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The Malaysian Code on Corporate Governance covers three parts, which are 1.0 -The
Principles of Corporate Governance and Best Practices in Corporate Governance and 2.0 Principles and Best Practices for Other Corporate Participants.
1.0
DIRECTORS
Based on corporate governance of Malaysia, Directors consist of The Board,
Board Balance, Supply of Information, Appointments to the Board and Reelection.
As for The Boards, every listed company should be headed by an
effective board which should lead and control the company and establish clear
functions. Meanwhile on Board Balance, the board include a balance of
executive directors and non-executives directors, where in making decision,
no individual or small group of individual can be, dominate. The board should
be supplied in a timely fashion with information in a form and of a quality
appropriate to enable it to discharge its duties, is the part in supplying of
information. Besides that, there should be formal and transparent procedures
for the appointment of new directors to the board. Last but not least, all
As for corporate governance in Hong Kong, The Board should meet regularly
and board meetings should be held at least four times a year. All directors are
given opportunity to include matters in the agenda for regular board meetings.
The most important is, all directors have given an opportunity to attend the
board meeting and notice of at least 14 days should be given. The minutes of
board meetings should be kept by a duly appointed secretary, and can be open
for inspection at any reasonable time on reasonable notice by any director also
should record in sufficient details.
Other than that, if a substantial shareholder or a director has a conflict
of interest in a matter to be considered by the board which the board has
determines to be material; the matter should be dealt with by a physical board
meeting rather than a written resolution. Last but not least, an issuer should
arrange appropriate insurance cover in respect of legal action against its
directors.
1.2
DIRECTORS REMUNERATION
Based on corporate governance of Malaysia, the remunerations consist of the
level and make up of remuneration, the procedure of remuneration and also
the disclosure of remuneration.
The level and make-up of remuneration should be sufficient to attract
and retain the directors needed to run the company successfully. The
component parts of remuneration should be structured so as to link rewards to
corporate and individual performance, in the case of executive directors.
Meanwhile in the case of non-executive directors, the level of remuneration
should reflect the experience and level of responsibilities undertaken by the
particular non-executive concerned.
Procedure explains that the companies should establish a formal and
transparent procedure for developing policy on executive remuneration and for
fixing the remuneration package of individual directors. Meanwhile the
disclosure of remuneration explains the companys annual report should
contain details of the remuneration of each director.
As for Corporate Governance in Singapore, in the remuneration matters, the
procedure for developing remuneration policies, there should be a formal and
transparent procedure. First, The Board should set up a Remuneration
Committee (RC) comprising entirely of non-executive directors, the majority
of whom, including the Chairman and must be independent.
Corporate Governance in Hong Kong explains that the issuer should disclose
its directors remuneration policy and other remuneration related matters. The
procedure for setting policy should be formal and transparent. The RC should
consult the chairman about their remuneration proposals for other executives
directors. Other than that, the remuneration committees terms of reference
should include as minimum, to make recommendations to the board on the
issuers policy and structure for all directors and on the establishment of a
formal and transparent procedure for developing remuneration policy.
Besides, the RC should consider salaries paid by comparable
companies, time commitment and responsibilities and employment conditions.
The RC also has to review and approve compensation payable to executive
directors and senior management for ay loss or termination of office or
appointment to ensure it is consistent with contractual terms.
The RC also should review and approve compensation arrangements
relating to dismissal or removal of directors for misconduct to ensure that they
are consistent with contractual term, as well as to ensure that there is no
director or any of his associates is involved in deciding his own remuneration.
1.3
SHAREHOLDERS
Based on corporate governance of Malaysia, the shareholders consist of the
dialogue between companies and investors ad also The Annual General
Meeting.
The Corporate Governance in Malaysia explain the dialogue between
companies and investors is companies and institutional shareholders should
each be ready, where practicable to enter into a dialogue based on the mutual
understanding of objectives.
with management
accounts
which
present a
balanced
and
As for the Corporate Governance of Hong Kong, The board should present a
balanced,
clear
and
comprehensible
assessment
of
the
companys
performance, position and prospects. Apart from that, the Management should
provide sufficient explanation and information to the board to enable it to
make an informed assessment of financial and other information put before it
for approval.
2.0
PRINCIPLES AND
BEST PRACTICES
FOR
OTHER
CORPORATE
PARTICIPANTS
The Corporate Governance of Malaysia highlights four main points. There are
shareholder voting, dialogue between companies and investors, evaluation of
governance disclosures and last but not least, external auditors.
2.1
Shareholder Voting
Institutional shareholders have a responsibility to make considered use of their
votes. Apart from that, the board should encourage poll voting. The board is
encouraged to put substantive resolutions to vote by poll and make an
announcement of the detailed results showing the number of votes cast for and
against each resolution. Companies are encouraged to employ electronic
means for poll voting. Thus, the chairman should inform shareholders of their
right to demand a poll vote at the commencement of general meeting.
2.2
2.4
External Auditors
committee meetings held in the year, as well as the attendance of every board member
at these meetings. The type of material transactions that require board approval under
the internal guidelines is the third point. Fourth, where the company considers a
director to be independent in spite of the existence of a relationship as stated in the
Code that would otherwise deem him as non-independent, the nature of the directors
relationship and the reason for considering him as independent should be disclosed.
The fifth and sixth point is the relationship between the Chairman and CEO
where they are related to each other and Composition of nominating committee.
Process for the selection and appointment of new directors to the board is the seventh
point. Eight, any key information regarding directors, which directors are executive,
non-executive or considered by the nominating committee to be independent and nine
point is, process for assessing the effectiveness of the Board as a whole and the
contribution of each individual director to the effectiveness of the Board. Tenth, Clear
disclosure of its remuneration policy, level and mix of remuneration, procedure for
setting remuneration and link between remuneration paid to directors and key
executives and performance.
Meanwhile eleven points highlight the composition of remuneration
committee. Twelve points is about the names and remuneration of each director. The
disclosure of remuneration should be in bands of S$250,000. There will be a
breakdown (in percentage terms) of each directors remuneration earned through
base/fixed salary, variable or performance-related income/bonuses, benefits in kind,
and stock options granted and other long-term incentives.
Besides that, the names and remuneration of at least the top 5 key executives
(who are not also directors) listed in thirteen points. The disclosure should be in bands
of S$250,000 and include a breakdown of remuneration. Fourteen point is where the
The Corporate Governance of Hong Kong and the best practice for other corporate
participates explains on three main points where, the first point is about a narrative
statement explaining how the issuer has applied the principles in the Code, enabling
its shareholders to evaluate how the principles have been applied. Second point is
about a statement as to whether the issuer meets the code provisions. If an issuer has
adopted its own code that exceeds the code provisions, it may draw attention to this
fact in its annual report and last point is for any deviation from the code provisions,
details of the deviation during the financial year.
Under the accountability and audit parts, the principle explain the best practice
that an issuer should announce and publish quarterly financial results within 45 days
after the end of the relevant quarter. These should disclose sufficient information to
enable shareholders to assess the issuers performance, financial position and
prospects. Besides, an issuers quarterly financial results should be prepared using the
accounting policies of its half-year and annual accounts.
Other than that, once an issuer announces quarterly financial results, it should
continue to do so for each of the first 3 and 9 months periods of subsequent financial
years, where it decides not to continuously announce and publish its financial results
for a particular quarter, it should announce the reasons for this decision.