CORPORATE GOVERNANCE

Berger Paints Nigeria Plc. (“BPN or the Company”) being a frontline Paints Manufacturing institution is managed based on high level of professional ethics, transparency, and international best governance practices.

Corporate Governance Framework: The Corporate Governance Framework is an internal code that defines the relationship between the Board of Directors, Management and other Stakeholders of the Company. It seeks to ensure accountability of the Board of Directors and Management of the Company to other Stakeholders who do not have oversight obligations or management powers and take these sets of individuals aforementioned as their due representatives.

Objectives of the Corporate Governance Framework

• To define the powers of the Board of Directors and Management of the Company, mode of execution of the powers and limits of the powers subject to the Articles of the Company, the Financial Reporting Council of Nigeria (FRCN) Code of Corporate Governance, and the Companies and Allied Matters Act.

• To delineate the powers of the Executive management of the Company and the limits thereof as may be approved by the Board of Directors or the Committees of the Board of Directors as may be necessary.

• To ensure accountability of the Board of Directors and Management of the Company in policies, decisions and actions to the Stakeholders of the Company through the introduction of checks and balances that ensure the establishment of appropriate controls.

• Through transparency and accountability, maintain shareholder confidence and enhance shareholder value.

• To institutionalize international best practice in the Company both at Board and Executive Management levels.

• To enhance the brand of the Company and promote it externally

The Company is governed by: (1) the Board of Directors; (2) the Committees of the Board; and (3) the Management Committee (MANCO) comprising Senior Management Staff of the Company. Each governing body is governed by a charter, which outlines the authority, responsibilities, composition and operations of the respective members.

THE BOARD OF DIRECTORS

Membership of the Board of Directors

Subject to the Memorandum and Articles of the Company the Board of Directors shall comprise of a Chairman who shall be a Non-Executive Director appointed from the body of Directors and who shall be the Chairman of the Board of Directors of the Company, Non – Executive Directors, Non-Executive Independent Directors and the Executive Directors.

• The Managing Director and other Executive Directors shall be appointees of the Board of Directors. The Managing Director shall be responsible for the day to day management of the Company assisted by Executive Directors (as applicable).

• In all cases, due consideration must be given to the provisions of the FRCN Code of Corporate Governance in the appointment of directors.

THE BOARD CHARTER

The primary purpose of the Board is to build long term shareholders’ value and ensure oversight of the Management. The Board shall ensure adequate systems; policies and procedures are put in place to safeguard the assets and investment of the company.

Responsibilities of the Board: The principal responsibilities of the Board shall be to consider, approve and oversee the implementation of strategies and objectives for the Company. This includes the following:

• Strategy and planning
• Finance and Investment management
• Executive and Human capital management
• Risk management
• Internal control
• Board management and remuneration
• Corporate governance
• Other duties as permitted under the CAMA and BPN’s Memorandum and Articles of Association.

Responsibilities of individual directors: Below are some of the responsibilities of each director;

• To comply with their legal, statutory and equitable duties and obligations when discharging their responsibilities as directors. Broadly, these include:
• Acting in good faith and in the best interest of the company;
• Acting with care and diligence and for proper purposes;
• Avoiding conflict of interest; and
• Refraining from making improper use of information gained through the position of director and from taking improper advantage of the position of director.
• Other duties as permitted under the CAMA and BPN’s Memorandum and Articles of Association.

Delegation to Management

The Board delegates to the Managing Director (MD), the authority to manage the day to day business affairs of the Company subject to such specific delegations and limits that the Board makes from time to time, The MD has authority to sub-delegate such authority and power to such members of the executive management team as he/she shall determine from time to time.

Re-election of Directors

The process for re-election of a director shall be in accordance with Section 285 of the Companies and Allied Matters Act, 2020 (CAMA), which provides that all the directors shall at the first Annual General Meeting retire from office and at subsequent AGMs, one third of them, or if their number is not three or a multiple of three, the number nearest to one-third shall retire.

Directors up for retirement by rotation shall be those who have been longest in office since the date of their last election. As between persons who became directors on the same day, those to retire shall unless they otherwise agreed, be determined by a lot.

