Oriental Holdings Berhad (5286-U)

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

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 amongst others 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 serve to provide a clear guidance on investment appraisal covering feasibility evaluation, review and approval, implementation, monitoring and reporting of investment outcome against target.

On 28 August 2008, 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 first Key Performance Indicator (“KPI”) reporting was conducted on 23 February 2009 in relation to 4th quarter, 2008 financial results.

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.

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 five (5) 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.

The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. All proceedings from the Board meetings are recorded and the minutes thereof signed by the Chairman of the meeting.

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 is incorporated in the minutes of the full Board meeting.

In accordance with the revised code where Audit Committee should comprise fully non-executive directors, Dato’ Wong Lum Kong, JP, the executive director resigned as the Audit Committee member and Diong Chin Teck, a non-executive director was appointed to the Audit Committee with effect from 31 January 2009.

A nominating committee comprising exclusively of non-executive directors, a majority of whom are independent, with the responsibility for proposing new nominees to the Board and for assessing directors on an ongoing basis comprising Tengku Rithauddeen, Tunku Dato’ Dr. Ismail, Dato’ Loh Say Bee and Puan Sharifah Intan Binti S M Aidid.

The Remuneration Committee has been established on 29 April 2009 comprising two Independent Non-Executive Directors namely Tengku Rithauddeen and Tunku Dato’ Dr. Ismail and two Non-Independent Non-Executive Directors, Puan Sharifah Intan Binti S M Aidid and Dato’ Dr. Tan Chong Siang. No meeting had been held since its establishment.

At the date of this statement, the Board consists of eleven (11) members comprising three (3) Independent Non-Executive Directors, four (4) Executive Directors and four (4) Non-Executive Directors. A brief profile of each Director is presented on pages 13 to 17 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 (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Malaysia”). 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 Listing Requirements, 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 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’ Wong Lum Kong, the Group Managing Director, and Dato’ Lim Su Tong @ Lim Chee Tong, the Executive Director. 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 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 Secretaries. The Board believes that the current Company Secretaries are capable of carrying out their duties to ensure the effective functioning of the Board. The Articles of Association specify that the removal of the Company Secretaries 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 reports 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 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.

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. There is no formal training or orientation programme for new Directors but they receive briefing on the Group’s operations. Furthermore, visits to the Group’s premises were made by new members of the Board 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) except for the Directors who were appointed in April and May 2009.

The Directors are aware of the need for continuous update of their skills and knowledge to assist them in discharging their duties during their tenure of service. During the year, they have attended, either collectively or individually the Risk Management presentation, Understanding Financial Theories and Financial Mathematics, Understanding Private Entities Reporting Standards and Audit Committee’s Role in The Oversight of Risk Management Process. The Directors will continue to attend briefings or seminars to keep abreast with the latest developments in the industry.

The Articles of Association provide 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 shareholders to renew their mandate.

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

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

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

Details of Directors’ remuneration for the financial year ended 31 December 2008 distinguished between Executive and Non-Executive Directors in aggregate are categorised as follows:

The Board strives to maintain an active dialogue with shareholders and does this through the Annual Report, the AGM and Extraordinary General Meetings. It has been the Company’s practice to send the Notice of AGM and related papers to shareholders at least twenty-one (21) working days before the meeting. At the AGM, the shareholders 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 Malaysia, in particular, the timely release of quarterly financial results within two months from the close of a particularfinancial quarter.

While the Company endeavours to provide pertinent information to its shareholders 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 shareholders and stakeholders.

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.

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.

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 36 and 37 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 36 and 37 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.

(a) The revised Code requires the Audit Committee to comprise fully non-executive directors, majority of whom are independent. As at 31 December 2008, the Audit Committee is made up of four non-executive directors and one executive director. Nonetheless, the Board takes cognizance of the membership requirement of the Audit Committee under the revised Code and the executive director had resigned from Audit Committee and a non-executive director is appointed to be the member of Audit Committee on 31 January 2009; and

(b) Remuneration Committee has yet to be established during the financial year ended 31 December 2008. Hence, the remuneration of Directors came under the purview of the entire Board with the relevant Directors abstaining from discussing their individual remuneration. Subsequently, the Remuneration Committee has been set up on 29 April 2009 comprising two independent non-executive directors and two non-independent non-executive directors.