CONFLICTS OF INTEREST POLICY AND PROCEDURES
- Conflicts of interest may arise in situations where Personnel1 engage in businesses or other activities outside the Group2or have personal interests, whether it directly or indirectly benefits themselves or their closely related person(s), i.e. close relatives3 or close associates4, which competes or conflicts with the interests of the Group.
- Furthermore, a conflict of interest arises in a situation in which an individual is able to take advantage of his or her role in the Group for his or her personal benefit, including the benefit of his/ her family/ household and friends. This would undermine the duties of good faith, fidelity, diligence, and integrity as expected by the Group from its Personnel in the performance of their duties and obligations. In addition, it may also attract legal liabilities.
- Employees should try to avoid any conflict of interest. However, in the event that the conflict is unavoidable, employees must obtain written approval of their respective Head of Department (“HOD”) before undertaking activities which may give rise to a conflict of interest.
- The Company Secretary is responsible for managing the director’s statutory conflict of interest declarations. Where a Subsidiary has its own board of directors, the Company Secretary of that Subsidiary shall be responsible for the directors’ statutory declarations.
- Business Associates5are required to declare any Conflict of Interest, which arises as part of their commercial relationship(s) with the Group.
A conflict of interest may arise where a Personnel might be seen to be influencing Group matters for actual, potential or perceived personal benefit. Such a conflict may arise in a situation when a director or an employee, is able to influence (directly or indirectly) the Group’s business, or other decisions in ways that could lead to gain for themselves, their family or others.
A conflict of interest may relate to a Personnel’s own interests or to a connected person, which means family, relatives, close associates, or persons from any business of which the Personnel may hold any direct or indirect interest.
An interest can be a financial or non-financial interest:
- Financial interests include remuneration (such as salary, wages, commission, consultancy fees, or other form of income) and assets (investments, stocks, bonds, property).
- Non-financial interests include enhancement of career, education or reputation, access to privileged information or facilities. Although many of these interests may not compete with the Personnel’s current duties and responsibilities to the Group, however, where a Personnel’s obligations to the Group are, or may appear, to be compromised, then a conflict of interest may still occur.
For the purpose of this Policy and Procedures, the Group defines conflicts of interest broadly as:
- Actual Conflicts of Interest (the person faces a real, existing conflict).
- Potential Conflicts of Interest (the person is in or could be in a situation that may result in a conflict, but this has not fully materialised); and
- Perceived Conflicts of Interest (the person is in or could be in a situation that may appear to be a conflict, even if this is not the case).
All three types of Conflict of Interest above are a potential risk to the Group. Therefore, all actual, potential or perceived conflicts that may arise, as a result of a business or personal relationship, should be declared.
AVOIDING CONFLICTS OF INTEREST
Where there exist conflicts of interest, no Personnel should be involved in making decisions on behalf of the Group. If there are any doubts on whether the decision made may conflict with the Group, then the test for bias would be whether an objective and informed observer would have reason to suspect that a conflict of interest may exist.
Such considerations apply to a wide range of activities, in which conflicts of interest may arise, including, but not restricted to staff recruitment, staff promotion and remuneration, disciplinary proceedings, appeals, procurement, and assessing proposed relationships between the Group and other third parties.
Examples of situations in which conflicts of interest might arise, include:
- where there is actual, potential, or perceived personal gain or gain to a close relatives/ close associate.
- where there is actual, potential, or perceived financial/ non-financial gain which may be seen to influence action or decision-making.
- where an individual is in a position whether actual, potential, or perceived to, directly or indirectly enhance their career or the career of others, with whom they are personally associated.
- where there is actual, potential, or perceived reputational impact, for either the Group or the Personnel.
Further examples are listed in Appendix A.
Staff recruitment is an activity which requires additional transparency and careful management of interests. All related interests must be recorded, inclusive of how the conflict of interest was managed.
In relation to external commitments that may create conflicts of interest, Personnel should ensure that they do not enter commitments or engage in activities which are inconsistent with their terms and conditions of employment for staff, or terms of appointment for directors, regarding outside commitments or activities and the permission required to enter such commitments or engage in such activities.
In the event of queries or doubts concerning a conflict of interest, Personnel should refer to the Group policies. Alternatively, Personnel may seek advice from HOD and/ or Human Resource Department (“HR”). Should further advice be required, Personnel may also seek guidance from the Risk/ Integrity Officer of the company, or the Head of Risk/ Integrity, or PPB Group Berhad’s Risk Management & Integrity Department (“PPBHQ RMID”).
