Corporate Governance Statement

1. Principal Responsibilities of the Board
   
   The Board has six specific responsibilities, as described below, which are discharged in the best interests of the Company, in pursuance of an integrated regulatory and commercial objective:
   
   
   1. Reviewing and adopting a strategic plan for the Company
      
      The Board plays an active role in the development of the Company’s strategy. It has in place an annual strategy planning process, whereby the management presents to the Board its recommended strategy together with proposed business and regulatory plans for the ensuing year at a dedicated session, for the Board’s review and approval. At this session, the Board questions both the management and Board perspectives, and challenges the management’s views and assumptions, to ensure the best outcome is derived from the process. In conjunction with this, the Board also reviews and approves the annual budget for the ensuing year, and sets the Key Performance Indicators (KPIs) under the Corporate Balanced Scorecard (CBS) covering four perspectives which are financial, customer, internal process, learning and growth. The Board ensures that the targets reflect industry trends and internal capabilities as well as provide sufficient stretch for the management.
      
      For FY2011, the strategy planning process began at a Board offsite meeting held in October 2010, where the management presented its proposals for the Board’s active review and decision. The Company’s Strategy and 2011 Business and Regulatory Plans were approved by the Board in November 2010.
      
      A mid-year review of the 2011 Business and Regulatory Plans was conducted by the Board in June 2011, where an overall assessment was made by comparing the targets as set by the Board against the actual performance year-to-date. The Board also discussed strategy implementation together with key initiatives undertaken in the first half of the year. The Chief Executive Officer (CEO), who took appointment from 1 April 2011, presented revisions to the Strategy and 2011-2013 Business Plan which were deliberated upon and approved by the Board in conjunction with its mid-year review. The revisions emphasised the importance of driving a transformation strategy with ‘above business-as-usual’ initiatives, and adopting a game-changing approach towards addressing market issues, market infrastructure and product development. The Chief Regulatory Officer (CRO) also presented to the Board the Regulatory Plan for 2011-2013, together with initiatives to be taken to achieve the regulatory objectives of the Company.
      
      In November 2011, the management presented to the Board the proposed Budget 2012 based on the approved Strategy and 2011-2013 Business and Regulatory Plans. The Board actively reviewed the sustainability, effectiveness and implementation of the strategic plans for 2011 and provided guidance and input to the management. The 2012 Budget for the Group was approved by the Board, taking cognizance of the need to continuously invest, build and grow the three main markets of Bursa Malaysia in line with the approved plans.
      
      
   2. Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed
      
      The Board is responsible for the overall management of the Company. In order to ensure the effective discharge of its function and responsibilities, the Board has established a Governance Model for the Group where specific powers of the Board are delegated to the relevant Board Committees¹ and the CEO. The Governance Model is supported by the Authority Limits Document (ALD) which clearly sets out the relevant matters reserved for the Board’s approval, as well as those matters which the Board may delegate to the Board Committees, the CEO and management. The Governance Model and the ALD are reviewed as and when required, to ensure an optimum structure for efficient decision-making in the organisation.
      
      

      1

      The Board Committees comprise three Governance Committees and four Regulatory Committees as set out in the Governance Model of Bursa Malaysia on page 93 of this Annual Report, which is also available at www.bursamalaysia.com, About Us- Corporate Governance section

      
      The key matters reserved for the Board’s approval include the annual business plan and budget, dividend policy, business continuity plan, new issues of securities, business restructuring, expenditures above a certain limit, disposals of significant fixed assets and acquisitions or disposals of companies within the Group.
      
      The Board Committees are entrusted with specific responsibilities to oversee the affairs of the Group, with authority to act on behalf of the Board in accordance with their respective Terms of Reference² (TOR). At each Board meeting, the minutes of the Board Committee meetings are presented to the Board for information. The Chairmen of the relevant Board Committees also report to the Board on key issues deliberated by the Board Committees at their respective meetings.
      
      

      2

      The TOR of each Board Committee, together with the names of members of the Board Committees for the term of appointment from 12 May 2011 to 11 May 2012 are available at www.bursamalaysia.com, About Us-Corporate Governance section

      
      The CEO³ is responsible for the day-to-day management of the business and operations of the Group in respect of both its regulatory and commercial functions. He is supported by the Management Committee⁴ and other committees established under the Group’s Management Governance Framework⁵. The CEO presents to the Board at each meeting a status report which includes a detailed summary of the Group’s operating drivers and financial performance for each of the reporting periods. He also provides updates on key strategic initiatives and significant operational issues and reports on the Group’s performance, based on the approved CBS.
      
      

      	3	The CEO’s job description was last reviewed and approved by the Board in September 2010
      	4	The Management Committee members are as set out on page 35 of this Annual Report
      	5	The Management Governance Framework which takes effect from 25 May 2011 comprises two committees for governance function and three committees for business operation function. It is available at www.bursamalaysia.com, About Us-Corporate Governance section

      
      To ensure the independence of the regulatory function, the CRO provides the Board with a separate status report on a regular basis, to inform the Board of actions taken by the Regulation function and provide updates on regulatory initiatives. The management also presents to the Board in the first quarter of every year, a report on the extent to which Bursa Malaysia has complied with its regulatory duties and obligations under the Capital Markets and Services Act 2007 (CMSA) during the preceding year. In March 2011, the Board reviewed the Annual Regulatory Report 2010 before the said report was submitted to the Securities Commission (SC) in compliance with Section 16 of the CMSA.
      
      In 2011, the Board reviewed the results of two surveys conducted by independent research firms in 2010 namely, the Customer Satisfaction Survey and the Employee Engagement Survey, to assess the satisfaction level of the external and internal stakeholders of the Company, respectively. The findings of the surveys served as a guide for the Board and management in respect of areas needing improvement.
      
      
   3. Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks
      
      Through the Risk Management Committee (RMC), the Board oversees the Enterprise Risk Management (ERM) framework of the Group. The RMC advises the Audit Committee (AC) and the Board on areas of high risk faced by the Group and the adequacy of compliance and control throughout the organisation. The RMC reviews the risk management policies formulated by management and makes relevant recommendations to the Board for approval. Details on the RMC and the Company’s ERM framework are set out on pages 84 to 85 of this Annual Report.
      
