Conflict of Interest Policy

The Board of Directors of HSG Berhad recognizes the enduring importance of acting ethically at all times and in ensuring that our business practices meet the highest standards of integrity in line with the values of our Company. Our commitment to integrity is necessary for protecting our stakeholders, enhancing the credibility of our business practices and safeguarding our reputation.

The Conflict of Interest (COI) Policy shall apply to all the directors and employees of HSG Berhad and its subsidiaries (the Group).

2.1 The term COI describes any circumstances that could cast doubt on the director’s or employee’s ability to act with total objectivity regarding the Group’s interest. No director or employee shall knowingly place himself or his family members in a position that would conflict with his interests or duties of the Group. Family members include spouse, parent, child (including adopted child and stepchild), brother, sister and the spouse of the Director’s child, brother or sister as defined under the Companies Act 2016 and the Main Market Listing Requirements of Bursa Securities.

2.2 Generally, COI may be described under the following broad categories:

1. Equity ownership in entities having a business relationship with the Group
   This applies to situations where a director or an employee holds shares in privately owned entities having a business relationship with the Group, either directly or indirectly (e.g. through a family member). This does not apply to shares held in publicly quoted companies which have a business relationship with the Group, unless such director or employee is a substantial shareholder and his interest is likely to impair the objectivity of such director or employee concerned.
2. Directorship, partnership or other forms of beneficial interest in entities having a business relationship with the Group
   This applies to situations where a director or an employee holds a position or has an interest in entities having a business relationship with the Group. An example would be where an employee of the Group is a director of a company supplying materials to the Group.
3. Other employment, business appointments or undertakings
   This applies to situations where employees hold other part time employment, or have other business appointments or undertakings. An employee is expected to devote his/her time, attention and commitment during work hours to his job duties. A COI can also arise where participation in any business activity outside working hours demands excessive time and attention from the employee, thereby depriving the Company of the employee’s best effort on the job or resulting in a negative impact on performance.
4. Opportunities related to company’s business for personal gain
   This applies to situations where a director or an employee taking for themselves personal opportunities related to the Group’s business, using the Group’s property, information or position for personal gain.
5. Personal use of Group assets
   This applies to situations where a director or an employee using the Group’s assets, resources or information for personal use without prior approval by the Board.
6. Acceptance of entertainment, gifts, meals and benefits from any person or parties/agents or organization connected to the Group
   This applies to situations where a director or an employee accepting any entertainment, benefits or gifts of a nominal value more than RM300 from any person or parties/agents or organisation who have ongoing or potential business dealings or are connected to the Group including but not limited to cash, vouchers or any items of value having any cost or financial value, including food and beverages (i.e. pens, hampers, concert tickets, supplier or sub-contractor sponsored meals and entertainment), particularly if it is given with the intent to influence such director or employee to secure an undue or improper result, award, decision, benefits or advantage of any kind in relation to the Group.

All directors and employees are responsible for identifying and managing conflicts of interest on an ongoing basis and are required to:

1. Comply with this Policy and other applicable policies and guidelines relating to the identification, documentation, escalation and management of COI;
2. Act with objectivity, integrity and independence, and exercise sound judgement and discretion;
3. Avoid, wherever possible, situations giving rise to COI as described in this Policy; and
4. Immediately declare the COI in accordance with this Policy, remove themselves from the decision-making process and not seek to influence such decisions any further.

1. The employees shall declare any COI or potential COI by filling up the COI Declaration Form. The COI or potential COI must be escalated to the HR Department for further action.
2. As for the director, he is required to always declare and notify the nature and extent of any COI to the Finance Department in writing or by electronic mail as soon as practicable, whether direct or indirect or whether actual or potential, with the Group. Thereafter, the Finance department shall table the COI matter to the Board at its meeting.To further strengthens the COI disclosure, all directors are required to make an annual declaration and every quarterly at Board meetings on any COI or potential COI.
3. In addition to declaring the COI, appropriate steps must be taken to manage the conflict and to mitigate the impact of the conflict on the decision-making process. Ideally, the conflict should be avoided altogether, e.g. by relinquishing the interest that gives rise to the conflict. However, there are circumstances where it may not be practical to totally avoid the conflict, in which case, appropriate actions must be taken, depending on the nature and severity of the conflict.
4. Where the conflict is not likely to arise frequently, and the impact of the conflict is minimal, the participation of the person in the decision-making process should be restricted. Restriction should include, but is not limited to the following:
   1. Not participating in any critical criteria setting or decision-making role in the process.
   2. Refraining from discussions about the matter.
   3. Limiting access to information and denying access to sensitive documents or confidential information in the process.
   4. Abstaining from voting on the decision.
5. Where the conflict is ongoing and could have serious implications, the person with the conflict should be removed from the process, which includes the following:
   1. Abstaining from any involvement whatsoever in the matter.
   2. Rearranging duties and responsibilities to a non-conflicting function but not to a person who is supervised by the person with the conflict.
   3. Transferring the person with the conflict to another project or another area of the Company.

1. The HR department is responsible for monitoring conflicts of interest involving employees. Upon receiving the COI Declaration Form, the HR department shall review the actions taken to address the conflict and decide, on a case-by-case basis whether such actions are appropriate and/or sufficient.
2. If the HR department is of the view that actions taken by the person with the conflict or the Head of Department (HOD) is not sufficient to manage or address the conflict, the matter shall be escalated to the Group Managing Director for a decision to be made.
3. For conflicts of interest involving staff, the HR department shall maintain records of all COI declarations as well as other related documents such as documentation reflecting the mitigating actions taken.
4. The Audit Committee is responsible for monitoring COI involving directors. For COI involving directors, the Finance department shall maintain records of the declarations and any related documents.

Failure to disclose a COI, provide complete and accurate information on the conflict or appropriately manage the conflict is a breach of this Policy and could result in disciplinary action being taken by the Group.

The COI Policy is subject to periodical review to ensure its relevance and compliance.