The Company is committed to good corporate governance and managing its affairs in a fair and transparent manner to create long-term sustainable value for its shareholders and the wider community through ethical and responsible business practices. The Company’s benchmark of governance remains rooted in its Corporate Governance Manual and corporate policies which adhere to the principles of accountability, fairness, transparency, and responsibility. The Manual, adopted by the Company during the financial year ended 31 March 30 September 2019 (“FY2019”), sets out the Group’s Corporate Governance Framework, Policies, Procedures and Standards (collectively the “Code”) and is premised on the Myanmar Companies Law 2017 and the Company’s Constitution. The Group remains committed to implement these practices consistently in all its business units and to align with the regional corporate governance standards under the leadership of its Board of Directors. The CG Manual and Policies are subject to review from time to time. Next major revision is scheduled on 1 January 2021.
Ranked #2 in the Pwint Thit Sa
(Transparency in Myanmar Enterprises) Report 2019
YSX Listed Company Award 2020
Best Disclosure Practice Award
A Committed Member of the
UN Global Compact since 2012
SECTION 1 – BOARD MATTERS
The Board leads, controls, and is collectively responsible for overseeing the business and affairs for the long-term success of the Company. The Management remains accountable for the day-to-day operations and administration of the Company in accordance with the policies and strategies set by the Board. The Company also has designated Chief Executive Officers (“CEOs”) for subsidiaries, who are responsible for their respective business units, whereby these units’ CEOs will replicate the Board’s policies and strategies at the operations level. In support of this, the Company’s Board Committees have also been set up to ensure that there are reviews and checks and balances. In so doing, a framework of effective risk management is also established, allowing for better assessment of the Group’s businesses.
Principal Duties of the Board
- providing entrepreneurial leadership, setting strategic objectives and ensuring that the necessary financial and human resources are in place for the Company to meet its objectives;
- setting the Company’s vision, mission, goals, values and strategies;
- establishing a framework of prudent and effective controls which enables risks to be assessed and managed, including the safeguarding of shareholders’ interests and the Company’s assets;
- strategizing that sound succession planning programmes for Directors and the Management are in place, and creating a process to reflect an adequate mix of individuals with relevant competence, industry experience and diversity of perspectives to carry out effective decision making are retained and nurtured in the talent pool;
- reviewing Management’s performance annually;
- identifying the key stakeholder groups and recognizing that their perceptions affect the Company’s reputation;
- ensuring that every Director shall constantly keep himself/herself apprised with the latest issues by attending relevant training; ensuring that obligations to shareholders and other stakeholders are understood and met; and
- considering sustainability issues, such as environmental and social factors, as part of its strategic formulation.
Delegation by the Board
To assist the Board in carrying out its responsibilities and to strengthen the Company’s Corporate Governance Framework, without relinquishing its duties, the Board had formed three (3) subcommittees specifically, the Audit and Risk Management Committee (“ARMC”), the Nominating Committee (“NC”), and the Remuneration Committee (“RC”). The ARMC, NC, RC are collectively, the “Board Committees”, which comprise Independent and Non-Executive Directors only. Each committee is guided by its own terms of reference to address its particular scope of work. All terms of reference are in the spirit of the Company’s Corporate Governance Manual; which are approved by the Board and reviewed periodically to ensure their applicability in the ever-changing regulatory and governance environment.
All the Directors are guided to exercise independent judgment under the Myanmar Companies Law 2017, and to make decisions objectively in the best interests of the Company. No individual Director holds a considerable concentration of power in his/her professional capacity.
Board Strategic Review
The Board reviews and approves Company’s strategic plans on a periodic basis. During FY2018, the Board approved the Company’s initiative to rebrand by introducing a new logo, as well as adopting a new mission, vision and core values to strategically reposition the Company’s image along with the times and bring it to the international market.
The schedule of all Board and Board Committee meetings and the Annual General Meeting (“AGM”) for the next calendar year is planned in advance, in consultation with the Board. Board meetings are held at least four times a year, with ARMC meetings twice a year to coincide with regulatory reporting, such as to facilitate the review of announcements of the Audited Financial Statements and Management Discussion & Analysis, and the publishing of Company’s Annual Reports and planning for the AGM. Additional key matters discussed at such meetings include financial performance, annual budget, corporate strategies and risk management, business plans, regulation, and significant operational matters. Other Board Committee meetings, such as RC and NC meetings are held once a year to review and evaluate the remuneration matrix and performance of each Director and key executives. Besides the scheduled Board meetings, the Board also meets to approve other material acquisitions and disposals of assets and major commitments undertaken by the Company when the need arises.
The Company’s Constitution authorizes Board and Board Committee meetings to be held via telephone or videoconference. Directors who are unable to attend meetings physically would be engaged via teleconferencing. To further facilitate the efficient management of the Company, the Company’s Constitution also allows Board and Board Committee resolutions to be passed by way of written resolutions.
A record of the Directors’ attendance at Board and Board committee meetings up to 30 June 2020 is displayed in the following table:
Directors’ Attendance at Meetings as of 30 June 2020
|Board Meeting||Audit & Risk Management|
|Total number of meetings held||6||3||2||2||1|
|U Theim Wai @ Serge Pun||6||N.A.||N.A.||N.A.||1|
|U Tun Tun||5||N.A.||N.A.||N.A.||1|
|Daw Zarchi Tin *||2||N.A.||N.A.||N.A.||N.A.|
|U Myat Thin Aung||6||N.A.||N.A.||2||1|
|U Than Aung||6||3||2||N.A.||1|
|Prof. Dr. Yi Yi Myint **||3||2||N.A.||1||1|
|Prof. Dr. Aung Tun Thet||6||N.A.||2||N.A.||1|
|U Kyi Aye||6||3||N.A.||2||1|
|U Linn Myaing||6||N.A.||2||N.A.||1|
|Mr. Fernando Miranda Zobel de Ayala ***|
(or his alternate, Mr. Jose Teodoro K. Limcaoco ****)
* Daw Zarchi Tin resigned from the Board with the effect from 31 October 2019.
