Distinguished Guests, Ladies and Gentlemen, I am honoured to be given the opportunity to deliver the closing address at this conference. I trust that you would have had a very enlightening day and especially so with the panel of distinguished speakers that the organisers have assembled today. I would also like to congratulate the organisers for holding this very timely discussion on challenges and opportunities for company secretaries in the new millennium.

Being the final speaker for the day, I run the usual risk that much of what I say in this address may have been said already particularly in matters relating to corporate governance. However, I am sure we would all agree that issues on corporate governance are important issues and therefore they are worth reiterating. I would like to take this opportunity to highlight the role of the company secretary, how we in the Commission see the role developing in the new millennium, the challenges ahead as well the opportunities it presents. I will be paying particular emphasis on the role of the company secretary in promoting high standards of disclosure and corporate governance.

The role of a company secretary

The role of the company secretary is not an easy one to describe. Their duties are not fixed by law but are generally those assigned to him by the articles or contract of employment. The company secretary's role as the administrator of a company is well recognised. They keep the necessary registers, send out notices, organise meetings, take down minutes and file whatever is required by the Registry of Companies. The Commission's Policies and Guidelines on the Issue and Offer of Securities also place a duty on company secretaries to receive and keep a record of disclosure of directors of public listed companies, of their dealings in the securities of such companies and to table those disclosures at the meeting of the board of directors. At its core the secretary's function is basically to handle all the paperwork and procedural matters that the running of a company involves.

But today he is more than an office administrator. His authority to bind the company to contracts within the scope of his administrative duties has received judicial recognition in the case of Panorama Developments v Fidelis [1971].

But perhaps more relevant is the developing role of the company secretary in terms of advising the Chairman and the board of the directors' and companies' compliance obligations under the law. On this issue, the Report of the Finance Committee on Corporate Governance, states that company secretaries role is not purely administrative.

"They (company secretaries) have a crucial advisory role, which then follows through into a critical role in encouraging compliance with the law."

This role of the company secretary is a crucial component in any effort to develop a framework for board effectiveness. As pointed out by the speaker from the Kuala Lumpur Stock Exchange, En. Izlan Izhab, earlier today, the Report of the Finance Committee sets out the crucial pre-requisites for an effective board, which he has alluded to in detail. Company secretaries play a crucial role in managing the transition from complacent and uninformed boards to ones that are clear about their responsibilities and discharge them effectively.

SC's move to a disclosure-based regulatory system

Ladies and gentleman

The discussion on the advisory role of company secretaries is particularly relevant in the context of SC's policy shift to a disclosure-based system of regulation. It must be well understood that a full disclosure-based regulatory system not only accords greater flexibility in the process of capital raising for issuers, but also carries with it an onerous regime of information disclosure. One cannot go without the other. There must be transparency in corporate activity and transactions, compliance with existing rules on investor protection and that there is no corporate misconduct. The regime among others is predicated on the diligence of advisers to companies and boards.

This is where the role of the company secretary becomes particularly relevant. The company secretary, in view of his proximity to the board of directors, is able to advise the board on matters pertaining to the disclosure responsibilities of a company. This is particularly relevant in the context of the continuing disclosure obligations of companies. The existing disclosure requirements of companies under securities legislation and the disclosure policies of the Kuala Lumpur Stock Exchange are fairly extensive. The company secretary can in this respect ensure that the board of directors is properly advised about its disclosure obligations and this in turn encourages compliance with the law.

In fact the recommendations of the Finance Committee go so far as to suggest that a liaison person should be identified within every listed company, to whom the regulators can look to in ensuring that the relevant disclosures are made. While the recommendation does not go on to mandate that that person should be the company secretary, it implicitly suggests that the company secretary is an appropriate candidate. This however, is not intended to detract from the fact the board of directors is ultimately responsible for ensuring that all required disclosures are made.

Therefore I would urge company secretaries to play a larger role in promoting the quality and timeliness of disclosures. The Commission by itself cannot ensure that high standards of disclosure are met without the co-operation and complicity of all market participants including company secretaries. It is everybody's responsibility to comply with the rules and standards or to encourage compliance with rules and standards to help to restore and enhance investors' confidence in our capital market.

Corporate governance

Ladies and gentleman

This then leads me to my next point about the role of company secretaries in promoting sound corporate governance standards. Quite apart from his role in encouraging high disclosure standards, the company secretary stands to play a very important role in promoting board effectiveness, as I alluded to earlier.

Board efficiency and effectiveness is now an increasing necessity. A lot has been reams of literature written on the need to re-invent the corporate enterprise so as to efficiently meet global competition. Companies now have to be more efficient and better managed than ever before so as to efficiently meet emerging global competition and innovations produced by advancements in technology.

Many jurisdictions around the world look to a Code of Best Practices as a mechanism to promote board effectiveness. Codes of Best Practice essentially set out best practice prescriptions on structures and processes that companies may use in their operations towards achieving the optimal governance framework. Codes guide boards by clarifying their responsibilities and provide prescriptions that aim to strengthen the control exercised by boards over their companies.

The significance of a Code is essentially that it allows for a more practical, constructive and flexible response to raising standards of corporate governance as opposed to the more black and white response engendered by statute or regulation.

Also of significance is the aspirational and evolutionary way in which Codes influence the expectations of society, that are eventually reflected in the law. The attention generated on corporate governance issues for instance, has already had an impact on evolving judicial interpretations of director's duties.

The development of the Malaysian Code on Corporate Governance is a crucial event in this context. The proposed Malaysian Code sets out a set of principles and best practices for good governance. Compliance with the Code is voluntary BUT the listing requirements of the Kuala Lumpur Stock Exchange will require all directors of listed companies to disclose in the annual report, how they have applied the principles set out in the Code and the extent to which they have complied with the best practices set out in the Code and justify significant variances therefrom.

Let me now move on to the significance of the introduction of the Code to company secretaries. As pointed out by Mr. John Greene, this morning, the Cadbury Committee on Corporate Governance, in its report, looked to company secretaries to advise the Chairman and the board on matters pertaining to implementation of the Code of Best Practice. Similarly, company secretaries here should gear up to assisting boards in implementing the prescriptions of the Code. Their presence at board meetings and their intimate knowledge of the administrative workings of the board and the company makes them the perfect candidate for undertaking this advisory role.

In guiding implementation, company secretaries must encourage boards to address their governance needs. Too often, companies comply with the strict letter of the best practice without regard to the spirit of it. Directors should be advised to concentrate on substance rather than form. They should not be encouraged to "box-tick". Perhaps most worrying about a box ticking system is that it would not be difficult for a lazy or unscrupulous directors or shareholders to arrange matters in such a way that the letter of every governance rule is complied with but not the substance. It might even be possible for the next disaster to emerge in a company which, on paper has a 100% record of compliance. The true safeguard for good corporate governance lies in the application of informed and independent judgement by experienced and qualified individuals. The presence of experienced and qualified company secretaries in guiding the implementation process is a crucial pre-requisite to successful implementation of the Code.

Quite apart from issues pertaining to its implementation, the Code does allude specifically to the value added role that company secretaries can play in enhancing board efficiency and effectiveness.

Board appointments