      
   4. Succession planning including appointing, training, fixing of compensation and, where appropriate, replacing senior management
      
      The Board has entrusted the Nomination and Remuneration Committee (NRC) with the responsibility to recommend candidates for appointment to the Board, Board Committees and key management positions, to determine compensation packages for these appointments, and to formulate the nomination, selection, compensation and succession policies for the Group. The Board is satisfied that the NRC, in its current form, effectively and efficiently discharges its functions in respect of nomination and remuneration matters listed separately in its TOR for the purpose of clarity. As such, there is no need to separate the nomination and remuneration functions into discrete Nomination and Remuneration committees.
      
      In May 2011, the Board incorporated additional roles and responsibilities into the NRC’s TOR, namely to implement and administer the Share Grant Plan (SGP) which was approved by shareholders on 14 April 2011. The SGP is a long-term incentive plan under the employees’ remuneration structure, which replaced the employees’ share option scheme that expired on 8 March 2010.
      
      In discharging its responsibility, the NRC reviews the human resources plan of Bursa Malaysia, including the succession management framework and activities, human resource initiatives and the annual manpower budget. In November 2010, the Board approved the People Development Plan, including the 2011 budget distribution for functional technical human resource development and talent management programmes.
      
      In 2011, the CEO succession plan was implemented by the Board, with the support of the NRC, for the first time since the demutualisation of Bursa Malaysia. The employment terms of the former CEO, Dato’ Yusli bin Mohamed Yusoff, ended on 31 March 2011. Prior to this, the NRC had considered suitable candidates for the CEO’s position based on several factors including competencies, calibre and credentials set against the approved criteria which included leadership skills, strategic thinking and the ability to implement change amidst a competitive exchanges landscape. The NRC also designed the final candidate’s remuneration package in consultation with an appointed external consultant, taking into account the desired pay-mix and long-term incentives to ensure a competitive package appropriate for the CEO of an Exchange.
      
      The Board approved the NRC’s recommendations on the proposed candidate and the remuneration package, and on 25 February 2011, it announced the appointment of Dato’ Tajuddin bin Atan as the new CEO of Bursa Malaysia after the SC’s concurrence was obtained on his appointment as Executive Director in accordance with Section 10(1)(b) of the CMSA.
      
      The NRC undertakes yearly evaluation of the performance of the key management personnel (except for the Chief Internal Auditor (CIA)) based on their scorecards, whose remuneration is directly linked to performance. For this purpose, the 2010 CBS results of the CEO and relevant senior management were reviewed by the NRC in January 2011. The CIA reports to the AC, and his performance evaluation is reviewed and determined by the AC. The CEO’s compensation package is reviewed annually by the NRC after which it is put to the Board for decision.
      
      
   5. Developing and implementing an investor relations programme or shareholder communications policy for the Company
      
      Bursa Malaysia believes in building investor confidence through good CG practices. The Company carries out its Investor Relations (IR) activities in accordance with its stated IR Policy, which is available on its website. A separate report on IR activities is provided on pages 62 to 64 of this Annual Report.
      
      
   6. Reviewing the adequacy and integrity of the Company’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines
      
      The Board is ultimately responsible for the adequacy and integrity of the Company’s internal control system. Details pertaining to the Company’s internal control system and the review of its effectiveness are set out in the Internal Control Statement and Risk Management Statement on pages 81 to 83 and pages 84 to 85 respectively of this Annual Report.
      
      
2. Constituting an Effective Board
   
   
   1. Board Composition and Balance
      
      The Board of Bursa Malaysia comprises 13 Directors. Four directors are Public Interest Directors (PIDs), eight are Independent Non-Executive Directors (NEDs) and there is one Executive Director who is also the CEO. The four PIDs are appointed by the Minister of Finance Malaysia (MOF) in line with the requirements under the CMSA for the Company to act in the public interest, having particular regard to the need for the protection of investors in performing its duties as an exchange holding company. In addition, the PIDs and Independent NEDs are all independent of management and free from any business or other relationship which could materially interfere with the exercise of their objectivity and independent judgement. Through the Directors’ Self and Peer Assessment of the Board Effectiveness Evaluation (BEE), the NEDs have indicated their satisfaction with the level of independence of each of their peers and their ability to act in the best interests of the Company in decision-making. The Directors have made valuable contributions to the Company through their business acumen and the application of a wide range of functional knowledge and skills from their longstanding experience. They are drawn from differing backgrounds such as accountancy, law, public policy, regulation, business, finance, stockbroking and risk management. The profiles of every Director are set out on pages 20 to 27 of this Annual Report.
      
      The Board is of the view that the current size of the Board is appropriate, given its unique composition comprising PIDs and taking into consideration the governance and regulatory functions of an exchange holding company. It is also of the view that it has the right mix of skills, experience and strength in those qualities which are relevant and which enable the Board to carry out its responsibilities in an effective and competent manner.
      
      
   2. Separation of Chairman and CEO
      
      

   The Chairman, who is a PID appointed on 1 March 2004, leads the Board with a keen focus on governance and compliance. In turn, the Board monitors the functions of the Board Committees in accordance with their respective TORs to ensure its own effectiveness, while the CEO manages the business and operations of the Company and implements the Board’s decisions. The distinct and separate roles of the Chairman and CEO, with a clear division of responsibilities, ensures a balance of power and authority, such that no one individual has unfettered powers of decision-making.
   
   

   3. Senior Independent Non-Executive Director
      
      The Board is of the view that the Board structure, with its unique composition, would enable it to act independently and objectively, and that this is adequate to enable any concerns about the Company to be appropriately channelled for discussion and deliberation. Nevertheless, in January 2011, the Board appointed a Senior Independent NED (SID) to act as an additional safeguard and to serve as a fallback point of contact for investors and shareholders when the normal channel of communication is considered to be inappropriate or inadequate. In this regard, the Board appointed Dato’ Dr. Thillainathan a/l Ramasamy to be the first SID for a one-year term. The SID’s TOR⁶ sets out his responsibilities, which include his duty as the principal conduit between the Chairman and Independent NEDs (including all PIDs other than Chairman) on sensitive issues. The SID is also responsible to receive report(s) made by employees or external parties for the purpose of whistleblowing in the form as prescribed under the Whistleblower Policy and Procedures (WPP).
      
