To this end, the SC is continuously examining ways of further facilitating and promoting long-term value creation by Malaysian corporations and greater corporate accountability to the investing public. Among other things, Malaysian corporations are encouraged to foster awareness and public dissemination of their performance in this regard, such as the possible disclosure of changes in shareholder value in their periodic reports. Encouraging greater disclosure of relevant information is consistent with the SC's ongoing Disclosure-Based Regulation (DBR) programme, which has just entered into its second phase of implementation. Under DBR, the onus of assessing the merit of investments rests with the investors, underpinned by the disclosure of material information by the company.
Some of the areas in which the SC will further emphasise the incorporation of shareholder value considerations, as part of its overall regulatory functions, include educating company directors on the importance of maximising shareholder value, as well as their duties in this regard. Investors and fund managers are also encouraged to play a more active role in assessing whether the firms they invest in place due priority on value creation.
Over the last two years, the crisis and subsequent corporate governance reforms in Malaysia have heightened awareness within the corporate sector that it must be mindful of safeguarding the interests of shareholders. Across international capital markets, shareholder activism has resulted in a convergence of business goals among more and more companies: to ensure long-term growth by creating value for shareholders. Creating shareholder value involves establishing an environment where shareholders can be confident that their interests are protected in the company they invest in. This, in turn, makes the company an attractive investment option — an important factor given the need to position the Malaysian corporate sector at a level where it is able to compete effectively for long-term capital.
Thus, to foster confidence in the wealth-enhancing potential of investing in Malaysian firms, an emphasis on shareholder welfare is not merely desirable, but necessary. While the importance of shareholder wealth maximisation has been increasingly recognised in recent years, its acceptance as a principal objective in decision-making within Malaysian corporations still needs to be further enhanced.
To this end, the SC would like to see the principle of shareholder value maximisation strongly applied in order to elevate corporate practices in Malaysia to more competitive levels, by continuing to set a framework for higher standards of transparency, accountability and performance management.
