Welcome Remarks by
Y Bhg Datuk Ranjit Ajit Singh
Chairman, Securities Commission Malaysia
at the
Malaysian Code on Corporate Governance 2012 Seminar
Friday 8 June 2012

“Raising the Bar: the Malaysian Code on Corporate Governance”

Distinguished speakers
Ladies and gentlemen


Good morning and welcome to the Malaysian Code on Corporate Governance 2012 seminar. I am delighted to see so many participants of such diverse backgrounds attend this seminar on Corporate Governance.


Corporate governance has always been a top agenda item for the Securities Commission, and today’s seminar is timely considering our recent release of the new Code on corporate governance. The new code is the first major deliverable of the Securities Commission’s Corporate Governance Blueprint 2011 (Blueprint) launched in July last year.


The Blueprint provides the strategic direction and action plans over the next five years on corporate governance development in Malaysia. More than just moving the regulatory yardstick by enhancing regulations and the outcomes for the capital market – it also focuses closely on behavior and how companies should internalise the values, spirit and purpose behind the regulations.


In Malaysia we had the good fortune to learn and adapt from global best practices and also the mistakes of others. From lessons learned we have over the years enhanced our corporate governance framework and promoted the observance of best practices through the Code and our regulations. And, while we have made significant strides in strengthening corporate governance, we will not rest on our laurels but continue our ongoing commitment to meet new demands and challenges.


Our recent voluntary initiative to have our corporate governance framework assessed under the World Bank Report on the Observance of Standards and Codes (ROSC) for 2012 underscores this point. Although the actual results of the assessment have yet to be released, the findings thus far suggest that Malaysia has seen improvements to our previous assessment in 2006.

Ladies and gentlemen


I believe that a sound corporate governance framework will be achieved neither by markets acting on their own, nor by the introduction of a prescriptive regulatory infrastructure. The challenge we are all facing here is to find the right balance between regulatory and market driven incentives. The successful development of a robust and credible corporate governance environment must be premised on a collaborative effort.


Shareholders must exercise their rights and voice their expectations on investee companies. Directors must embrace the right mindset and lead by example. Industry associations must foster self-discipline among their members. Reputational intermediaries must uphold gatekeeping responsibilities. And, the media also has an important role in showcasing the good corporate governance practices where prevalent.


Through a collective commitment of these roles, companies can achieve growth with governance and weather the shocks and uncertainties of the changing economic landscape. This will also help lift the confidence of shareholders and investors. At the end of the day – good corporate governance is the key to maintaining the integrity, stability, credibility and growth of our capital market.

Ladies and gentlemen


A key theme today is raising the bar in corporate governance practices. Central to this discussion is the ability of the boards and key management to do the right things for the right reasons.


The board plays a crucial role in setting the company’s strategic direction, which is premised on sustainability and promoting ethical conduct in business dealings. In doing so, the board’s roles are, amongst others – to lead the company, oversee the conduct of company’s business, identify and mitigate risks, ensure proper succession planning and implementation of effective and meaningful shareholder communications.


Given such significant responsibilities, the board must be structured with the view to protect the interest of shareholders and the relevant stakeholders. In this respect, much focus of the new Code is placed on enhancing the efficiency of boards through their composition, commitment and independence to meet these demands.


It is imperative that boards possess the expertise and competencies necessary to understand the risks inherent with the business models and strategic direction of the company. Equally important are boards who bring fresh perspectives, relevant insights and on occasions challenge conventional wisdom.


A deeper understanding of ever evolving corporate governance standards and performance issues is critical.


Boards whose members possess a profound grasp of best practice in these areas are able to move beyond mere box-ticking compliance and raise the bar for corporate governance. Therefore, the people chosen to sit on boards must be those who possess the right qualities – the attributes are not exhaustive and the onus is on the boards themselves to find the most honest, knowledgeable and suitable candidate.


At the end of the day we all look for boards that are committed to achieving high standards of corporate governance. Boards that believe that high standards of corporate governance provide a framework and solid foundation for achieving, attracting and retaining talent, promoting high standards of accountability and transparency and meeting the expectations of all stakeholders.

Ladies and gentlemen,


The value of good corporate governance practices must never be appreciated only when another major corporate scandal or financial crisis occur. There is the tendency that when all is well, markets advocate that the bar should not be raised for corporate governance. It is only when such corporate storms arrive do we realise the value of being prepared with the security of a good shelter, within a robust corporate governance framework, and this is an area in which the SC continues to focus our efforts.


To conclude, governance is a reflection of the values of individuals within an institution. The initiatives we have started to promote good governance are only as good as the people observing that.


This seminar is indeed significant in setting a tone on our corporate governance agenda. I hope interesting ideas will be borne as we look into the priorities of corporate governance. I want to acknowledge the speakers, Tan Sri Munir, regulators from our counterparts in other jurisdictions, academics and stock exchange regulator, and corporate governance observer, Guna.

With that, I thank you, and wish you all a good seminar ahead.