

The board should determine the company’s level of risk tolerance and actively identify,

assess and monitor key business risks to safeguard shareholders’ investments and the

company’s assets. Internal controls are important for risk management and the board should

be committed to articulating, implementing and reviewing the company’s internal controls

system. Periodic testing of the effectiveness and efficiency of the internal controls procedures

and processes must be conducted to ensure that the system is viable and robust. The board

should disclose in the annual report the main features of the company’s risk management

framework and internal controls system.

RECOMMENDATION DiGi Co. Bhd Maxis Bhd

The board should establish a sound framework to

manage risks.

√ √

Digi’s board has the ultimate responsibility of approving the Risk Management framework

and policy as well as overseeing Digi’s Risk Management and Internal Control Framework.

The Board through its Audit & Risk Committee reviews the key risks identify on a regular

basis to ensure, as far as possible, the protection of its assets and its shareholders’ investment.

The Annual Report provides an overview on the Risk Management functions within Digi.

The Group in Maxis Co. has established a sound risk management framework and procedures

of internal control. The Group is subject to provide an ongoing process for identifying,

evaluating and managing the significant risks faced by the Group that may affect the

achievement of its business objectives and strategies. The Group’s Statement on Risk

Management and Internal Control is set out on pages 62 to 66 of this Annual Report.

6.2) The board should establish an internal audit function which reports directly to the

Audit Committee.

The board should establish an internal audit function and identify a head of internal audit who

reports directly to the Audit Committee. The head of internal audit should have the relevant

qualifications and be responsible for providing assurance to the board that the internal

38


controls are operating effectively. Internal auditors should carry out their functions according

to the standards set by recognized professional bodies. Internal auditors should also conduct

regular reviews and appraisals of the effectiveness of the governance, risk management and

internal controls processes within the company.


The board should establish an internal audit function

which reports directly to the Audit Committee.

√ √

In the Digicompanythe internal audit function carried out by the Assurance Department,

assists both the Board and the Audit & Risk Committee by conducting appropriate reviews of

key business processes to assess the adequacy and effectiveness of internal control and risk

management, compliance with regulations and the Group’s policies and procedures. The

Assurance Department’s practices and conduct are governed by the Assurance Charter, which

is subject to review and approval on an annual basis by the Audit & Risk Committee.

Maxis’s Group has an independent internal audit function which reports directly to the

Committee, the primary responsibility of which is to provide independent and objective

assessment of the adequacy and effectiveness of the risk management, internal control and

governance processes established by Management and/or the Board within the Group. The

activities carried out by the Internal Audit department include among others, the review of

the adequacy and effectiveness of risk management and the system of internal controls,

compliance with established rules, guidelines, laws and regulations, reliability and integrity

of information

39


Principle 7 : Ensure timely and high quality disclosure

7.1) The board should ensure the company has appropriate corporate disclosure policies

and procedures.

The board should have internal corporate disclosure policies and procedures which are

practical and include feedback from management. These policies and procedures should

ensure compliance with the disclosure requirements as set out in the Bursa Malaysia Listing

Requirements. In formulating these policies and procedures, the board should be guided by

best practices.


The board should ensure the company has appropriate

corporate disclosure policies and procedures.

√ √

Digiwas established and adopted the Corporate Disclosure Policy by effective and timely

communications between the stakeholders, institutional investors and the investing public at

large. Digi keeping the market informed of relevant information which includes appropriate

disclosure and transparency, enabling both existing and potential shareholders to evaluate its

business, performance and prospects. All information made available to Bursa Securities is

immediately available to shareholders and the market on the Investor Relations section of

Digi’s website which is www.DiGi.com.my.

For the Maxis, The Board has also established and adopted the Corporate Disclosure Policy

which inclusive of feedback from management as recommended by the Code and the policies

and procedures therein has been formulated with reference to the Best Practices published in

the Corporate Disclosure Guide issued by Bursa Malaysia.

7.2) The board should encourage the company to leverage on information technology for

effective dissemination of information.

Companies should consider wider usage of information technology in communicating with

stakeholders including establishing a dedicated section for corporate governance on their

40

http://www.digi.com.my/


website. This section should provide information such as the board charter, rights of

shareholders and the annual report.


7.2: The board should encourage the company to

leverage on information technology for effective

dissemination of information.

