CITIZENS DEVELOPMENT BUSINESS FINANCE PLC
ANNUAL REPORT 2021/22
Corporate governance
GRI 102-18, 102-19, 102-22
CDB enterprise governance
Navigating the business operations through an extremely complex environment and creating value to our stakeholders is challenging in the absence of a proper enterprise governance framework. As a responsible corporate citizen, CDB considers “Enterprise Governance” as one of the most critical components to achieving stakeholder value creation. Thus, CDB continuously strives to implement the right processes, structures, and related mechanisms to achieve the set objectives of the Organisation.
CDB corporate governance
Sound and effective corporate governance practices are the basis of smooth, effective and transparent operations of CDB, which ensures attracting investments, protecting shareholders’ and other stakeholders’ rights, and enhancing shareholder value. Accordingly, good corporate governance practices aid in maintaining healthy relationship between stakeholders and the Management.
As we are required to comply with the external/internal and mandatory/voluntary practices for continuous improvement to compliance, the Board is always committed to bolster the effectiveness of the organisation governance models through responsible conduct, deepening competitive advantage through adding value, effective leadership, robust risk management, clear performance management, greater transparency and a sound ethical culture.
Given below is the current Governance Structure of CDB:
GRI 102-23
Business governance at CDB
Business governance contributes towards value creation through effective allocation of resources. Sustainable shared value creation emanates from accelerating the strategies and managing constraints in terms of operations, finance, human resources and information technology in an ever-changing world.
Value creation by the Departments for FY 2021/22
Operational |
Financial |
Human Resources |
Information Technology |
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Board committees |
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IRMC Integrated Risk Management Committee Oversight responsibility for all areas of risk management including credit, market, operational, liquidity, cyber/IT and strategic risks and ensures compliance with the entirety of the risk management policy framework and compliance with laws and regulations |
RC Remuneration Committee Monitors, evaluates and addresses remuneration related issues |
AC Audit Committee Identifies any deficiencies in routines and the Organisation in terms of governance, risk management, internal control, internal and external auditing and financial reporting |
RPTRC Related Party Transactions Review Committee Reviews in advance all proposed related party transactions of the Company to ensure related parties are treated on par with other shareholders and constituents of CDB |
NC Nomination Committee The shareholders’ governing body that nominates Board members and the Auditors and proposes their fees |
CC Credit Committee Formulates, reviews and revises policies and procedures for granting credit facilities, to be submitted for the approval of the Board of Directors whilst ensuring compliance with all statutory and regulatory requirements |
Management committees |
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CMC Corporate Management Committee This is the highest management level committee in CDB. This Committee reviews the entire performance of CDB, with a view to formulating strategies and issuing directions to manage deviations |
ITSC Information Technology Steering Committee Directs, reviews and approves IT strategic plans |
RCC Risk and Compliance Committee Reviews overall risk and compliance at CDB |
ISSC Information Security Steering Committee Review and approve information security strategic activities |
ALMC Asset-Liability Management Committee Reviews the funding strategy, liquidity management, assets mismatch as well as market risk exposures, management of liquidity risk and interest rate risks as primary objectives, and manages various financial risks of the Company |
IC Investment Committee Assists the Board of Directors to discharge its statutory duties and its oversight responsibilities in relation to investment activities |
Highlights for the year 2021/22 of the robust regulatory-compliance risk management programme
CDB as a leading financial service provider, requires ensuring zero non-compliance to protect the stakeholders, the customers in particular and the Organisation as a whole. Since compliance in financial institutions is becoming increasingly sophisticated with the growing regulatory demands, CDB has devoted substantial resources to ensure adherence to all regulatory requirements.
1. Governance
Compliance Division headed by a member of the Corporate Management team and overall Organisation’s compliance is secured with Compliance Representatives who are responsible for the external and internal benchmarks of governance. In addition to that, Compliance Division holds monthly Compliance Committee meetings with Directors to update the status of compliance.
Voluntary and mandatory corporate governance disclosures:
2. Risk assessment programme
As a part of creating a “Compliance Culture”, which was initiated in 2019/20, the Compliance Division independently carries out compliance reviews on all the departments and branches. Further, it assesses the risk through certain exceptional reports and takes corrective measures accordingly.
Annual audit, which conducted by the Internal Audit Department, aids in identifying areas needing further improvements.
3. Policies, procedures, and related controls
The Compliance Division is committed to streamline the process. Therefore, frequent reviews and updates on AML policy and other policies/procedures are carried out.
