The SC continued to apply various interventions to inculcate good corporate governance culture and practices across the market ecosystem, including directors, shareholders and gatekeepers. Measures were also undertaken to inculcate early understanding of governance among youth.
Promoting Good Corporate Governance
On 24 November 2021, the SC released the Corporate Governance Monitor 2021 (CG Monitor 2021), which presented the progress on the adoption of the 2017 edition of the Malaysian Code on Corporate Governance (MCCG) and the quality of corporate governance (CG) disclosures. Adoption levels across majority of the practices remained positive, with 24 out of the 36 best practices recording adoption levels of at least 90%. However, the adoption of the Step Up practices remained among the lowest compared to other practices in the MCCG.
24
(2020: 23) MCCG best practices have an adoption level of above 90%
79%
(2020: 78%) Listed companies adopted at least one Step Up practice
Practices which require immediate action by boards.
Disclosure of senior management remuneration
Adoption of gender diversity policy and targets
Disclosure of reliable and decision-useful sustainability information
The Corporate Governance Strategic Priorities 2021- 2023 (CG Strategic Priorities), launched in November 2021, outlined 11 targeted initiatives such as the introduction of an onboarding programme on sustainability for directors, enhancing availability of corporate governance data though the use of digital tools and deepening the conversation with youth on corporate governance and sustainability through collaboration with universities. The CG Strategic Priorities is also a critical component of the CMP3 launched in September 2021 to chart the path ahead for the Malaysian capital market over the next five years (Figure 2).
On 30 April 2021, the SC and Monash University Malaysia formalised a collaborative agreement to promote early understanding of corporate governance principles and practices among Monash University students, through guest lectures and joint research efforts.
The collaboration brings to fruition the SC’s effort to drive good corporate governance by investing in the youth and supporting them in reaching their full potential as future leaders and agents of positive change.
The Guidance Note on the Conduct of General Meetings for Listed Issuers1 (Guidance Note) was revised in 2021, to facilitate the conduct of fully virtual general meetings2, and to emphasise the need for boards to address all questions posed by shareholders in a general meeting, irrespective of the mode the meeting was conducted; whether fully virtual, hybrid, or physical.
On 12 August 2021, the Government launched the PERKUKUH programme, comprising 20 key initiatives aimed at strengthening the overall structure and governance of GLICs in Malaysia.
Led by the Ministry of Finance Malaysia (MOF), the SC is supporting the development of baseline governance requirements and best practices that GLICs are expected to adopt. The SC is also working closely with the Institutional Investor Council (IIC) to update and enhance the Malaysian Code for Institutional Investors (MCII) in order to achieve outcome-oriented stewardship. In this regard, Capital Markets Malaysia (CMM) will be working closely with the MOF and the SC to enhance capacity-building needs of GLICs to build strong ESG-ready boards.
In August 2021, the SC collaborated with the Institute of Corporate Directors Malaysia (ICDM) to conduct the inaugural ‘Chairman Survey’ to obtain insights from Chairmen of listed companies on board priorities in 2022 and the state of board dynamics.
Total respondents – 325 Chairmen of listed companies.
The Chairman Survey 2021 was conducted by the SC in collaboration with the ICDM.
91%
Chairmen were of the view that current board composition was optimal.
Which aspects of the current board composition can be improved?
Promoting Self-Regulation
In line with the SC’s CMP3 key strategies, the SC issued a Guidance Note on Co-operation and Self-Reporting on 23 June 2021 to encourage early resolution of enforcement action.
As incentives to recognise their efforts in coming forward and co-operating with the SC, entities and individuals may be offered ‘credits’ in the form of reduced fines and penalties.
The key areas covered in the Guidance Note are:
