Corporate governance is an area that has been growing apace in the last decade or more and there has been great interest in corporate governance today from governments, investors and directors alike. Why and how have the law and regulatory bodies in Malaysia kept abreast with these latest developments? Discuss.
* S167A Companies (Amendment) Act 2007 stipulates companies to set up effective internal control system to prevent any unauthorized usage of assets and to maintain proper records for the assets.
* However, the agency issue among listed companies in Malaysia lies within the controlling shareholder. Expropriation of ….
* However, companies such as YTL Corp, Celcom, Yeo ...view middle of the document...
It marked a significant milestone in corporate governance, a reform in Malaysia.
The code was later revised in 2007 - To strengthen the roles and responsibilities of the Board of Directors, Audit Committee and the internal audit functions.
The Malaysian Code on Corporate Governance (2012) MCCG 2012 – It focuses on strengthening the Board Structure and composition recognizing the role of directors as active and responsible fiduciaries.
New recommendations in the MCCG 2012
1. Roles and responsibilities of the board
Code of ethical conduct
The board should formalize a code of conduct to implement ethical standards that include communications and feedback channels to facilitate whistle blowing. The board should also implement necessary internal systems to ensure compliance with the code of conduct.
The board should formalize strategic policies that promote the company’s sustainability with particular focus on the environmental, social and governance aspects of the business.
The board is expected to formalize a board charter that set out key values, principles and ethos of the company. The charter should also set out the division of responsibilities between the board, management, various committees, chairman and chief executive officer, and the processes and procedures for board meetings.
The code of conduct, strategic policies and board charter should be reviewed regularly and published in the website of the company. The strategic policies should also be published in the annual report of the company.
2. Independent directors
The board is encouraged to undertake an annual assessment of the independent directors in the company based on prescribed criteria developed by the Nominating Committee (“NC”) to assess the independence and objectivity of these directors. Such assessment should be disclosed in the company’s annual report and any notice for general meetings regarding the appointment and re-appointment of independent directors.
The tenure of independent directors is generally capped to a cumulative period of 9 years. Upon the completion of the period, such directors may be re-designated as non-independent directors or, in exceptional cases, remain as independent directors subject to the assessment by the NC and approval of shareholders. The board should provide strong justifications to the shareholders in such cases.
Balance of power
The chairman of the board should generally be an independent director. If the chairman is not an independent director then the majority of board members should comprise of independent directors to ensure a balance of power on the board.
3. Commitment of directors
The board should set out expectations on the time commitment for its members to carry out their responsibilities. This commitment should be obtained at the time of appointment. In addition, the board should also set out protocols for directors...