1.0 Constitution

The Board of Labuan Reinsurance (L) Ltd. (“LRE” or “the Company”) is governed by the Labuan Companies Act 2010 (CA) or the Company’s Constitution, i.e. Memorandum and Article and Association, Labuan Financial Services Authority (“LFSA”), Labuan Financial Services & Securities Act 2010 and Labuan Islamic Financial Services & Securities Act 2010, and all applicable laws and guidelines issued by the LFSA.

2.0 Objective / Primary Purpose

To adopt sound corporate governance standards and practices to ensure that the Company is managed in a sound and prudent manner with due regard to the interests of the stakeholders. Its objective is to focus on the strategic matters of the Company and delegated certain subject matters to the respective sub-Board Committees.

3.0 Composition of the Board

3.1 The criteria and skill set of the Board members must reflect the fit and proper requirements and specific market or business knowledge. It is important that the criteria and skill sets are reviewed regularly to ensure alignment with the strategic direction and emerging challenges faced by the Company.
The Chairman of the Board must be a non-executive director.

4.0 Roles and Responsibilities

4.1 The role of the Board is to provide overall strategic guidance for the Company and effective oversight of the Management. In undertaking its role and fulfilling its responsibilities, the Board has reserved to itself, but is not limited to, the following specific responsibilities: –

(i) Strategy

(a) To approve the Company’s strategic direction.
(b) To challenge the assumptions, priorities and options put forward by the Management in the strategic plan.
(c) To approve the business plan and budget, and to set targets for the Management.

(ii) Management Oversight

(a) To select and proactively plans for the CEO’s successor.
(b) To review the performance management philosophy.
(c) To evaluate the CEO.
(d) To endorse the development plans of those in pivotal positions.
(e) To approve appointments of Senior Vice President & above, and Directors.
(f) To approve and implement a process or mechanism to ensure on an ongoing basis that the *Key Responsible Persons1 fulfil the ‘fit and proper’ criteria.

(iii) Governance

(a) To inculcate sound corporate governance.
(b) To approve the Company’s policies.
(c) To uphold Shariah compliance in accordance with the relevant Shariah Governance.

(iv) Shareholders/Stakeholders

(a) To ensure that all shareholders’ views are represented and that shareholders are treated equally.
(b) To balance and manage the economic impact of stakeholder interests on shareholder value.
(c) To support the Management in managing key stakeholders.

(v) Financials

(a) To be regularly informed of the financial condition, business performance and management policies of the Company.
(b) To review, approve and provide feedback on the corporate KPIs and targets.
(c) To approve the compensation and benefits of the staff.
(d) To approve the payment of interim dividends.
(e) To recommend the payment of final dividends.
(f) To recommend the remuneration packages of the Directors to the Shareholders.
(g) To approve the remuneration packages of the Senior Vice President and above.

(vi) Risk Management & Compliance

(a) To conduct an overall oversight of Risk Management and Compliance.
(b) To approve the Company’s risk parameters.
(c) To understand major risk exposures and to ensure appropriate risk mitigation approach is in place.
(d) To consider the risk factors in all major decisions.

5.0 Authority

5.1 Under the Company’s Articles of Association (Article 89), the Board may delegate responsibilities to committees consisting of their members, or other persons that they think fit, to oversee and address matters which require detailed review or in-depth consideration.

5.2 To establish the following committees with clearly define responsibilities and delegated authority: –
(a) Audit Committee (AC)
(b) Risk Committee (RC)
(c) Investment Committee (IC)
(d) Remuneration and Nomination Committee (R&NC)
(e) Shariah Supervisory Council (SSC)

5.3 The Committees established by the Board will adopt their Terms of Reference setting out the objective, membership, responsibilities, and authority of the committees.

5.4 Other than those specifically reserved for the Board’s approval according to:-
(a) this Terms of Reference;
(b) the Terms of Reference of the committees specified in point 2;
(c) the Limits of Financial Authority;
(d) the Limits of Underwriting Authority;
(e) the Investment Policies;
(f) the Authority Limits of Investment Decisions; and
(g) the Company’s Policies.

6.0 Board Meetings

6.1 The Board shall meet at least four (4) times a year on quarterly basis with 2 meetings to be held in Labuan. The meetings can be conducted at more frequent intervals should there be a need.

6.2 A Director must attend at least half (50%) of the Board meetings held in a financial year.

6.3 A quorum shall consist of half of the Board members present.

6.4 Decisions to be taken at any meeting of the Board shall be determined by a majority of votes. In the case of an equality of votes, the Chairman of the meeting shall have a second or casting vote.

6.5 The Board shall be entitled to secure the attendance of any person with relevant experience and expertise at the Board meetings, if the Board considers this appropriate.

