Corporate Governance

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KBZ Corporate Governance Statement

Introduction

This Corporate Governance Statement, which has been approved by the Board, describes our corporate governance framework, policies and practices as at 14 February 2019.

Framework and approach

Our approach to corporate governance is based on a set of values and behaviours that underpin day-to-day activities, provide transparency and fair dealing and seek to protect stakeholder interests.

This approach includes a commitment to excellence in governance standards, which KBZ Group sees as fundamental to the sustainability of our businesses and our performance. It includes monitoring local and global developments in corporate governance and assessing their implications.

KBZ Group’s current governance framework is overseen by the Board of Directors and implemented by subsidiary (company) Boards across its companies. As necessary, the Group Board requests subsidiary Boards to undertake specific extra duties according to operational requirements.

The Company Boards and Executive Teams, sit beneath the CEO and the Group Board to implement Board-approved strategies, policies and management of risk across the Group.

Group Board and Subsidiary Board’s Oversight of Management

The roles, responsibilities and accountabilities of the Group Board and Subsidiary Boards were reviewed at our Group AGM.

The key responsibilities of the Group Board are:

  • overseeing the sound and prudent management of the KBZ Group;
  • approving, and overseeing management’s implementation of the strategic direction of KBZ Group, its business plan and significant corporate strategic initiatives;
  • evaluating the Group Board performance and determining Board size and composition;
  • approving the KBZ Group Remuneration Policy;
  • selecting, appointing and determining the duration, remuneration and other terms of appointment of the CEO and Chief Financial Officer (CFO);
  • approving individual remuneration levels for Group Executives, other executives who report directly to the CEO and any other accountable persons the Board determines to be considered;
  • evaluating the performance of the CEO and succession planning for the CEO;
  • approving the appointment of Group Executives and the General Manager Group Audit and monitoring the performance of Group Executives;
  • approving the annual targets and financial statements and monitoring performance against forecast and prior periods;
  • considering and approving our overall risk management framework, approving our Group Risk Management Strategy and Group Risk Appetite Statement and monitoring the effectiveness of risk management by the Group;
  • forming a view of our risk culture and identifying any desirable changes;
  • considering the social, ethical and environmental impact of our activities and monitoring compliance with our sustainability policies and practices;
  • overseeing and monitoring Workplace Health and Safety (WHS) issues in the Group and considering appropriate WHS reports and information;
  • maintaining an on-going dialogue with KBZ’s stakeholders;
  • overseeing internal governance, including delegated authorities and approving policies and;
  • overseeing and monitoring customer complaints.
  • Board, Committees and Oversight of Management

The Role of the Chairman

The Chairman’s role includes:

  • providing effective leadership to the Board in relation to all Board matters;
  • guiding the agenda and conducting all Board meetings to facilitate discussions, challenges and opportunities and decision-making;
  • in conjunction with the Subsidiary Company Representatives, arranging regular Subsidiary Company Board meetings throughout the year, confirming that minutes of meetings accurately record decisions taken and include all the views of those participating;
  • overseeing the process for appraising Directors and the Board as a whole;
  • overseeing Board succession;
  • acting as a conduit between management and the Board, and being the primary point of communication between the Board and CEO;
  • representing the views of the Board to the public; and
  • taking a leading role in creating and maintaining an effective corporate governance system.

The Role of the CEO

The CEO’s role includes:

  • leadership of the Group and subsidiary companies’ management teams;
  • developing strategic objectives for the Group and achievement of specified goals; and
  • the day-to-day management of the KBZ Group’s operations, subject to the specified delegations of authority approved by the Board.

Board meetings

The Board has held regular quarterly scheduled meetings over the past 12 months, with additional meetings held as required. In addition to the Board considering strategic matters at each Board meeting, the Board also discusses our strategic plan and approves our overall strategic direction on an annual basis. The Board also conducts a half year review of this strategy. The Board conducts workshops on specific subjects relevant to our businesses at each meeting or more regularly as necessary. Board meetings are characterised by robust exchanges of views, with Directors bringing their experience and judgement to bear on the issues and decisions at hand.

