Corporate Governance

The Board of Directors (the “Board”) and Management of PSC Corporation Ltd (the “Company”) and its subsidiaries (collectively referred to as the “Group”) place great importance on high standard of corporate conduct to uphold good corporate governance.
This commitment and continuous support of the Code of Corporate Governance which was revised on 6 August 2018 (the “2018 Code”) and accompanying Practice Guidance. The Board and Management are mindful of the tenets of good governance that includes
accountability, transparency and sustainability. The Company believes that embracing such efforts are more likely to engender investor confidence and achieving long-term sustainable business performance.

In accordance with Rule 710 of the listing rules of Singapore Exchange Securities Trading Limited (“SGX-ST”), this Corporate Governance Statement sets out the Company’s corporate governance practices with specific reference to the principles and the provisions of the Code, which have been adopted based on 2018 Code. The Company believes that it has complied with the spirit and intent of the 2018 Code except in areas where the Company’s practices have deviated from the 2018 Code; explanation of which is
provided herein.

Section (A): Board Matters

The Board’s Conduct of Affairs

Principle 1:

The company is headed by an effective Board which is collectively responsible and works with Management for the long-term success of the company

The Company is headed by an effective Board, comprising individuals with diversified backgrounds and who collectively brings with them a wide range of experience, to lead and control the Group. The Board is responsible for the overall management and success of the Group. The primary role of the Board is to oversee the Group’s business performance and affairs, and to protect and enhance long-term shareholder value. To fulfil this, apart from its statutory responsibilities, the Board performs the following roles and functions:

providing entrepreneurial leadership, setting strategic directions and objectives of the Group;
approving major funding proposals, investment and divestment proposals of the Group;
reviewing the performance of management by establishing management’s goals and monitoring the achievement of such goals;
reviewing and endorsing the remuneration framework as may be recommended by the Remuneration Committee;
supervising management in ensuring that the Company has the necessary resources to meet its goals and establish a framework of prudent and effective controls to assess and manage risks;
overseeing the processes of risk management, financial reporting and compliance and evaluates the adequacy of internal controls;
considering sustainability issues, such as environmental and social factors, as and when necessary, as part of its strategic formulation; and
assuming the responsibilities for corporate governance.

Fiduciaries: All Directors discharge their duties and responsibilities objectively at all times as fiduciaries in the interests of the Company. The Board puts in place a code of conduct and ethics, and also sets the tone for the Company in respect of ethics, values and desired organisational culture, and ensure proper accountability within the Group. The Board has clear policies and procedures for dealing with conflicts of interest. Where Director faces a conflict of interest, he would recuse himself from discussions and decisions involving the issues of conflict.

Induction, Training and Development: Our Directors are provided with extensive background information about our Group’s
history, mission, values and business operations. The Nominating Committee ensures that all Directors are equipped with the appropriate skills and relevant industry knowledge to perform their roles on the Board and Board Committees effectively.

The Directors make visits to the Group’s operations facilities with Management providing explanations, briefings or discussions on key aspects to gain insight for a better understanding of the Group’s businesses and operations.

The Company will brief newly appointed Directors of their duties and obligations including the business and organisational structure of the Group and its strategic directions. Such Directors go for site visits of the Group’s operating units to familiarise themselves with the Group’s business practices.

Directors are updated periodically on industry trends and development of sustainability issues, relevant laws, regulations and changing business risks during Board meetings/committee meetings or at specifically-convened sessions so as to enable them to properly discharge their duties effectively. In the year under review, the Board has been briefed on the compliance and disclosure requirements of the amendments to the Listing Rules of the SGX-ST and accounting standards.

The Company Secretary and her representative regularly inform the Directors of any upcoming conferences, training and seminars relevant to their roles as directors of the Company. The external auditors would update the Audit and Risk Committee and the Board on new and revised accounting standards that are applicable to the Company or the Group annually.

The Directors and key management personnel of the Company are encouraged to attend relevant training programmes, courses, conference and seminars on new laws, regulations and updates on commercial areas conducted by relevant professional organisation from time to time. Changes to regulations and accounting standards are monitored closely by the Management. In order to keep pace with such laws and regulatory changes, the Company will provide and fund the appropriate trainings and development programmes for the Directors and/or key management personnel of the Company, where relevant.

Management and the Company Secretary assisted Directors in ensuring compliance with their obligations under the relevant rules and regulations, and in the Directors’ professional development. During the financial year ended 31 December 2021, the Directors attended seminars that they find useful to better perform their duties through electronic means.

Matters reserved for the Board: The Directors have identified a few areas for which the Board has direct responsibility for decision making (which are embodied in its internal guidelines) such as the following:

annual budgets and financial plans of the Group;
approval of the annual and half yearly results announcements;
approval of the annual report and financial statements;
declaration of interim dividends and proposal of final dividends;
convening of shareholders’ meetings;
approval of corporate strategy;
authorisation of major transactions;
approval of Board changes and appointments to Board Committees;
investments and divestments decisions including the Group’s capital commitment; and
commitments to term loans and lines of credit from banks and financial institutions by the Group.

