United Paints Group Co., Ltd. (UPG)

United Paints Group Co., Ltd.

Shareholders

The shareholders of United Paints Group Co., Ltd. are primarily traditional paint merchant wholesalers from across Myanmar. This group includes local paint store owners, entrepreneurs, and intellectuals.

Board Structure

United Paints Group Co., Ltd. (UPG), the holding company of the UPG Group of Companies, is governed by a Board of Directors comprising 15 members. The Board includes the following positions:

1 Chairman
1 Vice-Chairman
1 Board Secretary
12 Directors

Board Composition

The Board of Directors is structured to ensure diverse and balanced representation of skills, experiences, and perspectives. It comprises individuals from diverse ethnic backgrounds, including both male and female members, entrepreneurs, intellectuals, founding directors, and successor directors. Currently, the Board includes 1 female director and 5 successor directors.

Board Member Appointment

In compliance with the Myanmar Companies Law, Company Directors Guide (Directorate of Investment and Company Administration – DICA), UPG’s Company Constitution, and UPG’s Board Charter, members of the Board of Directors are elected by the General Meeting of shareholders.

Nomination

A nomination or recommendation for a candidate for the Board of Directors at the General Meeting shall take into consideration of the following factors:

The candidate’s age
Educational qualifications
Profession and working experience
The minimum share ownership required as per the UPG Constitution if the candidate is a shareholder
Any convictions for crimes involving dishonesty, fraud, or breach of trust
Positions held in the past five years (including memberships on any supervisory bodies or management teams or associations)
Current positions held, including time-consuming roles in social or religious or political organizations
Any other information relevant to an assessment of the candidate’s suitability as a member of the Board of Directors
Profile of candidate

The nomination or recommendation for appointment or reappointment shall clearly state the reasons for the nomination or recommendation. Any nomination or recommendation by the Board of Directors must adhere to the criteria mentioned above.

Reappointment

At each Annual General Meeting (AGM), one-third of the existing Board members will resign. However, the shareholders may re-elect them as members of the Board of Directors. The Nomination Committee will facilitate the re-election and reappointment process.

Board Vacancies

In the event of a vacancy on the Board between General Meetings, the Board may appoint a member to fill the vacancy until the next General Meeting. The Nomination Committee will identify and recommend suitable candidates for appointment. This appointment should follow the same nomination process as mentioned above.

Qualifications and Selection Criteria for Directors

In compliance with the Myanmar Companies Law, Company Directors Guide (Directorate of Investment and Company Administration – DICA), UPG’s Company Constitution, and UPG’s Board Charter, director candidates must meet the following selection criteria:

Have the minimum share ownership required per the constitution if the Director is one of the shareholders.
Be at least 22 years of age.
Hold a bachelor degree or diploma or its equivalent.
Have sufficient expertise in business management or corporate governance or background in business academia or relevant experience in the paint industry to perform their role as a Board member.
Have critical and independent thinking concerning both Board matters and management.
Have a reputation of integrity and ethical conduct.
Have no history of convictions for crimes involving dishonesty, fraud or breach of trust.
Not have engaged in any sanctionable practices, such as corruption, fraud, collusion, etc., either personally or on behalf of a company or individual,
Additional criteria for candidates appointed through the succession process:

Demonstrate leadership potential and managerial experience within the company’s subsidiaries.
Understand and contribute to the strategic objectives of UPG or a subsidiary.

Additional criteria for candidates appointed as Independent Director or Non-Shareholding Director

Have relevant professional qualifications and proven track record of integrity in their respective fields.
Be free from activities that may cause conflict of interest with any businesses of the UPG Group of Companies
Bring diverse perspectives and expertise that complement the existing Board composition.

Note: The founding Director(s) of the company are not subject to education limitation.

Appointment of Independent Director and Non-Shareholding Director

If deemed necessary, the Board of Directors may appoint Independent Directors and/ or Non-shareholding Directors, having specific qualifications, integrity, and relevant expertise, thereby contributing effectively to the Board composition.

Limit on Number of Directorship Positions

A Director may serve on a maximum of 2 subsidiary Boards as an Executive Director within the UPG Group of Companies. At present, none of the Director exceed this limit.

