Good corporate governance is one of FMI’s foundational principles. The Company seeks to manage its affairs in a fair and transparent manner, to create long-term sustainable value for its shareholders and to the wider community through ethical and responsible business practices. This report describes the corporate governance practices that were in place during FY2018. We believe that it is the Company’s inherent responsibility to disclose timely and accurate information to shareholders to allow them to make informed investment decisions, and as such, FMI is constantly looking for ways to improve and incorporate international best practices into its corporate governance system.

Myanmar‘s
Most Transparent Company
FMI ranked #1
on Pwint Thit Sa Report
for 2 years straight.

FMI has acceded to the
UN Global Compact
since November 2012 and is committed
to promote global corporate responsibility
with 10 guiding principles

Myanmar Employer Award
The Best Local Myanmar Employer
of the Year

Yoma Bank (2017)

FMI Governance Structure

FMI Board

FMI is a holding company with designated CEOs responsible for its subsidiaries, supported by Group Corporate Governance Framework, Policies, Procedures, and Standards. There is a clear separation of roles and responsibilities in FMI’s Board so that no one individual represents a considerable concentration of power. The Audit and Risk Management Committee, Nominating Committee and Remuneration Committee (collectively, the “Board Committees”) comprise Non-Executive Directors only.

The Board is ultimately accountable to shareholders regarding the management of the Company’s affairs. The Management recognises the importance of providing the Board with timely and accurate information, and seeks to keep 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 approves the declaration of dividends, 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.

Other key duties and responsibilities of the Board include:

  1. provide entrepreneurial leadership, set strategic objectives, and ensure that the necessary financial and human resources are in place for the Company to meet its objectives;
  2. establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders’ interests and the Company’s assets;
  3. review management performance;
  4. identify the key stakeholder groups and recognise that their perceptions affect the Company’s reputation;
  5. set the Company’s vision, mission, values, standards, policies and practices (including ethical standards), and ensure that obligations to shareholders and other stakeholders are understood and met; and
  6. consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.

The Chairman of the Board plays an instrumental role in providing the Company with strong leadership and vision, assisting the Board to develop policies and strategies and ensuring that these are implemented effectively, as well as to promote high standards of corporate governance.

The duties and responsibilities of the Chairman include:

  1. lead the Board to ensure effectiveness on all aspects of its role
  2. ensure Board members receive all information necessary for them to perform their duties
  3. ensure the Board has sufficient time for consultation and decision-making
  4. determine the agenda of Board meetings, chair such meetings and ensure that minutes are kept of such meetings
  5. promote a culture of openness and debate at the Board
  6. ensure the Board and committees function properly
  7. ensure Board members have full opportunity to provide their views and opinions on Board matters and issues are discussed and vetted fully prior to taking decision
  8. ensure the Board of Directors has proper contact with the management team
  9. ensure the Board of Directors satisfies its duties
  10. consult with external advisors appointed by the Board of Directors
  11. address problems related to the performance of individual Board members
  12. address internal disputes and conflicts of interest concerning individual Board members and the possible resignation of such members as a result
  13. promote a high standard of corporate governance

The Audit and Risk Management Committee (ARMC) shall be appointed by the Board of Directors from amongst the members of the Board. The committee provides 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. Under the Company’s constitution, the ARMC being a committee of the Board shall conform to any regulations which may be from time to time imposed on it by the Board.

The duties of the ARMC include the following:

  1. review with the external auditor the audit plan, their evaluation of the system of internal accounting controls and risk management, their audit report, their management letter and the management’s response;
  2. review the half-yearly and annual financial statements of the Group 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;
  3. review the internal controls and procedures and ensure co-ordination between the external auditor and the management, review the assistance given by management to the external auditor and discuss problems and concerns, if any, arising from the audits, and any matters which the external auditor may wish to discuss;
  4. review and discuss with the external auditor any suspected fraud or irregularity, or if applicable, suspected infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Company’s operating results or financial position, and the management’s response;
  5. consider the appointment or re-appointment of the external auditor, the audit fee, and matters relating to the resignation or dismissal of the external auditor;
  6. review transactions falling within the scope of interested person transactions, related party transactions in accordance with the Company’s Related Party Transactions Policy and Securities and Exchange Rules, and in particular matters pertaining to acquisitions and realisations;
  7. review transactions as potential conflicts of interest;
  8. review the adequacy and structure of the finance function on an on-going basis and take appropriate remedial actions as may be necessary;
  9. monitor and review the Group’s control of cash and banking procedures;
  10. undertake such other reviews and projects as may be requested by the Board and report to the board its findings from time to time on matters arising and requiring the attention of the ARMC;
  11. to review whether the weaknesses as identified by the external auditors have been fully addressed;
  12. to review with the management on the areas of risk that may affect the Group’s operations and the risk mitigation efforts;
  13. direct and work with the management to develop and review policies and processes to address and manage identified areas of risk in a systematic and structured manner;
  14. to determine and recommend to the Board for its approval, the nature and extent of significant risks in achieving the Board’s strategic objectives. In particular, the ARMC should determine the company’s levels of risk tolerance and risk policies, and oversee Management in the design, implementation and monitoring of the risk management and internal control systems. The ARMC should also oversee and advise the Board on the current risk exposures and future risk strategy of the Company.
  15. to review and implement the Company‘s policies, arrangements and procedures for reporting and detecting fraud and improprieties in matters of financial reporting or other matters;
  16. make recommendations to the Board in relation to business risks that may affect the Group, as and when these risks may arise; and
  17. generally undertake such other functions and duties as may be required by statute or the relevant securities rules, and by such amendments made thereto from time to time.

The Remuneration Committee shall be appointed by the Board of Directors from amongst the members of the Board. The committee will ensure that remuneration arrangements support the overall strategic goals of the Company and enable the recruitment, retention and motivation of senior executives while also complying with the requirements of rules and regulation.

The duties of the RC include the following:

  1. To consider and make recommendations to the Board concerning the Company’s remuneration policy, level and mix of remuneration and procedure for setting remuneration.
  2. To review and recommend to the Board a general framework of remuneration for the Board and key management personnel (i.e. persons having authority and responsibility for planning, directing and controlling the activities of the Company). A significant and appropriate proportion of executive directors and key management personnel’s remuneration should be structured so as to link rewards to corporate and individual performance. Such performance-related remuneration should be aligned with the interests of shareholders and promote the long-term success of the Company. It should take account of the risk policies of the Company, be symmetric with risk outcomes and be sensitive to the time horizon of risks. There should be appropriate and meaningful measures for the purpose of assessing the performance of executive directors and key management personnel.
  3. To review and recommend to the Board the specific remuneration packages for each director as well as for the key management personnel. The RC should cover all aspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonuses, options, share-based incentives and awards, and benefits in kind. Short-term and long-term incentive schemes should be made subject to appropriate and justifiable performance conditions.
  4. To ensure that the level and structure of remuneration offered will be:
    1. appropriate to the responsibilities undertaken and the level of contribution to the Company; and after taking into account factors like the industry and comparable company standards, the Company’s performance and the individual performance;
    2. aligned with the long-term interest and risk policies of the Company;
    3. appropriate to attract, retain and motivate (i) the directors to provide good stewardship of the Company, and (ii) key management personnel to successfully manage the Company.
  5. To review the company’s obligations arising in the event of termination of the executive directors and key management personnel’s contracts of service, to ensure that such contracts of service contain fair and reasonable termination clauses which are not overly generous. The RC should aim to be fair and avoid rewarding poor performance.

The Nominating Committee 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 of creating a diverse Board comprised of individuals with experience in finance, business, government, and education. Any appointment or removal of a Director is subject to approval from the entire Board.

The Company is strongly committed to fostering diversity and inclusion on its Board, leveraging on the collective strength of its members who passes 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 duties of the NC include the following:

