OBJECTIVE

1. The objective of this policy is to enhance the effectiveness of the Board and standard of corporate governance by embracing diversity in the boardroom.

PRINCIPLE

1. The Board sees diversity as an important advantage in the planning and deployment of its business strategy. Accordingly, the Board would not discriminate any board member and potential candidate on the grounds of race, age, gender, nationality, religion, sexual orientation and family status.

BOARD APPOINTMENT

1. Board appointments had and will continue to be made based on merit. Candidates will be considered based on a set of objective criteria, such as experience, talent, qualification and other credentials.
2. In carrying out the responsibility for identifying suitably qualified candidates to become board members, the Nomination Committee shall give adequate consideration to this Policy and balance the Group's business model and specific needs from time to time.

REVIEW AND DISCLOSURE

1. This Policy will be reviewed annually to ensure its continued effectiveness. The Board will disclose details of this Policy and its deliberation when there is change of board composition in its Corporate Governance Statement set out in its Annual Report.

• Integrity and honesty;
• Openness and respect for others;
• Execution and accountability;
• Passion for customers, partners and technology; and
• Commitment to personal excellence and self-improvement

K-One affirms to conduct its business with professional ethics and integrity. We are committed to operate in the best interest of our Customers, Employees, Suppliers, Communities and in the long term interests of our Group. Towards this end, K-One has voluntarily adopted the Electronic Industry Citizenship Coalition (EICC) Code of Conduct. The K-One Code of Conduct and Ethics' policies and procedures address the following:

1. Labour Standard – upholding the human rights of workers and treating them with dignity and respect.
   
   
2. Health and Safety Standards – providing a safe and healthy work environment.
   
   
3. Environmental Standard – maintaining an Environmental Management System in accordance with ISO 14001 Environmental Management Systems.
   
   
4. Ethical Standard – meeting corporate social responsibilities, protecting personal identity, following fair business practices, respecting intellectual property rights and promoting business integrity.
   
   
5. Quality Standard – maintaining an ISO 9001 Quality Management System which provides quality products and services that consistently meet or exceed the requirements of our customers.
   
   
6. Supplier Management Practices – encouraging our Supply Chain to adopt the Electronic Industry Citizenship Coalition (EICC) Code of Conduct principles and policies.
   
   
7. Conflict of Interest – ensuring Directors and employees are not engaged in business activities directly or indirectly that compete or are in conflict with the interest of the Group, amongst other conflict of interest situation.

In line with the best practice of Corporate Governance, the Audit Committee is governed by the following terms of reference:-

1. Composition

The Board of Directors (the “Board”) established the Audit Committee on 3 February 2005.

The Audit Committee shall be appointed by the Board from amongst its Directors, on the recommendation of the Nomination Committee and in consultation with the Chairman of the Audit Committee (“Audit Committee Chairman”).

The Audit Committee shall comprise of at least three (3) members. All the Audit Committee members must be Non-Executive Directors, with a majority of them being Independent Directors. No Alternate Director shall be appointed as a member of the Audit Committee.

The Audit Committee Chairman, who shall be elected by the Audit Committee, shall be an Independent Director.

All the Audit Committee members should be financially literate and at least one (1) member of the Audit Committee:

1. Must be a member of the Malaysian Institute of Accountants (“MIA”); or
2. If he/she is not a member of MIA:
   1. He/she must have at least three (3) years’ working experience; and:
      1. He/she must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or
      2. He/she must be a member of one (1) of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or
   2. He/she must have a degree/masters/doctorate in accounting or finance and at least three (3) years’ post qualification experience in accounting or finance; or
   3. He/she must have at least seven years’ experience as a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation; or
   4. He/she fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

The Nomination Committee must review the terms of office and performance of the Audit Committee and each of its members every year to determine whether the said Audit Committee and its members have carried out their duties in accordance with their terms of reference.

In the event of any vacancy with the result that the number of members is reduced to below three (3), the vacancy shall be filled within three (3) months. Therefore, any member of the Audit Committee who wishes to retire or resign shall provide sufficient written notice to the Company so that a replacement may be appointed before he/she leaves.

2. Attendance and Frequency of Meeting

1. The Audit Committee shall meet at least four (4) times in each financial year although additional meetings may be called at any time at the discretion of the Audit Committee Chairman.
2. The quorum for a meeting shall be two (2) members of the Audit Committee.
3. The majority of members present at the meeting shall be Independent Directors. The Head of Finance, the Head of Internal Audit and a representative of the External Auditors shall normally attend the meetings. Other Board members may attend such meetings upon the invitation of the Audit Committee. The Audit Committee may choose to meet with the External Auditors without the presence of any Executive Board member if it sees fit and necessary.