Chairman

The Chairman is appointed by the Board of Directors and also holds a position of a Director. The Chairman oversees the activities of the Board and will discharge the duties and responsibilities specified in the UPG Board Charter, including the following:

Act as the spokesperson for the Board of Directors and represent the Board in communications with shareholders and external stakeholders.
Chair Board meetings, Annual General Meetings (AGMs), and Emergency General Meetings (EGMs).
Oversee the development, review, and updating of the UPG’s Company Constitution and UPG Board Charter, ensuring their proper implementation.
Oversee the development, review, and updating of the company’s corporate governance policies and procedures.
Ensure the Board adherence to the legal requirements and corporate governance practices.
Oversee the formulation and implementation of the company’s mission, policies and strategies.
Observe the requirements for new directors, identify and recommend potential candidates who could contribute effectively to the Board, and ensure that upon appointment, they participate in a Director Orientation Program and any additional education or training programs as needed.
Ensure that Board members receive all information necessary for them to perform their duties.
Facilitate the distribution of duties and responsibilities among the Board members effectively to prevent bottlenecks and excessive workloads.
Ensure that the Board members fulfil their duties and responsibilities, and address issues related to the performance of individual Board members.
Address internal dispute and conflicts of interest concerning individual Board members.
Collaborate with the Board Secretary and other Board members to set the agenda for Board meetings, and ensure that critical issues are discussed and resolved.
Liaison between the Board and management.
Act as figurehead of the company at official events, ceremonies, celebrations, and other corporate activities.
Fulfill duties as a Director.

Vice-Chairman

The Vice-Chairman is appointed by the Board of Directors and also holds a position of a Director. The Vice-Chairman assists and supports the Chairman and discharges his/ her specific duties. The Vice-Chairman will discharge the duties and responsibilities specified in the UPG Board Charter, including the following:

Act as the Chairman in the absence of the Chairman.
Chair Board meetings, Annual General Meetings (AGMs), and Emergency General Meetings (EGMs) when delegated by the Chairman.
Monitor and promote the Board adherence to legal requirements and corporate governance practices.
Collaborate with the Chairman and other Board members in formulation and implementation of the company’s mission, policies and strategies.
Identify and evaluate opportunities for new investments, oversee the exploration, acquisition, and sale of company assets (e.g., real estate).
Oversee the management of the company’s fixed assets, maintain documentation, and conduct commercial evaluations for leasing, renting, and hiring these assets, both internally and externally.
Manage the acquisition, sale and investment of fixed assets, and provide pricing recommendations for Board decisions.
Oversee risk management of the UPG Group of Companies.
Provide guidance and collaborate with Board committees and other teams established by the Board.
Provide guidance and collaborate with the Audit & Risk Committee.
Chair or lead specific Board committees as assigned by the Board.
Advocate for continual improvement in corporate governance practices.
Fulfill duties as a Director.

Board Secretary

The Board Secretary is appointed by the Board of Directors, plays a crucial role in implementing governance practices. The Board Secretary serves as a focal person among Board members and facilitates effective communication within the Board. The Board Secretary will discharge the duties and responsibilities specified in the UPG Board Charter, including the following:

Ensure that all Board meetings are properly scheduled, organized, and conducted in accordance with the UPG Board Chater.
Support the Chairman in setting the agenda for Board meetings.
Prepare and distribute meeting agendas, meeting materials, and meeting notices for Board meetings, Annual General Meetings (AGMs), and Emergency General Meetings (EGMs).
Record and distribute accurate and timely meeting minutes and resolutions of all Board meetings, AGMs, and EGMs.
Maintain and update the official documents and records of the Board, including meeting minutes, resolutions, and official correspondence.
Ensure that the company complies with regulatory filing obligations, maintaining all authorizations, licenses, and permits.
Act as a primary point of contact for communication between the Board and the shareholders, regulatory authorities, and other stakeholders.
Facilitate the Director Orientation Programs and Director Development Programs for new and existing Board members.
Assist the Chairman in development, review, and updating of the UPG’s Company Constitution and UPG Board Charter.
Assist the Chairman in development, review, and updating of the corporate governance policies and procedures.
Monitor and report on changes in government policies, legislation, and regulations related to the company’s business and operations, advising the Board on necessary actions.
Coordinate with external advisors and consultants and ensuring that the Board receives expert advise and support when needed.

Board Responsibilities and Directors’ Duties

In compliance with the Myanmar Companies Law, Company Directors Guide (Directorate of Investment and Company Administration – DICA), UPG’s Company Constitution, UPG’s Board Charter, and UPG Code of Conduct, the Board of Directors and its members shall fulfil the following duties and responsibilities:

(A) General Duties

Duty of Care and Diligence

Each member of the Board of Directors shall, when making a decision in exercise of his or her powers, and discharging his or her duty of care and diligence:

Decide in good faith for a proper purpose.
Not have a material personal interest in the subject matter of the decision.
Rationally believe that the decision is in the best interests of the Company.