  1. 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 regard to any changes.
  2. keep under review the leadership needs of the Company, both executive and non-executive, with a view to ensuring the continued ability of the Company to compete effectively in the marketplace.
  3. keep up to date and fully informed about strategic issues and commercial changes affecting the company and the market in which it operates.
  4. to develop and maintain a formal and transparent process for the appointment and re-appointment of directors to the Board. The process for the appointment of new directors should include an evaluation of his/her capabilities and how the new director will fit in the overall competency of the Board.
  5. to make recommendations to the Board on relevant matters relating to:
    1. membership of the Audit and Risk Management Committee and the Remuneration Committee, and any other board committees as appropriate, in consultation with the chairmen of those committees;
    2. all Board appointments and shall ensure that the process of board appointment is transparent;
    3. the appointment and re-appointment of directors (including alternate directors, if applicable), having due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required and the need for progressive refreshing of the Board (particularly in relation to directors being re-elected for a term beyond six (6) years), including, if applicable, as an independent director;
    4. any matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the company subject to the provisions of the law and their service contract; and
    5. the appointment of any director to executive or such other office.
  6. to develop and maintain a process for the selection, appointment and re-appointment of directors, having regard to the composition and progressive renewal of the Board and each director’s competencies, commitment, contribution and performance (e.g. attendance, preparedness, participation, candor and any other salient factors), including, if applicable, as an independent director. All proposed appointees should be required to disclose any other business interests that may result in a conflict of interest and/or report any future business interests that could result in a conflict of interest.
  7. to ensure all directors submit themselves for re-nomination and re-appointment at regular intervals and at least once every three (3) years.
  8. to determine annually, and as and when circumstances require, whether a director is independent in character and judgment and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director’s judgment.

With Non-Executive Directors in the majority, the Board maintains a strong independence. The Non-Executive members of the Board bring a diverse set of experiences and opinions that help to create an environment of independent thinking. Any decision involving an Executive Director or company related to an Executive Director is made with the concerned Executive Director abstaining from voting and not participating in deliberations. This ensures that Board decisions are made in accordance with the interests of all stakeholders and that no individual dominates the Board’s decisions.

The Board may consider a Director as Independent if he/she:

  1. is not, and has not, been employed by the Company or any of its related corporations for the current or any of the past three (3) financial years;
  2. does not have an immediate family member who is, or has been in any of the past three (3) financial years, employed by the Company or any of its subsidiaries and whose remuneration is determined by the remuneration committee;
  3. has not served for an aggregate period of more than nine (9) years on the Board (whether before or after listing) and whose continued appointment as an independent director has been sought and approved in separate resolutions by (A) all shareholders and (B) all shareholders, excluding shareholders who also serve as the directors or the chief executive officer of the Company, and associates of such directors and chief executive officer;
  4. is not a shareholder holding 5% or more shares of the Company or any of its subsidiaries;
  5. is and was not a shareholder holding 5% or more shares of any organization to which the Company or any of its subsidiaries made, or from which the Company or any of its subsidiaries received, significant payments or material services, in the current or immediate past financial year; and
  6. does not receive, and has not received, any remuneration from the Company or any of its subsidiaries for the current or immediate past financial year, other than compensation for his services as a Director.

The Company conducts an induction programme for newly appointed Directors which seeks to familiarise Directors with the FMI Group’s businesses, board processes, internal controls and governance practices. It includes site visits, Management presentations on the FMI Group’s businesses, strategic plans and objectives, meetings with key management personnel and briefings on key areas of the Company’s operation.

FMI’s Directors attending Directors and Officers Duties under the new Myanmar Companies Law Training delivered by Baker & McKensie on Sept 18th, 2018

Directors are encouraged to attend seminars, 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.

The Board comprises 10 Directors. A majority of the Board is independent, with seven Non-Executive Directors and three Executive Directors. The Non-Executive Directors bring strong backgrounds in entrepreneurship, finance and academia which allows for effective decision making. With highly respected members of the community as Board members, the Company benefits from a diverse range of objective perspectives.

The Directors that serve the Company are:

Executive Directors

U Theim Wai @ Serge Pun
U Tun Tun
Daw Zarchi Tin

Non-Executive Directors

U Myat Thin Aung
U Than Aung
Prof. Dr. Yi Yi Myint
Prof. Dr. Aung Tun Thet
U Kyi Aye
U Linn Myaing
Prof. Dr. Kyaw Yin Hlaing

FMI Governance

All Directors are encouraged to voice their views on the Management’s decisions and share opinions during Board meetings. The Board seeks to create a receptive environment where perspectives can be voiced openly. Having the benefit of outside perspectives and experiences, Non-Executive Directors are especially encouraged to speak their minds to ensure the Company’s decisions accurately account for different interests. Non-Executive Directors may also meet and communicate outside of Board meetings in order to discuss Company matters in an independent setting.

