good governance + transparency responsible - … as set out in the governance model of bursa...

Good Governance + Transparency= Responsible

www.bursamalaysia .com062

The purpose of this statement is to provide investors with an insight into the CG practices of

theCompany inadditiontocompliancewithparagraph15.25of theMMLRunder theprincipled

leadership of the Board. This statement serves as a testament of the Board’s commitment to keep

the corporate conscience alive in its continuous effort to strive for the highest standards ofCG

practice in Bursa Malaysia.

Corporate Governance Statement

the Board of Directors

1. Principal responsibilities of the Board

The Board has six specific responsibilities, as described below, which aredischargedinthebestinterestsoftheCompany,inpursuanceofanintegratedregulatoryandcommercialobjective:

a. reviewing and adopting a strategic plan for the company

The Board plays an active role in the strategy development and planning process. At the end of each year, the management presents to the Board for approval the proposed strategy for the ensuing year. The process includes review and suggestion by the Board, leading to approval of the annual business plan and budget as well as the setting of corporate KPIs. The corresponding targets are used by the Board for evaluating the Company’sactualperformance.

At an offsite meeting in October 2009, the NEDs reviewed and challenged the management in the light of current market issues, gave their input to modify the approach in line with the strategicobjectivessetfor2009-2011.Indoingso,theBoardconsidered the proposed priorities and initiatives aimed at developing a differentiated value proposition for Bursa Malaysia to enhance its competitiveness and to achieve its regulatory goals. This served as guidance in formulating and mapping the strategies into the 2010 Business and Regulatory Plans which weresubsequentlyapprovedinNovember2009.

Amid-yearreviewofthe2010PlanswasconductedbytheBoardinJune2010.Themanagementpresentedthestatusofstrategyimplementation together with key initiatives undertaken in the first half of the year as indicated in the strategy dashboard and theCBS.Themanagement also reported on the year-to-datefinancial performance for comparison against budget.

The Board continuously focused its deliberations on business strategy, product development and market infrastructure for the securities, derivatives and Islamic markets.

A similar process was adopted in November 2010 for the development of the 2011 Business and Regulatory Plans. The Board reviewed the sustainability, value and effectiveness of the implementation of the strategic plan in 2010, and discussed substantively the potential development areas for improving Bursa Malaysia’s positioning as an investment and listing destination of choice.

b. Overseeing the conduct of the company’s business to evaluate whether the business is being properly managed

TheGovernanceModelfortheGroupwhichissupportedbytheALD was revised to reflect the flow of authority and functions of the CEOandmanagement,includingrelevantbusinessgovernanceand rules committees, in accordance with the approved financial limits as set out in the ALD to facilitate an efficient approval process.TheOCwasremovedfromtheGovernanceModeluponthe expiry of the ESOS on 8 March 2010.

The ALD sets out clearly the relevant matters which are reserved for the Board’s approval, as well as those matters which the Board may delegate to the Board Committees1, the CEO and management to ensure an optimum structureand efficient decision-making in the organisation.The Groupmanagement governance framework is put in place to enable good business and regulatory governance in accordance with the approved policies and guidelines which remain within the Board’s oversight.

The key matters reserved for the Board’s approval include the annual business plan and budget, dividend policy, business continuity plan, new issues of securities, strategic collaboration which involves business restructuring, acquisitions anddisposalsofcompanieswithintheGroup,aswellasdisposalsof significant fixed assets.

1 The Board Committees comprise three Governance Committees and four Regulatory Committees as set out in the Governance Model of Bursa Malaysia on page 80 of the Annual Report. The TOR and composition of each Board Committee is available at www.bursamalaysia.com.

BURSA MALAYSIA ANNUAL REPORT 2010 063

BoardCommitteesareentrustedwith specific responsibilitiestooverseetheaffairsoftheCompany,withauthoritytoactonbehalf of the Board in accordance with their respective TOR. At eachBoardmeeting, theminutes of theBoardCommitteemeetings are presented to the Board for information. The Chairmanof the relevantBoardCommitteewillalso report totheBoardonthekeyissuesdeliberatedbytheBoardCommitteeat its meeting.

TheCEOisresponsiblefortheday-to-daymanagementofthebusiness and operations of the Group in respect of both itsregulatory and commercial functions. He is supported by theLeadership Team, as set out on pages 25 to 27 of the Annual Report. The CEO provides the Board with a monthly statusreport which includes a detailed summary of the Group’soperating drivers and financial performance for the period as well as updates on key strategic initiatives and significant operational issues.