AML related guidelines were drafted and made available to all the operational team members, safeguarding CDB against financial crime risk.
4. Compliance monitoring and testing
In order to facilitate a smooth customer screening process,
Acuity – the online screening tool, and PEPs.lk were incorporated into robotic process automation (RPA) ensuring 100% compliance with CDD rules. Technology is consistently changing and evolving and affiliated risks are increasing along with the rapid technological developments. We, as a financial service provider, are highly vulnerable to AML/CFT risk. Therefore, we have invested on transaction monitoring system in order to detect suspicious transactions. Further, we also have an in-house develop mechanism to report, monitor and test such unusual transactions. The Compliance Division monitors daily and ensures continuous compliance with regulatory requirements.
5. Reporting and communication
The Compliance Division pioneered in creating a compliance culture within the Organisation by appointing Compliance Representatives across all the departments. Two-way communication has been built between the Compliance Division and Compliance Representatives. We always keep close relationship with branch team members since we believe proper training and communication helps in creating a sound compliance culture.
6. Compliance training
Officers engaged in the functions of Branch Operations, Deposit Operations, Credit Operations as well as the officers at the Compliance Division were provided with proper training on Anti-Money Laundering and Counter Terrorist Financing conducted by the CBSL. At the same time, a compliance training session has been incorporated in to the Induction Programme of the Organisation. Further, Compliance Division has conducted several training programmes to branch operation team members, marketing staff and verification staff in order to build an effective compliance culture within CDB. The insights that we received through such training programmes help in undertaking further developments to maintaining a sound compliance culture. Compliance department shares training materials such as videos and reading materials via the CDB E-learning platforms. Furthermore, the staff knowledge was assessed through an questionnaire and a reward mechanism was introduced.
7. Regulatory interactions and coordination
Compliance Division proactively monitors the external regulatory developments introduced and circulated by the CBSL Non-Bank Financial Institution Division, FIU, SEC and CSE etc.
8. Continuous improvement
Compliance Division always strives to improve the existing mechanism, by persuading all team members to engage in an effective compliance culture ensuring zero non-compliance and a financial crime risk-free environment at CDB. Therefore, in the financial year under review, we have improved the existing risk scorecard incorporating all AML related risk areas to evaluate more effectively the risk level of customers. Furthermore, the compliance and business operations team introduced a customer due diligence (CDD) automation project developed by CDB which include real-time customer screening, risk scorecard and KYC data gathering.
To encourage team members to build an effective compliance culture, the Compliance Division gives due recognition to well-performed team members. QR code embedded Eflyers were shared among all team members to create awareness on AML.
The Board
During the FY (i.e. 2021/22), 6 Board meetings were held online and the balance 6 Board meetings were held physically, due to the pandemic.
Chairman’s Responsibilities |
MD/CEO’s Responsibilities |
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Corporate governance disclosures
GRI 419-1
In our endeavour to strengthen governance at CDB for the year ended 31 March 2022, we complied with the provisions of all applicable codes and directions on corporate governance. Accordingly, CDB has adopted and is in compliance with voluntary requirements outlined in the “Code of Best Practice on Corporate Governance 2017”, issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) along with the mandatory requirements of Direction No. 03 of 2008 (Corporate Governance) and subsequent amendments issued by the Monetary Board of the Central Bank of Sri Lanka under the Finance Business Act No. 42 of 2011. Further, CDB is in the process of adopting the proposed Corporate Governance Direction No. 05 of 2021, which is effective from 1 July 2022 onwards.