While matters relating in particular to the Company’s objectives, strategies and policies require the Board’s direction and approval, Management is responsible for the day to day operation and administration of the Company in accordance with the objectives, strategies and policies set by the Board.

Board Committees: To ensure that specific issues are subject to consideration and review before the Board makes its decision, the Board has established a number of Board Committees to assist the Board in carrying out more effectively its oversight function. These Board Committees consist of Audit and Risk Committee (“ARC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”) (collectively the “Board Committees”).

The composition of the Board Committees as at the date of this report are as follows:

These Board Committees function within clear Board approved written terms of reference. Such terms of reference will be reviewed by the Board and Board Committees on a regular basis to ensure their continued relevance and to enhance the effectiveness of these Board Committees. The minutes of all Board and Board Committees meetings which provide a fair and accurate record of the discussions and key deliberations and decisions taken during the meetings, are circulated and available to the Board and Board Committees.

The roles and responsibilities and these Board Committees are set out in subsequent sections of this Corporate Governance Statement of the Company.

Board and Board Committees Meetings held in FY2021

Meetings: The attendance of the Directors at scheduled meetings of the Board and Board Committees during FY2021 is disclosed below:

The schedules of the Board and Board Committees meetings are given to all Directors well in advance. The Board meets at least two (2) times in a year. Besides the scheduled half yearly Board meetings, the Board also meets on an ad-hoc basis as warranted by circumstances. Board meetings will be convened when they are deemed necessary, to review the Group’s business operations, conduct strategic review of the business affairs and address other specific significant matters that arise.

The Company’s Constitution provides for the convening of the Board meetings by way of telephonic, video conferencing or other similar means of electronic communication. The Board also approves material and significant transactions by way of written resolutions which are circulated to the Board together with all relevant and supporting information.

The agendas for meetings during 2021 were prepared in consultation with the Executive Chairman and/or Deputy Chairman and/or the Chairman of the respective Board Committee. The agendas and meeting materials are circulated in advance of the scheduled meetings to the members of the Board and/or Board Committees.

The Directors were appointed based on their experience, stature and potential to contribute to the proper guidance of the Group and its businesses. As such, we believe that each individual Director’s contributions can be reflected in ways other than the reporting of attendances at Board meetings and/or Board Committee meetings.

Despite some of the Directors having multiple Board representations, the NC had reviewed the Directorship of the Directors and is satisfied that these Directors are able to ensure that sufficient time and attention are given to the affairs of the Company and have adequately carried out their duties as Directors of the Company after taking into consideration the number of listed company Board representations and other principal commitments of these Directors.

The NC and Board agreed that as a guide, the maximum number of the listed company board representation which any Independent Director may hold should not exceed ten (10), and both the NC and the Board will review and determine the maximum number of listed company Board representations as and when they deem appropriate.

Board Information: Management provides the Board and Board Committees with relevant, complete, adequate and timely information relating to matters to be brought before the Board and Board Committees, prior to Board and Board Committee meetings. Management has put in place a procedure for papers to be circulated to the Board and Board Committee or to be submitted at Board and Board Committee meetings.

To give Directors sufficient time to prepare for Board and Board Committee meetings, the agenda, papers and presentation slides are usually circulated to them electronically before the relevant meetings. Directors can access these materials via their personal computers or laptops prior to, during and after meetings. Hard copies of these materials are also distributed to the Directors. Management provides the Board with explanation and information as the Board may require, to enable the Board to make a balanced and informed assessment of the Group’s performance, position and prospects. This is to give Directors sufficient time to review and consider the matters to be discussed so that it can be meaningful and productive. The Board is also apprised of any significant developments on business initiatives, industry developments and regulatory updates.

A presentation is made to the Directors at the Board meeting on budgets, forecasts and variances. In respect of budgets, any material variance between the projections and actual results would be disclosed and explained during the meeting. Directors are also informed of any significant developments or events relating to the Group. The external consultants engaged on specific projects are invited to brief the Board during the Board meeting. The Board and Board Committees have unfettered access to information which the Company is in possession of or has access to, for the purpose of carrying out their responsibilities. However, sensitive matters may be table at the meeting itself or discussed without any papers being distributed.

The Management ensures that any information or materials requested by the Directors to make informed decisions will be provided in a timely manner.

Board’s access: The Directors have separate and independent access to the advice and services of the Management, Company Secretary, the key management personnel and external advisers (where necessary) at the Company’s expense at all times. Further, there is no restriction of access to the key management personnel when the Directors have to carry out their duties. As a matter of good corporate governance practice, the role of the Company Secretary has been clearly defined.

The Company Secretary and her representative attend to corporate secretarial administration matters. They assist the Board and Management in implementing and strengthening corporate governance policies and procedures. The Company Secretary and her representative ensure that Board procedures are properly followed. They prepare the agenda for Board and Board Committee meetings in consultation with the Executive Chairman and/or Deputy Chairman and the respective Board Committee Chairman, and attended Board and Board Committee meetings during 2021. The appointment and removal of the Company Secretary is subject to the Board’s approval.

