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1. INTRODUCTION

The Board Charter of the Company is to set out key values, principles and ethics of the Company in ensuring the Board's efficiency in discharging its duties. The Board functions are being worked out before the same are to be formalised and made public and the Board shall ensure compliance of the same. The Board of Directors ("the Board") is accountable and responsible for the performance and affairs of KPJ Healthcare Berhad ("the Company" or "KPJ"), including practicing a high level of corporate governance.

2. PURPOSE

This Board Charter sets out the role, functions, composition, operation and processes of the Board and is to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities as Board members. This Board Charter would act as a source of reference and primary induction literature to provide insights to prospective Board members and senior management. In addition, it will assist the Board in the assessment of its own performance and of its individual Directors.

3. THE BOARD

3.1 Board Membership

3.1.1 Composition


The Board consists of qualified individuals with diverse set of skills, experience and knowledge necessary to govern the Company. The composition and size of the Board is such that it facilitates the decision making of the Company. The Articles of Association of the Company provides for a minimum of 2 Directors and maximum of 15 Directors. The composition and size of the Board are reviewed from time to time to ensure its effectiveness.

In accordance with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, that requires at least one-third of the Board to comprise Independent Directors, the presence of five (5) Independent Non-Executive Directors out of eleven (11) lead to the Board being satisfied that the size and composition of the Independent Non-Executive Directors has fulfilled this requirement adequately. The number of members is sufficient and well balanced for the Company to carry out its duties effectively, whilst providing greater assurance that no individual or small group of individuals can dominate the Board's decision.

3.1.2 Appointment 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 & Remuneration Committee ("NRC"). In making these recommendations, the NRC will consider the required mix of skills, experience and diversity, including gender, where appropriate, which the Director brings to the Board.

The Articles of Association of the Company provides that every newly appointed Director be subjected to re-election at the immediate Annual General Meeting ("AGM"). 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 Independent Director

In accordance with the Malaysian Code on Corporate Governance("MCCG") 2012, the tenure of an Independent Director shall not exceed a cumulative term of 9 years. However, the Nomination Committee shall assess the independence of the independent director who has served as Independent Non Executive Director of the Company for a cumulative term of more than nine (9) years, justified by the discharged of his/ her duties with reasonable skill and competence, in bringing independent judgment and depth into the Board's decision making in the interest of the Company.

Further the Board of Directors shall recommended him/ her to continue to act as an Independent Non Executive Director of the Company and the Board shall seek the shareholders' approval at an AGM for the retention of the independent status of the existing Independent Director who had served in that capacity for more than nine (9) years.

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.

The Company's Chairman is not an Independent Director and there are five (5) Independent Directors out of eleven(11) Board members. The Board believes that the interests of shareholders are best served by a Chairman who is sanctioned by the shareholders and who will act in the best interests of the shareholders as a whole. He exercises independent and broad judgment as well as provides independent opinions and constructive views on proposals from the Management. As the Chairman is representing JCorp which has substantial interest in the Company, he is well placed to act on behalf of shareholders and in their best interests.

The Board continues with the view that although the Board consist of a majority of non-independent non-executive directors, its existing five (5) independent non-executive directors, with their extensive knowledge, wide experience and expertise will still be able to provide the necessary check and balance to the decision making process of the Board.

3.1.4 Directors' Evaluation

The Board, through its NRC, undertakes an evaluation in order to assess how well the Board, its Committees, the Directors including Independent Directors and the Chairman are performing. The evaluation covers the Board's composition, skills mix, experience, communication, roles and responsibilities, effectiveness as well as conduct. The process also includes a peer review in which Directors assess their fellow Directors' performance against set criteria, including the skills they bring to the Group and the contributions they make. A form of Directors' Evaluation were submitted to the Board and were filled up by the Board.

3.1.5 New Directorship

All Board members shall notify the Chairman of the Board before accepting any new directorship. Further, any nominations for new Directors to the Board are reviewed by the Nomination and Remuneration Committee and presented to the Board for approval. The Company Secretaries will ensure that all appointments are properly made and that statutory requirements are met.

