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TERMS OF REFERENCE OF THE AUDIT AND RISK MANAGEMENT (“ARMC”) COMMITTEE

1. OBJECTIVES

The primary objective of the ARMC is to assist the Board of Directors ("the Board") in fulfilling its fiduciary duties relating to corporate accounting and reporting practices of the Company and its subsidiaries ("the Group").

In addition, the ARMC shall:-

a) evaluate and appraise the quality of audits conducted both by the Company's and the Group's Internal and External Auditors;

b) maintain open lines of communication between the Board, Internal and External Auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities;

c) determine the quality, adequacy and effectiveness of the Group's administrative, operating and accounting controls;

d) oversee compliance with laws and regulations and observance of a proper code of conduct; and

e) provide assurance that the financial information presented by management is relevant, reliable and timely.

2. COMPOSITION

The ARMC shall be appointed by the Board from amongst the Directors and shall consist of not fewer than three (3) Non-Executive Directors, a majority of whom shall be Independent Directors. No alternate Director shall be appointed as a member of the ARMC.

All members of the ARMC shall be financially literate and at least one member of the ARMC must be:-

a) a member of the Malaysian Institute of Accountant ("MIA"); or

b) if he is not a member of MIA, he must have at least three (3) years of working experience and:

i) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

ii) he must be a member of one of the associations of the accountants specified in Part 11 of the First Schedule of the Accountants Act 1967; or

c) fulfils such other requirements as prescribed by the Bursa Malaysia Securities Berhad ("Bursa Securities").

The term of office and performance of ARMC and each of its members shall be reviewed by the Nomination Committee annually.

If a member of the ARMC, resigns, dies, or for any reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

3. CHAIRMAN OF THE ARMC

The members of the ARMC shall elect a Chairman from amongst their number who shall be an Independent Non-Executive Director.

A vacancy resulting in the non-compliance with the requirement on the election of an Independent Chairman of the ARMC must be filled within three (3) months.

In the absence of the Chairman of the ARMC, the other members of the ARMC shall amongst themselves elect a Chairman who must be an Independent Director to chair the meeting.

4. SECRETARY

The Company Secretary or his/her nominee shall be the Secretary of the ARMC. In his/her absence, the Chairman shall appoint the Secretary.

5. MEETINGS AND CIRCULAR RESOLUTIONS

The ARMC shall meet regularly with due notice of issues to be discussed, and should record its conclusion in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the Chairman's discretion.

The Chairman of the ARMC shall also convene a meeting if requested to do so by any member, the Management or the Internal Auditors or External Auditors to consider any matter that falls within the scope of responsibilities of the ARMC.

Notice of ARMC Meetings shall be given to all ARMC members unless the ARMC waives such requirement.

The Chairman of ARMC shall engage on a continuous basis with Senior Management, such as the Chairman, the Chief Executive Officer, the Finance Director, the Head of Internal Audit and the External Auditors in order to be kept informed of matters affecting the Company and the Group.

The Finance Director and the Head of Internal Audit should normally attend such meetings. Representatives of the External Auditors are to be in attendance at meetings where matters relating to the audit of the statutory accounts and/or External Auditors are to be discussed. Other Directors, officers and employees of the Company and the Group may attend meetings upon the invitation of the ARMC. However, the ARMC should meet the External Auditors without Executive Board members present at least twice a year.

Questions arising at any meeting of the ARMC shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the ARMC shall have a second or casting vote.

A resolution in writing signed by a majority of the ARMC members for the time being entitled to receive notice of a meeting of the ARMC shall be as valid and effectual as if it had been passed at a meeting of the ARMC duly convened and held. Any such resolution may consist of several documents in like form, each signed by one (1) or more members of the ARMC.

For the purpose of contemporaneous linking together by an instantaneous telecommunication device of a number of the member of the ARMC no less than the quorum required, whether or not any one or more of the member of the ARMC is out of Malaysia, is deemed to constitute a meeting of the ARMC. The ARMC will apply to such meeting held by instantaneous telecommunication device so long as the following conditions are met:-

a) all the member of the ARMC shall have received notice of a meeting by instantaneous telecommunication device for the purpose of such meeting. Notice of any such meeting will be given on the instantaneous telecommunication device or in any other manner permitted;

b) each of the member of the ARMC taking part in the meeting by the instantaneous telecommunication device must be able to hear each other at the commencement and for the duration of the meeting; and

c) at the commencement of the meeting, each of the member of the ARMC must acknowledge his/her presence for the purpose of the meeting to all of the other member of the ARMC taking parts.

