The Securities Commission Malaysia (SC) is dedicated towards promoting the internalisation of a culture of good governance amongst capital market participants. Greater emphasis is being placed on self and market regulation to complement the existing comprehensive regulatory framework. We believe that a strong corporate governance culture must be premised on a dynamic synthesis of efforts between regulators and the market.

Malaysian Code on Corporate Governance

Malaysian Code on Corporate Governance (MCCG), is a set of best practices to strengthen corporate culture anchored on accountability and transparency.

The new MCCG places greater emphasis on the internalisation of corporate governance culture, not just among listed companies, but also encourages non-listed entities including state-owned enterprises, small and medium enterprises (SMEs) and licensed intermediaries to embrace the code.

The code has 36 practices to support three principles namely board leadership and effectiveness; effective audit, risk management, and internal controls; corporate reporting and relationship with stakeholders.

A key feature of the new code is the introduction of the Comprehend, Apply and Report (CARE) approach, and the shift from “comply or explain” to “apply or explain an alternative”. This is meant to encourage listed companies to put more thought and consideration when adopting and reporting on their corporate governance practices.

The MCCG also adopts a differentiated and proportionality approach in the application of the code taking into account the differing sizes and complexity of listed companies. The code now identifies certain practices and reporting expectations to only apply to companies on the FTSE Bursa Top 100 Index and those with market capitalization of RM 2 billion or more.

Another new dimension in the code is the introduction of ‘Step Up’ practices to encourage companies to go further in achieving corporate excellence. This includes the practice which requires Audit Committee to comprise only of independent directors and the establishment of a Risk Management Committee.

The new MCCG is the result of a comprehensive review undertaken by the SC in 2016 drawing inputs from domestic and international stakeholders, lessons from past and recent governance failures and changes in market structures and business needs. The code, which was first introduced in 2000 following the recommendations made by the High Level Finance Committee in 1999 , had been reviewed twice in 2007 and 2012.

Malaysian Code for Institutional Investors

The Malaysian Code for Institutional Investors aims to set out broad principles of effective stewardship by institutional investors such as their disclosures of stewardship policies, monitoring of and engagement with investee companies and managing conflict of interests.

ASEAN Corporate Governance Scorecard: Country Report & Assessment

The ASEAN Corporate Governance Scorecard was introduced in 2011. The scorecard is a corporate governance initiative of the Association of Southeast Asian Nations (ASEAN), under the ASEAN Capital Markets Forum (ACMF) Implementation Plan for the development of an integrated capital market, to complement other ACMF initiatives and promote ASEAN as an asset class. This initiative is led by Securities Commission Malaysia and supported by the Asian Development Bank (ADB) through its regional technical assistance for ASEAN capital market integration. The scorecard hopes to raise corporate governance standards of publicly listed companies (PLCs) in ASEAN countries and increase their visibility to investors.

The country report highlights the areas of strengths and areas for further improvement of each participating country which provided regulators, PLCs, Institute of Directors, and other stakeholders useful data points to guide corporate governance reforms, strategies, and measures in their respective country.

The Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance were used as the main benchmark for the Scorecard.  These cover Rights of Shareholders, Equitable treatment of Shareholders, Role of Stakeholders, Disclosure and Transparency and Responsibilities of the Board. 

Corporate Governance Blueprint 2011

The Securities Commission Malaysia’s five-year Corporate Governance Blueprint (Blueprint) which was launched on 8 July 2011, provides the action plan to raise the standards of corporate governance in Malaysia by strengthening self and market discipline and promoting greater internalisation of the culture of good governance. It engenders 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.

Developed through a highly consultative process with industry, the Blueprint focuses on six connected themes of the corporate governance ecosystem namely shareholder rights, the roles of institutional investors, boards, gatekeepers and influencers, disclosure and transparency as well as public and private enforcement.

Click here to view Corporate Governance Blueprint 2011

The recommendations in the Blueprint will be implemented over a five year period. Most of the recommendations will be applied through a corporate governance code and changes to the Listing Requirements, both of which are expected to take effect by early 2012. A number of recommendations 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. There are also recommendations which would involve legislative amendments. All the recommendations of the Blueprint will take effect after appropriate transitional mechanisms are put in place to ensure minimum disruption.

The CG Blueprint was open for public consultations from 8 July 2011 to 15 September 2011. Additionally, the SC had issued a consultation paper on 15 November 2011 to obtain views on independent chairman and poll voting. The responses received from the public consultations and the SC’s position on each recommendation is available for download.