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 (the “CG 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 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. The next review and revision are scheduled in financial year ending 31 March 2023.
Ranked #5 in the Pwint Thit Sa
(Transparency in Myanmar Enterprises)
Report 2020 (Ranked #1 among the listed companies)
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 key management personnel (the “Management”) remains accountable for day-to-day operations and administration of the Company, in accordance with the policies and strategies set by the Board. The Company has designated Chief Executive Officers (“CEOs”) for subsidiaries, who are responsible for their respective business units, whereby the CEOs will replicate the Board’s policies and strategies at the operations level. In support of this, the Company’s Board Committees (as defined below) have also been set up to ensure that there are reviews and checks and balances. In doing so, a framework of effective risk management is established, allowing for better assessment of the Group’s businesses.
Principal Duties of the Board
- to provide entrepreneurial leadership, and review and guide corporate strategies, annual budgets and business plans, giving consideration to long-term sustainable business growth;
- to set the Company’s vision, mission, goals, values, standards, strategies, policies and practices (including ethical standards), and to ensure that obligations to shareholders and other stakeholders are understood and met;
- to set strategic objectives and ensure that the necessary financial and human resources are in place for the Company to meet its objectives;
- to 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;
- to oversee the internal control system including risk management policies and procedures to monitor and manage potential conflicts of interest;
- to ensure the integrity of the Company’s accounting and financial reporting systems are compliant with the law and relevant standards;
- to review the Management’s performance annually;
- to identify the key stakeholder groups and recognize that their perceptions affect the Company’s reputation; and to oversee the process of communications to engage with stakeholders;
- to consider sustainability issues, such as environmental and social factors, as part of its strategic formulation;
- to promote a high standard of corporate governance by ensuring timely and accurate disclosure on all material events regarding the Company;
- to strategize sound succession planning programmes for Directors and the Management are in place, and to create 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;
- to ensure that every Director constantly keeps himself/herself apprised with the latest issues by attending relevant training.
- to ensure that all related party transactions (“RPTs”) and Material RPTs are handled in a prudent manner, with integrity and at arm’s length and are reasonable in the circumstances, and in compliance with applicable laws and regulations to protect the interests of the Company’s shareholders and other stakeholders; and
- to ensure that all RPTs and Material RPTs be disclosed in a timely manner and be approved by the Board; and any Director who has a potential interest in the concerned RPT shall abstain from voting on the said matter.
Board’s Guidance during the Ongoing COVID-19 Pandemic and the Uncertain Economic and Business Environment in Myanmar
Since 1 February 2021, economic and business activities and trade have been severely impacted by reduced mobility and disruptions to essential services, including banking, healthcare, energy, logistics and internet services, and withdrawn foreign direct investments from Myanmar. The consequences from this event triggered an already testing macroeconomic environment caused by COVID-19, which resulted in a significant adverse impact on the revenue and profits of the Group. The Board has spent an immense amount of time reviewing the major impacts on the Group’s business operations, its financial resources, and the overall wellbeing of its employees.
Cost Control Measures
Under the guidance of the Board, the Group responded conscientiously to the current environment with a sequence of cost control measures, such as reducing: –
- Non-staff operating costs and overheads; and
- Staff costs by more than 60% through a cut to its workforce, unpaid leave, hiring freeze, and a retrenchment of its corporate and business functions.
The Board and the Group’s Chief Operating Officer have voluntarily extended 25% and 50% reduction respectively in their remuneration for FY Mar-2022. Moreover, the Group’s Executive Chairman also voluntarily waived his incentive bonus for FY Mar-2022.
The Board has made special consideration on the financial condition of the Group. The main objective of the Board was to make sure that the Group has sufficient resources and liquidity to run day-to-day operations and maintain vitality. This involved the Group taking the Cost Control Measures from the above and implementing the following schemes: –
- Discontinuance and postponement of most capital investment;
- Reduction of inventory and monetization of property, plant, and equipment; and
- Discussions with lenders on deferring principal and interest payment schedules in order to preserve cash and retain a good liquidity ratio.