      The NRC is responsible for the nomination of an SID based on established criteria. In November 2011, the Board approved the recommendation of the NRC for the appointment of Cheah Tek Kuang as an SID⁷ for a one-year term, commencing 1 January 2012.
      
      

      	6	The SID’s TOR was reviewed and approved by the Board on 22 November 2011. It is available at www.bursamalaysia.com, About Us-Corporate Governance section
      	7	The contact details are set out in the Corporate Information on page 94 of this Annual Report

      
      
      
   4. Significant Shareholder
      
      As at 31 December 2011, the Company had more than 60% public shareholding. None of the Directors are nominees of the Company’s substantial shareholders and the Company does not have any “significant shareholders” as defined under the CG Code⁸. In view of the composition of the Board and the calibre, expertise and experience of its members, the interests of investors including the Company’s minority shareholders and the public are adequately served and protected.
      
      

      8

      Under the CG Code, a “significant shareholder” is defined as a shareholder with the ability to exercise a majority of votes for the election of directors. The shareholdings of the Substantial Shareholders are set out in the Statistics of Shareholdings as at 31 January 2012 on page 187 of this Annual Report

      
      
      
3. Appointments to the Board and Board Committees
   
   
   1. Appointments to the Board
      
      The NRC, which comprises two PIDs and three Independent NEDs, has the responsibility to make recommendations to the Board for the appointment of Directors other than PIDs. As part of this process, the NRC formulates the nomination and selection policies for the Board and reviews candidates for appointment as Directors based on their qualifications, skills, functional knowledge, experience, character, integrity and professionalism. The NRC also evaluates the candidate’s ability to discharge his or her responsibilities as expected from an independent NED and whether the test of independence under the Main Market Listing Requirements (MMLR) is satisfied, taking into account the candidate’s character, integrity and professionalism.
      
      In 2011, the NRC considered the appointment of a new independent NED on the Board following the resignation of Dato’ Sri Abdul Wahid bin Omar in May 2011. For this purpose, the NRC made a selection of candidates from the pool of potential directors which was established by the Board in 2010. In view of the availability of such a pool, there was no requirement for the NRC in this particular exercise to engage the services of an external adviser to identify and/or nominate suitable candidates for the Board. In its review of the candidates, the NRC also considered the overall composition of the Board and the combination of skills of existing Directors to ensure the selected candidate would help close any possible gaps in the Board. The recommendation of the NRC was submitted to the Board for its consideration and approval. In June 2011, the Board approved the appointment of Tan Sri Datuk Dr. Abdul Samad bin Haji Alias as an Independent NED and Chairman of the AC, based on the NRC’s recommendation. This appointment took effect upon the SC’s concurrence in July 2011.
      
      Pursuant to Section 10(1) of the CMSA, one-third of the Board shall be appointed by the MOF in consultation with the SC, to be PIDs for a period specified by MOF. In May 2011, Datuk Puteh Rukiah binti Abd Majid was appointed by the MOF as PID in place of Dato’ Tajuddin bin Atan who ceased to be a PID upon his appointment as CEO and Executive Director on 1 April 2011.
      
      Additionally, any shareholder may propose a candidate for directorship subject to Article 71 of the Articles of Association (AA). The appointment of a candidate for directorship proposed by a shareholder will be put to vote at a general meeting and be subject to the SC’s approval. In 2011, there was no such proposal received by the Company.
      
      
   2. Appointments to the Board Committees
      
      The NRC is responsible for reviewing candidates for appointment to the Board Committees and makes recommendations to the Board for approval. The review is conducted on an annual basis. The NRC also reviews candidates at other times when the need arises, such as when a new Director is appointed or when the Board establishes an ad-hoc Board Committee. In determining the candidates for appointment to the Board Committees, various factors are considered by the NRC, including the results of the BEE for the Board Committees, to ensure the requirements of the committees are addressed.
      
      
   3. Retirement and Re-election of Directors
      
      Pursuant to Article 69 of the AA, an election of Directors other than the PID shall take place each year at the Annual General Meeting (AGM) of the Company, where one-third of the Directors longest in office shall retire and, if eligible, may offer themselves for re-election. In this regard, the NRC is responsible for making the recommendation to the Board on the eligibility of the Directors to stand for re-election at the AGM. In determining the Director’s eligibility, the NRC carries out a formal review of the performance of the Director, taking into account the results of the latest BEE, the level of contribution to the Board through each of his skills, experience and strength in qualities, his level of independence and ability to act in the best interest of the Company in decision-making. In this review, the NRC also considers the Board’s nine-year policy for independent NEDs and its gradual implementation, to ensure continued effective functioning of the Board as well as to enable the progressive refreshing thereof, in line with the best CG practices.
      
      In 2011, the Board approved the recommendations of the NRC, to support the proposed re-election of the four Directors who would retire by rotation at the AGM held on 14 April 2011. They were all subsequently re-elected by the shareholders at the said meeting.
      
      Pursuant to Article 76 of the AA, any Director appointed by the Board shall hold office until the next following AGM and shall then be eligible for re-election. Dato’ Tajuddin bin Atan, who was appointed as the CEO and Executive Director on 1 April 2011, retired at the AGM held on 14 April 2011, and was re-elected by the shareholders at the meeting.
      
      The appointment of Tun Mohamed Dzaiddin bin Haji Abdullah as Chairman and PID was extended by the MOF for a year from 1 March 2011. Being a Director of over 70 years of age, he retired at the AGM held on 14 April 2011 pursuant to Section 129 of the Companies Act 1967 (CA), and was re-appointed by the shareholders at the meeting.
      