6. MINUTES

The Secretary shall also be responsible for keeping the minutes of meeting of the ARMC at the registered office and distribute to each member of the ARMC and also to the other members of the Board. The ARMC Chairman shall report on each meeting to the Board.

The minutes of the ARMC meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

7. QUORUM

The quorum for the ARMC meeting shall be the majority of members present who must be Independent Directors.

8. REPORTING

The ARMC shall report to the Board, either formally in writing or verbally, as it considers appropriate, on the matters within its terms of reference at least twice a year, but more frequently if it so wishes.

The ARMC shall report to the Board on any specific matters referred to it by the Board for investigation and report.

9. AUTHORITY

The ARMC shall, in accordance with a procedure to be determined by the Board and at the expense of the Company and the Group:

a) have explicit authority to investigate any matter within its terms of reference, resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the ARMC;

b) have full and unrestricted access to any information, records, properties and personnel of the Company and of any other companies within the Group;

c) have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity;

d) obtain independent professional or other advice and to invite outsiders with relevant experience and expertise to attend the ARMC's meetings (if required) and to brief the ARMC;

e) have right to ensure the attendance of any particular ARMC meeting by other Directors and employees of the Company shall be at the ARMC's invitation and discretion and must be specific to the relevant meeting; and

f) in instances where matters reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Bursa Securities requirements, the ARMC must promptly report such matter to the Bursa Securities.

10. DUTIES AND RESPONSIBILITIES

The duties and responsibilities of the ARMC are as follows:-

a) to assess the suitability and independence of the External Auditors before considering their appointment, the audit fee, re-appointment and any question of resignation or dismissal;

b) to establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into and procedures that must be followed by the External Auditors;

c) to discuss with the External Auditors before the audit commences, the nature and scope of the audit, and ensure co-ordination when more than one audit firm is involved;

d) to review with the External Auditors his/her evaluation of the system of internal controls and his/her audit report;

e) to review the quarterly and year-end financial statements of the Group before submission to the Board, focusing particularly on:

i) any change in accounting policies and practices;

ii) significant adjustments arising from the audit;

iii) the going concern assumption;

iv) compliance with accounting standards and other legal requirements;

v) significant matters highlighted in the financial statements; and

vi) significant judgements made by the Management;

f) to discuss problems and reservations arising from interim and final audits, and any matter the External Auditors may wish to discuss (in the absence of management where necessary);

g) to review the External Auditor's management letter and management's response;

h) to do the following, in relation to the internal audit function:-

i) review the adequacy of the scopes, functions and resources of the internal audit function, and ensure that it has the necessary authority to carry out its works;

ii) review the internal audit programme and results of the internal audit process and, when necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

iii) review the internal audit plan, consider the internal audit reports and findings of the internal auditors, fraud investigations and actions and steps taken by Management in response to audit findings;

iv) review any appraisal or assessment of the performance of the members of the internal audit function; and

v) approve an appointment or termination of senior staff members of the internal audit function.

i) to consider any related party transactions that may arise within the Group including any transaction, procedure or code of conduct that raises questions of management integrity;

j) to consider the major findings of internal investigations and management's response;

k) to determine the remit of the internal audit function;

l) to consider other topics as defined by the Board;

m) to report its findings on the financial and management performance, and other material matters to the Board;

n) verification on allotment of shares under Executives' Share Option Scheme ("ESOS") is in compliance with the basis set out in the Bursa Securities’ Main Market Listing Requirements and ESOS by-laws;

o) to monitor the integrity of the Company’s and Group’s financial statements;

p) to monitor the independence and qualification of the Company’s External Auditors;

q) to monitor the performance of the Company’s internal audit function; and

r) to review the adequacy and effectiveness of risk management, internal control and governance systems.