ALLIANCE ISLAMIC BANK BERHAD (776882-V) B a rd Cha rter This charter is designed t prvide directrs and fficers with greater clarity regarding the rle f the Bard, the requirements f directrs in carrying ut their rle and discharging their duties t the Islamic Bank, and the Bard s perating practices. 1. Cmpany Statement f Purpse The purpse f the Islamic Bank is t imprve acrss all dimensins f cmpetitiveness and t differentiate via excellent custmer service and branding t build lng term sharehlders value with due regard t ther stakehlder interests. 2. Standards f Business Cnduct It is the plicy f the Islamic Bank that its affairs are cnducted in accrdance with the law and t high ethical standards. It is the respnsibility f all directrs and emplyees t ensure that, fr their part, this plicy is achieved. 3. Respnsibility f the Bard The Bard has the verall respnsibility fr prmting the sustainable grwth and financial sundness f the Investment Bank, and fr ensuring reasnable standards f fair dealing, withut undue influence frm any party. This includes a cnsideratin f the lng-term implicatins f the Bard s decisins n the Investment Bank and its custmers, fficers and the general public. In fulfilling this rle, the Bard shall (a) (b) (c) (d) (e) (f) (g) apprve the risk appetite, business plans and ther initiatives which wuld, singularly r cumulatively, have a material impact n the Islamic Bank s risk prfile; versee the selectin, perfrmance, remuneratin and successin plans f the CEO, cntrl functin heads and ther members f senir management, such that the Bard is satisfied with the cllective cmpetence f senir management t effectively lead the peratins f the Islamic Bank; versee the implementatin f the Islamic Bank s gvernance framewrk and internal cntrl framewrk, and peridically review whether these remain apprpriate in light f material changes t the size, nature and cmplexity f the Islamic Bank s peratins; prmte, tgether with senir management, a sund crprate culture within the Islamic Bank which reinfrces ethical, prudent and prfessinal behaviur; prmte sustainability thrugh apprpriate envirnmental, scial and gvernance cnsideratins in the Islamic Bank s business strategies; versee and apprve the recvery and reslutin as well as business cntinuity plans fr the Islamic Bank t restre its financial strength, and maintain r preserve critical peratins and critical services when it cmes under stress; and prmte timely and effective cmmunicatin between the Investment Bank and Bank Negara Malaysia n matters affecting r that may affect the safety and sundness f the Islamic Bank. Bard Charter apprved by AIS Bard n 24 January 2018 Page 1 f 10
3A. Matters Reserved fr the Bard s Decisin 1. Strategy and Management Apprval f the Islamic Bank s strategic directin and bjectives. Apprvals f the annual perating and capital expenditure budgets and any material changes t them. Extensin f the Islamic Bank s activities int new business r gegraphic areas. Any decisin t cease t perate all r any material part f the Islamic Bank s business. 2. Structure and Capital Changes relating t the Islamic Bank s capital structure including reductin f capital, share issues, share buy backs (including the use f treasury shares). Majr changes t the Islamic Bank s crprate structure, including, but nt limited t acquisitins and dispsals f shares which are material relative t the size f the Islamic Bank. Changes t the Islamic Bank s management and cntrl structure. 3. Financial Reprting and Cntrls Apprval f quarterly financial results. Apprval f the annual reprt and accunts, including crprate gvernance statement and directrs remuneratin reprt. Apprval f the dividend plicy. Declaratin f interim dividend and recmmendatin f final dividend. Apprval f any significant changes in accunting plicies r practices. Apprval f material unbudgeted capital r perating expenditures (utside f bard cmmittees apprval limits delegated by the Bard). 4. Cmmunicatin Apprval f reslutins and crrespnding dcumentatin t be put frward t sharehlders at a general meeting. Regulatry issues which require the Bard s respnse. 5. Bard Membership and Other Appintments Changes t the structure, size and cmpsitin f the bard. Successin plan fr the Bard and Chief Executive Officer ( CEO ). Appintments t the Bard. Selectin f the chairman f the Bard and the CEO. Appintment f the senir independent directr. Membership and chairmanship f bard cmmittees. Re-appintment/re-electin f directrs. Appintment r remval f the cmpany secretary. Appintment, re-appintment r remval f the external auditr t be put t sharehlders fr apprval in general meeting. 6. Remuneratin Remuneratin f the directrs and CEO. Investment Bank s crprate screcard and the annual bnus pl. Intrductin f new share incentive plans r majr changes t existing plans, t be put t sharehlders fr apprval. 7. Delegatin f Authrity Bard Charter apprved by AIS Bard n 24 January 2018 Page 2 f 10