3.1.6 Directors' Duties

3.1.6.1 The duties of a Director, either individually or collectively are many, amongst others:

a. Abide by all regulatory and statutory requirements that affect them;
b. At all times act in good faith in the best interests of the Company as a whole and not in the interests of some other person or body;
c. Exercise reasonable care, skill and diligence that can be reasonably expected of a director having the same responsibility;
d. Make the business judgement in good faith for a proper purpose and in the best interest of the Company;
e. Exercise the powers granted by the Company's Memorandum and Articles of association for "proper purposes", and not for any collateral purpose;
f. Refrain from or prevent any act that would adversely affect decision-making concerning the activities of the Company;
g. Avoid being in a position of conflict of interest with the Company;
h. Act in accordance with their fiduciary duties and comply with the spirit as well as the letter of the law;
i. Act honestly and in good faith in the best interest of the Company;
j. Carry out their duties in a lawful manner and use reasonable endeavour to ensure that the Company conducts its business in accordance with the law and a high standard of "commercial morality";
k. Endeavour to avoid conflicts of interest wherever possible. Where a conflict arises they must adhere scrupulously to the procedures provided by the law and the Memorandum and Articles of the Company for dealing with conflicts, whereby they must disclose their nature of interest during the board meeting and shall not participate in any discussion and shall abstain from the decision making process;
l. Be diligent, attend Board meetings and devote enough time to remain familiar with the nature of the Company's business and context, including the political, legal and social framework within which it operates. Directors should be aware of the statutory and regulatory requirements that affect the Company;
m. Observe the confidentiality of non-public information they possess as Directors; and
n. Ensure that the Company has in place an approved procedure for buying and selling shares or securities in the Company by Directors and their associates. Directors should not indulge in "insider trading" and should notify the Board in advance of any intended transaction by them, their relatives and associates.

3.1.6.2 The Directors shall not without the prior approval of the Company in general meeting:-

a. Carry into effect any proposal or execute any transaction for the acquisition of any undertaking or property of a substantial value, or the disposal of a substantial portion of the main undertaking or property of the Company; or
b. Exercise any power of the Company to issue shares unless otherwise permitted under the CA; or
c. Enter into any arrangement or transaction with a Director or a director of the holding company of the Company, or with a person connected with such a Director to acquire from or dispose to such a Director or person any non-cash assets of the requisite value.

3.1.6.3 The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings, property and uncalled capital, or any part thereof, and to issue debentures and other securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.

3.1.7 Directors' Liabilities

3.1.7.1 Directors may be liable if they:

a. Fraudulently take, apply, conceal or destroy any property of the Company;
b. Falsify, destroy, alter or mutilate any Company's record with the intent to defraud or deceive;
c. Knowingly be a party to the carrying on of any business of the Company in a reckless manner;
d. Induce a person to give credit to the Company through fraud or false pretences;
e. Knowingly be a party to the carrying on of any business of the Company with the intent to defraud creditors of the Company; and
f. Are involved in "insider trading".

3.1.8 Conflict of Interest

3.1.8.1 Directors must avoid any conflict of interest between the directors and the Company. In any situation that involves or may be expected to involve a conflict of interest with the Company, Directors should immediately disclose their interest whether direct and indirectly to the Company.

3.1.8.2 Directors must at all times act in the best interest of the Company and not for personal gain or enrichment. Specifically, Directors shall follow the following guidelines:-

a. Avoid placing own interest or any third-party interest above the Company;
b. Do not engage in any outside business that would directly or indirectly materially adversely affect the Company;
c. Do not abuse board membership by improperly using board membership for personal or third-party benefit;
d. Do not accept gifts, gratuities, honoraria or any other item of value from any person or entity as a direct or indirect inducement to provide special treatment to such donors.

3.2 Board Role

3.2.1 Duties and Responsibilities


All members of the Board contribute significantly in the areas of formulation of strategic direction and policies, performance monitoring and allocation of resources and enhancement of controls and governance. As prescribed by the MCCG 2012 , the Board assumes six (6) principals stewardship responsibilities as follows :-

a. Reviewing, monitoring and where appropriate, approving fundamental financial and business strategies and major corporate actions.
b. Overseeing the conduct of the Group's business to evaluate whether the business is properly managed.
c. Establishing the Group's Enterprise-Wide Risk Management ("EWRM") framework.
d. Formulating a succession plan for the President/Managing Director and Senior Executives.
e. Establishing an investor relations programme.
f. Ensuring processes are in place for maintaining the integrity of the Company, integrity of the financial statements, compliance with law and ethics, relationships with customers and suppliers, and relationship with stakeholders.

At the same time, the Board also ensures the sustenance of a dynamic and robust corporate climate focused on strong ethical values. This emphasizes active participation and dialogue on a structured basis involving key personnel at all levels, as well as ensuring accessibility to information and transparency on all executive actions. The corporate climate is also continuously nourished by value-centered programmes for team-building and active subscription to core values.

The Board has unrestricted access to timely and accurate information on various aspects of the Company's operations and performance. All Board reports are normally issued in sufficient time to all Directors to enable the Directors to review the reports prior to the Board meetings and understand the issues to be discussed.

The Board promotes good corporate governance in the application of sustainability practices. The Group practises a system of rewards based on the philosophy of pay for performance. Employees are rewarded for productivity improvements and contribution towards the achievement of the Group's immediate and long-term objectives. The rewards encompass not only compensation and benefits but also performance recognition and professional development and career progression.

