Corporate Governance Report
The Board’s Conduct of its Affairs
Principle 1: The Company is headed by an effective Board which is collectively responsible and works with the Management for the long-term success of the company.
Role of the Board
The primary role of the Board is to protect and enhance long-term value and returns for the shareholders. The Board approves the Group’s strategic plans, key business initiatives, major investments and funding decisions, and ensures the business affairs of the Group are effectively managed and conducted by the management of the Company (the “Management”).
The Board has adopted internal guidelines for cheque signatories and approval of capital and operating expenditures to optimise operational efﬁciency. Additionally, the Board has direct responsibility for decision-making in respect of the following:
- providing entrepreneurial leadership, setting the strategic directions and goals of the Company and ensuring that adequate resources are available to meet these objectives;
- establishing a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders’ interests and the Company’s assets;
- overseeing and monitoring the management and affairs of the Company;
- monitoring and reviewing the Management’s performance towards achieving organisational goals;
- overseeing the evaluation of the adequacy and effectiveness of ﬁnancial reporting, internal controls and risk management frameworks;
- monitoring the ﬁnancial performance of the business including approval of release of the annual and interim ﬁnancial reports and interested person transactions;
- identifying the key stakeholder groups and recognising that their perceptions affect the Company’s reputation;
- ensuring accurate and timely reporting to, and communication with shareholders;
- ensuring the Company’s compliance with laws, regulations, policies, directives, guidelines and internal code of conduct;
- determining and setting the Company’s values and standards, including ethical standards, and ensuring that obligations to shareholders and other stakeholders are understood and met; and
- considering sustainability issues, including environmental and social factors, in the formulation of the Company’s strategies.
Each individual Director has objectively discharged his duties and responsibilities at all times as ﬁduciaries in the best interests of the Company. Directors who are in any way, directly or indirectly, interested in a transaction or proposed transaction have to declare the nature of their interests in accordance with the provisions of the Companies Act 1967 (the “Companies Act”).
The Company has adopted internal guidelines governing matters that require the Board’s approval, and clear directions have also been given to the Management on the following matters which must be approved by the Board:
- material acquisition and disposal of assets/investments;
- corporate/ﬁnancial restructuring and corporate exercise;
- material ﬁnancial/funding arrangements and capital expenditures;
- policies and procedures, delegation of authority matrix, code of conduct and business ethics;
- nomination of directors and appointment of key executives; and
- interested persons transactions.
All relevant information on material events and transactions will be circulated to the Directors as and when they arise.
To facilitate effective management and without abdicating the Board’s responsibility, certain functions of the Board have been delegated to various Board committees (“Board Committees”). The Board is assisted by an Audit Committee (“AC”) as well as a Remuneration and Nominating Committee (“RNC”), each of which functions are clearly deﬁned in their respective terms of reference and operating procedures which are reviewed by the Board on a regular basis. The RNC and AC comprise Non-Executive Directors, all of whom including the Chairman of each Board Committee, are independent.
Board Meetings and Meetings of Board Committees
The Board meets on a half-yearly basis to review the ﬁnancial performance of the Group and approve the release of the Group’s half-year and full-year ﬁnancial results. Additional meetings of the Board may be held as and when circumstances require. The Constitution of the Company (the “Constitution”) allows meetings of the Board and Board Committees to be conducted by way of tele conference and video conference. The Directors normally set dates of the meetings of the Board and Board Committees well in advance.
The attendance of Directors who were in ofﬁce during FY2022 at meetings of the Board and Board Committees held in FY2022 are set out below:
To ensure that the Board is able to fulﬁll its responsibilities, the Management provides the Board with a management report containing complete, adequate and timely information prior to Board meetings as well as a report of the Group’s ongoing activities. In addition to the business plans submitted to the Board for approval, the Board is provided with board papers and related materials in respect of the Group’s performance, position and prospects as and when requested.
The Management will also keep the Board apprised of material variances between the actual results, corresponding period of the last ﬁnancial year and the budget with appropriate explanation on such variances.
The Board, the Board Committees and every Director have separate and independent access to the Management and are entitled to request for additional information as needed to make informed decisions. The appointment and removal of the Company Secretary is a matter for the Board to decide as a whole.
The Directors may, separately and independently, seek independent professional advice as and when necessary in furtherance of their duties. The appointment of such professional advisers is subject to approval by the Board. Any cost of obtaining such professional advice will be borne by the Company.
In addition, all Directors have separate and independent access to the Company Secretary. The Company Secretary attends all meetings of the Board and Board Committees and prepares minutes of meetings of the Board and of the Board Committees which are circulated for review. The Company Secretary is also responsible for ensuring that Board procedures and all other rules and regulations applicable to the Company are followed and advises the Board of the requirements of the Company’s Constitution, the Companies Act and the Listing Manual Section B: Rules of Catalist of the Singapore Exchange Securities Trading Limited (“SGX-ST”) (the “Catalist Rules”).
Training and Development of Directors
Newly appointed Directors will be issued a formal letter by the Company Secretary setting out their statutory duties and obligations as a Director upon their appointment.
The Management will organise orientation programmes for new Directors to familiarise them with the Group’s operations and business issues as well as the relevant regulations and governance requirements. In accordance with Catalist Rule 406(3)(a), the RNC will ensure that newly appointed Directors who do not have prior experience as a director of a public listed company in Singapore attend the mandatory training in the roles and responsibilities of a director as prescribed by the SGX-ST within one year from the date of their appointment at the Company’s expense. In FY2022, the CEO and Mr. Brian Praneda completed the mandated training as a ﬁrst-time director organised by the Singapore Institute of Directors. In addition, all the Board members have completed the mandated sustainability training course as required by the enhanced SGX sustainability reporting rules announced in December 2021.
The Company provides timely information to the Directors on Board’s processes, corporate governance practices and updates on changes to laws and regulations. The Directors are also encouraged to keep themselves abreast of the latest developments relevant to the Company or themselves. Where necessary, the Directors will be updated on new legislation and/or regulations and changing commercial risks, from time to time, which are relevant to the Group. News releases issued by the SGX-ST and Accounting and Corporate Regulatory Authority (“ACRA”) which are relevant to the Directors are circulated to the Board. The Directors are kept informed of upcoming conferences and seminars relevant to their roles as Directors of the Company. Such conferences and seminars as well as other training courses will be arranged and funded by the Company for all Directors. Annually, the external auditors will update the AC and the Board on any new and revised ﬁnancial reporting standards which are relevant to the Group.
