A new governance code has been published by the Securities Commission Malaysia (SC), with the aim of improving corporate culture by strengthening accountability and increasing transparency.
The Malaysian Code of Corporate Governance (MCCG) sees the country’s firms complying with a code for the first time.
“This new code is an important milestone in Malaysia’s continued journey in promoting good governance to ensure the sustainability and resilience of the capital market,” said SC chairman Tan Sri Ranjit Ajit Singh in a speech at the launch of the MCCG. “It serves as a compass for boards to steer their companies forward and deepen understanding on the importance of corporate governance.”
The new code represents global best practices and benchmarks. Malaysia hopes the code will help internationalise Malaysia’s corporate governance structures, not just with public companies, but also with non-listed firms, including state-owned businesses, and small and medium-sized firms.
The new MCCG now has 36 practices that are aimed at company boards, including effective auditing, risk management, internal controls, corporate reporting and relationships with stakeholders.
A key feature of the new code is the introduction of a “comprehend, apply and report” (CARE) approach, and shifts from “comply or explain” to “apply or explain an alternative”. This is meant to push listed firms to place more effort in adapting and reporting their corporate governance practices, which will allow stakeholders to see clearly how firms are governed from the top.