Corporate Governance Statement

CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“the Board”) of Scanwolf Corporation Berhad (“Scanwolf” or “the Company”) recognises the importance of good corporate governance and is committed to ensure that good corporate governance is being practised by the Group in order to safeguard stakeholders’ interests as well as enhancing shareholders’ value.

This Statement sets out the manner in which the Group has applied and the extent of compliance with the principles and recommendations as set out in the Malaysian Code on Corporate Governance (“MCCG” or “the Code”) during the financial year ended 30 June 2018 (“FYE 2018”).

The Board has also provided specific disclosures on the application of each Practices in its Corporate Governance Report (“CG Report”). The CG Report was announced together with the Annual Report of the Company on 29 October 2018. Shareholders may obtain this CG Report by accessing www.scanwolf.com for further details.

APPLICATION OF THE PRINCIPLES AS SET OUT IN THE CODE

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

1. BOARD RESPONSIBILITIES

1.1 The Board should set the company’s strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company’s values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

The Board, which assumes responsibility for the Company’s leadership, is collectively responsible for meeting the objectives and goals of the Company. The Board recognizes the key role it plays in charting the strategic direction of the Company and has undertaken the following principal responsibilities in discharging its fiduciary and leadership functions:

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee (“AC”), Nomination Committee (“NC”) and Remuneration Committee (“RC”) to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.

Certain matters which are reserved specifically for the Board’s decision are discussed. These includes the approval of corporate plans and budgets, acquisitions and disposals of assets that are material to the Group, major investments, changes to management and control structure of the Group and key policies, procedures and authority limits.

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at Board meetings.

The Board meets on a quarterly basis with additional meetings held whenever necessary. The Board met four (4) times during the year under review. The meeting attendance record of the Directors is as follows:

To ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively and in line with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Director of the Company must not hold directorships of more than five (5) public listed companies and must be able to commit sufficient time to the Company.

The Directors are mindful that they should continue to attend training programmes to enhance their skills and knowledge where relevant, as well as to keep abreast with the changing regulatory and corporate governance developments.

The details of training attended by the Directors of the Company during FYE 2018 are as follows:

In the future, the Board will continue to identify training needs amongst the Directors and enroll the directors for training programs, as and when required.

The Board is also mindful of the importance of business sustainability and, in conducting the Group’s business, the impact on the environmental, social, health and safety, staff welfare and governance aspects are taken into consideration.

In addition, the Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. The Board observes the corporate disclosure framework under Bursa Malaysia Securities Berhad Main Market Listing Requirements and other regulatory bodies to provide timely and material information of the Group to its shareholders and other stakeholders to facilitate their decision making process. The Group also refers to the “Corporate Disclosure Guide” issued by Bursa Malaysia Securities Berhad to enhance the timelines and quality of its disclosure.

To augment the process of disclosure, the Board has earmarked a dedicated section for corporate governance on the Company’s website where information on the Company’s announcements to the regulators, the Board Charter, and the Company’s Annual Report may be accessed.

1.2 A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

The Chairman plays a pivotal role in ensuring the effectiveness of the Board by providing leadership to the Board in ensuring that the Board carries out its functions effectively, manages the interface between Board and Management. Additionally, the Chairman ensures orderly conduct and proceedings of Board meetings by leading the discussions at our Board meetings and ensure that relevant matters are included in the meeting agenda alongside allocating sufficient time for discussions.

1.3 The positions of Chairman and Chief Executive Officer are held by different individuals.

The Chairman of the Company is an Independent Non-Executive Director and the Company does not appoint Chief Executive Officer currently.

The Group has a clear distinction and separation of roles between the Chairman and the Executive Directors, with clear division of responsibilities in order to ensure a clear balance of power between the Chairman and the Executive Directors.

The Chairman leads the Board in its collective oversight of management, while the Executive Directors are primarily responsible for the day-to-day management of the Group. Executive Directors are responsible for developing the business direction of the Group, ensure that the business strategies and policies are effectively implemented and to explain, clarify and inform the Board on matters pertaining to the Group.