Revamping and Reinforcing the Existing Business
Together with the Management of each business unit under the Group, the Management has re-assessed potential opportunities arising from the current macro environment and brainstormed ways to revamp the existing business units to stay competitive and sustainable, along with finding new strategies to re-engage employees in post-pandemic world for their career progression, and advancing its digital transformation journey to leverage operational efficiency movements and cross entity collaboration to maintain business vitality. This entails introducing new products and services as well as reassigning resources and constitution of middle-management teams consisting of local employees to enable a greater contribution to be made in order to tackle the challenges and opportunities lying ahead.
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) committees, specifically, the Audit and Risk Management Committee (“ARMC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”). The ARMC, NC and RC are collectively, referred to as the “Board Committees”, which comprise Independent and Non-Executive Directors only. Each Board 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 CG 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 Companies Law, 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 the Company’s strategic plans on a periodic basis. The Company has always believed that the real estate sector is one of the cornerstones for the long-term growth of the country. In 2018, the Company expanded its real estate activities through the launch of City Loft @ Star City – a new division of modern urban housing offering up to 25-year mortgage in the market for the first time – providing an opportunity for young people with a combined monthly family income of MMK 1.0 million to MMK 1.5 million to own their first home. Continuously in early 2022, the Company extended its real estate business through the launch of Padauk Garden Development (“PGD”), which consists of a land bank of 23.56 acres that lies parallel to FMI City. The land where PGD would be developed was originally part of the master plan of FMI City and its related land development rights (“LDRs”). PGD aims to offer affordable and quality housing units and shop-houses to middle income families, SME business owners, and real estate investors.
During FY Mar-2022, the Board further reviewed and approved the Company to restructure the existing convertible loan (entered into with Ayala Corporation (“Ayala”) in FY2020) into a perpetual loan (the “Restructured Loan”). The said Restructured Loan is a perpetual loan with no fixed maturity date, which means that it can only be redeemed by way of allotment and issuance of 8,227,424 new ordinary shares in the capital of the Company (“Redemption Shares”) upon satisfaction of the following conditions: –
- the Company having convened a general meeting and obtained the requisite shareholders’ approval for the allotment and issuance of the Redemption Shares to Ayala; and
- the 7-day volume weighted average price of a share of Ayala is equal to or exceeds MMK 15,000, which would be the issue price per Redemption Share.
Such number of Redemption Shares shall comprise twenty per cent (20%) of the share capital of the Company as at the date of conversion; and rank pari passu in all respects with, and carry all rights similar to the existing Shares, pursuant to the terms of the Restructured Loan.
The schedule of all Board and Board Committees meetings and the Annual General Meeting (“AGM”) for the next calendar year is planned in advance, in consultation with the Board. Board meetings are scheduled to be held at least four times a year, with ARMC meetings being held whenever the Board meetings are convened, to facilitate the review of announcements of the audited financial statements and management discussion & analysis, and the publishing of the Company’s annual reports and planning for the AGM. Additional key matters to be discussed at the Board meetings and ARMC meetings include financial performance, annual budget, corporate strategies and risk management, business plans, regulatory issues, and significant operational matters. Other Board Committees meetings, such as RC meetings and NC meetings are scheduled to be held once a year or whenever necessary, to review and evaluate the remuneration matrix and performance of each Director and the Management. 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 Committees meetings to be held via telephone or video conference. Directors who are unable to attend meetings physically would be engaged via teleconferencing. Due to the COVID-19 pandemic and the various travel restrictions as implemented by the government authorities, majority of the meetings during FY Mar-2022 were convened via teleconferencing. To further facilitate the efficient management of the Company, the Company’s Constitution also allows Board and Board Committees resolutions to be passed by way of written resolutions.