During the period under review, Directors are provided with brieﬁngs and updates (i) on the developments in ﬁnancial reporting and governance standards by the external auditors; and (ii) on changes in the relevant laws and regulations pertaining to the Group’s business and changing commercial risks and business conditions of the Group by the Management on a monthly basis and during the meetings of the Board and Board Committees.
The Board has adopted a set of ethical values and standards which establish the fundamental principles of professional and ethical conduct expected of the Directors in the performance of their duties. It includes guidelines on matters relating to conflicts of interest. When an actual, potential and perceived conflict of interest arise, the concerned Director must disclose such interest, recuse himself or herself from discussions and decisions involving the matter, unless the Board is of the opinion that his/her presence and participation is necessary to enhance the efﬁcacy of such discussion. Nonetheless, he/she is to abstain from voting in relation to the conflict-related matters.
Board Composition and Guidance
Principle 2: The Board has an appropriate level of independence and diversity of thought and background in its composition to enable it to make decisions in the best interests of the company.
The Board presently comprises four (4) Directors, three (3) of whom are Independent Directors. In accordance with Provision 2.3 of the Code, the Board comprises three (3) Non-Executive Directors which makes up a majority of the Board. Details of the Directors are as set out below:
The proﬁles and key information of the individual Directors as well as their respective shareholdings in the Company are set out in the “Board of Directors” and “Directors’ Statement” sections of this annual report respectively.
The Board and the RNC remain committed to continuously reviewing the adequacy of the composition of the Board and ensuring that at all times, the Board will be in compliance with Principle 2 of the Code. The independence of the Directors is reviewed annually by the RNC. The RNC adopts the Code’s deﬁnition as to what constitutes an Independent Director in its review. The RNC and the Board have reviewed and ascertained that all Independent Directors are independent according to the Code, its Practice Guidance and Catalist Rules 406(3)(d)(i) and 406(3)(d)(ii) and note that:
- the Independent Directors: (i) are not employed by the Company or any of its related corporations for the current or any of the past three (3) ﬁnancial years; (ii) do not have an immediate family member who is employed or has been employed by the Company or any of its related corporations in the current or any of the past three (3) ﬁnancial years, and whose remuneration is determined by the RNC; and (iii) has not been a director of the Company for an aggregate period of more than nine (9) years (whether before or after listing);
- none of the Independent Directors or their immediate family member had in the current or immediate past ﬁnancial year (i) provided or received material services or signiﬁcant payments to and/or from the Group when aggregated over any ﬁnancial year in excess of S$50,000 for services other than compensation for board service; or (ii) was a substantial shareholder, partner, executive ofﬁcer or a director of any organisation which provided or received material services or signiﬁcant payments to and/or from the Group when aggregated over any ﬁnancial year in excess of S$200,000 for services rendered; and
- none of the Independent Directors are directly associated with a substantial shareholder of the Company.
Each Independent Director is required to complete a Director’s Independence Checklist annually to conﬁrm his independence based on the guidelines as set out in the Code and the Catalist Rules. The Independent Directors have conﬁrmed that they do not have any relationship with other Directors, the Company or its related corporations or its ofﬁcer or its substantial shareholders, that could interfere, or be reasonably perceived to interfere with the exercise of their independent business judgement with a view to the best interests of the Company. The Independent Directors have also conﬁrmed their independence in accordance with the Catalist Rules. Taking into consideration the RNC’s review and the conﬁrmations received from the Independent Directors, the Board is of the view that Mr. Tan Lye Heng Paul, Mr. Phua Cher Chew, and Mr. Brian Praneda are independent.
The Company had endorsed a Board Diversity Policy. The Company recognises and embraces the importance of diversity towards a well-functioning and effective Board. The Company believes that having a diversity of skill-sets, knowledge, experience, nationalities, ethnicity, age, cultural background and educational background among other relevant qualities in the Board’s composition is essential for the effective governance of the Company. Such diversity will ultimately beneﬁt the Board’s ability to make decisions in the best interests of the Company. Such diversity will also foster constructive debate and allow the Board to avoid groupthink.
The RNC is responsible for reviewing and assessing Board composition on behalf of the Board, and for recommending the appointment of new directors. In doing so, the RNC will consider all the previously mentioned qualities in identifying and nominating suitable candidates to the Board, having regard to the optimum composition of the Board and how the diversity of qualities can be balanced appropriately. Although all Board appointments will ultimately be made based on merit and objective criteria, the Board will have due regard to the beneﬁts of diversity and how a diversity of skills, experience, knowledge and independence can be complementary.
When a vacancy arises under any circumstances, or where it is considered that the Board would beneﬁt from the services of a new Director with particular skills, the RNC, in consultation with the Board, will determine the selection criteria and select candidates with the appropriate expertise and experience for the position. The RNC will then nominate the most suitable candidate for appointment by the Board to the Company. The Board Diversity Policy also recognises gender as an important aspect of diversity. As such, if external search consultants are used to search for candidates for Board appointments, the brief will include a requirement to also present female candidates. When seeking to identify a new director for appointment to the Board, the RNC will request for female candidates to be ﬁelded for consideration and the female representation on the Board be continually improved over time based on the set objectives of the Board. The Company does not have a timeline as to the appointment of a female director, and such an appointment will be dependent on when a vacancy arises. Nonetheless, the Company believes that the Board is sufﬁciently diverse, having considered, among others, the diversity of skills, experience, cultural background and nationalities of its current directors.
In addition to applying this Policy, the RNC will monitor its implementation and the Company’s progress against the objectives set in the Board Diversity Policy. The RNC shall report to the Board on the progress made towards achieving board diversity on an annual basis.
The RNC will review the Board Diversity Policy periodically, where appropriate, in order to ensure its effectiveness, and will recommend appropriate revisions to the Board for consideration and approval.
