Corporate Governance > Board Committees

Board Committees

The current Board Committees to assist the Board in the execution of its responsibilities are as follows:-

  • Board Audit Committee
  • Nomination and Remuneration Committee
  • Group Board Risk Management Committee

(a) Board Audit Committee

The BAC comprises of the following Directors:

  1. YM Raja Tan Sri Dato’ Seri Aman bin Raja Haji Ahmad
    Chairman/Independent Non-Executive Director
    (Re-designated as Non-Independent Non-Executive Director and ceased to be the Chairman effective 1 May 2016)

  2. Dato’ Mustafa bin Mohamad Ali
    Member/Independent Non-Executive Director
    (Retired effective 27 October 2016)

  3. En. Abd Malik bin A Rahman
    Member/Independent Non-Executive Director
    (Appointed as Chairman effective 1 May 2016)

The present terms of reference of the Board Audit Committee are in compliance with the requirements of the BMSB Main Market Listing Requirements and the best practices contained in MCCG.

The Board recognises that an effective Board Audit Committee is vital to ensure the Company’s financial statement is a reliable source of financial information. The Board Audit Committee ensures that the Company’s financial statements comply with applicable financial reporting standards as this is integral to the reliability of financial statements.

The Board has established an internal audit function which reports directly to the Board Audit Committee. The Group Chief Internal Auditor has the relevant qualifications and be responsible for providing assurance to the Board that the internal controls are operating effectively. The Group Internal Audit is carrying out their functions according to the standards set by recognised professional bodies and conduct regular reviews and appraisals of the effectiveness of the governance, risk management and internal control processes within the Company. Periodic testing of the effectiveness and efficiency of the internal control procedures and processes is conducted to ensure that the system is viable and robust.

The internal audit function of the Group is performed in-house. The Chief Group Internal Auditor reports to the Board Audit Committee of AHB and the respective subsidiaries. As for AXA-AFFIN Life Insurance Berhad and AXA-AFFIN General Insurance Berhad, the Head of Internal Audit reports to the Audit Committee of the respective Company.

(b) Nomination and Remuneration Committee (“NRC”)

On 11 August 2016, the Nomination Committee (“NC”) and Remuneration Committee (“RC”) was combined to form a single committee as allowed by the Policy Document on Corporate Governance issued by BNM on 3 August 2016. The members of the NRC are as follows:-

Tan Sri Mohd Ghazali bin Mohd Yusoff (Appointed as Chairman on 26.1.2017) Independent Non-Executive Director
Gen. Dato’ Seri DiRaja Tan Sri (Dr.) Mohd Zahidi bin Haji Zainuddin (R) Non-Independent Non-Executive Director
Raja Tan Sri Dato’ Seri Aman bin Raja Haji Ahmad Non-Independent Non-Executive Director
Abd Malik bin A Rahman Independent Non-Executive Director
Dato’ Mohd Hata bin Robani (Appointed as member on 7.2.2017) Independent Non-Executive Director
Tan Sri Dato’ Seri Alauddin bin Dato’ Mohd Sheriff (Resigned w.e.f 23.12.2016) Independent Non-Executive Director
Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin (Ceased as Director w.e.f 29.10.2016) Non-Independent Non-Executive Director
Dato’ Mustafa bin Mohamad Ali (Ceased as Director w.e.f 27.10.2016) Independent Non-Executive Director

The members of the NRC shall be appointed by the Board of Directors of AHB. The Composition of the NRC must comply with the requirement of the Policy Document on Corporate Governance dated 3 August 2016 as follows:-

  1. Have at least three (3) directors;
  2. Have a majority of Independent directors;
  3. Be chaired by an Independent director;
  4. Comprise directors who have skills, knowledge and experience relevant to the responsibilities of the Board Committees; and
  5. Must not have any Executive Director in the membership.

The Committee should be chaired by an Independent Director. If its membership for any reason falls below three (3) members, the Board of Directors shall, within three (3) months of that event, appoint such a number of new members as may be required to fulfil the minimum requirement.

The appointment of a NRC member automatically terminates when the member ceases to be a Director.

