Corporate Governance

The Board of Directors of Furniweb Industrial Products Berhad fully subscribes to and supports the spirit of the Malaysian Code on Corporate Governance ("the Code") and is committed to ensuring that the principles and best practices of the Code are observed and practiced throughout the Group in the pursuit of discharging its roles and responsibilities to protect shareholders' interests and enhance the financial performance of the Group.

The Board is pleased to outline the manner in which the Group has applied the principles set out in the Code and hereby confirms that the Group has complied with the best practices set out in the Code.

BOARD OF DIRECTORS

1.	The Board
	The Board of Directors has within it individuals drawn from varied professions and specializations. Together with the management, they collectively bring a diverse range of experience, skills and knowledge necessary to effectively discharge their responsibilities towards achieving the Group's business strategies and corporate goals. Board meetings are scheduled every quarter and additional meetings are convened as and when necessary. During the financial year ended 31 December 2006, six (6) meetings of the Board were held. Details of each director's meeting attendance during the financial year are as follows:
	Director Attendance Dato' Lim Heen Peok 6 out of 6 Cheah Eng Chuan 6 out of 6 Lee Sim Hak 6 out of 6 Ong Lock Hoo 6 out of 6 Dato' Hamzah bin Mohd Salleh 5 out of 6 Dato' Haji Johar bin Murat @ Murad 6 out of 6 Lim Chee Hoong 6 out of 6 Chua Carmen (appointed on 6 March 2006) 5 out of 6
2.	Board Committees
	The Board has delegated specific responsibilities to three (3) sub-committees, which are set out below, in order to assist the Board in the execution of its duties effectively.
	Committee Key Functions Audit Committee Explained on pages 22 to 25 of this Annual Report Remuneration Committee Explained on pages 26 to 28 of this Annual Report Nomination Committee Explained on pages 29 to 30 of this Annual Report
	All committees have written terms of reference and operating procedures that are reviewed intermittently. The Chairmen of the various committees report to the Board the outcome of the committee meetings and are incorporated in the minutes of the Board meeting. These committees, which do not have executive powers, will deliberate and examine particular issues and report to the Board with their recommendations. The ultimate responsibility for the direction and control of the Company and the Group rests with the Board.
3.	Board Balance
	The Board of Directors presently comprises three (3) Executive Directors, one (1) Non-Independent Non-Executive Director and four (4) Independent Non-Executive Directors. The composition of the Board complies with the Listing Requirements of Bursa Malaysia Securities Berhad ("BMSB"). There is balance in the Board as the directors, with their different backgrounds and specializations, collectively bring a wide range of experience and expertise to the Group. The profiles of the directors are presented in pages 13 to 15 of this Annual Report. There is clear segregation of responsibilities between the Chairman of the Board and the Group Managing Director to ensure that there is a balance of power and authority in the Group. The Independent Non-Executive Chairman is primarily responsible for the effectiveness and proper conduct of the Board while the Group Managing Director is responsible for implementing the policies and decisions of the Board as well as overseeing the operations and business development of the Group.
4.	Supply of Information
	The management has a responsibility and duty to provide the whole Board with all the information, of which it is aware, to facilitate the discharge of the Board's responsibilities. The Board therefore expects to receive all material information about the Group, its operating units, its activities and performance on a timely basis. Prior to each Board meeting, all Board members are provided with the requisite notice, agenda and the relevant Board papers to enable them to have sufficient time to peruse the papers and, if necessary, obtain further information or clarification from the management to ensure effectiveness of the proceeding of the meetings. Senior management members are invited to attend these meetings to explain and clarify matters. All directors have access to the advice and services of the Company Secretary and independent professional advisers, whenever necessary, at the Group's expense to enable the Board and members of its various committees to discharge their duties with adequate knowledge on the matters being deliberated.
5.	Directors' Training
	All directors of the Company have attended the Mandatory Accreditation Programme conducted by the Research Institute of Investment Analysts Malaysia, an affiliate of BMSB. In compliance with the Continuing Education Programme implemented by BMSB, the directors also attended other appropriate training programmes to continuously update themselves with changes on guidelines issued by the relevant authorities as well as to keep abreast with developments in the marketplace, industry and corporate scene.

RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS

The Board recognises the importance of timely dissemination of information to shareholders and investors to ensure that they are well informed of all major developments of the Company and the Group. Such information is communicated to shareholders and investors through various disclosures and announcements to BMSB, including the quarterly financial results, annual reports and where appropriate, circulars and press releases.

The Annual General Meeting represents the principal forum for dialogue and interaction with shareholders. At the Annual General Meeting, the Board encourages and welcomes participation from shareholders to ask questions regarding the resolutions being proposed at the meeting and also other matters pertaining to the business activities of the Group. The Directors are present during these meetings to respond to questions raised by shareholders.

Apart from the mandatory announcements through BMSB, the Company also provides the Group's corporate and nonfinancial information at its website: www.furniweb.com.my 

ACCOUNTABILITY AND AUDIT

1.	Financial Reporting
	The Board aims to present a balanced and understandable assessment of the Group's financial position and prospects in all their reports to shareholders, investors and regulatory authorities. This is primarily achieved through the announcement of quarterly financial results and the Chairman's Statement in the Annual Report. The quarterly financial results are reviewed by the Audit Committee and approved by the Board before being released to BMSB. The directors are also responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Group, and for ensuring that the appropriate accounting policies have been consistently applied and that the financial statements comply with the Companies Act, 1965 and applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board.
2.	Internal Control
	The Board places significant emphasis on maintaining a sound system of internal control covering not only financial controls but also operational and compliance controls as well as risk management in order to safeguard shareholders' investments and the Group's assets. The Board continually reviews the adequacy and effectiveness of the internal control system to ensure it meets the Group's particular needs and to manage the risks to which it is exposed.

ADDITIONAL COMPLIANCE INFORMATION

1.	Share Buy-back
	During the financial year, the Company purchased 196,400 of its issued ordinary shares from the open market at the average price of RM0.41 per share. The repurchase transactions were financed by internal funds. As at 31 December 2006, a total of 208,900 of the Company's ordinary shares have been repurchased and were being held as treasury shares in accordance with the requirement of Section 67A of the Companies Act, 1965. Treasury shares are carried at cost and have no rights to voting, dividends and participation in other distribution.
2.	Options, Warrants or Convertible Securities
	Other than the Employees' Share Option Scheme disclosed on page 34 of the Annual Report, the Company has not granted any option to any party to take up unissued shares in the Company.
3.	Sanctions/Penalties Imposed
	There were no sanctions or penalties being imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.
4.	Non-audit Fees
	The amount of non-audit fees paid and payable to the external auditors by the Group for the financial year ended 31 December 2006 was RM22,000.
5.	Variation in Results
	There was no material variation between the audited results for the financial year ended 31 December 2006 and the unaudited results previously released.
6.	Material Contracts
	During the financial year, the Group did not enter into any material contracts involving Directors' and major shareholders' interest other than as disclosed in Note 28 of the financial statements.
7.	Recurrent Related Party Transactions
	The recurrent related party transactions for the financial year ended 31 December 2006 are set out in Note 28 of the financial statements.