| Caption | CA Sri Lanka reference | CBSL section | Principle, compliance and implementation | Status of compliance |
| The Board | ||||
| Board meetings | A.1.1 | 3 (1)/3 (3) and 3 (4) | Board meetings are held monthly with proper notice, mainly to review the performance of the Company and other matters referred to the Board by the heads of respective divisions, while special Board meetings are convened whenever necessary. These meetings ensure that prompt action is taken to align the business processes to achieve the expectations of all stakeholders. All the Directors have attended to all the meetings that they were eligible for. |  |
| Responsibilities of the Board | A.1.2 | 2 (1) | The Board is collectively responsible for the success of
the Company. The Board formulates the business strategy
and ensures that MD/CEO and Management Team possess
the skills, experience and knowledge to implement the strategy. It also ensures that effective systems are in place to secure integrity of the information, internal controls and risk management and compliance with all applicable laws and regulations. The Independent Directors are responsible for bringing independent judgement to decisions made by the Board. |
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| Compliance with laws and access to independent professional advice | A.1.3 | 2 (3) | A procedure has been put in place for Directors to seek independent professional advice, in furtherance of their duties, at the Company’s expense. This will be coordinated through the Board Secretary, as and when it is required. In addition, the Board is assisted by several Board subcommittees on various matters. | |
| Advice and services of the Company Secretary | A.1.4 | 3 (5) and 3 (7) | All secretarial matters for which clarification is needed by the Board are referred to the Company Secretary who has the required qualifications as set out in the Companies Act. The Company Secretary provides all information after obtaining necessary professional advice, whenever required to do so. All Board members have access to the Company Secretary to ensure that proper Board procedures are followed and that all applicable rules and regulations are complied with. Consent of all Board members is required for the removal of the Company Secretary. | |
| Independent judgement of Directors | A.1.5 | 2.4 | None of the Directors have held executive responsibilities in their capacity as Non-Executive Directors. The Non-Executive Directors do not have any business interests that could materially interfere with the exercise of their independent judgement. Directors are required to disclose all transactions with the Company, including those of their close family members as required by the relevant Sri Lanka Accounting Standards and the Companies Act. The Board has taken steps to ensure that conflicts and potential conflicts of interest of Directors are disclosed to the Board. | |
| Dedication of adequate time and effort for matters of the Board | A.1.6 | 2.5 | The Board members dedicate adequate time and effort to fulfil their duties as Directors of the Company (both before and after the Board meetings) to ensure that the duties and responsibilities owed to the Company are discharged accordingly. In addition to attending Board meetings, they have attended Board subcommittee meetings and also have made decisions via circular resolutions, where necessary.
The Board subcommittees include:
Further, additional meetings and discussions are held with the Management whenever the need arises. |
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| Resolutions to be presented | A.1.7 | One-third of Directors can call for a resolution to be presented to the Board. | |
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| Training for new and existing Directors | A.1.8 | Both new and existing Directors of the Company are provided guidelines on general aspects of directorship and industry specific matters. During the year, presentations were made to the Board/Board subcommittees by the Company from time to time on industry specific matters and regulatory updates and the Directors have attended a number of meetings with the Corporate Management Teams to familiarise themselves with the Company strategy, operation and internal control.
Director training focus areas for 2021/22 were:
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| Situation of insolvency | 2 (6) | No such situation arose during the year. | |
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| Inclusion of proposals by all Directors in the agenda | 3 (2) | The Company Secretary facilitates any request made by the Directors at a meeting or otherwise and ensures that the said matters and proposals are included in the agenda for the next meeting for discussion. | |
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| Management function delegated by the Board | 6 (1) and 6 (2) | The Board annually evaluates the delegated authority process to ensure that the delegation of work does not materially affect the ability of the Board as a whole in discharging its functions. | |
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| Chairman and Chief Executive Officer (CEO) | ||||
| Division of responsibilities of the Chairman and MD/CEO | A.2.1 | 2 (2) and 7 (1)/7 (11) |
The roles of the Chairman and the MD/ Chief Executive Officer are functioning separately in the Company. The Chairman is a Independent Non-Executive Director while the Managing Director serves as an Executive Director of the Company. This is to ensure a balance of power in strategic and operational decisions authority such that no one possesses unfettered powers of decisions. The Chairman is responsible for leading, directing, and managing the work of the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. The MD/CEO’s role is primarily to conduct the business operations of the Company with the help of the Corporate Management. | |
| Chairman’s Role | ||||
Role of the Chairman |
A.3.1 | 7 (4) - 7 (10) |
