Basic tenets of reporting disclosures and board independence adopted by most Malaysian PLCs
KUALA LUMPUR: Most large and mid-small public-listed companies in Malaysia have adopted the basic tenets of reporting disclosures and Board Independence as prescribed by the Malaysian Code on Corporate Governance 2017 (MCCG), according to a recent EY report, Take 5: Responsible Governance.
The report, which surveyed 300 Malaysia-based public-listed companies (PLCs), finds most PLCs have also adopted the separation of roles and responsibilities between the Chairman of the Audit Commi ee and the Chairman and the Board (99 per cent), as well as the Chairman and the CEO (more than 90 per cent), in compliance with Board Independence as stipulated in the MCCG.
Nonetheless, the report also highlights several governance areas with scope for improvement. On representation of independent directors, the EY survey findings reveal that over two-fifths, specifically 47 per cent of large companies do not have more than 50 per cent independent directors and 42 per cent of mid-small companies do not have at least 50 per cent independent directors.
Another area for improvement is stepping up the transparency in senior management remuneration, where fewer than 20 per cent PLCs have disclosed the remuneration components of their top five senior management personnel.
The survey report also suggests opportunities for greater gender diversity in board composition, where only 25 per cent of large and 16 per cent of mid-small companies have at least 30 per cent women directors.
The recent high-profile governance cases in Malaysia have tested the strength of her corporate governance including rules and regulations, and enforcement effectiveness.
In response, policymakers, regulatorybodiesandenforcement agencies have launched a series of actions to increase the transparency of public disclosures and tougher enforcement actions to restore integrity, transparency and accountability.
Susanna Lim, Partner, Malaysia Risk Advisory, Ernst & Young Advisory Services Sdn Bhd and EY Asean Technology Risk Leader says, “With the new corporate liability provision in the MACC Act, Boards and CEOs need to strengthen their corporate vigilance and deliver responsible governance practices or face legal ramifications.”