The Board and the RNC have considered and are satisﬁed that the current size of the Board of four (4) Directors is appropriate, taking into consideration the existing nature and scope of the operations of the Group.
The Board and the RNC are also satisﬁed that the current Board as a group has core competencies in accounting and ﬁnance, legal, business and management experience, industry knowledge, strategic planning experience and customer- based experience or knowledge.
The Non-Executive Directors provide, amongst other things, strategic guidelines to the Company based on their professional knowledge and experience. They constructively challenge and help develop directions on strategy and review the performance of the Management in achieving agreed targets and objectives. To facilitate a more effective check on the Management, the Non-Executive Directors are encouraged to arrange for meetings without the Management being present at times deemed necessary.
In general, the Board is able to exercise objective judgment independently from the Management and no individual or small group of individuals dominates the decision-making of the Board.
Chairman and Chief Executive Ofﬁcer
Principle 3: There is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision-making.
Mr. Phua Cher Chew is currently the Non-Executive and Independent Chairman of the Board while Mr. Jacob Lee Yen Min is the CEO. There is no familial relationship between the Chairman and the CEO. There is a clear division of roles and responsibilities between the Non-Executive Chairman and the CEO. The Non-Executive Chairman leads and manages the business of the Board whilst the CEO and his team of management staff translate the Board’s decisions into executive action. The segregation of the roles and responsibilities of the Chairman and the CEO ensures an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making.
The Chairman of the Board, is responsible for:
- leading the Board to ensure its effectiveness on all aspects of its role;
- setting the agenda for the meetings of the Board and instructing the Company Secretary to disseminate it to all Directors before each meeting;
- promoting a culture of openness and debate within the Board;
- ensuring the Board members engage the Management in constructive debate on various matters including strategic issues;
- ensuring that the Directors receive complete, adequate and timely information; (f) ensuring effective communication with shareholders;
- facilitating the effective contribution of all directors, the Non-Executive Directors in particular; and
- continuous pursuance of high standards of corporate governance.
The CEO is responsible for implementing the Group’s strategies and policies, making strategic and business investment decisions as well as the overall management and performance of the Group. The Board is of the opinion that there is a balance of power and authority within the Board.
In view that the Chairman of the Board is independent, the Board has not appointed a lead independent Director. The Chairman of the Board encourages constructive relations within the Board and between the Board and the Management to facilitate effective contribution of all Directors. The Chairman of the Board is assisted by the Board Committees in ensuring compliance with the Company’s standards of corporate governance. He is available to shareholders when they have concerns and for which contact through the normal channels of communication with the CEO or the Financial Controller has failed to resolve, or for which such contact is inappropriate.
Principle 4: The Board has a formal and transparent process for the appointment and re-appointment of directors, taking into account the need for progressive renewal of the Board.
The RNC was formed in June 2003 through the merger of the Nominating Committee and the Remuneration Committee of the Company. Currently, the RNC comprises three (3) Non-Executive Directors, all of whom including the Chairman of the RNC are independent. The Chairman of the RNC is not a substantial shareholder of the Company or directly associated with any substantial shareholder of the Company.
The members of the RNC are as follows:
Mr. Brian Praneda – Chairman
Mr. Phua Cher Chew
Mr. Tan Lye Heng Paul
The RNC has written terms of reference setting out its authority and duties, and regulates its procedures and in particular, the calling and frequency of meetings, the notice to be given of such meetings, the voting and proceedings thereat. The Company also maintains records of the deliberations and proceedings of the meetings of the RNC. The key terms of reference of the RNC are as follows:
- the RNC shall comprise not fewer than three (3) Directors, a majority of whom shall be independent;
- the Chairman of the RNC shall be an Independent Non-Executive Director; and
- the Board shall within three (3) months of cessation of a member appoint a new member from the date of cessation so that the number of members of the Board does not fall below three (3) if a member, for any reason, ceases to be a member.
The RNC handles both nominating and remuneration matters of the Company. With regards to nominating matters, the RNC pursuant to its written terms of reference shall:
- establish procedures for and make recommendation to the Board on all Board appointments including appointment and/or replacement of the Chairman of the Board, CEO and key management personnel and re-appointments and on relevant matters relating to the succession plans of the Board;
- review re-nominations, having regard to the Director’s contribution and performance (e.g. attendance, preparedness and participation) including, if applicable, as an Independent Director;
- decide whether the Director is able to and has been adequately carrying out his duties as a Director when the Director has multiple board representations;
- review the independence of the Directors on an annual basis;
- establish procedures for the evaluation of the Board’s performance and propose objective performance criteria, which shall be approved by the Board;
- assess the effectiveness of the Board as a whole and the Board Committees as well as assess the contribution by each individual Director to the effectiveness of the Board;
- identify gaps in the mix of skills, experience and other qualities required in an effective Board and nominate or recommend suitable candidate(s) to ﬁll these gaps;
- ensure that all Board appointees undergo an appropriate induction programme;
- review annually the Board’s structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary; and
- recommend the appropriate training and professional development programmes for the Board.
The RNC’s role in respect of remuneration matters is separately disclosed under Principle 6 (Procedures for Developing Remuneration Policies).
The RNC is charged with determining the independence of the Directors having regard to the circumstances set forth in Provision 2.1 of the Code, its Practice Guidance and Catalist Rules 406(3)(d)(i) and 406(3)(d)(ii). The RNC conducts an annual review of the Directors’ independence and is of the view that Mr. Brian Praneda, Mr. Phua Cher Chew and Mr. Tan Lye Heng Paul are independent.
Currently, none of the Directors hold an excessive number of board representations. Nonetheless, the Board has set the maximum number of listed company board representations each Director may hold to be ﬁve (5). When a Director has multiple board representations, the RNC also considers whether or not the Director is able to and has adequately carried out his duties as a Director of the Company. The RNC is satisﬁed that sufﬁcient time and attention has been given by the Directors to the affairs of the Company, notwithstanding that some of the Directors have multiple board representations.
The listed company directorships and principal commitments* of the Directors are set out in the table below:
* The term “principal commitments” includes all commitments which involve signiﬁcant time commitment such as full-time occupation, consultancy work, committee work, non-listed company board representations and directorships and involvement in non-proﬁt organisations. Where a director sits on the boards of non-active related corporations, those appointments should not normally be considered principal commitments.