As a measure to ensure the independence of the regulatory function, the CRO provides the Boardwith a separate statusreport on a regular basis, to inform the Board of actions taken by the Regulation group and provide updates on regulatory initiatives. In March 2010, the Board also reviewed the Annual Regulatory Report 2009 before the report was submitted to the SC.TheRegulationgroupalsokepttheBoardupdatedonthestepstaken inresponsetothe issuesraisedbytheSC intheRegulatory Assessment Report of the previous year.

In addition, the Board reviewed the findings of the 2009 Customer Satisfaction Survey conducted by an externalresearch firm, Synovate. The survey showed improvement in the level of satisfaction among Bursa Malaysia’s external stakeholders compared with the previous year, as well as the relevant business units or functional groups’ contribution to thequalityofbusinessprocess,overall imageandvalue.Theoutcome of the survey is used as guidance to focus on areas whichrequireimprovement.

c. Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks

ThroughtheRMC, theBoardoversees theERMframeworkoftheGroup.TheRMCadvisestheACandtheBoardonareasofhighriskfacedbytheGroupandtheadequacyofcomplianceandcontrolthroughouttheorganisation.TheRMCreviewstherisk management policies formulated by management and makes relevant recommendations to the Board for approval. FurtherdetailsontheRMCandtheCompany’sERMframeworkare set out on pages 74 to 75 of the Annual Report.

d. Succession planning including appointing, training, fixing of compensation and, where appropriate, replacing senior management

The Board has entrusted the NRC with responsibility torecommend candidates for appointment to the Board, Board Committees and key management positions, to determinecompensation packages for these appointments, and to formulate the nomination, selection, compensation and succession policies fortheGroup.TheBoardissatisfiedthattheNRC,initscurrentform, effectively and efficiently discharges its functions and, accordingly,decidedinFebruary2010thattherewasnoneedto separate the nomination and remuneration functions into discrete Nomination and Remuneration committees.

In September 2010, the NRC reviewed itsTOR to reflect thenomination and remuneration matters separately for the purpose of clarity. As a result, it set out more expansively the practicesundertakenbytheNRCasauthorisedbytheBoard,toenhance Board effectiveness.

In reviewing the Directors’ succession in line with the Board’s 9-yearpolicy,theNRCproposedtotheBoardinJuly2010theestablishment of data for a pool of potential directors. Each existing Board member was asked to provide names of persons heconsideredfittobeadirectoroftheCompany,thusprovidingfor the continued effective functioning and progressive refreshing of the Board.

With the expiry of the CEO’s contract in January 2012, theBoardestablishedaSpecialTaskForce (STF) inJuly2010 toidentify potential candidates for the CEO position. The STFfirst established selection criteria and essential qualities ofa successor, including leadership skills, strategic thinking capability, ability to implement change and other relevant factors. A broad spectrum of both internal and external candidates was reviewed, taking into account background and working experience, set against the backdrop of the criteria. The STFpresenteditsreporttogetherwithashort-listofcandidatesfor theNRC’s consideration,which theNRCdeliberateduponand, thereafter, gave its recommendations to the Board.

The NRC also considered the final candidate’s remunerationpackageaspartoftheCEO’sappointmentprocess,andfurtherrecommendedthesametotheBoardforapproval.InFebruary2011,theBoardagreedwiththeNRC’srecommendationontheselection of the final candidate to be the CEO in succession,based on his competencies, strength and achievements, which are viewed to be capable of driving Bursa Malaysia forward in the changing exchanges landscape.


The NRC is also entrusted with the review of the humanresources plan of Bursa Malaysia, including the succession management framework and activities, human resource initiativesandtheannualmanpowerbudget.InJanuary2010,the NRC embarked on a search and selection process forkeymanagement positions.The appointment of Global Head,SecuritiesMarketswas approved in July 2010 based on therevised organisation structure. Proposed candidate for the CMOOpositionwasconsidered inDecember2010 inviewofreplacingtheretiredCMOO.

The NRC undertakes a yearly evaluation of the performanceof keymanagementpersonnel (except for theHeadofGroupIA/CIAwho reportsdirectly to theAC)whose remuneration isdirectlylinkedtoperformance.Forthispurpose,the2009CBSandKPIsresultsoftheCEO,theCOOandCROwerereviewedbyNRC in February2010.TheACassessed theperformanceof Head of Group IA, and further recommended the Head ofGIA’s2009BalancedScorecardandKPIsresultstotheNRCfordetermination of his discretionary performance reward.

