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NEWS UPDATES 29 June 2010

Malaysian Securities Commission upgrades corporate governance

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In the wake of cases like Kenmark Industrial and Linear, where almost all of its cash was taken out by one director, the Malaysian Securities Commission (SC) is preparing new standards for corporate governance, reports the New Straits Times.

SC chairman Tan Sri Zarinah Anwar said the comprehensive and forward-looking document will cover strategic priorities from board governance to active shareholder participation.

Kenmark Industrial is being investigated following its rapid financial decline, and Linear Corp lost almost all of its cash when it was taken out by one director.

To ensure the SC is guided by the best, an International Corporate Governance Consultative Committee (ICGCC) comprising members from both the private and public sectors has been formed.

The committee's role is to advise, challenge and establish a new set of policy recommendations for the CG blueprint.

"We are intensifying our oversight, enforcement and supervisory approach, and this includes our approach to corporate governance," Zarinah told participants at the SC and Bursa Malaysia Corporate Governance Week 2010 in Kuala Lumpur yesterday.

The SC will announce further details of the blueprint and name the committee members in August.

When met by reporters, Zarinah said the SC will ensure that all parties discharge and play their role on CG more appropriately and efficiently.

These include regulators, auditors, board of directors, senior management and principal officers of companies.

Earlier, in her keynote address, Zarinah said the call to further strengthen governance practices and increase regulation was nothing new.

"If public-listed companies can get their governance act right, the need for more regulation will be reduced, as will the chance of a company taking on risks that are not well understood," she said.

Good corporate governance is ultimately about performance and accountability, both to shareholders and stakeholders such as employees and creditors, she added.

"Good corporate governance is key to the integrity of corporations, financial institutions and markets, and central to the health of our economy and its stability."

It is also critical that directors have a comprehensive understanding of their role and possess the necessary skills and competence to discharge their responsibilities effectively, Zarinah said.

The SC is in talks with Bursa Malaysia to develop a comprehensive and sustained approach through training.

This means making new directors understand their role and responsibilities, and ensuring the current ones continually upgrade their skills.

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