Bursa Malaysia Annual Report 2015

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GOVERNANCE
73 Bursa Malaysia • Annual Report 2015
CORPORATE GOVERNANCE
STATEMENT
3. REINFORCE INDEPENDENCE
3.1 Annual assessment of independence
a. Non-Executive Directors’ (“NEDs”) independence,
including new appointments
A proposed Director must satisfy the test of independence
of an “independent director” as defined under Paragraph
1.01 and Practice Note 13 of the MMLR that he/she is
independent of Management and free from any business
or other relationship which could interfere with the exercise
of independent judgement or the ability to act in the
best interests of Bursa Malaysia, taking into account the
candidate’s character, integrity and professionalism.
All the Directors had given confirmation on a quarterly basis
as to whether he/she had any family relationship with any
Director and/or major shareholder of Bursa Malaysia, any
COI with Bursa Malaysia or any convictions for offences
within the past 10 years other than traffic offences. This is
one of the criteria to enable the Board/NRC to assess the
Directors’ independence as and when any new interest or
relationship develops.
In view of the fact that independent and objective
judgement could be compromised by, among others,
familiarity or close relationship with other Board members,
the Board recognised the importance to focus beyond the
NEDs’ (including PIDs) background, economic and family
relationships, and consider whether the Independent NEDs/
PIDs could continue to bring independent and objective
judgement to Board deliberations.
In November 2015, the Board approved the NRC’s
recommendation to formalise the process of determining
the NEDs’ independence by having each of them complete
the Form of Declaration/Confirmation of Independence on
an annual basis in the fourth quarter of each year.
The NRC assessed the independence of the NEDs on an
annual basis in conjunction with the BEE exercise during its
review of the BEE results in October 2015. For this purpose,
the assessment on “Independence and Objectivity”
was included as one of the performance criteria for the
Directors, where the Directors were assessed through
several questions under the Directors’ SPA. For example,
“One is not afraid to pursue an unpopular stand on issues,
or expressing disagreement on matters during the meeting,
if any”, or “One consistently demonstrates independence
of judgement, clarity of thought and objectivity in problem
solving during deliberations at Board meetings”.
To mitigate the risks arising from COI or undue influence
from interested parties, the Directors were also assessed
through several questions on “Probity and Personal Integrity”
under the Directors’ SPA. For example, “This Director
demonstrates that he/she assumes his/her fiduciary role
responsibly and in utmost good faith, proactively discloses
real and apparent COI situations and abstains from voting
when necessary, or demonstrates respect of confidentiality
and high level of professionalism and impeccable integrity
in his/her conduct at all times”.
The average ratings for the Directors on the above questions
indicate the level of independence demonstrated by each of
them in their exercise of judgement and ability to act in the
best interest of the Company in decision-making, as well as
the Directors’ ability to resolve problems based on clarity
and understanding of the subject matter.
b. NEDs’ eligibility to stand for re-election/re-appointment
In line with Recommendation 3.1 of the MCCG 2012, the
NRC refers to the ratings of the three Independent NEDs in
“Independence and Objectivity” and “Probity and Personal
Integrity” as one of the factors in determining the NEDs’
eligibility to stand for re-election/re-appointment at the
forthcoming 39th AGM (as mentioned under Section 2.2.c of
this CG Statement).
Based on the above assessment in 2015, the NRC is
satisfied with the level of independence demonstrated by
all the NEDs and their ability to act in the best interest of
the Company during deliberations at Board meetings. The
Board therefore approved the NRC’s recommendations and
supported their proposed re-election in accordance with
Article 69 of the AA, and the proposed extension of the PID’s
term of appointment.
3.2 Tenure of Independent Director
The Board has implemented a nine-year policy for Independent
NEDs, in line with Recommendation 3.2 of the MCCG 2012. The
Directors among the first batch of Independent NEDs of the
demutualised Bursa Malaysia had already retired on a gradual
basis at the 35th and 36th AGMs to enable the progressive
refreshing of the Board in line with best CG practice.
The Chairman and all NEDs have served the Board for less than
nine years where their tenures of service are set out in the Board
of Directors’ Profiles of this Annual Report.