The Directors, whether as a group or individually, may seek and obtain independent professional advice in the furtherance of their duties, the expenses of which are borne by the Company.

BOARD COMPOSITION AND GUIDANCE

Principle 2:

The Board has an appropriate level of independence and diversity of thought and background in its composition to enable it to make decisions in the best interests of the company.

Board Composition:

As at the date of this report, the Board consists of seven (7) Directors of whom one (1) Executive Chairman, two (2) are Non-Executive and Non-Independent Director and four (4) are Non-Executive and Independent Directors:

Profiles of the Directors are found in the “Board of Directors” section of the Annual Report.

Board Independence: The Board assesses the independence of each Director in accordance with the guidance provided in the 2018 Code. The criteria for independence are based on the definition given in Provision 2.1 of the 2018 Code. As at the date of this report, the Board has four (4) Non-Executive and Independent Directors whose independence has been reviewed by the NC.

The NC reviews annually, and as and when circumstances require, if a Director is independent. Each Independent Director is required to complete a Director’s Independence Checklist annually to confirm his independence based on the Listing Rules of the SGX-ST, Principles and Provisions as set out in the 2018 Code.

Save for Dr Chen Seow Phun, John (“Dr John Chen”) (who has served on the Board beyond nine (9) years and had sought approval from the Shareholders in the annual general meeting of the Company held on 29 April 2021 of his continued appointment as Independent Director pursuant to Rule 210(5)(d)(iii)), none of the Independent Director has served on the Board beyond nine years from the date of his appointment. Notwithstanding that Dr John Chen has served the Board beyond nine (9) years, the NC, with the concurrence of the Board, is satisfied that Dr John Chen has been able to objectively guide and oversee the Management of the Group, provide the check and balance and exercise an independent business judgement to the best interests of the Group. Dr John Chen had abstained from the discussions pertaining to the review of his independence, and being member of the NC has abstained from voting on any resolution in relation to his independence.

Similarly, the NC has reviewed the independence status of the Independent Directors for FY2021, and is satisfied that Mr Chandra Das S/O Rajagopal Sitaram (“Mr Das”), Mr Siu Wai Kam (“Mr Siu”) and Mr Goh Yang Jun, Jasper (“Mr Jasper Goh”) are independent in accordance with Provision 2.1 of the 2018 Code and Rule 210(5)(d) of the Listing Rules of SGX-ST. As NC members, Dr John Chen and Mr Das have abstained from voting on any resolution in relation to their independence.

As at the date of this report, Dr Goi Seng Hui (“Dr Goi”) and Dr John Chen sit on the board of Tat Seng Packaging Group Ltd (“Tat Seng”), a listed subsidiary of the Company. The Board believes that their directorships in Tat Seng have not and will not interfere, or be reasonably perceived to interfere, with their ability to exercise independent judgement and act in the best interest of the Company. Further, having gained in-depth understanding of the business and operating environment of the Group, they provide much needed experience and knowledge of the industry.

During the year, the NC had conducted interviews to ascertain the suitability of several candidates’ qualities and capabilities, taking into consideration the appropriate skills and relevant industry knowledge to perform his roles on the Board and Board Committee effectively. After due deliberation, the NC recommended to the Board the appointment of Dr Goi as the Non-Executive Chairman on 8 March 2021 and Mr Das and Mr Tan Kian Chew (“Mr Tan”) as the Independent Directors on 5 May 2021. Dr Goi was re-designated his position to Executive Chairman and Mr Tan was re-designated his position to Non-Executive and Non-Independent Director on 1 September 2021.

Independent Directors: The composition of the Board in FY2021 complies with Provision 2.2 of the 2018 Code as Independent Non-Executive Directors make up a majority of the Board where the Chairman is not independent.

Non-Executive Directors: The NC is of the view that in FY2021 given that there is a majority number of directors who are non-executive and independent of management in terms of character and judgement, objectivity on issues deliberated is assured. The current Board composition complies with Provision 2.3 of the 2018 Code where Non-Executive Directors make up a majority of the Board.

Matters requiring the Board’s approval are discussed and deliberated with participation from each member of the Board and all major decisions are made collectively without any individual or small group of individuals influencing or dominating the process.

Board size: The size and composition of the Board is reviewed on annual basis by the NC to ensure that the Board has the appropriate mix of expertise and experience to enable Management to benefit from a diverse perspective of issues that are brought before the Board. The Board also regularly examines its size and, with a view to determining the impact of its number upon effectiveness, decides on what is considered an appropriate size for itself taking into account the scope and nature of the Company’s operation.

