Function & Conduct

Function & Conduct

Board of Directors’ Composition, Function and Conduct
The UOB (Malaysia) Board is committed to upholding good corporate governance which is integral to the Bank’s growth and success. The Board works with Management to ensure that good corporate governance principles are observed at all levels of the Bank.  The Bank’s corporate governance practices are guided by the principles and best practices as set out in Bank Negara Malaysia (BNM)’s Guidelines on Corporate Governance and the Malaysian Code on Corporate Governance.

Board Duties
The Board is responsible for providing strategic direction, entrepreneurial leadership and guidance, ensuring true and fair financial statements, monitoring financial performance, determining capital/debt structure, reviewing risk management framework and processes as well as approving annual budgets and matters reserved to the Board by law and regulators’ requirements.

The Board receives updates through regular management reports.  These allow the Board to oversee the Bank’s performance, operations and governance initiatives.

Board Delegation
The Board recognises the need to be more nimble in discharge of its responsibilities, hence the Board has delegated certain duties to four Board Committees , namely the Nominating Committee (NC), Remuneration Committee (RC), Risk Management Committee (RMC) and Audit Committee (AC).

Each of the Board Committee has written terms of reference which set out the committee’s composition, roles and responsibilities, operating processes including decision-making by the committee and reporting back to the Board.  These are reviewed annually for continued relevance.  After each Board Committee meeting, the chairman/chairperson of the respective Board Committees reports to the Board on significant issues and concerns discussed, and where applicable, recommendations made during the meetings.

Common membership in the Board Committees facilitates the sharing of information between relevant Board Committees and enables better coordination of the work among the Board Committees.

Board and Board Committee Meetings
Board and Board Committee meetings are scheduled well before the start of a calendar year. Additional meetings are held during the year when warranted by circumstances. Directors are informed of meeting dates well in advance and received comprehensive information related to the agenda items ahead of a meeting. Papers for a meeting are uploaded onto a secure portal which directors can access via tablet devices provided by the Bank.

Managing Potential Conflicts of Interests
Each director is required to act honestly, in good faith and with due care and diligence when exercising his/her powers.  All directors have to notify the Bank in a timely manner of any change in interests or other appointments.  Where a director has an interest in a matter being discussed, he/she is required to recuse himself/herself from the discussion and abstain from voting on the matter.

Board Attendance
Directors’ attendance at Board and Board Committee meetings in 2018 is set out in the table below.

Number of meetings attended in 2018
  Board of
Directors

Audit Committee

Risk Management Committee

Remuneration Committee Nominating
Committee

Dr Wee Cho Yaw

1 N/A N/A - -

Mr Ong Yew Huat
(Retired on 1 January 2019)

6^ 3 3 1 3

Mr Wee Ee Cheong

5 N/A N/A N/A 4

Dato' Jeffrey Ng Tiong Lip

5 5^ 4 N/A 5

Puan Fatimah Binti Merican

6 5 5 2^ 5^

Mr Ching Yew Chye
(Appointed on 1 June 2018)

3 2 2^ 1 2

Mr Wong Kim Choong

6 N/A N/A N/A N/A

Number of meetings held in 2018

6 5 5 2 5

^ Chairman/Chairperson of Committee.

 

Board Independence, Composition and Diversity
The Board currently comprises seven members, the majority of whom are independent directors. Dato’ Jeffrey Ng Tiong Lip, Puan Fatimah Binti Merican, Mr Ching Yew Chye and Datuk Phang Ah Tong are independent directors. Annually, the NC assists the Board to assess the overall composition and effectiveness of the Board and Board Committees as well as each director’s independence according to the criteria in BNM’s Guidelines on Corporate Governance. For the year under review, the NC concluded that the independent directors continue to demonstrate conduct and behavior that are essential indicators of independence and that each of them continues to fulfil the definition of independence.

The profiles of the directors can be found in the Board of Directors section of this report. Collectively, the directors have vast and varied experience in banking, finance, business and management, and the skills and expertise relevant to the business of the Bank. The Board leverages the range of deep skills, expertise, experience and insights of its members in the discharge of its duties.

Induction and Continuous Development
The directors also recognise the importance of training and development to keep abreast of prudential requirements and best practices. For the year under review, they attended various training programmes related to their duties as directors including governance and risk management practices, updates on accounting standards, digital development in Malaysia and the Bank, cyber security and anti-money laundering. Through the Bank’s continuous development programmes, new and existing directors receive training on topics that are relevant to the business of the Bank thereby equipping directors with the relevant knowledge and skills to perform their role effectively. They also attended external programmes organised by FIDE Forum.

A new director receives an induction package upon appointment. The package includes among other materials, the articles of directorship which enumerate a director’s general duties, obligations and responsibilities, the Board Charter, terms of reference of the Board Committees, and guidance on directors’ duties and relevant company policies. The induction process consists of meetings with key senior management and briefings on key areas of the Bank’s business, risk management and support functions. A new director who is also appointed to serve on Board Committees is briefed on specialised or technical topics relevant to the activities of those Board Committees.

