Kuala Lumpur Kepong : Corporate Governance Report 2023

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.

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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.

These include the following:

• the Constitution,
• Board Charter,
• Code of Conduct for Directors,

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1. • 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,
   • Limits of Authority.
2. Review, challenge and decide on Management's proposals for the Group; and monitor its implementation
3. • The Board oversees the development and implementation of corporate strategies by:
   • • working with the Senior Management to ensure that an appropriate strategic direction and set of goals are in place;
     • regularly reviewing and amending or updating the
       Company's strategic direction and goals developed by the
       Senior Management;
     • providing guidance and leadership to the Senior Management and ensuring that adequate resources are available to meet its objectives; and
     • overseeing planning activities including the development and approval of strategic plans, major funding proposals, investment and divestment proposals, annual corporate budgets and long-term budgets including operating budgets, capital expenditure budgets and cash flow budgets.
4. Ensure that the strategic plans of the Group support long term value creation and include strategies on economic, environmental and social considerations underpinning sustainability
5. 1. • The Board reviews the progress and performance of the Group to ensure that the strategic plans always support long term value creation and include strategies on economic, environmental and social considerations underpinning sustainability.
      • The Board embeds sustainability and corporate responsibility practices as part of Group strategy.
   2. Supervise and assess Management performance to determine whether the business is being properly managed
   3. • The Board devotes sufficient time to provide leadership to the Group by:
      • • guiding the development of appropriate standards and values for the Group;

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1. • acting in a manner consistent with the Directors' Code of
     Conduct; and
   • Overseeing the performance of Management whilst maintaining a relationship that is supportive yet vigilant.
2. Ensure there is a sound framework for internal controls and risk management
3. • 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 Audit and Risk Committee ("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.
   • The Board oversees the control and accountability systems that steer the Company's progress towards the goals set by the Management which are in line with the Company's purpose, the agreed corporate strategy, legislative requirements and community expectations.
   • The Board ensures effective risk management, compliance and control systems (including legal compliance) are in place.
4. Understand the principal risks of the Group's business and recognise that business decisions involve the taking of appropriate risks
5. • The Board is cognisant of the significant financial and non- financial elements that could result in exposures and alter the risk profile of the Group.
6. Set the risk appetite and establish a sound framework to manage risk
7. • The Board ensures that there is an appropriate risk management framework to identify, analyse, evaluate, monitor and respond to significant financial and non-financial risks factors.
8. Ensure Senior Management has the necessary skills and experience, and there are measures in place to provide for the orderly succession of the Board and Senior Management
9. • The Board reviews potential candidates for the Board and Senior Management positions across the Group through the Nomination Committee ("NC") to ensure efficient succession planning and continuity of the vision and mission of the Group.

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1. • The Board, through the NC, assesses the calibre of key senior management of the Group; and ensures that candidates appointed to key senior management positions are of high calibre and competence, as well as the right "fit".
2. Ensure the Group has in place procedures to enable effective communication with stakeholders
3. • The Board ensures 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.
   • The Board is committed to ensuring a secure and fulfilling work environment that values and supports the well-being of the Group's employees. In the financial year 2023, the Chief Executive Officer and Chief Operating Officer fostered open dialogue and supported employee growth through a series of corporate events. These events included Employee Wellness Week, Sustainability Commitments Global Townhall, and The
     Plantation Managers' Conference in Bali.
4. Ensure all Directors are able to understand financial statements and forms a view on the information presented
5. • The Board, through the assessment conducted by the NC, is satisfied that all its members possess financial literacy given it is the responsibility of the Directors to oversee the Group's financial reporting obligations.
6. Ensure the integrity of the Group's financial and non-financial reporting
7. • The Board, through the ARC, ensures the integrity of the financial and non-financial reporting of the Group.
   • The Board is cognisant of the disclosures on corporate governance, sustainability and other non-financial aspects.

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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 ARC, NC 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 Group Chief Executive Officer, and which are supported by relevant working groups. The Group management committees consist of the Corporate Responsibility Steering Committee, Executive Committee and Treasury Committee. There are currently four (4) main Excos overseeing the plantation, oleochemicals, refineries and property operations.

The Board is regularly updated on the Group's businesses and the competitive and regulatory environment in which they operate. Additionally, periodic in-house briefings, conducted 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.

To create a more immersive learning experience, Management facilitates on-site visits, fostering informal engagement between the Board and Management teams across the Group's operations. These visits not only deepen Directors' understanding of the Group's operations but also keep them informed about industry-specific developments, thereby enhancing their contributions to the Group's overall strategy.

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.

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Measure:

Timeframe:

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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 1.2

A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

The 2023 external Board & Directors Effectiveness Evaluation results demonstrated the Directors' trust and confidence in the Chairman's effective leadership in maintaining smooth Board operations, achieving consensus, conducting meetings, engaging with individual Director perspectives and communicating with shareholders.

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Board members viewed the Chairman as an open-minded leader who fosters an environment where all Directors can freely express their ideas and concerns. Directors noted the Chairman's practice of not imposing personal views on the Board, instead seeking input from all members and offering insights before discussions conclude, thus facilitating consensus in definitive decision-making.

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

Measure:

Timeframe:

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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 1.3

The positions of Chairman and CEO are held by different individuals.

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

Measure:

Timeframe:

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