1. What is the objective of the Blueprint?
  To engender a shift in corporate governance culture from mere compliance with rules to one that more fittingly captures the essence of good corporate governance; namely a deepening of the relationship of trust between companies and stakeholders.
2. How does the Blueprint contribute to a strengthened corporate governance culture in Malaysia?
  • It outlines strategic initiatives aimed at strengthening self and market discipline, and promoting greater internalisation of the culture of good governance.
  • It enriches the governance process through promoting more extensive and proactive participation by a broader range of stakeholders.
  • It shares the SC’s thoughts on corporate governance and focuses on actions which are grounded on principles and ideals in achieving excellence in corporate governance.
1. How many recommendations are there in total and how many would be implemented through a new code on CG and via the Listing Requirements?
  • There are 35 broad recommendations in total. Most will be implemented through a new Malaysian Code on Corporate Governance and through changes to the Listing Requirements.
  • Others will need to be examined and further studied through the formation of taskforces and working groups expected to be driven by industry in collaboration with the SC. Some recommendations require legislative amendments.
  • Two particular issues that the SC wishes to undertake public consultation on:
    (i) Whether the chairman should also be an independent directors; and
    (ii) Whether poll voting should be mandated for other substantive resolutions apart from related-party transactions. (In the Blueprint, poll voting is recommended to be mandated for related-party transactions.)
2. Will the Malaysian Code on Corporate Governance be revised? When will the new code be issued?
  • It is envisaged that the new Malaysian Code on Corporate Governance will come into effect by early 2012. Changes to the Listing Requirements would also be effected by early 2012.
  • Appropriate transitional mechanisms will be put in place when the changes are effected to ensure minimum disruption to affected parties.
3. What is the implementation timeline for the recommendations?
  • The recommendations will be implemented over a five-year period.
  • An assessment of the progress of implementation will be undertaken in 2013 and a full post implementation review will be carried out at the end of the five year period.
4. When will the respective taskforces and working groups be formed?
  The SC will put in place a dedicated team to facilitate the formation of taskforces and working groups. It is envisaged that by early 2012, all the taskforces and working groups would have been formed and pursuing active discussions. Some will be initiated by the SC, while others would be industry driven.
5. What is the difference between taskforces and working groups?
  • Recommendations which require collective efforts and commitment by different industry players and stakeholders will be undertaken via formation of taskforces. The role of the taskforces would be to take into account the differing views of the industry under a more formal process.
  • On the other hand recommendations that require further study on a technical or specific area would be driven through formation of working groups that would mainly be led by the SC.
6. Can the public comment on the recommendations?
  • Yes, the SC welcomes feedback on the Blueprint and invites comments on the recommendations.
  • Submission of comments is open until 15 September 2011 and can be made via email to or in writing to the following:

    CG Blueprint Team
    Securities Commission Malaysia
    3 Persiaran Bukit Kiara, Bukit Kiara
    50490 Kuala Lumpur, Malaysia
    Tel: 603-62048000

1. Why does the Blueprint recommend mandatory poll voting only for RPTs?
  • Due to the potential for abuse in related-party transactions, mandatory poll voting will enable disinterested shareholders to more effectively convey to companies where such transactions are not acceptable.
  • The Blueprint also propagates a move towards poll voting under a phased approach for all substantial transactions. A public consultation will be undertaken regarding mandating poll voting for all substantial transactions.
2. What are the new measures to enhance participation and voting by shareholders?
  • While the rights of shareholders to attend, speak and vote at general meetings is already enshrined in the law, challenges exist with respect to shareholder participation and voting in general meetings.
  • To facilitate the exercise of this voting right, regulation must ensure that listed companies do not impose restrictions on the number of proxies appointed nor any qualitative restrictions on proxy appointment.
  • Consequently the law may need to be amended to clarify that:
    (i) A body corporate can be appointed as proxy; and
    (ii) More than one corporate representative can be appointed (particularly where the shareholder is a nominee).
1. How would the new code for institutional investors be developed?
  • Given the significant stake they hold, institutional investors are in unique position to play a leadership role in the exercise of shareholder rights.
  • We expect institutional investors to work together towards the establishment of an umbrella body to review their existing practices towards the formulation of a new stewardship code. This umbrella body would represent the common interest of all institutional investors and act as a platform to shape and influence a wider sphere of corporate governance culture.