Duty of Loyalty

Each member of the Board of Directors shall, at all times, remain mindful of and discharge their duty to the Company. They shall not:

Improperly use their position or information obtained as a director to gain an advantage for themselves or others, or cause detriment to the Company.
Conduct transactions in which they have a personal interest unless in accordance with Myanmar Companies Law, UPG’s Related Parties Transaction Policy, and UPG Code of Conduct.
Disclose confidential information.
Enter into contractual relations with a competing company.
Use assets and facilities of the Company for personal benefit.

Duty to Disclose

A member of the Board of Directors shall promptly report any conflict of interest or potential conflict of interest to the Chairman of the Board of Directors. They shall provide all relevant information, including information concerning their family member. The concerned Board member shall not take part in the assessment by the Board of Directors of whether a conflict of interest exists.

Time Commitment

A member of the Board of Directors shall commit the time specified in the UPG Board Charter to their position, including attendance at Board meetings and preparation time.

Participation

A member of the Board of Directors shall actively engage in Board discussions and openly voice their concerns. Directors shall maintain objectivity in their analysis, ensuring they are not unduly influenced by the Chairman or any other Board member.

Adherence to Board Charter, Corporate Governance Policies, UPG Code of Conduct, and Applicable Laws

Board members and employees shall understand the policies outlined in the Board Charter as their shared obligation. They shall commit to ensuring the provisions and principles of these policies are upheld through the company. Additionally, all Board members and employees agree to abide by all applicable laws and regulations and ethical standards of business conduct.

The Board holds primary responsibility for overseeing the development, compliance with, and periodic review of corporate governance and conduct policies and practices within the company. This includes regular updates to these policies.

(B) Responsibilities

Accountability

The Board is accountable to the shareholders of the company for creating long-term value, while also considering the interests of its shareholders.

Responsibilities

The Board is entrusted with the following primary responsibility:

Reviewing, approving and monitoring the Company’s long-term strategic objectives, business plans and performance targets.
Reviewing and approving the annual operating budget.
Ensuring Board meetings are conducted in accordance with procedures specified in the Board Charter.
Supervising and advising the management team and overseeing the general business of the company.
Overseeing the financial management and reporting of the company.
Overseeing (a) the integrity of the financial statements, (b) the performance, qualifications, and independence of the external auditor, and (c) the performance of the internal audit function and the effectiveness of controls.
Overseeing and approving the risk management framework, policies and procedures to effectively manage risks.
Ensuring compliance with legal and regulatory requirements.
Defining clear authorities among the Board, management, and Board committees using the approved Authority Matrix.
Reviewing and approving major decisions on (a) organizational structure, (b) establishment of subsidiary companies, (c) establishment of branches and representative offices, and (d) capital allocations and expenditures in line with the approved Authority Matrix.
Reviewing and/ or approving the transactions with related parties.
Selecting and recommending directorship candidates for election by shareholders.
Facilitating the onboarding of directors through the Director Orientation Program, providing necessary training, and ensuring access to required information.
Defining the remuneration and incentive schemes, including key performance indicators, for the Chairman and Board members, and key executives.
Conducting annual Board evaluations and Directors’ renomination.
Appointing and, as necessary, dismissing key executives of the Company.
Developing succession plans and development objectives for key executives.
Assessing the effectiveness of the Company’s governance practices and policies, and making changes as needed.
Discussing its own activities and those of its individual members, the effectiveness of such activities, and the composition and competence of the Board of Directors. At least once a year, the Board of Directors shall discuss (without the management team being present) the activities of the management team and its individual members, and the effectiveness thereof.
Approving and reviewing the Company’s Policy, Mission, Values, and Code of Conduct.

Securing Information

The Board of Directors and its individual members are responsible for obtaining all information from the management team and external auditor needed to carry out their duties. If deemed necessary, the Board may seek information from officers and external advisors of the Company. The Company shall facilitate the Board in obtaining such information. The Board may also require specific officers and external advisors to attend its meetings.

Access to Information

Each member of the Board of Directors has access to the books and records of the company, as necessary for the performance of their duties. Board members shall consult with the Chairperson of the Board of Directors and the Board Secretary before exercising their access rights.