** Prof. Dr. Yi Yi Myint retired from the Board with the effect from 17 February 2020 at the close of 28th AGM of the Company.
*** Mr. Fernando Miranda Zobel de Ayala was appointed as a Director of the Board with effect from 23 January 2020.
**** Mr. Jose Teodoro K. Limcaoco was appointed as the alternate director to Mr. Fernando Miranda Zobel de Ayala on 8 June 2020.
Board Approval and Approval Matrix
The Company has prescribed internal guidelines for matters that require Board approval. For expenditures of MMK 5 million and below, the authorization limits are granted to the Management, subject to controls, approval of capital and operating expenditures, specific transactions, and supplementary budgets. The Board has adopted a matrix in which Board approval is required for any matters that could impose a material impact on the Company’s operations and financial position as well as matters other than the ordinary course of business.
Matters that specifically require Board approval include, but are not limited to the following:
- Group’s strategic plans and business focus;
- Company’s annual and quarterly financial statements;
- Acquisition, establishment, investment, divestment, or disposal of any subsidiary, business or asset of the Group exceeding the authorized limits;
- Restructuring or reorganization of the Group’s business, entry into, amendment, or termination of any joint venture or partnership requiring a capital investment on the part of the Company or any of its subsidiaries in excess of 10% of the Company’s total assets;
- Company’s annual budget;
- Dividend policy and payout;
- Appointment and remuneration of Directors;
- Capital-related matters including capital structure, equity and debt instruments issuance and redemption;
- Taking up facilities, loans and incurring debts and/or lines of credit with banks and financial institutions and creditors;
- Approving matters within the ordinary course of business that exceed the authorized limits.
Conflicts of Interest
Prior to the appointment of each Director, every Director is required to make a declaration to the Board on any conflict of interest he/she may have with regards to the business operations conducted by the Company. Additionally, where a Director is subsequently conflicted or potentially conflicted or has any interest in any transaction, he/she will immediately declare his/her conflict of interest during the Board meeting; and where applicable under the Myanmar Companies Law, abstain himself/herself from participating in the deliberations and subsequently voting on such transaction. This ensures that Board decisions are made in the best interests of the company and all stakeholders.
The Company conducts an induction programme for newly appointed Directors, assisting to familiarize the Directors with the Company’s businesses, Board processes, internal controls and governance practices. It includes site visits, Management presentations on the Group’s businesses, strategic plans and objectives, meetings with key management personnel and briefings on key areas of the Group’s operations. The Company will conduct induction programme for the newly appointed directors, Mr. Fernando Miranda Zobel de Ayala and Mr. Jose Teodoro K. Limcaoco, to assist them in familiarizing with the Company’s business.
Board Training and Development
In addition to the minimum development training, the Directors are encouraged to regularly attend training, conferences and workshops to supplement and keep themselves updated with current market/industry information and to ensure continuous professional development at the Company’s expense. Since the Myanmar Companies Law 2017 has come into effect in late 2017, the Company has arranged for Directors’ development programmes periodically, such as CG Awareness and Future Board Planning delivered by Myanmar Institute of Directors in June 2019; and Directors and Officers Duties under the Myanmar Companies Law 2017 delivered by Baker McKenzie in September 2018.
Access to Information
The Management acknowledges that it is pivotal to provide Directors with complete, adequate and timely information prior to Board meetings for the Board to carefully consider the information, to make informed decisions, and to discharge their duties and responsibilities. To enable Directors adequate time to prepare for meetings, the Board and Board Committee papers are typically circulated to Directors a week in advance of the meetings. Investment proposals made by the Management and the respective working teams, for Board approval are presented with background and essential information to evaluate each investment. The Company has also adopted practices, such as allowing the Management to provide informal updates to the Directors on prospective deals and potential developments at the infancy stage before formal Board approval is sought. Specific personnel or third parties with expertise who contribute to the discussions or to give opinions may also be invited to join the Board and Board Committee meetings as needed. The Management also regularly engages the Board on business operations, industry outlook, and market sentiment to keep Directors abreast of the industry trends and market position. Directors are given full access to the Management, the corporate secretary team, the external auditor, and expert advice at the expense of the Company.
Corporate Secretary Team
The Company also has a dedicated internal corporate secretary team (the “CST”) to promptly facilitate and fulfill ongoing corporate requests raised by the Directors. The CST is responsible for, among other things, advising the Board on company regulations, and disclosure obligations to the relevant authorities, and that effective board processes are observed, and are compliant with the relevant rules and regulations prescribed by the Securities and Exchange Commission of Myanmar (“SECM”), the Yangon Stock Exchange (“YSX”), and the Directorate of Investment and Company Administration (“DICA”). The CST is responsible in advising the Board and the Management to disclose material information on a timely basis, as well as maintaining and updating of all statutory registers, making statutory filings and keeping corporate records as prescribed under the Myanmar Companies Law. While the CST assists the Chairman, the Chairman of each Board Committee and the Management in the preparation and circulation of the agendas for the various Board meetings, the CST also attends all Board meetings, prepares minutes of meetings, and assists to ensure effective coordination between the Board, the Board Committees and the Management. The CST attends seminars and further professional programmes related to the corporate secretarial field as and when needed.
