Statement on Corporate Governance: Corporate Disclosure by Maybank Investment Bank Berhad (Maybank IB) Pursuant to Bank Negara Malaysia (BNM) Guidelines on Corporate Governance for Licensed Institutions (BNM/GP1) for the Financial Year ended 31 December 2012 Information of the Board Composition of the Board The Board of Maybank Investment Bank Berhad (Maybank IB) currently comprises six (6) directors. There are three (3) Independent Non-Executive Directors, and three (3) Non-Independent Non- Executive Directors. The current composition of the Board complies with the BNM/GP1 and Company‟s Articles of Association which provides that at least one third of the Board must comprise Independent Directors. The members of the Board are as follows: Chairman Tan Sri Dato‟ Megat Zaharuddin Megat Mohd Nor - Non-Independent Non-Executive Director Members Dato‟ Sri Abdul Wahid Omar - Non-Independent Non-Executive Director Datuk‟ Karownakaran @ Karunakaran – Independent Non-Executive Director Cheah Teik Seng - Independent Non-Executive Director Datuk Mohaiyani Shamsudin - Independent Non-Executive Director Datuk Abdul Farid Alias - Non-Independent Non-Executive Director Secretary Noreen Melini Muzamli * Dato‟ Dr Tan Tat Wai resigned as an Independent Non-Executive Director of Maybank IB effective 7 March 2012. The Board has considered its size and composition following the Annual Board Assessment exercise for the financial year ended 31 December 2012 and is satisfied with the current number and composition of the Board to ensure an efficient and effective conduct of board deliberation pursuant to BNM/GP1. The current Board‟s size enables the Board to discharge its function in a professional manner in consideration of the size, breadth and complexity of Maybank IB‟s business activities. Roles and Responsibilities of the Board The Board‟s duties and responsibilities include the following, which is outlined in its Terms of Reference: (i) To review and approve strategies, business plans and significant policies and monitor management‟s performance in implementing them. (ii) To approve policies on credit, margin-trading facility, trading limit, underwriting and investment in securities (both equities and fixed income). (iii) To approve comprehensive policies, processes and infrastructure with respect to the management of all risk categories (including but not limited to credit, market, liquidity, operational, legal and reputational risks). Page 1 of 13 (iv) To review and ensure the adequacy and integrity of Maybank IB‟s internal control system and management information system, including systems for compliance with applicable laws, regulations, rules and guidelines. (v) To approve credit facilities and underwriting of securities under the category of policy loans (other than those delegated) and director-related facilities. (vi) To oversee the conduct of Maybank IB‟s business, to evaluate whether the business is effectively managed and to ensure that the operation of the business is conducted within the framework of relevant laws & policies. (vii) To maintain adequate oversight of the overall Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) measures undertaken and be fully committed in establishing an effective internal control system. (viii) To approve human resource matters including selection, recruitment, termination and promotion of senior personnel; and to approve all recommendations by the Maybank Group Nomination and Remuneration Committee (NRC). (ix) To approve the appointment of Directors and the emoluments and benefits for the Non- Executive Directors of Maybank IB; and (x) To ensure sound and prudent policies and corporate governance practices of Maybank IB by providing effective check and balance. Quality and supply of information to the Board The Board is kept up-to-date on various matters via comprehensive management reports on a regular basis on the business of Maybank IB and its group of companies as well as several other key areas which include, among others, the following:- (i) Current financial performance of Maybank IB that includes current monthly/quarterly and year- to-date actual figures which are compared against budget, capital adequacy and balance sheet; (ii) Performance of each business division with additional details including identified growth strategies, implementation progress and key challenges; (iii) Updates on corporate exercises and strategic initiatives, which include any acquisition /regional expansion activities; (iv) Current performance of Maybank IB‟s subsidiary and associate companies such as Binafikir Sdn Bhd and Anfaal Capital; (v) Regulatory updates and compliance status; (vi) Issues and updates on Human Capital which include movement of staff, key initiatives undertaken such as management succession planning and talent management, and any other HR matters deemed appropriate; and (vii) Other items deemed appropriate or is requested to be included by the Board. The Board meets once every month with additional meetings convened to attend to urgent matters that require its decision. Board Meetings for the ensuing financial year are scheduled before the end of the calendar year, so as to allow members of the Board to plan ahead and fit the coming year‟s Board and Board Committees meetings into their respective schedules. Prior to each Board meeting, an agenda together with comprehensive reports for each agenda item to be discussed, will be forwarded to each director at least five clear days before the scheduled meeting to enable the directors to obtain further clarification or explanation, where necessary. However, papers that are deemed urgent may still be submitted to the Company Secretary after the expiry of such deadline of papers submission to be tabled to the Board, subject to the approval of the Chairman of the Board and CEO of Maybank IB. Page 2 of 13 Feedback is obtained from directors on the quality and quantity of meeting papers as part of the annual assessment of the Board‟s current meeting practices. The current format and structure of the Board meeting papers are designed to ensure the papers contain sufficient and relevant information pertaining to the business, operations and management of Maybank IB in a clear and concise manner to enable the directors to effectively discharge their duties. At Board meetings, presentations and briefings by external consultants or advisors on relevant papers, particularly those involving complex issues are also held to assist directors to deliberate and decide on such matters. The Board also monitors the status and follow-up actions on issues raised at Board meetings via Matters Arising which is a fixed item in the meeting agenda. Minutes of each Board meeting are also circulated to all directors for their perusal prior to confirmation of the minutes before the commencement of the following Board meeting. In accordance with the expectations of BNM and the continuous practice of the Maybank Group, the Maybank IB‟s minutes of meeting of the Board and various Board Committees incorporate the discussions of the members at the meetings in arriving at decisions and are concise and accurate. The Company Secretary also ensures that a quorum is present at the commencement of each Board and Committees meeting in order to constitute a valid meeting. The Board‟s Annual Board Outline Agenda aims to highlight to the Board and Board Committees as well as the Management on subject matters other than 'routine' for the year to facilitate better planning and for greater time effectiveness of various parties. It would also give a greater sense of discipline on the part of Management to commit to the said outline as well as allowing the Board to deliberate on and contribute towards achieving a higher level of value-added discussions. The Board has full and unrestricted access to all information pertaining to Maybank IB‟s businesses and affairs to enable it to discharge its duties effectively. Directors also have full and unrestricted access to the advice and services of the senior management and the Company Secretary. The Board had formally adopted a Board Manual (“Manual”) in December 2010. The objective of this Manual is to act as a guide and reference for directors in discharging their duties effectively as the Manual highlights the guiding principles and matters relating to the Board‟s organisation, responsibilities, and relevant internal policies and procedures. The Manual is a dynamic document as it is updated from time to time to reflect changes to Maybank IB‟s policies as well as amendments to the relevant rules and regulations. Individual directors may also seek independent professional advice at Maybank IB‟s expense where necessary, in the furtherance of their duties in accordance with Maybank IB‟s Policy and Procedure on Access to Independent Professional Advice, Senior Management and Company Secretary. The Board is responsible to further enhance the skills and knowledge of its members on the relevant new laws and regulations and changing commercial risks, as well as to keep abreast with developments in the financial services industry through a Structured Training Programme for Directors (“STPD”). The STPD requires that each director attend at least one training programme, which is to be specifically developed by Maybank IB for its directors during the financial year. For the period under review, all the Board members have complied with the aforesaid internal policy by attending various training programmes and workshops on issues affecting the