Apprval f the delegated levels f authrity, including the CEO s authrity limits. Establishing bard cmmittees and apprving their terms f reference, and apprving material changes theret. 8. Other Determining the independence f nn-executive directrs. Apprval f bank-wide plicies. Any decisin likely t have a material impact n the Islamic Bank frm any perspective, including, but nt limited t, financial, peratinal, strategic r reputatinal. Matters which exceed the bard cmmittees apprval authrities delegated by the Bard. 4. Bard Perfrmance The Bard keeps its wn perfrmance under review n a grup basis under its hlding cmpany [Alliance Bank Malaysia Berhad ( ABMB )]. This includes a frmal review step, such as an annual review and self/peer assessment prcess, as well as cmprehensive reviews frm time t time where necessary. The bjectives f the bard perfrmance review is t assess the verall Bard effectiveness with particular emphasis n: Individual perfrmance f directrs; The Bard s wn rle; The effectiveness f prcesses t supprt that rle; and The capabilities desirable t carry ut that rle. Directrs shuld act hnestly and in the best interests f the Islamic Bank when perfrming their duties as directrs. 5. Bard Cmpsitin/Directrs 5.1 Cmpsitin f the Bard The Bard fsters independence f view and its cmpsitin shuld reflect the nature f the Islamic Bank s business with a balance f cultural fit, business experience and diverse perspectives. The Islamic Bank s Articles f Assciatin prvides that until therwise determined in general meeting, the number f directrs shall nt be less than five (5). The Bard must have a majrity f independent directrs at all times. The independence f directrs is t be assessed by the Grup Nminatin & Remuneratin Cmmittee/Bard in accrdance with the requirements f Bank Negara Malaysia. An individual must nt be cnsidered t be an independent directr if he r any persn linked t him (a) (b) has been an executive in the last tw years; is a substantial sharehlder f the financial institutin r any f its affiliates; r Bard Charter apprved by AIS Bard n 24 January 2018 Page 3 f 10
(c) has had a significant business r ther cntractual relatinship with the financial institutin r any f its affiliates within the last tw years. Significant business r ther cntractual relatinship refers t any transactin engaged with the Islamic Bank r ther entities within the ABMB Grup, whether with ther persns r thrugh a firm r a cmpany f which he is a partner, directr r majr sharehlder, the value f which exceeds RM1 millin. Hwever, transactins as stated abve shall exclude the fllwing transactins: fr persnal use f the said directr; fr persnal investment f the said directr except fr the purpse f carrying n a trade r business; r nrmal banking transactins ther than financing and advances prvided that such transactins are n nrmal cmmercial terms. A directr f the Islamic Bank will still be deemed independent if the cmpany in which he is als a directr, has financing with the Licensed Institutin, prvided he is nt a substantial sharehlder f the cmpany, r a guarantr f the financing and is nt invlved in the deliberatin and decisin-making prcess. 5.2 Chairman s rle The Chairman carries ut a leadership rle in the cnduct f the Bard and its relatins with sharehlders and ther stakehlders. He maintains a clse prfessinal relatinship with the chief executive fficer and his management team and acts as mentr as required. He chairs Bard meetings, as well as general meetings f sharehlders, and cncerns himself with the gd rder and effectiveness f the Bard and its prcesses. The Chairman must ensure that all directrs are encuraged t participate in the affairs f the Bard and have an adequate pprtunity t express their views. 