Use of Experts

The Board of Directors may hire experts to provide assistance or advice. The cost associated with these experts shall be approved by the Board and borne by the Company. A Board member may reply upon the advice of a relevant expert provided that the member has no reason to doubt the expert’s report or conclusions.

Board Meetings

The Board of Directors shall hold meetings monthly. In 2023-24, a total of 12 Board meetings were held.

The chart below shows the board member attendance, either in person or via online (zoom). No absence was recorded.

Board Committees and Departments

To promote effective governance and oversight, the Board has established 3 committees and 2 departments as follows:

Audit & Risk Committee
Nomination & Remuneration Committee
Preparatory Committee on Corporate Governance
Corporate Internal Audit Department
Corporate HSE Department

Each committee is chaired by a Director and assigned specific responsibilities to enhance the Board’s ability to fulfil its duties.

Audit and Risk Committee

The Audit and Risk Committee serves as a standing committee to ensure effective oversight of financial reporting, internal controls, risk management, and compliance with legal and regulatory requirements. This committee plays a crucial role in enhancing corporate governance practices by providing objective assurance to the Board regarding the integrity of financial information and the effectiveness of risk management frameworks.

1. Selection and Appointment of Committee Members

The Chairman and the members of the Audit and Risk Committee are selected by the Board of Directors and approved by shareholders at the Annual General Meeting (AGM). The Chairman is prohibited from simultaneously chairing any other audit committees or teams within the UPG Group of Companies. The Audit and Risk Committee is composed of 4 members, including 2 Directors. This committee is chaired The term of the committee members is 2 years, and the Chairman can serve for 2 consecutive terms.

2. Committee Meettings

The Audit & Risk Committee held a total of 6 meetings in 2023-24 fiscal year. The following table shows the attendance percentages of these meetings.

Attendance Percentages of Audit & Risk Committee

No	Role	Attendance Percentage
1	Chairman	100%
2	Member	100%
3	Member	100%
4	Secretary	100%

3. Duties and Responsibilities

The Audit and Risk Committee is responsible for the duties and responsibilities specified in its Terms of Reference (TOR), including the followings:

Financial Reporting Oversight

Review and monitor the integrity of the company’s financial statements.
Ensure compliance with accounting standards and regulatory requirements.
Liaison with external auditors to discuss the scope and results of audits, and address any issues that arise.

Internal Controls and Audits

Access the effectiveness of the company’s internal control systems.
Oversee the internal audit functions, including the approval of the audit plan and review of audit findings.
Ensure that management promptly addresses any control weaknesses identified by auditors.

Risk Management

Monitor the company’s risk management processes, ensuring that all significant risks are identified, assess, and mitigated appropriately.
Review and recommend risk management policies and procedures to the Board.
Oversee the implementation of risk management strategies and ensure they align with the company’s overall objectives.

Compliance Oversight

Ensure the company adheres to the applicable laws, regulations, accounting standards, and internal policies in financial management
Address any compliance issues or breaches and recommend corrective actions.

External Auditor Coordination

Recommend the appointment, reappointment, or removal of external auditors to the Board.
Review the performance and independence of external auditors.
Diss and resolve issues arising from the external audit, including management’s response to audit recommendations.

Reporting and Communication

Report regularly to the Board on the committee’s activities, findings, and recommendations.
Ensure transparent communication between the committee, the Board, and the management, and external auditors.
Prepare and present the committee’s annual report to shareholders, if required.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee currently serves as an ad hod committee for Board and management nominations before the Annual General Meetings (AGMs). Additionally, this committee provide ad hoc advice on Board and management remuneration.

1. Selection and Appointment of Committee Members

The Chairman and the members of the Nomination and Remuneration Committee are selected by the Board of Directors before the Annual General Meetings (AGMs). The committee composes 5 Non-Executive Directors., including 1 Chairman, 1 Secretary, and 3 members.

The term of the committee is until the complete establishment of the Board of Directors.

2. Duties and Responsibilities

The Nomination and Remuneration Committee is responsible for the duties and responsibilities specified in its Terms of Reference (TOR), including the followings:

Nomination and Board Succession

Identifying and recommending qualified candidates for board position
Developing and implementing succession plans for Board members.
Ensuring diversity and maintaining appropriate balance of skills and experience on the Board

Remuneration Advisory on Ad Hoc Basis

Providing ad hoc advisory on remunerations for Board members and executives
Reviewing and recommending remuneration packages aligning with company performance
Ensuring transparency and fairness in remuneration practices

Preparatory Committee on Corporate Governance

The Preparatory Committee on Corporate Governance currently serves as an ad hoc committee assigned to study and develop a corporate governance framework that emphasizes accountability and transparency. This committee is crucial in laying the groundwork for the eventual establishment of the company’s Corporate Governance Committee.