Access to Information
Directors have unfettered access to information, the internal and external auditors and senior management for the purpose of carrying out their duties. Comprehensive information is provided to directors in advance of each meeting to enable their deliberation and decision-making at the meeting. The information provided includes financial, strategic, risk management and operational reports. Directors may approach Management should they require additional information. Senior executives are present at meetings to provide additional information or clarification on matters tabled. Where relevant, professional advisers may be invited to brief the Board or Board Committees.

Whether individually or as a group, directors may seek independent professional advice in the course of discharging their duties at the Bank’s expense.

Board Charter
Click here for the Board Charter of UOB (Malaysia).

Constitution
Click here for the Constitution of UOB (Malaysia).

Board Committees

The Nominating Committee, Remuneration Committee, Risk Management Committee and Audit Committee have been constituted in accordance with Bank Negara Malaysia’s Guidelines on Corporate Governance. The roles and duties of each Board Committee are explained further in this section.

The main responsibilities of the Nominating Committee (“NC”) include reviewing nominations for appointment and re-appointments as well as removal of directors, Shariah Committee members, CEO and key senior management officers and the company secretary.  NC also reviews the size and overall composition of the Board and Board Committees annually and to ensure the Board and each Board Committee has an appropriate size and mix of competencies.

Each year, NC assesses the effectiveness of the Board and Board Committees, as well as contribution and performance of each director to the effectiveness of the Board.  It assesses the independence of each director annually based on the criteria in Bank Negara Malaysia’s Guidelines on Corporate Governance.  In order to promote independent oversight by the Board, for the year under review the NC has renewed the policy that an independent director of the Bank shall hold office for a maximum of six years or such other term as the NC deems fit but not exceeding a total of nine years.

The NC also assesses the performance of Shariah Committee members, CEO, key senior management officers and the company secretary. 

NC also ensures all directors receive an appropriate continuous development programme and oversees succession plans for the Board, CEO and key senior management officers.

The Remuneration Committee (“RC”) provides a formal and transparent procedure for developing remuneration policy for directors, Shariah Committee members, CEO and key senior management officers and ensuring that compensation is competitive and consistent with UOB (Malaysia)’s culture, objectives and strategy.

The RC also supports the Board actively in overseeing the design and operation of the Bank’s remuneration system, and recommends framework of remuneration for directors, Shariah Committee members, CEO and key senior management officers for the Board’s approval.  Each year, RC reviews and ensures the remuneration package is sufficient to attract and retain directors, Shariah committee members, CEO and key senior management officers.

The Risk Management Committee (“RMC”) assists the Board in overseeing the establishment and operation of a robust risk management system, policies, processes and procedures to identify, monitor, control and report risks.  The RMC also oversees senior management’s activities in managing credit, market, liquidity, operational, compliance, legal and other risks, and to ensure that the risk management process is in place and functioning.  It also reviews the Bank’s framework in managing money laundering and terrorism financing risks.

Each year, RMC reviews risk management strategies, policies and risk appetite before recommending them to the Board for approval.  It also reviews bank-wide stress test scenarios, assumptions, parameters and results, reasonableness of proposed actions and contingency plans and senior management’s attestation on the overall state of business continuity preparedness of the Bank.  RMC also examines whether incentives provided by the remuneration system take into consideration risks, capital, liquidity and the likelihood and timing of earnings, without prejudice to the tasks of the RC.

The Audit Committee (“AC”) assists the Board by providing oversight of the Bank’s financial reporting and the effectiveness and adequacy of the Bank’s internal control system.  It also reviews and updates the Board on credit transactions and exposures with connected parties, all related party transactions, reviews the accuracy and adequacy of the chairman’s statement in the directors’ report, corporate governance disclosures and interim financial reports in relation to the preparation of financial statements.

The AC meets the external auditor to review the annual financial statements, nature and scope of the external audit and audit plan, significant changes in accounting standards and audit issues. The AC meets the external auditor separately in the absence of Management at least annually.  In addition, the AC reviews the adequacy of the scope, functions and resources of the internal audit function in performing its duties independently.  Significant audit findings are highlighted to the AC through audit reports and at the AC meetings.  The AC also meets with the internal and external auditors as often as they deem appropriate to be apprised of matters which are under review.

Each quarter, the AC meets to review the financial statements before recommending them to the Board for approval.  In reviewing the financial statements, the AC assesses the accounting policies and practices applied and any judgement made that may have a significant impact on the financial statements.  AC meetings may involve discussions of accounting standards and accounting practices and developments, especially those that have an impact on the business of the Bank and its reporting obligations.

Another important duty of the AC is the review of fraud and whistleblowing cases reported to the Bank.  Annually, the AC reviews the policy governing the management of whistleblowing cases.