1.4 The Board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practices.

The Board is supported by experienced, competent, and knowledgeable Company Secretary who is qualified to act as Company Secretary under Section 235(2) of the Companies Act 2016.

The Company Secretary advise the Board on the issues relating to the Company’s constitution, Malaysian Code on Corporate Governance, Companies Act 2016 and Listing Requirements of Bursa Malaysia Securities Berhad.

The Board obtained appropriate advice and services, if necessary, from Company Secretary to ensure adherence to Board meeting procedures and compliance with regulatory requirements.

1.5 Directors receive meeting materials, which are complete and accurate within a reasonable period prior to themeeting. Upon conclusion of the meeting, the minutes are circulated in a timely manner.

Meeting materials alongside with the meeting agenda and the relevant papers submitted by management are issued and circulated in time for the members of the Board and Committees at least seven (7) days prior to each meeting.

The meetings of the Board and the board committees are properly minuted and circulated to all Board members.

All Board members/board committees’ members reviewed and confirmed the minutes of the meetings to ensure they are accurately reflect the deliberations and decision of the Board, including whether any Director abstainedfrom voting or deliberation on a particular matter. The signed board minutes are kept at the Company’s minutesbook.

2.1 The Board has a Board Charter which is periodically reviewed and published on the company’s website. The Board Charter clearly identifies-

The Board has made available its Board Charter on the corporate website. The document clearly sets out the roles and responsibilities of the Board and Board Committees and the processes and procedures for convening their meetings. The Board Charter is subject to periodic review to ensure that it continues to be relevant and applicable as a reference to enable Directors to carry out their stewardship role and discharge their fiduciary duties towards the Company. On this, the Board has on 31 May 2018 reviewed its Board Charter. The Board Charter can be accessed at the Company’s website at www.scanwolf.com.

3.1 The Board establishes a Code of Conduct and Ethics for the company, and together with management implements its policies and procedures, which include managing conflicts of interest, preventing the abuse of power, corruption, insider trading and money laundering.

The Code of Conduct and Ethics is published on the company’s website.

The Company’s Codes of Conduct and Ethics for Directors continue to govern the standards of ethics and good conduct expected of Directors. The Code of Conduct and Ethics for Directors includes principles relating to corporate governance; conflict of interest; relationship with employees; shareholders and business partners; social responsibilities and environmental commitment; compliance with laws, rules and regulations and dealings in securities are available at the Company’s website.

3.2 The Board establishes, reviews and together with management implements policies and procedures on whistleblowing.

The Company does not adopt a whistleblowing policy. The Board has always conducted themselves in an ethical manner while executing their duties and function. The Board believes in open management that any issues of concern can be channelled to any Independent Directors for appropriate action. Nonetheless, the Company is in the midst of formulating a whistleblowing policy and the Company expects to adopt a whistleblowing policy by the second quarter of financial year ending 30 June 2019.

2. BOARD COMPOSITION

4.1 At least half of the Board comprises independent directors. For Large Companies, the board comprises amajority independent directors.

As at 30 June 2018, there are seven (7) Board members; of which four (4) are Independent Directors and three (3) are Non-Independent Directors. The Independent Directors constitute 57.14% of the Board. The Board composition also complies with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad that requires a minimum oftwo (2) Directors or one-third (1/3) of the Board, whichever is higher, to be Independent Directors.

It is within the viewpoint of the Board that with the current composition of Directors and their individual backgrounds and specialisations, the Company is aided with a wide range of experience and expertise in areas such as finance,accounting and audit, taxation, corporate affairs, marketing, property management and banking.

To ensure that the Company promotes corporate governance effectiveness, the Independent Non-Executive Directors are in place to provide check and balance in the function of the Board and reflects the Company’s commitment to uphold effective corporate governance.