Board Performance Appraisal

A Board appraisal is usually undertaken annually, covering the Board and its Committee’s structure, composition, responsibilities, processes and relationships in the Board performance. This assessment shall be made in relation to individual directors’ performance and the Board’s performance as a whole.

This review would be carried out by an external independent consultant, supervised by the Company Secretary and the report would be presented at the Annual General Meeting (AGM).

Removal of directors

The process for the removal of a Director is in accordance with the provisions of Section 288 of CAMA.

THE COMPANY SECRETARY/ LEGAL ADVISER

All Directors have direct access to the Company Secretary/Legal Adviser, who shall be accountable to the Board, through the Chairman, on all Corporate Governance and secretarial matters. The Company Secretary provides directors with guidance on their responsibilities, ethics and good governance. He is responsible to the Board for ensuring that the Board procedures are followed and that applicable rules and regulations are complied with.

He shall play an active role in the directors training and strategic administrative planning.

The appointment and removal of the Company Secretary/Legal Adviser shall be governed by the provisions of the CAMA.

Board’s General Powers

The Board makes final approval of all matters delegated to Board Committees and the Managing Director. These powers shall be subject to CAMA and the Memorandum and Articles of Association of the Company.

COMMITTEES OF THE BOARD

In executing its oversight functions and in compliance with the regulations guiding the Company, the Board of Directors shall establish Committees of the Board as may be required but which at the minimum shall be:

• Board Establishment, Remuneration & Governance Committee;
• Board Finance and General-Purpose Committee
• Board Audit and Risk Management Committee.

Each of the Committees is governed by a Charter approved by the Board of Directors that delineate the structure, membership, obligations, expected skills of the Members, removal/resignation, proceedings, approval limits and scope of duties.

The Board Establishment, Remuneration & Governance Committee

The purpose of the Committee is to advise the Board on its oversight responsibilities in relation to recruitment, compensation and benefits, promotions and disciplinary issues affecting senior officers of the company on Manager grade and above.

The Committee also considers the nomination of new directors to the Board, succession planning for key positions on the Board, training of directors, recommending director’s remuneration and overseeing board performance and evaluation. The purpose of the Committee also includes the development and maintenance of appropriate corporate governance framework for the Company and ensuring compliance with extant Codes of corporate governance.

The functions of the Committee are divided categorized under 4 broad headings, namely:

• Establishment
• Remuneration
• Governance
• Evaluation and appraisal

The tenure and membership of the Committee shall be determined by the board.

In determining the membership of the Committee, the Board shall take care to ensure that the Committee shall comprise of members representing balanced views, knowledge of credit, investment, finance and general management or entrepreneurial experience.

The Company Secretary/ Legal Adviser shall serve as secretary to the committee

The Board shall review and re-assess the Charter at least once every four years as it may be necessary and make recommendations to the Board on required changes.

The Board Finance and General Purpose Committee

The purpose of the Committee is to consider the company’s overall financial performance, capital and operating expenditures, investments proposals and to consider placement of funds proposals as referred to it by the Management Committee and make recommendations to the Board on same.

In performing its oversight role, the Committee shall work with the Management to review the quality and process employed

The following are some of the responsibilities of the committee;

• Consideration and review of the Company’s financial performance
• Review debts owed to the company and recovery steps taken by management
• Consider and review the annual budget
• Ensure the implementation of an effective tax policy
• Handle other duties and responsibilities as delegated to it by the Board.

The membership and tenure of the Committee shall be determined by the Board.

In determining the membership of the Committee, the Board shall take care to ensure that the Committee shall comprise of members representing balanced views, knowledge of credit, investment, finance and general management or entrepreneurial experience.

The Board shall review and re-assess the Charter at least once every four years as it may be necessary and make recommendations to the Board on required changes.

Board Audit and Risk Management Committee.

The purpose of the Committee is to consider the Company’s long term strategy, risks and opportunities relating to the strategy, assist in the identification, evaluation and mitigation of strategic, operational, and external environment risks and monitor the strategy and risk management framework and associated practices of the Company.