3. Procedures of Meetings

1. The Audit Committee Chairman shall preside at all meetings. In his absence, the Audit Committee members present shall elect among themselves an Independent Director to be the Chairman of the meeting.
2. The Audit Committee may call for a meeting as and when required with reasonable notice as the Audit Committee deem fit.
3. The Company Secretary shall be the Secretary of the Audit Committee and shall be responsible, in conjunction with the Audit Committee Chairman, for drawing up the agenda and circulating it to the members prior to each meeting.
4. All decisions are determined by a majority of votes. In case of equality of votes, the Audit Committee Chairman shall have a casting vote.
5. A resolution in writing signed by a majority of the Audit Committee members and constituting a quorum shall be effective as a resolution passed at a meeting of the Audit Committee.

4. Minutes of Meetings

1. The Company Secretary shall be responsible for keeping the minutes of meetings of the Audit Committee and circulating them to the Audit Committee members. The Audit Committee members may inspect the minutes of the Audit Committee at the Registered Office or such other place as may be determined by the Audit Committee.

5. Authority

The Audit Committee shall:-

1. Have the authority to investigate any matter within its terms of reference.
2. Have the resources which are required to perform its duties.
3. Have full and unrestricted access to any information pertaining to the Company.
4. Have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity.
5. Be able to obtain independent, professional or other advice.
6. Be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

6. Functions

The Audit Committee provides by way of regular meetings, a line of communication relating to the Group’s management of internal controls, risk management, accounting policies and financial reporting between the Board and the Group’s Internal and External Auditors.

The functions of the Audit Committee shall include the following:-

1. Reviewing with the External Auditors on the following and report the same to the Board:
   1. audit plan, its scope and nature;
   2. audit report;
   3. results of their evaluation of accounting policies and system of internal controls within the Group;
   4. management letter and management’s response; and
   5. major audit findings arising from interim and final external audits, audit report and assistance given by the Group’s officers to the External Auditors.
2. Performing the following in relation to the internal audit function:-
   1. review adequacy of scope, functions, competency and resources and setting of performance standards of the internal audit function;
   2. review internal audit, processes, results of internal audit or investigation undertaken and whether or not appropriate action has been taken on the recommendations of the internal audit function;
   3. review major findings of internal audit investigations and management’s response and ensure that appropriate actions are taken on the recommendations of the internal audit function;
   4. review any appraisal or assessment of the performance of members of the internal audit function; and
   5. review and approve any appointment or termination of senior staff members of the internal audit function and take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
3. Reviewing with Management, External Auditors and Internal Auditors of the Company’s general policies and procedures to reasonably assure the adequacy of internal accounting and financial reporting controls.
4. Reviewing risk management development under the internal audit function.
5. Reviewing with Management:
   1. the audit reports and the implementation of audit recommendation; and
   2. interim financial information.
6. Reviewing related party transactions (if any) entered into by the Company or the Group to be undertaken on an arm’s length basis and normal commercial terms and on terms not more favourable to the related parties than those generally available to the public and to ensure that the Directors report such transactions annually to shareholders via the Annual Report and to review conflict of interest situations that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.
7. Reviewing quarterly results and annual financial statements prior to approval by the Board, focusing on:-
   1. changes in or implementation of major accounting policies;
   2. significant and unusual events;
   3. the going concern assumption; and
   4. compliance with accounting standards and other legal requirements.
8. Reviewing and reporting to the Board any letter of resignation from the External Auditors of the Group as well as whether there is any reason (supported by grounds) to believe that the Group’s External Auditors are not suitable for re-appointment.
9. Making recommendations concerning the appointment of External Auditors and their remuneration to the Board.
10. Verifying the allocation of options for compliance with the criteria pursuant to the Employees’ Share Option Scheme of the Company.
11. Promptly reporting to Bursa Malaysia Securities Berhad on any matter reported by the Audit Committee to the Board which has not been satisfactorily resolved resulting in a breach of the Listing Requirements.

7. Reporting Responsibilities

The Audit Committee Chairman shall formally report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities as well as how it has discharged its responsibilities. This report shall include:-

1. the significant issues that it considered in relation to the financial statements and how these were addressed;
2. its assessment of the effectiveness of the external audit process and its recommendation on the appointment or reappointment of the External Auditor; and
3. any other issues on which the Board has requested the Audit Committee’s opinion.

These terms of reference were reviewed and approved by the Audit Committee and the Board on 21 February 2017.

1. The following unethical wrongdoings committed by any staff in the conduct of business shall be reported:
   1. Fraud;
   2. Corruption, bribery or blackmail;
   3. Breach of legal or regulatory obligations and common code of ethics;
   4. Conflict of interest;
   5. Sexual harassment;
   6. Misuse of confidential information and property of the Group;
   7. Criminal offences; and
   8. Concealment of any or a combination of the above.

