The Board of Directors (the “Board”) recognises the importance of adopting high standards of corporate governance within the Group. The Board views corporate governance to be synonymous with four key concepts, namely transparency, accountability, integrity as well as corporate performance to maximize the stockholder’s value.

As such, the Board strives to adopt the substance behind corporate governance prescriptions and not merely the form. The Board is fully committed to the maintenance of high standards of corporate governance by supporting and implementing the prescriptions of the Principles and Best Practices set out in Parts 1 and 2 of the Malaysian Code on Corporate Governance (Revised 2007) (the “Code”) respectively.

The Board is pleased to provide the following statements, which outline the main corporate governance practices that were in place throughout the financial year, unless otherwise stated.

Principles Statement

The following statement sets out how the Company has applied the Principles in Part 1 of the Code.

A.   Directors

The Board

The Group recognises the vital role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including strategic direction, establishing goals for Management and monitoring the achievement of these goals.

The Board has formalised a Board Charter which among other things provides guidance for Directors and Management with regards to the role of the Board and its Committees, the requirements of Directors in carrying out their stewardship role and in discharging their duties towards the Group, Board’s operating practices as well as delineates a formal schedule of matters reserved for the Board’s decision.

Additionally, the Board also deliberated and approved an Investment Policy which served to provide a clear guidance on investment appraisal covering feasibility evaluation, review and approval, implementation, monitoring and reporting of the investment outcome against a target.

The Performance Coordinating Team (“PCT”) has been established to review and report the operational and financial performance of their respective business divisions to the Executive Committee (“EXCO”) in assisting them to discharge their oversight role of the Group business activities.  The Key Performance Indicator (“KPI”) reporting is conducted on a quarterly basis.

The abovementioned measures initiated by the Board are in line with the guidance from the Code and serve to ensure that the direction and control of the Group is firmly in its hand.

Meetings

The Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. During the financial year, the Board met on six (6) occasions, where it deliberated upon and considered a variety of matters including the Group’s financial results, major investments and strategic decisions on the direction of the Group. Principal risks that have a significant impact on the Group’s business or on its financial position, were identified, including measures to mitigate such risks.

The Board receives the agenda and documents on matters requiring its consideration prior to and in advance of each meeting. All proceedings from the Board meetings are minuted, including the issues discussed and the conclusions made in discharging the duties and responsibilities.

On 22 September 2010, Dato’ Ghazi Bin Ishak was appointed as a member of the Board Committee.

Details of each of the Director’s meeting attendance during the financial year are as follows:

Board Committees

The Board delegates certain responsibilities to the Audit Committee, in order to enhance business and operational efficiency as well as efficacy.

The Audit Committee has written terms of reference to discharge its responsibilities and the Board receives reports of its proceedings and deliberations. The Chairman of the Audit Committee reports to the Board the outcome of the Committee meetings and matters from such reports are incorporated in the minutes of the full Board meeting.

In accordance with the revised Code, Audit Committee shall elect and appoint Committee members comprising no fewer than three (3) directors. All Committee members shall be Non-Executive Directors with the majority of whom shall be Independent.  In line with the revised Code, three (3) out of four (4) members of the Audit Committee are Independent Non-Executive which also satisfies the test of independence under the Paragraph 15.09 of the Listing Requirements. The role of the Audit Committee and its function is explained on pages 37 to 41 of this annual report.

The Nominating Committee comprising exclusively Non-Executive Directors, a majority of whom are independent, as summarised in the table below is empowered by the Board and its terms of reference to ensure there are appropriate procedures in place for the nomination, selection, training and evaluation of Directors and that succession plans are in place.

During the financial year, the Nominating Committee Members met on two (2) occasions to deliberate and assess the effectiveness of the Board as a whole, the committees of the Board, and the contribution of each  director. All assessment and evaluations carried out by the Nominating Committee in discharging its duties are documented in the minutes of meeting. The details of each of the Nominating Committee Members’ meeting attendance during the financial year are as follows:

On 24 February 2011, Dato’ Ghazi Bin Ishak was appointed as an additional member of the Nominating Committee.

The Board, through the Nominating Committee’s annual appraisal process, believes that the Board possesses the required mix of skills, experience and other qualities of the Board, including core competencies brought by Independent Non-Executive Directors to the Board which enables it to discharge its duties in an effective manner. Furthermore, the Board continuously reviews its size and composition with particular consideration on its impact on the effective functioning of the Board.

The Board appoints its members through a formal and transparent selection process which is consistent with the Articles of Association of the Company. This process has been reviewed, approved and adopted by the Board. All new appointees will be considered and evaluated by the Nominating Committee for the candidates’ ability to discharge responsibilities as expected from them. The committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made and that legal and regulatory obligations are met.

