CG Strategic Priorities to chart capital market growth
KUALA LUMPUR: The Securities Commission Malaysia (SC) has released the Corporate Governance (CG) Strategic Priorities 2021–2023 to chart the growth path for the capital market in the next five years and steer the capital market in the direction post-Covid-19.
Executive chairman Datuk Syed Zaid Albar said as the global and Malaysian economies recover from the pandemic, it is critical to “build back better” capital markets and ensure that long-term economic scarring is minimised while existing inequities and structural challenges in the economy do not worsen.
“These fault lines must be addressed to enable communities and social systems to get back on their feet and businesses must play their role in society, as good corporate citizens with a purpose,” he said when launching the CG Strategic Priorities 20212023 yesterday.
Syed Zaid emphasised that CG is important in the much-needed post-pandemic environment and that it can be useful in defining the role of stakeholders within a business and ensuring that when decisions are made, the best interests of all stakeholders are considered.
Elaborating on the framework, Syed Zaid said the SC’s CG Strategic Priorities 2021-2023 comprise 11 initiatives that aim to promote agile and responsible boards, environmental, social and corporate governance (ESG) and governance fitness at boards, investor activism and stewardship; deepening engagements with youth on CG; and widening access to CG data.
The CG Strategic Priorities build on the SC’s previous plan for 2017 to 2020, where a 90 per cent implementation score was achieved and it is an important component of the Capital Market Masterplan 3 that was launched in September 2021.
Syed Zaid asserted that capital market readiness in terms of ESG is no longer a choice for companies, as stakeholders have come to expect more responsible, sustainable, and climateconscious behaviour.
“This expectation is going to increase over time and thus, boards need to be ESG-ready and recognising the need for them to be agile and effective as they navigate challenging and uncertain times, the SC will implement measures to improve board diversity, including accelerating the participation of women on boards and in senior management.
“Listed companies are reminded that while it will be mandatory for boards to comprise at least one woman director, boards should put in efforts to achieve the target of having 30 per cent women directors in order to further harness the benefits of having a diverse board,” he added.
Currently, only 162 listed companies have at least 30 per cent women on their board.
Meanwhile, alongside the CG Strategic Priorities, the SC also released the Corporate Governance Monitor 2021 report to highlight progress made in the adoption of the 2017 edition of the Malaysian Code on Corporate Governance.
Adoption levels across the majority of the practices remained positive, with 24 out of the 36 best practices recording adoption levels of at least 90 per cent versus 23 practices in 2019.
The lowest adoption level was for practices relating to the disclosure of senior management remuneration where only 5.0 per cent of listed companies disclose the detailed remuneration of their senior management.
“Transparency on pay is critical to promote alignment between pay and performance and for shareholders to evaluate if the incentive structure is driving the right behaviour,” said Syed Zaid.
The CG Monitor 2021 features three thematic essays, including SC’s Audit Oversight Board report on the demographics of audit committees in terms of independence, diversity and competence.
These fault lines must be addressed to enable communities and social systems to get back on their feet and businesses must play their role in society, as good corporate citizens with a purpose.
Datuk Syed Zaid Albar