6.6 The meeting of the Board may be conducted via face-to-face or by means of a video conference or any communication technology, which allows all members of the Board participating in the meeting to communicate simultaneously with each other, or other appropriate means as determined by the Committee.

7.0 Secretary to the Board Meeting

7.1 The Secretary of the meeting is the Alternate Secretary or in her absence, the Resident Secretary.

8.0 Roles and Responsibilities of the Chairman

8.1 The Chairman carries out a leadership role in the conduct of the Board and its relations with the shareholders and other stakeholders.

8.2 The Chairman promotes constructive views from directors and encourages
deliberations on strategies and business objectives.

8.3 He maintains a close professional relationship with the CEO and the Management Team.

8.4 The Chairman acts as a facilitator at Board meetings and ensures that no Board members dominates the discussions.

8.5 He chairs Board meetings, as well as general meetings of the shareholders, and concerns himself with the good order and effectiveness of the Board and its
proceedings.

8.6 The key role of the Chairman are:-

• Ensuring that appropriate procedures are in place to govern the Board’s operation.
• Ensuring that the whole Board plays a full and constructive part in developing
  and determining the Company’s strategy and overall business and commercial objectives.
• Effectively leading the Board as a whole and in particular during Board meetings and general meetings.
• Ensuring that complete, timely and clear information on the Company’s affairs are provided to the Board.
• Ensuring effective communication between the Company and its shareholders,
  management and other stakeholders.

9.0 Roles and Responsibilities of Directors

9.1 To effectively discharge their duties, the Directors should be committed to attend Board meetings, and are responsible to:-

(a) Be proactive in seeking more information within the Company and the industry, in an effort to have knowledge so as to participate and contribute effectively in the meetings.

(b) Maintain confidentiality on Board deliberations and all confidential information received by a Director unless the disclosure is required by law.

(c) Exercise independent judgement when making decisions and act strictly in the best interest of the Company and its shareholders generally and not in the
interest of any one shareholder or group of shareholders.

(d) Seek professional independent advice at the Company’s expense (as and when required), and shall exclude any advice concerning the personal interests of the Directors (such as with respect to their agreement or disputes with the Company), unless these are matters affecting the Board as a whole and unanimous agreement obtained from the Board.

(e) Disclose in writing to the Board any actual or potential conflict of interest or duty that might reasonably be thought to exist as soon as the situation arises, and in addition, take necessary and reasonable actions to resolve or avoid any actual or potential conflict of interest or duty.

(f) Ensure that high standards of corporate governance are applied.

(g) Must devote sufficient time to prepare for and attend Board meetings and maintain sound understanding of the Company, including committing to an on-going education to keep abreast with the relevant market and regulatory developments relating to the Company’s business.

(h) Allow the Alternate Director to attend or participate in a Board meeting on behalf of the Principal Director. Nevertheless, the Principal Director will be fully accountable for any decisions made by the Alternate Director.

10.0 Roles and Responsibilities of CEO

10.1 The role of the CEO is vital to the performance of the Company. She is required to provide leadership, strategic vision, high-level business judgement and wisdom, and the ability to meet immediate performance targets without neglecting longer-term growth opportunities of the Company.

10.2 The key role of the CEO, amongst others, shall include:-

• Developing the Company’s strategic direction;
• Ensuring that the Company’s strategies and corporate policies are effectively implemented;
• Ensuring that Board decisions are implemented, and Board directions are responded to;
• Providing directions in the implementation of short- and long-term business plans;
• Providing strong leadership, i.e. effectively communicating the vision,
management philosophy and business strategy to the employees;
• Keeping the Board fully informed of all important aspects of the Company’s operations and ensuring that sufficient information is distributed to Board members; and
• Ensuring the day-to-day business affairs of the Company is effectively managed.

11.0 Appointment, Resignation and Disqualification of Directors

11.1 Pursuant to the Company’s Articles of Association (M&A), the Directors are
appointed by the respective shareholder in accordance with the Shareholders
Agreement. The disqualification of a Director shall follow the reasons as provided under Article 98 of the M&A.

11.2 The respective shareholder will arrange for a replacement for their respective nominee in the event of a resignation.

12.0 Board Effectiveness

12.1 The periodic assessment on the effectiveness of the Board and the individual Board member is designed and established with the objective of assessing the effectiveness of the Board and the individual Director. It aims to improve the Board’s effectiveness as well as draw the Board’s attention to key areas that need to be addressed or improved.

12.2 The Board shall appoint an independent external party periodically to conduct the evaluation.

12.3 A summarized report of the results will be presented to the Remuneration and Nomination Committee and the Board to enable them to identify the areas for improvement and put in place appropriate measures

12.4 In order to keep the Directors abreast with the dynamic and complex business environment as well as new statutory and regulatory requirements, the Board must dedicate sufficient resources toward the on-going development of its Directors by attending training/seminar (if required)