Overview StatementThe corporate governance adopted by the Manager provides a framework of control mechanisms to support the Trust in achieving its goals. This is also critical to the performance of the Manager and consequently, the success of the Trust. The Manager has adopted a strong corporate governance framework that is designed to meet the best practice principles. In particular, the Board and the Management of the Manager have the obligation to act honestly, with due care and diligence, and in the best interests of its Unitholders and other stakeholders by emphasising on the transparency of decision-making process, fairness and trustworthiness in managing the Trust. The Manager also recognises the need to adapt and improve the principles and practices to meet the ongoing changes and challenges in regulatory requirements, international developments and investor expectations. The Trust is a real estate investment trust which was established under a Trust Deed with a mandatory requirement to appoint a trustee. Maybank Trustees Berhad was appointed as the Trustee for AmFIRST REIT and the appointment was approved by the SC as prescribed under sections 288(1)(a) and 289(1) of the Capital Markets and Services Act 2007 (“CMSA”). The Trustee is required to act honestly and discharge its roles and responsibilities in accordance with the Deed, SC’s Listed REITs Guidelines, trust laws and securities laws. It has to exercise a degree of due care and diligence and has to act in the best interests of Unitholders. The primary roles and functions of the Trustee are outlined in the Deed. The following sections describe the Manager’s main corporate governance practices and policies which are guided by measures recommended in The Malaysian Code on Corporate Governance 2021 (the “Code”). Chapter 15.25(3) of the Main Market Listing Requirement (“MMLR”) requires the Board to provide only an overview of the application of the Principles set out in the Code. In addition, real estate investment trusts in particular are provided with specific exemptions as stipulated in clause 8.36 of Chapter 8 in MMLR. However, in the spirit of good corporate governance, the Manager has applied and outlined the practices under the Principles (wherever possible) during the financial year under review. The Code requires the REIT to provide a summary of its corporate governance practices during the financial year with reference to the three (3) broad principles as follows: Principle A Board Leadership and Effectiveness Principle B Effective Audit and Risk Management Principle C Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders The key focus areas on corporate governance and its priorities are as follows: BOARD AND KEY MANAGEMENT LEADERSHIPThe Manager’s shareholders critically assess on an ongoing basis its Board’s leadership and its key management staff, especially its Chief Executive Officer who plays an important role in executing strategies that had been approved by the Board. The Board and the key management staffs face an uphill task to improve the REIT’s performance especially during the challenging market conditions coupled with increased leasing space within Klang Valley. It is only through continuous focus by the Board and key management staffs on the key challenges, that action plans were formulated and executed to achieve the REIT’s intended goals. The key management staffs work closely with the licensed property managers on a day-to-day basis in ensuring effective property management. It will be the Board’s priority to ensure leadership in both the Board and key management staffs are always intact to ensure the REIT delivers sustainable performance. CODE OF ETHICS, CODE OF CONDUCT, WHISTLEBLOWER PROTECTION POLICY AND NO GIFT POLICYThe Code of Ethics as well as the Code of Conduct (“Codes”) have always been central in the Manager’s day-to-day activities. Being part of the AmBank Group, it has been continuously emphasised to all staffs that they are to comply with the internal policy. The Codes provide the framework for sound decision-making and guide for good business conducts. The Code of Ethics outlines six (6) key principles, which every Director and employee must adhere to. These are being Compliant, Responsible, Ethical, Accurate, Trustworthy and Equitable. In addition, the Whistleblower Protection Policy as well as the No Gift Policy were established and employed by the Manager to further enhance the culture of good ethics and business conduct. The Manager’s staffs are also required to complete online trainings organised by AmBank Group as and when launched and attend refresher courses conducted by the Compliance Department. The Whistleblower Protection Policy provides an independent reporting channel for all staffs and stakeholders. External parties can always have access via email or call the Compliance Officer for lodgment of complaints or clarification when required. Whistleblowers are protected and the channels are independent of the operational departments. The Compliance Department and the Company Secretary play an important role in receiving complaints and channeling the same to