      
4. Board Structures and Procedures
   
   
   1. Board and Board Committee Meetings
      
      The Board of Directors convened 10 meetings in 2011, out of which eight were scheduled in advance (including one Board offsite meeting held in June 2011) and two were special meetings. The Directors’ attendance at these meetings is recorded below:
      
      

      Name of Director	Attendance
      Tun Mohamed Dzaiddin bin Haji Abdullah (Chairman and PID)	10/10
      Datuk Dr. Md Tap bin Salleh (PID)	10/10
      Datuk Dr. Syed Muhamad bin Syed Abdul Kadir (PID)	10/10
      Datuk Puteh Rukiah binti Abd Majid 9 (PID)	6/6
      Datin Paduka Siti Sa'diah binti Sheikh Bakir	9/10
      Dato’ Dr. Thillainathan a/l Ramasamy	10/10
      Dato' Sri Abdul Wahid bin Omar 10	4/5
      Izham bin Yusoff	9/10
      Dato’ Wong Puan Wah @ Wong Sulong	9/10
      Cheah Tek Kuang	9/10
      Dato’ Saiful Bahri bin Zainuddin	9/10
      Ong Leong Huat @ Wong Joo Hwa	10/10
      Tan Sri Datuk Dr. Abdul Samad bin Haji Alias 11	4/4
      Dato’ Tajuddin bin Atan 12 (CEO)	9/10
      Dato’ Yusli bin Mohamed Yusoff 13	2/2

      
      

      	9	Appointed as a PID on 27 May 2011
      	10	Resigned as an Independent NED w.e.f. 31 May 2011
      	11	Appointed as an Independent NED on 7 July 2011
      	12	Appointed as CEO and Executive Director w.e.f. 1 April 2011, thereby ceased to be a PID
      	13	Ceased to be CEO and Executive Director w.e.f. 1 April 2011

      
      In 2011, two meetings of NEDs were held in the absence of the Executive Director and management. At these meetings, the NEDs discussed various matters, including the overall performance of management and areas requiring improvement. The views of the NEDs were subsequently shared with the Executive Director for necessary action.
      
      The Board’s annual meeting calendar is prepared and circulated to Directors before the beginning of each year. It provides the scheduled dates for meetings of the Board and Board Committees, AGM, major conferences hosted by the Company, as well as the closed period for dealings in securities by Directors based on the targeted date of announcement of quarterly results of the Group. The agenda of each Board meeting is finalised by the Chairman. Meeting papers are prepared by management in accordance with the format as provided in the Guideline on Submission of Board Memoranda, to provide relevant facts, analysis and recommendation for supporting the proposals to enable informed decision-making by the Board. The agenda and papers for meetings are furnished to Directors and Board Committee members well in advance, to enable them to prepare for these meetings. At Board meetings, the management presents the papers and consultants may be invited to provide further insight. The Board members are invited to provide their feedback in a form prepared by the Company Secretary on the adequacy of contents and quality of information presented by the management in these Board papers, as well as presentation skills. The Chairman encourages constructive, healthy debate, and Directors are given the chance to freely express their views or share information with their peers in the course of deliberation as a participative Board. Any Director/Board Committee member who has a direct or deemed interest in the subject matter to be deliberated abstains from deliberation and voting on the same during the meeting.
      
      The Company Secretary ensures that there is a quorum for all meetings and that such meetings are convened in accordance with the relevant TOR. The minutes prepared by the Company Secretary memorialise the proceedings of all meetings, including the tabling of pertinent issues, the substance of inquiry and response, members’ suggestions and the decisions made, as well as the rationale behind those decisions. In doing so, the Company Secretary internalises the governance principles in the Company and keeps the Board updated on the follow-up action arising from the Board’s decisions and/or requests at subsequent meetings. This allows the Board to perform its fiduciary duties and fulfil its oversight role via the respective Board Committees towards instituting a culture of transparency and accountability in Bursa Malaysia.
      
      
   2. Supply of and Access to Information
      
      The Directors have individual and independent access to the advice and dedicated support services of the Company Secretary in ensuring the effective functioning of the Board. The Directors may seek advice from the management on issues under their respective purview. The Directors may also interact directly with, or request further explanation, information or updates, on any aspect of the Company’s operations or business concerns from the management.
      
      In addition, the Board may seek independent professional advice at the Company’s expense on specific issues to enable the Board to discharge its duties in relation to the matters being deliberated. Individual Directors may also obtain independent professional or other advice in furtherance of their duties, subject to approval by the Chairman or the Board, depending on the quantum of the fees involved.
      
      
   3. Board Effectiveness Evaluation
      
      The Board has entrusted the NRC with the responsibility for carrying out the annual BEE. An external consultant is engaged for this purpose every three years, the last having been appointed in 2008. The same external consultant, PricewaterhouseCoopers Advisory Services Sdn Bhd (PwCAS), was engaged to carry out the BEE in 2011. The BEE was conducted via questionnaires, comprising a Board and Governance Committee effectiveness assessment, and a Directors’ and Governance Committee members’ Self and Peer Assessment. PwCAS collated the feedback obtained through completed questionnaires and interviews with Directors and thereafter summarised the findings, with the assurance of anonymity, as part of the governance review process. The NRC reviewed the outcome of the BEE as presented by PwCAS in September 2011 and agreed to recommend to the Board in October 2011 for approval of the areas identified for continuous improvement to be resolved or dealt with by the CEO, the Board and/or the NRC as an action plan.
      
      The Board’s effectiveness is assessed in the areas of composition, administration, accountability and responsibility, conduct, and the performance of the Chairman and CEO. The Board, through the Governance and Regulatory Committees effectiveness assessment, examines the respective Governance and Regulatory Committees, including their respective Chairmen, to ascertain whether their functions and duties are effectively discharged in accordance with their respective TORs. The Directors’ Self and Peer Assessment is intended to evaluate the mix of skills, experience and other relevant qualities the Directors bring to the Board, and takes into account the individual director’s ability to exercise independent judgement at all times and to contribute to the effective functioning of the Board. The Self and Peer Assessment process also examines the ability of each Board or Committee member to give material input at meetings and to demonstrate a high level of professionalism and integrity in the decision-making process. The assessment results form the basis of the NRC’s recommendation to the Board for the re election of Directors at the 35th AGM in 2012. In September 2011, each Board and Board Committee member was provided with individual results together with a peer average rating on each area of assessment for personal information and further development.
      