In performing its oversight role, the Committee shall work with the Management to review the quality and processes employed. The following are some of the responsibilities of the committee;

• Reviewing the audited and unaudited accounts of the Company
• Considering reports from the Internal Auditor and making recommendations to the Board on the internal control framework.
• Consider the viability of all major strategic initiatives and investments.
• Monitor changes and trends in the business environment.
• Review the adequacy and effectiveness of risk management and controls.
• Evaluate and Assess the Company’s risk management framework, including Management’s process for the identification, prevention and reporting of significant risks
• Develop the Company’s Corporate Social Responsibility policy.
• Perform such other duties and responsibilities delegated to the Committee by the Board.

The membership and tenure of the Committee shall be determined by the Board. In determining the membership of the Committee, the Board ensures that the Committee shall comprise of members representing balanced views, knowledge of Audit, Risk Management and Strategic Planning experience.

At least one (1) member should possess deep knowledge of Risk Management and Strategic Planning matters. The Board shall determine the Chairman of the Committee. Where the Chairman is absent from a meeting, members of the committee shall choose any one of themselves to act as Chairman for that particular meeting.

The Company Secretary shall serve as the secretary to the committee.

The Board shall review and re-assess the Charter at least once every four years as it may be necessary and make recommendations to the Board on required changes.

The Company Secretary serve as the secretary to all Board Committees.

MANAGEMENT COMMITTEE (MANCO)

The primary purpose of the Committee shall be to deliberate and take policy decisions on the effective and efficient day to day management of BPN. Some of the Committee’s primary responsibilities shall be to;

• Monitor the activities of the Company to ensure they are in line with the Company’s vision, mission, objects and values.
• Ensure the implementation of BPN’s strategy and business plan approved by the Board.
• Ensure the efficient deployment and management of BPN’s resources.
• Provide day to day management for the business

Responsibilities of the Committee: In addition to its primary responsibilities listed above, the Committee shall be responsible for the following:

• Developing and reviewing on an on-going basis, BPN’s business focus and strategy subject to the approval of the Board.
• Tracking and managing strategy and business performance against approved plans and budget of the Company.
• Recommending through the Appraisals and Promotion Committee, to the Establishment, Remuneration and Governance Committee of the Board, the appointment, promotion and termination of Senior Management staff of Manager grade and above.
• Making important decisions in all areas of management where delegation of authority is granted to the Management Committee.
• Performing other duties and responsibilities as permitted under CAMA and BPN’s Memorandum and Articles of Association.

Composition of the Committee

The Committee shall be consisted of the Managing Director/ Chief Executive Officer, (Chairman), and all Heads of Departments

The Company Secretariat serves as the secretary to the committee.

The Committee has the power to take independent advice from, or to retain the services of such independent or external professional advice at the expense of BPN, as it deems necessary to carry out its duties.

Reporting and accountability

Highlights of the MANCO meetings and actions taken by the MANCO usually forms part of the MD/CEO’s update at the next meeting of the Board.

STATUTORY AUDIT COMMITTEE

Berger Paints Nigeria Plc’s (‘BPN’ or ‘Company’) Statutory Audit Committee is a Committee consisting of two Directors and three representatives of the shareholders of BPN in line with Section 404 (2) of CAMA 2020.

The Committee has the key objective of ensuring the integrity and efficiency of the audit process. It has oversight responsibility for the Company’s financial statements, ensuring that it is prepared in accordance with the legal and accounting requirements and agreed ethical policies.

Authority of the Committee

The Committee has authority to investigate any matter within its responsibilities and to obtain such information as it may require from any director, officer or employee of the Company.

Committee reporting

The Audit Committee shall strive to ensure its independence from the Board and Management. The Committee shall only report to the shareholders in line with the provisions of Section 404 (4) of CAMA, 2020.

Responsibilities of the Committee- Below are some of the responsibilities of the Statutory Audit Committee

• Ascertain whether the accounting and reporting policies of the Company are in accordance with legal requirements and agreed ethical policies.
• Review the scope and planning of audit by the external auditors including identified risk areas, relevance of audit plan to audit approach, and reporting time table.
• Review the effectiveness of the Company’s system of accounting and internal control.
• All such other matters as are reserved to the Audit Committee by CAMA 2020 and the provisions of the SEC Code of Corporate Governance.