specified ombudsperson. GOVERNANCE, RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORKPolicies are approved by the Board and cascaded down to the entire organisation to ensure all departments are aware of what is expected of them. Standard operating procedures are formulated based on these approved policies. Staffs are guided by these policies and procedures in discharging their daily duties. The Board is assisted by the Audit Committee in ensuring the adequacy and effectiveness of the risk management and internal control framework. The Risk Management Committee, a Management level committee headed by the Chief Executive Officer and supported by the Heads of Departments reviews the entity wide risk. The Committee is responsible for identifying the principal risks associated with the business activities and ensuring appropriate measures, systems and internal controls are in place to mitigate the risk exposure. The Risk Management framework further extends to functional roles and responsibilities established for the management of risk. In parallel, Business Operational Controls Officer (“BOC”) performs relevant key controls testing to ensure adherence to policies and procedures adopted. In addition, the Compliance Department’s role is also to assess that key areas such as regulatory compliance and internal policies are complied with accordingly. Finally, the Internal Audit function is undertaken by the Group Internal Audit Department (“GIAD”) which is independent of the Manager and REIT’s business and operations, and reports directly to the Audit Committee. The GIAD performs independent assessment of the adequacy and effectiveness of the Manager’s risk management, internal control and governance processes and systems. Results of GIAD’s reviews and issues of concerns are reported directly to the Audit Committee. The CEO and Heads of Departments are responsible to ensure the audit findings are resolved within the agreed timelines, and the status of resolution of key audit findings are also monitored by the Audit Committee. APPLICATION OF SPECIFIC PRACTICES FOR EACH PRINCIPLEAlthough it is not mandatory, the Manager detailed out the specific applications of the practices for each principle as indicated by the Code as follows: PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS
Practice 1.1The Manager is managed by an experienced Board with a wide and varied range of expertise. The Board is responsible for the overall management and corporate governance of the Trust, including establishing goals for management, monitoring the achievement of these goals and review of Management’s performance. Each Director has a duty to act honestly and in good faith, with due care and diligence, and in the best interests of the Unitholders. The Board ensures that proper and effective controls are in place to assess and manage business risk, and compliance with applicable laws, regulations, guidelines and policies. The Board focuses mainly on strategy, financial performance and critical business issues, including:
The Board is adequately resourced and supported by an Audit Committee of Directors to look into, amongst others the risk management, internal control and financial management of the Trust. Practice 1.2The Chairman of the Board, Mr Soo Kim Wai, a Non-Independent Non-Executive Director, leads the Board objectively and ensures its effectiveness. The Chairman encourages active participation and all parties are free to express their opinions in the Board meetings or informal discussions with the Management Team. Practice 1.3The roles and responsibilities of the Chairman and Chief Executive Officer are separated, and the positions are held by two (2) different individuals. Mr Soo Kim Wai is a Non-Independent Non-Executive Director / Chairman while YM Raja Nazirin Shah Bin Raja Mohamad is the Executive Director / Chief Executive Officer. This is to ensure appropriate segregation of duties, authority and increased accountability. The segregation ensures a clear distinction between the Chairman’s responsibilities to lead and manage the Board and the Chief Executive Officer’s responsibilities to manage the Trust and the Manager. The Chairman leads the Board and ensures that members of the Board work together with the Management Team in a constructive manner to address strategies, business operations, financial performance, risk management and internal control issues. The Chief Executive Officer has full executive responsibilities in consultation with the Executive Committee (‘‘EXCO’) over the business directions and operational decisions of the Trust. He leads the Management Team and provides direction on the day-to day operations and works with the Board to determine the overall business, investment and operational strategies for the Trust and ensures that these are implemented as planned and in accordance with the Deed and the SC’s Listed REITs Guidelines Practice 1.4The practice recommends that the Chairman should not be a member of the Audit Committee, Nomination Committee or Remuneration Committee. The Manager does not have a Nomination or Remuneration Committee, however the