Nomination and appointment of Board Members

Key responsibilities of the Group Board Nominations Committee are:

  • assessing the skills required to discharge competently the relevant Board’s duties having regard to KBZ’s overall Group performance, financial position and strategic direction;
  • developing, reviewing, and assessing the various Boards’ policies on Director tenure, Board composition and size;
  • reviewing and making recommendations to the various Boards annually on diversity generally within the Group, measurable objectives for achieving diversity and progress in achieving those objectives;
  • developing and implementing succession planning in the context of Board membership and Senior Management appointments;
  • reviewing the process for the orientation and education of new Directors and any ongoing education for existing Directors;
  • reviewing eligibility criteria for the appointment of Directors;
  • considering and recommending candidates for appointment as Directors to the various Boards and determining the terms and conditions;
  • reviewing and where necessary developing the Group’s corporate governance policies to provide reasonable assurance that they meet all internationally recognised standards.

 

KBZ seeks to maintain Boards of Directors across the Group with a broad range of financial and other skills, experience and knowledge necessary to guide its various business entities. External consultants are used to advise on Board’s appointments.

New Directors receive an induction pack which includes a letter of appointment setting out the expectations of the role, conditions of appointment and remuneration.

The Group Board approves the appointment of any new Director, either to fill a casual vacancy or as an addition to the existing Directors.

Board induction and continuing education

All new Board Members and Directors participate in an induction program to familiarise themselves with our businesses and strategy, culture and values and any current issues before the Board. The induction program includes meetings with the Chairman, the CEO, the Board Members and each Senior Group Executive.

The Board expects Directors to undertake continuing education and training to develop and maintain their skills and knowledge needed to perform their role as Directors effectively in line with our Group direction and policies. This includes participation in internal workshops held throughout the year, attending relevant site visits and undertaking relevant external education as deemed appropriate according to their specific role. This process is in place to ensure KBZ Group maintains its professional standards and continues to meet highest international standards. It is in place to ensure it is in a strong place to further enhance its reputation in Myanmar, Regionally and further afield.

Company Secretaries

KBZ has two Company Secretaries:

  • The Senior Company Secretary is our Group Executive, Legal & Secretariat. The Senior Company Secretary attends Board and Board Committee meetings and is responsible for providing Directors with advice on legal and corporate governance issues.
  • The Group Company Secretary also attends Board meetings and is responsible for the operation of the secretariat function, including implementing our governance framework and, in conjunction with management, giving practical effect to the Board’s decisions. The Group Company Secretary is accountable to the Board, through the Chairman, on all matters to do with the proper functioning of the Board.

Operation and reporting

Scheduled meetings of each company’s Boards Directors occur at least quarterly. All Boards are able to meet more frequently as necessary. Each Board is entitled to the resources and information it requires on a Group level and has direct access to Group employees and advisers. Senior executives and other selected employees are invited to attend the Group Board Committee meetings as required. If present or exceptionally in absentia, all Directors whether it be at Group level or that of subsidiary companies within the Group receive all the relevant papers and minutes of the meetings. No Director is precluded from Board meeting, be it at Group or company level, unless exceptionally if there is perceived to be any conflict of interest.

Performance

The Group and subsidiary company Board’s undertake ongoing self-assessment as well as commissioning external consultants for an independent perspective and advice.

A review process conducted over 2018 included an assessment of the performance of the Group Board, each Director and each subsidiary company. Each subsidiary company also made their independent assessments which where presented to the Group Board. The Group Board discussed the results and agreed follow up action on matters relating to various Board compositions, process, priorities and new directions.

The Chairman also regularly discusses the results with individual Directors and subsidiary Board Chairs. The Group Board reviews the results of performance reviews and results which are then privately discussed by the Group Chairman with the Group Board Risk & Compliance Committee.

Management

The Group Board, in conjunction with its Board Remuneration Committee, is responsible for:

  • determining the corporate goals and objectives relevant to the remuneration of the CEO, and the performance of the CEO in light of these objectives; and
  • approving individual remuneration for Group Executives, other executives who report directly to the CEO, any other accountable persons and any other person the Board determines.

The Group Board Risk & Compliance Committee and the Group Board Audit Committee also refer to the Board Remuneration Committee any matters that come to their attention that are relevant, including with respect to risk adjusted remuneration.

Management performance evaluations are conducted at the end of the each financial year.