The Remuneration Committee comprises two Independent Non-Executive Directors namely Tengku Rithauddeen and Mary Geraldine Phipps; and two Non-Independent Non-Executive Directors, Puan Sharifah Intan Binti S M Aidid and Dato’ Dr. Tan Chong Siang.  The details of each of the Remuneration Committee Members’ meeting attendance during the financial year are as follows:

Board Balance

At the date of this statement, the Board consists of ten (10) members comprising three (3) Independent Non-Executive Directors, four (4) Executive Directors and three (3) Non-Executive Directors. A brief profile of each Director is presented on pages 12 to 18 of this Annual Report.

The concept of independence adopted by the Board is in tandem with the definition of an independent Director in Section 1.01 of the Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and Practice Note 13. The key elements of fulfilling the criteria are the appointment of Directors, who are not members of Management (Non-Executive Directors) and who are free of any relationship, which could interfere with the exercise of independent judgment or the ability to act in the interests of the Company. The Board complies with paragraph 15.02 of the LR, which requires that at least two Directors or one-third of the Board of the Company, whichever is higher, are Independent Directors. 

The Directors, with their different backgrounds and specialisations, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate and legal affairs, marketing and operations. The Executive Directors are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as coordinating the development and implementation of business and corporate strategies. The Independent Non-Executive Directors bring to bear the objective and independent judgment to the decision making of the Board and provide a capable check and balance for the Executive Directors.

The Non-Executive Directors contribute significantly in areas such as policy and strategy and performance monitoring. Together with the Executive Directors who have an intimate knowledge of the business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities.

There is a clear division of responsibilities at the head of the Company to ensure a balance of authority and power. The Board is led by Dato’ Loh Cheng Yean as the Executive Chairman whilst the executive management of the Company is led by Dato’ Robert Wong Lum Kong, DSSA, JP, Dato’ Lim Su Tong @ Lim Chee Tong and Loh Kian Chong, the Executive Directors. The Board has also identified YM Tengku Tan Sri Dato’ Seri Ahmad Rithauddeen Bin Tengku Ismail as the Senior Independent Non-Executive Director to whom concerns of Directors may be conveyed.

The Board is satisfied that the current Board composition fairly reflects the interests of minority stockholders in the Company.

Supply of Information

The Board recognises that the decision-making process is highly contingent on the strength of information furnished. As such, Directors have unrestricted access to any information pertaining to the Group.

The Chairman, with the assistance of the Company Secretary, ensures that all Directors have full and timely access to information with Board papers distributed in advance of Board meetings. This ensures that Directors have sufficient time to appreciate issues deliberated at Board meeting and expedites the decision-making process.

Every Director also has unhindered access to the advice and services of the Company Secretary. The Board believes that the current Company Secretary is capable of carrying out her duties to ensure the effective functioning of the Board. The Articles of Association specified that the removal of the Company Secretary is a matter for the Board as a whole.

Prior to meetings of the Board and the Audit Committee, appropriate documents which include the agenda and report relevant to the issues of the meetings covering the areas of strategic, financial, operational and regulatory compliance matters, are circulated to all members to obtain a further explanation, where necessary, in order to be properly briefed before the meetings.

The Directors meet, review and approve all corporate announcements, including the announcement of the quarterly financial reports, before releasing them to Bursa Securities.

In respect of soliciting independent professional advice, the Board as a whole will determine, whether as a full Board or in their individual capacity, to take this measure where necessary and under appropriate circumstances in furtherance of their duties. The independent professional advice, where obtained, will be at the Company’s expense. Nevertheless, where necessary and under appropriate circumstances in furtherance of his duties, a Director may do so with the prior consent of the Board.

Directors’ Training

The Board as a whole, ensures that it recruits to the Board only individuals of sufficient caliber, knowledge and experience to fulfill the duties of a Director appropriately. The board ensures a continuous training programme is in place for new and existing members of the Board.  Furthermore the new members of the Board also receive briefing on the Group’s operations and visit the Group’s premises to enhance their knowledge on the Group’s operations. This is geared towards ensuring that new Directors are able to appreciate the Group’s operating environment and business dynamics and therefore able to contribute effectively in the Board’s deliberation.

As at the date of this Statement, all Directors have attended and successfully completed the Mandatory Accreditation Programme (MAP).  During the year, the Directors have pursued relevant courses and attended seminars to keep abreast with industry, regulatory and compliances issues, trends and best practices.  Seminars and training programmes attended by the Directors for the year are as follows:

• Exotic Options and Structured Forwards
• Promoting The Corporate Governance Agenda – Raising The Bar
• Standard Boardroom Issues & Shareholders’ Meetings
• Mandatory Accreditation Programme For Directors of Public Listed Companies
• Malaysian Financial Reporting Standards Update 2009
• The Regulatory Framework And Directors Duties 2010 – “What Directors Need To Know”
• Malaysian Financial Reporting Standards Update 2010
• Dealing With Deadlock Situation And Boardroom Tussles
• Directors’ Continuous Obligations

The Company Secretary also circulates relevant guidelines to update the Directors on statutory and regulatory requirement changes from time to time.  The Directors will continue to undergo other relevant training programmes to further enhance their skills and knowledge, as appropriate.  