A record of the Directors’ attendance at Board and Board Committees meetings as of 31 March 2022 (“FY Mar-2022”) is displayed in the following table:
Directors’ Attendance at Meetings during FY March 2022
|Board Meeting||Audit & Risk Management|
|Total number of meetings held||21||31||1||2||1|
|U Theim Wai @ Serge Pun||2||N.A.||N.A.||N.A.||1|
|U Tun Tun||2||N.A.||N.A.||N.A.||1|
|Prof. Dr. Aung Tun Thet||2||3||1||N.A.||1|
|U Kyi Aye||2||3||N.A.||2||1|
|U Than Aung||2||3||1||2||1|
|U Linn Myaing||2||N.A.||1||2||1|
|Mr. Cezar Peralta Consing2 (or his alternate, Mr. Alberto Macapinlac de Larrazabal)||2||N.A.||N.A.||N.A.||1|
1 Due to the change in the financial year end from 30 September to 31 March every year after 30 September 2021, the financial reporting period for FY Mar-2022 consisted of only six months, which resulted in the frequencies of Board Meetings and ARMC Meetings held during FY Mar-2022 were two times and three times respectively.
2 Mr. Cezar Peralta Consing (“Mr. CPC”), nominated by Ayala Corporation in place of Mr. Fernando Miranda Zobel de Ayala (“Mr. FZA”), was appointed as the Non-Executive Director of the Company on 2 August 2021. Concurrently with his appointment, Mr. Alberto Macapinlac de Larrazabal (“Mr. AMDL”) was appointed on the same date as the alternate director of Mr. CPC to carry out Mr. CPC’s duties, when he is not present.
Board Approval and Approval Matrix
The Company has prescribed internal guidelines for matters that require Board’s approval. For expenditures of MMK 5 million and below, the authorization limits are granted to the Management. The Board has adopted a matrix in which Board’s approval is required for any matter that could impose or cause a material impact on the Company’s operations and financial positions as well as matters other than in the ordinary course of business.
Matters that specifically require Board’s approval include, but are not limited to the following:
- Group’s strategic plans and business focus;
- Company’s annually and half yearly financial statements;
- Acquisition, establishment, investment, divestment, or disposal of any subsidiary, business or asset of the Group exceeding the authorized limits of MMK 5 million;
- 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, resignation, and remuneration of Directors;
- Capital-related matters including capital structure, equity and debt instruments issuance and redemption of the Company;
- Taking up facilities, loans and incurring debts and/or lines of credit with banks and financial institutions and creditors;
- Reviewing and approving of RPTs, such as acquisition, disposal, the entrance of a new and significant contract with a related party;
- 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 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 the Management and briefings on key areas of the Group’s operations. The Company will conduct induction programme for the newly appointed directors, Mr. Cezar Peralta Consing and Mr. Alberto Macapinlac de Larrazabal, in familiarizing with the Company’s businesses.
Board Training and Development
In addition to the 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 Companies Law 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 Companies Law delivered by Baker McKenzie in September 2018. Directors are given necessary resources and are apprised on latest regulations by the Management with the assistance of CST (as defined below) to effectively discharge their fiduciary duties in a timely manner.
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. In order for the Directors to have adequate time to prepare for meetings, the Board and Board Committees papers are typically circulated to Directors a week in advance of the meetings. Investment proposals made by the Management and the respective working teams are presented with background and essential information for the Board to evaluate and approve 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 are able to contribute to the discussions or to give opinions may also be invited to join the Board and Board Committees meetings to provide more information as and when 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, CST, the external auditor, and expert advice as and when needed 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 secretarial requests raised by the Directors. The CST is responsible for, among other things, advising the Board to disclose material information on a timely basis, maintaining and updating of all statutory registers, making statutory filings, and keeping corporate records as prescribed under the Companies Law, and to ensure that the Company is compliant with relevant rules and regulations prescribed by the SECM, the Yangon Stock Exchange (the “YSX”), and the Directorate of Investment and Company Administration (“DICA”). In addition to assisting the Chairman of the Board, 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 facilitates and administers annual performance evaluation of the Board and management to assess the balance of skills and knowledge of the Board as a whole, as well as to identify the key areas of concerns and improvements that require the Board’s immediate attentions. 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 helps to prevent the phenomenon of group-think. Further, the NC requires each Director to declare his/her relationships with the Company, Management, and substantial shareholders in writing and reviews these declarations periodically to ensure the Directors are not conflicted. While determining the independence of its Directors, the Company ensures to comply with the “Qualifications of Independent Directors” set out in Notification No. 90/2020 issued by the Ministry of Investment & Foreign Economic Relations. In accordance with the definition of “independent”, which is disclosed in the CG Manual, 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 an Independent Non-Executive Director.