The Company Secretary/Legal Adviser or any other person so delegated, shall serve as the secretary to the Committee.

Chairman’s eligibility and terms of appointment

The Chairman of the Committee is usually appointed from among the shareholders’ representatives. Where the Chairman of the Committee is absent from a meeting, the members of the Committee present at the meeting shall have authority to choose one of the shareholders’ representatives to be the Chairman for that particular meeting.

Tenure

Each member of the Committee serves for a year but may be re-elected.

POLICIES OF BPN (‘The Company’’)

The following policies are instrumental in conducting the affairs of the Company;

• Complaints and Management Policy
• Whistle Blowing Policy
• Conflict of Interest Policy
• Directors Remuneration Policy
• External Auditor’s Independence Policy

COMPLAINTS AND MANAGEMENT POLICY

The Complaint Management Policy (“the Policy”) was prepared pursuant to the requirements of the Securities & Exchange Commission’s Rules Relating to the Complaints Management Framework of the Nigerian Capital Market (“SEC Rules”) issued on February 16th 2015 and the Nigerian Stock Exchange Directive (NSE/LARD/LRD/CIR6/15/04/22) to all Listed Companies (“the NSE Directive”) issued on 22nd April, 2015. Furthermore, it was prepared in recognition of the importance of effective engagement in promoting shareholder/investor confidence in the company.

Scope

This Policy sets out the broad framework by which Berger Paints Plc (“BPN” or “the Company”) and its registrar provides assistance regarding shareholders’ issues and concerns. It also provides the opportunity for BPN’s shareholders to provide feedback to the Company on matters that affect shareholders. Complaints that are subjudice or do not fall within the purview of SEC or NSE are outside the scope of this Policy.

Procedure for Shareholder Complaints/Enquiries

Shareholders who wish to make a complaint or an enquiry should in the first instance contact the registrar, who manages all the registered information relating to all shareholdings, including shareholders’ contact details and dividend payment instructions. Upon receipt of a complaint or an enquiry, the Registrar shall immediately provide the relevant details of such complaint or enquiry to BPN for monitoring, record keeping and reporting purposes.

In resolving complaints or enquiries, the Registrar shall be guided by the timelines stipulated in this Policy. If the registrar is unable to satisfactorily address shareholders’ enquiries and resolve their complaints, then shareholders should contact the Office of the Company Secretary.

In order to effectively assist with the resolution of complaints, all material facts and supporting documents should be included. In addition, the complaint must be signed and dated and include the name, phone number, physical and email address of the complainant.

Complaints/Enquiries Received Directly by BPN

Where a complaint or an enquiry is sent to BPN directly, the company shall use its best endeavors to ensure that:

• Relevant details of the complaint or enquiry are immediately recorded.
• A response is provided by the company or the registrar within the time frame set out in this policy.
• Complaints or enquiries received by e-mail are acknowledged within two (2) working days of receipt.
• Complaints or enquiries received by post are responded to within five (5) working days of receipt.
• Complaints or enquiries are resolved within ten (10) working days of receipt.
• The Nigerian Stock Exchange is notified of the resolution of a complaint or enquiry.

Where a complaint/enquiry cannot be resolved within the stipulated time frame set out above, the shareholder shall be notified that the matter is being investigated. Delays may be experienced in some situations, including where documents need to be retrieved from storage or third parties.

Electronic Complaints Register and Quarterly Reporting Obligations

BPN maintains an electronic complaints register which includes the:

• Date that the enquiry or complaint was received.
• Complainant’s information (including name, physical address, telephone number, e-mail address).
• Nature and details of the enquiry or complaint.
• Action taken/status.
• Date of the resolution of the complaint.

Information on the details and status of complaints are provided to the Nigerian Stock Exchange on a quarterly basis.

Fees and Charges

Wherever possible, and subject to statutory requirements, BPN will not charge shareholders for making enquiries or providing a response in the course of resolving a shareholder issue. Shareholders should note that in some circumstances the registrar may charge shareholders a fee (for example, to resend previous dividend statements further to a request by the shareholder)

WHISTLE BLOWING POLICY

Berger Paints Nigeria Plc. recognizes that the decision to report a concern can be a difficult one to make mostly out of fear of victimization.  However, the company is unequivocally committed and undertakes to protect all whistle-blowers.