With more than 50% of the Company’s Directors considered Non-Executive or Independent, the Board is committed to maintain an environment of independence from day to day operations. Additionally, the diverse set of experiences and opinions brought in by the Non-Executive Directors help to prevent the phenomenon of groupthink. Additionally, the NC requires each Director to declare his relationships with the Company, Management, and substantial shareholders in writing and reviews these declarations periodically to ensure the Directors are not conflicted. In accordance with the definition of “Independent” prescribed in the Company’s terms of reference for Board of Directors, which is disclosed in the Corporate Governance Manual, inter alia, the Board may consider a director Independent if he/she has not served for an aggregate period of more than nine (9) years on the Board. In this regard, Prof. Dr. Aung Tun Thet, who serves the Board less than nine (9) years, is qualified as the Independent Non-Executive Director.
Size and Composition of the Board
The Board comprises nine Directors, with one Independent Non-executive Director, five Non-Executive Directors, one Alternate Director, and two Executive Directors. The Independent Director and Non-Executive Directors bring strong backgrounds in entrepreneurship and finance which allows for effective decision making. The Company benefits from a diverse range of objective perspectives with highly respected members of the community as Board members. The Compositions of the Board and Board Committees as of 30 June 2020 are set out below:
|Name||Date of First Appointment||Last Re-election||Board||ARMC||RC||NC|
|U Theim Wai @ Serge Pun||(ED)||12 Sep 2004||2016||Chairman||-||-||-|
|U Tun Tun 1||(ED)||17 Nov 2009||2017||Member||-||-||-|
|U Myat Thin Aung 2 3||(NID) (NED)||31 Jul 1992||2017||Member||-||Chairman||-|
|U Than Aung 4||(NID) (NED)||31 Jul 1992||2017||Member||Member||-||Member|
|Prof. Dr. Aung Tun Thet||(ID) (NED)||3 Dec 2013||2018||Member||-||-||Chairman|
|U Kyi Aye||(NID) (NED)||5 Nov 2015||2016||Member||Chairman||Member||-|
|U Linn Myaing||(NID) (NED)||2 Jul 2012||2018||Member||-||-||Member|
|Mr. Fernando Miranda |
Zobel de Ayala 5
|(NID) (NED)||23 Jan 2020||2020||Member||-||-||-|
|Jose Teodoro K. Limcaoco 6||(AD)||8 Jun 2020||N.A||Alternate||-||-||-|
|(ID) Independent Director|
(NID) Non-Independent Director
(ED) Executive Director
(NED) Non-Executive Director
(AD) Alternate Director
|Assessment of Independence of Individual Directors
All references to the independence of each individual director are based on the Corporate Governance Manual of the Company.
1 U Tun Tun retired and stood for re-election pursuant to Clause 16.14 of the Constitution of the Company at the 28th AGM held on 17 February 2020 (“28th AGM). The NC had considered his contribution and performance, and recommended to the Board to nominate his re-election at the 28th AGM.
2 U Myat Thin Aung retired and stood for re-election pursuant to Clause 16.14 of the Constitution of the Company at the 28th AGM. The NC had considered his contribution and performance, and recommended to the Board to nominate his re-election at the 28th AGM.
3 By virtue of tenure of directorship, since the Company’s inception, U Myat Thin Aung is considered as a Non-Independent and Non-Executive Director.
4 By virtue of tenure of directorship, since the Company’s inception, U Than Aung is considered as a Non-Independent and Non-Executive Director.
5 Mr. Fernando Miranda Zobel de Ayala was appointed as a Non-Executive Director of the Company on 23 January 2020 pursuant to Clause 16.7 of the Constitution of the Company at the 28th AGM.
6 Mr. Jose Teodoro K. Limcaoco was appointed as the alternate director to Mr. Fernando Miranda Zobel de Ayala on 8 June 2020.
The Company is strongly committed to fostering diversity and inclusion on its Board to cultivate a diverse approach in business decision making, leveraging on the collective strength of its members who possess diverse abilities, knowledge, skills and professional experiences which could contribute to spurring innovative thinking and sustainable competitive advantages for the long-term growth and success of the Company. The NC is tasked to assist the Board to review the structure, size and composition (including the skills, knowledge, industry and business experiences, gender, age, ethnicity, tenure of service, and culture) of the Board and make recommendations with regards to any changes.
Indemnification of Directors and Officers
During the financial year ending 30 September 2019 (“FYE 30 Sep 2019”), the Company began purchasing the Directors and Officers Liability Insurance for the Board to protect individual Directors and Officers of the Company against the third party claim(s) as a result of the wrongful acts committed or alleged to have committed while acting in their capacity as Directors and officers of the Company.
Chairman of the Board
U Theim Wai @ Serge Pun is the Executive Chairman of the Company.
The Chairman of the Board plays an instrumental role in providing the Company with strong leadership and vision, assisting the Board in developing policies and strategies, and monitoring that these are implemented effectively, as well as to promote high standards of corporate governance. As the Chairman, he bears primary responsibility for the workings of the Board by ensuring effectiveness in all aspects of its role, including without limitation:
- setting the agenda for Board meetings with input from management;
- exercising control over the quality, quantity and timeliness of information flow between the Board and Management to encourage constructive relations within the Board and between the Board and Management;
- promoting a culture of openness and debate at the Board;
- facilitating adequate time is allotted for discussion of all agenda items and strategic issues;
- observing the effective contribution of Non-Executive Directors; and
- playing a pivotal role in fostering constructive dialogue between shareholders, the Board and Management at the AGM and other shareholder meetings.
