The regulations are intended to enhance the quality of information disclosed by listed corporations in their financial statements and to ensure that accounting standards issued by the Malaysian Accounting Standards Board (MASB) are strictly complied with. This is in line with the Commission's developmental efforts to bring about greater accountability, transparency and better corporate governance in the interests of investor protection.
These regulations require every listed corporation, its directors and chief executive to prepare and present its financial statements in accordance with approved accounting standards. The 'approved accounting standards' referred to above are accounting standards which are issued by the MASB under subsection 7(1) of the Financial Reporting Act 1997.
As a matter of policy the Commission has decided that the term 'financial statements' is to encompass the following:
(a) balance sheet;
(b) income statement;
(c) a statement showing either:
(i) all changes in equity; or
(ii) changes in equity other than those arising from capital transactions with owners and distributions to owners;
(d) cash flow statement; and
(e) accounting policies and explanatory notes.
In addition, every director of a listed corporation shall ensure that the accounts of the corporation when laid before the annual general meeting are made out in accordance with approved accounting standards. Failure to comply with these regulations is an offence.
In the event of any failure to comply with approved accounting standards, the Commission may direct a listed corporation, its directors or chief executive:
- to rectify the relevant financial statements or accounts in order to ensure compliance with approved accounting standards;
- to provide relevant undertakings to the Commission with regard to compliance with the approved accounting standards; or
- to make such announcement as the Commission deems fit in relation to the non compliance or the rectification required.
Where the Commission has issued a direction to a listed corporation to rectify the relevant financial statements or accounts, the listed corporation, its directors or chief executive, as the case may be, shall submit the rectified financial statement or accounts to the Commission. The rectified accounts may also be provided to any person as the listed corporation, its directors or chief executive deems fit. Failure to comply with any direction of the Commission or breach of an undertaking provided by the listed corporation, its directors or chief executive is an offence under the regulations.
In ensuring compliance with accounting standards, the Commission will actively initiate scrutiny of the financial statements of listed corporations. The aim of the Commission in this regard is to secure quality financial information. For this reason, enforcement by the Commission will be carried out initially through active discussions and voluntary agreement on the type of remedial actions to be taken by affected corporations.
However failure by the relevant corporations, directors or management to address deficiencies in their financial statements after all these consultative processes will result in the Commission taking appropriate actions against the listed corporations, its directors or management as permitted by law. Such recourse will be sought where the Commission arrives at the conclusion that non-compliance has occurred and that the corporation has failed to provide an acceptable explanation for the non-compliance or that the corporation has failed to take the relevant remedial actions stipulated by the Commission.