Berger Paints Nigeria Plc. will not tolerate any harassment or victimization (including informal pressures) and will take appropriate steps to protect any employee and/or stakeholder who alerts the company of any danger, wrong, fraud or threat of fraud.

Confidentiality

All information will be treated in strict confidence while the identity of the whistle-blower is protected.  This policy encourages the giver of an information to include their name, address and phone number when passing on any information to the company.  However, as a matter of honor,

• Staff/stakeholder must disclose the information in good faith
• Staff/stakeholder must believe it to be substantially true
• Staff/stakeholder must not act maliciously or make false allegations
• Staff/stakeholder must not seek any personal gain

How to raise Concern(s)

Members of staff are expected to first raise concerns with their immediate supervisor/manager or their superior.  For example, if they believe that management is involved, they should approach the Board or a Board member.

Protection for Whistle Blowers

BPN has an obligation to adequately protect the Whistle Blower. Therefore, reprisal against any employee who in good faith reports a concern about illegal or unethical conduct will not be tolerated.

The Company is also committed to maintaining confidentiality to the fullest extent possible and provides assurance that all reports will be subject to appropriate investigation and conclusion though an efficient process.

Therefore, whistle Blowers are encouraged to disclose their names when filing reports to enhance credibility. However, anonymous disclosures may be considered on the following discretionary basis:

• The seriousness of the issues.
• The significance and credibility of the concerns.
• The possibility of confirming the allegation

Whistle Blowers either Internal or External may be rewarded depending on the gravity of the case. Compensation may also be provided to Whistle Blowers who may have suffered loss in the course of the process. This is however at the discretion of management.

CONFLICT OF INTEREST POLICY

The Conflict of Interest and Related Party Transaction Policy was developed to provide a guideline for managing potential conflict of interest situation on the Board.

The aim of the policy is to assist the Board in understanding, reviewing, approving and ratifying related person transactions, to ensure that all related party transactions are conducted at arm’s length and do not present a conflict of interest for the related party, considering the size of the transaction, the overall financial position of the third party, and the direct or indirect nature of the related party’s interest in the transaction.

The company has developed a procedure to deal with conflict of interest:

• Declaration of interest- at the beginning of a financial year or on appointment as a director of the company, each director discloses actual or perceived conflicts of interests, which the company secretary takes note and keeps record of. The record is updated regularly and referenced when business transactions are considered. If there’s a change or update in a director’s interest, they are expected to promptly notify the Company Secretary.

• Reporting conflict of interest- Directors must openly disclose all potential, real or perceived conflict of interest as soon as the issue arises. The disclosure should be made to the Board or any of the Board Committees that may be involved in the approval process. Where the said disclosure is in relation to a particular item on the agenda, the Company Secretary ensures documentation of said disclosures by recording same in the minutes of a meeting, while also updating the conflict of interest register with periodic disclosures.

• Review and approval- The Board shall review the material facts of all related party transactions that require its approval and either approve, disapprove or ratify such transactions. Any director who has an interest in the related transaction being discussed excuses himself or herself from any reporting, discussions and vote on the related party transaction and, if necessary, from the Board meeting, or applicable part thereof. The Board will not approve or ratify a related-party transaction unless convinced that the transaction is in the best interest of the Company and its shareholders.

• Family Directorships- No two members of the same extended family shall occupy the position of Chairman and that of Managing Director or Executive Director of the Company at the same time. To safeguard the independence of the Board, not more than two members of the same family shall sit on the Board at the same time.

• Independent Director Conflict of Interests- an Independent Director shall be free of any relationship with the Company or its management that may lead to potential conflicts of interest and thus impair, or appear to impair, the Director’s ability to make independent judgments. Specifically, independent directors among other things, are not allowed to provide material, legal/consulting services to the company or its affiliates, borrow funds from the company or its affiliates, have close family ties with any of the Company’s advisers, Directors or Senior Employees, amongst others.