In the selection process for the appointment of new Directors, the RNC will review the composition of the Board and identify the skill sets which enhance the Board’s overall effectiveness. Potential candidates are identiﬁed from various sources including personal networks. In assessing the suitability of a candidate to be appointed to the Board, the RNC will consider if he or she is able to make the appropriate contributions to the Board and the Group. The key factors which the RNC will take into consideration are:
- qualiﬁcations, industry knowledge and functional expertise which are relevant and beneﬁcial to the Group; and
- extensive experience and business contacts in the industry in which the Group operates.
The proposed candidates’ independence (if necessary) will also be considered before the RNC makes its recommendations to the Board. The new Directors will then be appointed by the Board.
The RNC is in charge of nominating the Directors for re-appointment, having regard to their competencies, commitment, contribution and performance, including but not limited to attendance, preparedness, participation and candour. Under the Company’s Constitution, a Director newly appointed by the Board shall hold ofﬁce only until the next annual general meeting (“AGM”) of the Company and shall then be eligible for re-election at the AGM. In addition, at least one-third of the Directors for the time being shall retire from ofﬁce by rotation at each AGM of the Company, provided all Directors (including managing directors and executive directors) shall retire by rotation at least once every three (3) years.
The RNC has reviewed and is satisﬁed that the Directors who are retiring in accordance with the Company’s Constitution at the forthcoming AGM of the Company are properly qualiﬁed for re-appointment by virtue of their skills, experience and contributions. The RNC has recommended to the Board that Mr. Tan Lye Heng Paul and Mr. Phua Cher Chew who will be retiring by rotation pursuant to Regulation 89 of the Company’s Constitution be nominated for re-election as Directors at the forthcoming AGM of the Company.
Pursuant to Rule 720(5) of the Catalist Rules, the additional information set out in Appendix 7F of the Catalist Rules relating to Mr. Tan Lye Heng Paul and Mr. Phua Cher Chew, who are retiring by rotation at the forthcoming AGM of the Company and submitting themselves for re-appointment thereat, are disclosed below and to be read in conjunction with their respective biography under the “Board of Directors” section of the annual report.
Each member of the RNC shall abstain from voting on any resolution and making any recommendation and/or participating in any deliberations of the RNC in respect of the assessment of his performance or re-nomination as a Director. Accordingly, Mr. Tan Lye Heng Paul and Mr. Phua Cher Chew, as members of the RNC, have abstained from voting on any resolutions in relation to the assessment of their respective performance as Directors of the Company.
The RNC recognises the importance of business continuity and the need for succession planning to attract and retain highly qualiﬁed individuals to serve on the Board. There is a structured process on reviewing the succession planning for Directors, including the Chairman, the CEO as well as other key management personnel. Board succession planning is evaluated and carried out through the annual review by the RNC. The outcome of that review is reported to the Board. The Board seeks to refresh its memberships progressively while ensuring continuity of corporate performance.
Principle 5: The Board undertakes a formal annual assessment of its effectiveness as a whole, and that of each of its board committees and individual directors.
The RNC has recommended to the Board and has implemented a formal review process to assess the effectiveness of the Board and of each Board Committee separately, as well as the contribution by the Chairman and each individual Director to the Board on an annual basis. All members of the Board are required to complete and return the evaluation forms to an independent coordinator (the “Independent Coordinator”) directly and in conﬁdence within four (4) weeks after the end of each ﬁnancial year. The Independent Coordinator will then collate the results and forward them to all members of the RNC for discussion. The RNC will thereafter report its ﬁndings to the Board.
For the purpose of its evaluation of the Directors’ performance, the RNC focuses on whether the Directors, individually or collectively, possess the background, experience, competencies in ﬁnance and management skills critical to the Group’s business as well as whether each Director, with his special contributions, brings to the Board an independent and objective perspective to enable sound, balanced and well considered decisions to be made.
The performance criteria for the board evaluation are in respect of the board composition and independence, board processes, board information and accountability, board’s review risk and internal controls and the Company’s performance of industry comparative date.
Factors taken into account in the assessment of a Director’s performance include his abilities and competencies, his objectivity and the level of participation at Board and Board Committee meetings including his contribution to Board processes as well as the business strategies and performance of the Group.
The Board, together with the RNC, is of the view that due to the relatively small size of the Board and given the background, experience and expertise of each Director, assessment by the RNC of the effectiveness of the Board as a whole and each Director’s performance is sufﬁcient and it would not be necessary to assess the effectiveness of the Board Committees.
The RNC, having reviewed the overall performance of the Board in terms of its role and responsibilities as well as the conduct of its affairs as a whole for FY2022, and the peer assessment of each Director, is of the view that the performance of the Board as a whole, and the contribution of each Director to the effectiveness of the Board has been satisfactory. No external facilitator had been engaged by the Board for this purpose.
Procedures for Developing Remuneration Policies
Principle 6: The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for ﬁxing the remuneration packages of individual directors and key management personnel. No director is involved in deciding his or her own remuneration.
The RNC comprises three (3) members, all of whom, including the Chairman, are Independent Directors. The members of the RNC are as follows:
Mr. Brian Praneda – Chairman
Mr. Phua Cher Chew
Mr. Tan Lye Heng Paul
With regards to remuneration matters, the RNC pursuant to its written terms of reference shall:
- review and recommend to the Board a framework of remuneration for the Directors and key management personnel which covers Directors’ fees, where applicable, basic salaries, allowances, bonuses, speciﬁc remuneration packages and beneﬁts-in-kind;
- review and recommend to the Board the speciﬁc remuneration packages for each Director as well as for the key management personnel which take into account annual increments and bonuses;
- review the remuneration packages of all managerial staff who are related to any of the Directors;
- review the performance of key management personnel to enable the RNC to determine their annual remuneration and bonus rewards; and
- recommend to the Board, in consultation with the key management personnel and the CEO, any long-term incentive scheme.