WHEN TO DECLARE CONFLICTS OF INTEREST
All Personnel shall declare their conflicts of interest, whether actual, potential, or perceived conflict:
- during the onboarding process, i.e. new employment or when transferred between roles.
- on an annual basis. For employees, this exercise will be initiated by HR. For directors, they will undertake an annual declaration of their interests and submit their declaration to the Company Secretary. (Note: For annual declaration, employees are still required to provide their declaration to HR even when there is no conflict).
- on ad hoc basis. That is, immediately or as soon as they become aware of any changes to their current interests.
- Whilst it is primarily the duty of a Personnel to declare all interests, others, such as a manager, colleague, or employees of the Group, may also become aware of an actual, potential, or perceived conflict of interest and should request that the Personnel declare their interests so that they can be dealt with appropriately.
- There may be times where Personnel would not necessarily know whether there exists a conflict of interest, and if so, how it should be dealt with. As such, when in doubt, Personnel are advised to always declare the conflict.
Business Associates are also required to complete a declaration of interests when dealing with the Group. A declaration should be made:
- during the onboarding process as a new Business Associate.
- during the renewal of the relationship.
- as soon as they become aware of any changes to their current interests.
- Declaration should be made either to the Procurement Department, or the relevant Business Sponsor/ Project Sponsor6.
MAKING A DECLARATION
To declare a conflict of interest:
- A declaration can be made to the HOD by completing the Conflict of Interest Declaration Form (“COI Declaration Form”). If necessary, the HOD may consult the relevant party (as specified in the COI Declaration Form) for the proposed action plan on how to mitigate or resolve such conflict. Thereafter, the HOD shall review the proposed action plan, sign off the form (approve), and ensure that the necessary controls are in place.
- No employee is allowed to approve their own Conflict of Interest Declaration. For clarity, where the conflict involves the senior management, the declaration should be made as follows:
- HOD to declare to the Head of Company (“HOC”).
- HOC to declare to Chief executive Officer(“CEO”) .
- CEO to declare to Group Managing Director (“Group MD”).
- Group MD to declare to the Board of Directors(“BOD”)Chairman.
- Once completed, the employee is to forward the COI Declaration Form to HR for record and keep a copy of the form for his/ her own record and future reference. Thereafter, he/ she is required to lodge the declaration into the Conflict of Interest Register (“COI Register”) and attach the COI Declaration Form as supporting document.
- Conflicts of interest relating to recruitment, transfer, or promotion, must be dealt with in accordance with HR’s policy and procedures. If there are no conflicts of interest, HR will proceed with the hiring, onboarding, or transfer process and Personnel will be informed of the outcome. Where the conflict of interest falls within the category of high-risk personnel, e.g. recruitment of individuals with connection to political officials or public officials, HR must notify PPBHQ RMID, or the Head of Risk/ Integrity, or the Risk/ Integrity Officer of the company and subsequently obtain approval from the HOC/ CEO/ Group MD (as the case may be). The outcome of each case shall be recorded accordingly.
Please refer to Appendix B for the declaration process flowchart for employees.
- A declaration can be made to the Procurement Department or to the relevant Business Sponsor/ Project Sponsor. The Procurement Department, or the relevant Business Sponsor or Project Sponsor will then review the declaration and consult the relevant party as per Group’s internal procedure, for the proposed action plan on how to mitigate, or resolve such conflict. Thereafter, the Head of Procurement or Head of the Business Sponsor/ Project Sponsor shall review the declaration and sign-off (approve) the form.
- Once completed, the Procurement Department or the relevant Business Sponsor/ Project Sponsor is to keep a copy of the form for its own record and future reference. Thereafter, they are required to lodge the declaration into the COI Register.
- At the beginning of any committee meeting or meetings where decisions are made, there should be a standing item on the agenda on conflicts of interest. Members of the meeting shall declare any conflict of interest, whether actual, potential, or perceived conflict of interest. The minutes of each meeting should record whether any conflicts of interest were declared.
- In respect of directors, additional provisions for the management of the BOD (including the BOD Chairman) on actual, potential, or perceived conflicts of interests and conflicts of loyalty should be followed. A conflict of loyalty may occur where a director’s loyalty or duty to another person or organization could prevent them from deciding in the best interests of the Group.
- Directors should be mindful of the potential for bias in decision-making and, with the Company Secretary, should consider whether there is the possibility of actual or perceived bias in fulfilling their various roles in the Group. The provisions for the Management of Declaration of Interests by Directors are set out in Appendix C of this Policy and Procedures.