Board diversity: The Board consists of directors with diverse expertise and experience in business management, accounting, banking and financial, IT, engineering, mathematics, economics and industry knowledge. They are capable of exercising objective judgment on the corporate affairs of the Company independent of Management. In concurrence with the NC, the Board is of the view that the current seven-member Board has the appropriate structure, size, diversity and composition to provide effective guidance and make decisions in the best interests of the Group. In terms of age diversity, the composition of the board comprises at least one director each in the age group of his forties, fifties and sixties respectively. The current Board composition reflects a diversity of age, skills and knowledge in FY2021.

The Board has adopted a Board Diversity Policy on 9 November 2018 to assist the NC and the Board in identifying prospective candidates for Directorship that meet the criteria as determined by the NC and that support the diversity’s objectives (“Board Diversity Policy”). Following the reconstitution of the Board and Board Committees on 1 September 2021, the Board with the recommendation of NC has revised the Board Diversity Policy with effect from 17 September 2021.

The Company recognises that an effective board requires directors to possess not only integrity, commitment, relevant experience, qualifications and skills in carrying out their duties effectively but also include diverse background as enablers towards promoting good corporate governance.

In identifying qualified candidates for nomination to the board, the NC will consider prospective candidates based on merit, having regard to their character, competencies, expertise, skills, track record, background and other qualities as being important in fostering a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. The NC is mindful of related regulatory requirements (including the Listing Rules issued by the SGX-ST and the 2018 Code), and will give due consideration to characteristics, such as gender, age, ethnicity, disability and geographic representation, which contribute to board diversity.

The NC may, in addition to conducting its own search and selection process, engage qualified independent advisors to assist in identifying prospective candidates for directorship that meet the criteria as determined by the NC and that support PSC’s diversity objectives.

The Board has established that at least 10% of the total number of board seats be reserved for women and that the composition of the board shall comprise at least one (1) director each in the age group of his/her forties, fifties and sixties respectively. The NC will review these objectives when necessary and recommend changes to this policy, as appropriate.

In implementing this policy, the NC will take into account the Company’s diversity objectives and the diverse nature of the business environment in which the Company operates whilst maintaining flexibility to address succession planning and to ensure that the Company continues to attract and retain qualified individuals to serve on the board.

Adherence to the Board Diversity Policy will form part of the annual performance of the board and/or the board committees of the Company. This policy shall be read in conjunction with the prevailing terms of reference of the NC.

Regular meetings for Independent Directors: Directors and Management discuss and debate issues at Board meetings. Non-executive and Independent Directors are kept apprised of the Group’s business (which include financial highlights, operational performance indicators and key risks monitoring indices)at the meeting. During the Board Meeting for year-end results deliberation held on 23 February 2022, a Non-executive and Independent Directors session without the Executive Chairman, Chief Executive Officer (“CEO”) and Management’s presence is scheduled for the Non-executive Directors to review the performance and effectiveness of Management and feedback is thereafter provided to the Executive Chairman, CEO and Management.

To-date, none of the Independent Directors of the Company has been appointed as Director of the Company’s principal subsidiaries.

Chairman and Chief Executive Officer (“CEO”)

Principle 3:

There is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision making.

During FY2021, the Deputy Non-Executive and Independent Chairman, Dr John Chen assumed the Non-Executive function of the former Chairman. The Nominating Committee, in consultation with the Board, has taken steps to appoint Dr Goi Seng Hui (“Dr Goi”) firstly as Non-Executive Chairman and Non-Independent Director on 8 March 2021 and subsequently re-designated his position to Executive Chairman of the Company with effect from 1 September 2021 as part of the Company’s future growth and transformation of the Group.

During FY2021, there was a distinct separation of responsibilities between the role of Chairman and the Chief Executive Officer (“CEO”), to ensure that there is an appropriate balance of power and authority, increased accountability and greater capacity of the Board for independent decision-making. The Company has appointed Mr Henry Chu Heng Hwee (“Mr Henry Chu”) as the CEO with effect from 10 May 2021. Mr Henry Chu is subsuming the executive duties and responsibilities of the former Executive Directors in terms of overseeing, planning, directing, controlling the activities; and to developing and executing the Group’s strategies and business objectives.

As the Executive Chairman, Dr Goi provides close oversight, guidance, advice and leadership to the CEO and Management. His responsibilities include:

determining the Group’s strategies;
with the assistance of the Company Secretary, scheduling of meetings to enable the Board to perform its duties while not interfering with the flow of the Group’s operations;
with the assistance of the Company Secretary, approving the meeting agenda of the Board and ensures adequate time is available for discussion of all agenda items;
with the assistance of the Company Secretary, ensuring that Board meetings are held when necessary;
facilitating effective contributions from the Non-Executive Directors and encouraging constructive relationships within the Board and between the Board and the Management;
exercising control over the quality, quantity and timeliness of information flow from the Management to the Board, promoting effective communication with the Company’s shareholders;
ensuring, fostering constructive and effective communication with shareholders; and
promoting high standards of corporate governance with full support of the Directors and the Management.

