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Bursa Malaysia today announced key amendments to the corporate governance (CG) framework under the Listing Requirements (LR) and MESDAQ Market Listing Requirements (MMLR). The amendments are aimed at raising the standards of corporate governance for companies listed on Main Board, Second Board and MESDAQ Market and increasing investor confidence.
Amongst the significant changes made are the amendments to strengthen the effectiveness of the audit committee. Executive directors are now prohibited from being part of the audit committee so as to enhance the independence of the audit committee. The internal audit function is also made compulsory to provide a more effective support to the audit committee in carrying out its functions.
Selvarany Rasiah, Chief Regulatory Officer of Bursa Malaysia said, “These key amendments are one of the exchange’s many ways to enhance the quality of our listed companies. The audit committee’s role is crucial in terms of maintaining the check and balance on a company's financial reporting system. With the amendments, the audit review process by the audit committee will be strengthened. This, in turn, will further improve our capital market’s integrity and boost investor confidence.”
The amendments will take effect from 28 January 2008. Listed companies will, however, be given up to 31 January 2009 to comply with the requirements on the revised composition of the audit committee as well as the mandatory internal audit function. Details of the timeframes for compliance of the various rules are set out below.
| Amended Provisions | Timeframe for compliance |
|---|---|
| Paragraph (30), Appendix 9C – statement on internal audit function | Annual reports for financial years ending on or after 31 January 2009
must contain the statement on internal audit function |
| Paragraph 15.10 – composition of audit committee | By 31 January 2009 |
| Paragraph 15.13 – functions of audit committee | Audit committee must begin discharging the amended function with effect
from 1 April 2008 |
| Paragraph 15.28 – internal audit function | By 31 January 2009 |
Bursa Malaysia today announced key amendments to the corporate governance (CG) framework under the Listing Requirements (LR) and MESDAQ Market Listing Requirements (MMLR). The amendments are aimed at raising the standards of corporate governance for companies listed on Main Board, Second Board and MESDAQ Market and increasing investor confidence.
Amongst the significant changes made are the amendments to strengthen the effectiveness of the audit committee. Executive directors are now prohibited from being part of the audit committee so as to enhance the independence of the audit committee. The internal audit function is also made compulsory to provide a more effective support to the audit committee in carrying out its functions.
Selvarany Rasiah, Chief Regulatory Officer of Bursa Malaysia said, “These key amendments are one of the exchange’s many ways to enhance the quality of our listed companies. The audit committee’s role is crucial in terms of maintaining the check and balance on a company's financial reporting system. With the amendments, the audit review process by the audit committee will be strengthened. This, in turn, will further improve our capital market’s integrity and boost investor confidence.”
The amendments will take effect from 28 January 2008. Listed companies will, however, be given up to 31 January 2009 to comply with the requirements on the revised composition of the audit committee as well as the mandatory internal audit function. Details of the timeframes for compliance of the various rules are set out below.
Amended Provisions Timeframe for compliance Paragraph (30), Appendix 9C – statement on internal audit function Annual reports for financial years ending on or after 31 January 2009 must contain the statement on internal audit function Paragraph 15.10 – composition of audit committee By 31 January 2009 Paragraph 15.13 – functions of audit committee Audit committee must begin discharging the amended function with effect from 1 April 2008 Paragraph 15.28 – internal audit function By 31 January 2009 Key Amendments
The key amendments are in the following respects:-
- requiring all audit committee members to be non-executive directors;
- mandating the internal audit function by listed issuers and requiring the internal audit function of listed issuers to report directly to the audit committee;
- expanding the functions of the audit committee to include the review of the adequacy of the competency of the internal audit function;
- setting out the rights of audit committee to convene meetings with external auditors, internal auditors or both, excluding the attendance of other directors and employees of the listed issuer;
- enhancing the disclosure in the annual reports of listed issuers to include information pertaining to the internal audit function;
- clarifying that Bursa Securities may “approve” such other requirements relating to the financial-related qualifications or experience that must be fulfilled by at least one audit committee member and the signatory to the statutory declaration in relation to the accounts; and
- requiring listed issuers to submit a copy of written representation or submission of external auditors’ resignation to Bursa Securities as provided under section 172A of the Companies Act 1965.
The complete text of the amendments is also available for reference along with a set of frequently asked questions and answers on Bursa Malaysia’s website at www.bursamalaysia.com.
