.jpg)
Chief Executive Officer, Yusli Mohamed Yusoff said the exchange recognizes that rules are not sufficient to instill the necessary discipline in the market place.
"In this respect, there is a need for strict and objective enforcement of the requirements to ensure that public listed companies stay vigilant and fulfill their obligations.
"Whereas before the exchange was only in a position to take enforcement action against the listed company, now it is empowered to take enforcement action where there are obligations placed and the director has caused, aided or abetted the breach by the listed company.
"Similarly, where an adviser breaches an obligation placed under the Listing Requirements, action can be taken against the adviser," he said.
Yusli was delivering his keynote address at the launch of the KPMG Audit Committee Guide and Half Day Seminar 'Audit Committee Insight - What Works Best' in Kuala Lumpur today.
On the KPMG Audit Committee Guide, Yusli said It is of benefit as a further reference point to facilitate and enhance best practice for industry and market participants
"This effort is also an important indication of the support and teamwork that practitioners, including KPMG, have contributed in the collective effort by industry regulators and market practitioners to improve standards and practice," he said.
On greater enforcement, Yusli said for the period beginning 1 January to 31 December 2003, the exchange has initiated 326 cases against public listed companies for various breaches of the listing requirements.
Of this - 129 cases involved breaches on failure to comply with corporate disclosure policy and immediate announcements. Another 34 involved breaches on failure to furnish quarterly reports, annual audited accounts and annual reports.
The remaining 163 cases are for various breaches on failure to comply with continuous listing obligations, continuing disclosure and corporate governance disclosures.
"As compared to the 445 cases initiated for financial year end 2002, there has been a reduction in terms of investigation cases on public listed companies. This indicates that there is now a better understanding of requirements and hence greater compliance.
"This would also mean listed issuers now understand that the exchange is committed in monitoring for compliance and enforcement. Either way, the results are beginning to show," he said.
Specific to independent directors and audit committees, Yusli said the Listing Requirements have adopted a general definition of the independent director. An independent director is one who is independent of management and free from any business or other relationship, which could interfere with the exercise of independent judgement or the ability to act in the best interest of the listed issuer.
The Listing Requirements have also excluded specific categories of persons from holding the office of independent director. For example, these exclusions include the executive director or former executive director [until a lapse of 2 years] and a major shareholder of the listed issuer or its related corporation.
The person must not be an officer of the listed issuer within the last 2 years; or must not be a relative of the Executive Director, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or a major shareholder, and has not engaged in transactions with the listed issuer - the consideration of which trigger the threshold as prescribed in the Listing Requirements.
Public Listed Companies are also required to ensure a minimum number of independent directors i.e at least 2 directors or one third of its board, must be independent.
"The Chairman of the Audit Committee of a public listed company must be independent; whilst the composition of the audit committee must be a majority of independent directors.
"Further to this, the rights of the Audit Committee have been enhanced to include the right to obtain independent professional advice and the right to convene meetings with external auditors, and even to exclude the attendance of the executive members, where necessary," Yusli said.