The Chairman’s main role is to lead and manage the Board and ensure effectiveness in all aspects of its role. The Chairman of the CDB is a Independent Non-Executive Director. The Chairman’s role encompasses that;
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| Financial Acumen | ||||
| Availability of sufficient financial acumen and knowledge | A.4.1 | The Chairman is a Chartered Financial Analyst and a Fellow Member of the Institute of Chartered Management Accountants in UK while MD/CEO is a member of the Chartered Institute of Management Accountants of UK. In addition, the Board includes one member of The Institute of Chartered Accountants of Sri Lanka and three members of the Chartered Institute of Management Accountants of UK. Directors’ profiles are given on pages 139 to 141. | |
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| Balance of the Board | ||||
| Presence of Non-Executive Directors | A.5.1 | 4 (1)/4 (6) and 4 (7) | During the FY 2021/22, seven of the thirteen Directors were Non-Executives (NED) which is well above the minimum prescribed by this Code which is two NEDs or equivalent to one third of the total number of Directors, whichever is higher. This ensures that the views of NEDs carry a significant weight in the decisions made by the Board.  |
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| Independent Directors | A.5.2 | 4 (4) | During the FY 2021/22, five out of the seven Non-Executive Directors were independent as defined by the Code.  |
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| Independence evaluation review | A.5.3 | All five Independent Directors are independent of management and free of any business or other relationship that could impair their independence. | |
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| Signed declaration of independence | A.5.4 | All Non-Executive Directors of the Company have made written submissions as regards their independence against the specified criteria set out by the Company, which is in line with the requirements of Schedule K of the Code. | |
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| Determination of independence of the Directors by the Board | A.5.5 | The Board has determined the independence of Directors based on the declarations submitted by the NEDs, as to their independence, as a fair representation and will continue to evaluate their independence on this basis annually. No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code. | |
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| Appointment of an Alternative Director | A.5.6 | 4 (5) | Where an alternative Director is appointed, requirements of the Code are met. However, such a situation has not arisen. | |
| Senior Independent Director | A.5.7 | 7 (2) | N/A | |
| Confidential discussion with the Senior Independent Director | A.5.8 | N/A | |
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| Meeting of Non-Executive Directors | A.5.9 | Chairman meets with the Non-Executive Directors without the presence of MD/CEO and other Executive Directors, on a need basis. | |
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| Recording of concern in Board minutes | A.5.10 | 3 (9) | Minutes of all meetings are duly recorded in sufficient detail and retained by the Company Secretary under the supervision of the Chairman. However, there were no concerns raised by the Directors during the year, which needed to be recorded in the Board meeting minutes. | |
| Supply of Information | ||||
| Information to the Board by the Management | A.6.1 | The Board was provided with timely and appropriate information by the Management by way of Board Papers and proposals. The Board sought additional information as and when required. Corporate and Senior Management made presentations on issues of importance. The Chairman ensured that all Directors were briefed on matters arising from Board meetings. The Directors have free and open contact with Corporate and Senior Management of the Company. | |
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| Adequate time for effective Board meetings | A.6.2 | 3 (6) and 3 (8) | Board was provided with timely and appropriate information by the Management by way of Board Papers and proposals. The Board sought additional information as and when necessary. The Company Secretary prepares the agenda and keeps the minutes of meetings. Further, refer pages 126 to 127 for Board meeting write up. | |
| Appointments to the Board | ||||
| Nomination Committee and assessment of Board composition | A.7.1 and A.7.2 | 4 (9) | Board as a whole annually assesses Board-composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company. The findings of such assessment should be taken into account when new Board appointments are considered and when incumbent Directors come up for re-election. Refer page 155 for the details of Nomination Committee and its composition. During the financial year 2021/22, there were no new appointments to the Board. However, Mr Sujeewa Kumarapperuma was redesignated as an Independent Non-Executive Director. | |
| Disclosure of details of new Directors to shareholders | A.7.3 | When the new Directors were appointed to the Board, a brief résumé of each such Director including the nature of his/her experience, the names of companies in which the Director holds directorship, and membership in the Board subcommittees etc., are informed to the Central Bank of Sri Lanka and the Colombo Stock Exchange in addition to disclosing this information in the annual report. | |
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| Appointment of an employee as a Director | 4 (3) | Not applicable for the FY 2021/22. | |
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| Appointment to fill a casual vacancy | 4 (10) | No such event occurred during the financial year 2021/22. | |
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| Holding in office in more than 20 companies | 5 (2) | No Director holds such positions. | |
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| Re-election | ||||