1. Selection and Appointment of Committee Members

The Chairman and the members of the Preparatory Committee on Corporate Governance are appointed by the Board of Directors. This committee comprises a total of 10 members, icluding 1 Chairman, 2 Vice-Chairmen, 3 Consultants, 1 Think Tank Leader, 1 Secretary, and 2 Co-Secretaries. The Chairman of the committee is also the Vice-Chairman of the Board of Directors.

The term of the committee is until the establishment of the Corporate Governance Committee.

2. Committee Meetings

The Preparatory Committee on Corporate Governance held a total of 7 meetings in 2023-24 fiscal year. The following table shows the attendance percentages of these meetings.

Attendance Percentages of Preparatory Committee on Corporate Governance

No	Role	Attendance Percentage
1	Chairman	100%
2	Vice-Chairman 1	100%
3	Vice-Chairman 2	86%
4	Legal Consultant	86%
5	Industrial Consultant	86%
6	HSE Consultant	75%
7	Think Tank Leader	100%
8	Secretary	100%
9	Co-Secretary 1	100%
10	Co-Secretary 2	100%

2. Duties and Responsibilities

The Preparatory Committee on Corporate Governance is primarily responsible for the following duties and responsibilities.

Development of Corporate Governance Framework

Studying and designing a framework that ensures accountability and transparency in corporate practices
Aligning governance practices with regulatory requirements and company culture

Laying Groundwork for Company Governance Committee

Developing foundational policies, procedures, and practices for the future Corporate Governance Committee
Ensuring smooth transition from preparatory phase to the fully established Corporate Governance Committee

Engagement with the Myanmar Institute of Directors (MIoD)

Collaborating with the Myanmar Institute of Directors (MIoD) on the development and initial implementation of the corporate governance framework
Leveraging MIoD’s expertise to ensure alignment with good governance practices and the company’s culture

Corporate Internal Audit

Corporate Internal Audit is an independent department that directly reports to the Audit and Risk Committee and the Board. The main purpose of the Corporate Internal Audit is to audit the financials of the Holding Company and the subsidiary companies, perform risk-based audits as per the Annual Audit Plan, and provide assurance to the company’s overall financial reporting system.

The Corporate Internal Audit works in tandem with subsidiary internal audits for internal control and risk assessment. The 2-Layer Audit structure ensures that the corporate level audit collaborates closely with the internal audit departments of the subsidiary companies. Their cooperation focuses on ensuring robust internal controls and conducting comprehensive risk assessments across the entire organization, both at the corporate and subsidiary levels. This collaborative approach helps to maintain consistency in audit practices, improve the effectiveness of internal controls, and identify and mitigate risks throughout the organization.

A director leads the Corporate Internal Audit Department.

Corporate HSE Department

The Corporate Health, Safety, and Environment (HSE) Department is responsible for maintaining established standards of health, safety, and environment (HSE) across all workplaces including offices and factories of the UPG subsidiaries. The department plays an important role in promoting a safe and sustainable working environment.

This department is organized with key positions, including HSE Manager, HSE Document Control Officer, HSE Technical & Compliance Trainer, HSE Executive, and HSE Inspectors.

2. Duties and Responsibilities

The primary duties and responsibilities of the Corporate HSE Department are as follows:

Facilitating HSE Committees of Subsidiaries
Facilitating the establishment of occupational health & safety committees within subsidiaries.
Developing and Implementing HSE Practices
Facilitating the development and implementation of HSE manuals and procedures across subsidiaries.
Overseeing Compliance
Monitoring the subsidiaries’ compliance with Myanmar’s HSE-related laws, regulations, and their established manuals and procedures.
Conducting Inspections
Conducting both routine and random inspections to identify HSE hazards, assess risks, and verify compliance with HSE manuals and procedures.
Learning and Development
Providing learning and development opportunities to the employees and HSE personnel of the subsidiaries.
Documentation and Record Keeping
Managing HSE documentation, records, and reports to track incidents, compliance activities, inspections, and corrective actions.
Analyzing and Reporting
Analyzing the HSE performance of subsidiaries and reporting findings to the UPG Board of Directors.