• Insider Trading- No Director or a close family of the Company who is aware of material non-public information relating to BPN may directly or through family members or other person, buy or sell securities of BPN or engage in any other action to take advantage of that information, pass that information on to others outside the Company, including close family and friends except authorized persons within the Company. Directors and their related companies may not undertake transactions involving the sale or purchases of BPN’s securities during closed periods (prohibited trading periods). Directors shall be notified of closed periods via written communication by the Company secretariat.

• Prohibitions on trading activities generally occur quarterly, interim, annual disclosures of financial statements and whenever the officials of the company may deem appropriate. Announcement of quarterly financial results have a potential to have a material effect on the price of the company’s securities in the stock market, therefore, to avoid the appearance of trading on the basis of material non-public information, Directors of BPN with potentially material nonpublic information shall not trade in BPN’s securities during the period beginning two weeks prior to the anticipated date of public disclosure or filing of the financial result of each quarter, whichever is earlier, and ending two business days following the release of BPN’s earnings for the period.

• Breach of Policy- If a Director fails to make the necessary disclosures about conflicts of interest, the Director may be in breach of the Company’s code of conduct and be liable to disciplinary action.

• Refusal to take any action directed by the Company to resolve a conflict of interest may also be in breach of the Company’s conflicts of interest policy.

• Disclosure – All conflicts of interest transactions shall be disclosed in the Company’s Annual Report, regulatory returns and any other required media in accordance with and in the manner required by the relevant laws, rules and regulations necessitating the disclosure.

• The disclosures shall contain name of the director, details of the transaction and the Director’s interest in the transaction with the Company, and the value of the amount involved in the transaction and of the related person’s interest in the transaction.

• For related party transactions, disclosures shall be made separately for the Company, its affiliates, associates, joint ventures in which the entity is a partner and key management personnel of the Company.

• Review of policy- the policy is subject to review and update every two (2) years or as may be deemed necessary by the Board.

DIRECTORS’ REMUNERATION POLICY

Policy is designed to establish a framework for remuneration that is consistent with the Company’s scale and scope of operations, meets the recruitment needs of the business and is aligned with leading corporate governance practices particularly the Financial Reporting Council of Nigeria (FRCN)’s Code of Corporate Governance.

Remuneration structure;

• The Establishment, Remuneration, Governance and Audit Committee (ERGAC) shall recommend the remuneration packages of Executive Directors in all its forms. Executive Directors shall play no part in decisions on their own remuneration.
• The compensation of the Managing Director (MD) and the Executive Directors’ may include incentive schemes to encourage continued improvement in performance against the criteria set and agreed by the Board.
• The Board on recommendation of the ERGAC, shall set operational targets including a number of Key Performance Indicators (KPI’s) covering both financial and non-financial measures for the executives at the beginning of each year.
• The performances of the Executives Directors will be measured against these criteria at the end of the financial year and their evaluation result used to determine the variable element of their remuneration.
• The remuneration of the MD and other Executive Directors shall consist of both fixed and variable remuneration components.
• Executive Directors’ will not be paid sitting allowances for attendance at Board and Board Committees meetings.

Non-Executive Directors Remuneration

• Non-executive Director’s fees will be set at a level that is in the minimum, at par with market developments and reflects the qualifications and contribution required in view of the extent of the Director’s responsibilities and liabilities.
• The remuneration of the Non-Executive Directors shall consist of a fixed fee, sitting allowances and reimbursable expenses.
• Non-Executive Directors will be paid a Director’s fee. Sitting allowances will be paid for each Board and Board committee meeting attended by the Non-Executive Director.
• Non-Executive Directors will be reimbursed expenses necessarily and reasonably incurred in the course of their role as Board members, where not provided directly by the Company. Reimbursable expenses include travel expenses, transport expenses, hotel expenses, meals, communication costs e.g. telephone, internet subscription, etc.

Directors’ Exit Benefits

The Board through the Board Establishment and Governance Committee determines from time to time, the payment to retiring directors, of a discretionary ‘Ex Gratia’ sum calculated based on the number of years served on the Board and payable to retiring directors for every year served on the Board. This payment is subject to the approval of the Shareholders at the general meeting. In calculating the Ex Gratia sum payable, cognizance will be taken of additional Months served and pro-rated.

