Thursday, 14 July 2011

Malaysia: the Securities Commission's Corporate Governance Blueprint 2011

Earlier this month the Securities Commission published its Corporate Governance Blueprint 2011: see here (pdf, 6.19 MB) or here (links to individual chapters in pdf). The Blueprint sets out the Commission's proposals for improving the governance framework over the next five years and makes clear that regulation alone is not enough. The Blueprint contains six principle chapters: [1] shareholders' rights (here, pdf), [2] the role of institutional investors (here, pdf), [3] the role of the board (here, pdf), [4] disclosure and transparency (here, pdf), [5] the role of gatekeepers (here, pdf) and [6] public and private enforcement (here, pdf).

There is much in the Blueprint. For example, chapter two sets out proposals for a new code governing institutional investors. Chapter three recommends that boards adopt a charter setting out, amongst other things, the board's functions and responsibilities as well as the key values, principles and ethos of the company. The charter should also include information about the company's governance arrangements, including the committees formed and the division of powers between the board, committees, chairman and CEO. Chapter four sets out five pillars of disclosure and transparency and makes recommendations regarding the content of the Commission's Corporate Governance Code. Chapter five makes wide-ranging recommendations, including greater clarity regarding the role of company secretaries and widening the obligations regarding mandatory whistle-blowing. Chapter six explains that shareholders are able to bring a statutory derivative action where the company has suffered harm but notes that there has only been one reported case. The chapter recommends further research to explore ways in which private enforcement can be promoted, including whether the Securities Commission should have a greater role.

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