Advisory Boards

KBZ Group has established an Advisory Board for advising its multiple operations in order to advise management on the strategies and initiatives of those businesses within the overall Group strategy.

Responsibilities of the Group Advisory Board include:

  • providing advice to KBZ’s company management executives regarding strategies and initiatives to continue to strengthen the position and identity of the Group of businesses;
  • providing advice to KBZ’s company management of relevant current priorities so as to promote and preserve its distinct position and identity in alignment with our overarching business values with those of the relevant stakeholders and communities served;
  • considering and assessing reports provided by management on the health of the relevant business and subsequently giving appropriate feedback and guidance;
  • acting as ambassadors for the business, including by supporting community and major corporate promotional events to assist in building relationships with stakeholders and advising senior management on relevant local, national, regional and international community matters; and
  • alerting management to market opportunities and issues of which Advisory Board members are aware that would enhance each business and their stakeholders.

Ethical and responsible decision making

KBZ Group is committed to and has a reputation for ethical and responsible decision making. This is encapsulated in our motto, ‘The Strength of Myanmar’. Our vision, Mission and core values are all outlined in detail on our Group website.

KBZ is also focused on the impact of its organisational culture on the Group’s operations, including its management of risk. We take an integrated approach to sustainably embedding a strong risk culture, including through leadership and communication, risk appetite and governance, risk awareness and transparency, accountability and reinforcement, and behaviours and relationships.

Our Values

Our Values support our stakeholder-focused strategy and are embedded in our culture as outlined in our Code of Conduct and more specific policies detailed on the Group website. Each of companies is obligated to follow these principles and regulations. Simultaneously, the Group Advisory Board works in conjunction with each of the Group companies to ensure sector specific polices are put in place according to best international practice.

Code of Conduct and Principles for Doing Business

The Code provides a set of guiding principles to help us make the right decisions, ensuring we uphold the reputation of the Group. The principles within our Code also the stakeholder’s expectations of us as a Group and as subsidiary companies. The Code has the full support of all the Boards and the Executive Teams across the Group. We take compliance with the Code very seriously.

Our Principles for Doing Business (Principles) underpin the Group’s commitment to sustainable business practice and community involvement. In summary:

  • we believe our success depends on the trust and confidence placed in us by all our stakeholders;
  • we believe in maintaining the highest level of governance and ethical practice;
  • we believe our staff are a vital element of our businesses whose contributions lead to their success and respected position in society;
  • we are committed to managing our direct and indirect impacts on the environment;
  • we believe being actively involved in our community is fundamental to the sustainability of our business; and
  • we believe our suppliers should be viewed as partners in our sustainability journey.

The Principles align with key global initiatives that promote responsible business practices. The Principles apply to all Directors, employees and contractors.

The Board

All Directors are required to disclose any actual, potential or apparent conflicts of interest upon appointment and are required to keep these disclosures to the Board up to date.

Any Director with a material personal interest in a matter being considered by the Board must declare their interest and, unless the Board resolves otherwise, may not be present during the boardroom discussions or vote on the relevant matter.

Our employees and contractors

We expect our employees and contractors to:

  • have in place adequate arrangements for the management of actual, potential or apparent conflicts of interest;
  • obtain consent from senior management before accepting a directorship on the board of a non-KBZ Group company;
  • disclose any material interests they have with our customers or suppliers to their manager and not be involved with customer relationships where they have such an interest;
  • not participate in business activities outside their employment with us (whether as a principal, partner, director, agent, guarantor, investor or employee) without approval or when it could adversely affect their ability to carry out their duties and responsibilities; and
  • not solicit, provide facilitation payments, accept or offer money, gifts, favours or entertainment that might influence, or might appear to influence, their business judgement.

Fit and Proper Person assessments

We have a Board-approved KBZ Group Fit and Proper Policy. The Chairman of the Board is responsible for assessing the Directors and Non-executive Directors of the KBZ subsidiary Boards, Group Executives and actuaries. The individual is asked to provide a detailed declaration and background checks are completed.

Concern reporting and whistle blower protection

Under the KBZ Group Whistle Blowing Policy, we encourage our employees, contractors, former employees, service providers (such as auditors, accountants and consultants) and our suppliers to raise any concerns about activities or behaviour that may be unlawful or unethical. Our attitude is ‘when in doubt report’ and our senior management are committed to protecting the dignity, well-being, career and good name of anyone reporting wrongdoing, as well as providing them with the necessary support. KBZ Group does not tolerate retaliation or adverse action related to a whistleblowing disclosure.