      
   4. Training for Directors
      
      The Board takes a strong view of the importance of continuing education for its Directors to ensure they are continually equipped with the necessary skills and knowledge to meet the challenges of the Board, from time to time. For this purpose, a dedicated training budget for Directors’ continuing education is provided each year by the Company. The Board has also set a policy that each Director is required to attend at least three training sessions on capital market developments in each year, to keep abreast of industry developments and trends. In addition, each Director shall further determine the areas of training that he or she may require for personal development as a Director or as a member of a Board Committee. The Company Secretary arranges for the Directors’ attendance at these training programmes which are conducted either in-house or by external service providers.
      
      In 2011, all Directors of Bursa Malaysia attended at least six training programmes. At least three of the same were on capital market developments. The development programmes included Corporate Governance, Risk Management & Audit, Leadership & Business Management, and Financial & Capital Markets. Throughout the year, the Directors were invited to attend a series of talks organised by Bursa Malaysia together with various professional associations and regulatory bodies. Several Directors attended conferences and seminars as guest speakers, panelists or moderators. The Directors also attended the two main conferences in the capital market organised by the Company namely, the Invest Malaysia 2011 held on 12-13 April 2011 and the 22nd Palm & Lauric Oils Conference held on 7-9 March 2011. The following additional in-house development programmes were organised for the Directors in 2011:
      
      
      

      The Implication of Whistleblower Protection Act 2010 on Bursa Malaysia		24 June 2011
      Revamp of the Rules of Bursa Malaysia Securities		21 November 2011
      Amendments to the Listing Requirements (Disclosure & Others) and Corporate Disclosure Guide		22 November 2011

      
      
      Besides the above, the Directors attended various external programmes in 2011, amongst others, which are set out as follows:
      
      
      1. Corporate Governance
         
         • CG and Boardroom Issues in Challenging Times, 17-18 February 2011 (Attended by Dato’ Dr. Thillainathan a/l Ramasamy)
         • Asian CG: The Future Steps, 1 March 2011 (Attended by Datin Paduka Siti Sa'diah binti Sheikh Bakir)
         • Directors Duties & Governance 2011, 3 March 2011 (Attended by Datuk Dr. Md Tap bin Salleh and Izham bin Yusoff)
         • CG Blueprint 2011: Towards Excellence in CG, 8 July 2011 (Attended by Tun Mohamed Dzaiddin bin Haji Abdullah and Dato’ Saiful Bahri bin Zainuddin)
         • The Nomination/Remuneration Committee Programme, 18-19 July 2011 (Attended by Dato’ Dr. Syed Muhamad bin Syed Abdul Kadir)
         • Driving the CG Agenda, 28 July 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid)
         • The Role of CG in Creating Effective Boards, 25 November 2011 (Attended by Datuk Dr. Md Tap bin Salleh)
         • CG: The Pillar of Business Sustainability, 29 November 2011 (Attended by Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
         • Reporting on CG Practices: What do People Want to Know?, 1 December 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid)
         • Independent Directors are a Myth, 1 December 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid and Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
           
           
      2. Leadership & Business Management
         
         • High Level on Better Supervision & Better Ranking in a Post-Crisis Era, 17-18 January 2011 (Attended by Cheah Tek Kuang)
         • Women in Leadership Forum Asia, 22 February 2011 (Attended by Datin Paduka Siti Sa'diah binti Sheikh Bakir)
         • Governance Practices for the Financial Markets in the 21st Century, 28-29 March 2011 (Attended by Dato’ Dr. Thillainathan a/l Ramasamy)
         • Government Transformation Programme National Key Result Area on Fighting Corruption and Promoting Integrity, 31 March 2011 (Attended by Tun Mohamed Dzaiddin bin Haji Abdullah)
         • The Resurgence of Corporate Malaysia, 3-4 May 2011 (Attended by Dato’ Wong Puan Wah @ Wong Sulong)
         • The Board’s Responsibility for Corporate Culture: Selected Governance Concerns and Tools for Addressing Corporate Culture and Board Performance, 5 May 2011 (Attended by Tun Mohamed Dzaiddin bin Haji Abdullah, Dato’ Dr. Syed Muhamad bin Syed Abdul Kadir and Izham bin Yusoff)
         • 21st Century Corporation: Driving Sustainable Leadership & Innovation, 6 May 2011 (Attended by Dato’ Dr. Syed Muhamad bin Syed Abdul Kadir)
         • Understanding Environmental, Social and Governance Indices and Their Relevance in Today's Investment Practices, 23 May 2011 (Attended by Datuk Dr. Md Tap bin Salleh)
         • An Introduction to Blue Ocean Strategy, 27 June 2011 (Attended by Dato’ Dr. Syed Muhamad bin Syed Abdul Kadir)
         • Essentials of Fundamental Analytics 1: Analysing Company Performance, 7 August 2011 (Attended by Ong Leong Huat @ Wong Joo Hwa)
         • Forbes Global CEO Conference: At The Crossroads, 12-14 September 2011 (Attended by Cheah Tek Kuang)
         • Converge, Transform, Sustain: Towards World Class Excellence, 2-3 November 2011 (Attended by Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
         • Sustainable Leadership: Standing Apart From Others, 30 November 2011 (Attended by Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
           
           
      3. Risk Management & Audit
         
         • Assessing the Risk and Control Environment, 24 March 2011 / 22 August 2011 (Attended by Datuk Dr. Md Tap bin Salleh, Dato’ Dr. Syed Muhamad bin Syed Abdul Kadir, Datin Paduka Siti Sa'diah binti Sheikh Bakir and Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
         • Governance Framework in Financial Institutions, Enterprise Risk Management & Oversight and Financial Reporting Problems, 3-4 May 2011 (Attended by Dato’ Dr. Thillainathan a/l Ramasamy)
         • The Institute of Internal Auditors International Conference 2011: Standing Tall, 10-13 July 2011 (Attended by Izham bin Yusoff)
         • Audit Committee (AC) Effectiveness: Winning Practices & What Works Best, 12 July 2011 (Attended by Datuk Dr. Md Tap bin Salleh)
         • Improving CG in Malaysian Capital Markets: The Role of the AC, 11 August 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid and Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
         • Internal Audit, Internal Control & Compliance Conference 2011: Nexus between AC Board and Internal Audit in Discharging Effective Governance, 12-13 September 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid, Izham bin Yusoff and Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
         • Black Hole of Assurance: Is Your Board and AC Aware of the Black Swans, 4-5 October 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid)
         • Risk Management & Internal Controls: Are the Boards Aware What They Are Up Against?, 2 December 2011 (Attended by Tan Sri Datuk Dr. Abdul Samad bin Haji Alias)
           
