Historically, while developmental initiatives to improve the various aspects of the legal and institutional framework for corporate governance in Malaysia have progressed on an basis, the financial crisis provided further impetus necessary for the adoption of a concerted and holistic approach towards corporate governance reform by both government and industry.
In March 1998, a High-level Finance Committee on Corporate Governance, comprised of both government and industry was formed for the purpose of swiftly identifying and dealing with weaknesses highlighted by the crisis in the then existing governance framework. The Finance Committee’s findings, which were reported through the publication of the Finance Committee Report on Corporate Governance (Report) in March 1999, represents the end-product of an extensive collaborative effort between government and industry, with the implementation of key aspects of the Report, such as the introduction of the Malaysian Code on Corporate Governance, having been spearheaded by industry.
The members of the Finance Committee comprise the Ministry of Finance, SC, Companies Commission of Malaysia, Financial Reporting Foundation, Malaysian Accounting Standards Board, Bank Negara Malaysia, Association of Banks Malaysia, Association of Merchant Banks Malaysia, the then Bursa Malaysia, Association of Stockbroking Companies Malaysia, Malaysian Association of The Institute of Chartered Secretaries and Administrators and Federation of Public-listed Companies.
An Implementation Project Team, subsequently formed and tasked to lead and oversee the implementation of the recommendations of the Report, is currently working towards the completion of the implementation process. The members of the Implementation Project Team comprise the Ministry of Finance, SC, Companies Commission of Malaysia, Bank Negara Malaysia, Bursa Malaysia and Federation of Public-listed Companies.
In summary, the thrust of the Malaysian corporate governance reform agenda underlying the Report focuses on the following key areas:
- Fair treatment of all shareholders and protection of shareholder rights, with particular focus on the rights of minority shareholders;
- Transparency â€“ through the timely disclosure of adequate, clear and comparable information concerning corporate financial performance, corporate governance and corporate ownership;
- Accountability and independence of the board of directors;
- Strengthening regulatory enforcement; and
- Promoting training and education at all levels to ensure that the framework for corporate governance is supported by the necessary human resource capital.