The profile of each of the members of the Board is set out at pages 6 to 8 of this Annual Report.

4.2 The tenure of an independent director does not exceed a cumulative term limit of nine years. Upon completion of the nine years, an independent director may continue to serve on the Board as a non-independent director.
If the Board intends to retain an independent director beyond nine years, it should justify and seek annual shareholders’ approval. If the Board continues to retain the independent director after the twelfth year, the Board should seek annual shareholders’ approval through a two-tier voting process.

The Independent Non-Executive Directors bring objective and independent views, advice and judgment on interests, not only of the Group, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make significant contributions to the Company’s decision by giving rationale and fair view and to decide impartially.

Presently, the tenure of all the Independent Non-Executive Directors does not exceed a cumulative term of nine (9) year as recommended by the Code.

4.3 Appointment of board and senior management are based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender.

To maintain the best interest of the Company, diversity within the Board, Senior Management and all levels of the organization is applied. In line with this, the Board and Senior Management are appointed based on merit, mix of skills, competencies, experience, professionalism and other relevant qualities which involve age and cultural background to have better governance in the Group.

4.4 The Board discloses in its annual report the company’s policies on gender diversity, its targets and measures to meet those targets. For Large Companies, the board must have at least 30% women directors.

At present, the Company does not maintain a gender diversity policy as recommended by the Code. The Company is in the midst of formulating a gender diversity policy which will encapsulates the objectives, principles and measures of the Group’s diversity culture. The Board is supportive in upholding gender diversity within the boardroom and the Management with due consideration on merited factors, such as, skills, experience, attitude and suitability of any potential candidates.

Hence, as part of the Company’s succession planning, gender diversity objectives will constantly be observed as a key consideration by the Company even without any specific targets determined. The Board is taking steps to identify women candidates for appointment to the Board.

4.5 In identifying candidates for appointment of directors, the Board does not solely rely on recommendations from existing board members, management or major shareholders. The Board utilises independent sources to identify suitably qualified candidates.

The Company has in place, its procedures and criteria for identifying candidates for appointment of directors. All candidates for appointment are first considered by the Nomination Committee, taking into account the mix of skills, competencies, experience, professionalism and other relevant qualities to manage the Company.

4.6 The Nomination Committee is chaired by an Independent Director or the Senior Independent Director.

Dato’ Ong Boon Aun @ Jaymes Ong, Independent Non-Executive Director chairs the Nomination Committee.

During the financial year ended 30 June 2018, the Nomination Committee held two (2) meetings and carried out activities in the discharge of its functions and duties.

5.1 The Board should undertake a formal and objective annual evaluation to determine the effectiveness of the board, its committees and each individual director. The Board should disclose how the assessment was carried out and its outcome.
For Large Companies, the board engages independent experts periodically to facilitate objective and candid board evaluations.

The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of each Director, including Non-Executive Directors.

The Nomination Committee has developed criteria to access the effectiveness of the Board and individual Director. The evaluation on the Board’s effectiveness is divided into four sections on the following key areas:

The process also assesses the competencies of each Director in the areas of integrity and ethics, governance, strategic perspective, business acumen, judgement and decision making, teamwork, communication and leadership.

The Nomination Committee also undertakes annual assessment of the independence of its independent directors based on required mix skills, criteria of independence as per requirements of Main Market Listing Requirements, meeting attendance, ability to ensure effective checks and balances on the Board’s decision making process, constructively challenge business propositions and contributes to the development of business strategy and direction of the Company, ensures that adequate systems and controls to safeguard the interests of the Company are in place and continuous updating of knowledge and enhancing of skills through attendance of business related trainings.

The Nomination Committee had met two (2) times during the financial year and activities of the Nomination Committee are as follows:

The Nomination Committee and the Board was satisfied with the current composition of the Board and Board committees as well as the performance of the Directors and independence of the Independent Directors.

The terms of reference of the Nomination Committee can be viewed at the Company’s website at www.scanwolf.com.

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