Role of the COO
The Company’s entities are empowered to run day-to-day operations independently by having dedicated management teams led by designated CEOs at the subsidiary levels who are responsible for each of its respective business units. Each designated CEO is accountable to run its business unit in accordance with respective Board and Board Committee policies. The Company’s COO is tasked to providing Group level support for infrastructure and executive decisions, working alongside and assisting the respective subsidiaries’ CEOs, monitoring the overall operations and resources, serving as the main point of communication between the Board of Directors and these CEOs, and establishing company procedures after obtaining perspectives from the Company’s Board of Directors and shareholders. Effectively, the Company does not implement the traditional role of a “single CEO”, and the said role is spread over a number of top executives and CEOs of the business units in the governance model of the Company.
Management Structure for Business Units
NC Composition and Role
Prof. Dr. Aung Tun Thet (Chairman)
U Than Aung (Member)
U Linn Myaing (Member)
The NC comprises Non-Executive Directors only and is chaired by the Independent Non-Executive Director. It is regulated by a set of terms of reference supported by the Board, with duties and authority delegated by the Board. The NC works with the Board to determine the appropriate qualifications, skills and experience for the Board as a whole and its individual members with the objective to create a diverse Board of individuals from financial sector, business, government relations, and academic. Any appointment or removal of a Director is subject to approval from the entire Board to develop and maintain a formal and transparent process.
The NC is tasked to regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regards to any changes; and to ensure all Directors submit themselves for re-nomination and re-appointment at regular intervals and at least once every three (3) years. The NC further keeps under review the leadership needs of the Company including the succession planning for both key management and the Directors, with a view to ensuring the continued ability of the Company to compete effectively in the marketplace. Please refer to the Company’s Corporate Governance Manual for the detailed duties of the NC.
Re-nomination of Directors
The NC reviews annually the performance of each Director. When considering the nomination of Directors for re-election and re-appointment, the NC takes into account their contribution to the effective running of the Board, preparedness, participation, time commitments, whether proper attention has been given by the Directors to the affairs of the Company, and Directors’ other Board memberships at other organizations. In addition to that, the NC also determines whether he/she is independent in character and judgment, and whether there are relationships or circumstances which are likely to affect the Director’s judgement. The NC also monitors that all the re-nomination and re-appointment of the Directors are submitted at regular intervals. Directors are subject to re-election at least once every three (3) years in accordance with the Constitution of the Company that at least one-third of the Directors (including the Executive Chairman) for the time being, shall retire as Directors at each AGM of the Company. Shareholders are provided with relevant information on the candidates that are subject to election or re-election in the AGM’s Notice. During the 28th AGM, U Myat Thin Aung and U Tun Tun retired and sought re-election pursuant to Clause 16.14 of the Constitution of the Company, while Prof. Dr. Yi Yi Myint did not seek re-election and retired pursuant to Clause 16.14 of the Constitution of the Company at the close of 28th AGM.
Process and Criteria for Appointment of New Directors
The Company adopts a holistic approach in the selection of new Directors. The NC is tasked to identify candidates and reviewing all nominations for the appointment, reappointment and termination of Directors and Board Committee members, taking into consideration the Directors’ character and competence including integrity, reputation, capability, independence status, contributions during and outside Board Meetings, as well as other criteria prescribed under the Corporate Governance Manual of the Company and additional relevant factors as may be defined by the NC. When there is a need to appoint a new Director, the NC utilizes open advertisement or the services from external networks to select prospective candidates. Thereafter, the NC will:
- review the existing composition and range of knowledge, expertise and skills in the Board and Board Committees;
- identify the Company’s needs and review the profiles of shortlisted candidates for nomination before sourcing for interview process;
- after the NC Chairman, Executive Chairman and other NC members interview the candidates, consider the candidates for appointment with an emphasis on the following to maintain the Diversity pledge of the Board:
- A determination of the candidate’s independence;
- The candidate’s gender, age, cultural background, skills composition, industry and business experiences to complete the Board’s pledge to maintain a diversified Board;
- The candidate’s character and reputation in the industry;
Directors’ Time Commitment
Despite the fact that some of the Directors have multiple board representations, the Board and NC examine carefully that these Directors have demonstrated their commitment and effectiveness fully in carrying out their duties and responsibilities as the fiduciaries in the best interests of the Company and avoiding potential conflicts of interest from representing on other Boards. The NC has adopted a guide that the maximum number of listed company representations each Director may hold is five (5). In determining whether each Director is able to dedicate sufficient time to carry out his/her duty, the contributions by Directors to and during meetings are also taken into consideration. Based on the Directors’ attendance at meetings held as of 30 June 2020, NC believes that each Director has dedicated sufficient time and attention to the Company’s affairs; and has performed his/her duties effectively, and the Board held the view that all Directors had sufficiently discharging his/her duties, notwithstanding some Directors who held multiple representations on other listed companies.
Succession planning for Directors and Key Management
As the first company in Myanmar to be listed on the YSX, FMI recognizes the importance of a succession planning process to remain prepared for the future. FMI strongly believes that succession planning serves as a tool in retaining talent, and its Management conducts regular reviews with all of its employees to identify and nurture talent.
FMI recognizes that succession planning is not a “one-size fit” and builds its succession planning based on FMI Group’s business direction. As such, the FMI Group’s succession planning considers all ranks of the organization and employees at every level and not just its Board and key management. FMI considers key positions in the company to be equally critical as finding the “correct players”.
Extracted from Nominating Committee Guide 2012 issued by KPMG.
