EIG BOARD CHARTER

1. INTRODUCTION

The Board of Directors (“Board”) is accountable and responsible for the governance, performance and strategic direction of Esthetics International Group Berhad (“Company”) and its subsidiaries (“EIG” or the “Group”). All Board members are expected to provide leadership and direction to Group, as well as overseeing the management and guiding strategic direction and policy.

2. PURPOSE

This Board Charter sets out the role, functions, composition, operation and processes of the Board by adopting the principles of good corporate governance and practice. In addition, it also assists the Board in the assessment of its own performance and its individual Directors.

This Board Charter is not an “all inclusive” document and should be read as a broad expression of principles. This Board Charter is subject to the provisions of the Companies Act 2016 (“Companies Act”), the Constitution of EIG, the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Malaysian Code on Corporate Governance (“MCCG”) and any other applicable law or regulatory requirements. The Board Charter will be reviewed on a periodic basis and may be amended by the Board from time to time.

3. THE BOARD

3.1 Board Membership

3.1.1 Composition

The Board shall be of a size and composition with diversity in perspectives, competencies, experience, knowledge and skills to understand and deal with the current and emerging issues of the business of the Group. The Board also acknowledges the importance of gender diversity on the Board as well as the Management.

The Constitution of the Company provides for a minimum of four (4) directors. At any one time, at least two (2) or one-third (1/3), whichever is higher, of the Board members are to be Independent Directors.

The Board recognises the importance of having a clearly accepted division of power and responsibilities at the head of the Company to ensure a balance of power and authority. The position of Chairman and the Managing Director and Group Chief Executive Officer are separated and clearly defined.

The Independent Directors provide independent judgment, experience and objectivity to the Board without being subject to operational considerations. They help to ensure that the interests of all shareholders are indeed taken into account by the Board and that the relevant issues are subjected to objective and impartial consideration by the Board.

The Board may appoint a Senior Independent Director. The roles of the Senior Independent Non-Executive Director include acting as a sounding board for the Chairman, the point of contact between the Independent Directors and Chairman where appropriate, and as a designated contact to whom shareholders’ concerns or queries may be raised, as an alternative to the formal channel of communication with shareholders.

The composition and size of the Board are reviewed from time to time to ensure its appropriateness.

3.1.2 Appointments and Re-election

The appointment of a new Director is a matter for consideration and decision by the full Board, upon the recommendation from the Nominating Committee (“NC”).

In making these recommendations, the NC will consider the required mix of skills, experience and diversity which the Director brings to the Board. The NC will also consider the “Directors’ Fit & Proper Policy” of the Company. The Board and NC recognize the value of having women members of the Board and commit to at least 40% women participation at the Board.

The Constitution of the Company provides that every newly appointed Director be subjected to re-election at the Annual General Meeting (“AGM”) immediately following the appointment. Further, one third (1/3) of the Board shall retire from office and be eligible for re-election at every AGM, and all the Directors shall submit themselves for re-election at least every three (3) years.

3.1.3 Director Independence

The Board assesses the independence of the Directors annually by taking into consideration their disclosed interests and having regard to the criteria for assessing the independence of Directors under the annual Board Assessment. A separate assessment for Independent Directors is also undertaken annually.

3.1.4 New Directorship

Directors are expected to have such expertise and experience so as to qualify them to make a positive contribution to the Board performance of its duties and to give sufficient time and attention to the affairs of the Company. Any Director shall notify the Chairman before accepting any new directorship and the notification shall include the indication of time that will be spent on the new appointment.

3.2 Board Role

3.2.1 Duties and Responsibilities

The Board is charged with leading and managing the Group in an effective and responsible manner. The Board sets the Group’s values and standards and ensures that its obligations to its shareholders and stakeholders are understood and met.

The Board assumes, amongst others, the following duties and responsibilities:

(1) review and adopt the overall strategic plans and programs for the Group;

(2) ensure the Group’s core values, vision and mission and shareholders’ interests are met;

(3) establish such committees, policies and procedures to effectively discharge the Board’s roles and responsibilities;

(4) ensure the Company has appropriate corporate governance structures in place including standards of ethical behaviour and promoting a culture of corporate responsibility;

(5) promote investor relations and shareholder communications;

(6) Governance of sustainability in the company and ensuring that the strategic plan and risk management plans of the Group supports long-term value creation and includes strategies on economic, environmental and social considerations underpinning sustainability;

(7) review the adequacy and the integrity of the management information and internal controls systems of the Group; and

identify principal risks and ensure implementation of a proper risk management framework to manage such risks