ASSESSING AND DEALING WITH CONFLICTS OF INTEREST
As stated above, all declared actual, potential, or perceived conflicts of interests should be reviewed and considered by the HOD (or the Committee Chair, as appropriate). Where the declaration relates to a specific activity, it must be assessed accordingly by the HOD, and the party consulted (relevant department). The HOD should then determine if further action is required based on the recommendation by the consulted party (if any).
Personnel should not determine the management of their own declarations.
Several factors may need to be considered when assessing the seriousness of the conflict of interest declared and to avoid any potential for bias. These include but are not limited to:
the seriousness of the actual, potential, or perceived conflict
- how closely the two interests are related to each other
- the magnitude of the actual, potential, or perceived effect of one on the other
- the nature or significance of the decision or activity being carried out
- the extent to which the individual’s other interest could affect or be perceived to affect the Group’s decision or activity
- the nature or extent of the individual’s current or intended involvement in the PPB Group’s decision or activity
No Conflict Exist
- Where the HOD (or the Committee Chair) determines that there is no conflict of interest, this should still be formally recorded and lodged in the COI Register. An explanation and any supporting documentation, i.e. COI Declaration Form, should be included as to why it was concluded that no conflict of interest arose.
- In the instance that the overlap of two or more interests is so slight that it does not constitute a real conflict of interest, for example, where the connection between the interests is remote or insignificant, then it may be determined that such interests do not represent a conflict.
Conflict Does Exist
- Once a conflict of interest is determined to exist, the HOD (or Committee Chair) will decide on the appropriate action. These may include, to:
- Continue: be permitted to continue with full participation, and no restrictions.
- Continue with exemption: seek a formal exemption to allow participation, i.e. remain in the meeting where the conflict of interest is considered, but not participate in discussions.
- Continue with restrictions or additional oversight: additional oversight or review over their activity in relation to the project or transaction.
- Abstain: for the individual to abstain/ withdraw from any decision-making in relation to the project
- Reassign: reassign/ refer the decision, tasks, or duties to others.
- Remove/ Withdraw Entirely: for the Personnel to be removed from any involvement, or to withdraw entirely from the project, where there is a significant or ongoing conflict.
- If the Committee Chair has a conflict of interest, the committee should agree for the Deputy Chair or another appropriate member to act as the Committee Chair for the relevant conflict/ matter.
The HR/ Procurement Department/ Business Sponsor/ Project Sponsor/ HOD may consult the Risk/ Integrity Officer, or Head of Risk/ Integrity, or the PPBHQ RMID, on any area of concern pertaining to the conflict of interest declaration. A copy of the COI Declaration Form is to be provided to enable assessment to be conducted.
The Committee Chair may consult the Company Secretary for advice. The Company Secretary may consult the Risk/ Integrity Officer, or Head of Risk/ Integrity, or the PPBHQ RMID, and/ or Legal Department, if necessary.
CONSEQUENCES FOR NON-DISCLOSURE
Appendix A: Examples of Interests and Potential Conflicts of Interests
Appendix B: Conflicts of Interests for Employees Flowchart
Appendix C: Management of Declaration of Interests by Directors
- Failure to disclose a conflict of interest, providing an incomplete or inaccurate disclosure of a conflict of interest, failing to seek approval in an event of a conflict of interest, or failing to appropriately deal with a conflict of interest, may constitute misconduct or a breach of terms and conditions of employment (for employees) and may result in disciplinary action being taken by the Group. For directors, it may result in termination of their appointment.
- For Business Associate, failure to disclose any conflict of interest may cause the contract or transaction to be terminated and potentially blacklisted from future dealings with the Group.
Refers to the Group’s directors and employees.
“The Group”, or “PPB Group” refers to PPB Group Berhad and its subsidiaries.
“Close relatives” here refers to both biological or non-biological relationships and includes but not limited to your spouse(s), children (including stepchildren and adopted children), parents, stepparents, siblings, stepsiblings, grandparents, grandchildren, in-laws, uncles, aunts, nieces, nephews, and first cousins, as well as other persons who are members of your household.
“Close associates” includes, but is not limited to, close friends or any person working closely with you, e.g. work colleagues (former or current).
For purposes of this Policy and Procedures, the term “Business Associates” includes, but is not limited to, suppliers, vendors, contractors, agents, service providers, consultants, advisers, distributors, joint venture, or partners, consortia parties, and any other third party acting for or on behalf of PPB Group.
“Business Sponsor” or “Project Sponsor” means the relevant Personnel/ Department in the Company that wants to transact or have an official relationship with the Business Associate.