The table above provides an overview of the factors which are driving the need for board renewal and succession planning. As the business environment and business strategies change, companies need directors who have the right competencies to contribute to the Company and the Board. Amongst key considerations the Company places are to:
- Identify required talent needs based on strategic business plans
- Determine required capabilities of critical positions
- Match competencies between the critical positions and identify employees to plug the gap
- Creating high level development plan to grow selected employees
- Assess and monitor performance
With regard to succession planning of the Board, there is a process of refreshing the Board progressively over time so that the experience of longer serving directors can be drawn upon while tapping into the new external perspectives and insights of new appointees as part of the on-going Board review powers. With regard to the succession planning of FMI’s CEO, FMI does not have the position of a Group CEO which concentrates the executive role to one (1) person. Instead, the Board has a general oversight over the chief executive officers at each business pillar and reviews the Group’s initiative on strategic development and direction on new investment.
In addition to quarterly reviews on its employees to re-align goals, these reviews present FMI an opportunity for FMI to engage its employees to establish their work patterns and career goals in order to develop the employees’ potential.
Succession planning for Directors and Key Management is an important part of the governance process of the Board. Along with the Board, the NC plans the succession by short listing a supply of highly capable candidates within and outside the Group ready to assume the positions whether through an unexpected event or a planned transition.
The Group believes that succession planning is vital to ensure continuity and leadership to help achieve its strategic objectives. The Group has been operating in Myanmar for almost three decades; and has been successfully and gradually migrated from the first-generation leadership to the currently second-generation leadership over the past 10 years. In planning for succession, talent is constantly identified internally and externally to build strength and to serve as a pipeline for leadership succession planning. The Group has internally implemented a five year “work yourself out of a job” initiative which is a process that current leaders pursue higher and bigger scope of business while continuously giving rooms for young leaders to take up higher level of management roles. The Group also believes that the Group’s today success is driven by the depth and breathe of its leadership. Henceforth, the Group conducts an on-going six-month long “Leading the Yoma Way” leadership development programme where its senior executives and managers biannually identify prospective candidates across all business entities and train them to be future executives to succeed them in their roles.
Furthermore, every year, the Group has been consistently selecting a range of promising middle management level leaders across the Group and sending them as delegates to the DeBoer Fellowship for an intensive year of personal and professional development. In 2018, the Group also hosted Global Institute for Tomorrow (GIFT) on a four-day thinktank programme, where qualified candidates in Management and leading roles in their respective business functions were nominated to find solutions for the barriers on how new technologies could be employed to improve the living of the unbanked population.
Board Evaluation Process & Criteria
The Independent Director together with the NC reserves their right to review the Board evaluation goals and update these goals if required, to ascertain the appropriateness in accordance with the needs of the Company.
Amongst the evaluation parameters of the Board review include:
- Composition of the Board (consisting a mix of competencies, varying experience, financial industry experience, risk management and remuneration expertise, qualification, diversity and transparency in the process of director search and appointment);
- Time commitment of the Board (assess the time commitment of directors who have multiple directorships and principal commitment to ensure each director devotes sufficient times to discharge his responsibilities)
- Structure of Board meetings (meetings held quarterly, number of meetings sufficient to meet commercial needs, the logistics and agenda, quality of the Board package, sufficient time allotted for each discussion, adequate inputs received from all Board members, the environment of the meeting to encourage free flowing discussions and debates without fear or fervor, dissenting suggestions are welcomed and the Board minutes are recorded properly and approved);
- Governance of the Board (that the Board allocates adequate time to analyse and examine governance and compliance matters, including appropriate adjustments, ensuring the integrity of the Company’s accounting and financial reporting and systems, timely disclosures, reviewing of high risks issues and risk assessment)
- Stakeholder value (Board decision-making is adequate to assess creation of stakeholder value, existence of mechanisms to communicate and engage with various stakeholders, Board acting on a fully informed basis, in good faith with due diligence and care, shareholders and stakeholders are treated fairly
- Board engagement with Management (Management is evaluated and monitored by the Board, review of remuneration of Management, and the Board and the Management have active access to each other and exchange of information)
- Board training (adequate orientation and professional development training is observed, continuing directors training, Board setting up a corporate culture and value, independent and non-executive directors)
- Board Evaluation (recommend the process and criteria for assessing the effectiveness of the board and board committee, and the contribution of each individual director to the effectiveness of the board)
The Independent Director will additionally provide his review annually on: (i) the performance of the Board as a whole; and (ii) assess the quality, quantity and timelines of information flow and dissemination between the Management and Board, that enables the Board to effectively and reasonably perform its duties. The Independent Director is entitled to ask for any information necessary for it to discharge its responsibilities. This can include, for instance, comprehensive information on the background of directors and checklists completed by directors declaring their independence.
SECTION 2 – REMUNERATION MATTERS
RC Composition and Role
U Myat Thin Aung (Chairman)
Prof Dr. Yi Yi Myint1 (Member)
U Kyi Aye (Member)
The RC is appointed by the Board from amongst the members of the Board. It comprises Non-Executive Directors only. The RC considers and makes recommendations to the Board concerning the Company’s remuneration policy, level and mix of remuneration and procedure for setting remuneration. The RC ensures that remuneration arrangements support the overall strategic goals of the Company and enable the recruitment, retention and motivation of Directors and senior management personnel while also complying with the requirements of rules and regulation.
The RC ensures that the level and structure of remuneration offered will be appropriate to the responsibilities undertaken and the level of contribution to the Company. The RC also takes into consideration of factors like the industry and comparable company standards, the Company’s performance, and the individual performance. The RC covers all aspects of remuneration including but not limited to Directors’ fees, salaries, allowances, bonuses, options, share-based incentives and awards, and benefits in kind to successfully manage the Company. Please refer to the Company’s Corporate Governance Manual for the detailed duties of the RC.
Remuneration of the top-earning Executives and Non-Executive Directors
FMI strives to remunerate its Executive Directors and Non-Executive Directors from the Board in a fair, consistent and competitive manner to match with the responsibilities they are charged with. The Company ensures that these packages are competitive in quality and value against market rates.