We investigate reported concerns in a manner that is confidential, fair and objective. If the investigation shows that wrongdoing has occurred, we are committed to changing our processes and taking action in relation to those parties who have behaved incorrectly. Outcomes may also involve reporting the matter to relevant authorities and regulators.

Anti-Bribery and Corruption

KBZ Group requires compliance with anti-bribery and corruption (AB&C) laws in all markets and jurisdictions in which it operates. These laws include, but are not limited to, the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977.

KBZ Group’s Anti-Bribery and Corruption Compliance Program includes a global Anti-Bribery & Corruption Policy, with Board endorsement and oversight and clear emphasis that KBZ does not tolerate the giving or receiving of bribes, including the making of facilitation payments. KBZ expects that books and records must be fair and accurate and reasonably detailed. We expect all employees to comply with these principles in the performance of their services for or on behalf of any of the KBZ companies. We also require third parties who provide services for or on behalf of KBZ to comply accordingly.

Diversity

KBZ Group has an Equality & Diversity Policy that sets out the inclusion and diversity initiatives across the Group. This is coupled with a comprehensive Group-wide strategy to enable execution of key priorities and actions. In this context, diversity covers both the visible and invisible differences that make our employees unique, whether that be gender, gender identity, age, ethnicity, accessibility requirements, cultural background, sexual orientation, religious beliefs, or the differences we have based on our experiences, insights and perspectives.

The objectives of the policy and the 2019-22 Inclusion & Diversity strategy are to ensure that the Group:

  • has a workforce profile that delivers competitive advantage through the ability to fully understand stakeholder expectations;
  • has a truly inclusive workplace where every individual can shine regardless of gender, cultural identity, age, work style or approach;
  • leverages the value of diversity for all our stakeholders to enhance our Group’s corporate reputation; and
  • continues to take a leadership position on inclusion and diversity practices and sets the agenda in the external communities in Myanmar, Regionally and beyond.

To achieve these objectives, the Group:

  • has set Board-determined, measurable objectives for achieving gender diversity. The Board assesses annually both the objectives and progress in achieving them;
  • assesses pay equity on an annual basis;
  • encourages and supports the application of flexibility policies across the business;
  • implements our Accessibility Action Plan for employees and customers with accessibility requirements, including ensuring employment opportunities are accessible for people with a disability; and
  • actively promotes an environment of inclusion for lesbian, gay, bisexual, transgender and intersex (LGBTI) employees.

The implementation of these objectives is overseen by the KBZ Group Inclusion & Diversity Council, which is chaired by the Senior Group Executive and meets bi-annually.

The Boards of KBZ Group companies, or appropriate Board Committees, receive regular updates from the Inclusion & Diversity Council on inclusion and diversity initiatives. The Inclusion & Diversity Governance Framework was implemented in 2018. We will continue to listen to the needs of our employees through our new annual employee survey (which includes questions that constitute an ‘Inclusion Index’). Our Inclusive Leadership programme ensures we are investing in the right capabilities for an inclusive culture. The majority of Group leaders and Group Executives will have already completed the programme .

In addition to the Group’s commitment to achieving its inclusivity targets, in 2019 our Senior Company Secretary signed up as a Pay Equity Ambassador. KBZ offers a range of flexible working options for our people based on their needs, work preferences and the needs of the business. These include:

  • flexible workhours;
  • mobile working;
  • working part-time; and jobsharing.

In addition, KBZ offers a variety of leave options that support flexibility, including parental leave, wellbeing and lifestyle leave and domestic violence support leave.

Sustainability

We view sustainable and responsible business practices vitally important for our business and the benefit os our stakeholders. Sustainability is about managing risks and opportunities in a way that best balances the long term needs of all our stakeholders – our customers, employees, suppliers, investors and community partners – as well as the wider community and the environment at large.

Our management of sustainability aims to address the matters that we believe are the most material for our business and stakeholders, now and in the future. We also understand that this is an evolving agenda and seek to progressively embed the management of sustainability matters into business as usual practice, while also anticipating and shaping emerging social issues where we have the skills and experience to make a meaningful difference and drive business value.

