Opening Message at the Launch of the Malaysian Board Practices Review 2020

8 July 2021 | By Ms Foo Lee Mei, Managing Director, Securities Commission Malaysia

Opening Message by
Ms Foo Lee Mei
Managing Director, Securities Commission Malaysia
Launch of the Malaysian Board Practices Review 2020
Institute of Corporate Directors Malaysia
8 July 2021

1.	Tan Sri Zarinah Anwar, Chairman of the Institute of Corporate Directors Malaysia (ICDM), Distinguished board members of ICDM, Ms Michele Kythe Lim, CEO and President, ICDM, Ladies and gentlemen.
2.	Good morning, I hope everyone is keeping well and safe.
3.	Thank you to ICDM for inviting the SC to deliver the opening remarks this morning.
4.	I am pleased to be able to join you for the launch of the Malaysian Board Practices Review 2020 report, and I would like to commend ICDM, Russell Reynolds Associates and Bursa Malaysia for their effort in producing this insightful report. I would also like to commend the 300 over participants who have signed on today. I am truly encouraged by your commitment to further the development and implementation of CG practices alongside the SC and other stakeholders.
5.	The launch of this report, dovetailing the release of the revised Malaysian Code on Corporate Governance in April (2021) is very timely indeed. As you may be aware, the revised MCCG shines a spotlight on the very same issues - the selection, nomination, appointment and evaluation of board members. Four key thrusts in maintaining effective and high performing boards.
6.	In my short address today, I would like to frame our discussion around these four words “From Good To Great”
7.	Since the Asian Financial Crisis, the SC has put in place various processes and structures to drive the development of good corporate governance in Malaysia. All the requirements that we adopted were in line with global best practices but structured after taking into account local CG developments as well as the different sizes and stage of development of our PLCs.
8.	But as we reflect on the corporations that have failed over the last decade globally and in Malaysia, what strikes me the most is that these corporations have in place structures which are supposed to promote good corporate governance. Enron’s board members when it filed for bankruptcy couldn’t have been more skilled and experienced – it included a former dean from Stanford who was an accounting professor, a former CEO of an insurance company, a former CEO of an international bank and the list goes on. If following the regulatory structures and recipes didn’t work, what other issues should we examine?
9.	To put it into context, let me use the metaphor of a car with four (4) steering wheels. What is our destination? The 3Ps of course – Planet, People Profit.
10.	How can we arrive safely to the 3Ps when we have 4 persons driving the car? Simple – No one should sleep at the wheel, and there are no passengers – all of us are expected to play our role in steering the car towards its destination, be it the Chairman, Executive Director or the Independent Non-Executive Directors. Courts have been very reluctant to differentiate the responsibilities of an independent non-executive director and an executive director. In the eyes of the law, the full gamut of directors’ responsibility applies equally, it will rest on your shoulders.
11.	There are many moving parts affecting the ability of this car to reach its destination safely. In the time that we have this morning, let’s focus on the discussions in the car. These are the questions you will need to reflect on – Do the 4 drivers have the skills and experience to drive this car? Do the 4 drivers trust each other? Do the 4 drivers bring sufficient diversity in gender, experience and skills, age to navigate the car and overcome challenges along the journey? Does the main driver promote a culture of healthy dissent?
12.	Research have shown that the highest performing companies and effective and well-functioning boards invariably exhibit a robust and healthy culture of dissent. Board member dissent should not be viewed negatively but rather an obligation of all board members. When regulators or the courts consider the company’s documents to ascertain if you have discharged your duties as a director, the key issue they would look for is, “did this director raise any questions, did he ask the difficult questions and seek clarification from the executives?
13.	The questions that were raised earlier brings together and validates the importance of the Board Review carried out by ICDM. A robust board selection and nomination process and effective board evaluation will go a long way in ensuring that the company reaches the 3P destination and move up the curve from being good to great!
14.	I strongly encourage you to leverage ICDM and its network of experts to continue building effective boards.
15.	Two weeks ago, at the MIA Corporate Board Leadership Symposium, I left the audience with this question – “are we there yet” (in relation to listed companies’ adoption and implementation of good CG practices).
16.	Today, as I end this address, I would like you to reflect on this- Do the board practices in the company that I serve place the company among leaders or laggards?
17.	With that let me wish you a productive session ahead.

	End