| Appointment of Non-Executive Directors | A.8.1 | Articles of Association of the Company requires, each Non-Executive Director to retire by rotation once in every three years and is required to stand for re-election by the shareholders at the Annual General Meeting. The proposed re-election of Directors is subject to prior review by the full Board. | |
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| Re-election by the shareholders | A.8.2 | Refer comment above. | |
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| Resignation of a Director | A.8.3 | 4 (2)/4 (11) and 5 (1) | Not applicable for FY 2021/22 | |
| Appraisal of Board Performance | ||||
| Annual appraisal of Board performance and that of its committees | A.9.1 and A.9.2 | 2 (8) | The Board annually evaluated its performance against the annual objectives set at the beginning of the year. The performance of Board subcommittees was also evaluated against the objectives of the respective subcommittees. | |
| Level of contribution, engagement of each Director at the time of re-election | A.9.3 | Board already has a robust process to review the participation, contribution and engagement of each Director at the time of re-election. | |
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| Disclosure of criteria used for the performance evaluation | A.9.4 | Refer pages 156 to 157 for the “Report of the Remuneration Committee” in the Annual Report for details of the criteria considered for performance evaluation of the Board. | |
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| Disclosure of Information in respect of Directors | ||||
| Details in respect of Directors | A.10.1 | 4 (8) | Details of Directors are given in this Annual Report | |
| Relationship between Chairman and CEO and other Directors | 7 (3) | There are no material relationships between the Chairman/the CEO and/or other members of the Board which will impair their respective roles. | |
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| Appraisal of CEO | ||||
| Financial and non-financial targets for CEO | A.11.1 | MD/CEO’s performance objectives are aligned with the business sustainability of the Company. The performance targets for the MD/CEO are set at the commencement of every financial year by the full Board which are in line with, medium and long-term objectives of the Company. | |
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| Annual evaluation of the performance of CEO | A.11.2 | There is an ongoing process to evaluate the performance of MD/CEO against the financial and non-financial targets set as described above which is followed by a formal annual review by the Board at the end of each financial year. | |
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| Directors’ Remuneration Procedures | ||||
| Remuneration Committee | B.1.1 | The Remuneration Committee is responsible for assisting the Board with regard to the remuneration policy for the Executive Directors and the members of the Corporate Management, and for making all relevant disclosures. The Committee determines and agrees with the Board, the Broad policy framework for the remuneration of the MD/CEO. The MD/CEO participates in meetings by invitation in deciding the remuneration of the Corporate Management in order to recruit, retain and motivate the Corporate Management Team. | |
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| Composition of the Remuneration Committee | B.1.2 and B.1.3 | The following Non-Executive Directors served on the Remuneration Committee during the financial year.
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| Remuneration of Non-Executive Directors | B.1.4 | The Board as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a fee for being a Director of the Board and additional fee for either chairing or being a member of a committee, working on special committees and/or serving on subsidiary Boards. They do not receive any performance-related incentive payments. | |
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| Consultation of the Chairman and access to professional advice | B.1.5 | Inputs of the Chairman are obtained by his involvement as a member of the said subcommittee. External professional advice is sought by the Remuneration Committee, on a need basis through the Board Secretary. | |
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| The Level and Make up of Remuneration | ||||
| Level and make up of remuneration | B.2.1 - B.2.9 | The Board is mindful of the fact that the remuneration of Executive and the Non-Executive Directors should reflect the expectation of the Company and sufficient enough to attract and retain the quality of Directors needed to run the Company. The remuneration package of the MD/CEO is structured to link rewards to corporate and individual performance. The Company’s remuneration framework for the CEO is designed to create and enhance value for all CDB’s stakeholders and to ensure that there is strong alignment between the short-term and long-term interests of the Company. | |
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| Remuneration of the Non-Executive Directors | B.2.10 | Non-Executive Directors receive a nominal fee in line with the market practices as disclosed in this Annual Report. Non-Executive Directors do not participate in performance-related incentive schemes. | |
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| Disclosure of remuneration | ||||
| Disclosure of Directors’ remuneration in the Annual Report | B.3.1 | Refer the Remuneration Committee Report on pages 156 to 157 for disclosure on the names of the Remuneration Committee members and the remuneration policy of the Company. Also refer the Note 45 to the Financial Statements on page 241 for the aggregate remuneration paid to Executive and Non-Executive Directors. | |
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| Relations with Shareholders | ||||
| Arranging Notice of AGM and related papers to be sent to shareholders | C.1.1 | Company ensures that all the notices relevant for the AGM are disseminated well before the meeting and as per the stipulated regulatory timelines. | |
