...------------------------------------------------- MCCG : 2007 Part II. Best Practices in Corporate Governance This entry was posted on May 16, 2012. Bookmark the permalink. Leave a comment The principles are divided into 4 parts as shown below: 1. Directors 2. Directors’ Remuneration 3. Shareholders 4. Accountability and Audit Below are the guideline set for Directors. 1. DIRECTORS I The Board Every listed company should be headed by an effective board which should lead and control the company. II Board Balance The board should include a balance of executive directors and non-executive directors (including independent non-executives) such that no individual or small group of individuals can dominate the board’s decision making. III Supply of Information 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. IV Appointments to the Board There should be a formal and transparent procedure for the appointment of new directors to the board. V Re-election All directors should be required to submit themselves for re-election at regular interval and at least every three years. 2. DIRECTORS’ REMUNERATION I The Level and Make-up of Remuneration Levels 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...
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...FINANCE COMMITTEE ON CORPORATE GOVERNANCE M a l a y s i a n C o d e o n CORPORATE GOVERNANCE March 2000 FINANCE COMMITTEE ON CORPORATE GOVERNANCE M a l a y s i a n C o d e o n CORPORATE GOVERNANCE March 2000 Securities Commission No 3. Persiaran Bukit Kiara Bukit Kiara 50490 Kuala Lumpur Malaysia Tel: 603-654 8000 Fax: 603-651 1818 Homepage: Http://www.sc.com.my Copyright @Finance Committee on Corporate Governance March 2000 Perpustakaan Negara Malaysia Cataloguing-in-Publication Data The Malaysian code on corporate governance/Finance Committee on Corporate Governance. ISBN 983-9386-23-9 1. Corporate governance-- Law and legislation-- Malaysia 2. Corporation law--Malaysia 3. Stockholders--Legal status, laws etc.--Malaysia 4. Insider trading in securities--Law and legislations--Malaysia. I. Malaysia. Suruhanjaya Sekuriti, Jawatankuasa Kewangan Tadbir Urus Koprat. 346.5950926 CONTENTS PAGES INTRODUCTION PART 1 PART 2 PART 3 PART 4 1-6 PRINCIPLES OF CORPORATE GOVERNANCE 7-8 BEST PRACTICES IN CORPORATE GOVERNANCE 9-15 PRINCIPLES AND BEST PRACTICES FOR OTHER CORPORATE PARTICIPANTS 16 EXPLANATORY 17-47 APPENDICES JPK WORKING GROUP 1 48-49 MEMBERSHIP OF THE COMMITTEE 50 GC GC INTRODUCTION The Code essentially aims to set out principles and best practices on structures and processes that companies may use in their operations towards achieving the optimal governance...
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...also Financial Sector Master Plan (FSMP). This sources provides guidelines on the principles and best practices in corporate governance and the direction for the implementation as well as charts for the future prospects of corporate governance in Malaysia. Malaysian Code on Corporate Governance is an initiative that established by the Financial Committee on Corporate in 1998. This committee is consists of both government and also industry. MCCG was introduced on March 2000. This code brought a systematical change in structure of public and also private corporation. The principles underlying the report focus on four areas which are board of directors, directors’s remuneration, shareholders and accountability and audit. Compliance with the code is not mandatory. However, the listed companies in Bursa Malaysia are required to prepare their annual report on how they have applied the principles and best practices set out in the code and also provide the reasons for areas of non-compliance as well as the alternative practices adopted, if any. MCCG was revised several times in 2007, 2011 and 2012. This updates is due to several reason. For example, to improve the role and responsibility of directors, internal and external auditing, promoting board structure...
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...Audit Committee Report According to the Malaysian Code on Corporate Governance (MCCG) 2007 (Revised), under the Accountability & Audit, as well as the Bursa Malaysia Listing Requirements, The board should establish an audit committee comprising at least three members, a majority of whom are independent. All members of the audit committee should be non-executive directors. The board should provide the audit committee with written terms of reference which deal clearly with its authority and duties. First off, on the matter of the compliance on the size of the board/committee, all the companies that we reviewed comply with that limit. 2 of the 12 companies were actually surpassed that minimum requirement, where they have 4 members in their Audit Committee. Those companies that we wish to highlight are Kamdar Group Berhad & Key Asic Berhad. This is a good example as the more members there are in an Audit Committee, there more reliable and independent the information involving the financial statements and any other relevant information will be, albeit, the independence of each member would be a factor to consider. Moving on, the question of whether those who are in the Audit Committees are independent or not come in to place. According to the MCCG 2007, the board of Audit Committee must have a majority of who are independent. The point here that we should note is that, all of the members of the Audit Committee should comprise fully of non-executive directors. Going through...