3.2.2 Matters Reserved for the Board

The following are matters which are specifically reserved for the Board: –

(1) appointment of Directors and Directors’ remuneration;

(2) approval of the strategic business plans, at least annually;

(3) approval of annual consolidated budgets, including major capital commitments;

(4) approval of quarterly financial reports, annual report and corporate governance statement, with advice from the Nominating and Remuneration Committee and the Audit and Risk Management Committee, as appropriate;

(5) approval of new ventures;

(6) approval of material acquisitions and disposals of undertakings and properties and, if need be, recommend for shareholders’ approval;

(7) determine membership and approve the terms of reference of Board Committees and monitor the effectiveness of the Company’s corporate governance practices

(8) changes to the control structure within the Group, including key policies and delegated authority limits.

3.3 Roles of Executive Chairman and Group Managing Director & Chief Executive Officer

The role of the Chairman and the Group Managing Director & CEO are distinct and separate to ensure there is a balance of authority and accountability.

3.3.1 The Chairman

The Chairman is responsible for the leadership effectiveness, conduct and governance of the Board, including:

(1) Instilling good corporate governance practices, leadership and effectiveness of the Board.
(2) Facilitating the board in setting the strategic direction for the Group
(3) Monitor the workings of the Board, especially the conduct of Board meetings.
(4) Ensure that relevant issues for the effective running of the Company’s business are on the agenda.
(5) Monitoring that quality information to facilitate decision-making is delivered to Board members on a timely basis.
(6) Encourage all Directors to play an active role in Board activities.
(7) Managing Boardroom dynamics by encouraging active participation and allowing dissenting views to be freely expressed.

3.3.2 The Group Managing Director & CEO

The Group MD & CEO has overall responsibility for the day-to-day management of the business and execution of the Group’s strategies in-line with the Board’s direction, overseeing the operations and driving the Group’s businesses towards achieving the Group’s vision and goals. The key responsibilities of the Group MD & CEO include:

(1) develop strategic direction of the Group;
(2) due execution of strategic goals, effective operation within the Group
(3) leading the senior management of the Group in making, implementing and managing the day-to-day decisions on the Group’s business operations, and the associated risks involved in pursuing the Group’s corporate objectives.
(4) ensure Board decisions are implemented and Board directions are responded to;
(5) provide direction in the implementation of short and long-term business plans;
(6) provide strong leadership; i.e. effectively communicating a vision, management philosophy and business strategy to the employees;
(7) keep the Board abreast of all important aspects of the Group’s operations and ensure sufficient information is distributed to Board members; and
(8) ensure day-to-day business affairs of the Company are effectively managed.

The Executive Directors are, as employees, involved in the day-to-day management of the Group shall assist the Group MD & CEO in the effective implementation of the Group’s strategic plan and policies established by the Board and managing the daily operations of the Company.

3.3.3 The Independent Non-Executive Directors

An independent director must fulfill the provisions and definition of independent director of the Listing Requirements at all times and must declare their independence to the Board annually.

To preserve the independence of the Independent Non-Executive Directors, their tenure shall not exceed a cumulative term limit of nine years each. If the Board intends to retain an Independent Non-Executive Director beyond nine years, it should justify and seek annual shareholders’ approval through the two-tier voting process..

The responsibilities of an independent director broadly include the following:

(1) to ensure there is a proper check and balance on the Board by providing unbiased and independent views in Board deliberations and decision making of the Board, taking into consideration the interest of all shareholders;
(2) to improve corporate credibility and governance standards, and make significant contributions to the Company’s decision making by bringing in the quality of detached impartiality; and
(3) mitigate potential conflict of interest in policy-making process and management of the Group;
(4) Constructively contribute to the development of business strategy and direction of the Company; and
(5) Ensure that adequate systems and controls to safeguard the interests of the Company are in place.

3.4 Board Committees

The Board may from time to time establish Committees as is considered appropriate to assist in carrying out its duties and responsibilities. The Board delegates certain functions to the following Committees to assist in the execution of its responsibilities:-

(1) Audit and Risk Management Committee;
(2) Nominating Committee; and
(3) Remuneration Committee.

The Committees shall operate under clearly defined terms of reference. The Committees are authorised by the Board to deal with and to deliberate on matters delegated to them within their terms of reference.

The Chairman of the respective Committees shall report to the Board the outcome of the Committee meetings and such reports or minutes will be included in the Board papers.