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| Separate resolution for all separate issues | C.1.2 | Separate resolutions are proposed for all substantially separate issues to provide shareholders with the opportunity to deal with each significant matter separately. This mechanism promotes better stewardship while assuring the transparency in all activities of the Company. | |
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| Use of proxy votes | C.1.3 | The Company has an effective mechanism to record all proxy votes and proxy votes lodged for each resolution prior to the General Meeting. | |
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| Availability of all Chairmen of Board subcommittees at the AGM | C.1.4 | Chairman of the Company ensures that the Chairmen of all Board appointed subcommittees are present at the AGM to answer the questions under their purview. | |
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| Adequate Notice of the AGM to shareholders together with the summary of the procedure | C.1.5 | A Form of Proxy dispatched to all shareholders together with the Notice of Meeting (including a QR code embedded annual report) giving a summary of the procedure as per legal requirements giving adequate notice to shareholders. This provides opportunity to all shareholders to attend the AGM based on their voting status and obtain clarifications for the matters of interest to them. | |
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| Communication with shareholders | C.2.1 - C.2.7 | The Company has implemented the relevant communication channels, disclosed the policy and methodology and other requirements of the Code for communication with shareholders. | |
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| Major and material transactions | C.3.1 - C.3.2 | During the year there were no major transactions as defined by Section 185 of the Companies Act No. 7 of 2007 which materially affected CDB’s net assets base. Transactions, if any, which materially affect the net assets of the Company, will be disclosed in the quarterly/annual Financial Statements. Further, all these transactions (if any, during the financial year) are reviewed by the Board Related Party Transactions Review Committee headed by an Independent Non-Executive Director of CDB. | |
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| Financial and Business Reporting | ||||
| Reports to public and regulatory and statutory reporting | D.1.1 - D.1.3 |
10 (1) | CDB has reported a true and fair view of its financial position and performance for the year ended 31 March 2022 and at end of each Quarter of 2021/22. In the preparation of Financial Statements, CDB had strictly complied with the requirements of the Companies Act No. 07 of 2007, the Finance Business Act No. 42 of 2011 and amendments thereto. They are prepared and presented in conformity with Sri Lanka Accounting Standards. CDB has complied with the reporting requirements prescribed by the regulatory authorities such as the Central Bank of Sri Lanka, the Colombo Stock Exchange, the Securities and the Exchange Commission of Sri Lanka. Financial statements are published in newspapers in all three languages, on 29 June 2022. | |
| Directors report in the Annual Report | D.1.4 | The Directors’ Report given in this Annual Report covers all areas of this section as required by the direction. Please refer pages 4 to 7 for the Directors’ Report. | |
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| Statement of Directors and Auditors responsibility for the financial statements, Report/ statement on internal controls | D.1.5 | The Statement of Directors’ Responsibility for Financial Reporting is given in this Annual Report as required by the direction, and Auditor’s reporting responsibility is given in their audit report on the Financial Statements in this Annual Report. | |
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| Management Discussion and Analysis | D.1.6 | The Management Discussion and Analysis Report is given in this Annual Report as required by the direction. | |
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| Declaration by the Board that the business is a going concern and summoning an EGM to notify serious loss of capital | D.1.7 | This is given in the Directors’ Report. Further, likelihood of such occurrence is remote. However, should the situation arise, an EGM will be called for and shareholders will be notified. | |
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| Disclosure of related party transactions | D.1.8 | 9 (2) – 9 (4) | Relevant related party transactions are adequately and accurately disclosed in the Annual Report. Further, all the related party transactions are reviewed by the BRPTR Committee. | |
| Minimal disclosures | 10 (2) | All required disclosures have been made in the Annual Report. Please refer pages 121 to 168. | |
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| Board Appointed Committees | ||||
| Board appointed two subcommittees | 8 - 8 (3) | Audit Committee and Integrated Risk Management Committee are functioning as per the requirements of this direction. | |
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| Risk Management and Internal Control | ||||
| Review of risks facing the Company and evaluation of the Internal Control System | D.2.1 and D.2.5 | The Company has established a comprehensive framework of policies and procedures for risk management and internal controls, which are regularly reviewed and updated. The Company’s Audit Committee ensures that there is an effective internal control and financial reporting system by adopting the following measures: (i) Audits are conducted by the Internal Audit Department, in areas involving high risks as identified in the annual internal audit plan. (ii) A structured process is in place for loss reporting, control exception reporting and compliance breach reporting. (iii) A comprehensive checklist is used for following up on the status of implementation of all audit recommendations. (iv) Periodic Branch Audits are performed on the Company’s branch operations. The Company obtained the External Auditor’s certification on the effectiveness of the internal control mechanism on financial reporting. | |