The duties of the NRC shall include:-

  • To recommend candidates for all directorships to be filled by shareholders or the Board;
  • To recommend candidates to fill the seats on Board Committees;
  • To recruit and retain the best available directors;
  • To assess the contribution of each individual director;
  • To review annually the Board structure, size, composition and the balance between Executive Directors, Non-Executive Directors and Independent Directors to ensure that the Board has the appropriate mix of skills and experience including core competencies which Directors should bring to the Board and other qualities to function effectively and efficiently;
  • To take the necessary steps to ensure that women candidates are sought as part of the Company’s recruitment exercise to meet its gender diversity policy;
  • To establish and implement processes for assessing the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each Director;
  • To review regularly the status of Independent Directors and ensure that they meet the criteria of Independent Directors as defined in the guidelines issued by BNM and in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad;
  • To assess and recommend to the Board, the re-appointment of Directors and CEO upon the expiry of the respective terms of appointment as approved by BNM;
  • To recommend Directors who are retiring at Annual General Meetings for re-election and termination of Board membership for appropriate reasons;
  • To conduct assessments on the fitness and propriety of Directors, the CEO, the Company Secretary and Senior Officers and making decisions on their appointments;
  • To review regularly the list of key responsible persons (which include the Directors, CEO and Senior Officers) of the Company to ensure that the list is comprehensive and has included all key positions within the Company;
  • To establish and to review regularly the internal policies on fit and proper procedures and assessment processes relating to key responsible persons and the Company Secretary;
  • To assess on an annual basis, that the Directors, CEO and Senior Officers are not disqualified under section 59 of the Financial Services Act 2013 and that the Directors, CEO and Senior Officers continue to comply with the fit and proper criteria as approved by the Board;
  • To assess on an annual basis, that the Company Secretary is not disqualified under Section 238 of the Companies Act 1965 and that he/she continues to comply with the fit and proper criteria as approved by the Board;
  • To recommend to the Board the removal of a Director or CEO if he/she is disqualified under section 59 of the Financial Services Act 2013, no longer comply with fit and proper criteria as approved by the Board or is inefficient, errant and negligent in discharging his/her responsibilities;
  • To recommend to the Board the removal of the Company Secretary if he/she is disqualified under section 238 of the Companies Act 1965 or he/she is no longer comply with fit and proper criteria as approved by the Board;
  • To ensure existence of an appropriate framework and succession plan for the CEO and Senior Officers of the Company;
  • To ensure that all Board appointees undergo the necessary training programmes prescribed by the applicable statutory and regulatory bodies;
  • To provide adequate training and orientation of new directors with respect to the business, structure and management of the Group as well as the expectations of the Board with regards to their contribution to the Board and Group;
  • Review the performance of senior management of the Company;
  • Determine the level and make-up of the directors and senior management’s remuneration so as to ensure that the Company attracts and retains the directors and senior management of the appropriate calibre, experience and quality needed to run the Group successfully. The level and make-up of the remuneration should be structured so as to link rewards with corporate and individual performance and commensurate with responsibilities;
  • Develop policies, practices and recommend proposals appropriate to facilitate the recruitment and retention of directors and senior management of the Company;
  • To carry out such other responsibilities as may be specified by BNM from time to time; and
  • Consider other matters as referred to the Committee by the Board.

In carrying out its duties and responsibilities, the NRC is additionally guided by the Board Policy Manual.

The NRC has developed and maintained the criteria for core competencies to be assessed in the recruitment and annual assessment of the directors in the Board Policy Manual namely integrity, commitment, ethics, governance, strategic perspective, business acumen, judgment, decision making, teamwork, communication and leadership. Directors are assessed based on their contributions as a member of the Board and their respective membership in Board Committees.

The Board delegates the screening and evaluation process for potential new directors and for re-appointment of existing directors to the NRC. The Chairman of the Board actively participates in the selection of Directors. The screening process of potential candidates is in accordance with BNM’s guidelines and the Company’s Fit and Proper Policies and Procedures for Key Responsible Persons. The Policy sets out a formal and transparent process for the appointment, re-appointment and annual assessment of the Directors and Key Senior Management Personnel. Potential candidates recommended by the Nomination Committee for Board membership will be assessed by the Board before approval and will be subject to final approval by BNM.

In selecting potential new directors and directors to be nominated for re-election, the NRC consider the skills and industry knowledge that the candidate will bring to the Board, including specific qualifications, knowledge, abilities, skills, experience and expertise of the candidate. In selecting a new director to replace another director who resigns or for any reason ceases to be a member of the Board, the NRC will consider the candidate nominated by the Chairman, other directors, the Group CEO or the major shareholders.

On 13 August 2012, the Board approved the proposed policy on Boardroom diversity. The Board, through the Nomination Committee will take steps to ensure that women candidates are sought as part of its recruitment exercise. Selection of women candidates to join the Board will be, in part, dependent on the pool of women candidates with the necessary skills, knowledge and experience. The ultimate decision will be based on merit and contributions the candidate brings to the Board.