The renumeration structure of the Company for Executive Directors is based on the following components:
- Fixed salary
- Variable Component or Bonuses
- Benefits-in-kind including shares award as per the Company’s share scheme allowances, and other incentives.
Disclosure on Directors’ Remuneration
Band & Name of Director
|Base/Fixed Salary||Variable Component Or Bonuses (%)||Benefits-in-kind,|
Allowance And Other Incentives
|MMK 250 Million – MMK 520 Million|
Daw Zarchi Tin
|MMK 140 Million – MMK 250 Million|
U Theim Wai @ Serge Pun
U Tun Tun
1 Retired from FMI’s Board on 17 February 2020
Disclosure on Non-Executive Directors’ Remuneration Structure
|Fee (MMK)||Other Benefits|
|Basic Retainer Fee|
|Fee For Appointment to ARMC|
|Fee for Appointment to NC AND RC|
The level and mix of each of the Executive Directors’ and Non-Executive Directors’ remuneration structures for FYE 30 Sep 2019 are set above.
SECTION 3 – ACCOUNTABILITY AND AUDIT
ARMC Composition and Role
U Kyi Aye (Chairman)
Prof. Dr. Yi Yi Myint 1 (Member)
U Than Aung (Member)
The ARMC is appointed by the Board from amongst the members of the Board. It comprises Non-Executive Directors only. The ARMC plays a key role in assisting the board in areas such as independent advice, assurance, and assistance to the Board on the Company’s risk, compliance, control, governance framework, and its external accountability responsibilities including in relation to financial statements. The ARMC reviews the half-yearly and annual financial statements of the Company before submission to the Board for approval, focusing in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, compliance with accounting standards as well as compliance with any stock exchange and statutory/regulatory requirements.
The ARMC directs and works with the Management to develop and review policies and processes to address and manage identified areas of risk in a systematic and structured manner in achieving the Board’s strategic objectives. The ARMC also oversees and advises the Board on the current risk exposures and future risk strategy of the Company. Under the Company’s constitution, the ARMC generally undertakes such other functions and duties as may be required by statute or the relevant securities rules, and the Board by such amendments made thereto from time to time and require the attention of the ARMC. Please refer to the Company’s Corporate Governance Manual for the detailed duties of the ARMC.
Accountability of Board and Management
The Board is ultimately accountable to shareholders regarding the management of the Company’s affairs. The Management recognizes the importance of providing the Board with timely and accurate information and keeps the Board informed of any material developments. This ensures that the Board has the proper information to make informed decisions on the Company’s behalf. The Board reviews and approves the Company’s annual financial statements before they are released; and aims to provide shareholders with a balanced and clear assessment of the Company’s financial position.
The Board reviews all decisions that may have a material impact on the Company’s financial position or earnings. In addition, the Board recommends the declaration of dividends for approval by shareholders, and approves the publishing of the financial statements, the acquisition or disposal of key assets and the nomination of Directors. The Board’s advice is sought on all key financial decisions, strategies, and projects with special attention given to the Board’s opinion on the impact of the Management’s decisions on the local community.
Risk-based internal audit is one of the main functions carried out by the Group’s Risk Management to help the businesses accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes through the Enterprise Risk Management Framework, outlined as follows:
- identification of potential risks inherent within the Group and external risks which the Group faces in the pursuit of its corporate objectives;
- assessing and rating all the identified risks in a meaningful way in order for the Group to determine the extent of risks that it faces;
- treating all identified risks, as far as possible, through established controls or pending control plans;
- monitoring and updating any changes to the severity of the identified risks and any new risks that have emerged and;
- reporting key risks and the established controls (or pending controls plans) to the ARMC and the Board regularly.
The Company has engaged Myanmar Vigour & Associates Limited (“Deloitte Myanmar”) as its Independent Auditor to audit the accounts of the Company and all its subsidiaries. The report of the Independent Auditor is set out in the Independent Auditor’s Report section of the FYE 30 Sep 2019 Annual Report. The Company adheres to Section 290: Independence – Audit and Review Engagements by International Ethics Standards Board for Accountants (“IESBA”) that an Independent Auditor shall refrain from providing non-audit advisory works to the same client and its related parties.
Release of Annual Reports
The Company strictly complies with the Securities and Exchange Rules that the Audited Financial Statements and the Annual Reports are released within 90 days from the financial year end with Statement of the Directors that the consolidated financial statements of the Company give a true and fair view of the financial position of the Company. Financial statements, the Company’s Annual Reports, and other price-conscious information are disseminated to shareholders through announcements on the YSX’s website, the Company’s website, press release, and media briefings.
Whistle Blowing Policy
The Group is committed to achieving the highest standards of integrity and accountability within its internal structure. With this in mind, the Company has developed these Procedures for reporting improprieties (the “Policy”) where all employees (the “Employees”) with serious concerns about the Company’s activities and operations may come forward and voice these concerns with the assurance that swift action will be taken if necessary.
This Policy is a clear and unambiguous statement of the Company’s commitment that any impropriety by the Company or any of its employees, Directors, or Officers, once identified and reported, will be dealt with in an expeditious manner and thoroughly investigated and subsequently remedied. In fact, this Policy intends to empower Employees to raise potentially serious concerns within the Company rather than letting them escalate or possibly seeking alternative externally. The Company will also use its best endeavors to explore and implement policies to ensure that such impropriety can be prevented in the future. In the event that the whistle-blowing reports involve any Director, member of the senior management or the Non-executive Director, the reports shall be escalated to the Chairman of Board, for his attention and further action as necessary.