The RNC is tasked to provide a formal, transparent and objective procedure for ﬁxing the remuneration packages of individual Directors and to ensure that the level of remuneration paid by the Company serves to attract, retain and motivate the employees needed to manage the Company successfully. All aspects of remuneration, including but not limited to Directors’ fees, salaries, allowances, bonuses and other beneﬁts-in-kind and termination terms shall be covered by the RNC, to ensure they are fair. The recommendations made by the RNC will be submitted for endorsement by the Board. Each member of the RNC shall abstain from voting on any resolutions in respect of his remuneration package.
The RNC has access to professional advice from experts outside the Company on remuneration matters as and when necessary. The RNC will ensure that existing relationships between the Company and its appointed remuneration consultants, if any, will not affect the independence and objectivity of the remuneration consultants. The Company will also disclose the names and ﬁrms of the remuneration consultants (if any) in the annual remuneration report and include a statement on whether the remuneration consultants have any such relationships with the Company. The Company did not engage any remuneration consultant in respect of the remuneration matters of the Group during FY2022.
The RNC is of the view that it is currently not necessary to use contractual provisions to allow the Company to reclaim incentive components of remuneration from the Executive Director and key management personnel in exceptional circumstances of misstatement of ﬁnancial results, or of misconduct resulting in ﬁnancial loss to the Company. The RNC will review the compensation commitments of the Directors’ or key management personnel’s contracts of service as and when necessary to ensure that such contracts of service contain fair and reasonable termination clauses.
Level and Mix of Remuneration
Principle 7: The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the Company, taking into account the strategic objectives of the Company.
The Group sets remuneration packages which are competitive and sufﬁcient to attract, retain and motivate Directors and key management personnel with adequate experience and expertise to manage the business and operations of the Group for the long term. In setting remuneration packages, the Group takes into account salary and employment conditions within the same industry and in comparable companies. The Group adopts a remuneration policy for the Executive Director and key management personnel, comprising of a basic salary component and a bonus component. The bonus component is performance-based and seeks to align the interests with those of the shareholders of the Company.
Currently, the Company does not have any long-term incentive scheme. The RNC will consider recommending the implementation of incentive schemes for the executive and non-executive directors as well as key management personnel as and when it considers appropriate.
All Directors, excluding the Executive Director, are paid a basic Directors’ fee. Currently, the basic fee is determined and considered by the Board based on the effort, time spent and responsibilities of the Directors. The RNC had assessed that the current remuneration of Non-Executive Directors to be appropriate to the level of contribution and commitment required from the Independent Directors. Based on the current operations and structure of the Group, the ﬁxed basic fee is reasonable due to the non-complexity of the Group’s business. The RNC is also mindful that the remuneration for Non-Executive Directors should not be excessive so as not to compromise reasonably be perceived to compromise their independence. The payment of such fees to the Directors is subject to approval of shareholders at the AGM of the Company. The Independent Directors have not been over-compensated to the extent that their independence is compromised.
Non-Executive Directors have no service contracts with the Company. The Executive Director has a service contract with the Company, which can be terminated by either the Company or the Executive Director giving not less than three (3) months’ notice in writing.
The Company does not use contractual provisions to allow the Company to reclaim incentive components of remuneration from the Executive Director and key management personnel in exceptional circumstances of misstatement of ﬁnancial results, or of misconduct resulting in ﬁnancial loss to the Company. The Executive Director owes a ﬁduciary duty to the Company, and hence, the Company should be able to avail itself of remedies against the Executive Director in the event of such breach of ﬁduciary duties. The RNC will review such contractual provisions with the Executive Director and key management personnel as and when necessary.
Disclosure on Remuneration
Principle 8: The Company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.
The compensation package for employees including the Executive Director and CEO and key management personnel comprises a ﬁxed component (base salary), a variable component (cash-based annual bonus) and beneﬁts-in-kind, where applicable, taking into account factors such as the individual’s performance, the performance of the Group and industry practices.
Save for the CEO and the Financial Controller, the Company does not have any other key management personnel. A breakdown of the remuneration of the Directors and key management personnel for FY2022 is set out below:
There were no termination, retirement and post-employment beneﬁts granted to the Directors and key management personnel.
The Company does not have any employee who is a substantial shareholder of the Company, or an immediate family member of any Director, the CEO or a substantial shareholder of the Company, and whose remuneration exceeds S$100,000 during FY2022.
Currently, the Company does not have any share-based compensation scheme or any long-term incentive scheme involving the offer of shares or options in place.
ACCOUNTABILITY AND AUDIT
Risk Management and Internal Controls
Principle 9: The Board is responsible for the governance of risk and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of the company and its shareholders.
The Board endeavours to ensure that the annual audited ﬁnancial statements as well as the half yearly and full year announcements of the Group’s ﬁnancial results present a balanced and comprehensible assessment of the Group’s performance, position and prospects. The Board takes adequate steps to ensure compliance with the relevant legislative and regulatory requirements and observes obligations of continuing disclosure under the Catalist Rules. In FY2022, the Board has reviewed reports submitted by the Management to ensure compliance with all the Group’s policies, operational practices and procedures and relevant legislative and regulatory requirements.
In line with the Catalist Rules, the Board has also provided a negative assurance statement to shareholders in respect of the half yearly results announcement.
The Board’s Responsibility
The Board acknowledges that it is responsible for the overall internal control framework and the maintenance of a sound system of risk management and internal controls.
Enterprise Risk Management Exercise
An Enterprise Risk Management (“ERM”) Committee which comprises senior personnel from the operational and ﬁnancial functions of the Group has been established since FY2017. The ERM Committee has reviewed the Group’s business and operational activities to identify areas of signiﬁcant business risks as well as appropriate measures to control and mitigate these risks.
For the key operational, ﬁnancial, compliance, human capital, environment, and information technology risks identiﬁed, the ERM Committee will ensure the adequacy and effectiveness of the internal controls implemented to manage the identiﬁed risks based on the ERM framework executed.
Conﬁrmation provided by Senior Management
The Board has overseen the Management in the design, implementation and monitoring of the risk management system. On an annual basis, the ERM Committee will report to the Board the processes, risks, and risk mitigating controls that are in place and provide updates on the status of signiﬁcant issues of the Group, if any, to the Board. Based on the evaluation of risk management system performed by the ERM Committee, the CEO and Financial Controller have provided written assurance to the Board that the Group’s risk management system is adequate and effective for FY2022.
