Executive Chairman Dato' Mohd Azlan Hashim said a successful and effective securities industry is built around corporate excellence.
"The Exchange as regulator, will be only as good as the companies and market that it regulates. The Exchange, as a market operator will only be a robust trading hub with increased investor confidence and participation.
"Listed companies have a key role to play in attracting investors, both domestic and international, in enhancing investor interest and in encouraging investor participation in the market," he said.
Mohd Azlan was speaking at the KLSE Corporate Awards 2002. The awards were presented by Acting Prime Minister YAB Dato' Seri Abdullah Ahmad Badawi at a ceremony attended by over 900 representatives from over 400 companies listed on KLSE.
Mohd Azlan said the KLSE Corporate Awards 2002 is a significant opportunity to promote corporate governance standards and practices in Malaysia and to recognise Malaysian companies that strongly abide by such standards and best practices.
"The results of these awards will be publicised to over 300 major international fund managers and available to over 3 million investors of the KLSE from over 100 countries.
"We can expect more exciting events in the coming years. Next year, for the KLSE Corporate Awards 2003, we will see the inclusion of MESDAQ Market listed companies in the competition," he said.
The KLSE Corporate Awards seek to recognise the top achievers practising excellent corporate conduct from amongst the public listed companies.
The KLSE Corporate Awards is being expanded from the original two categories, the KLSE Corporate Excellence Awards and the KLSE Sectoral Awards to include Merit Awards. The KLSE Corporate Excellence Award will honour the top two companies from the Main Board and the top two companies from the Second Board. The KLSE Corporate Sectoral Award honours the top company from each of the eleven Main Board sectors and the five Second Board sectors.
Commencing with the KLSE Corporate Awards 2002, the KLSE Corporate Merit Awards will also be presented. The Merit Award recipients will comprise the first and second runner-up companies in each sector, after the determination of the KLSE Corporate Sectoral Award winners, provided these companies have met the minimum adjudication criteria.
"We are here today to recognise Malaysian companies that have excelled. We are here to recognise that the rules and standards of governance in Malaysia are second to none and have served the Malaysian companies, capital market and investors well," Mohd Azlan added.
Mohd Azlan said many find it not easy to manage a public listed company and those who have done well deserve to be recognised.
"One cannot help but appreciate and even admire the depth of effort, the skills, the resources, the time and the knowledge and expertise invested, in establishing a successful and well managed public company.
Touching on the demutualisation of KLSE, Mohd Azlan said some have raised concerns about possible conflicts that a demutualised KLSE could face in performing its regulatory functions whilst operating as a commercial entity with profit motive.
"These conflicts and concerns, perceived or real, are well recognised. In fact, conflicts could exist in both types of market structures, mutual or demutualised.
"The issue at hand therefore, is how the market framework, regulatory or otherwise, addresses and manages the risks involved. Consequently, there are proposed mechanisms put forth that will form part of the public interest framework designed and formulated to address these matters," he said.
The Public Interest Framework of the demutualised KLSE will cover six dimensions, as follows:-
- A balanced board structure comprising directors representing shareholders, public interest and independent directors.
- Shareholding and decision making limitations to prevent unhealthy concentration of shareholding with private individuals or bodies.
- Independent supervision of the listed demutualised exchange directly by the Securities Commission (SC), including provisions for SC to issue directives where conflicts exist and conduct regulatory audits. Approval is also required from SC to vary the fee structure charged to participants and investors.
- An internal regulatory organisation structure clearly defining and distinguishing regulatory and business operations to achieve regulatory efficacy and business efficiency.
- A risk management organisation and system which emphasises comprehensive protection of market participants.
- The Capital Market Development Fund (CMDF) created from part of the value allocation, especially aimed at safeguarding the overall development and growth of the capital market in respect of public interest.
Mohd Azlan added that even upon demutualisation or listing, KLSE remains committed to the very reasons of its establishment.
"First of all, KLSE will continue with its dual role, as the operator of the market, and as the front line regulator. In tandem with this, KLSE will also continue its commitment to enhance both physical and regulatory infrastructure.
"KLSE will also ensure that it remains the preferred and primary market for Malaysian companies to raise funds. Though operating as a commercial entity upon demutualisation, KLSE will uphold the principle that the commercial objectives are balanced with KLSE's public interest responsibilities.
"Last, but not least, a demutualised KLSE will continue to align its business strategies with the country's economic policies," he said.