In the fourth quarter of 2010, the NRC also reviewed theperformanceoftheCROforapprovingtherenewaloftheCRO’sservice contract together with her remuneration package for the nextthreeyears.TheNRCfurthermaderecommendationstotheSCwithitsapprovalontheCRO’sappointmentinaccordancewiththeGuidanceontheRegulatoryRoleofBursaMalaysia.

e. Developing and implementing an investor relations programme or shareholder communications policy for the company

Bursa Malaysia believes in building investor confidence throughgoodCG,andtheCompanycarriedoutitsIRactivitiesin accordance with the IR Policy which is available on Bursa Malaysia’s website. A separate report on IR activities is provided on pages 56 to 57 of the Annual Report.

f. reviewing the adequacy and integrity of the company’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines

The Board is ultimately responsible for the adequacy andintegrityoftheCompany’sinternalcontrolsystem.ThedetailsontheCompany’sinternalcontrolsystemandthereviewofitseffectivenessaresetoutintheInternalControlStatementandRisk Management Statement on pages 71 to 73 and pages 74 to 75 of the Annual Report respectively.

2. constituting an effective Board

a. Board Balance and Independence

The Board of Bursa Malaysia comprises 13 Directors. Fourdirectors are PIDs, eight are Independent NEDs and there is oneExecutiveDirector,whoisalsotheCEO.ThefourPIDsareappointedbytheMOFinlinewiththerequirementsundertheCMSA for the Company to act in the public interest, havingparticular regard to the need for the protection of investors in performing its duties as an exchange holding company. In addition, the PIDs and Independent NEDs are all independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. Through the BEE Directors’ Self and Peer Assessment, the NEDs have indicated their satisfaction with the level of independence of each of their peers and their ability toact in thebest interestof theCompany indecision-making. The Directors have made a valuable contribution to the Company through theirbusinessacumen,and theapplicationof a wide range of functional knowledge and skills from their long-standing experience. They are drawn from differingbackgrounds such as accountancy, law, regulation, business, finance, stock broking and risk management. The profile of each Director is set out in the Board of Directors’ Profile on pages 18 to 24 of the Annual Report.

The Board is satisfied with its existing number and composition. In this regard, the Board is of the view that the current size of the BoardisappropriategiventheuniquecompositionoftheBoardcomprising PIDs, as well as the governance and regulatory functions of an exchange holding company. It is also of the view that it has the right mix of skills, experience and strength in qualitieswhicharerelevantandenabletheBoardtocarryoutits responsibilities in an effective and competent manner.

In Bursa Malaysia, the Chairman, who is a PID, leads theBoard. In turn, the Board monitors the functions of the Board Committees inaccordancewith the respectiveTOR toensureits own effectiveness, while the CEO manages the businessand operations of the Company and implements the Board’sdecisions. The distinct and separate roles of the Chairmanand CEO with a clear division of responsibilities, ensures abalance of power and authority, such that no one individual has unfetteredpowersofdecision-making.

For the foregoing reason, andgiven theBoard’sability toactindependently and objectively due to its unique compositionwith1/3PIDandmorethan1/3NED,theexistingstructurewasconsideredadequate to enableany concernon theCompanyto be conveyed or channelled to the Board for its deliberation. Nevertheless, in January 2011, the Board appointed Dato’ Dr. Thillainathan to be the Senior Independent NED2 as an additional safeguard, to serve as a fallback point of contact for investors and shareholders when the normal channel of communicationisconsideredtobeinappropriateorinadequate.

2 ThecontactdetailsaresetoutintheCorporateInformationonpage83oftheAnnualReport.



As at 31December 2010, theCompanyhasmore than60%public shareholding. None of the Directors are nominees of the Company’s substantial shareholders, and the Companydoesnothaveany“significantshareholders”asdefinedundertheCGCode3. In view of the composition of the Board and the calibre, expertise and experience of the Directors, the interests ofinvestorsincludingtheCompany’sminorityshareholdersandthepublicareadequatelyprotectedandadvanced.

3. Board Structures and Procedures

a. Board and Board committee Meetings

The Board of Directors’ convened 12 meetings in 2010, out of which eight were scheduled in advance (including two Board offsite meetings) and four were special meetings. The Directors’ attendancewasasfollows:

name of Directors Attendance

TunMohamedDzaiddinbinHajiAbdullah(Chairman)