           
      4. Financial & Capital Markets
         
         • Introduction to Islamic Banking and Finance, 15 January 2011 (Attended by Ong Leong Huat @ Wong Joo Hwa)
         • Invest Malaysia in Abu Dhabi 2011, 30 January 2011 (Attended by Datin Paduka Siti Sa'diah binti Sheikh Bakir)
         • Industry Dialogue on Capital Market Masterplan, 21 February 2011 (Attended by Dato’ Saiful Bahri bin Zainuddin)
         • Global Investment Forum, 15 July 2011 (Attended by Tun Mohamed Dzaiddin bin Haji Abdullah)
         • Joint High Level Conference on Islamic Finance, 18 July 2011 (Attended by Dato’ Tajuddin bin Atan)
         • Economic Outlook on Banking Sector, 26 July 2011 (Attended by Dato’ Saiful Bahri bin Zainuddin)
         • Organisation of Islamic Cooperation Member States Stock Exchange Forum: Capital Market Linkages and Technology, 17-18 September 2011 (Attended by Dato’ Tajuddin bin Atan)
         • 51st General Assembly of the World Federation of Exchanges, 11-16 October 2011 (Attended by Dato’ Tajuddin bin Atan)
         • 1st Asian Central Banks’ Watchers Conference: Asian Perspectives on World Finance, 1 November 2011 (Attended by Dato’ Dr. Syed Muhamad bin Syed Abdul Kadir, Cheah Tek Kuang and Ong Leong Huat @ Wong Joo Hwa)
         • 16th Malaysian Capital Market Summit: The New Normal After the Global Financial Crisis – Capitalising on Transformation Opportunities, 24- 25 November 2011 (Attended by Datuk Puteh Rukiah binti Abd Majid)
         • ASEAN Capital Markets Forum: Group of Experts Meeting, 25 November 2011 (Attended by Dato’ Dr. Thillainathan a/l Ramasamy)
         • International Organisation of Securities Commissions Asia-Pacific Regional Committee
           Seminar: Regional Challenges and Risks Facing Asia Pacific Markets & Regional Cross-Border Offering of Investment Management Products, 2 December 2011 (Attended by Tun Mohamed Dzaiddin bin Haji Abdullah)

All Directors, including the newly-appointed Datuk Puteh Rukiah binti Abd Majid and Tan Sri Datuk Dr. Abdul Samad, completed the Mandatory Accreditation Programme (MAP) prior to 2011. In 2011, the new Directors attended the formal and tailored induction programme organised by the Company Secretary which included a briefing on the Group’s structure, business and governance processes by the Senior Management. They were also provided with a Directors’ manual containing the Group’s Governance Model, Board TOR, Directors’ Code of Ethics and other applicable policies, guidance or guidelines for their easy reference.

An offsite development session was held on 8 September 2011, for the Listing Committee to discuss common areas of breach, proposed enforcement actions and policies, as well as related issues and challenges. The Market Participants Committee also held an offsite development session on 13 October 2011, to deliberate on its enforcement policies, enforcement impact in regard to key breaches, as well as related issues and challenges.

1. Level and Make-up of Remuneration
   
   The current remuneration policy for the NEDs comprises the following:
   
   
   1. Directors’ Fees
      
      The sum of RM90,000.00 per annum for the Chairman and RM60,000.00 per annum for each NED of Bursa Malaysia (as approved by the shareholders at the 33rd & 34th AGM for FY2009 and FY2010 respectively).
      
      The Board did not recommend any increase in the Directors’ Fees for the Chairman and NED in respect of FY2011, for which shareholders’ approval would be sought at the forthcoming 35th AGM.
      
      
   2. Meeting allowance for each Board or Board Committee¹⁴ meeting attended by a NED
      
      
      • RM3,000.00 for the Chairman of the Board;
      • RM1,500.00 for other members of the Board;
      • RM1,500.00 for the Chairman of a Board Committee; and
      • RM1,000.00 for other members of the Board Committees
      
      The meeting allowance is also applicable to ad-hoc Board Committees, Tender Evaluation Committee or any other committee which the NEDs are invited to attend pursuant to the Company’s policy and procedures.
      
      

      14

      Information on the composition, number of meetings held and attendance at meetings of all Board Committees is set out on page 95 of this Annual Report.

      
      
   3. Benefits-in-kind and Emoluments
      
      NEDs are not entitled to participate in the SGP of Bursa Malaysia or any incentive plan for employees of the Group. They are given other allowances such as travelling and mobile phone allowances comparable to other public listed companies (PLCs), particularly those in the financial sector, government-linked companies and selected stock exchanges. The Chairman is also provided with a monthly fixed allowance, revised to RM50,000.00 since 1 March 2010, in view of his wide-ranging scope of responsibilities and the fact that he does not serve on the boards of any other PLCs or market participants regulated by Bursa Malaysia to avoid conflict of interest (COI) situations.
      
      The Executive Director/CEO is not entitled to the above Director’s fee nor is he entitled to receive any meeting allowance for the Board and Board Committee meetings he attends. The CEO, who also serves as Chairman of Yayasan Bursa Malaysia, Bursa Malaysia Derivatives and Bursa Malaysia Derivatives Clearing, and as Director of all other subsidiary companies within the Group, is also not entitled to Directors’ fees for his attendance at any Board meetings.
      
      The CEO’s remuneration package comprises a fixed component which includes monthly salary and benefits-inkind/emoluments such as gratuity, company car, driver and leave passage, whilst the variable component includes short term incentives (STI) in the form of a performancebased bonus and long-term incentives (LTI) in the form of restricted shares and performance shares under the SGP, where applicable.
      
      In addition to the above, the Directors have the benefit of Directors & Officers (D&O) Insurance in respect of any liabilities arising from their acts committed in their capacity as D&O of Bursa Malaysia. However, the said insurance policy does not indemnify a Director or principal officer if he or she is proven to have acted negligently, fraudulently or dishonestly, or in breach of his or her duty or trust. The Directors and principal officers are required to contribute jointly towards the premium of the said policy.
      