Chairman is a member of the Group Nomination and Remuneration Committee (GNRC) established at the Group level. He is also a member of the Audit Committee by virtue of being as the most suitable and appropriate candidate that satisfies the MMLR’s Chapter 15, Clause 15.09(1)(c). As the MCCG Guidance 1.4 outlines that having the same person assuming the positions of Chairman of the Board and being a member of the Audit Committee may impair the objectivity of the Chairman, the Manager of the Board manages the objectivity by ensuring the Chairman of the Board would abstain from deliberation and decision making at the relevant meetings if there is any potential conflict of interest. Practice 1.5The Board is supported by qualified and competent licensed Company Secretaries. The roles and responsibilities of the Company Secretaries includes guiding and advising the Directors on areas of corporate governance, relevant legislations, regulations and policies besides ensuring compliance with the MMLR and other regulatory requirements. The Company Secretaries attend the Board and the Board Committee’s meetings and are responsible for the accuracy and adequacy of records of the proceedings of the Board and the Board Committee’s meetings and resolutions. Practice 1.6The Company Secretaries, namely Ms. Chan Sau Leng and Ms. Ruzeti Emar binti Mohd Rosli from Boardroom Corporate Services Sdn. Bhd. work with the Chairman and Management to ensure that the Board papers and agenda are provided to the Directors ahead of meetings of the Board and Board Committee so that they have time to review matters to be discussed prior to the meetings. The Board papers are circulated at least five (5) business days in advance. Meetings are usually a half-a-day event and include presentations by the Management, and where necessary, presentations by external consultants and experts on strategic issues relating to specific business areas. The Board meetings are scheduled at least four (4) times per annum with the purpose, amongst others, to discuss and review the operations of the Trust and approve the release of the interim and the audited financial statements of the Trust. Additional meetings are held as and when necessary between the scheduled meetings.
Note: All attendances reflected were the number of meetings attended during the Directors’ tenure of service for FY2022.
Practice 2.1Currently, the Manager has an Audit Committee of Directors, established to provide assistance, review and report to the Board in relation to fulfilling the statutory responsibilities of the Manager, monitoring of the accounting and financial reporting practices, as well as ensuring adequate and effective internal control systems of the Manager are in place, amongst other roles and primary responsibilities. The Audit Committee comprises of three (3) members of the Board and the committee meets on a quarterly basis together with other key management staff. n addition, the Board has established an EXCO which was formed to support the Board to assess, deliberate and approve operational decisions expeditiously. The EXCO comprises of four (4) members who are representatives of the Manager’s shareholders. The EXCO meeting is held on a monthly basis and is attended by Chief Executive Officer, Heads of Departments and key support staff. Both the Audit Committee and the EXCO minutes are tabled quarterly to the Board. The minutes comprise key deliberations, recommendations to the Board and decisions made.
Practice 3.1The Board employs the Code of Ethics and Code of Conduct (“Codes”) which were enforced by the AmBank Group (“Group”). The Codes provide the framework for the decision-making and guide business conduct. The Group’s Code of Ethics sets out six (6) key principles, namely:
The code includes reporting of unlawful or unethical behavior through established procedures including Whistleblower Protection Policy that are in place. Staffs are reminded periodically of the six (6) key principles through an online training executed group wide.The Manager’s staff are required to complete the refresher course periodically to ensure staff understands what is required of them and are able to apply it when they are discharging their duties. In addition, the Compliance Officer too conducts briefing on the subject matter to further emphasise its importance. The Manager has adopted the No Gift Policy enforced by the Group. This is to ensure no conflict of interest arises or preference is given to suppliers during transactions involving procurement process such as award of contracts or negotiations. Pursuant to the incorporation of Section 17A, Corporate Liability (for corruption) under the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act 2009”), which was effective from 1 June 2020, the Manager has adequate procedures and in compliance with the prescribed Guidelines on Adequate Procedures (“GAP”). The GAP was issued pursuant to Section 17A(5) of MACC Act 2009 and was derived based on the 5 principles as follows:
Practice 3.2The Whistleblower Protection Policy and procedure were adopted by the Board and are currently in place. The purpose is to report the following improper conduct, but not limited to:
The policy embeds the requirement for the protection of the whistleblower which is fundamental for the entire process. Key principles include:
Practice 4.1On 11 February 2019, the Board with the recommendation from the Management approved and issued its initial Sustainability Policy Version 1.0 (“Policy”) and subsequently reviewed and updated the policy on 24 November 2021. The well approved and documented Policy is meant to create the Manager’s commitment in managing Environment, Social and Governance (“ESG”) elements in addressing sustainability risks and opportunities in a systematic manner. Guided by the Manager’s core values, AmFIRST REIT’s approach towards sustainability emphasises are on the following pillars: Compliant, Responsible, Ethical, Accurate, Trustworthy and Equitable (C.R.E.A.T.E). These values are inculcated in our working culture to always be compliant, responsible, accurate, equitable and ethical in managing our ESG (Environment, Social, Governance) risks to gain trust amongst our stakeholders towards building a sustainable business. The Senior Management appointed a consulting firm, namely AGV Environment Sdn. Bhd. that has vast experience and are familiar with the ESG requirements to guide the Manager in implementing the ESG initiatives. There is a proper Sustainability Governance Structure which was implemented as required under the Policy to ensure these are followed through accordingly. In summary, the Manager has established a 3-Tiered Governance Structure which comprises of:
Practice 4.2Under the said Policy, the Management has a set of responsibilities to assist the Board to ensure those strategies, priorities and targets are communicated to relevant parties. Annually, a detailed disclosure on the qualitative and quantitative sustainability performance related to ESG risks and opportunities are to be made in the Sustainability Statement which is included in this Annual Report on pages 61 to 86. Practice 4.3On annual basis the Board are kept abreast with sustainability issues relevant to its business by its Management and its consultant. The Board members too on their own accord keep themselves abreast of ESG issues and where applicable will address it in their Board, Audit Committee as well as in EXCO meetings so that the ESG initiatives are practiced accordingly. Practice 4.4Currently the Manager’s performance management system incorporates the governance aspect for each staff as a key performance indicator (“KPI”). The Manager would look into incorporating the other components namely Environment and Social KPIs in FY 2023 with the rollout of Sustainability Program for FY2023 onwards. Likewise the AmBank Group is reviewing to incorporate the same for its groupwide Directors. Practice 4.5 [A Step Up]As the Board understood the importance of the ESG program, the Board approved and the Manager established a designated Sustainability Management Team as outlined in the said Policy. The efforts are further coordinated with the assistance of Finance staff.
Practice 5.1The Manager relies on the established terms of reference and policies of the Group in terms of the governance in ensuring an effective Board comprising right balance of mix of skills, experienced and competent directors, composition of independent and non-independent directors and the maximum tenure of nine (9) years of an independent director. The Board took cognisant of the Group’s policies and practices in upholding good corporate governance. None of the Independent Directors had reached the nine-year period and all the Non-Executive Directors are subject to the yearly re-election by rotation at the annual general meeting of the Manager. Practice 5.2The Manager’s Board retains its Board composition with at least one-third (1/3) of independent Directors and is of the view that the decisions that the Board makes are objective and in the best interest of all stakeholders. The Board has six (6) members comprising five (5) Non-Executive Directors and one (1) Executive Director. Two (2) of the Board members are Independent Directors (representing 1/3 of the Board) in compliance with the MMLR and SC’s Listed REITs Guidelines while the Chairman of the Board is a Non-Independent Non-Executive Director. As at the date of this Report, none of the Directors held Directorships in more than five (5) listed issuers. The relationships among the Board members are disclosed on page 113 of this Annual Report. In addition to this, information on direct and indirect unitholdings related to the Manager and transactions with the companies related to the Manager are disclosed in Note 14 and Note 26 respectively, in the notes to the financial statements. The Board comprises business leaders and experienced professionals with backgrounds in fund management, property, banking, legal and finance. The profiles of the Directors are set out on pages 28 to 30 of this Annual Report. The Board is of the view that its current composition comprises individuals who, as a group, provide the necessary core competencies and that the current Board size is appropriate and effective, taking into consideration the nature and scope of AmFIRST REIT’s operations. The Board diversity in terms of ethnicity, professional background and experience are as illustrated below: 