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| Internal audit function | D.2.3 | The Company already has its own in-house Internal Audit Department, which is responsible for the internal audit function. | |
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| Reviews of the process and effectiveness of risk management and internal controls | D.2.4 | The Audit Committee carries out reviews of the process and effectiveness of risk management, internal controls and reports to the Board on a regular basis. | |
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| Audit Committee | ||||
| Composition of the Audit Committee | D.3.1 | The Company’s Audit Committee consists of three members, all of whom are Non-Executive Directors. The Committee operates within clearly defined terms of reference. Details of the members, invitees and the Secretary of the Committee are found in the Audit Committee Report in this Annual Report. Please refer pages 150 to 152 for the Audit Committee Report. | |
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| Duties of Audit Committee - Ensuring the objectivity and independence of External Auditors and Terms of Reference of the Audit Committee | D.3.2 | The Committee maintains an appropriate relationship with the External Auditors, KPMG (Chartered Accountants) to ensure their objectivity and independence. The payments to External Auditors for Audit and Non-Audit services are disclosed in the Directors’ Report of this Annual Report. In addition, the Company has established an internal audit function which operates independently and has direct access to the Audit Committee. The External Auditors do not have any relationship (other than that of Auditor) or any other interest in the Company. | |
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| Disclosure of the Audit Committee | D.3.3 | Names of the members of the Audit Committee and the scope of the Committee are given in this Annual Report under the Audit Committee Report. | |
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| Related Party Transactions Review Committee | ||||
| Related Party Transactions Review Committee | D.4.1 - D.4.3 | Please refer the BRPTRC note on pages 160 to 161 and the related party transactions on pages 241 to 243. | |
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| Code of Business Conduct and Ethics | ||||
| Code of Business Conduct and Ethics | D.5.1 - D.5.3 | Company has developed a Code of Business Conduct and Ethics for all employees, which addresses conflict of interest, corporate opportunities, confidentiality of information, fair dealing, protecting and proper use of the Company’s assets, compliance with applicable laws and regulations and encouraging the reporting of any illegal or unethical behaviour etc. | |
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| Affirmation by the Chairman that there is no violation of the Code of Conduct and Ethics | D.5.4 | Refer the Chairman’s Statement in the Annual Report for details. | |
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| Corporate Governance Disclosure | ||||
| Disclosure of corporate governance | D.6.1 | 2 (7) | This requirement is met through the presentation of this Report. | |
| Institutional investors | ||||
| Shareholder voting | E.1 | Institutional shareholders are required to make considered use of their votes and encouraged to ensure their voting intentions are translated into practice. Annual General Meeting is used to have an effective dialogue with the shareholders on matters which are relevant and of concern to the general membership. | |
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| Evaluation of governance disclosures | E.2 | Institutional investors are encouraged to give due weight to all relevant factors in the Board structure and composition. | |
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| Other investors | ||||
| Investing/Divesting decisions | F.1 | Individual shareholders are encouraged to carry out adequate analysis or seek independent advice on their investing, holding or divesting decisions. | |
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| Shareholder voting | F.2 | Individual shareholders are encouraged to participate in General Meetings and exercise their voting rights. | |
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| Internet of Things and Cybersecurity | ||||
| Process of mitigating cybersecurity threats | G.1 | During the financial year, CDB carried out internal and external IT vulnerability testing with the assistance of external parties in order to mitigate cybersecurity threats. Further, these external parties made several Board presentations on the findings and on local/global best practices. | |
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| Environment, Society and Governance (ESG) | ||||
| ESG Reporting | H.1 - H.1.1 | Compliant | Please refer Report on the Natural Capital on pages 71 to 88. | |
| Environmental Factors | H.1.2 - H.1.2.1 | Please refer Report on the Natural Capital on pages 71 to 82. | |
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| Social Factors | H.1.3 - H.1.3.1 | Please refer Report on the Society section on pages 83 to 88. | |
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| Governance | H.1.4 - H.1.4.1 | Please refer Report on the Regulator section on pages 89 to 93. |
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| Board Role on ESG Factors | H.1.5 - H.1.5.1 | Please refer Key Framework and Compliance Report on pages 71 to 88. | |
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| Sustainability Reporting | ||||
| Principles of sustainability reporting | G.1.1 - 1.7 | The Company has adopted the relevant principles and procedures of the Code to develop a sustainable business environment and disclosures are made in the Annual Report. | |
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| Transitional Provisions | ||||
| Transitional and other general provisions | 11 (1) - 11 (6) | The Company has complied with transitional provisions when applicable. | |
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