   PRINCIPLES

2. The general principles governing this whistle blowing policy are as follows:
   1. All reports or complaints would be treated with strictest confidence;
   2. The identity of the whistle-blower(s) will remain anonymous during the investigation;
   3. The whistle-blower(s) will be informed of the investigators handling the matter and its status;
   4. Whistle-blower(s) are protected against any detrimental action in reprisal for whistle blowing unethical conducts. However, this protection would not be extended to someone who maliciously raises matter he/she knows is untrue; and
   5. The Board reserves its right to amend this policy as and when needed.

   WHISTLE BLOWING CHANNEL

3. Whistle-blower(s) who believe reasonably and in good faith that violation or malpractice of unethical wrongdoings exist should report the wrong doing to the Board Chairman or the Audit Committee Chairman by emailing to corp@k-one.com or post to 66 & 68, Jalan SS 22/21, Damansara Jaya, 47400 Petaling Jaya, Selangor, Malaysia.
4. Whistle-blower(s) are required to identify himself or herself in order for the Board Chairman to accord the necessary protection to him or her. However, the Board reserves its right not to investigate any allegation communicated by anonymous whistle-blower(s).

   
   ACTION

5. All alleged unethical wrongdoings will be investigated, except those from anonymous whistle-blower(s), wherein, the Board reserves the right not to investigate. The Internal Auditors shall review each claim and pursue it to the extent that the information and evidence received allows. The Internal Auditors shall begin preliminary investigations to establish whether the claim has merit and can be substantiated and reported to the Chairman of the Audit Committee for further action.
6. The Board Chairman or the Audit Committee Chairman may seek assistance from other resources within and outside the Group when conducting its investigation at the cost of the Group.
7. Upon completion of investigation, the Board Chairman or the Audit Committee Chairman shall decide the appropriate actions for:
   1. Informing the whistle-blower(s) the status of the findings;
   2. Initiating disciplinary action against any persons who has committed unethical conducts;
   3. Making a police report where the unethical conduct constitutes a criminal offence; and
   4. Recommending steps to be implemented to prevent a similar situation from repeating in the future.
8. The Internal Auditors shall maintain a record of the alleged unethical wrongdoings received and on quarterly basis, prepare a summary report to be presented to the Audit Committee.

OBJECTIVE

1. Succession planning is a crucial element of business continuity planning. The key objective of succession planning is to ensure that:
   1. A transition plan is in place to mitigate the impact in the event of "loss" of key senior management/technical personnel through resignation or retirement or otherwise;
   2. Strategic corporate and/or technical knowledge is retained and transferred within the organization; and
   3. The operation of the Group continues to run with minimal interruption.

BOARD'S RESPONSIBILITY

1. It is the Board's responsibility to ensure that all candidates who are appointed to senior management or technical positions are capable enough and to satisfy themselves that there are programmes in place to provide orderly succession.
2. Annually, the Board shall work with the Nomination Committee in reviewing the succession plan established by the Management to ensure that the objective of succession planning is achieved. In this respect, when reviewing/appraising the executive directors' performance, the Nomination Committee shall consider the management succession plan as part of its review of the performance of the top executives.
3. When deliberating the management succession, the Board, in consultation with the Executive Directors and Nomination Committee, shall:
   1. Determine the critical positions, the employees' age profile and years of service and the expected vacancies;
   2. Identify the current and future competencies and the gaps in the current employees' competency levels;
   3. Identify from the pool of internal staff suitable candidates and develop individual development plans which include coaching and mentoring for these high potential employees;
   4. When the internal pool of candidates is insufficient, the Board shall activate plans to track and/or hire from the industry;
   5. Determine the leadership transition period and ensure that the resignation notice period of critical positions provides sufficient time for smooth transition;
   6. Consider interim measures of stepping in when replacement for critical positions, be it key senior management or technical has yet been identified; and
   7. Assess the effectiveness of the approaches used in corporate communication to manage expectations and avoid misunderstanding with stakeholders.

MANAGEMENT'S RESPONSIBILITY

1. In order to support and assist the Board in reviewing and assessing the effectiveness of implementing succession planning, the Executive Directors shall:
   1. Ensure that succession planning is integrated with human resource planning and business planning;
   2. Align appraisal, training, learning and development, staffing, recruitment, remuneration, diversity and employment equality with the Group's corporate/management succession plan;
   3. Inculcate awareness about the importance of effective succession planning with the senior management;
   4. Implement an appraisal process to facilitate feedback from multiple perspectives and sources for a fairer and transparent evaluation and assessment of candidates and employees;
   5. Develop sufficient pools of talent for key areas and positions to aid selection; and
   6. Report the development and programme of management succession planning to the Nomination Committee and propose adjustments, policies and actions where needed.