5.3 Rle f CEO The rle f the CEO is seen as critical t the perfrmance f the Islamic Bank. He is expected t prvide leadership, strategic visin, high-level business judgment and wisdm, and the ability t meet immediate perfrmance targets withut neglecting lnger-term grwth pprtunities f the Islamic Bank. The key rle f the CEO, amngst thers, shall include: Develping the strategic directin f the Islamic Bank; Ensuring that the Islamic Bank s strategies and crprate plicies are effectively implemented; Ensuring that bard decisins are implemented and bard directins are respnded t; Prviding directins in the implementatin f shrt and lng term business plans; Prviding strng leadership; i.e. effectively cmmunicating a visin, management philsphy and business strategy t the emplyees; Keeping bard fully infrmed f all imprtant aspects f the Islamic Bank s peratins and ensuring that sufficient infrmatin is distributed t bard members; and Ensuring the day-t-day business affairs f the Islamic Bank are effectively managed. Bard Charter apprved by AIS Bard n 24 January 2018 Page 4 f 10
5.4 Rle f Executive Directrs Executive directrs are, as emplyees, invlved in the day-t-day management f the Islamic Bank. As the functin f the bard is t prvide effective versight ver Management, the number f executive directrs n the bard shuld be kept t the very minimum and shuld nt be mre than ne. The executive directr f the Islamic Bank, if any, will usually be the CEO. 5.5 Rle f Nn-Executive Directrs Nn-executive directrs are expected t prvide the relevant checks and balances, fcusing n sharehlders and ther stakehlders interests and ensuring that high standards f crprate gvernance are applied. They may als act as a bridge between Management and stakehlders, particularly sharehlders. 5.6 Directrs sharehldings Directrs sharehldings are disclsed in the annual reprt. Any directr wh acquires r dispses a relevant interest in the shares f the hlding cmpany (ABMB) must ntify the Bard immediately. Hwever, Directrs are limited in their ability t deal in the hlding cmpany s shares by reasn f their psitin as insiders. Pursuant t Chapter 14 f the Bursa Main Market Listing Requirements, Directrs and principal fficers f the Islamic Bank/hlding cmpanies are restricted frm dealing in securities f the hlding cmpany during the clsed perid (as defined under the Bursa Main Market Listing Requirements, which will be ntified t the Directrs frm time t time). Directrs may deal in the shares f the hlding cmpany during the clsed perid subject t cmplying with the fllwing cnditins:- (a) (b) Befre any prpsed dealing in the shares f the hlding cmpany, a written ntice f intentin t deal with the shares must be given t the Islamic Bank/hlding cmpany. Upn receipt f the ntice, the hlding cmpany will immediately make an annuncement t Bursa Securities, with amng thers, the fllwing infrmatin:- (i) (ii) The directr s current sharehldings in the hlding cmpany; and The directr s intentin t deal in shares f the hlding cmpany during clsed perid. (c) (d) the prpsed dealing culd nly be effected after ne (1) full market day frm the date f the annuncement made pursuant t paragraph (a) abve. a written ntice f dealing in shares f the hlding cmpany must be given t the Islamic Bank/hlding cmpany within ne (1) full market day after the dealing and the hlding cmpany will immediately make an annuncement f such dealing t Bursa Securities. The fllwing infrmatin shuld be included in the ntice and annuncement: Bard Charter apprved by AIS Bard n 24 January 2018 Page 5 f 10
date f dealing; cnsideratin fr the dealing; and number f shares purchased r dispsed, bth in abslute terms and as a percentage f all issued shares f that class. Fr dealings utside clsed perids, Directrs must give written ntice f the dealing t the hlding cmpany within 3 market days after the dealing, and the hlding cmpany will make an immediate annuncement t Bursa Securities f such dealing. Directrs wh pssess inside infrmatin relating t the Islamic Bank/hlding cmpany may nt deal in the hlding cmpany s shares. 5.7 Directrs remuneratin Nn-executive directrs are paid fees as apprved by sharehlders at the annual general meeting. Directrs wh hld executive psitins in the Islamic Bank/Grup will nt be paid directrs fees as they will be entitled t salaries and ther emluments pursuant t a cntract f service with the Islamic Bank/Grup. The Directrs may establish any cmmittees fr managing any f the affairs f the Islamic Bank, and may fix their remuneratin. 