Lead Independent Director:

Under the 2018 Code, the Board should have a lead independent director to provide leadership in situations where the Chairman is conflicted, and especially when the Chairman is not independent. Upon the appointment of Non-Executive Chairman on 8 March 2021 and re-designated his position to Executive Chairman on 1 September 2021 who is not independent, the Company is required under the 2018 Code to appoint or re-designate an existing independent director as the Lead Independent Director of the Board who should also be a member of the NC.

In view of the above, the Board is cognizant of the variation from Provision 3.3 of the 2018 Code and would be taking steps to comply with the 2018 Code as soon as it is practicable.

Notwithstanding that the Company does not yet have a Lead Independent Director, the Board is of the view that there is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision making, given that the Executive Chairman is not involved in the daily operations of the Group, the overall management and strategic development; which is instead undertaken by the CEO.

Furthermore, members of the ARC, NC and RC of the Company are all Non-Executive Directors and majority of whom are independent. Major proposals and decisions made by the Board are subject to majority approval by the members of the Board and reviewed by the relevant Board Committee.

In addition, Dr Goi Seng Hui and Mr Kenneth Goi will recuse themselves where either has a material personal interest. In such cases, deliberations would be led by the Deputy Non-Executive and Independent Chairman. Upon both their recusal, the Independent Directors would make up a majority of the Board deciding as such matters and would be in a strong position to safeguard the interests of the Company, especially when there is a conflict of views and a majority vote is required to reach a decision.

The NC conducts annual Board performance appraisal including review of any changes to the Board members. On the other hand, remuneration packages are reviewed periodically by the RC. The Board believes that there are adequate safeguards to ensure an appropriate balance of power and authority within the spirit of good corporate governance. In addition, all Directors take decisions objectively and in the interests of the Company.

Board Membership

Principle 4:

The Board has a formal and transparent process for the appointment and reappointment of directors, taking into account the need for progressive renewal of the Board.

Nominating Committee composition:

As at the date of this report, the NC comprises three (3) members, majority of whom are Independent:

Mr Chandra Das S/O Rajagopal Sitaram (Chairman, Non-Executive and Independent Director)
Dr Chen Seow Phun, John (Member, Non-Executive and Independent Director)
Mr Tan Kian Chew (Member, Non-Executive and Non-Independent Director)

The NC Chairman has no relationship (direct or indirect) with the Company, its related corporations, its five percent (5%) shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of his independent judgement in the best interest of the Company.

The terms of reference of the NC provides that NC shall comprise at least three members of the Board, a majority of whom, including the Chairman of the NC shall be independent directors.

Nominating Committee role: The principal responsibilities of the NC are set out in the terms of reference and its key functions include:

To review succession plans for directors, in particular make recommendations to the Board on the appointment and/or replacement of the Chairman, the CEO, key management personnel, non-executive directors and alternate directors (if applicable).
To regularly review the Board structure, size and composition having regard to the scope and nature of the operations and the core competencies of the directors as a group. The NC shall make recommendations to the Board with regards to any adjustments that are deemed necessary.
To establish and review the criteria on the determination of the maximum number of directorships of listed companies any Director may hold.
To decide whether or not a Director is able to and has been adequately carrying out his duties as a Director of the Company, particularly when he has multiple board representations and other principal commitments.
To identify gaps in the mix of skills, experience and other qualities required in an effective Board and nominate or recommend suitable candidate(s) to fill in these gaps.
To review, assess and recommend nominee(s) or candidate(s) for appointment or election to the Board, having regard to his qualifications, competency, other principle commitments and whether or not he is independent and in the case of a re-nomination, to his contribution and performance.
To determine, on an annual basis, if a Director is independent bearing in mind the circumstances set forth in the Listing Rules of the SGX-ST and the 2018 Code
To make recommendations on the re-appointment to the Board for the continuation (or not) in services of an Independent Director who has served for an aggregate period of more than nine (9) years for re-election in a general meeting.
To recommend Directors who are retiring by rotation to be put forward for re-election and to conduct a rigorous review and determine whether an independent director who has served the Board for a period of nine (9) years since his date of appointment, can still remain independent.
To review training and professional development programs for the Board and to ensure that all Board’s appointees undergo an appropriate induction programme, where applicable.
To assess the effectiveness of the Board as a whole, its Board Committees and the contribution of each Director to the effectiveness of the Board.

The Chairman of the NC acts on the results of the performance evaluation and where appropriate, propose new members be appointed to the Board or seek the resignation of directors, in consultation with the NC.

Director appointment and re-appointment: In appointing Directors, the Board considers the range of skills and experience required in the light of:

geographical spread and diversity of the Group’s businesses;
the strategic direction and progress of the Group;
the current composition of the Board; and
the need for independence.

The Board has delegated to the NC the functions of developing and maintaining a transparent and formal process for the appointment and re-appointment of Directors, making recommendations for Directors who are due for retirement by rotation to seek re-election at a general meeting and determining the independent status of each Director.

