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Presenting the keynote address titled "Corporate Governance - Sustaining the Momentum" at the Asian Corporate Governance Conference 2005 in Kuala Lumpur this morning, Tun Mohamed Dzaiddin Hj Abdullah, Chairman, Bursa Malaysia Berhad acknowledged that heightened awareness and appreciation for good corporate governance practices has evolved from prescribed practices to mandatory and obligatory practices.
"Many countries and companies have voluntarily adopted frameworks and principles of corporate governance to remain relevant and competitive. What we all need to collectively do now, is keep the momentum going.”
In sustaining the momentum, Tun Dzaiddin advised participants to focus on three key initiatives. First, to continuously raise the bar of corporate governance standards as a nation. Second, to encourage shareholder activism – as an effective check and balance mechanism and thirdly, to publicise good corporate governance initiatives and success stories.
"Continuous review and improvement of corporate governance provisions in rules and codes of best practices in our home country are crucial in keeping up with global competition and benchmarking with internationally best standards.
"Instead of being rigid, the conceptual framework for addressing corporate governance issues should provide some flexibility to cater for different levels of market development and to meet in-country requirements.”
Tun Dzaiddin also explained the continuous development of corporate governance initiatives in Malaysia which include the implementation of a full disclosure based regulation or DBR whereby the assessment process of corporate proposals for the issue, offer and listing of securities had gradually been liberalised while maintaining regulatory standards.
Amendments were also made to the Securities Industry Act 1983 in 2004 to accord protection to officers and employees of a company who has evidence of contravention of any laws or regulation or information that involves mismanagement, corruption or abuse of authority.
Amendments to the securities laws to enhance enforcement/investor redress mechanisms were also made in 2004. The amendments enhances investor avenues for judicial redress in the case of contraventions of the Securities Industry Act 1983 or the Listing Requirements.
Bursa Malaysia had also issued the Best Practices in Corporate Disclosure in August 2004 as a guide on recommended approaches for listed companies to comply with disclosure obligations under the listing requirements and securities laws.
On the second initiative to increase investor and shareholder activism, Tun Dzaiddin said that the market should be regulated not just by regulatory authorities but by the industry players themselves.
"It has been proven that increasing shareholder activism has a long-term positive effect on the organization. It serves as an effective check and balance mechanism within the company itself.
“More vigilant shareowners are also more likely to be socially responsible - adding environmental and social value to the company. Actively involved and socially responsible shareowners are more likely to help find solutions to corporate challenges, “ Tun Dzaiddin said.
As a final initiative in sustaining the momentum for corporate governance, Tun Dzaiddin encouraged companies and markets to widely publicise their corporate governance efforts to the domestic and international investors, in raising the profile of the company, or market.
"In Malaysia, some companies have already done so through bagging awards for good and exemplary levels of corporate governance practices. Now, large corporations are emphasizing on social and environmental initiatives on their websites and in their annual reports.”
Tun Dzaiddin said that one of the challenges toward achieving higher level of corporate governance standard is to inculcate a culture of high performance within organizations.
"Companies need to understand and adopt the true intention and purpose of all corporate governance measures being undertaken. Directors must take it upon themselves to improve disclosure practices beyond minimum compliance of legal requirements. It must be inculcated that a high standard of transparency reduces the potential for corporate abuse and mismanagement and attracts investors.
"With a higher level of corporate governance standards, companies strive towards enhancing shareholder value holistically and in the long run this transforms into an intangible asset in achieving the company’s sustainable growth," Tun Dzaiddin said.
