The 7th Investor Relations Awards 10 October 2017
10 October 2017   |   By: YBhg Dato’ Ahmad Fairuz Zainol Abidin Deputy Chief Executive, Securities Commission Malaysia

YBhg Dato’ Seri Tajuddin Atan, CEO Bursa Malaysia 

Mr Steven Tan, Chairman of the Malaysian Investor Relations Association (MIRA)

Members of the Board of MIRA

Distinguished Guests,

Ladies and gentlemen,

I would like to thank MIRA for the invitation to deliver the keynote address at today’s event – the 7th Malaysian Investors Relations Award to recognise excellence in the field of IR. This year’s event is made even more auspicious as it coincides with the 10th anniversary of MIRA (it’s a double celebration).

I would like to commend and congratulate MIRA; for the past 10 years, it has been committed to raising the standards and standing of the IR profession and community in Malaysia, and contributed to facilitating greater communication and trust between companies and the investing public. Well done.

Ladies and gentlemen,

Geopolitical developments, innovation and technology are accelerating change in the global economy. These developments are affecting how companies create competitive advantage, long term value and as a result, boards are re-examining their company’s strategy and risk management and consider whether they have the required capabilities to deal with these changes.

IR and Communication on Sustainability

Dovetailing the point on supporting long term value creation, I would like to take this opportunity to highlight three messages to companies and the IR professional community. Firstly is the need for companies to communicate more effectively on sustainability issues material to the company. There is a growing recognition that sustainability can have a significant effect on company performance and its ability to provide long term value to its stakeholders.

Sustainability, long considered a “good to have” is scaling the agenda in boardrooms. Boards are increasingly expected to consider sustainability issues as part of its strategy and have a good understanding of the company’s sustainability practices. Investors are increasingly integrating consideration of these sustainability issues and metrics into their decision-making. An MIT Sloan Report in 2016 found that more than 80% of investor respondents indicate that good sustainability performance increases a company’s potential for long-term value creation, and that poor sustainability performance can be a deal breaker for investors. Nearly half of all surveyed investors say that they won’t invest in a company with poor sustainability performance. Nearly 60% of investment firm board members say they are willing to divest from companies that have poor sustainability performance.

This illustrates the need for companies to proactively engage investors on these issues to improve investor understanding of how the company generates value through its action on material sustainability issues. The Sustainability Reporting Framework introduced by Bursa Malaysia facilitates the disclosure of such information.

Companies should take the opportunity to demonstrate and explain how the company will be sustainable over the long run. They are to include sustainability in investor presentations and engagements to build and strengthen trust and credibility with investors to demonstrate the company’s ability to provide long term value to its stakeholders.

IR an emphasis in the new Malaysian Code on Corporate Governance

Ladies and gentlemen,

This brings me to my second message, which is illustrated in the emphasis of the new Malaysian Code on Corporate Governance (Code). As you are aware, the Code was introduced earlier this year with key enhancements. The Code also dedicates a principle, Principle C to address the “Integrity of Financial Reporting and Meaningful Relationship with Stakeholders”. One of the intended outcomes under this Principle is to have continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations. The first practice under Principle C is for the board to ensure there is effective, transparent and regular communication with its stakeholders, and establishing an investor relations functions is one of the means identified in the Code to achieve this.

While companies have made much progress and achieved excellence in IR as we are here today to recognise, there remains headroom to further strengthen the IR functions of listed companies. Not all companies for example make the investor relations’ contact details available to shareholders. MSWG in its last assessment (in 2015) of corporate governance practices of listed companies found that only 517 companies disclosed their investor relations’ contact details publicly.

With today’s investors relying on the internet as the primary source of information, it is vital to ensure that the content of the IR webpage and database is an accurate and comprehensive repository of relevant information on the company.

IR – Critical for smaller companies to cultivate relations with investors

My final point today touches on the critical need for smaller companies to cultivate relations with investors. While larger capitalised companies are increasingly taking IR functions as a “must have, the need for investor relations cuts across all sizes of companies in all segments and sectors. I would to take this opportunity to reemphasize that message for smaller companies. A professional and well managed IR function is even more critical for smaller companies which may not have as much exposure and coverage compared to the larger-capitalised companies. Having a good IR strategy and communication is not just necessary but critical to establish presence, and cultivate relations with investors.

Investor relations need not be a costly affair. The advent of information technology has brought down the costs and increased the convenience of undertaking IR initiatives. In fact, all listed companies, whether they be small-cap or big-cap firms, should consider the latest technologies in rolling out its investor relations efforts.

On that note, one of the SC’s Corporate Governance Strategic Priorities (2017-2020) will focus on inculcating an understanding of corporate governance early in the life cycle of companies. Given the important role which small and medium enterprises (SMEs) play in the development of Malaysia’s economy, the SC will be initiating the development of a corporate governance toolkit to ease these companies into embracing good governance practices, which may include establishing an investor relations function appropriate for the company’s stage of development.

Ladies and gentlemen,

As I conclude my remarks, it is important to reflect on the roles which we have been playing and how we will continue to execute that role in the present day and the future.

Hence it is imperative that good governance and the development of good relations with investors are undertaken by companies at all levels and sizes, to ensure there is mutual understanding of expectations and objectives. The SC continues to look at MIRA to further strengthen the relationship between companies and its shareholders, ensuring there is a strong and meaningful relationship between the two.

On that note, I would like to wish MIRA once again – a happy 10th anniversary, congratulations and may MIRA continue to make even greater strides for the profession. I would also like to congratulate all the award recipients today for your commitment and excellence in IR. 

Thank you.
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