The effectiveness of the internal control systems and procedures are monitored by the Management. The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal control system will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.
Apart from the above, the AC also commissions and reviews the ﬁndings of internal controls or infringement of any Singapore laws, rules or regulations which has or is likely to have a material impact on the Group’s operating results and/or ﬁnancial position on annual basis. In FY2022, the AC, on behalf of the Board, has reviewed the adequacy and effectiveness of the Group’s internal controls systems, including ﬁnancial, operational, compliance and information technology controls, and risk management systems on an annual basis. The processes used by the AC to review the adequacy and effectiveness of the system of internal control and risk management include:
- discussions with the Management on risks management;
- the internal audit processes;
- the review of external and internal audit plans; and
- the review of signiﬁcant issues raised by the external and internal auditors.
Based on the framework of risk management and internal controls established and maintained by the Group, the review performed by the Management and the AC, the work performed by the internal auditors and the review undertaken by the external auditors as part of their statutory audit, the Board, with the concurrence of the AC, is of the opinion that the Group’s internal controls, including ﬁnancial, operational, compliance and information technology controls, and risk management systems, are effective and adequate to meet the needs of the Group in its current business environment.
For FY2022, the Board has also received written assurance from the CEO and the Financial Controller that:
- the ﬁnancial records have been properly maintained and the ﬁnancial statements give a true and fair view of the Group’s operations and ﬁnances; and
- the Group’s risk management and internal control systems are effective and adequate.
Principle 10: The Board has an Audit Committee (“AC”) which discharges its duties objectively.
Currently, the AC comprises three (3) Non-Executive Directors, all of whom including the Chairman of the AC are independent. At least two members, including the Chairman of the AC, have recent and relevant accounting or related ﬁnancial management expertise or experience. The Chairman of the AC is not a substantial shareholder of the Company or directly associated with any substantial shareholder of the Company.
The members of the AC are as follows:
Mr. Tan Lye Heng Paul – Chairman
Mr. Phua Cher Chew
Mr. Brian Praneda
The members of the AC have many years of experience in senior management positions in both ﬁnancial and industrial sectors. The Board is of the opinion that the members of the AC are appropriately qualiﬁed to discharge their responsibilities.
The AC has explicit authority to investigate any matter within its terms of reference, with full access to and co-operation from the Management as well as full discretion to invite any Director or executive ofﬁcer of the Group to attend its meetings, and is given reasonable resources to enable it to discharge its functions properly. For FY2022, the AC held two (2) meetings.
The main objective of the AC is to assist the Board in fulﬁlling their ﬁduciary duties to the Company and each of its subsidiaries. The AC, pursuant to its written terms of reference, shall:
- review the signiﬁcant ﬁnancial reporting issues and judgments so as to ensure the integrity of the ﬁnancial statements of the Company and any announcements relating to the Company’s ﬁnancial performance;
- recommend to the Board the appointment or re-appointment or removal of, and approving the remuneration and terms of engagement of, the external auditors and internal auditors;
- review the audit plans of the internal and external auditors of the Company, and review the internal auditors’ evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Management to the internal and external auditors;
- evaluate the adequacy, effectiveness, independence, scope and results of both the internal and external audit functions;
- determine that no unwarranted management restrictions are being placed upon the external and internal auditors;
- review the ﬁnancial statements with the Management and external auditors (where applicable) for submission to the Board;
- review the half yearly and full year announcements of the results of the Group before submission to the Board for approval;
- review the assurance from the CEO and the Financial Controller on the ﬁnancial records and ﬁnancial statements;
- report to the Board summarising the work performed by the AC in carrying out its functions;
- review interested person transactions;
- have explicit authority to investigate any matter within its terms of reference, with full access to and co-operation by the Management and full discretion to invite any Director or executive ofﬁcer of the Group to attend its meetings, and reasonable resources to enable it to discharge its functions properly;
- review the policy and arrangements for concerns about possible improprieties in ﬁnancial reporting or other matters to be safely raised, independently investigated and appropriately followed up on;
- review the scope and results of the audit and its cost effectiveness and the independence and objectivity of the external and internal auditors;
- meet with the external and internal auditors, without the presence of the Management, at least annually; and
- review and report to the Board, at least annually, the adequacy and effectiveness of the Group’s internal controls, including ﬁnancial, operational, compliance and information technology controls, and risk management systems (such review can be carried out internally or with the assistance of any competent third parties).
In addition to the abovementioned activities undertaken to fulﬁl its responsibilities, the AC is kept abreast by the Management, external and internal auditors on changes to accounting standards, Catalist Rules and other rules and regulations which could have an impact on the Group’s business and ﬁnancial statements.
The AC has met the external auditors and the internal auditors, without the presence of the Management, for FY2022.
The Company’s external auditors are Ernst & Young LLP. During FY2022, the aggregate amount of fees paid and/or payable to the external auditors for audit services amounted to approximately S$147,000. During FY2022, there were no non-audit services rendered by the external auditors to the Group. The AC has reviewed and conﬁrmed the independence and objectivity of the external auditors. The AC noted that the Company has received a notice of nomination from Pollux Holdings Pte. Ltd., a substantial shareholder of the Company, nominating Foo Kon Tan LLP for appointment as the external auditors of the Company at the forthcoming AGM of the Company. The AC, having reviewed and considered the proﬁle of and proposal from Foo Kon Tan LLP as well as the Audit Quality Indicators Disclosure Framework issued by Accounting and Corporate Regulatory Authority, has recommended to the Board that Foo Kon Tan LLP be appointed as auditors of the Company at the forthcoming AGM of the Company. Details of the proposed change of auditors are further set out in the appendix dated 4 April 2023 to the Annual Report.