Size and Composition of the Board
The Board comprises nine Directors, of which there is 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 September 2020 are set out below:
|Name||Date of First Appointment||Last Re-election||Board||ARMC||RC||NC|
|U Theim Wai @ Serge Pun1||(ED)||12 Sep 2004||2019||Chairman||-||-||-|
|U Tun Tun2||(ED)||17 Nov 2009||2020||Member||-||-||-|
|Prof. Dr. Aung Tun Thet||(ID) (NED)||3 Dec 2013||2018||Member||Chairman||-||Chairman|
|U Kyi Aye3||(NID) (NED)||5 Nov 2015||2019||Member||Member||Chairman||-|
|U Linn Myaing||(NID) (NED)||2 Jul 2012||2018||Member||-||Member||Member|
|U Than Aung 3||(NID) (NED)||31 Jul 1992||2019||Member||Member||Member||Member|
|Mr. Cezar Peralta Consing4||(NID) (NED)||2 Aug 2021||2021||Member||-||-||-|
|Mr. Alberto Macapinlac de Larrazabal)||(AD)||2 Aug 2021||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 CG 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 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. He 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 Than Aung is considered as a Non-Independent and Non-Executive Director.
4 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.
5 Mr. Jose Teodoro K. Limcaoco was appointed as the alternate director to Mr. Fernando Miranda Zobel de Ayala on 1 June 2020 for purposes of attendance, participation and voting at meetings of the Board of Directors and Shareholders of the Company.
The Company is strongly committed to foster 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 to make recommendations with regards to any changes.
Indemnification of Directors and Officers
Since FY2019, the Company has begun purchasing the Directors and Officers Liability Insurance for the Board to protect individual Director and Officer 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 Board.
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.facilitating adequate time is allotted for discussion of all agenda items and strategic issues;
Role of the Chief Operating Officer (“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 business unit in accordance with Board and Board Committee policies. The Group’s COO is tasked to provide Group level support for infrastructure and executive decisions, work alongside and assist the respective subsidiaries’ CEOs, monitor the overall operations and resources, serve as the main point of communication between the Board and these CEOs, and establish company procedures after obtaining perspectives from the Company’s Board 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.
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 academia. 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. The NC further keeps under review the leadership needs of the Company including the succession planning for both Key Management Personnel 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 CG 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 that are likely to affect the Director’s judgement. The NC also reviews that all the re-nomination and re-appointment of the Directors before each AGM. 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.
Process and Criteria for the Appointment of New Directors
The Company adopts a holistic approach in the selection of new Directors. The NC is tasked to identify candidates and to review all nominations for the appointment, reappointment and termination of Directors and Board Committee members, taking into consideration of the Directors’ character and competence including integrity, reputation, capability, independence status, contributions during and outside of Board and Board Committee meetings, as well as other criteria prescribed under the CG 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. During the selection process, 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 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; and
- The candidate’s character and reputation in the industry.
Directors’ Time Commitment
Despite the fact that some of the Directors sit on multiple boards, 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 directorship 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 during FY2020, 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 discharged his/her duties, notwithstanding some Directors who held multiple representations at other listed companies.
Succession planning for Directors and Key Management Personnel
As the first company in Myanmar to be listed on the YSX, the Company recognizes the importance of a succession planning process to remain prepared for the future. The Company strongly believes that succession planning serves as a tool in retaining talent, and Key Management Personnel conduct regular reviews with employees of the Company (“Employees”) to identify and nurture talent.
The Company recognizes that succession planning is not a “one-size fit” and builds its succession planning based on the Group’s business direction. As such, the Group’s succession planning considers all ranks of the organization and Employees at every level and not just its Board and Key Management Personnel. The Company 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 diagram 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 their roles. Amongst key considerations the Company takes into 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; and
- 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 ongoing Board review powers. With regard to the succession planning of the role of the Company’s CEO, FMI does not have the position of a Group CEO which concentrates the executive role upon one (1) person. Instead, the Board has a general oversight over the chief executive officers at each business pillar and reviews the Group’s initiatives on strategic development and direction on new investment. In addition to regular reviews on Employees to re-align goals, these reviews present an opportunity for the Company to engage Employees to establish their work patterns and career goals in order to develop the Employees’ potential.