11/12

Dato’ Tajuddin bin Atan 11/12

Datuk Dr. Md Tap bin Salleh4 8/9

Datuk Dr. Syed Muhamad bin Syed Abdul Kadir5

3/3

Dato’ Abdul Latif bin Abdullah6 3/3

DatukHajiFaisyalbin DatukYusofHamdainDiego7

7/7

Datin Paduka Siti Sa’diah binti Sheikh Bakir 10/12

Dato’Dr.Thillainathana/lRamasamy 11/12

Dato’ Sri Abdul Wahid bin Omar 9/12

Izham bin Yusoff 10/12

Dato’ Wong Puan Wah @ Wong Sulong 12/12

CheahTekKuang 9/12

Dato’ Saiful Bahri bin Zainuddin 10/12

OngLeongHuat@WongJooHwa 10/12

Dato’YuslibinMohamedYusoff(CEO) 11/12

In2010, therewere fiveNEDsmeetings ledby theChairmanof the Board, to discuss corporate and organisational issues with a view to enhancing the overall effectiveness of the Board. Issues of concern that were raised during the NEDs meetings werecommunicated to theCEO forhisnecessaryactionandmanagement’s continuous improvement.

The Board annual meeting calendar is prepared and circulated to Directors before the beginning of each year. The calendar provides the scheduled dates for meetings of the Board, Board Committees and shareholders, major conferenceshosted by the Company, as well as the closed period fordealings in securities by Directors based on the targeted date of announcement of quarterly results of the Group.Theagenda of each Boardmeeting is finalised by the Chairman.Meeting papers are prepared by management in accordance with an existing agreed format which provides relevant facts, analysis and recommendation for supporting the proposals to enable informed decision-making by the Board. The agendaand papers for meetings are furnished to Directors and Board Committeemembersinadvancetoenablethemtoprepareforthe meetings. At Board meetings, the management presents the papers, and consultants may be invited to provide further insight.TheChairmanencouragesconstructive,healthydebate,and Directors are given the chance to freely express their views or share information with their peers in the course of deliberation.AnyDirector/BoardCommitteememberwhohasadirect or deemed interest in the subject matter to be deliberated shall abstain from deliberation and voting on the same during the meeting.

The Company Secretary ensures there is a quorum for allmeetings and that such meetings are convened in accordance withtherelevantTORs.TheminutespreparedbytheCompanySecretary memorialise the proceedings of all meetings including pertinent issues, the substance of inquiry and response,members’ suggestions and the decisions made. In doing so, theCompanySecretaryinternalisesthegovernanceprinciplesin theCompanyandkeeps theBoardupdatedon the follow-up action arising from the Board’s decision and/or requestat subsequentmeeting.This allows the Board to perform itsfiduciary duties and oversight role of the respective Board Committees’functions.

3 UndertheCGCode,a“significantshareholder”isdefinedasashareholderwiththeabilityto exercise a majority of votes for the election of directors. CMDF and MOF Inc, being the largestshareholdersinBursaMalaysiaasat31December2010haveequalshareholdingsin the Company. Details of their shareholdings are set out in Statistics of Shareholdings as at 14 February 2011 on page 175 of the Annual Report.

4 appointed as a PID on 1 April 2010.5 appointed as a PID on 5 August 2010.6 ceased to be a PID w.e.f. 1 April 2010.7 ceased to be a PID w.e.f. 9 June 2010.


b. Supply of and Access to Information

The Directors have individual and independent access to the adviceanddedicatedsupportservicesoftheCompanySecretaryin ensuring effective functioning of the Board. The Directors may seek advice from the Leadership Team or management on issues under their respective purview. The Directors may also interactdirectlywith,orrequestfurtherexplanation,informationor update on any aspect of the Company’s operations orbusiness concerns from the Leadership Team. In addition, the Board may seek independent professional advice at the Company’sexpenseonspecific issuestoenabletheBoardtodischarge its duties in relation to the matters being deliberated. Individual Directors may also obtain independent professional or other advice in furtherance of their duties, subject to approval bytheChairmanortheBoard,dependingonthequantumofthefees involved.

c. Board effectiveness evaluation

The Board has entrusted the NRC with the responsibility forcarrying out the annual BEE. An external consultant is engaged to carry out the BEE every three years, and this exercise was last conducted in 2008. In 2010, the Company Secretaryfacilitated theNRC incarryingout theBEEexercise.TheBEEwasconductedviaquestionnaires,whichcompriseaBoardandBoard Committee effectiveness assessment, and a DirectorsandBoardCommitteemembersselfandpeerassessment.TheNRCreviewstheoutcomeoftheBEEexercise,recommendstothe Board action plans for improvement and follows up on the action plans.