The Company conﬁrms its compliance with Rules 712 and 716 of the Catalist Rules in relation to the appointment of auditing ﬁrms for the Group. Certain Singapore-incorporated subsidiaries of the Company were audited by other auditors as disclosed in Note 14 to the ﬁnancial statements in this Annual Report. The Board and AC have considered and are satisﬁed that the appointment of other auditors would not compromise the standard and effectiveness of the audit of the Group and accordingly, Rule 716 of the Catalist Rules has been complied with. No former partner or director of the Company’s existing auditing ﬁrm or audit corporation is a member of the AC. With reference to the joint recommendations made by the Monetary Authority of Singapore, ACRA and SGX-ST, the audit committees of all Singapore-listed entities are encouraged to disclose their perspectives and assessment on key audit matters (“KAM”). The following KAM was discussed between external auditors and Management, and reviewed by the AC.
The Board undertakes to investigate complaints in an objective manner and has put in place a whistle-blowing policy and procedures which provide employees with well-deﬁned and accessible channels within the Group including a direct channel to the AC, for reporting suspected fraud, corruption, dishonest practices or other similar matters.
The policy aims to encourage the reporting of such matters in good faith, with the conﬁdence that the identity of the whistleblower is kept conﬁdential and only made known to the members of the AC, which has oversight and monitors the whistle-blowing function, and employees making such reports in good faith will be treated fairly and be protected from reprisal. On an ongoing basis, the whistle-blowing policy is covered during staff training as part of the Group’s efforts to promote fraud control awareness.
The AC, which comprises independent directors, is responsible for the oversight and monitoring of the whistle-blowing policy, ensuring that any investigation and follow-up procedures are taken, if any. The policy and its effectiveness will be reviewed by the AC periodically, with recommendations regarding updates or amendments, if any, to be made to the Board as required.
There was no whistle-blowing report received during FY2022.
Complaints, incidents or claims can be raised directly to the Chairman of the AC at firstname.lastname@example.org.
The AC’s responsibilities over the Group’s internal controls and risk management systems are complemented by the work of the internal auditors. The size of the operations of the Group does not warrant the Group having an in-house internal audit function. The Company has outsourced its internal audit function to an independent professional ﬁrm, Wensen Consulting Asia (S) Pte. Ltd. (“Wensen”), to perform the review and test of controls of the Group’s processes in FY2022. Wensen has experience in providing risk advisory, internal audit and other consulting services. The team, comprising a manager and senior associate is led by an engagement partner who has more than 20 years of experience. The AC approves any hiring, removal, evaluation and remuneration of the external professional ﬁrm to which the internal audit function is outsourced. The AC has reviewed and assessed the qualiﬁcations and experience of the appointed internal audit ﬁrm’s team which undertakes the function of its internal audit within the Group.
The internal auditors report to the Chairman of the AC. The internal auditors plan their internal audit schedules in consultation with, but independent of, the Management. The internal auditors have unrestricted access to all the Company’s documents, records, properties and personnel, including access to the AC.
The AC has reviewed the scope and ﬁndings of the internal audit performed by the internal auditors during FY2022 and the Management’s responses thereto. There were no material internal control weaknesses identiﬁed by the internal auditors in their course of audit for FY2022.
The AC will assess and ensure the adequacy and effectiveness of the internal audit function annually. The AC is satisﬁed that the internal audit function is independent, effective and adequately staffed with suitably qualiﬁed and experienced professional members with the relevant experience.
The internal auditors are guided by the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.
SHAREHOLDER RIGHTS AND ENGAGEMENT
Shareholder Rights and Conduct of General Meetings
Principle 11: The Company treats all shareholders fairly and equitably in order to enable them to exercise shareholders’ rights and have the opportunity to communicate their views on matters affecting the Company. The Company gives shareholders a balanced and understandable assessment of its performance, position and prospects.
All shareholders are entitled to attend the Company’s general meetings and are provided the opportunity to participate in the general meetings. Shareholders are also briefed by the Company on the rules, including voting procedures that govern general meetings. These general meetings also provide excellent opportunities for the Company to obtain shareholders’ views on value creation. Shareholders (other than a shareholder who is a relevant intermediary) may appoint up to two (2) proxies to vote on their behalf at the general meetings of the Company. A shareholder who is a relevant intermediary is entitled to appoint more than two (2) proxies to attend and vote at the general meetings of the Company. The duly completed proxy form has to be deposited at the Company’s registered ofﬁce or such other place as may be speciﬁed for that purpose 72 hours before the time of the general meetings.
The shareholders are encouraged to attend the general meetings to communicate their views on matters affecting the Group and to stay informed of the Group’s strategies and visions. The Company’s Constitution does not allow shareholders to vote in absentia. The Company is not implementing absentia voting methods such as voting via mail, e-mail or fax until security, integrity and other pertinent issues are satisfactorily resolved. Substantially separate issues are tabled in separate resolutions at general meetings. Where the issues are interdependent and linked to form one signiﬁcant proposal and the resolutions are bundled, the Company will explain the reasons and material implications in the notice of the general meeting. Voting is carried out systemically, and the votes casted and resolutions passed are properly recorded.
The Company conducts the voting of all its resolutions by poll at all its general meetings. The results of poll of each resolution tabled are announced at the meetings and in an announcement released after the meeting via SGXNET and on the Company’s corporate website. Shareholders can vote personally or by their appointed proxies. The Company will employ electronic polling if necessary.
All Board members, including the Chairman of the AC and the RNC, and the external auditors are normally available at general meetings of the Company to answer questions from the shareholders. Registered shareholders are invited to attend and participate actively in such meetings.
In view of the COVID-19 situation, the AGM in respect of the ﬁnancial year ended 31 December 2021, was convened and held on 27 April 2022 (“2021 General Meeting”) by electronic means pursuant to the COVID-19 (Temporary Measures) (Alternative Arrangements for Meeting for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 (the “Order”). Shareholders could appoint the Chairman of the AGM as their proxy to vote on the resolutions at the AGM. All Directors who were in ofﬁce had attended the 2021 General Meeting. Save for the 2021 General Meeting, there were no other general meetings held in FY2022.
The Company Secretary prepares minutes of general meetings, which incorporates substantial and relevant comments or queries from shareholders relating to the agenda of the general meeting, and responses from the Board and the Management (if any). The Minutes of the 2021 General Meeting was published on the SGX website within one month after the date of the 2021 General Meeting.
