Opening Remarks
Datuk Syed Zaid Albar
Chairman, Securities Commission Malaysia
OECD Asian Roundtable on Corporate Governance
7 November 2018

Ms Mathilde Mesnard, Deputy Director, Directorate for Financial and Enterprise Affairs, OECD
Mr Shigeru Ariizumi, Deputy Commissioner for International Affairs, Financial Services Authority, Japan
Fellow regulators,
Distinguished speakers,
Ladies and gentlemen,

1. Let me first extend a warm welcome to fellow regulators, speakers and participants to the Securities Commission Malaysia. A special thanks to OECD for giving us the opportunity to host this year’s OECD Asian Roundtable on Corporate Governance in Malaysia. As you know, I have just assumed office as Chairman of SC last week and I am honoured to deliver my first address at this Roundtable.
2. It has been 5 years since the SC last hosted this roundtable here and since then Malaysia’s corporate governance development has moved forward in great strides.  The Institutional Investor Council which was established in 2015 is now in full swing and has been actively engaging companies including FGV, Top Glove and Sapura Energy on various governance and sustainability issues. The new Malaysian Code of Corporate Governance released in 2017 took a novel approach focusing on driving internalization of good governance practices, greater transparency and board diversity. We have now established the Institute of Corporate Directors Malaysia to develop a professional pathway for directors and promote board assessment.
3. My colleagues have informed me that the SC has been a long-standing member of this Roundtable, and the rich discussions have in many ways informed our policy decisions in developing the corporate governance framework in Malaysia. With such a diverse group of participants, this Roundtable is an important platform for us to engage and share experiences on emerging corporate governance issues.
4. I am also delighted to report that Malaysia’s status in the OECD Corporate Governance Committee was recently upgraded from an Invitee to Participant. I would like to take this opportunity to thank the OECD Secretary General, Mr Angel Gurria and the OECD Council for this upgrade. The SC’s acceptance and agreement to this upgrade signifies our commitment to continue developing and promoting the adoption of corporate governance best practices in Asia and beyond.
5. Before I elaborate further, let me briefly touch on the biggest issue of governance that has embroiled Malaysia and several other jurisdictions worldwide recently—1MDB. Given that criminal charges have been filed and trials are pending, I have to limit myself to general remarks rather than specific details.
6. The new government is determined to restore the status Malaysia enjoyed in global public governance standings prior to this scandal. My remit, and that of the SC, is to discharge our duties with the utmost professional competence and highest levels of personal integrity.
7. I assure all of you that we intend to do that. It will be our contribution to regain the trust and confidence of the investors.
Ladies and gentlemen,
8. Businesses large and small have the ability to exercise impact over a wide range of stakeholders. The extent of this “impact” is influenced by the actions of businesses steered through the internalization of good corporate governance practices. The corporate governance landscape is shifting globally, driven by several key developments.  Uncertain economic growth has broaden society’s awareness of the impact that businesses have on politics, policies and their own daily lives. They have come to the realisation that they have more power than before to make their voices heard.
9. There is also the growing awareness amongst governments and regulators that sustainable economic growth requires a proactive regulatory approach. To build strong businesses, regulators need to put in place an effective oversight of business activities. I am sure, many regulators in this room will agree with me that ensuring good governance now, is far less costly than paying for consequences of bad governance later.
10. Hence, the advocacy of good corporate governance remains a central theme and priority of the SC’s regulatory agenda – embracing the core principles of transparency, responsibility and accountability. Over the years, the SC has also invested significant resources in promoting high level of disclosures, stakeholder engagements and sustainable development practices amongst listed companies.
11. From a regulatory standpoint, the SC has always adopted a balanced posture emphasizing ‘pragmatism’ through the principles of proportionality which is embodied in the SC’s Regulatory Philosophy document. In adopting this approach, we have taken great care to ensure that our regulatory framework facilitates the development of the capital market while at the same time promotes market integrity and investor protection. I am pleased to note that the OECD will be releasing its first report on the use of Flexibility and Proportionality in Corporate Governance Frameworks at this Roundtable.
12. In drafting the new Malaysian Code on Corporate Governance released in 2017, we were mindful of the need to adopt a proportionate approach – differentiating the application of certain practices and reporting expectations based on the differing size and stage of growth of our listed companies. Another important dimension to this new Code is the introduction of the CARE (Comprehend, Apply, Report) approach which emphasizes the internalisation of good corporate governance values. I will not discuss the details of the Code here as I understand there will be a session later focusing on the Code.
Ladies and gentlemen,
13. Moving forward, the SC will implement its 3-year Corporate Governance Strategic Priorities (2017-2020) focusing on among others, achieving 30% women on boards of top 100 companies on Bursa, inculcating good corporate governance in early stages of a company’s (SME) development and investing in the future of our youth – by embedding corporate governance principles in tertiary curriculum.
14. Driving gender diversity on boards and senior management will remain our key priority. Women on boards of Top 100 companies remains at 23.2% (latest statistics) while those at senior management level stood at 27%(as of 2017). This issue is not unique only to Malaysia. As all of you may be aware, institutional investors such as State Street, Blackrock and Vanguard Group have begun voting against reappointment of boards of companies which do not meet their gender diversity criteria, especially companies with all-male leadership.
15. In order to accelerate the achievement of our national target of 30% women on boards by year 2020, large companies are now required to have 30% women on their boards. The SC’s new online reporting which went live early this year will allow us to track the progress made by listed companies in implementing this target. To widen opportunities for women to be appointed on boards, SC also introduced the requirement for two-tier voting for independent directors who wish to serve beyond 12 years. We believe this will encourage board refreshment and facilitate entrance of new skills and talents to boards of listed companies. We will also be working together with the Institutional Investor Council, whose members include EPF, Khazanah, KWAP and PNB, in driving the achievement of gender diversity targets in their investee companies.
16. With enhanced monitoring and greater transparency in coporate governance disclosure, the SC is optimistic that the target can be achieved.
17. With limited resources, regulators such as the SC cannot work alone in promoting good governance practices. All corporate governance proponents, investors and stakeholders have a role to play. Bursa Malaysia, the Minority Shareholder Watch Group (MSWG), the Institutional Investors Council, the Malaysian Institute of Corporate Governance and (the newly established Institute of Corporate Directors Malaysia) are key drivers in this eco-system.   To streamline our efforts in this area, SC will establish a Corporate Governance Council consisting of regulators and CG stakeholders to drive the implementation of Malaysia’s corporate governance priorities and achievements of targets set for year 2020.
18. On that note, I wish you a fruitful discussion over the next 1.5 days.