When a vacancy exists, the NC, in consultation with the Board, determines the selection criteria for the position based on the skills and knowledge deemed necessary for the Board to best carry out its responsibilities. Candidates may be suggested by Directors or Management or sourced from external sources. The NC will interview the candidates and assess them based on the criteria as set out in the Board Diversity Policy. The NC will make a recommendation to the Board on the appointment. The Board appoints the most suitable candidate who must stand for re-election at the next Annual General Meeting (“AGM”) of shareholders. Particulars of interests of Directors who held office at the end of the financial year in the capital of the Company and in related corporations (other than wholly-owned subsidiaries) are set out in the Directors’ Statement.

The Company’s Constitution provide that, at each AGM, one-third of the Directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not greater than one-third) shall retire from office by rotation. A retiring Director is eligible for re-election by the shareholders of the Company at the AGM, and prior to nominating a retiring Director for re-election, the NC will evaluate the Director’s contribution and performance taking into consideration factors such as attendance, preparedness, participation, candour and any other factors as may be determined by the NC. The details of the retiring Directors seeking for re-election are found in Table A set out on page 64 to page 66 of this Annual Report.

The NC is also responsible to determine the independence of Directors annually by taking into account the circumstances set forth in the 2018 Code and any other salient factors. In considering the independence of an Independent Director who has served on the Board beyond nine (9) years, the NC has taken into consideration the following factors:

(i) There were changes to the composition of the Board and Board Committees in FY2021;

(ii) The extensive knowledge and experience contributed by the Independent Directors to the Company;

(iii) The attendance, preparedness, participation and contribution in the meetings of the Board and Board Committees;

(iv) Provision of continuity and stability to the new Management at the Board level by facilitating smooth communication between old and new Management;

(v) Provision of reasonable checks and balances for the Management;

(vi) The Independent Directors have devoted adequate attention and sufficient time to the affairs of the Group; and

(vii) The Independent Directors provide overall guidance to the Management and acts as safeguard for the protection of Company’s assets and shareholders’ interests.

The Board and the NC had developed a process of evaluation of performance of the Board and Board Committees and individual Directors through establishment of quantifiable performance criteria. The evaluation performance checklist is drawn up based on the Practice Guide provided in the 2018 Code.

Taking into account, among others, these Directors’ participation during and outside the formal Board and Board Committees meetings as well as other contributions, the Board has accepted the NC’s nomination of the retiring Directors, who have given their consent for re-election at the forthcoming AGM of the Company. The retiring Directors are Mr Siu and Mr Jasper Goh who will retire pursuant to Regulation 87 of the Constitution of the Company, and Mr Das and Mr Tan who will retire pursuant to Regulation 93 of the Constitution of the Company. Mr Siu and Mr Jasper Goh, while eligible for re-election, have expressed their intention not to seek for re-election at the forthcoming AGM to be held on 28 April 2022. Mr Das and Mr Tan, being eligible, have offered themselves for re-election at the forthcoming AGM to be held on 28 April 2022.

Multiple directorships: The NC is responsible for reviewing the ability of the Directors to devote sufficient time and attention to the affairs of the Company and in particular to take into account multiple directorships and significant principal commitments held by the Directors. The NC requires each Director to declare any new additional directorships or significant principal commitments during the year to enable the ongoing monitoring of the time commitment, attendance and contributions of the Directors to the Company. The NC is satisfied that the other directorships and principal commitments of the Directors had not hindered them from carrying out their duties as Directors of the Company.

In respect of disclosure of each Director on the listed company directorships and other principal commitments are set out in pages 31 to 33 of this Annual Report.

Alternate Directors: Currently, the Company does not appoint any alternate director.

Board Performance

Principle 5:

The Board undertakes a formal annual assessment of its effectiveness as a whole, and that of each of its board committees and individual directors.

We believe that Board performance is ultimately reflected in the performance of the Group and the Company. The Board should ensure compliance with applicable laws and Board members should act in good faith, with due diligence and care in the best interest of the Group and the shareholders. In addition to these fiduciary duties, the Board is charged with two (2) key responsibilities of setting strategic direction and ensuring that the Group is ably led. The Board, through the delegation of its authority to the NC, will review the Board’s composition annually to ensure that the Board has the appropriate mix of expertise and experience to lead the Group.

Based on the recommendations of the NC, the Board has an annual performance evaluation process, carried out by the NC, to assess the effectiveness of the Board, Board Committees and each Director’s contributions. This annual assessment process consists principally of evaluation by and feedback from each Director.

(a) Assessment of the effectiveness of the Board as a whole – The NC uses an objective performance criteria to conduct Board assessments via the circulation of assessment evaluation forms to the Directors annually for their evaluation of various Board issues and processes such as the Board structure, conduct of Board meetings, review of the Company’s corporate strategy and planning, ensuring and reviewing the Company’s risk management and internal control processes, review of the Company’s performance, review of the Board’s compensation evaluations and communication with the Company’s shareholders. The NC has reviewed and is satisfied with the performance and effectiveness of the Board as a whole for the FY2021.