Re-election

The Articles of Association provides that all Directors are subject to retirement and at least one third of the Board is subject to retirement by rotation at each Annual General Meeting (“AGM”). The Directors to retire in each year are those who have been longest in office since their appointment or re-appointment. A retiring Director is eligible for re-appointment. New Directors appointed to the Board shall also retire at the Annual General Meeting following their appointment. In any of the circumstances, the Directors are eligible for re-election. This provides an opportunity for stockholders to renew their mandate.

The election of each Director is voted on separately. To assist stockholders in their decision, sufficient information such as personal profile, meeting attendance and the shareholdings in the Group of each Director standing for election are furnished in the Annual Report accompanying the Notice of AGM.

Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.

The Company Secretary ensures all appointments are properly made, all necessary information is obtained and all legal and regulatory obligations are met.

B.    Directors’ Remuneration

The Company pays its Directors fees that are approved annually by stockholders at the AGM.

The Remuneration Committee is responsible for recommending the remuneration framework and the remuneration packages of Executive Directors to the Board, to ensure the rewards are linked to their performance and contributions to the Group’s growth and profitability in order to align the interest of the Directors with those of stockholders.  The Committee also ensures the level of remuneration for Executive Directors are linked to their level of responsibilities undertaken and contribution to the effective functioning of the Board. None of the Executive Directors participated in any way in determining their individual remuneration.  

The Board, as a whole, approves the remuneration of Non-Executive Directors with the Directors concerned abstaining from the decision in respect of their individual remuneration.

Details of Executive and Non-Executive Directors’ remuneration for the financial year ended 31 December 2010 in aggregate are categorised as follows:

The number of Directors of the Company whose total remuneration falls within bands of RM 50,000 for the financial year ended 31 December 2010 is as follows:

* Included in the RM 50,001- RM 100,000 category is also one (1) former Non-Executive Director and three (3) alternate directors.

C.    Stockholders and Investors

The Board strives to maintain an active dialogue with stockholders through the Annual Report, AGM and Extraordinary General Meetings. It has been the Company’s practice to send the Notice of AGM and related papers to stockholders at least twenty-one (21) working days before the meeting. At the AGM, the stockholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations in general.

In addition, the Company makes various announcements through Bursa Securities, in particular, the timely release of quarterly financial results within two months from the closing of a particular financial quarter.

While the Company endeavours to provide pertinent information to its stockholders and stakeholders, it is mindful of the legal and regulatory framework governing the release of material and price-sensitive information. In any of the circumstances, the Directors are cautious not to provide undisclosed material information about the Group and frequently stress the importance of timely and equal dissemination of information to stockholders and stakeholders.

During the AGM, the Board takes the opportunity to present a comprehensive review of the progress and performance of the Group.  The stockholders are given both the opportunity and the time to seek clarifications or raise questions on the agenda items of the general meetings, where the Board would respond with the appropriate answers.

The Company’s website at www.ohb.com.my contains vital information concerning the Group which is updated  regularly and stockholders are able to put forward questions to the Company through the website.

D.    Accountability and Audit

Financial reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly announcements of results to Bursa Securities as well as the Chairman’s statement and review of operations in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.

Directors’ responsibility statement in respect of the preparation of the audited financial statements

The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and their financial performance and cash flows for the year then ended. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates.

The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

State of internal controls

The Board acknowledges its responsibilities for the Group’s systems of internal control covering not only financial controls but also operational controls, compliance controls and risk management.

The Statement on Internal Control furnished on pages 42 to 44 of this Annual Report provides an overview on the state of internal controls within the Group.

Relationship with the Auditors

Key features underlying the relationship of the Audit Committee with the internal and external auditors are included in the Audit Committee Report as detailed on pages 37 and 38 of this Annual Report.

A summary of the activities of the Audit Committee during the financial year, including the evaluation of the independent audit process, is set out in the Audit Committee Report on pages 37 and 38 of this Annual Report.

The Board and Management strive to maintain a professional and transparent relationship with the external auditors in the conduct of the audit and towards ensuring compliance with the requirements of the appropriate accounting standards. Additionally, the Audit Committee has been explicitly accorded the power to communicate directly with the external auditors.

 Corporate social responsibility

The Group is committed to sustainable development. Employees’ welfare, environment as well as community responsibilities are integral to the way in which the Group conducts its business.

A copy of the report on the activities pertaining to corporate social responsibilities is set out in pages 45 and 46 of this Annual Report.

Compliance Statement

The Company has complied, throughout the financial year ended 31 December 2010, with all the Best Practices set out in Part 2 of the Code.