3.5 Board Meetings

The Board shall conduct at least four (4) scheduled meetings annually, with additional meetings to be convened as and when necessary. Any Director may request for inclusion of any matter in the agenda for a particular Board meeting. The request must be sent at least seven (7) days before the meeting for the Chairman’s approval.

The quorum necessary for the transaction of business of the Directors shall be fixed by the Directors from time to time. Questions arising at any Board meeting shall be decided by a majority of votes, with each Director having one vote. For the avoidance of doubt, in case of an equality of votes, the Chairman shall have a second or casting vote.

A full agenda of the meeting and all Board papers are to be distributed in advance of the meetings to ensure Directors are well informed and have the opportunity to seek additional information, and are able to obtain further clarification from the Company Secretary, should such a need arise. Where necessary, the services of other senior management or external consultants will be arranged to brief and help the Directors to clear any doubt or concern.

3.6 Financial Reporting

In presenting the annual financial statements and quarterly announcements to the shareholders, including other price sensitive public reports and reports submitted to regulators, the Board aims to present a balanced and understandable assessment of the Group’s position and prospects.

The Board ensures that the financial statements are prepared in accordance with the Companies Act and applicable approved accounting reporting standards, so as to give a true and fair view of the state of affairs of the Group and the Company.

 

3.7 Directors’ Remuneration

Directors’ remuneration is undertaken by the Board as a whole so as to attract, retain, motivate and incentivize Directors of the necessary caliber needed to lead the EIG Group successfully.

The remuneration of Directors is recommended by the Remuneration Committee with consideration given to the Group’s performance, Directors’ responsibilities and complexity of the company’s activities, but final endorsement lies with the entire Board as a whole to ensure that the aforementioned objective is met. Directors do not participate in decisions regarding their own remuneration packages and Directors’ fees must be approved by shareholders at the AGM. The fees and any benefits payable to the Directors shall be subject to annual shareholder approval at a general meeting.

3.8 Directors’ Training & Continuing Education

In addition to the Mandatory Accreditation programme as required by Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Directors shall continue to update their knowledge and enhance their skills through appropriate continuing education programmes and life-long learning. The Board shall assess the training needs of the Directors from time to time.

4. COMPANY SECRETARY

The Company Secretary plays an important advisory role and is a source of information and advice to the Board and Committees on issues relating to compliance with laws, rules, procedures and regulations affecting the Company and Group.

The Board shall appoint someone who is capable of carrying out the duties to which the post entails, and the removal of the Company Secretary shall be a matter for the Board as a whole. The Company Secretary shall report directly to the Board.

5. INVESTOR RELATIONS AND SHAREHOLDER COMMUNICATION

The Board is committed to transparency and accountability in its communication to shareholders, as well as to potential investors, analysts and the public. The shareholders shall be informed of all material matters affecting the Company and Group.

The Board is to ensure prompt and timely release and dissemination of quarterly results, announcements, circulars and notices to enable shareholders to keep abreast of material information relating to the Group.

The AGM is the principal forum for dialogue with shareholders. The Board also encourages shareholders to participate in the question and answer session at the AGM.

6. ACCESS TO INFORMATION AND INDEPENDENT ADVICE

The Directors, collectively or individually, may seek independent professional advice and information in the furtherance of their duties at the Company’s expense, so as to ensure the Directors are able to make independent and informed decisions.

7. CODE OF ETHICS AND CONDUCT

The Directors are expected to conduct with the highest ethical standards. All Directors and employees are expected to behave ethically and professionally at all times and thereby protect and promote the reputation and performance of the Company. The Directors also have a duty of confidentiality in relation to the Company’s confidential information.

A Director should disclose to the Board:
(1) any material personal interest they have in a matter which relates to the affairs of the Group; and
(2) any other interest (direct or indirect) which the Director believes is appropriate to disclose in order to avoid any conflict of interest or the perception of a conflict of interest.
(3) The disclosure should be made as soon as practicable after the Director becomes aware of their interest. Details of the disclosure must be recorded in the minutes of the meeting at which the disclosure is made or the meeting held following the disclosure

The Group communicates the Code of Conduct to all employees upon their appointment/employment and is deemed to be part of the terms and conditions of service stipulated in the Employee Handbook.

8. REVIEW OF THE BOARD CHARTER

The Board Charter has been adopted by the Board on 25 August 2022. The Board Charter is available on EIG’s Corporate website at www.estheticsgroup.com. Any subsequent amendment to the Charter can only be approved by the Board.

The Board Charter will be periodically reviewed and updated in accordance with the needs of the Company any new regulations that may have an impact on the discharge of the Board’s responsibilities.