Reporting

We assess and report on the most material sustainability matters in regards to the KBZ Group of Companies as necessary. This incorporates an analysis of how we are managing the identified risks and opportunities associated with our businesses and an assessment of our performance against our sustainability strategy. We are a supporter of the UN Global Compact an annually submit our annual Communication on Progress report in the form of an Annual/Sustainability Report. The next report is due in May and links to our previous reports are available on the Group website.

Financial reporting

Our approach to financial reporting reflects certain core principles which include:

  • that our financial reports present a true and fair view of our companies activities;
  • that our accounting methods comply with applicable accounting standards and policies.

The Group Board, through the Board Audit Committee, monitors Myanmar and international developments relevant to these principles, and reviews our practices accordingly.

The Group Board oversees responsibility for risk management across the Group and delegates responsibility to senior management within subsidiary company Boards for oversight in their particular areas of business. Similarly, the Board delegates oversight responsibility for the preparation of remuneration reports and disclosures to the Board Remuneration Committee.

Group Board Audit Committee

The key responsibilities of the Group Board Audit Committee are:

  • overseeing the integrity of the financial statements and financial reporting systems of the KBZ Group of Companies;
  • overseeing the performance of the audit functions;
  • overseeing the integrity of the Group’s corporate reporting, including the Group’s compliance with regulatory reporting and professional accounting requirements; and
  • reviewing and approving policies and procedures for the receipt, retention and treatment of information submitted confidentially by employees and third parties about accounting, internal control, compliance, audit or other matters about which an employee has concerns, and monitoring employee awareness of these policies and procedures.

The Group Board Audit Committee reviews, discusses and assesses:

  • any significant financial reporting issues and judgments made in connection with the preparation of the
    financial reports;
  • the processes used to monitor and comply with laws and regulations over financial information, reporting and disclosure; and
  • the process surrounding any disclosures made by KBZ Group or any of its subsidiary companies.

Periodically, the Group Board Audit Committee may consult with external auditors to assess internal controls over financial information, reporting and disclosure.

The Group Board Audit Committee also refers to the Group Board or any other subsidiary company Boards any matters that come to their attention that are relevant for the Group Board or the respective Board Committees.

Financial knowledge

The Group Board receives regular reports from management about the financial condition and operational results of the Group and its subsidiary companies.

Corporate governance

KBZ Groups’s internal audit function provides the Group Board and Executive Management with an objective evaluation of the adequacy and effectiveness of management’s control over risk. Group Audit covers the governance, risk management and internal control frameworks of KBZ subsidiary companies. It has access to all of our wholly owned entities and conducts audits and reviews following a risk-based planning approach.

Market disclosure

We maintain a level of disclosure that meets all regulatory requirements within our jurisdictions. Our Group Disclosure Committee is responsible for determining what information should be disclosed publicly. The Disclosure Committee is comprised of the Group CEO and the Executive Team.

Risk management

The Group Board is responsible for approving the KBZ Group Risk Management Strategies and KBZ the general Group Risk Appetite across the Group’s subsidiary companies. A Group Board sub-committee is responsible for monitoring the effectiveness of risk management across the KBZ Group. The Board has delegated to the Group Board Risk & Compliance sub-committee responsibility to:

  • review and recommend the KBZ Group Risk Management Strategy and a KBZ Group Risk Appetite Statement to the Board for approval;
  • establish a view of the Group’s current and future risk position relative to its risk appetite and capital strength;
  •  review and approve frameworks, policies and processes for managing risk; and
  • review and, where appropriate, approve risks beyond the approval discretion provided to management.

KBZ Group’s Risk Management Strategy and Risk Appetite Statement are reviewed by the Board Risk & Compliance Committee and are approved by the Group Board annually or more regularly if necessary.

The Group Board Risk & Compliance sub-committee reviews and monitors the risk profile and controls of the Group for consistency with the Group Risk Appetite Statement and reviews and monitors capital levels for consistency with the Group’s risk appetite. The Group Board Risk & Compliance sub-committee receives regular reports from senior management across the Group on the effectiveness of our management of material risks.