The reporting mechanism invites and encourages all Employees to act responsibly and impartially to uphold the reputation of the Company and maintain public confidence in it. Nurturing and developing a culture of openness and transparency within the organization will further aid and expedite this process. Further background to this Policy and reporting mechanisms are explained on the Company’s website.
Related Party Transactions
It is the Company’s policy that any transaction with a related party (“RP”) will be at arm’s length and on terms generally available to an unaffiliated third party under the same or similar circumstances. The ARMC shall oversee and review the propriety of related party transactions (“RPTs”) and their reporting disclosures.
RPTs can present a potential or actual conflict of interest which may be against the best interest of the Company and its shareholders. The Company has formulated guidelines for identification of related parties and the proper conduct and documentation of all related party transactions
The objective of this Policy is to set out (a) the materiality thresholds for RPTs and; (b) ensure proper approval, disclosure and reporting of such transactions as applicable under the law/regulations, between the Company and any of its RP in the best interest of the Company and its stakeholders. 2
The Group instils and promotes a risk management culture to allow prudent risk-based decision-making by embedding core values, principles, compliance and dynamic internal control systems in its day-to-day operations. Ongoing communication, education, monitoring and mitigation are an integral part of the Group’s dynamic risk management culture and is adopted across all its business activities.
Investment assessments and due diligence exercises are carried out periodically on prospective business opportunities to ensure that potential financial, operational and strategic risks are identified and mitigated prior to commitment. In addition, Fraud Risk Assessment is conducted across the Group as part of the Annual Internal Audit Programme to ensure consistency with the Group’s commitment to anti-corruption.
Enterprise risk assessments are carried out as and when necessary, to validate the existence and effectiveness of the controls in place, review the changes in risk profile, and update the existing controls if required.
Risk Management Framework provides a sound system of risk management and internal control, and is underpinned by a strong foundation of the Group’s strong corporate governance culture, supported by five pillars of management control system being: Policies Procedures, Internal External Audits, Due Diligence Reviews, Compliance Monitoring Reporting and Enterprise Risk Assessments, all of which are overseen by the ARMC and the Board.
Monitoring and Reporting Risks
The risks and the adequacy and effectiveness of mitigating controls identified are closely monitored and validated as part of Enterprise Risk Assessment, all of which are registered on the enterprise risk register for ongoing review and follow up. The ARMC oversees how Management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the Risk Management in relation to the risks faced by the Company.
Any existing or new risks that are identified as posing a high risk to the Company, or which exceeds the risk tolerance level of the company, or requires immediate corrective actions, will be reported to the senior management and ARMC as soon as practicable.
1 Retired from FMI’s Board on 17 February 2020
2 FMI’s current RPT Policy in Corporate Governance Manual
SECTION 4 – SHAREHOLDER RIGHTS AND ENGAGEMENT
The Company is committed to delivering high standards of corporate disclosure through a transparent and non-discriminatory approach towards its communications with shareholders, the investment community and the media. The Company has in place a communication system that discloses timely and complete financial data, and price-sensitive information to shareholders. Half-yearly releases of financial results and all other information including Management Discussion and Analysis are promptly announced on the websites of the YSX and the Company at https://fmi.com.mm/investors/announcements/ as soon as there is any changes. Press releases and analyst briefings are conducted whenever there is significant development, with the presence of key executives. The Company’s latest financial results, annual reports, and presentation materials for briefings are available on these websites for chronological review. There is also a specific webpage dedicated for investor relations with the Company’s share and financial information, which are disclosed on a timely manner. The contact details of the Company’s Investor Relations and general queries is as follows:
Conduct of General Meetings
The Company endorses active shareholder participation at its general meetings. Notices of AGM and related information are delivered at least twenty-eight (28) days in advance. Detailed information of each item to be processed during the AGM is supported with explanatory notes and guided instruction via both Burmese and English languages. Notices of AGMs are also advertised in the local daily newspaper, where notice handbooks and Annual Reports are dispatched to shareholders by mail. The general meetings of the Company are held annually at a central location that is convenient for public transportation. Shareholders who are unable to attend the AGM in person are briefed to appoint a proxy to attend and vote on their behalf. Proxy Forms are required to be sent to the registered address of the Company not less than forty-eight (48) hours before the time of the commencements of the AGMs. On a show of hands, every Member present has one vote; and on a poll, every Member present has one vote for each fully paid Share held by that Member. Voting in absentia by mail, facsimile or email is generally not allowed to properly authenticate shareholders’ identity and their voting intention. Each resolution passed during the AGM deals with only one single issue, where results of each AGM are published on the YSX’s and the Company’s websites as soon as the event is adjourned. Shareholders are given the right to participate in decision making in affairs, including but are not limited to share allotment, share issuance, and amendment to the Company’s Constitution. The proceeding of each AGM includes the business presentation delivered by the Executive Chairman and/or the COO to update shareholders on the Company’s overall performance over the past year. Shareholders are also invited to express their opinions and ask questions regarding the Company and the Group. The Directors and key executives in attendance address their concerns and queries responsively.
