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 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 Committee, Nominating Committee and Remuneration Committee (collectively, the “Board Committees”) comprise Non-Executive Directors only.

FMI’s Board forms the core of FMI’s corporate governance practices. The Board leads and oversees the decisions of FMI’s management team (the “Management”) and serves to protect the long-term interests of shareholders and the wider community. FMI believes that an active, well-informed, accountable and independent Board is essential to ensure high standards of corporate governance.

The Company is managed by the Board which leads and controls, and is collectively responsible for overseeing the business and affairs of the Company, and for the long- term success of the FMI Group. The Management remains accountable to the Board where they are responsible for the day-to-day operations and administration of the Company in accordance with the policies and strategy 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 Company’s businesses.

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 Management’s performance
  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.
Role of Chairman – U THEIM WAI @ SERGE PUN

U Theim Wai 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.

As Executive Chairman, he 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 ?ow 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, in particular, strategic issues, and he 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 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.

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 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.

The Board acknowledges the importance of a formal assessment of the Board’s performance and Nominating Committee (NC) adopts a formal system of evaluating the performance of the Board as a whole and its Board Committees, as well as to assess the contributions of each individual Director which had been made during FY2018.

For FY2018, the Board and Board Committees, directors were requested to complete appraisal forms to assess the overall effectiveness of the Board and the Board Committees. The appraisal process took into factors and criteria which would allow the comparison with industry peers and addresses how the Board has enhanced long-term shareholder value. In addition, it also took into account for the Board’s structure, size, composition, conduct of meetings, processes, responsibilities & functions and communication with both Senior Management and shareholders. Completed forms were returned for collation and compilation on a non-attribution basis, so that open and frank feedback and comments can be encouraged.

NC has also made available a process of assessment of the contribution made by each individual Director towards the effectiveness of the Board and the Board Committees, taking into account factors such as the Director’s attendance, participation and contribution at Board and Board Committee meetings. The NC also takes into consideration the feedback from individual Directors on areas relating to the Board and the Board Committee’s competencies and effectiveness. The Executive Chairman will act on the results of the performance evaluation and, in consultation with the NC, propose, where appropriate, new members to be appointed to the Board or seek the resignation of Directors.

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.

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 11 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
U Nyunt Tin
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 19922017Member--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 Tin29 Jul 2016N.AMemberMember--
Prof. Dr. Kyaw Yin Hlaing29 Jul 2016N.AMember--Member

The Composition of the Board as at Oct 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

Remuneration of Non-Executive Directors

 FeeOther Benefits
Basic Retainer Fee
Non-Executive Director10,000,000Nil
Fee for Appointment to Audit 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.

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.

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
Committee Meeting
Nominating
Committee Meeting
Remuneration
Committee Meeting
Annual
General Meeting
Total number of meetings held43221
Executive Directors
U Theim Wai @ Serge Pun 4N.A.N.A.N.A.1
U Tun Tun4N.A.N.A.N.A.1
Daw Zarchi Tin *1N.A.N.A.N.A.1
Non-Executive Directors
U Myat Thin Aung4N.A.N.A.21
U Than Aung4N.A.2N.A.1
Prof. Dr. Yi Yi Myint43N.A.21
Prof. Dr. Aung Tun Thet2N.A.2N.A.1
U Kyi Aye43N.A.21
U Linn Myaing **4N.A.N.A.N.A.1
U Nyunt Tin43N.A.N.A.1
Prof. Dr. Kyaw Yin Hlaing2N.A.1N.A.1

Directors’ Attendance during period Apr 2017 – Oct 2018
* 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

The FMI 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 FMI Group’s dynamic risk management culture and is adopted across all its businesses.

Investment assessments and due diligence exercises are carried out 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 anti-corruption commitment. Half yearly and annual enterprise risk assessments are carried out 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 FMI 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 Audit Committee and the Board.

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 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 Committee as soon as practicable.

Risk-based internal audit is one of the main functions carried out by Group Risk Management to help the businesses to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes through:

  1. identification of potential risks inherent within the FMI Group and external risks which the FMI Group faces in the pursuit of its corporate objectives
  2. assessing and rating all the identified risks in a meaningful way in order for the FMI Group to determine the extent of risks that it faces
  3. treating all identified risks, as far as possible, through established controls or pending control plans
  4. monitoring and updating any changes to the severity of the identified risks and any new risks that have emerged and
  5. reporting key risks and the established controls (or pending controls plans) to the Audit Committee and the Board regularly.

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%

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.