Governance

GOVERNANCE POLICIES

Dilmah Ceylon Tea Company PLC (“DCTC” or “the Company”) has established and implemented the following policies as part of its Corporate Governance Framework in compliance with the Listing Rule 9.2.1 of the Colombo Stock Exchange.

Shareholders may request the complete policies by submitting a written request to the Company Secretary at legal@dilmahtea.com.

1. Policy on Matters Relating to the Board of Directors

The Board shall ensure the Company’s prosperity by collectively directing the Company’s affairs, while meeting the appropriate interests of its shareholders and relevant stakeholders in compliance with all applicable laws and regulations.

The Board shall maintain the level of integrity and principles inculcated by the Founder and shall be guided by the 06 Pillars of Dilmah, namely, Integrity, Quality, Ethics, Tradition, Sustainability, and ‘Our Customers’.

This Policy addresses the following areas on Matters relating to the Board of Directors:

a. Principle Duties of the Board and its responsibilities reflecting the principles established by the Founder, and to act in the best interest of the Company, its shareholders, employees and society at large.

b. The Composition of the Board acknowledging the importance of diversity and inclusion and maintaining a balance of representation between executive and non-executive directors and further outlining the functions of a Senior Independent Director (SID), and the appointment of Alternate Directors.

c. The Primary Role of the Board in managing, monitoring, evaluation and periodic review relating to the day-to-day operations and functions of the Company.

d. Addressing the requirement for a Market Announcement to be made providing the rationale for combining the positions of Chairperson and CEO.

e. Frequency and procedure of Board meetings

f. Directors’ Duties to act in the best interest of the Company and the requirement to conduct themselves lawfully, with integrity and high ethical standards.

g. Fitness of Directors and CEO subject to the Fit and Proper Assessment Criteria on

a) Honesty, Integrity and Reputation

b) Competence and Capability

c) Financial Soundness

h. Appraisals of the Board and procedures on Board Performance Evaluations

i. Rights of Directors on raising concerns about matters of the company

j. Independent Directors and the annual determination on the “independence” and “non-independence” of such Directors.

k. Matters Reserved for the Board including legal/ regulatory requirements, appointments, training and evaluation of Directors, management, transactions and financing relating to the company.

l. Procedures relating to the training of Directors on general aspects of directorship, as well as training conducted to keep Directors abreast of the Listing Rules obligations arising thereof.

m. Mechanisms in place to ensure all necessary disclosures and declarations are made in compliance with regulatory standards.

2. Policy on Board Committees

The Board of Directors of DCTC shall ensure that the following Board committees are established and maintained at a minimum and are functioning effectively.

A. Nominations and Governance Committee

B. Remuneration Committee

C. Audit Committee

D. Related Party Transaction Review Committee

This Policy ensures the effective implementation of the Board Committees and addresses the Scope, Composition and Functions of each Committee and due compliance with the CSE Listing Rules.

These committees support good governance by promoting the healthy development and functioning of the Board, its committee and individual members. In this and other ways, the committee helps the board carry on its due diligence.

Committee members stay current on changes on governance rules and policies and ensure compliance and maintaining high standards of adherence. Most board committees shall meet at least quarterly, and often as required, and maintain minutes of meetings of the Committees.

3. Policy on Corporate Governance, Nominations and Re-election of Board Members

This Policy establishes the basic philosophy and policy framework of corporate governance at DCTC and sets out the overall approach of the Board of Directors of DCTC in relation to Corporate Governance, Nominations and Re-election of Board Members.

The Board believes that the long-term success of the Company is dependent on the maintenance of an ethical business environment that focuses on adherence to both the letter and the spirit of regulatory and legal mandates, as well as the “06 Pillars of Dilmah”.

This Policy further signifies the Policies established in line with the Corporate Governance Framework and sets out the criteria on Nominations and Re-election of Board Members including the annual rotation, review and evaluation process and succession planning and development of Directors.

4. Policy on Remuneration

This Policy aims at aligning Directors’ / CEO’s as well as Executives and Employees remuneration with the objectives set out in the Company’s strategy and the measurement of personal and collective performance.

Remuneration structures are designed to be consistent with prudent risk-taking and ensures that total remuneration is appropriately balanced to include a combination of fixed remuneration, perquisites, and variable remuneration to promote the Company’s competitiveness and to support the execution of the Company’s strategy.

This Policy establishes the guiding principles on remuneration specific to the CEO, Executive Directors and Non-Executive Directors as well as Executives and Employees; and the role of the Remuneration Committee.

The Remuneration Committee shall regularly observe and evaluate the effectiveness of the Company’s remuneration schemes to ensure that the selected measures and structures foster the Company’s business strategy and long-term financial success.

5. Policy on Internal Code of Business Conduct and Ethics for all Directors and Employees

This Policy is intended to serve as a source of guiding principles for Directors and employees on areas of ethical risk and issues and to encourage them to report unethical conduct and help foster a culture of honesty and accountability. The ‘Code of Conduct’ (COC) of MJF Holdings Ltd & Group Companies shall be construed as an integral part of this Internal Code of Business Conduct & Ethics.