5.8 Directrs utside cmmitments Nn-executive directrs agree t infrm the Chairman in regard t additinal external appintments. T ensure that Directrs have the time t fcus and be effective Bard members, it is recmmended that the cap n the number f listed Bards that a Directr f the Islamic Bank can sit n be limited t 5. Hwever, the Directrs are expected t knw the extent f their cmmitments and they must be prepared t devte sufficient time t the affairs f the Islamic Bank. 5.9 Prvisin f Business r Prfessinal Services by Directrs Because a cnflict f interest (actual r perceived) may be created, directrs shuld nt, generally, prvide business r prfessinal services f an nging nature t the Islamic Bank. Ntwithstanding the general rule, the Islamic Bank is at liberty t: Fr the purpse f a special assignment, engage the services f any directr having special expertise in the particular field; r Engage the services f anther member f a directr s rganizatin; s lng as the terms f engagement are cmpetitive, are clearly recrded and all legal requirements fr disclsure f the engagement are prperly bserved. 5.10 Tenure and Age Limit fr Directrs The tenure f executive directrs is tied t their executive ffice. Bard Charter apprved by AIS Bard n 24 January 2018 Page 6 f 10
The maximum tenure f an Independent Directr shall be upn reaching 9 years frm the date f first appintment as a Directr. Upn cmpletin f the 9 years, an Independent Directr may cntinue t serve n the bard subject t the Directr s re-designatin as a Nn-Independent Directr. The Bard must justify and seek Bank Negara Malaysia s and sharehlder s apprval in the event it retains as an Independent Directr, a persn wh has served in that capacity fr mre than 9 years. As the capacity, energy and enthusiasm f a Directr is nt necessarily linked t age, it is deemed nt apprpriate t prescribe age limits fr the retirement f directrs. The Bard believes in having healthy mix f age and experience and therefre des nt prescribe a minimum r maximum age limit fr its Bard members. 5.11 Successin The Bard addresses issues f successin fr the chairman and ther members. Thrugh the Grup Nminatin & Remuneratin Cmmittee, it identifies suitable candidates and initiates the appintment f new members as pprtunity r need arises. 6. Cmpany Secretary The appintment f the cmpany secretary is agreed by the Bard. The secretary supprts the Bard in carrying ut its rle, including assistance in cmmunicatins between Bard and Management and attending meetings and recrding minutes f the prceedings, as well as ensuring that bard prcedures are fllwed. 7. Bard Prcesses 7.1 Frequency and duratin f meetings The current practice is t schedule eight (8) meetings per year. The Grup Audit Cmmittee is scheduled t meet at least fur (4) times a year. Other cmmittees f the Bard meet as required. Additinal frmal business is dealt with as required, whether by physical r telephnic meetings r thers. 7.2 Agenda The Bard s agenda is settled by the chairman in cnjunctin with the cmpany secretary. The agenda includes regular business and financial reprts, risk management, peridical review f strategic issues and cnsideratin f current issues and prpsals put frward fr apprval such as delegatin t Management, setting f Management limits etc. 7.3 Meeting papers Papers n agenda items are circulated t directrs nt less than three days in advance f meetings. Annuncements relating t the Islamic Bank and ther pertinent infrmatin are circulated t directrs fr infrmatin between meetings and befre publicatin. Bard Charter apprved by AIS Bard n 24 January 2018 Page 7 f 10
7.4 Attendance at meetings by fficers Senir fficers are asked t attend particular items within their respnsibility. 7.5 Cmmittees f the Bard The Bard s apprach is that majr plicy decisins are matters fr the Bard as a whle. The standing cmmittees f the Bard are the Grup Audit Cmmittee, Grup Risk Management Cmmittee and Grup Nminatin & Remuneratin Cmmittee. The cmmittees f the Bard perate within clearly defined rles and respnsibilities as set ut in the terms f reference ( TOR ) f each f the cmmittees: (i) Grup Audit Cmmittee ( GAC ) GAC is respnsible t ensure the internal and external audit functins are prperly cnducted and audit recmmendatins are being carried ut effectively, t cmply with regulatry guidelines n Audit Cmmittee and Internal Audit Functin and t prvide independent versight f ABMB and its subsidiaries financial reprting and internal cntrl system and ensure checks and balances within ABMB and its subsidiaries. GAC reviews, amng thers, the quarterly results, full year financial statements, audit reprts which include bservatins pertaining t risk management and internal cntrls, related parties transactins and ther matters as prescribed in its TOR. (ii) Grup Nminatin & Remuneratin Cmmittee ( GNRC ) GNRC is respnsible t supprt the Bards in carrying ut their functins