The Board has every intention of meeting the 30% women participation target as recommended by Corporate Governance Blueprint 2011 issued by the Securities Commission and will take the necessary measures to meet the target. The NRC is responsible to implement this policy and monitoring the progress towards the achievement of the target of 30% women participation in the Board.

The Committee had reviewed the size and composition of the Board and its committees and is of the opinion that the current Board and its committees possess the appropriate mix of skills and competencies required to effectively lead the Group.

The NC, before the formation of the combined NRC on 11 August 2016 held three (3) meetings during the financial year. All the members of the NC attended the meetings, except for YBhg Tan Sri Dato’ Seri Alauddin bin Dato’ Mohd Sheriff who attended two (2) meetings. During the meetings, the Committee:-

  • noted on BNM’s approval dates for the appointment and re-appointment of directors and Group CEO of AHB and their respective due date for re-appointment;
  • recommended to the Board for approval of the proposed re-appointment of directors of AHB and nomination of directors to be appointed at subsidiaries and associated company;
  • noted available training programs for directors in year 2016;
  • noted on 30% women representation requirement on the Board of Directors of listed companies;
  • noted on Bank Negara Malaysia’s concept paper on corporate governance;
  • recommended for the Board’s approval of the group policy on the maximum tenure of service of independent directors;
  • deliberated on the issues and concerns raised by BNM in its letter dated 18 March 2016; and
  • recommended for Board’s approval of the proposed reconstitution of Board of Directors of AHB Group.

The RC, before the formation of the combined NRC on 11 August 2016 held one (1) meeting during the financial year. All the members of the RC attended the meeting, except for YBhg Tan Sri Dato’ Seri Lodin bin Wok Kamaruddin who was unable to attend the meeting. During the meeting, the Committee:-

  • noted the key findings and recommendations of Director’s Remuneration Report 2015 jointly done by FIDE Forum and PricewaterhouseCoopers;
  • reviewed and recommended for the Board’s approval of the director’s remunerations for AHB and its subsidiaries for the financial year ended 31 December 2015; and
  • considered and recommended for Board’s approval of the proposed payment of bonus and annual salary increment to the staff of AHB.

The combined NRC held three (3) meetings during the financial year since its formation on 11 August 2016. All the members of the NRC attended the meetings. During the meetings, the Committee:-

  • recommended to the Board for approval of the proposed terms of reference for the NRC;
  • noted BNM’s approval dates for the re-appointment of directors and their respective expiry dates;
  • conducted Directors’ appraisal for year 2016. The directors were appraised based on their core competencies, namely integrity, commitment, ethics, governance, strategic perspective, business acumen, judgement, decision making, teamwork, communication and leadership;
  • conducted fit and proper assessment on the directors and senior management of the Company;
  • conducted the assessments of Independent Directors for year 2016;
  • conducted the assessments of Board Audit Committee, Group Board Risk Management Committee and Board Nomination and Remuneration Committee for year 2016;
  • conducted an assessment of Board effectiveness for year 2016 as required by the Green Book under the Government Linked Companies (“GLCs”) Transformation Programme;
  • noted the list of Independent Directors of AHB and its subsidiaries who have served as Independent Directors for a cumulative term of more than nine years and the number of new Independent Directors that need to be appointed to meet BNM’s requirements;
  • noted the present composition and changes needed to the composition of AC, NRC and Group Board Risk Management Committee at AHB;
  • noted the list of trainings available for directors and list of trainings attended by the directors in year 2016; and
  • reviewed and recommended the directors’ remunerations of AHB and its subsidiaries for the financial year ending 31 December 2016; and
  • Recommended for Board’s approval of the proposed appointment of two new candidates as independent directors of AHB.

(c) Group Board Risk Management Committee (“GBRMC”)

The members of the GBRMC are as follows:-

Dr. Rosnah binti Omar (Chairman) Independent Non-Executive Director
Ignatius Chan Tze Ching Non-Independent Non-Executive Director
Tan Sri Mohd Ghazali bin Mohd Yusoff (Appointed as member on 26.1.2017) Independent Non-Executive Director
Tan Sri Dato' Seri Alauddin bin Dato' Mohd Sheriff (Ceased as member w.e.f. 23.12.2016) Independent Non-Executive Director

The Committee has the following Terms of Reference:-

Composition and scope of the GBRMC

The GBRMC shall consist of not less than three (3) members comprising only Non-Executive Directors, of which the majority of members shall be Independent Directors. The GBRMC should be chaired by an Independent Director.