This Policy addresses significant aspects of Business Conduct and Ethics including the conflict of interest, entertainment and gifts, the need for accurate accounting and record keeping, as well as fair and transparent procurement practices. It further elaborates on the protection and proper use of company assets and the reporting of any illegal or unethical behaviour or acts.

6. Policy on Risk Management and Internal Controls

This Risk Management Policy sets out the Risk Management Framework including the roles and responsibilities to ensure that risks and opportunities are identified, measured, monitored, managed and reported effectively and in a timely manner.

The policy recognises that:

a) all organisations face risks and opportunities and that risk is inherent in the organisation’s endeavours to achieve its strategic, operation and financial objectives.

b) a higher risk appetite could result in higher returns on the upside as well a significant detrimental consequences on the downside and vice versa.

c) a culture of risk awareness needs to be created and nurtured through regular reporting to sharpen the requisite skills and strengthen vigilance

In view of the above, this policy seeks to provide guidance to the CEO and management on management of risks within a defined risk appetite which can vary depending on the Company’s vulnerabilities as well as external factors.

This Policy elaborates on the classification of risk, risk culture, risk appetite and the approach to managing risk.

7. Policy on Relations with Shareholders and Investors

As part of its Good Corporate Governance practices, DCTC treats all its shareholders and investors in a fair manner by providing regular, timely, and accurate communication in compliance with the prevailing requirements for the disclosure of information in accordance with the Company’s Articles of Association and regulations of the Colombo Stock Exchange (CSE).

This policy seeks to establish and maintain a constant, ongoing relationship with shareholders and investors through engagement methods that comply with the principles of correctness and transparency, which help to better understand each other’s perspectives and legitimate interests, encouraging the creation of long-term value in accordance with all applicable laws and regulations.

The Company Secretary shall be appointed as the contact person to address concerns of shareholders and investors and may be contacted at legal@dilmahtea.com or on 0114822000.

8. Policy on Environmental, Social and Governance Sustainability

DCTC recognizes the need to manage its impacts on the environment and society through a strong governance framework. This policy sets out the commitment to identifying, measuring, monitoring and managing its impacts on the economy, environment and society through a strong governance framework. The overall objective of this ESG Framework is to drive integrated thinking to optimize resource allocation for short, medium and long term financial stability and sustainable growth of the Company.

A comprehensive policy framework is in place for governing various aspects of the organization. This policy articulates how the Company will manage its impacts on the economy, society and the environment though the appointment of a Board Sustainability Committee and a Sustainability Executive Committee.

9. Policy on Control and Management of Company Assets and Shareholder Investments

This policy outlines the principles, guidelines, and procedures to ensure the responsible stewardship of company assets and shareholder investments. All directors and employees of DCTC are responsible for the protection and responsible use of company assets.

The Policy contains the procedures in place in relation to the management of company assets and shareholder investments.

10. Policy on Corporate Disclosures

DCTC is committed to providing timely and accurate information relating to the Company, its business, and its financial results to the investment community and the Company’s shareholders on a non-selective basis.

This Policy on Corporate Disclosure is adopted in accordance with all laws and regulations applicable to DCTC to eliminate situations where material non-public information such as earnings, strategic plans, or other market sensitive information is disclosed to securities analysts, brokers, dealers, selected institutional investors, and other interested parties; before disclosing the information to the general public. The Policy refers to the types of disclosures and addresses the disclosure of material information, immediate market disclosures and responding to market rumours.

11. Policy on Whistleblowing

All employees of DCTC are encouraged to raise concerns and report on any suspected or actual wrongdoing, including but not limited to, fraud, corruption, bribery, harassment, safety violations, and environmental damage affecting the Company – without fear of retaliation, subsequent discrimination or disadvantage. The Policy is intended to encourage and enable staff to raise serious concerns within DCTC rather than overlooking a problem or ‘blowing the whistle’ outside, and establishes the reporting mechanism and its commitment to protecting employees against retaliation.

12. Policy on Anti-Bribery and Corruption

DCTC is dedicated to conducting business honestly and ethically, adopting a zero-tolerance approach to bribery and corruption. It is committed to acting professionally, fairly, and with integrity in all business dealings and relationships, wherever it operates, while also implementing and enforcing effective systems to prevent bribery.

This Policy covers matters related to facilitation payments, kickbacks, gifts, invitations, and hospitality, outlining the responsibilities of employees and third parties in preventing bribery and corruption within the Company.

IMPLEMENTATION

The company will implement all policies through a comprehensive approach that includes clear communication, training, and regular monitoring. Each policy will be integrated into the company’s daily operations, ensuring that all employees and stakeholders are well-informed of their roles and responsibilities. Mandatory training sessions will be conducted to ensure that everyone understands the policies and their practical applications.

Policies shall be reviewed on an annual basis, to ensure they remain effective and relevant. This review process will include assessing the outcomes, identifying areas for improvement, and incorporating any changes in regulations or industry standards.

1st October 2024