Composition of the Board and Board Committees

NameDate of First AppointmentLast – Re-electionBoardARMCRCNC
U Theim Wai @ Serge Pun 12 Sep 20042016Chairman---
U Tun Tun17 Nov 20092017Member---
Daw Zarchi Tin*1 Jul 20182018Member---
U Myat Thin Aung31 Jul 19922017Member-Chairman-
U Than Aung31 Jul 19922017MemberMember-Member
Prof. Dr. Yi Yi Myint17 Nov 20092015MemberMemberMember-
Prof. Dr. Aung Tun Thet3 Dec 20132015Member--Chairman
U Kyi Aye5 Nov 20152016MemberChairmanMember-
U Linn Myaing**2 Jul 20122015Member---
U Nyunt Tin***29 Jul 2016N.AMemberMember--
Prof. Dr. Kyaw Yin Hlaing29 Jul 2016N.AMember--Member

The Composition of the Board as at December 2018 is set out above
*Daw Zarchi Tin was appointed as a new Board member with effect from July 2018
**U Linn Myaing was re-designated from Executive Director to Non-Executive Director with effect from July 2018
***U Nyunt Tin resigned from the Board with effect from November 2018

Remuneration of Non-Executive Directors

 FeeOther Benefits
Basic Retainer Fee
Non-Executive Director10,000,000Nil
Fee for Appointment to Audit and Risk Management Committee
Committee Chairman2,000,000Nil
Committee Member1,000,000Nil
Fee for Appointment to Nominating Committee and Remuneration Committee
Committee Chairman1,500,000Nil
Committee Member1,000,000Nil

The fee structure of the Non- Executive Directors for FY 2018.

Dates for Board meetings are communicated to all Directors in advance. Meetings are convened when material developments in the Company’s affairs are likely to occur, and meetings are held at the Company’s registered office. All materials required for proper consideration of issues affecting the Company are sent to Directors in advance to allow them to carefully consider the proper course of action. The Board meets to decide the date on the Annual General Meeting and Board Committees usually meet before the formal Board meeting, or whenever the need arises. The recommendations of the Board Committees are placed before the Board for approval.

Board Attendance of Meetings

 Board MeetingAudit & Risk Management
Committee Meeting
Nominating
Committee Meeting
Remuneration
Committee Meeting
Annual
General Meeting
Special
General Meeting
Total number of meetings held421111
Executive Directors
U Theim Wai @ Serge Pun 4N.A.N.A.N.A.11
U Tun Tun4N.A.N.A.N.A.11
Daw Zarchi Tin *3N.A.N.A.N.A.11
Non-Executive Directors
U Myat Thin Aung4N.A.N.A.111
U Than Aung4N.A.1N.A.11
Prof. Dr. Yi Yi Myint42N.A.111
Prof. Dr. Aung Tun Thet3N.A.1N.A.11
U Kyi Aye42N.A.111
U Linn Myaing **4N.A.N.A.N.A.11
U Nyunt Tin***11N.A.N.A.11
Prof. Dr. Kyaw Yin Hlaing2N.A.1N.A.11

Directors’ Attendance during period April 2018 – March 2019
*Daw Zarchi Tin was appointed as a new Board member with effect from July 2018
**U Linn Myaing was re-designated from Executive Director to Non-Executive Director with effect from July 2018
***U Nyunt Tin resigned from the Board with effect from November 2018

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 Audit and Risk Management Committee oversees how management monitors compliance with the FMI Group’s risk management policies and procedures, and reviews the adequacy of the Risk Management Framework in relation to the risks faced by the FMI Group.

Any existing or new risks that are identified as posing a high risk to the FMI Group, or which exceeds the risk tolerance level of the FMI Group, or requires immediate corrective actions, will be reported to the senior management and Audit and Risk Management Committee as soon as practicable.

SHAREHOLDERS HAVING MORE THAN 5% INTEREST

As of 29 Aug 2018

NAMES OF SHAREHOLDERSHAREHOLDING INTERESTS
No.%
THEIM WAI @ SERGE PUN9,008,50633.22%
YANGON LAND CO., LTD.8,001,89329.51%

*No other Board member and senior executive holds more than 5% of FMI shareholdings.

The Company has engaged Myanmar Vigour & Associates Limited as its external auditor, to audit the accounts of the Company and all its subsidiaries.The report of the external auditor is set out in the Independent Auditor’s Report section of the FY2018 Annual Report.

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.

Corporate Governance Manual

As of Nov 2018