The Chairmen of the Board Risk Management Committees of AFFIN Bank Berhad, AFFIN Islamic Bank Berhad and AFFIN Hwang Investment Bank Berhad shall be invitees at GBRMC meetings. The Group Chief Executive Officer and CEOs representing the Banks above will also be invited to attend the GBRMC accordingly. The Group Chief Risk Officer (“GCRO”) shall be in attendance at the GBRMC meetings, with the Company Secretary acting as the Secretariat.

GBRMC represents a Board committee to assess and examine the adequacy of group risk management framework including the policies, procedures and processes for the Group. GBRMC is established to ensure that the Group wide enterprise risk management framework, policies and guidelines adequately protect AFFIN Banking Group comprising AFFIN Bank Berhad, AFFIN Islamic Bank Berhad, AFFIN Hwang Investment Bank Berhad (Banking Group) any other financial institutions to be included against all identified risks. The enterprise risk management include credit, market, liquidity, interest rate and operational which incorporate legal, regulatory, reputational, human resource and anti-money laundering and counter financing of terrorism (AML/CFT) risks.

Quorum of GBRMC Meeting

Two (2) members present shall constitute a quorum.

Frequency of GBRMC Meetings

The GBRMC shall meet at least once every quarter basis to execute its responsibilities and tasks.

Detailed Scope of Responsibilities of GBRMC

  • Set the overall approach of the Banking Group’s enterprise wide risk strategy for approval by the Board of AHB. The risk management framework and guidelines must enable the identification, measurement, managing, monitoring and reporting of all relevant and material risks on a group wide basis.
  • The GBRMC shall ensure that the group risk management policies adequately protect the Banking Group against all risks identified in the scope above with group wide risk management framework detailing the policies, procedures and processes to address the Group’s strategic business and operational risks.
  • Review the risk appetite for the Group that are consistent with the Banking Group’s risk appetite, strategic/business focus and prevailing business environment and ensure that the reviews on the risk appetite are effectively communicated throughout the Banking Group. The GBRMC is to certify that this is well integrated throughout and embedded into the business strategy, operations and culture of the Banking Group.
  • Review and appraise risks inherent in all products and activities and evaluate reports on risks under stress scenarios and the capability of the Bank’s capital to sustain such risks. Any new risks to the Banking Group are subject to adequate risk management policy and controls before being introduced or undertaken.
  • Review the capital management of the Group in accordance with the mandatory regulatory supervision on the reserves, loans and capital ratios by the Regulatory Authorities. Evaluate and make recommendation to the AHB’s Board on all new subsidiaries and mergers and acquisition proposals to ensure soundness of investment by the Group.
  • Discuss and consult with the Banking Group Board Risk Management Committee (“BRMC”) and the CEO’s of the Banking Group on matters to administer and improve the enterprise wide risk management policy within the Group. The consultation includes operational matters and compliance adherence on the risk management’s governance and internal controls including on new regulatory framework from the Regulatory Authorities.
  • Oversees the implementation of group wide risk management framework by reviewing the related reports submitted by the Chief Risk Officers on the adherence of the policies and procedures as approved by the Board of AHB. The reports include the respective monitoring and reporting of the BRMC in managing identified risk that may affects the financial stability and non-financial impact to the Banking Group. Reviews of critical risk matters should be made available immediately to GBRMC for information, considerations and actions to mitigate the identified risk.
  • Submit a regular report on the overall adherence of regulatory compliances and implementation of the enterprise wide risk management policy for the Board of AHB’s information and consideration. To submit and recommend to the Board where appropriate the measures to be undertaken on the Group Risk Management Policy and Guidelines on matters that will impact the performance of the business activities and the risk management controls of the Group. Minutes of the GBRMC shall be submitted to the Board for endorsement and notification.
  • Address any matters that may affect the enterprise wide risk management controls and reporting to the Board and prepare the Risk Management Statement in the Annual Report for the Board’s consideration and approval.

The Committee had four (4) meetings in 2016. All the members of the Committee attended the meetings. During the meetings, the Committee noted and deliberated on amongst others the following:-

  1. Review of oversight and strategic ERM in AHB Group of Companies.
  2. Enhancement of Group ERM Framework, Policies and Guidelines.
  3. Review ICAAP project vis-à-vis ICAAP readiness with capital management for AHB and Risk Appetite Framework for the AHB as the FHC.
  4. Oversees the adherence of the Group Governance, Risk and Compliance with the regulatory supervisors of AHB as the FHC.
  5. Review on Non-Financial performance in the Group ERM Framework.
  6. Recommend the training of high-level impact of ERM for the Board, Management and GCRO team members in administering the prudent ERM.
  7. Review the resources and compensation plan to enhance ERM adherence and compliance in the financial subsidiaries.