(b) Assessment of the effectiveness of the Board Committees – The NC has implemented a process to be carried out by the NC via the circulation of assessment evaluation forms to assess the effectiveness of the respective Board Committees annually. The NC has recommended that the members of the respective Board Committees complete the evaluation form adopted by the NC. The results of the Board and Board Committees assessments are reviewed and discussed by the NC and, any recommendation and suggestion arising from the evaluation exercise are circulated to the Board for consideration of the appropriate measures to be taken. The NC has reviewed and is satisfied with the performance and effectiveness of the respective Board Committees for FY2021.

(c) Assessment of the contribution of individual Directors to the effectiveness of the Board – The Individual Director’s assessments implemented by the NC are based on the Director’s self-assessment which is evaluated annually and informally on a continual basis by the NC. The criteria taken into consideration by the NC and the Chairman include contribution and performance based on factors such as attendance, preparedness and participation. The evaluations are discussed by the NC and any appropriate action taken. The NC has reviewed and is satisfied with the contribution by individual Directors to the effectiveness of the Board for FY2021.

The NC is of the view that such assessments by the Directors are useful and constructive and this collective process has provided an opportunity to obtain insightful feedback from each Director on suggestions to enhance the effectiveness of the Board and has helped Directors to be more focused on their duties, responsibilities and contributions to the effectiveness of the Board. The assessments also help the NC to determine whether the Directors with multiple Board representations are able to and have adequately discharged their duties as Directors of the Company.

In general, the selected performance criteria will not change from year to year unless they are deemed necessary and the Board is able to justify the changes. In consultation with the NC, the Board will act on the results of the Board performance and propose, where appropriate, new members to be appointed to the Board or propose changes to the Board.

Section (B): Remuneration Matters

Procedures for Developing Remuneration Policies

Principle 6:

The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for fixing the remuneration packages of individual directors and key management personnel. No director is involved in deciding his or her own remuneration.

Remuneration Committee composition: As at the date of this report, the RC comprises three (3) members, majority of whom are Independent:

Mr Chandra Das S/O Rajagopal Sitaram (Chairman, Non-Executive and Independent Director)
Dr Chen Seow Phun, John (Member, Non-Executive and Independent Director)
Mr Goi Kok Ming (Wei Guoming) (Member, Non-Executive and Non-Independent Director)

Remuneration Committee role: The Group’s remuneration policy is to provide compensation packages at market rates which reward successful performance and attract, retain and motivate Directors and key management personnel. The RC is established for the purposes of ensuring that there is a formal and transparent process for fixing the remuneration packages for individual Directors and key management personnel and makes recommendation to the Board on all remunerations. The RC has a formal set of terms of reference approved by the Board. A summary of the RC key functions include:

Reviewing and recommending to the Board a general framework of remuneration for the Board and key management personnel (including the Executive Chairman, CEO and other persons having authority and responsibility for planning, directing and controlling activities of the Company and Group), and the specific remuneration packages and terms of employment (where applicable) for each Director as well as key management personnel. The RC’s recommendations should cover all aspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonuses, options, share-based incentives and awards, and benefits-in-kind;
carrying out its duties in the manner that it deems expedient. Subject always to any regulations or restriction that may be imposed upon the RC by the Board from time to time;
ensuring that all aspects of remuneration are covered, taking into consideration the Principles and Provisions of the 2018 Code;
the remuneration packages of employees related to Executive Chairman, CEO, substantial shareholders and controlling shareholders of the Group are in line with the Group’s staff remuneration guidelines and are commensurate with their respective job scopes and levels of responsibility; and
reviewing and recommending to the Board, the terms of renewal of service agreements of Executive Chairman, CEO and/or key management personnel and ensuring the service agreements contain fair and reasonable termination clauses which are not overly generous in the event of termination.

The RC members are knowledgeable in the field of executive compensation and also have access to independent expert advice from external consultants, where necessary.

Termination clauses: The RC has reviewed the fairness and reasonableness of the termination clauses of the service agreements of the Executive Chairman, CEO and key management personnel. The RC will have access to independent expert advice from external consultants, where necessary. There was no termination of any key management personnel during FY2021.

The RC is responsible for recommending to the Board a framework of remuneration for the Directors and key management personnel which is submitted to the whole Board for endorsement. The RC reviews recommendations on remuneration policies and packages for Directors and key management personnel in the interests of improved corporate performance. The RC’s review of remuneration packages takes into consideration pay and employment conditions within the industry and in comparable companies, the Company’s relative performance, the performance of the individual Directors and key management personnel, the long-term interests of the Group and ensures that the interests of the Directors align with that of the shareholders. The review covers all aspects of remuneration, including but not limited to Directors’ fees, salaries, allowances, bonuses, options, profit sharing (where applicable) and benefits-in-kind.

The RC’s recommendations are submitted to the Board for endorsement. Each member of the Board shall abstain from voting on any resolution concerning or making any recommendation and/or participating in any deliberations of the RC in respect of his own remuneration.

Remuneration experts: The RC, in considering the remuneration of all directors, has not sought external advice or appointed remuneration consultants.

