The Securities Commission Malaysia (SC) chairman, Tan Sri Ranjit Ajit Singh, has urged corporate boards to set up incentive structures that compel board members to focus on long-term goals instead of short-term profit-seeking.
In a keynote address at the International Corporate Governance Network (ICGN) annual conference 2017, Singh said: “Boards are under greater scrutiny as there are concerns that market forces and other exogenous factors are causing short-term priorities to compromise long-term interests.”
Singh also said that board members need to consider how to carefully create a non-reactive approach to corporate governance, and that “policymakers should recognise the nature and context in which businesses operate to bring a better understanding in corporate strategy, and strike a balance in combining long-term and short-term approaches with the absence of abuse.”
The Malaysian Code on Corporate Governance 2012 (MCCG 2012) was the first deliverable of the CG Blueprint and replaced the 2007 version. It set out broad principles and specific recommendations on structures and processes, which public companies should adopt in making good corporate governance a key part of their business and culture.
The MCCG 2012 stated that “the code on corporate governance focuses on clarifying the role of the board in providing leadership, enhancing board effectiveness through strengthening its composition and reinforcing its independence. It also encourages companies to put in place corporate disclosure policies that embody principles of good disclosure.”
In April 2017, the SC launched the new Malaysian Code on Corporate Governance, which aims to improve corporate culture by strengthening accountability and increasing transparency.