Except as disclosed in the preceding paragraph and the next paragraph, the Company does not publish minutes of general meetings of shareholders on its corporate website as the Company is of the view that there are potential adverse implications, including commercial and legal implications. All shareholders, including those who did not attend the relevant general meeting, have a statutory right to request and would be furnished copies of minutes of general meetings in accordance with Section 189 of the Companies Act. The Company is therefore of the view that its practices are consistent with the intent of Principle 11 of the Code.
The forthcoming AGM to be held in respect of FY2022 will be convened and held by electronic means pursuant to the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 (the “Order”). Alternative arrangements relating to attendance at the AGM via electronic means (including arrangements by which the meeting can be electronically accessed via “live” audio- visual webcast or “live” audio-only stream), submission of questions to the Chairman of the Meeting in advance of the AGM, addressing of substantial and relevant questions prior to and at the AGM, and “live” voting or by appointing the Chairman of the Meeting as proxy at the AGM, will be put in place for the AGM. As required by the Order, the Company will publish the minutes of the AGM on the SGX website and the Company’s website at the URL: http://pollux.com.sg/ within one month after the date of the AGM.
Currently, the Company does not have a ﬁxed dividend policy. The Board would consider establishing a dividend policy when appropriate. In considering the payment of dividend, the Board shall consider factors such as the Company’s proﬁts, cash flows, working capital and capital expenditure requirements, investment plans and other factors that the Board may deem relevant. Taking into consideration these factors, the Company has not declared any dividends for FY2022.
Engagement with Shareholders
Principle 12: The Company communicates regularly with its shareholders and facilities the participation of shareholders during general meetings and other dialogues to allow shareholders to communicate their views on various matters affecting the Company.
The Board is mindful of its obligations to provide timely and fair disclosure of material information to the SGX-ST and shareholders in accordance with Appendix 7A on “Corporate Disclosure Policy” of the Catalist Rules. The Board embraces openness and transparency in the conduct of the Company’s affairs, whilst safeguarding its commercial interests. The Board’s policy is that all shareholders should be equally informed on a timely basis of all major developments that impact the Group. Price sensitive information, ﬁnancial results and annual reports of the Company are released via SGXNET on a timely basis. The Annual Report, the Appendix, the Notice of AGM and the accompanying proxy form will be published on the Company’s website at http://pollux.com.sg/annual-reports and on the SGX website at https://www.sgx.com/securities/company-announcements. The Notice of AGM is also advertised in a daily newspaper.
The Company is committed to corporate governance and transparency by disclosing to its stakeholders, including its shareholders, as much relevant information as is possible, in a timely, fair and transparent manner as well as to hearing its shareholders’ views and addressing their concerns.
The Company does not practice selective disclosure of material information. All material information on the performance and development of the Group and of the Company is disclosed in an accurate and comprehensive manner through SGXNET and the Company’s website.
General meetings have been and are still the principal forum for dialogue with shareholders. General meetings offer opportunities for the Board to interact with shareholders, understand their views, gather feedback as well as address concerns. Enquiries by shareholders are dealt with as promptly as practicably possible. The Company does not have an investor relations team, however, the Company maintains a website at http://pollux.com.sg and updates it on a timely basis to bring public awareness of the Group’s latest development and businesses. To enable shareholders to contact the Company easily, the contact details are set out in the Company’s website. Shareholders can provide feedback to the Company via the electronic mail address, the registered ofﬁce address or telephone calls. Calls and emails requesting for information are attended to promptly.
MANAGING STAKEHOLDERS RELATIONSHIPS
Engagement with Stakeholders
Principle 13: The Board adopts an inclusive approach by considering and balancing the needs and interests of material stakeholders, as part of its overall responsibility to ensure that the best interests of the company are served.
The Company has regularly engaged its stakeholders mainly through its company website and emails to ensure that its interests are aligned with those of its stakeholders. The Company has identiﬁed stakeholders groups which have a signiﬁcant influence and interest in the Group’s business and operations. The key stakeholders include investors, tenants, employees, government and regulators and business partners.
The Company adopts an inclusive approach by considering and balancing the needs of material stakeholders and embeds environmental, social and governance considerations into its risk assessment, ﬁnancing policies and business operations. The Company will be publishing its Sustainability Report for FY2022 by 30 April 2023 on SGXNET and the Company’s corporate website.
The Company maintains a corporate website at http://pollux.com.sg to communicate and engage with stakeholders.
DEALINGS IN THE COMPANY’S SECURITIES
The Company has issued a guideline on share dealings to all Directors and employees of the Group which sets out the code of conduct on transactions in the Company’s shares by these persons, the implications of insider trading and general guidance on the prohibition against such dealings.
In line with Rule 1204(19) of the Catalist Rules, the Company issues a notiﬁcation to all Directors and employees of the Group informing them that they are not allowed to deal in the securities of the Company during the period commencing one
(1) month before the announcement of the Company’s half-year and full-year ﬁnancial results, and ending on the date of the announcement of the relevant results. The Company also does not deal in its shares during such period. In addition, the Company prohibits all Directors and ofﬁcers (including employees) of the Group from dealing in the Company’s securities on short-term considerations or when they are in possession of unpublished price-sensitive information.
INTERESTED PERSON TRANSACTIONS
The Company has established procedures governing all interested person transactions to ensure that they are properly reviewed and approved. The Group does not have a general mandate from shareholders for interested person transactions pursuant to Rule 920 of the Catalist Rules.
During FY2022, the aggregate value of all interested person transactions are as follows:
As at the end of FY2022, there was an aggregate outstanding loan amount of S$4,805,220 due to Pollux Treasures Pte. Ltd., a company wholly-owned by Pollux Botero Pte. Ltd. (a 50:50 joint venture with Goldman Morgan Holdings Pte. Ltd.), from the Company and Goldman Morgan Holdings Pte. Ltd. This loan is unsecured and interest-free, and is repayable on demand.
Save as disclosed in this annual report, there were no other material contracts entered into by the Company or any of its subsidiaries involving the interests of the CEO, any Director or controlling shareholder, either still subsisting at the end of FY2022, or if not then subsisting, entered into since the end of the previous ﬁnancial year.
With reference to Rule 1204(21) of the Catalist Rules, there was no non-sponsor fee paid to the Company’s sponsor, Novus Corporate Finance Pte. Ltd., for FY2022.