The Board assessed its effectiveness in the areas of composition, administration, accountability and responsibility, conduct, the performance of Chairman and CEO. The Board, throughthe Board Committee effectiveness assessment, examinedthe respective Board Committees, including their respectiveChairmen, to ascertain whether their function and dutiesare effectively discharged in accordance with the TOR. The Directors self and peer assessment is intended to evaluate the mixofskills,experienceandotherrelevantqualitiestheNEDsshould bring to the Board, and takes into account the individual director’s ability to exercise independent judgement at all times and their contribution to the effective functioning of the Board. The self and peer assessment process also examines the ability of each Board or Committee member to give material inputat meetings and demonstrate a high level of professionalism andintegrityinthedecision-makingprocess.Theassessmentresults form the basis of the NRC’s recommendation to theBoardforthere-electionofDirectorsatthenextAGM.

TheCompanySecretarycollatesthefeedbackandsummarisesthe findings, with the assurance of anonymity, as part of the governancereviewprocess.TheNRCanalysestheBEEresultsand recommends to the Board an action plan for improvement in the areas identified in the BEE. Each Board and Board Committeememberisprovidedwithindividualresultstogetherwith a peer average rating on each area of assessment for personal development.

d. training of Directors

The Company provides a dedicated training budget forDirectors’ continuing education. Relevant training (internal or external)programmesarearrangedbytheCompanySecretaryfor the Directors and members of Board Committees. TheDirectorswerealsoinvitedviae-mailtoattendtrainingonCGforcontinuousdevelopmentandupdateonCGbestpractices.A series of talks was organised by Bursa Malaysia together with various professional bodies throughout the year, including ‘TechnicalWeekonLeadingGovernance’heldinApril2010andSC-BursaMalaysiaCGWeek-TowardsCGExcellence from28June2010to2July2010.

The Directors may also request to attend additional trainingcourses according to their individual needs as a director or member ofBoardCommittees onwhich they serve. In 2010,all Directors attended development and training programmes, the details of which are set out on pages 167 to 171 of the Annual Report. Each Director has attended at least three training sessions on capital market development in 2010 in accordance with the internal policy to keep abreast with industry developments and trends.

Two newly appointed PID, Datuk Dr. Md Tap completed the Mandatory Accreditation Programme (MAP) in April 2010 whilst Datuk Dr. Syed Muhamad completed the MAP in May 2005 when he was first appointed as a director of a listed issuer in June 2005. They also attended the induction programmeorganisedbytheCompanySecretarytofamiliarisethemselveswith the Group’s business and governance processes. Theywere provided with a Directors’ manual which contains the Group Governance Model, TOR and other applicable policy,guidance or guidelines for their easy reference.

An offsite sessionwas held on 9December 2010 for the LCmembers to discuss on common area of breaches, enforcement actions and policies, as well as the proposed changes to the LR andCorporateDisclosureGuide.TheMPCmembersalsohadanoffsite session on 14 December 2010 to review its enforcement policies, enforcement impact on key breaches and to discuss on key area of changes proposed under the revamped business rules in relation to market participants.



4. Appointments to the Board and Board committees

a. Appointments to the Board

TheNRC,whichcomprisesonePIDandfourIndependentNEDs,has the responsibility to make recommendations to the Board for the appointment of Directors other than PIDs. As part of thisprocess,theNRCformulatesthenominationandselectionpolicies for the Board, and reviews candidates for appointment as Directors based on criteria such as their qualifications,skills, functional knowledge, experience, character, integrity and professionalism.TheNRC also evaluates the candidate’sability to discharge his responsibilities as expected from an independent NED and whether the test of independence under the MMLR is satisfied, taking into account his character, integrity and professionalism.

TheBoardhasalsoapprovedthenine-yearpolicyasguidancewhere an independent NED who has served for nine years on the Board, will be subjected to a rigorous review by the Board, to determine whether the Director can continue to be independent in character and judgement, and also to take into account the need for progressive refreshing of the Board.

In 2010, there was no proposal of any candidate for directorship at the 33rdAGMwhichwassubjecttoArticle71oftheAAandtheSC’sapproval.However,twoPIDswerenewlyappointedbytheMinisterofFinancepursuanttoSection10(1)oftheCMSAin April and August 2010 respectively.

b. Appointments to the Board committees

TheNRCisresponsibleforreviewingcandidatesforappointmenttotheBoardCommittees,andmakesrecommendationstotheBoard for approval. The review is conducted on an annual basis andwhentheneedarises.TheBoardCommitteemembers’selfandpeerassessmentresultsareusedasreferencebytheNRCin recommending to the Board for approval of the appointment of therelevantBoardCommitteesmembersfortheensuingterm.

InApril2010,theBoardestablishedanad-hocBoardCommittee,theCorporateHealthCheckCommittee(CHCC),whichcomprisedindependent NEDs, to ascertain the general health condition and progress of Bursa Malaysia since its listing in 2005, and to determine factors which could potentially hinder effectiveness of theorganisation.TheCHCC’srecommendationswereapprovedby the Board to be implemented for the benefit and growth of the Company,whichisalsofundamentaltogoodCG.