EXTERNAL AUDITORS’ INDEPENDENCE POLICY

Berger Paints Nigeria Plc. (“BPN or the Company”) is fully committed to securing the integrity of the audit process and the total independence of its external auditors. This External Auditors’ Independence Policy (“Policy”) thus seeks to safeguard the independence of the External Auditors from influence in the performance of their responsibilities to the Company.

The Policy is aimed at:

• Securing the integrity of the Audit Process and the total independence of its External Auditors
• Safeguarding the independence of the External Auditors from influence in the performance of their responsibilities to the Company.
• Specifying permitted/non-permitted conduct by the Auditors which might impact the Audit process.

Safeguarding Auditors’ Independence

The following measures have been put in place to ensure that the independence of auditors is safely guarded:

Prohibited Services– External Auditors are not allowed to provide services that shall amount to conflict of interest. Services such as book keeping or other services related to the accounting records or financial statements of the company, appraisal or valuation services, fairness opinion or contribution-in-kind reports, actuarial services, internal audit outsourcing services, management or human resource functions, broker, dealer or investment banking services, and legal or expert services unrelated to the Audit.

In addition to these specific prohibited services, the Statutory Audit Committee shall consider whether any service provided by the Audit firm may impair the firm’s independence in fact or appearance.

All audit and non-audit work (including fees and conditions) to be carried out by the external auditors shall be approved by the full Board of BPN on the recommendation of the Board Audit Committee.

Prohibited relationships

• No retired partner of an Audit firm currently auditing the Company or that had audited the Company shall be appointed a Director (Executive or Non-Executive) of the Company or any of its subsidiaries, until 3 years after the disengagement of the Firm from such audit and/or the disengagement of the Partner from the Firm.

• No Senior Management Staff of an Audit firm appointed by the Company shall be employed by the Company until after a period of 2 years has elapsed since the person ceased to be a staff of the audit firm. A junior staff of the said Audit firm may be employed by the Company provided such a junior staff had no responsibility in the Company’s audit engagement.

• The Audit firm shall not employ any Senior Management Staff of the Company or involve a former employee of the Company in the audit of the Company until after until after a period of 2 years has elapsed since the Firm ceased to audit the Company.

• Neither Party may employ related parties such as shareholders, directors, or close family members of either Party who are able to exert significant influence on the opinion of the auditors on the financial statement nor the audit process until after a period of 2 years has elapsed since the Firm ceased to audit the Company.

• Any offer of employment to a former Partner/Employee of the audit firm shall be considered by the Statutory Audit Committee and recommendations made in this regard to the full Board of BPN.

• Contingent Fees – The Audit Committee shall not approve engagements that remunerate the External Auditors on a contingent fee or a commission basis. Such remuneration is considered to impair the Auditor’s independence.

• Direct or material indirect business relationships – The Audit firm shall not have any direct or material indirect business relationships with the company, its officers, directors or significant shareholders, such as a financial stake or interest in a business transaction involving the Company outside of its audit engagement.

• Certain Financial Relationships – The following financial relationships between the Company and the External Auditors are prohibited -creditor/ debtor relationships, broker-dealer, futures commission merchant accounts, insurance, etc.

Disclosures

At least annually, and prior to the issuance of the Audit Report, the Auditors shall disclose in writing to the Statutory Audit Committee all relationships between the Auditors and other parties that may affect their independence.

The Auditors shall confirm and discuss their independence in writing with the Statutory Audit Committee including but not limited to audit planning, audit execution, audit quality and remuneration and that there was no unreasonable restriction by the Board and Management of BPN.

Tenure & Rotation

The Lead Audit Partners may be rotated periodically and shall be replaced after five (5) years, the external Auditor shall be replaced after ten (10) years and can only be re-appointed after ten (10) years.

Implementation of Policy: The Internal Auditor monitors the implementation of this policy and includes a compliance status in its quarterly report to the Statutory Audit Committee.

Review of Policy: The Statutory Audit Committee reviews this policy at least once every four years or as may be required to ensure that it remains relevant and appropriate. All changes and approvals are signed by the Chairman of the Statutory Audit Committee and countersigned by the Chairman of the Board of Directors following deliberations and approval by the full Board.