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THONG GUAN INDUSTRIES BERHAD

11

STATEMENT ON CORPORATE GOVERNANCE

The Nominating Committee’s mandate, expressed through its terms of reference, is to bring to the Board recommendations on the appointment of new Directors. Additionally, under its terms of reference, the Nominating Committee reviews the Board’s structure, size, composition and systematically assesses the Board effectiveness,its Committees,and individual Director including Independent Non Executive Directors’contribution on an annual basis.The Nominating Committee is empowered to seek professional advice within or outside the Group as it deem necessary to discharge its responsibilities.

Appointment Process

The Nominating Committee meets annually with additional meetings convened whenever the need arises (1 meetings were held during the year in review and was attended by both the members).

The Committee met to deliberate on the retirement by rotation of Directors and their eligibility for re-election at the Company’s annual general meeting. The Nominating Committee is of the view that the current Board composition imparts the required mix of skills, competencies and experience for the Board to discharge its duties effectively.

Directors’ Continual Professional Development

The Board, through the Nominating Committee, ensures that recruits to the Board are individuals of calibre, with the necessary experience and knowledge to meet the expectations of the Board as a Director of the Company. Although there is no formal training or orientation programme for Directors, they are brought to the major locations of the Group’s manufacturing plants to acquire an understanding of the Group’s operations.

The Board took the view that familiarisation visits to the various operational sites would equip them with a thorough understanding of the Group’s operations.This is geared towards ensuring that new Directors are able to appreciate the Group’s operating environment and business dynamics and therefore able to contribute effectively in the Board’s deliberation. Nonetheless, the Directors will continue to undergo other relevant training programs to further enhance their skills and knowledge, where relevant.

The Company Secretary circulates relevant guidelines to update the Directors on statutory and regulatory requirements changes from time to time.

Re-election of Directors

One-third of the Board, including the Managing Director, is subject to retirement by rotation at each Annual General Meeting (“AGM”). In any case, each Director shall retire from office at least once in every three (3) years in accordance with the Company’s Articles of Association.Those retiring Directors shall be eligible for re-election. Newly appointed Directors shall hold office until the next AGM and shall be eligible for re-election.

Under Section 129 (6) of the Companies Act 1965, Directors over seventy (70) years of age are required to submit themselves for re-appointment annually. Such provisions give an opportunity to shareholders to renew or repel their mandate. Each Director is voted separately during election. All relevant information such as personal profile, meeting attendance and the shareholdings in the Group of each Director standing for election are furnished in the Annual Report accompanying the Notice of AGM to assist shareholders in their decision.

B. DIRECTOR’S REMUNERATION

Shareholders at the Annual General Meeting approved the annual fees payable to Directors.

A Remuneration Committee established by the Board on 20 November 2002,carries out annual reviews,develops and recommends remuneration structure for Executive Directors. It comprises the following members:

Directors

Attendance

Lee Eng Sheng Ang Poon Chuan Tengku Makram Bin Tengku Ariff

Chairman, Independent Non Executive Director Member, Managing Director Member, Independent Non Executive Director

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The adoption of remuneration packages for Directors, however, is a matter for the Board as a whole, with individual Directors abstaining from decision-making in respect of his remuneration package.

The aggregate remuneration of Directors for the financial year ended 31 December 2007 is as follows:

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