      
2. Procedure for Approving Board Remuneration
   
   The Board has established a formal and transparent process for approving the remuneration of the NEDs and the Executive Director/CEO, whereby the NRC is responsible for reviewing the remuneration policy and making recommendations on the same to the Board for approval. In its review, the NRC considers various factors including the NEDs’ fiduciary duties, time commitments expected of them and the Company’s performance.
   
   In 2011, the Board approved the NRC’s recommendation to maintain the remuneration policy of the NEDs, and in this regard, a similar quantum of Directors’ fees for FY2010 was approved by the shareholders at the 34th AGM.
   
   The former CEO’s bonus payment was linked to the performance of CBS results for FY2010 and the NRC, in February 2011, evaluated and determined his overall performance rating based on the same. Being also an Executive Director of Bursa Malaysia, he abstained from deliberation on his bonus payout at the subsequent Board meeting.
   
   
3. Disclosure of Board Remuneration
   
   Disclosure of each Director’s remuneration, including those of the former and current CEO, is set out in the Annual Audited Financial Statements on pages 135 to 136 of this Annual Report.

1. Dialogue between the Company and Investors
   
   Bursa Malaysia communicates regularly with shareholders and investors through annual reports, quarterly financial reports and various announcements made via Bursa LINK. Financial and market statistics and press releases are placed on Bursa Malaysia’s website to keep shareholders and investors regularly informed of the Group’s performance and operations. Analyst briefings are held twice a year, in connection with the half-yearly and annual financial results, following announcements via Bursa LINK to ensure fair and timely dissemination of information to the public generally. These briefings include a presentation, conference call as well as a Question & Answer (Q&A) session. The events are web-cast and a transcript is made available to all shareholders and investors on Bursa Malaysia’s website. A detailed report on Investor Relations appears on pages 62 to 64 of this Annual Report.
   
   
2. Annual General Meeting and Extraordinary General Meeting (EGM)
   
   Although the AGM is mandated as an occasion for shareholders, the Chairman allowed representatives of the media to attend the 34th AGM. A total of 11 out of 12 Directors were present to account to the shareholders for their stewardship of the Company. The proceedings of the 34th AGM included the CEO’s presentation of the Company’s operating and financial performance for 2010, the presentation of the external auditors’ unqualified report to the shareholders, and a Q&A session during which the Chairman invited shareholders to raise questions pertaining to the Company’s accounts and other items for adoption at the meeting, before putting a resolution to vote. The Directors, CEO/management and external auditors were in attendance to respond to the shareholders’ queries. The CEO also shared with the shareholders the Company’s responses to questions submitted in advance of the AGM by the Minority Shareholder Watchdog Group (MSWG).
   
   Shareholders were invited to submit any additional questions they might have had via an enquiry box placed at the venue of the 34th AGM so that they could be responded to in writing after the meeting. The officers of the Company were also present to handle other faceto- face enquiries from shareholders.
   
   All NEDs abstained from voting on the resolution concerning their remuneration. The external auditors and share registrar were on standby to act as independent scrutineers and poll administrator respectively, but there was no demand for a poll. All the resolutions set out in the Notice of the 34th AGM were put to vote by show of hands and duly passed.
   
   In addition to the 34th AGM, an EGM of the Company was convened and held immediately upon the conclusion of the said AGM, to consider the establishment of the SGP of up to 10% of the issued and paid-up share capital of the Company and matters incidental thereto. Similarly, the Chairman allowed representatives of the media to attend the EGM. The same Directors who attended the 34th AGM were present at the EGM. The proceedings of the EGM included the presentation by the Company’s external Human Capital Consultant on the rationale, key objectives, employees’ eligibility, annual awards and costs for the establishment of the SGP. A Q&A session was held during which the Chairman invited shareholders to raise questions. The Directors, CEO, management team and the consultant’s representatives were on hand to respond to the shareholders’ queries.
   
   The outcome of the 34th AGM and the EGM, including the detailed poll results of the EGM for Ordinary Resolutions 1 and 2 as represented by the number and percentage of shares held by the shareholders voting in person or by proxy, was announced on the same day via Bursa LINK. The minutes of both the AGM and EGM were posted in the financial section of the IR Portal, which is accessible on Bursa Malaysia’s website.
   
   Since the implementation of the e-Dividend in September 2010, Bursa Malaysia continued to keep its valued shareholders informed in its Administrative Detail, which was sent out together with the Notice of the 34th AGM, stating that the Company’s representatives were available at the Service Counter prior to the commencement of the said AGM to explain the benefits and registration process of the e-Dividend.
   
   
3. Corporate Sustainability
   
   The Board promotes good CG in the application of sustainability practices throughout Bursa Malaysia, the benefits of which are believed will translate into better corporate performance. A detailed report on sustainability activities which demonstrates Bursa Malaysia’s commitment towards the evolving global environmental, social, governance and sustainability agenda appears on pages 65 to 67 of this Annual Report.

1. Financial Reporting
   
   The Board ensures that shareholders are provided with a balanced and meaningful evaluation of the Company’s financial performance, its position and its future prospects, through the issuance of Annua Audited Financial Statements (AAFS) and quarterly financial reports and corporate announcements on significant developments affecting the Company in accordance with the MMLR.
   
   In this respect, the AC Chairman Tan Sri Datuk Dr. Abdul Samad bin Haji Alias¹⁵, who is a member of three professional accounting organisations, together with all AC members who are financially literate, discharged his function in reviewing the financial statements of the Company in the presence of both external and internal auditors, prior to recommending them for the Board’s approval and issuance to stakeholders. The CFO also formally presented to the AC and the Board details of revenues and expenditures, for review of quarter-to-quarter and year-to-date financial performance against budget. The Chairman’s Message, CEO’s Message and Financial and Operational Review in this Annual Report provide additional analysis and commentary on the Group’s financial performance.
   
   

   15

   Tan Sri Datuk Dr. Abdul Samad bin Haji Alias’s profile is set out on Page 26 of this Annual Report.