√ √

Digi’s Leverage on information technology for effective dissemination of information is the

investor relations website. It also features in-depth information related to Digi’s financial

results as well as other relevant financial data. These include announcements to Bursa

Securities, media releases, investor briefings, quarterly results and annual reports. Others

leverage is Digi aims to provide sufficient information to shareholders and investors about its

activities,

Maxis will seek to leverage on the latest and most innovative information technology

available to promote more efficient and effective ways to communicate with both its

shareholders and stakeholders. The Company’s Annual Reports, announcements to Bursa

Malaysia, media releases, a Corporate Governance section including the Board Charter and

Terms of Reference of the AC and NC and presentations relating to its quarterly financial

results has been made available on the Company’s website.

41


Principle 8 : Strengthen relationship between company and shareholders

8.1) The board should take reasonable steps to encourage shareholder participation at

general meetings.

General meetings are an important avenue through which shareholders can exercise their

rights. The board should take active steps to encourage shareholder participation at general

meetings such as serving notices for meetings earlier than the minimum notice period.

The board should direct the company to disclose all relevant information to shareholders to

enable them to exercise their rights. The board should also consider adopting electronic

voting to facilitate greater shareholder participation.

The board can demonstrate their commitment to shareholders by ensuring that the company

publishes these measures on its corporate website.


The board should take reasonable steps to encourage

shareholder participation at general meetings.

√ √

Digi was Encourage shareholder participation at general meetings. The Notice of Meeting of

the AGM is sent to shareholders at least 21 days ahead of the meeting date together with the

Financial Statements and agenda for the meeting with a memorandum providing information

to shareholders to assist them in deciding on how they should vote on each item of the

business. A full copy of the Notice of Meeting and Proxy Form are posted on DiGi’s website

and lodged with Bursa Securities. It is also advertised in a major local newspaper.

In every AGM, the Management Team presents a comprehensive review of Digi’s financial

performance for the year and outlines the prospects of Digifor the subsequent financial year.

Time is being set aside for shareholders’ queries. Where it is not possible to provide

immediate answers, Digi will undertake to provide shareholders with written answers after

the AGM. Copies of the review are posted on Digi’s Investor Relations website immediately.

42


Since 2006, Digi’s AGM has been open to the financial media to observe the proceedings.

The outcome of the AGM is announced to Bursa Securities on the same meeting day.

Maxis’sBoard has taken reasonable steps to encourage shareholder participation at general

meetings. In Company’s Articles require 21 days’ notice for the AGM but the Company has

gone beyond the prescribed requirement to issue a notice with 28 days’ notice period.

Notices of the annual general meetings and the accompanying papers are provided to

shareholders within the prescribed time in accordance to the Bursa Securities Listing

Requirements. These notices are lodged with Bursa Securities. They are also placed in major

local newspapers in English, Bahasa Malaysia, Mandarin and Tamil languages.

In every annual general meeting, the management team presents a comprehensive review of

the Company’s financial performance for the year and outlines its prospects for the following

financial year. Time is set aside for shareholders’ queries. Where it is not possible to provide

immediate replies, the Company undertakes to provide shareholders with written replies after

these annual general meetings. Copies of the review are posted on the Company’s Investor

Relations website immediately after the close of the annual general meetings.

Shareholders who are unable to attend are allowed to appoint proxies in accordance with the

Company’s Articles to attend and vote on their behalf.

8.2) The board should encourage poll voting.

The board is encouraged to put substantive resolutions to vote by poll and make an

announcement of the detailed results showing the number of votes cast for and against each

resolution. Companies are encouraged to employ electronic means for poll voting.

The chairman should inform shareholders of their right to demand a poll vote at the

commencement of the general meeting.


The board should encourage poll voting. √ √

Digi will adopt poll voting if there is/are substantive resolution(s) to be put forth for

shareholders’ approval at the general meetings going forward.

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Maxis’s Board considers electronic poll voting as a viable voting option for its shareholders.

The Chairman of Maxis would at the outset of general meetings inform the shareholders of

their right to request to vote by poll.

8.3) The board should promote effective communication and proactive engagements with

shareholders.

Direct engagement with shareholders provides a better appreciation of the company’s

objectives, quality of its management and challenges, while also making the company aware

of the expectations and concerns of its shareholders. This will assist shareholders in

evaluating the company and facilitate the considered use of their votes. Board members and

senior management are encouraged to have constructive engagements with shareholders

about performance, corporate governance, and other matters affecting shareholders’ interests.