5. re-election of Directors

Pursuant to Article 69 of the AA, an election of Directors other than the PID, shall take place each year at the AGM of the Companywhereone-thirdoftheDirectorswhoarelongestinofficeshallretireand, if eligible, may offer themselves for re-election. The NRC isalso responsible for making recommendations to the Board on the re-electionofDirectorsthroughthisprocessofretirementbyrotationin accordance with the provisions of the AA. At the 33rdAGMheldon 29 March 2010, four Directors retired by rotation and were re-electedtotheBoardbytheshareholders.

PursuanttoSection129oftheCA,aDirectorwhoisover70yearsofagemustretireattheAGMoftheCompany,andmaybereappointedbyshareholderswithnotlessthana3/4majority.Atthe33rdAGM,TunMohamed Dzaiddin bin Haji Abdullah, a PID was reappointedpursuant to this provision.

Directors’ remuneration

1. Level and Make-up of remuneration

ThecurrentremunerationpolicyfortheNEDscomprisesthefollowing:

a. Directors’ fees

RM90,000 per annum for the Chairman and RM60,000 perannum for each NED (as approved by the shareholders at the 33rdAGMforFY2009).

b. Meeting allowance for each Board or Board committee8

meeting attended by a neD

• RM3,000fortheChairmanoftheBoard;

• RM1,500fortheothermembersoftheBoard;

• RM1,500fortheChairmanofaBoardCommittee;and

• RM1,000fortheothermembersoftheBoardCommittees.

The meeting allowance is also applicable to ad-hoc BoardCommittees and theTender Evaluation Committee which theNEDsattendpursuanttotheCompany’spolicyandprocedures.

c. Benefits-in-kind and emoluments

NEDs are not entitled to participate in the ESOS or any incentive planforemployeesoftheGroup.Theyaregivenotherallowancessuch as travelling and mobile phone allowances comparable to otherPLCs,particularlythoseinthefinancialsector,GLCsandselectedstockexchanges.TheChairmanisalsogivenamonthlyfixed allowance, revised to RM50,000 since 1 March 2010, in view of the scope of his responsibilities and the fact that he doesnotserveontheboardsofanyotherPLCsorothermarketparticipantsregulatedbyBursaMalaysiatoavoidCOI.

8 Information on the composition, number of meetings held and attendance of meetings of all Board Committees is set out on pages 81 to 82 of the Annual Report.


TheExecutiveDirector/CEOisnotentitledtotheaboveDirector’sfeenor is he entitled to receive any meeting allowance for the Board andBoardCommitteemeetingsheattends.TheCEO’sremunerationpackagecomprisesamonthlysalaryandotherbenefits/emoluments.

In addition to the above, the Directors have the benefit of D&O Insurance in respect of liabilities arising from their acts committed in thecapacityasD&OofBursaMalaysia.However,thesaidinsurancepolicy does not indemnify a Director or principal officer if he is proven to have acted negligently, fraudulently or dishonestly, or in breach of adutyor trust.TheDirectorsandprincipalofficersarerequired tocontribute jointly to the premium of the D&O Insurance Policy.

2. Procedure for Approving Board remuneration

TheNRCisresponsibleforreviewingtheremunerationoftheNEDsandtheExecutiveDirector/CEO,andmakesrecommendationsonthesame to the Board for approval. In 2010, the Board approved the NRC’srecommendationtomaintaintheexistingremunerationpolicy,given that theDirectors’ feeswere recently increased for FY2009upon the shareholders’ approval at the 33rdAGM.Accordingly, theBoard agreed with the NRC’s recommendation to maintain theremuneration of the NEDs as appropriate taking into account the fiduciary duties and time commitment expected of them.

TheCEO’sremunerationpackageislinkedtotheperformanceofCBSand KPIs results for the previous year. In the evaluation, the NRCconsiders four perspectives: financial, customer, internal process,learning and growth. The CEO abstained from deliberation on hisremuneration at the Board meeting.

ThelastreviewoftheCEO’sremunerationpackagewasconductedby the NRC in the third quarter of 2009, in conjunction with therenewal of his service contract taking into account pay mix trends and positioning across GLCs, financial institutions and investmentbanks, as well as regional exchanges. The same was recommended to the Board for decision.

3. Disclosure of Board remuneration

Disclosure of each Director’s remuneration is set out in the Annual AuditedFinancialStatementsonpage126oftheAnnualReport.