Succession planning for Directors and 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 a 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 NC reserves their right to review the Board’s 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 reviews include:
- Composition of the Board (consisting a mix of competencies, 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 analyze and examine governance and compliance matters, including appropriate adjustments to ensure 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 for 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 committees, and the contribution of each individual Director to the effectiveness of the Board).
The Chairman of the NC, the sole Independent Director of the Company, will additionally provide his review annually on: (i) the performance of the Board as a whole; and (ii) assess the quality, quantity and timeliness of information flow and dissemination between the Management and the Board, to enable the Board to effectively and reasonably perform its duties. The NC 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 Kyi Aye (Chairman)
U Than Aung (Member)
U Linn Myaing (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 the 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, Management’s salaries, allowances, bonuses, share-based incentives and awards, and benefits in kind to successfully manage the Company. Please refer to the Company’s CG Manual for the detailed duties of the RC.
Remuneration of the top-earning Executives and Non-Executive Directors
The Company strives to remunerate its Executive Directors and Non-Executive Directors 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 remuneration 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 and other incentives.
Breakdown on Key Executives’ Remuneration for FY Mar-2022
|Remuneration band |
& name of director
|Base/ Fixed salary |
|Variable component |
or bonuses (%)
|Benefits-in-kind, allowance & |
other incentives (%)
|MMK 40 Million – MMK 60 Million|
|U Theim Wai @ Serge Pun|
U Tun Tun
Daw Thiri Kalyar
Breakdown on Non-Executive Directors’ Remuneration for FY Mar-2022
|Fee (MMK)||Other Benefits|
|Basic Retainer Fee|
|Fee For Appointment to ARMC|
|Fee for Appointment to NC AND RC|
SECTION 3 – ACCOUNTABILITY AND AUDIT
ARMC Composition and Role
Prof. Dr. Aung Tun Thet (Chairman)
U Kyi Aye (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 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 of 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. 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 CG 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 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.
The Company has engaged Myanmar Vigour & Associates Limited (“Deloitte Myanmar”) as its Independent Auditor to audit the accounts of the Group. The report of the Independent Auditor is set out in the Independent Auditor’s Report section of FY2020 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/or 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 procedures for reporting improprieties (the “Policy”) where 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 direct 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 or member of the senior management, the reports shall be escalated to the Chairman of Board, for his attention and further action as necessary.
The reporting mechanism invites and encourages 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 Person 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 objectives of this policy are 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.
Monitoring and Reporting Risks
The risks and the identified adequacy and effectiveness mitigating controls 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.
SECTION 4 – SHAREHOLDER RIGHTS AND ENGAGEMENT
The Company is committed to deliver 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. As at the time of the publication of this Annual Report, half-yearly releases of financial results and all other information including Management Discussion and Analysis are timely announced on the websites of the YSX and the Company at https://fmi.com.mm/investors/announcements/. 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 the websites for chronological review. There is also a specific webpage dedicated for investor relations to update and disclose Company’s share and financial information 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 supplemented with explanatory notes and guided instructions in both Burmese and English languages. Notices of AGM are also advertised in the local daily newspaper, where notice handbooks and Annual Reports are typically dispatched to shareholders by mail. The general meetings of the Company are held annually at a central location that is convenient for public. Shareholders who are unable to attend the AGM in person are allowed 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 AGM. 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 making decision for corporate 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 of 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 FY2020.
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. 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
- Corporate Social Responsibility 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
These policies are accessible on the Company’s website at https://fmi.com.mm/governance/corporate-policies/. The Company prescribes 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 half year ended 30 March 2020 (“HY2020”). Contact details for stakeholder engagement are provided on the Company’s website and Facebook social media. As exhibited in its Corporate Social Responsibility Policy, the Company along with the wider Yoma 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 programs.
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 actively engaging and encouraging its shareholders, who for various reasons, have not managed to transfer their shares smoothly from Special Accounts to Securities Accounts to utilize the electronic trading platform in an attempt to fully implement book-entry transfer system across the Myanmar stock market so as to keep abreast with the international standard. 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.
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.