The board should promote effective communication

and proactive engagements with shareholders.

√ √

Digicontinues to keep investors engaged through road shows, meetings, briefing,

announcements and AGMs. Digi’s uses can array of media channels to disseminate material

and price-sensitive information, for investor to make informed decisions.

Maxis have been actively promoting proactive engagements and communications with its

shareholders and stakeholders through the following channels:

• Release of financial results on a quarterly basis;

• Press releases and announcements to Bursa Malaysia and subsequently to the media; and

• An online Investor Relations section and online Press Room, the “Maxis Media Centre”,

which can be accessed by shareholders and the general public via the Company’s website at

www.Maxis Co.com.my.

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CONCLUSIONIn the nutshell, we have selected which of the two companies are most comply towards

MCCG 2012 which are DiGi.comBerhadand Maxis Berhad. Moreover, both companies,

DiGi.com and Maxis Berhad had complied almost all the disclosure of corporate governance.

Based on this two companies, we had analysed and identified that they had complied the

disclosure in the 8 broad principles followed by 26 corresponding recommendations that has

been stated on MCCG 2012. Furthermore, we found that the classification of the key

principles of good corporate governance for listed company Annual Report towards their

compliance accordance the Malaysian Code on Corporate Governance 2012. Thus, the

company that comply most of the disclosure of corporate governance is the company that

have good corporate governance.

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REFERENCE(2013). Annual Report. Bursa Malaysia website.

Corporate Governance. (n.d.). Retrieved from www.maxis.com.my: http://www.maxis.com.my/

Corporate Governance. (n.d.). Retrieved from www.digi.com.my: http://new.digi.com.my/

Malaysian Code on Corporate Governance. (2012). Retrieved from

http://www.mia.org.my/new/downloads/circularsandresources/circulars/2012/21/

MCCG_2012.pdf

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APPENDIX

PRINCIPLE

Principle 1 – Establish clear roles and responsibilities

The board should establish clear functions reserved for the board and those

delegated to management.

The board should establish clear roles and responsibilities in discharging its

fiduciary and leadership functions.

The board should formalise ethical standards through a code of conduct and

ensure its compliance.

The board should ensure that the company’s strategies promote sustainability.

The board should have procedures to allow its members access to information

and advice.

The board should ensure it is supported by a suitably qualified and competent

company secretary.

The board should formalise, periodically review and make public its board

charter.

Principle 2 – Strengthen composition

The board should establish a Nominating Committee which should comprise

exclusively of non-executive directors, a majority of whom must be

independent.

The Nominating Committee should develop, maintain and review the criteria to

be used in the recruitment process and annual assessment of directors.

The board should establish formal and transparent remuneration policies and

procedures to attract and retain directors.

Principle 3 – Reinforce independence

The board should undertake an assessment of its independent directors

annually.

The tenure of an independent director should not exceed a cumulative term of

nine years. Upon completion of the nine years, an independent director may

continue to serve on the board subject to the director’s re-designation as a non-

independent director.

The board must justify and seek shareholders’ approval in the event it retains as

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an independent director, a person who has served in that capacity for more than

nine years.

The positions of chairman and CEO should be held by different individuals,

and the chairman must be a non-executive member of the board.

The board must comprise a majority of independent directors where the

chairman of the board is not an independent director.

Principle 4 – Foster commitment

The board should set out expectations on time commitment for its members and

protocols for accepting new directorships.

The board should ensure its members have access to appropriate continuing

education programmes.

Principle 5 – Uphold integrity in financial reporting

The Audit Committee should ensure financial statements comply with

applicable financial reporting standards.

The Audit Committee should have policies and procedures to assess the

suitability andindependence of external auditors.

Principle 6 – Recognise and manage risks

The board should establish a sound framework to manage risks.

The board should establish an internal audit function which reports directly to

the Audit Committee.

Principle 7 – Ensure timely and high quality disclosure

The board should ensure the company has appropriate corporate disclosure

policies and procedures.

The board should encourage the company to leverage on information

technology for effective dissemination of information.

Principle 8 – Strengthen relationship between company and shareholders

The board should take reasonable steps to encourage shareholder participation

at general meetings.

The board should encourage poll voting.

The board should promote effective communication and proactive engagements

with shareholders.

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