Page 70 - ar2010

The Board recognises the importance of Corporate Governance and conscientiously attains highest business ethics and governance in conducting the day-to-day business and affairs of the Group. Thus, at all times the practice of good corporate governance is the main priority in safeguarding and enhancing the shareholders’ value and protecting the interests of all stakeholders.

The Board believes that good corporate governance adds value to the main business of the KPJ Group and will ensure that this practice continues.

The Board of Directors believes in playing an active role in directing management through its review and approval of the Group’s direction and strategy. Its monitoring of professional standards and business performance, its review of the adequacy and integrity of the Group’s internal control systems, including the identifcation of principal risks and ensuring the implementation of appropriate systems to manage those risks, are part of its underlying duty to ensure that the Group meets its responsibilities to its shareholders.

Board Structure, Composition and Balance

The present size and composition is well balanced and is made up of professionals with a wide range of knowledge and experience in business, operations and fnance relevant to the direction of a large expanding Group. The profles of Board Members are on pages 16 to 21 of this Annual Report.

The size of the Board is optimum for the complexity and scale of operations of healthcare business. Whilst the Company has a signifcant shareholder in Johor Corporation (JCorp), the investment of minority shareholders is fairly refected through Board representation of Independent Non-Executive Directors and all of them have fulflled the criteria of independence as defned in the Bursa Malaysia Securities Berhad’s Listing Requirements which require at least two directors or one-third of the total number of Directors, whichever is higher, to be Independent Directors.

The Independent Non-Executive Directors do not engage in any business dealings or other relationships and the day-to-day management of the Company. Hence, they are capable of exercising independent judgment and act in the best interests of the Company and its shareholders. All Independent Non-Executive Directors are qualifed professionals in their respective felds and carry with them vast industry experience along with subject matter expertise in medical, legal, accounting and business management.

The presence of Independent Non-Executive Directors, representing more than half of the total members with necessary calibre, ensures that the Board is well balanced and could carry suffcient weight on Board’s decisions. Although all the Directors have equal responsibilities for the Group’s operations, the role of these Independent Non-Executive Directors is particularly important in ensuring that all business strategies proposed by the executive management are fully and independently discussed and assessed, and take into account the long term interest, not only of shareholders, but also employees, customers, suppliers, and the many communities in which the Group operates.

On 31 December 2010 one Independent Non-Executive Director, Tan Sri Dato’ Dr Abu Bakar Suleiman, had resigned which reduced down the number of Independent Non-Executive Directors to six. On 3 January 2011, Kamaruzzaman Abu Kassim, who represents Johor Corporation (signifcant shareholders) was appointed as Director of the Company. He was then appointed as the Chairman of the Company on 12 January 2011 subsequent to the resignation of Tan Sri Dato’ Muhammad Ali Hashim on the same date.

As a result of the above changes, the composition of the Board of Directors is as follows: 1. One Non-Executive Chairman 2. Two Non-Executive Directors

3. Six Independent Non-Executive Directors 4. One Managing Director.

This Board composition complied with the Bursa Malaysia Securities Berhad’s Listing Requirements.

Responsibility between Chairman and Managing Director

The responsibility between the Chairman and the Managing Director are clearly divided to ensure that there is a balance of power and authority.

For the fnancial year ended 31 December 2010, the Chairman, who was the President and Group CEO of JCorp until 29 July 2010, Tan Sri Dato’ Muhammad Ali Hashim, continued to contribute signifcantly towards the Group. Through his business acumen and entrepreneurial leadership, he has enabled JCorp and its Group of Companies to grow into one of Malaysia’s leading conglomerates with more than 280 companies including KPJ Healthcare Bhd. He has never held the position of Managing Director of the Company.

The Board of Directors of KPJ Healthcare Berhad subscribes to and supports the Malaysian Code on Corporate Governance (revised 2007) as a minimum basis for practices on corporate governance. The Board of KPJ Healthcare Berhad (KPJ) is pleased to report to the shareholders in particular and other stakeholders that highest standards of corporate governance has been continuously practiced and upheld in accordance with the Principles as set out in Part 1 of the Malaysian Code on Corporate Governance (“The Code”). The Board, to the best of their knowledge, confirms that the Group has complied with the Best Practices as set out in Part 2 of the Code throughout the year ended 31 December 2010.