The Board of Directors has always conducted itself in an ethical manner while executing its duties and functions and complied with the Company Directors' Code of Ethics recommended by the Companies Commission of Malaysia. The Board shall develop and implement its own code of ethics and expected to be finalised by financial year end 2013.

3.2.2 Matters Reserved for the Board

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

a. Approval of corporate plans and programmes;
b. Approval of annual budgets, including major capital commitments;
c. Approval of new ventures;
d. Approval of material acquisitions and disposals of undertakings and properties;
e. Changes to the management and control structure within the Company and its subsidiaries ("the Group"), including key policies, delegated authority limit.

3.3 Chairman and President/Managing Director

The Group complies with the requirement to have the position of the Chairman and President/Managing Director held by two (2) separate individuals. The role of the Chairman and the President/Managing Director are distinct and separate to ensure there is a balance of power and authority.

The Company's Chairman who is a Non-Independent and Non-Executive Chairman, shall be responsible for the leadership, effectiveness, conduct and governance of the Board, while the President/Managing Director holds the principal responsibilities of reporting, clarifying, communicating and recommending key strategic and operational matters and proposals to the Board for approval as well as implementation of policies and strategies.

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 Committees shall operate under clearly defined terms of reference. The Committees are authorized 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 reports to the Board on the outcome of the Committee meetings and such reports or minutes will be included in the Board papers.

Hence, the Board delegates certain functions to the following Committees to assist in the execution of its responsibilities:-

a. Audit Committee
b. Building Committee
c. Medical Advisory Committee
d. Nominating & Remuneration Committee ("NRC") ; and
e. Tender Board Committee

The functions of the Audit Committee are to ensure compliance with Paragraph 15, Part C of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the independence of the External Auditors, the integrity of Management and the adequacy of disclosures to Shareholders. The Audit Committee acts to assist the Board of Directors in fulfilling its fiduciary responsibilities by ensuring that the results of internal and external audit findings are fully considered and properly resolved.

The NRC is established primarily identify and recommend candidates for Board directorship, recommend directors to fill the seats on Board Committees, evaluate the effectiveness of the Board and Board Committees (including the size and composition) and contributions of each individual director and ensure an appropriate framework and plan for Board succession, in accordance to the terms of reference. The Building Committee main purpose are to oversee the timeline and costing of each project undertaken byt the Group and to address any issues relating to these projects.

The Medical Advisory Committee role is to develops, monitors and to ensure that the best clinical governance activities and guidelines are being practiced in the Group.

As for Tender Board Committee, the Committee are to evaluate, deliberate and approve the recommendations made by the Management prior to awarding of major contracts and tenders to potential contractors.

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. All Directors will be provided with the performance and progress reports on a timely basis prior to the scheduled Board meetings. A full agenda of the meeting and all Board papers, including complicated issues or specific matters, would be distributed in advance to ensure Directors are well informed and have the opportunity to seek additional, 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 the Directors or clear to their doubts or concerns.

3.6 Financial Reporting

Pursuant to Paragraph 15.26(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all the Company Directors are collectively responsible in ensuring that the financial statements and the quarterly results are drawn up in accordance with the approved accounting standards adopted by the Malaysian Financial Reporting Standard ("MFRS"), the provisions of the Companies Act, 1965, and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Board ensures that the financial statements of the Company and its subsidiary companies as of the end of the financial year together with the financial results and cash flows for the year ended are prepared based on the appropriate and relevant accounting policies, on a consistent basis and made judgments and estimates that are reasonable and fair in preparing the financial statements of the Company and its subsidiaries. The financial statements are also prepared on a going concern basis and the Directors have assured that proper accounting records are kept so as to enable the preparation of the financial statements with reasonable accuracy.

3.7 Directors' Remuneration

The Board is of the view that the composition of the NRC meets the objectives and principles of good corporate governance. The members of the NRC comprise exclusively of non-executives directors, a majority of whom is independent. The Nomination Committee develops, maintains and reviews the criterias to be used in the recruitment process and annual assessment of directors.

Through the NRC, the Board has established formal and transparent remuneration policies and procedures to attract and retain directors in which NRC are responsible for making recommendations on the framework, policies and procedures in reviewing and determining the specific remuneration package of the Directors. The Company's remuneration scheme for a President/Managing Director commensurate with performance, seniority, experience and scope of responsibilities and is benchmarked to market/industry standards. For Non-Executive Directors, the level of remuneration reflects the level of responsibilities undertaken by them.

