Kuala Lumpur, 8 June 2012

SC: Companies must internalise corporate governance
Beyond box-ticking to doing the right things

Companies need to move beyond what is mandatory and should internalise the values, spirit and purpose behind the regulations, leaders of industry were told at a seminar on the new Malaysian Code on Corporate Governance 2012 (CG Code 2012), organised by the Securities Industry Development Corporation (SIDC), the training and development arm of the Securities Commission Malaysia (SC). The CG Code 2012 was introduced by the SC earlier this year.

Datuk Ranjit Ajit Singh, Chairman of the SC, urged all parties to play their respective roles effectively as the successful development of a robust and credible corporate governance environment must also be premised on a collaborative effort.

“Through a collective commitment, by shareholders who actively exercise their rights and voice their expectations, directors who embrace the right mindset and lead by example and industry associations which foster self-discipline, companies can achieve growth and lift the confidence of shareholders and investors” said Datuk Ranjit.

The CG Code 2012 seeks to strengthen governance through clarifying the role of the board, enhance board effectiveness, ensuring timely and quality disclosures, and strengthening the relationship between a company and its stakeholders.

Board effectiveness was a dominant theme during the seminar with several of the speakers giving strong emphasis to this area.

“Board effectiveness must be demonstrated through the composition of the board, the independence of the board and diversity in terms of skill sets as well as gender” commented Professor Mak Yuen Teen from the National University of Singapore.

Tan Sri Dato’ Dr Munir Majid, Chairman of Bank Muamalat Malaysia, said “Governments and controlling shareholders should not be overbearing. They should also have regard for the essence and values of the code. For example, nomination committees should be allowed the space to consider the best directors for the company without imposition or limitation. That process of search and assessment, which is assumed in the code, should be allowed to take place.”

In his discussion on global corporate governance developments, Charles Grieve, senior director of the Hong Kong Securities and Futures Commission, shared examples of where the power of shareholder participation and activism had catalysed a number of new corporate governance proposals such as the UK’s proposal for external board evaluations once every three years and a binding vote on board’s remuneration policy; the US ‘Say-on-Pay’ Vote and Australia’s “Two-strikes out” vote, also on directors’ remuneration.

About 100 corporate leaders participated in the seminar which featured panel discussions on the key principles and recommendations of the code by prominent local and regional corporate governance experts and advocates.