GOVERNANCE Sect ion 04 Annual Report 2022 113 CORPORATE GOVERNANCE OVERV I EW STATEMENT BOARD INDEPENDENCE The independence of a Director is assessed in accordance with Ranhill’s Policy on the Independence of Directors. The Policy provides for assessing a sitting Director’s degree of independence, as well as potential candidates being considered for directorship. The Board reviews the independence of Directors before they are appointed, on an annual basis and at any other time where the circumstance of a Director changes and reassessment is warranted. The criteria for Independence set out in Paragraph 1.01 and Practice Note 13 of BMLR form the basis for the evaluation of Independent Directors which are also incorporated in the Board Charter as guidelines. During the year, the NRC assessed the independence of Ranhill’s Independent Directors as per the BMLR. The Committee is satisfied with the level of independence demonstrated by all the Independent Directors and their ability to act in the interest of the Group. The Board Charter provides that the tenure of the Independent Director shall not exceed a cumulative term of nine (9) years as per MCCG 2021 requirements. Upon completion of nine (9) years, an Independent Director may continue to serve on the Board subject to the Director’s redesignation as a Non-Independent Director. Otherwise, the Board must provide justification and seek shareholders’ approval by way of two-tier voting at the Annual General Meeting in the event the Board intends to retain the director as an Independent Director. The Board took note of the BMLR that the tenure of an Independent Director (“ID”) should not exceed a cumulative term of twelve (12) years which will be effective from 1 June 2023. Currently, none of the INEDs of Ranhill have served the Board for nine (9) years. The Board also believes that the current Board composition is appropriate for its purpose, and is satisfied that it adequately safeguards the interests of minority shareholders of the Group. The test of whether a relationship or business is material is based on the nature of the relationship or business and the circumstances and activities of the Director. Materiality is considered from the perspective of the company and its Group members, the persons or organisations with which the Director has an affiliation with and from the Director’s perspective. To assist in assessing the materiality of a supplier or customer the Board has adopted the following materiality thresholds: • A material customer is a customer of Ranhill which accounts for more than 2% of Ranhill’s consolidated gross revenue; and • A supplier is material if Ranhill accounts for more than 2% of the supplier have consolidated gross revenue. In accordance with the policy, the Board considers all relevant facts and circumstances including the following: • Is a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company; • Is employed, or has previously been employed in an executive capacity by the company or another Group member, and there has not been a period of at least three (3) years between ceasing such employment and serving on the Board; • Is, or has within the last three (3) years been, a partner, Director or senior employee of a material professional adviser to the company or another Group member; • Is, or has been within the last three (3) years, in a material business relationship with the company or another Group member, or an officer of, or otherwise associated with, someone with such a relationship; • Has a material contractual relationship with the company or another Group member other than as a director; • Has close family ties with any person who falls within any of the categories described above; or has been a director of the company for such a period that his or her independence may have been compromised. II. BOARD EFFECTIVENESS BOARD ASSESSMENT EVALUATION (“BAE”) The BAE is an annual assessment of the effectiveness of each individual Director and the Board as a whole to assess the Board’s overall effectiveness and is part of an ongoing effort to drive continuous effectiveness of the Board and Board Committees. These were structured along with both self-assessment and peer reviews. The criteria for evaluation are guided by the Board Charter, which is available at www.ranhill.com.my. The performance of directors for their eligibility for re-election at the forthcoming AGMwill be assessed from the results of the BAE and fit and propriety criteria declaration. For FY2022, the Group Company Secretary assisted the NRC Chairman in facilitating the conduct of the BAE exercise internally. The details of the conduct of the BAE FY2022 and the NRC’s recommendations as provided in the activities of the NRC. Board viewed that the BAE is to be conducted by an external independent party every 5 yearswhichwill be due in2025 (or a shorter period when circumstances warrant it), to ensure the assessment and evaluation continue to be robust and relevant.
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