Practice 5.3The Code states that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. This is in line with the Group’s existing policy which states that an Independent Non-Executive Director shall serve up to a maximum of nine (9) years (the “9-Year Rule”). The Independent Director may continue as a Non-Independent Director subsequently subject to the recommendation of the Group Nomination and Remuneration Committee (“GNRC”) of Directors and the approval of the Board. The two-tier voting process for the purposes of retaining an independent Director beyond 9 years as recommended by MCCG is not applicable for the Manager as the Manager is a limited company with two major corporate shareholders. Practice 5.4 [A Step Up]The Manager has adopted the policy which limits the tenure of its independent Directors to nine years. The policy has been complied diligently, and this was demonstrated in prior years, where independent Directors had stepped down after nine (9) years of service. As of this Annual Report date, the current two independent Directors of the Manager have both served for approximately 5 years and 9 months. Practice 5.5It is imperative that the Board and Senior Management are appointed based on objective criteria, merit and taking into account diversity in skills, experience, age, cultural background and gender. The Manager adopts the Group’s appointment procedures for both Directors and for its staff. The Manager utilises the resources made available by Group Human Resource. The Board places significance on the merit as well as the role which objective criteria were derived. Newly appointed Directors and Senior Management are given briefings by the Management on the business activities of the Trust, its strategic directions and policies and the regulatory environment in which the Trust operates. Directors are also informed of their statutory and other duties and responsibilities as well as policies and procedures relating to the corporate conduct and governance including the disclosure of interests, prohibitions on dealings in the Trust’s units and restrictions on the disclosure of price-sensitive information. Subsequent to a Director’s appointment, the Director will be required to complete the Mandatory Accreditation Programme as required by Bursa Malaysia, and the Capital Market Director Programme (“CMDP”) as required by SC within the timeline as stipulated in MMLR and SC’s Licensing Handbook respectively. CMDP is an exclusive platform for Directors of licensed intermediaries to be equipped with the relevant knowledge, skills and abilities to meet the expected competencies required of a board. It is also designed to allow Directors to explore and deliberate on pertinent issues affecting the industry from the perspectives of multi stakeholders. Practice 5.6The Manager’s Group has various approaches and sources to identify candidates for the appointment of Directors. Apart from the common method of obtaining recommendation from Board members and major shareholders, the Group uses independent recruitment firms as well as the direct approach of identifying individuals that have relevant experience and undertaken similar Board roles and are well known in the market. Practice 5.7The appointment and reappointment of the Directors are the responsibility of the Manager’s shareholders and not the Unitholders. Practice 5.5 and 5.6 sets out the due process involved to ensure they are able to discharge their duties once they are onboarded as Directors of the Manager. Practice 5.8GNRC performs the function that a nominating committee would otherwise perform, namely it administers nominations to the Board, reviews the structure, size and composition of the Board, and reviews the independence of Board members. The composition of the Board is reviewed to ensure an appropriate mix of expertise, independence, experience and knowledge in business, legal, finance and management skills critical to Trust’s business. Practice 5.9The Board takes cognisance of having more women Directors on the Board. The Code’s requirement as well as the MMLR is for the Board to comprise 30% of women Directors. Although the REIT is exempted by virtue of Chapter 8, Clause 8.36 of MMLR, the shareholders of the Manager as well as the Board do consider women candidates who meet the role and merit. As of the annual report date, the Manager’s Board does not have any woman Director. Practice 5.10The Manager being a subsidiary of AmBank Group, adopts the Group Nomination & Remuneration (“GNRC”) Terms of Reference which forms the policy in addressing the gender diversity for the Board and Senior Management, where applicable. The Terms of Reference is published in the AmBank Group’s website www.ambankgroup.com. The Manager discloses its gender diversity in the employee distribution section in its Sustainability Statement on page 80. The Manager provides equal opportunities and evaluate employee based on merit.