in the fllwing matters cncerning the Bards, Shariah Cmmittee, Senir Management and cmpany secretary: Appintment and remvals; Cmpsitin f the Bards; Perfrmance evaluatin and develpment; and Fit and prper assessments and actively verseeing the design and peratin f the Islamic Bank s remuneratin system, as prescribed in its TOR. (iii) Grup Risk Management Cmmittee ( GRMC ) GRMC is respnsible t versee Senir Management s activities in managing credit, market, liquidity, peratinal, legal and ther risks and t ensure the risk management prcess is in place and functining accrding t its purpse. In principle, the GRMC review and apprve risk management strategies, methdlgies, plicies and guidelines, risk tlerance / appetite and ther risk relating issues as prescribed in its TOR, including the fllwing: t ensure that the crprate bjectives are supprted by a sund risk strategy and an effective risk management framewrk that is apprpriate t the nature, scale and cmplexity f its activities; and Bard Charter apprved by AIS Bard n 24 January 2018 Page 8 f 10
t versee the management f cmpliance risk. T keep the Bard infrmed f the bard cmmittees wrks, key deliberatins and decisin n the delegated matters, minutes f bard cmmittee meetings are circulated t the respective Bards upn cnfirmatin. Other cmmittees may be established as deemed apprpriate t address matters calling fr special attentin r t exercise specified pwers n behalf f the Bard. 7.6 Management f cnflicts f interest and use f crprate infrmatin Directrs are required t infrm the Bard f cnflicts r ptential cnflicts f interest they may have in relatin t particular items f business. Directrs absent themselves frm discussin r decisins n thse matters unless reslved therwise by the remaining members f the Bard. Directr may nly use r disclse infrmatin relating t the Islamic Bank t the extent such use r disclsure is cnsistent with their duties as directrs. This sectin shuld be read in cnjunctin with the Cnflict f Interest Plicy fr Directrs. 7.7 Minutes Minutes are prepared and frwarded t chairman fr clearance within tw weeks fllwing Bard and Bard cmmittee meetings. They are circulated with the Bard papers fr cnfirmatin at the fllwing meeting. The minutes shuld recrd the decisins and their ratinales. It is imprtant t recrd any cncerns r dissenting views raised by any directrs. 7.8 Familiarizatin with business and n-ging training New members f the Bard are prvided with backgrund material and are ffered management briefings n strategic and ther issues. Directrs are expected t acquire and maintain a sufficiently detailed knwledge f the Islamic Bank s business and n-ging perfrmance t enable them t make infrmed decisins n the issues befre the Bard. Directrs are encuraged t undertake nging training as apprpriate regarding the perfrmance f their duties s as t ensure that they are able t perfrm their duties as directrs f the Islamic Bank t the best pssible standards. 7.9 Access t prfessinal advice The Bard may have access t independent advisers where it sees a need. If it became apprpriate fr a Directr t btain external prfessinal advice, separate frm advice btained n behalf f the Islamic Bank, this wuld be arranged in cnsultatin with the chairman and the advice s btained wuld rdinarily be prvided t all directrs. 8. Representatin f the Islamic Bank The Bard lks t Management t speak fr the Islamic Bank and t manage the cmmunicatin f infrmatin t investrs, ther stakehlders and the public Bard Charter apprved by AIS Bard n 24 January 2018 Page 9 f 10
in an rderly and effective way while meeting all mandatry disclsure requirements. Nn-executive directrs ther than the chairman shuld avid cmmenting n the Islamic Bank t external audiences and the chairman keeps in tuch with the chief executive fficer n the need r pprtunity fr cmment n his wn part. 9. The Islamic Bank s Memrandum and Articles f the Assciatin The Bard perates pursuant t pwers and subject t the prvisins in the Memrandum and Articles f the Assciatin f the Islamic Bank. 10. Cmmunicatin with sharehlders The Bard seeks t ensure that sharehlders are infrmed f all majr develpments and transactins affecting the Islamic Bank. Infrmatin is prvided t sharehlders by way f disclsures t the Bursa Securities and/r press releases, and thrugh the Islamic Bank s website and annual reprt. The Bard regards the annual general meeting f the hlding cmpany as an pprtunity t cmmunicate directly with sharehlders. Bard Charter apprved by AIS Bard n 24 January 2018 Page 10 f 10