   
   Bursa Malaysia together with its operating subsidiaries, i.e. securities exchange, derivatives exchange, clearing houses for both securities and derivatives exchanges, and central depository, are required to perform their financial reporting function by way of submission to the SC the respective AAFS within three months after the close of each FY in accordance with Section 127 of the CMSA. The Directors’ Responsibility Statement for the AAFS of the Company and Group is set out on page 98 of this Annual Report.
   
   
2. Internal Control
   
   The Company continues to maintain and review its internal control procedures to ensure, as far as possible, the protection of its assets and its shareholders’ investments. Details of the Company’s internal control system and framework are set out in the Internal Control Statement together with the Risk Management Statement and AC Report on pages 81 to 83, pages 84 to 85, and pages 86 to 89 of this Annual Report respectively.
   
   
3. Relationship with Auditors
   
   Bursa Malaysia’s relationship with its external auditors is primarily maintained through the AC and the Board. The AC has explicit authority to communicate directly with external auditors and internal auditors. The CIA reports directly to the AC and is present at all AC meetings together with the internal auditors. The CEO and management only attend the AC meetings upon invitation. The CEO’s attendance at AC meetings since October 2011 was upon the request of the AC to facilitate direct communication with the CEO, to seek clarification on audit issues and to obtain additional information in relation to the operations of the Group. The external auditors did not call for any other meeting with the AC apart from the review of financial statements.
   
   The AC held two meetings with the external auditors in 2011 to discuss management’s cooperation in the audit process, sharing of information, and proficiency in the financial reporting function, in relation to appropriate accounting treatment. These meetings were held without the presence of the CIA, internal auditors, the CEO and management. The external auditors were given direct access to the AC to highlight any issues of concern at any time. Further details on the AC in relation to the external auditors are set out in the AC Report on pages 86 to 89 of this Annual Report.

1. Conflict of Interest
   
   In addition to being a business-oriented listed entity, Bursa Malaysia has also discharged its obligation as a market regulator. In this regard, conflict of interest (COI) or potential COI may arise in the course of Bursa Malaysia or its subsidiaries carrying out their respective functions for commercial reasons, or when discharging its statutory duties as an exchange holding company. Where Bursa Malaysia’s own or any other interest conflicts with the public interest, the latter will prevail as Bursa Malaysia is bound by law to act in the public interest, having regard to the need for investor protection.
   
   Bursa Malaysia has continued to maintain the separation of business functions from its regulatory functions. This is to ensure that both these functions operate independently of each other, and that business units within Bursa Malaysia are not in a position to influence any supervisory or regulatory decisions made by the Regulation unit. Furthermore, Bursa Malaysia has put into place arrangements and appropriate controls to identify and deal with COI matters. During the year, Bursa Malaysia conducted frequent briefings to staff to instil greater awareness throughout the organisation of its COI Guidelines. The Group Internal Audit (IA) also performed its review on compliance with certain internal processes and procedures, to ensure that conflicts were properly identified and managed.
   
   In 2011, no COI was recorded arising from Bursa Malaysia’s commercial interests vis-a-vis the proper performance of its regulatory duties.
   
   
2. Related Party Transactions (RPT)
   
   An internal compliance framework exists to ensure that the Company meets its obligations under the MMLR, including obligations in connection with RPT. The Board, through the AC, reviews the COI which could arise from a potential RPT. A Director who has an interest in a transaction must abstain from deliberation and voting on the relevant resolution in respect of such transaction at a Board meeting.
   
   A list of the significant related-party disclosures between the Company and its subsidiaries, and between the Group and other related parties including relevant key management personnel for FY2011, is set out on pages 164 to 166 of this Annual Report.
   
   
3. Code of Ethics and Whistleblower Policy and Procedures (WPP)
   
   The Company’s Codes of Ethics for Directors and employees continue to govern the standards of ethics and good conduct expected from Directors and employees, respectively. The Code of Ethics for Directors, for example, includes principles relating to Directors’ duties, COI and dealings in securities. For employees, the Code of Ethics covers all aspects of the business operations of the Company, such as confidentiality of information, dealings in securities, COI, gifts, gratuities or bribes, dishonest conduct, sexual harassment and the Company’s whistleblower procedure, mainly to prevent abuse of market and price-sensitive information and also to promote integrity and ethical conduct.
   
   The management conducted a review of the Code of Ethics for employees to enhance effectiveness of the whistleblowing mechanism and procedures. The management undertook a further review in the light of the Whistleblower Protection Act 2010 which came into effect on 15 December 2010, and decided in July 2011 that a standalone WPP with oversight by an independent Board Committee of Bursa Malaysia Group, i.e. AC should be drawn up. Hence, the whistleblower procedure in the Code of Ethics was deleted. The AC in October 2011 reviewed the WPP together with its TOR to include its responsibilities and authority in view of its primary purpose of overseeing the implementation of the WPP. Additionally, delegation of duties to the CIA and/or designated officer(s) of Group IA for the day-to-day administration of the WPP was provided for. The WPP and the revised TOR of the AC were approved by the Board in November 2011 for implementation within the Group. The Board further decided to formalise a WPP for Directors which was approved for implementation in December 2011.
   
   
4. Dealing in Securities
   
   The Guidance to Directors on Dealings in Securities was revised in September 2010 to provide clarity to the procedures for compliance by Directors in accordance with the MMLR when dealing in securities of Bursa Malaysia during and outside the closed periods. The revision comprised the relevant provisions on Directors’ duties to make disclosure under the CA and CMSA using the prescribed form of notification for dealings in securities of Bursa Malaysia. The Guidance also provides that Directors must not deal in securities as long as they are in possession of price-sensitive information, consistent with CMSA which prohibits insider trading. In 2011, none of the Directors dealt in securities of Bursa Malaysia during closed periods, although they may have done so under exceptional circumstances where deemed acceptable by the Chairman of the Board or, in his absence, the AC Chairman.
   
   The employees of the Company (including principal officers) are informed in advance via e-mail before the commencement of each closed period, in which they are not allowed to trade as prescribed under the Securities Transaction Policy to curb insider trading and to avoid COI. In addition, every employee is required to submit an annual declaration that he/she has not at any time transacted in securities of Bursa Malaysia or other listed issuers in regard to which he or she is in possession of material and price-sensitive information.