Corporate Governance in Malaysia | Corporate Governance Regulatory Framework | Corporate Governance Practice in Malaysia | Corporate governance-related enforcement actions | Resources | Useful links

Corporate Governance Practice in Malaysia

The SC believes that the successful development of a strong and credible corporate governance environment is premised on a dynamic synthesis of the efforts of both the regulators and the market. Each must fully discharge its respective roles and responsibilities as an integral player of the CG ecosystem that holds the market forces in balance.

Role of Directors
Directors play a crucial role in setting the “tone at the top” honoring the responsibilities that arise from the trust placed in them by investors. All directors need to implement their own best practices for corporate governance that promote integrity, transparency and accountability.

Directors also need to have a good understanding of their roles and responsibilities by continuously evolving to meet the expectation of stakeholders, business complexities and associated business complexities. As such, continuous training programmes for directors is vital.


Role of Gatekeepers
External auditors are described as watchdogs of companies, and represent the only independent party that is well positioned to review the transactions and books of a corporation. The external auditors are responsible for producing independent opinions on information statements having carried out financial audits. It is for this reason that auditors have often been described as the key external enforcers of corporate governance. In addition to auditors, other gatekeepers such as the corporate advisers and regulators are also key external enforcers of integrity and corporate governance in the corporation.

Role of Shareholders
Shareholders are increasingly weighing corporate governance as a critical factor in deciding on the quality of a particular investment. The ability of companies and markets to obtain and retain a reputation for good corporate governance has become as fundamental as the very practice of good corporate governance itself.

Shareholders must play their role in ensuring that the Boards and management of companies direct their efforts and resources into the best interest of the companies and their shareholders. It is particularly important that institutional investors intensify their voice as they have the clout to influence the conduct of directors and corporations, by being vigilant and enquiring, and by exercising their influence over shareholder resolutions.

Role of Industry Associations
The many industry associations in Malaysia play an important role in enhancing parts of the corporate governance framework in Malaysia. They provide services to their members ranging from education, specific services, conduct surveys and provide a platform for sharing of ideas and best practices. For example, the Minority Shareholders Watchdog Group plays public advocate for minority investors and the Institute of Corporate Responsibility Malaysia that creates that platform for sharing of best practices among industry practitioners. Industry associations and self-regulatory organisations have voluntarily established best practice codes on corporate disclosure, internal audit, internal controls and the conduct of general meetings. The government’s transformation programme for government linked companies (GLCs) launched the Green Book on GLC governance.