Practice 6.1The Manager took note of practice 6.1 on the recommended practice to conduct a formal and objective annual evaluation to determine the effectiveness of the Board, its Committees and each individual Director even though this practice note is not applicable to REIT entities.
Practice 7.1The Manager acknowledges the need to ensure a fair and equitable remuneration mechanism for the Directors and Senior Management, which commensurates with the demands and performance of the Manager, and also the individual’s responsibilities. The Manager utilises the AmBank Group’s Human Resource remuneration policies and procedures which were implemented Group wide. The remuneration scheme that the Manager adopted from its Group reflects and considers level of position, years of experience, competency, different roles, complexity of functions, market conditions and other criteria that may be considered on a case to case basis. There is systematic performance management system with key performance indicators agreed upfront for annual appraisals for staffs. Staffs are required to undergo semi-annual performance review with respective Heads of Departments. This is to ensure that staffs are made known on their progress and appropriate corrective actions can be taken. The entire process is overseen by Group Human Resource. The policy and procedures are periodically reviewed by the AmBank’s Group Human Resources and reflected accordingly in the AmBank’s internal portal for all the staff’s reference. Practice 7.2The GNRC at Group level looks into the aspect on remuneration of the Directors and Key Management Personnel (where applicable and if required).
Practice 8.1The Directors’ remuneration is paid by the Manager and not the Trust. For Non-Executive Directors, they receive Directors’ fees and meeting allowances for their attendance at meetings of the Board and the Board Committee. The determination of the Non-Executive Directors’ remuneration is a matter for the Board as a whole and is subject to the approval of the Manager’s shareholders. The Directors are not involved in the approval of their own remuneration. Practice 8.2The Board opined that the top Senior Management’s remuneration will not be disclosed due to sensitivity and competitive external human resource environment in the industry. This is necessary and in the best interest of the Manager as well as the Trust, in order to retain its experienced staff and ensure smooth continuity of the business operations. Furthermore, the Code, referring to Guidance 8.2 suggests that the disclosure of how Director’s remuneration is measured, allows stakeholders to understand the link between Senior Management remuneration and the company’s performance. On the contrary, due to the unique REIT structure whereby the Manager is separate from the Trust, there is no direct link between the remuneration of Management Team and the Trust’s performance. The remunerations were disbursed from the management fees earned by the Manager, which were predetermined at the inception of the Trust via the Trust Deed.
Practice 9.1The Chairman of the Audit Committee, Dato’ Wong Nam Loong is not the Chairman of the Board. Dato’ Wong Nam Loong was appointed on 15 August 2016 as an Independent Non-Executive Director and has led the Audit Committee since then. The Chairman of the Audit Committee ensures that the Committee’s primary roles and responsibilities are discharged in accordance with its Terms of Reference, which is set out in the Audit Committee’s Report on pages 107 to 108 of this Annual Report. Practice 9.2The Board takes cognisance of matters pertaining to independence and conflict of interest. It is imperative that the functions of Board Committee are not impaired when they are discharging their duties. In this respect, the Board will require a former key audit partner to observe a cooling-off period of at least three years before being appointed as a member of the Audit Committee, if there is any. This will also apply to any other similar appointments if the Board deems there is a potential conflict or an issue on independence. Practice 9.3It is the Audit Committee’s responsibility to review the appointment of the external auditors and resignation of external auditors, negotiate and approve the annual audit fees. This is clearly outlined in the Audit Committee’s Terms of Reference. During the annual audit plan presentation by the external auditor, the Audit Committee had assessed the suitability, objectivity and independence of the external auditor. The external auditor had confirmed their independence during the meeting with the Audit Committee prior to the commencement of their annual audit. Practice 9.4 [A Step Up]While the requirement of the Code states that the Audit Committee should solely comprise of Independent Directors, the Board is of the view that the Audit Committee is able to discharge its duties effectively with its two-thirds (2/3) composition of Independent Directors. The inclusion of a Non-Independent Director who represents one-third (1/3) of the Committee is deemed necessary to facilitate and support