The Group is committed to good corporate governance and managing its affairs in a fair and transparent manner to create long-term sustainable value for the Company’s shareholders and the wider community through ethical and responsible business practices. This report describes the Company’s Corporate Governance Framework, Policies, Procedures and Standards (collectively the “Code”) adopted by the Group during FY2019.

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

FMI Governance Structure

FMI Board

There is a clear separation of roles and responsibilities in the Board so that no one individual represents a considerable concentration of power. The Audit and Risk Management Committee (“ARMC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”, and collectively, the “Board Committees”) comprise Non-Executive Directors only.

The Group believes that an active, well-informed and accountable Board is essential to uphold high standards of corporate governance.

The principal functions of the Board include:

  1. 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;
  2. 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;
  3. reviewing the performance of the FMI’s management team (the “Management”)
  4. identifying the key stakeholder groups and recognising that their perceptions affect the Company’s reputation;
  5. setting the Company’s values and standards (including ethical standards);
  6. ensuring that obligations to shareholders and other stakeholders are understood and met; and
  7. considering sustainability issues, such as environmental and social factors, as part of its strategic formulation.

The Board undertakes the responsibility of overseeing the corporate performance of the Company and is accountable to shareholders for the processes and structure of directing and managing the business and affairs of the Company. The Management remains accountable to the Board, and is responsible for the day-to-day operations and administration of the Company in accordance with the policies and strategies set by the Board. In support of this, the Board has established a framework of effective risk management that allows it to assess and manage the risks associated with the Company’s businesses.

The Management recognises the importance of providing the Board with timely and accurate information and keeps the Board informed of any material developments. The Board reviews and approves the Company’s annual financial statements 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 also 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.

U Theim Wai is the Executive Chairman of the Company.

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

The Executive Chairman bears primary responsibility for the workings of the Board by ensuring effectiveness in all aspects of its role, including setting the agenda for Board meetings with input from Management and 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. To promote a culture of openness and debate at the Board, he ensures that adequate time is available for discussion of all agenda items and strategic issues, and also facilitates the effective contribution of Non-Executive Directors. At the AGM and other shareholder meetings, he plays a pivotal role in fostering constructive dialogue between shareholders, the Board and Management.

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 Group’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 Management 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

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 20092018MemberMemberMember-
Prof. Dr. Aung Tun Thet3 Dec 20132018Member--Chairman
U Kyi Aye5 Nov 20152016MemberChairmanMember-
U Linn Myaing**2 Jul 20122018Member---
U Nyunt Tin***29 Jul 2016N.AMemberMember--
Prof. Dr. Kyaw Yin Hlaing****29 Jul 2016N.AMember--Member

The composition of the Board during FY2019 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.
**** Prof. Dr. Kyaw Yin Hlaing resigned from the Board with effect from May 2019.

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.N.A.N.A.
Prof. Dr. Kyaw Yin Hlaing ****2N.A.1N.A.11

Directors’ Attendance for FY2019 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.
**** Prof. Dr. Kyaw Yin Hlaing resigned from the Board with the effect from May 2019.

Remuneration of Executive Directors

Remuneration
Band & Name of Director
Base/Fixed SalaryVariable Component Or Bonuses (%)Benefits-in-kind, Allowance And
Other Incentives
Total
PaidDeferred
Executive Directors
MMK 60 Million – MMK 520 Million
U Theim Wai @ Serge Pun
-80%-20%100%
MMK 20 Million – MMK 100 Million
U Tun Tun
Daw Zarchi Tin
100%
100%
-
-
-
-
-
-
100%
100%

The level and mix of each of the Executive Directors’ remuneration for FY2019 are set out above.

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 FY2019.

SHAREHOLDERS HAVING MORE THAN 5% INTEREST

As of 29 Aug 2018

NAMES OF SHAREHOLDERSHAREHOLDING INTERESTS
No.%
THEIM WAI @ SERGE PUN9,008,50633.23%
YANGON LAND CO., LTD.8,001,53329.51%

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

The Company has engaged Myanmar Vigour & Associates Limited (“Deloitte Myanmar”) 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 FY2019 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