Corporate Governance in Malaysia

Corporate governance is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking account the interests of other stakeholders.

 

The main sources of the Corporate Governance reforms agenda in Malaysia are from the Malaysian Code on Corporate Governance by Finance Committee on Corporate Governance, Capital Market Master Plan (CMP) by Securities Commission and Financial Sector Master Plan (FSMP) by Bank Negara Malaysia on the financial sector.

 

It started with the establishment of Finance Committee on Corporate Governance in 1998, which consists of both government and industry. Recognition of corporate governance in Malaysia was significantly evidenced by the release of the Malaysian Code on Corporate Governance. The principles underlying the report focus on four areas including board of directors, directors remuneration, shareholders and accountability and audit.

 

Complementing the reforms the Capital Market Master Plan was introduced by the Securities Commission to chart the direction of the Malaysian capital market for the next ten years. The efficient mobilization and allocation of funds together with high degree of confidence to market participants are the visions outline by the CMP. Corporate governance is a key strategic thrust of the CMP as the Securities Commission considers good corporate governance among public listed companies is vital to achieve the objective of promoting a more conducive environment for investors in the Malaysian capital market.

 

Financial Sector master Plan was launched by the Bank Negara Malaysia in March 2001 to chart the future direction of the financial sector over the next ten years. Its goal is to develop a more resilient, competitive and dynamic financial systems that contributes to the economic growth and technology driven. Elements of corporate governance that are recommended by the master plan would include promoting shareholders’ and consumers’ activisms, regulatory control and priority sector financing.