the Independent Directors in areas of his expertise. Practice 9.5The Audit Committee possesses the necessary range of skills to effectively discharge its duties. All members have good understanding of the operations and its financial reporting process. Mr Soo Kim Wai, who is an Audit Committee member possesses extensive experience in the accounting field and is a member of several professional accounting bodies namely the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants and Association of Chartered Certified Accountants. Apart from financial knowledge, the Board has ensured that the Independent Directors should also comprise of members who have experience in the relevant property related industry. Collectively, the current Audit Committee members have extensive experience and knowledge in accounting, finance, legal and real estate field. During the financial year under review, the Directors, including the Audit Committee members had attended various conferences, seminars and workshops to enhance their knowledge and expertise and to keep abreast with the relevant changes in laws, regulations and the business environment. The training programs attended by the Directors during the FY2022 were, on areas relating to real estates, corporate leadership, professional development, information technology, regulatory and compliance, sustainability on ESG, finance as well as business in the new normal. These trainings were arranged by the Group Learning and Development Department of the ultimate holding company of the Manager and regulators as well as professional establishments. PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT
Practice 10.1The Board has established an effective risk management and internal control framework. It plays a vital function in the Manager’s management of its risks and transactions. The Board through its Audit Committee is responsible for the risk management of the Trust which includes but is not limited to, identifying the principal risks associated with the business activities and ensuring appropriate measures, systems and internal controls are in place to mitigate the risk exposure. Practice 10.2The features of the risk management and internal control framework are disclosed in detail in the Statement on Risk Management and Internal Control on pages 102 to 106 of this Annual Report. The internal control is mainly driven by policies and procedures which are designed to provide reasonable assurance to the Board that the Trust will achieve its objectives. There is an established internal audit function which is undertaken by GIAD. The Manager also has a designated Compliance Officer to ensure compliance with regulations, internal policies and procedures. Practice 10.3 [A Step Up]A Risk Management Committee which is a management level committee was established to assist the Audit Committee in assessing the adequacy of internal control and risk management. The Risk Management Committee comprises of the Chief Executive Officer and Heads of Departments of the Manager. There is requirement to report the risks affecting the Trust on half yearly basis to the Audit Committee and the Board.
Practice 11.1The internal audit function is performed by GIAD which operates under a charter which gives it unrestricted access to review all activities of the Manager. The Group Chief Internal Auditor of GIAD reports independently to the Audit Committee. GIAD’s activities conform with the Institute of Internal Auditors (IIA)’s International Standards for the Professional Practice of Internal Auditing as well as standards and requirements set out by the relevant Regulators on the internal audit function. GIAD has internal procedures in place to ensure that the audit personnel are free from any relationships or conflicts of interest and their objectivity and independence are not impaired when conducting audits on the Manager. The current structure allows GIAD to perform its function effectively and independently. Practice 11.2GIAD is headed by the Group Chief Internal Auditor (“GCIA”) Encik Shamsul Bahrom bin Mohamed Ibrahim, who has over 23 years of comprehensive internal auditing and management experience in the financial services industry. En. Shamsul holds a BSc (Hons) Finance & Accounting from University of Salford, Manchester as well as Masters in Business Administration from University of Strathclyde, Scotland. En. Shamsul is also a Chartered Banker, a Certified Bank Auditor, and a Qualified Risk Auditor. In 2021, En. Shamsul completed the Cybersecurity Fundamentals Certification and has also been conferred with the Certified Professional in Financial Crime Compliance title. More recently, En. Shamsul completed the certification programme administered by the Association of Certified Fraud Examiners and attained the Certified Fraud Examiner title. En. Shamsul is a member of the Institute of Internal Auditors Malaysia (IIAM), the Asian Institute of Chartered Bankers (AICB) and the Institute of Enterprise Risk Practitioners (IERP). He is also the current Chairman of AICB’s Chief Internal Auditors Networking Group (CIANG). GIAD focuses