Level and Mix of Remuneration

Principle 7:

The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the company, taking into account the strategic objectives of the company.

Remuneration framework: The remuneration packages of the Executive Chairman and CEO are determined based on the framework recommended by the RC. In doing so, the RC reviews the length of appointment period, the notice period for termination and the terms of the compensation package in the event of termination of Executive Chairman and CEO’s service agreements to ensure that the terms of such clauses are not onerous to the Company. The Executive Chairman and CEO’s framework of remuneration includes a fixed element as well as a variable element in the form of a bonus and a profit-sharing incentive which is linked to the Company’s performance. In setting remuneration packages, the Company takes into consideration the remuneration and employment conditions within the same industry and in comparable companies, as well as the Group’s relative performance, the performance of the individuals and value creation as enumerated under the 2018 Code.

Long-term incentives: Currently, the Company has no employee share option schemes or other long-term incentives since the share option scheme expired on 8 July 2013 (“Scheme”). The expiry of the Scheme will not affect any option granted and duly accepted but not yet exercised, whether in whole or in part by the Directors or the employees of the Group. The share options previously granted had expired on 21 January 2019.

Non-Executive Director remuneration: Save for Mr Tan Kian Chew with an advisory fee of S$100,200 per annum, the Non-Executive and Independent Directors have no service agreements with the Company. They are paid Directors’ fees, with additional fees paid for serving as the Chairman or members of Board Committees as well as attendance at each Board and Board Committees meetings. These fees are recommended by the RC and submitted to the Board for endorsement. Directors’ fees are recommended by the Board for approval at the Company’s AGM. The remuneration of Non-Executive and Independent Directors should be appropriate to the level of contribution and in accordance to the directors’ fees framework adopted by the RC, taking into account factors such as effort and time spent, and responsibilities of the Directors. The Non-Executive and Independent Directors should not be over-compensated to the extent that their independence may be compromised and no Director is involved in deciding his own remuneration. The Directors’ fees are wholly paid in cash.

Contractual provisions to reclaim incentives: The RC is of the view that the variable component of the remuneration packages of the Executive Chairman, CEO and key management personnel, where applicable are moderate. Although the Company did not institute contractual provisions in the service agreements or agreements to reclaim incentive components of remuneration paid in prior years from the Executive Chairman, CEO and key management personnel, the Company is in the process of reviewing the necessity to include such contractual provisions to reclaim such incentive components of remuneration paid in prior years to the Executive Chairman, CEO and key management personnel where incidents occur in exceptional circumstances such as misstatement of financial statements, or of misconduct resulting in financial loss to the Company.

Executive Director and Key Management Personnel Remuneration

The Executive Chairman has a separate formal service agreement with the Company. For FY2021, the remuneration packages of the Executive Chairman, CEO and the key management personnel comprise primarily a basic salary component and a variable component which is the bonuses and other benefits. The service agreement of the Executive Chairman is for a period of three (3) years. This service agreement is subject to review by the RC and provide for termination by either party giving to other an appropriate prior written notice.

The RC seeks to ensure that the level and mix of remuneration for the Executive Chairman, CEO and key management personnel are competitive, aligned with shareholders’ interests and promote the Group’s long-term success. The Company adopts a remuneration policy for the comprising both a fixed and variable component. The fixed component is in the form of a base salary and allowances. The variable component is in the form of a variable bonus that is linked to the Company and each individual’s performance.

During FY2021, there was no termination, retirement or post-employment benefits or other long-term incentives granted to the Directors, the Executive Chairman, CEO and key management personnel. Subsequent to the expiration of PSC Executives’ Share Option Scheme, the Company is exploring other mode of long-term incentives.

Remuneration for the Executive Chairman, CEO, and key management personnel comprises a fixed component, variable cash component and market-related benefits.

A. Fixed Component – The fixed component comprises the base salary and fixed allowances.

B. Variable Cash Component – Variable component is given in the form of an Annual Variable Bonus (“AVB”). This AVB is a cash-based incentive for the Executive Chairman, CEO and key management personnel, which is linked to the achievement of annual performance targets. Corporate and individual performance objectives are set at the beginning of each financial year. The objectives are aligned to the Group’s overall strategic, financial and operational goals, and are cascaded down to a select group of key management personnel such as profit sharing, creating alignment between the performance of the Group and the individual. Profit sharing is for the Executive Chairman, CEO and key management personnel.

Disclosure on Remuneration

Principle 8:

The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.

Remuneration disclosure: The remuneration framework is based on policies which are aligned with Company’s interests to support the Group’s business with the aim of retaining key capabilities, provide sound and structured funding of remuneration in ensuring affordability and sustainable value creation. Competitive remuneration packages are offered to attract and retain experienced individuals. The remuneration policies, the procedures for setting remuneration and the relationships between remuneration, performance and value creation are described in Principle 7 above.

Summary compensation table of the Directors receiving remuneration from the Group for the financial year ended 31 December 2021 is set out below:

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