The CEOs and Executive Teams are responsible for implementing our risk management strategy and frameworks, and for developing policies, controls, processes and procedures for identifying and managing risk in all of KBZ Group’s activities.

Effective risk management enables us to:

  • accurately measure our risk profile and balance risk and reward within our risk appetite, optimising financial growth opportunities and mitigating potential loss or damage;
  • protect KBZ Group’s reputation as a responsible and sustainable Group of companies;
  • embed equate controls to guard against excessive risk or undue risk concentration; and
  • meet our regulatory and compliance obligations.

This is a multi-tiered process of risk identification, risk management and self-assessment. Each subsidiary company is responsible for identifying and evaluating the risks that they originate within approved Group Board approved risk appetite policies. They are required to establish and maintain appropriate risk management controls, resources and self-assessment processes.

KBZ Group distinguishes between different types of risk:

  • liquidity risk – the risk that the Group will be unable to fund assets and meet obligations as they become due;
  • market risk – the risk of an adverse impact on earnings resulting from changes in market factors, such as foreign exchange rates, interest rates, commodity prices or equity prices. This includes interest rate risks in the balance book - the risk to interest income from a mismatch between the duration of assets and liabilities that arise in the normal course of business activities;
  • conduct risk – the risk that our activities result in unsuitable or unfair outcomes for our stakeholders or undermines market integrity;
  • operational risk – the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, such as financial crime. This definition is aligned to the regulatory (Basel II) definition of operational Risk which includes legal and regulatory risk but excludes strategic risk;
  • compliance risk – the risk of legal or regulatory sanction, financial or reputational loss, arising from our failure to abide by the compliance obligations required of us;
  • business risk – the risks arising from the strategic objectives and business plans;
  • sustainability risk – the risk of reputational or financial loss due to failure to recognise or address material existing or emerging sustainability related environmental, social or governance issues;
  • equity risk – the potential for financial loss arising from movements in equity holdings and values. Equity risk may be direct, indirect or contingent;
  • insurance risk – the risk in our insurance entities of claims costs being greater than expected, due to a failure in product design, underwriting, reinsurance arrangements or an increase in severity and frequency of insured events;
  • related entity (contagion) risk – the risk that problems arising in connection with other KBZ Group affiliated organisations such as suppliers, contractors, customers or any other parties and stakeholders with which we engage in some way compromise the financial or operational position of the KBZ Group; and
  • reputation risk – the risk of the loss of reputation, stakeholder confidence, or public trust and standing.

KBZ Group’s material exposures to economic, environmental and social sustainability risks are managed in accordance with our risk management strategy and frameworks.

Group Board Risk & Compliance Committee

The Group Board Risk & Compliance Committee:

  • reviews and makes recommendations to the Board regarding Risk Management Strategies and KBZ Group Risk Appetite for approval;
  • reviews and monitors the risk profile and controls of the Group consistent with the KBZ Group Risk Appetite guidelines;
  • reviews and approves the frame works, policies and processes for managing risk;
  • reviews and approves the limits and conditions that apply to credit risk approval authority delegated to the CEOs, CFOs and any other officers within the KBZ Group and subsidiary companies to whom the Board has delegated credit approval authority;
  • monitors changes anticipated for the economic and business environment nationally and globally including consideration of emerging risks and other factors considered relevant to our risk profile and risk appetite;
  • reviews and where appropriate approves risks beyond the approval discretion provided to management; and
  • supports the Board to oversee compliance management within the Group.

From the perspective of specific types of risk, the Board Risk & Compliance Committee’s role includes:

  • credit risk – approving key policies and limits supporting the Credit Risk Management Framework, and monitoring the risk profile, performance and management of our credit portfolio;
  • liquidity risk – approving key policies and limits supporting the Liquidity Risk Management Framework, including our annual Group funding strategy, recovery and resolution plans and monitoring the liquidity position and requirements;
  • market risk – approving key policies and limits supporting the Market Risk Management Framework, including, but not limited to, the Value at Risk limits and Net Interest Income at Risk limits, and monitoring the market risk profile;
  • conduct risk – reviewing and approving the KBZ Group Code of Conduct Framework and reviewing and monitoring the performance of conduct risk management and controls;
  • operational risk – approving key policies supporting both the Operational Risk Management Framework and the Financial Crime Risk Management Framework, and monitoring the performance of operational and financial crime risk management and controls;
  • compliance risk – reviewing and approving the KBZ Group Compliance Management Framework and reviewing compliance processes and our compliance with applicable laws, regulations and regulatory requirements. discussing with management and external consultants any correspondence with regulators or government agencies and any published reports that raise material issues, and reviewing complaints and whistle-blower concerns; and
  • reputation risk – reviewing and approving the Reputation Risk Management Framework and reviewing and monitoring the performance of reputation risk management and controls.