Shareholders

1. Dialogue between the company and Investors

Bursa Malaysia communicates regularly with shareholders and investors through the annual report, quarterly financial reportsand various announcements made via Bursa LINK. Financial andmarket statistics and press releases are placed on Bursa Malaysia’s websitetokeepshareholdersandinvestorsinformedontheGroup’sperformance and operations. Analyst briefings are held twice a year, in connection with the half yearly and annual financial results, following announcements via Bursa LINK to ensure fair dissemination to the public generally. These briefings include a presentation, conference call as well as a Question and Answer session. The events are web-cast,andatranscriptisalsomadeavailabletoallshareholdersand investors on Bursa Malaysia’s website. A detailed report on Investor Relations appears on pages 56 to 57 of the Annual Report.

2. Annual general Meeting

Although the AGM is mandated as an occasion for shareholders,the Chairman allowed representatives of the media to attend the 33rd AGM.All13Directorswerepresenttoaccounttotheshareholdersfor their stewardship of the Company. The proceedings of the 33rd AGMincludedtheCEO’spresentationoftheCompany’soperatingand financial performance for 2009, the presentation of the external auditors’unqualifiedreporttotheshareholders,andaQuestionandAnswersessioninwhichtheChairmaninvitedshareholderstoraisequestionsontheCompany’saccountsandotheritemsforadoptionatthemeeting,beforeputtingaresolutiontovote.TheDirectors,CEO/management and external auditors were in attendance to respond totheshareholders’queries.TheCEOalsosharedwiththemeetingtheresponsestothequestionssubmittedinadvancebytheMSWG.

Shareholders were invited to drop any additional questions in anenquiry box placed at the venue of 33rd AGM so that they mightbe responded to in writing after the meeting. The officers of the Companywerealsopresenttohandleenquiriesfromshareholders.

All NEDs abstained from voting on the resolution concerning their remuneration. The external auditors were on standby to act as scrutineers, but there was no demand for a poll. All the resolutions set out in the Notice of the 33rdAGMwereput tovotebyshowofhands and duly passed. The outcome of the 33rdAGMwasannouncedon the same day via Bursa LINK, which is accessible on Bursa Malaysia’swebsite.TheminutesofAGMwerepostedinthefinancialsection of IR Portal.



In response to the directive dated 19 February 2010 to all listedissuers, Bursa Malaysia had issued a letter to shareholders on 5 March 2010 together with Notice of 33rdAGM to inform theshareholdersof the implementationofe-Dividendand itsbenefits inSeptember2010.TheCompany’s representativeswereavailableat thevenueof 33rdAGMtobrieftheshareholdersonthebenefitsofe-Dividendand the registration process in view of the commencement date of registrationfore-Dividendon19April2010.

3. corporate Sustainability

The Board promotes good CG in the application of sustainabilitypractices in Bursa Malaysia, the benefits of which will translate to better corporate performance. A detailed report on sustainability activities appears on pages 58 to 61 of the Annual Report.

Accountability and Audit

1. Financial reporting

The Board ensures that shareholders are provided with a balanced andmeaningfulevaluationoftheCompany’sfinancialperformance,its position and its future prospects, through the issuance of Annual Audited Financial Statements and quarterly financial reports andcorporate announcements on significant developments affecting the CompanyinaccordancewiththeMMLR.Inthisrespect,thefinancialstatementsarereviewedbytheACatitsmeetings,inthepresenceof external auditors and internal auditors, before being presented to the Board for approval.The CFO also presented to theAC andthe Board slides containing details of revenues and expenses in the form of charts, for review of quarter-to-quarter and year-to-datefinancialperformanceagainstbudget.TheChairman’sMessageandCEO’sMessageonpages16to17andpages34to47oftheAnnualReport provide additional analysis and commentary. The Directors’ ResponsibilityStatementfortheAnnualAuditedFinancialStatementsoftheCompanyandGroupissetoutonpage87oftheAnnualReport.

2. Internal control

TheCompanycontinuestomaintainandreviewits internalcontrolprocedures to ensure, as far as possible, the protection of its assets anditsshareholders’investments.DetailsoftheCompany’sinternalcontrolsystemandtheframeworkaresetoutintheInternalControlStatementtogetherwithRiskManagementStatementandACReporton pages 71 to 73, pages 74 to 75 and pages 76 to 77 of the Annual Report respectively.