3.8 Directors' Training & Continuing Education

In addition to the Mandatory Accreditation Programme as required by the 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 encourages its Directors to attend talks, seminars, workshops and conferences to update and enhance their skills and knowledge to enable them to carry out their roles effectively as Directors in discharging their responsibilities towards good corporate governance, operational and regulatory standards and sustain active participation in the Board deliberations. 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 has unrestricted access to the advice and services of Company Secretaries and where necessary, in the furtherance of their duties, obtain independent professional advice with the Company paying the related costs. The Company Secretaries ensure that all Board meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are recorded and maintained in the statutory register of the Company. The Company Secretaries also keep abreast of the evolving capital market environment, regulatory changes and developments in Corporate Governance through continuous training.

5. GENERAL MEETINGS

5.1 Annual General Meeting


The AGM is the principal forum for dialogue with private and institutional shareholders. The Directors must ensure that the AGM provides an important opportunity for effective communication with, and constructive feedback from, the Company's shareholders.

The Chairman must encourage active participation by the shareholders during the AGM.

The Chairman and, where appropriate, the President/Managing Director shall respond to shareholders' queries during the AGM. Where necessary, the Chairman will undertake to provide a written answer to any significant question that cannot be readily answered at the meeting.

The Company shall in each year hold a general meeting as its AGM in addition to any other meetings in that year, and not more than fifteen (15) months shall elapse between the date of one annual general meeting and that of the next, but so long as a company holds its first annual general meeting within eighteen (18) months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

The notices convening an AGM shall specify the place, day and hour of the meeting, and shall be given to all shareholders at least twenty-one (21) days before the meeting. Any notice of meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special business. At least twenty-one (21) days' notice of such meeting shall be given by advertisement in at least one (1) nationally circulated Bahasa Malaysia or English daily newspaper and in writing to the stock exchanges upon which the Company is listed.

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business. For all purposes, two (2) members present in person or by proxy, or, in the case of corporations which are members, present by their representatives appointed pursuant to the provision of the Company's AA and entitled to vote shall be a quorum.

5.2 Extraordinary General Meeting

The Directors may whenever they think fit, convene an EGM, and EGMs shall also be convened on any requisition made in accordance with the provisions of the CA, or if the Company makes default in convening a meeting In compliance with a requisition received pursuant to Section 144 of the CA a meeting may be convened by such requisitionists in the manner provided in Section 144 of the CA. Any meeting convened by requisitionists shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by the Directors.

Subject always to the provisions of Section 151 of the CA, no business shall be transacted at an EGM except business of which notice has been given in the notice convening the meeting.

The notices convening an EGM shall specify the place, day and hour of the meeting, and shall be given to all shareholders at least fourteen (14) days before the meeting or at least twenty-one (21) days before the meeting where any special resolution is to be proposed. At least fourteen (14) days' notice or twenty-one (21) days' notice in the case where any special resolution is proposed of such meeting shall be given by advertisement in at least one (1) nationally circulated Bahasa Malaysia or English daily newspaper and in writing to stock exchanges upon which the Company is listed.

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business. For all purposes, two (2) members present in person or by proxy, or, in the case of corporations which are members, present by their representatives appointed pursuant to the provision of the Company's AA and entitled to vote shall be a quorum.

6. INVESTOR RELATIONS AND SHAREHOLDER COMMUNICATION

The Board shall place great importance in ensuring the high standards of transparency and accountability in its communication to shareholders, as well as to potential investors, analysts and the public. The Board recognises the need of effective communication with shareholders and the investment community, and adheres strictly to the disclosure requirements of Bursa Securities. Dissemination of information includes the distribution of annual reports and relevant circulars to shareholders, issuance of press releases, announcing the quarterly financial results and performance of the Group to Bursa Malaysia Securities Berhad and the public as well as holding press conferences

The Chairman and the Board encourage shareholders to attend and participate in the AGM held annually as well as in the EGM. The shareholders are given the opportunity to seek clarification by making use of the Question and Answer session during the AGM / EGM on any matters pertaining to the business and financial performance of the Company. The rights to demand for a poll during the meetings are conveyed to shareholders by the Board.

The shareholders shall be informed of all material matters affecting the Company and Group. The ways of communication to shareholders and investors, amongst other, are by way of timely announcements and disclosures made to Bursa Malaysia, which includes quarterly financial results, changes in the composition of the Group and any other material information that may affect investor's decision making.

The AGM is the principal forum for dialogue with shareholders. At each AGM, a presentation is given by the President/Managing Director to explain the Group's strategy, performance and major developments to shareholders. The AGM is the principal forum for dialogue with shareholders. Notice of the AGM and Annual Reports are sent out at least 21 days before the date of the meeting. In the case of an EGM, the Notice is sent out at least 14 days before the date of the meeting (or 21 days where any special resolutions are proposed).

7. ACCESS TO INFORMATION AND INDEPENDENT ADVICE

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

8. REVIEW OF THE BOARD CHARTER

The Board Charter has been adopted by the Board in 2014. 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 and any new regulations that may have an impact on the discharge of the Board's responsibilities.

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