The Group Board Risk & Compliance Committee also:

  • oversees and approves the Internal Capital Adequacy Assessment Process and in doing so reviews the outcomes of KBZ Group stress testing, sets the target capital ranges for regulatory capital and reviews and monitors capital levels for consistency with the KBZ Group’s risk appetite;
  • provides relevant periodic assurances and reports (as appropriate) to the Board Audit Committee;
  • reviews and approves other risk management frameworks across the Group and/or the monitoring of performance of subsidiary companies (as appropriate);
  • forms a view of KBZ Group’s risk culture and oversees the identification of, and steps taken to address any desirable changes to risk culture and periodically reports to the Board;

Group Compliance Management Framework

The Compliance Management Framework sets out our approach to managing compliance with our obligations and mitigating compliance risk. It is an integral part of the broader risk management strategy and is regularly assessed and enhanced as appropriate to ensure it responds to the internal and external environment and supports our strategic compliance direction.

To proactively manage our compliance risks, our compliance objective is to:

  • comply with our legal obligations, regulatory requirements, voluntary codes of practice to which we subscribe, and Group policies, including the KBZ Group Code of Conduct;
  • establish frameworks, policies and processes designed to manage, monitor and report compliance and to minimise the potential for breaches, fines or penalties, or loss of regulatory accreditations; and
  • ensure that appropriate remedial action is taken to address instances of non-compliance.

Remuneration

The Group Board Remuneration Committee assists the Board by ensuring that the KBZ Group has coherent remuneration policies and practices that fairly and responsibly reward individuals having regard to performance and that reflect KBZ Group’s risk management framework, the respective jurisdictions under which our companies operate and the highest standards of governance.

The Board Remuneration Committee:

  • reviews and makes recommendations to the Group Board in relation to the KBZ Group Remuneration Policy and assesses the Group Remuneration Policy’s effectiveness and its compliance with laws, regulations and prudential standards;
  • reviews and makes recommendations to the Group Board in relation to the individual remuneration levels of CEOs, Group Executives, other Executives across the Group who report directly to the CEOs, in addition to any other Accountable Persons or other persons whose activities in the Board Remuneration Committee’s opinion affect the financial soundness of KBZ Group;
  • reviews and makes recommendations to the Group Board in relation to the remuneration structures for staff across the Group;
  • reviews and makes recommendations to the Group Board on corporate goals and objectives relevant to the remuneration of the CEOs, and the performance of the CEOs in light of these objectives;
  • reviews and makes recommendations to the Group Board on the short and long-term variable reward plans for Group Executives and any other Accountable Persons;
  • oversees general remuneration practices across the Group.

The Group Board Remuneration Committee reviews and recommends to the Group Board as to the size of variable reward pools each year based on consideration of pre-determined business performance indicators and the financial soundness of KBZ Group. The Group Board Remuneration Committee also approves remuneration arrangements outside of the Group Remuneration Policy relating to individuals or groups of individuals which are significant because of their sensitivity, precedent or disclosure implications. In addition, the Group Board Remuneration Committee considers and evaluates the performance of senior executives when making remuneration determinations and otherwise as required.

The Group Board Remuneration Committee also reviews and makes recommendations to the Group Board for the reduction or lapsing of incentive-based equity grants to employees where:

  • the Group Board Remuneration Committee determines that an adjustment should be made as a result of risk or compliance failures.
  • Independent remuneration consultants are engaged by the Group Board Remuneration Committee to provide information across a range of issues, including remuneration benchmarking, market practices and emerging trends and regulatory reforms.
  • The Group Board Remuneration Committee refers to the Group Board or any other Board Committees any matters that come to the attention of the Group Board Remuneration Committee that are relevant for the Group Board or the respective Board Committees across the Group.

 

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