3. relationship with Auditors

Bursa Malaysia’s relationship with its external auditors is primarily maintained through the AC and the Board. The AC has explicitauthority to communicate directly with external and internal auditors. TheHeadofGroupIAreportsdirectlytotheACandhe/sheispresentatallACmeetingstogetherwiththerelevantmembersofhisstaff.TheCEOandmanagementonlyattendtheACmeetingsuponinvitation.The external auditors did not call for any other meeting with the ACapart from the reviewof financial statements.TheACheld twomeetings with the external auditors in 2010 to discuss management’s cooperationintheauditprocess,thequalityandcompetencyinthefinancial reporting function, the state of affairs of the IA function and audit issues in relation to appropriate accounting treatment. These meetingswereheldwithout thepresenceof theHead/ActingHeadofGroupIAandinternalauditors,theCEOandmanagement.FurtherdetailsontheACinrelationtotheexternalauditorsaresetoutintheACReportonpages76to77oftheAnnualReport.

Other Areas

1. conflict of Interest

In addition to being a business oriented listed entity, Bursa Malaysia has also discharged its obligation as a market regulator. Inthisregard,COIorpotentialCOImayariseinthecourseofBursaMalaysia or its subsidiaries carrying out their respective functions for commercial reasons or the proper performance of its statutory duties as an exchange holding company. Where Bursa Malaysia’s own or any other interest conflicts with the public interest, the latter will prevail as Bursa Malaysia is bound by law to act in the public interest, having regard to the need for investor protection.

Bursa Malaysia has continued to maintain the separation of business functions from its regulatory functions. This is to ensure that these functions operate independently, and that business units within Bursa Malaysia are not in a position to influence any supervisory or regulatory decisions made by Regulation. Furthermore, BursaMalaysia has put into place arrangements and appropriate controls to identifyanddealwithCOI.During theyear,BursaMalaysiahasconducted briefing to staff to educate and instil greater awareness pertaining to theCOIGuidelines.TheGroup IAhasalsoperformedreview on compliance with certain internal processes and procedures, to ensure that conflicts are being properly identified and managed.

In 2010, there was no actual COI arising between BursaMalaysia’s commercial interests and the proper performance of its regulatory duties.


2. related Party transactions

AninternalcomplianceframeworkexiststoensurethattheCompanymeets its obligations under the MMLR including obligations in connection with related party transactions. The Board, through the AC, reviews all related party transactions. A Director who has aninterest in a transaction must abstain from deliberation and voting on the relevant resolution in respect of such transaction at the Board meeting. In 2010, there was no transaction entered into by Bursa Malaysia or its subsidiaries involving conflicts arising from the direct or indirect interest of a director or person connected with such director.

AlistofthesignificantrelatedpartydisclosuresbetweentheCompanyanditssubsidiaries,andbetweentheGroupandotherrelatedpartiesincludingrelevantkeymanagementpersonnelforFY2010issetouton pages 152 to 154 of the Annual Report.

3. code of ethics

TheCompany’sCodesofEthicsforDirectorsandemployeescontinueto govern the standards of ethics and good conduct expected from Directors and employees, respectively. The Code of Ethics forDirectors, for example, includes principles relating to the Directors’ duties,COIanddealings in securities. Foremployees, theCodeofEthicscoversallaspectsofthebusinessoperationsoftheCompanysuch as confidentiality of information, dealings in securities, COI,gifts, gratuities or bribes, dishonest conduct, sexual harassment and theCompany’swhistle-blowingprocedures.

The management conducted a review on the Code of Ethicsfor employees with an aim to enhance effectiveness of the whistle-blowingmechanismandprocedures.Themanagementalsoundertook further review in the light of the Whistleblower Protection Act 2010 which came into effect on 15 December 2010.

4. Dealing in Securities

TheGuidancetoDirectorsforDealingsinSecuritieswasrevisedinSeptember 2010 to provide clarity to the procedures for compliance by Directors in accordance with the MMLR when dealing in securities of Bursa Malaysia during and outside the closed periods. The revision comprised the relevant provisions on the Directors’ duty tomake disclosure under the CA and CMSA using the prescribedform of notification for dealings in securities of Bursa Malaysia. The Guidance also provides that Directors must not deal in securitiesas long as they are in possession of price-sensitive information,consistentwithCMSAwhichprohibitsinsidertrading.In2010,noneof the Directors dealt in securities of Bursa Malaysia during closed periods, although they may do so under exceptional circumstances if deemedacceptablebytheChairmanoftheBoardor,inhisabsence,theACChairman.

The employees of the Company (including principal officers) areinformed in advance through internal communication via e-mailbefore the commencement of each closed period, in which they are not allowed to trade as prescribed under the Securities Transaction PolicytocurbinsidertradingandtoavoidCOI.

compliance Statement

The Board is satisfied that in 2010 the Company has complied withthebestpracticesof theCGCodesavefortheappointmentofaSeniorIndependentNED,whichtookeffectinJanuary2011.


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