its efforts in accordance with the Annual Audit Plan which is developed based on a structured risk-based assessment of all the activities undertaken by the Manager that ensures all risk-rated areas are kept in view to ensure appropriate audit coverage. The risk-based audit plan is reviewed periodically, taking into account the changes in the business and risk environment. The Annual Audit Plan, including the internal audit resources required to execute the plan is approved by the Audit Committee. The main objective of the audit review is to assess the adequacy and effectiveness of the Manager’s governance, risk management and systems of internal control. Apart from the above, GIAD also performs ad-hoc reviews and investigations involving fraud, misconduct, when requested by Regulators, the Board or Management. The results of the audit reviews, including Management’s action plans to address issues highlighted by internal auditors are tabled to the Audit Committee for deliberation. GIAD conducts follow-up and reports to the Audit Committee regarding the status of implementation of the Management action plans, until full resolution. The Audit Committee is of the view that GIAD is adequately resourced to perform its functions and has maintained its independence from the activities that it audits. PRINCIPLE C: INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS
Practice 12.1The Board emphasises the need to communicate with stakeholders regularly, effectively and in a transparent manner. Apart from media write ups, the Manager posts key information on the Trust’s official website www.amfirstreit.com.my for stakeholder awareness. The stakeholders are able to query or reach Senior Management both via email and telephone. The contact details are listed on the said website.
Practice 13.1The Board through its Management and Company Secretary strictly complies with the Annual General Meeting (“AGM”) notice issuance to the Unitholders. The Manager gives more than 28 days’ notice prior to the meeting. The number of days of notice period provided since past three (3) years were as follow:
Practice 13.2All Directors are required to attend the AGM to address any questions raised by the Unitholders. All the questions raised with responses provided during the AGM are minuted by the Company Secretary and shall be posted on the Trust’s corporate website for Unitholders reference. Practice 13.3AmFIRST REIT’s 9th AGM on 7 July 2021 was held fully virtual via Remote Participation and Electronic Voting (“RPEV”), to facilitate greater Unitholders participation. The meeting platform was https://web.lumiagm.com/ which was broadcasted from Symphony Square Auditorium located at Petaling Jaya, Selangor. The Manager through its outsourced Company Secretary utilizes Lumi’s technology which is the dominant player globally in the provision of software and real-time audience engagement technology to facilitate annual general meetings for companies. Lumi’s technology runs on a secure dedicated network and encrypted cloud-based servers. Practice 13.4The Chairman of the Board together with the Chief Executive Officer interacts and provides detailed presentation of the given sufficient opportunity to pose questions during the general meeting and all the questions are addressed accordingly. The detailed presentation as well as the questions and answers are in the official website of AMFIRST REIT. Practice 13.5The meeting which was broadcasted from Symphony Square Auditorium located at Petaling Jaya, Selangor via https://web.lumiagm.com/, had all the necessary infrastructure and tools to support the broadcast of the general meeting and the Lumi technology had the capability to allow participation by Unitholders. Prior to the AGM, the Manager has issued the necessary Administrative Guide together with the Notice of Meeting to all Unitholders so that they are aware of the required procedures in participating the AGM. This to ensure participation by Unitholders is seamless. In addition, to ensure the fully virtual AGM is conducted in an independent and transparent manner, Boardroom Share Registrars Sdn. Bhd. was appointed as the Poll Administrator to conduct the polling process whereas Commercial Quest Sdn. Bhd. was appointed as an Independent Scrutineer to verify the poll results. Questions submitted online via meeting platform were moderated before being sent to the Chairman to avoid repetition. The Minority Shareholders Watch Group (“MSWG”) recommended that the independent moderators should be present to moderate the Questions and Answers (“Q&A”) session in a fair, objective and impartial manner to ensure that all relevant questions are answered. In this regard, the Manager appointed KPMG Management & Risk Consulting Sdn. Bhd. as the Independent Moderator to moderate the questions posted by Unitholders to the Board during the allocated Q&A session. Practice 13.6The Minutes of the general meeting is made available to all Unitholders within 30 days after the AGM in the corporate website of AmFIRST REIT for their information.
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