The Company has implemented a Dividend Policy which aims to provide a return to shareholders once a year through the payment of dividends after taking into consideration the Company’s financial performance, short- and long-term capital requirements, future investment plans, and general business and economic conditions. The determination of dividend payment is at the sole discretion of the Board, which endeavors to maintain a balance between meeting shareholders’ expectations and prudent capital management. The Board will review the Policy from time to time and reserves the right to modify, amend, and update the Policy. In paying out the dividends, all Shareholders should be treated equally and decisions on the declaration and disbursement of dividends shall be made by shareholders at the AGM upon recommendation of the Board. The Board reviewed the Company’s strategic needs and plans for expansion; and recommended no dividend for the FYE 30 Sep 2019.1
1 FMI’s current Dividend Policy from the Corporate Governance Manual
Corporate Values and Conduct of Business
The Company has employed a Code of Conduct (“COC”) for the Group that applies to all members of the Board, Management and employees. The COC sets the minimum standard that all levels of employees are expected to mirror and comply with the spirit and principles of the COC, regardless of the jurisdiction or legal entity through which the Group operates. It also sets out the principles for employees in carrying out their duties and responsibilities to the highest standards of personal and corporate integrity when dealing with the Company’s stakeholders. Measures are taken to ensure full compliance with the COC, and breaches of this COC will result in disciplinary action.1 In observance of the Board’s commitment to maintain high moral standards which are central to the Company’s corporate identity and sustainable growth, the Company has also adopted the following corporate policies:-
- Anti-Bribery Policy
- Anti-Corruption Procedure
- Code of Conduct
- Conflict of Interest Policy
- CSR Approach
- Diversity Policy
- Employment Policy
- Environment, Health and Safety Policy
- Human Rights Policy
- Land Acquisition Policy
- Practice on Reward for the Performance of the Company beyond Short-Term Financial Measures
- Stakeholder Engagement
- Whistle Blowing Policy
1 FMI’s current Code of Conduct. https://cdn.yomastrategic.net/public/fmi/contents/uploads/2018/09/14044952/Code-of-Conduct.pdf
These policies are accessible on the Company’s website at https://fmi.com.mm/governance/corporate-policies/. They prescribe relevant measures and procedures to mitigate the prospect of committing misconducts in the workplace; and require the acknowledgement and cooperation of the Company’s personnel from all levels including external parties representing the Group such as agents and intermediaries, consultants, business partners, and suppliers.
Managing Stakeholder Relationships
Along with other capital market players, the Company strives to enhance the investment atmosphere by engaging its shareholders, investors, and analysts through participating in investor expos, conferences and workshops locally and abroad, as well as continuously interacting with its investment community on social media platforms to communicate its value proposition and to seek investors’ feedback for improvements. Please refer to the “Stakeholder Engagement” session in Company’s Sustainability Report on how the Company manages its stakeholder relationships. The Company values its stakeholders and has pledged its support for the Ten Principles of the United Nations Global Compact. Its attempts to safeguard the wellbeing of its stakeholders are exhibited in the Company’s Sustainability Summary HY2020. Contact details for stakeholder engagement are provided on the Company’s website and Facebook social media. As exhibited in its Corporate Social Responsibility (CSR) Policy, the Company along with the Group, take part in various community projects aiming to create value in the community it operates in.
The Company has policies and programmes in place to strengthen its employee participation and engagement in the workplace. Please refer to the Company’s website on Sustainability Initiatives for more information on these engagement programmes.
In accordance with the Section 55 (a) of the Securities Exchange Law of Myanmar, “any person shall not carry out any securities business without license.” 1 Since the listing of the Company on the YSX in 2016, the Company has been working on transferring all the Special Accounts to Securities Companies to help with the management of securities trading. Annually, the Company is also submitting a list of insiders who has access to price-sensitive and confidential information to the YSX to avoid the possible breaches of insider trading. Internally, the Company has adopted a code of principles on securities dealings that the Company’s Directors, staffs and their family members are required to observe and adhere to for the time being that they are serving the Company, which are:- (a) to observe and comply to insider trading guidelines prescribed by the SECM 2 and to follow Securities Companies’ insiders examining procedures at all times when dealing Company’s shares; (b) to abstain from shares dealing while in possession of undisclosed material facts of the Company; and (c) to avoid selling their shares owned in the Company for the time being that they are serving the Company. All Directors and staffs are also required to report their dealings in the Company’s shares within three (3) business days.
Directors’ Interest in Shares or Debentures
The directors holding office as of FYE 30 Sep 2019 had no interests in the share capital of the Company as recorded in the register of directors’ shareholdings kept by the Company, except as follows:
in name of director
|Shareholdings in which a director is
deemed to have an interest
|Names of directors||At beginning of year or|
date of appointment, if later
|At beginning of year or|
date of appointment, if later
|U Theim Wai @ Serge Pun||9,008,506||9,008,506||8,003,533||8,001,533|
|U Tun Tun||79,500||82,200||-||-|
|U Myat Thin Aung||66,160||66,160||-||-|
|U Than Aung||22,800||22,800||-||-|
|U Linn Myaing||8,610||11,310||-||-|
|Prof. Dr. Yi Yi Myint||6,379||6379||-||-|
|Prof. Dr. Aung Tun Thet||635||635||-||-|
|U Kyi Aye||205||205||-||-|
List of Substantial Shareholders
The table below exhibits the shareholders holding more than 5% of FMI’s shares as of FYE 30 Sep 2019:
|No.||BENEFICIAL OWNER||NUMBER OF SHARES HELD||% HOLDING|
|1||U Theim Wai @ Mr. Serge Pun||9,008,506||33.23%|
|2||Yangon Land Co., Ltd.||8,001,533||29.51%|
Prohibition of Insider Trading
In compliance with the Securities and Exchange Law and the Securities and Exchange Rule issued by Ministry of Finance, and the regulations issued by Securities and Exchange Commission of Myanmar, the Company strictly prohibits insiders such as members of the Board and employees in special positions with undisclosed material information related to business or financial situation of the Company from buying or selling securities for its own account or for other persons, disclosing or providing material information and giving advice to other persons to buy or sell securities based on unpublished material information.
The Board ensures from time to time that internal rules in place are reviewed and developed to prevent insider trading, and employees get the necessary training to protect insider information from accidental disclosures to the public.