Kuala Lumpur Kepong Berhad : Corporate Governance Report 2021

CORPORATE GOVERNANCE REPORT

OUTLINE:

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B - DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

1

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company's strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company's values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

investment and divestment proposals, annual corporate budgets and long-term budgets including operating budgets, capital expenditure budgets and cash flow budgets.

1. • reviewing the progress and performance of the Company in meeting these plans and corporate objectives, including reporting the outcome of such reviews.
2. Ensuring corporate accountability to the shareholders primarily through adopting an effective shareholder communications strategy, encouraging effective participation at general meetings and, through its Chairman, being the key interface between the Company and its shareholders.
   The Board subscribes to high standards of transparency and accountability in the disclosure of information to its shareholders as well as to potential investors and the public. The Company uses various channels for effective communication with the shareholders and other stakeholders including releasing timely announcements and disclosures to Bursa Malaysia Securities Berhad, holding general meetings and making information available on the Company's website at www.klk.com.my.
3. Overseeing the control and accountability systems that steer the Company's progress towards the goals set by the Board which are in line with the Company's purpose, the agreed corporate strategy, legislative requirements and community expectations.
4. Promoting good corporate governance culture within the Company based on the principles of transparency, objectivity and integrity.

The Board has in place policies and procedures to promote a culture of integrity and ethics within the Group as a whole while providing clarity on the parameters and controls instituted.

These include the following:

• Board Charter,
• Code of Conduct for Directors,
• Code of Conduct for Employees,
• Code of Conduct and Ethics for the Company,
• Group Whistleblowing Policy,
• Group Donations and Sponsorship Policy,
• Policy on Related Party Transactions,
• Corporate Disclosure Policy and Procedures,
• Group Anti-Corruption Policy (including Gifts Registers and Vendor Integrity Pledges),
• Grievance Redressal Policy.

3

1. Ensuring effective risk management, compliance and control systems (including legal compliance) are in place.
   The Board has overall responsibility for maintaining a sound risk management and internal control system to safeguard the interests of stakeholders and the Group's assets. Through the Group Risk Management Committee ("GRMC"), the Board oversees the risk management framework of the Group. The GRMC advises the ARC and the Board on areas of high risk and the adequacy and effectiveness of the Group's risk management and internal control system which is embedded in all aspects of the Group's activities.
2. Ensuring the integrity of the financial and non-financial reporting of the Company and its subsidiaries.

1. Delegating appropriate powers to the Chief Executive Officer ("CEO"), Chief Operating Officer, Executive Committees and Management to ensure the effective day-to-day management of the business, and monitoring the exercise of these powers.
2. Reviewing potential candidates for the Board and Senior Management positions across the Group through the Nomination Committee to ensure efficient succession planning and continuity of the vision and mission of the Group.
3. Embedding sustainability and corporate responsibility practices as part of Group strategy.

The Board is guided by its Board Charter and Code of Conduct for Directors which clearly sets out the Board's strategic intent, roles and responsibilities in discharging its fiduciary and leadership functions, and the standard of conduct expected of Directors respectively.

Board Committees, which operate within its respective defined Terms of Reference, have been constituted to assist the Board in the discharge of its specific duties and responsibilities. These Committees comprise the Audit and Risk Committee, Nomination Committee and Remuneration Committee. The Chairman of the respective Committees report to the Board the outcome of deliberations at each Committee meeting.

To ensure the effective discharge of the Board and Board Committees' functions and responsibilities, the Board has also put in place a governance structure where specific tasks are delegated to the relevant management and executive committees which report to the CEO, and which are supported by relevant working groups. The Group management committees consist of the Corporate Responsibility Steering Committee, Sustainability Steering Committee, Executive Committee, Treasury Committee and Group Risk Management Committee. There are currently five (5) main Excos overseeing the

4

property, plantation, refineries and oleochemicals operations, as well as anti-bribery and anti-corruption activities.

The Board is regularly updated on the Group's businesses and the competitive and regulatory environment in which they operate. Additionally, in-house briefings by external auditors, solicitors and/or Management are organised from time to time to update Directors on relevant and new statutory and regulatory requirements and the Group's business and operational practices. All Directors are also encouraged to visit the Group's operating centres to have an insight into the Group's various operations which would assist the Board to make effective decisions relating to the Group.

The Directors also attended various programmes to keep abreast with general economic, industry and technical developments as well as changes in legislation and regulations affecting the Group's operations.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure:

Timeframe:

5