  • The key areas under the new code would include commitment to engagement, integration of CG elements in mandates, performance monitoring, exercise of voting rights, “focus list of underperforming companies” and internal governance.
1. Why a nine-year limit for independent directors?
  A nine-year limit is recommended as a longer tenure tends to affect the independence of directors. Interestingly a majority of our listed companies already recognises this (A study conducted by the SC on PLC Boards in 2009 reveals that 60% of listed companies have independent directors who have served on boards for less than nine years). The implementation of this recommendation will take into account an appropriate transitional period for existing directors who have served for more than nine years.
2. What would happen to those independent directors who have already exceeded the nine-year limit?
  An independent director may continue to serve on the board subject to the director’s re-designation to a non-independent director at point of re-election to the board.
3. The limitation on PLC directorships would be reduced from 10 to 5. How would this affect the existing directors?
  Recent statistics show that the average directorship of individuals on listed companies is three and the number of directors holding more than five directorships is extremely small (0.8%). We would implement the reduction after an appropriate transitional period.
4. The Continuing Education Programme was previously mandated, then made a voluntary practice, what is the motivation behind mandating it again?
  • The growing complexities of modern business and pace of change has given rise to the need to mandate CEP. Continuing development would foster intellectual honesty and equip directors to best serve the interests of the company.
  • Taking a phased implementation approach, this recommendation would first apply only to directors of new companies being listed as well as newly appointed directors of listed companies. It is our expectation that all directors will comply with this requirement by 2016.
5. Why isn’t there a recommendation for the Chairman to be independent?
  The SC recognises that strong independent leadership on the board is critical to striking the right balance between ownership and control. Encouragingly, 30% of companies have chairs who are independent non-executive directors. A public consultation will be undertaken as to whether the chairman should be an independent director.
1. When will the shortening of the submission period for quarterly and annual reports be implemented?
  • A review of the current framework for periodic disclosure, including shortening the submission timeframe for quarterly and annual reports, would be undertaken by a task force of industry and regulators.
  • The implementation on the shortening of the submission period would depend on the readiness and capacity of the related industries such as the auditing profession who would need to provide the necessary support for companies to comply with new timelines.
2. What is the rationale for the shortened submission period?
  Currently the timeframe for submission of quarterly and annual reports is two months and six months from the end of the financial period respectively. The value of information, especially financial information, declines over time. The older the information, the less relevant and reliable it is. It is critical for shareholders and other stakeholders to receive information in a timely manner in order to make informed decisions. Timely disclosure of information also promotes and maintains investor confidence in the market.
3. What are some of the means to achieve better disclosure?
  • Mandating companies to focus on substance rather than form in meeting corporate governance requirements would include specific requirement for companies to explain how they have applied the principles and best practice of corporate governance. This would involve a review of disclosure practices to encourage companies to move beyond minimum reporting and to develop their own approaches to corporate governance.
  • Promoting better use of information technology when communicating with shareholders to ensure timely and speedier release of information for informed decision-making.
  • A review of developments in integrated reporting and how to promote awareness and its adoption by companies would be implemented via the establishment of a taskforce.
4. How is the issue of integrated/sustainable reporting being promoted under the Blueprint?
  • Integrated reporting involves disclosures of the company’s commitment to the environmental, social and governance (ESG) agenda. Best practices for integrated reporting require disclosures on the positive and negative impacts of the company’s operations from an ESG perspective and how the company intends to manage the negative aspects of its business operations.
  • As integrated reporting is a recent development and substantial preparation is required for companies to adopt this method of reporting, the initial approach would be to promote greater awareness of integrated reporting and voluntary adoption by companies.
1. What are the expectations on corporate advisers and company secretaries in relation to whistleblowing?
  As company secretaries and corporate advisers are in a position to detect fraudulent practices in the course of their work for the company, we would explore the possibility that the mandatory whistleblowing obligations be imposed on them to report breaches of securities laws.
2. Does the obligation also come with the same protection accorded to auditors when they whistleblow?
  Yes, the same protection would be accorded to them.
  What is the mechanism of a litigation funding by a third party?
  • The mechanism for third party litigation funding would be put in place after completion of a feasibility study to be undertaken by a working group to be led by the SC.
  • It is proposed that a litigation fund by an independent third party be established and moving forward investors would make applications for funding to assist them in instituting private actions to encourage private enforcement actions by addressing the issue of high cost in pursuing such actions.