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...INTRODUCTION Flat Cargo Berhad (FCB) was one of the largest air freight companies in Malaysia, FCB was a listed company operating primarily as an air carrier. Its core business was to provide air freight transportation, which included aircraft charter and leasing. Kencana & Associates served as its auditors. In 2006, during a routine financial audit, the auditors identified several suspicious findings that resulted in a delay in finalizing the auditor’s report. These are the issues found from FCB’s working paper for 2005; the auditors were unable to verify the aircrafts claimed to have been purchased by FCB in 2005. The audit team found a non-functional rundown aircraft barely worth RM231 million in a hangar. Next issue was, several debtors’ confirmation letters were returned because the addressees had changed their mailing addresses, besides that a large sum of sales transactions was found with no supporting documents. Most of these transactions involved small clients. Next issue found was a loan received from a Hong Kong based company was found to be incorrectly recorded in the debtors’ account. Other issues were found are several abnormal transactions involving the purchase of aircrafts by FCB and offsetting the debtor’s accounts were found in FCB’s books. Based on the audit working paper of FCB in 2005, auditor found some disagreements with management account which may lead to fraud. They were unable to verify the aircrafts which was claimed to have been bought by...
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...financial reporting Principle 6: Recognise and manage risks Principle 7: Ensure timely and high quality disclosure Principle 8: Strengthen relationship between company and shareholders Table 1: Comparison between the MCCG 2012 and the 2007 Code 1 FOREWORD By TAN SRI ZARINAH ANWAR Chairman, Securities Commission Malaysia The Securities Commission Malaysia (SC) had in July 2011 released the Corporate Governance Blueprint 2011 (Blueprint) which sets out the desired corporate governance landscape going forward. The essence of the Blueprint is to achieve excellence in corporate governance through strengthening self and market discipline and promoting good compliance and corporate governance culture. Boards and shareholders must embrace the understanding that good business is not just about achieving the desired financial bottom line by being competitive, but by also being ethical and sustainable. The Malaysian Code on Corporate Governance (Code), first issued in March 2000, marked a significant milestone in corporate governance reform in Malaysia. The Code was later revised in 2007 (2007 Code) to strengthen the roles and responsibilities of the board of directors, audit committee and the internal audit function. The Malaysian Code on Corporate Governance 2012 (MCCG 2012) focuses on strengthening board structure and composition recognising the role of directors as active and responsible fiduciaries. They have a duty to be effective stewards and guardians of the company, not just...
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...Tobacco Malaysia (BATM) has grown together with the nation from 1912 to 2012, into one that is involved in the full spectrum of the tobacco industry, with an unrivalled portfolio of highly successful international brands. The Company is now the market leader of the Malaysian cigarette industry, with approximately 63 percent market share, and ranks amongst the top 25 public listed companies on Bursa Malaysia Securities Berhad in terms of market capitalization (British American Tobacco (Malaysia) Berhad, 2013). The corporate governance of the BATM is set out in the BATM’s Code of Corporate Governance which has been established and enhanced based on the principles and best practices outlined in the Malaysian Code on Corporate Governance 2012 (MCCG 2012), Bursa Malaysia Main Market Listing Requirements (BMMMLR), Standards of Business Conduct of BATM and etc. By ensuring the highest standards of corporate governance, the Board believes that it able to strengthen the Company’s sustainability, effectiveness of...
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...Corporate governance is an area that has been growing apace in the last decade or more and there has been great interest in corporate governance today from governments, investors and directors alike. Why and how have the law and regulatory bodies in Malaysia kept abreast with these latest developments? Discuss. * S167A Companies (Amendment) Act 2007 stipulates companies to set up effective internal control system to prevent any unauthorized usage of assets and to maintain proper records for the assets. * However, the agency issue among listed companies in Malaysia lies within the controlling shareholder. Expropriation of …. * However, companies such as YTL Corp, Celcom, Yeo Hiap Seng, which are controlled by individuals with strong political connections or family owned companies, usually do not disclose accurate executive remuneration packages. Hence, agency costs may arise as there is a high possibility that majority controlling shareholders will provide high remuneration packages for themselves at the expense of the minority shareholders * * Rachagan. S. (2007) “Controlling Shareholders and Corporate Governance in Malaysia: Would the self-enforcing model protect minority shareholders?”, The Corporate Governance Law Review, 3(1). Corporate governance is a term that refers to the rules, process or laws by which businesses are operated, regulated, and controlled. It describes the rules and practices put in place within a company to deal with the relationships...
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...OLDTOWN BERHAD (797771-M) OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) (Incorporated in Malaysia) The Board of Directors (“the Board”) of Oldtown Berhad (“the Company”) recognises the value of good governance and believes that a high standard of corporate governance will deliver long-term sustainable shareholder value. The Board is committed to ensure good corporate governance practices are applied throughout the Company and its subsidiaries (“the Group”). This Statement sets out the key aspects of how the Company has applied the Principles and Recommendations of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) during the financial year ended 31 March 2014 and any non-observation of the Recommendations of MCCG 2012, including the reasons thereof, has been included in this Statement. Principle 1 – Establish Clear Roles and Responsibilities 1.1 Clear Functions of The Board and Management The Board leads the Group and plays a strategic role in overseeing the Group’s corporate objectives, directions and long term goals of the business. The Board is responsible for oversight and overall management of the Group. The Board Committees are established to assist the Board in discharging its responsibilities. The Board delegates specific responsibilities to three (3) principal Committees, namely the Audit Committee, the Nomination Committee and the Remuneration Committee. All committees have written terms of references and operating...
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...PETRONAS GAS BERHAD PETRONAS Gas Berhad (PGB) has been in business for 30 years and is still growing strong. Since its incorporation in 1983, PGB’s business has vastly expanded in spite of challenges faced. Today, PGB has prospered as Malaysia’s leading gas infrastructure and utilities with business presence throughout the country. ORGANISATIONAL STRUCTURE Definition of corporate governance “…is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking into account the interest of other shareholders”. The Board of Directors (Board) of PETRONAS Gas Berhad in this Corporate Governance Statement complies with paragraph 15.25 of the Main Market Listing Requirements (MMLR) and applied in full the Principles of Corporate Governance and the Best Practices in Corporate Governance as set out in the Malaysian Code on Corporate Governance. Principle 1: Establish Clear Roles and Responsibilities The chairman leads the Board, and the President and Group Chief Executive Officer (CEO) leads the executive management of the Company and provides direction for the implementation of the strategies and business plan as approved by the Board and the overall management of the business operations Groupwide. The Board of Directors (Board) of PETRONAS Gas Berhad recognizes that its primary...
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...I. Executive Summary Flat Cargo Berhad (FCB) is a listed company that provides air cargo carrying services within the Asian region. The company owns five fully owned subsidiaries and the major shareholders of this company is Bangor Berhad. The company’s external auditor is Kencana & Associates where the audit team is led by Mr Chuah Mun Soong. On 5th February 2006, Mr Chuah has been informed by his team that there are some inconsistencies in the accounts of FCB. Therefore he has decided to do his own investigation on the company to determine is there any fraud involved before he can report the situation the managing partner of Kencana & Associates, Mr Keong Chee Wah. II. Statement of the Problem One of the issues faced by the company is the inconsistencies in the company’s accounts where they were unable to verify the aircraft that they claim have purchased in the year 2005. The auditor also found a non-functional aircraft in the hangar that does not worth much. It can be said the cause of this problem would the weakness in assets management or internal control system as well as the weakness in the accounting department where the management of the company is able to make false claims. The second issue faced is poor debt management where a lot of debt confirmation letters that were sent was returned due to the changes in debtors addresses. This can be only explained by the company’s weakness in keeping proper records of their debtors as well as their ability...
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...disclose their CSRR. The award was also meant to raise awareness of corporate transparency and to encourage the uptake of environmental and social reporting in companies. A partnership between The Star Publications and the Institute of Corporate Responsibility (ICR) Malaysia, together with ACCA, PricewaterhouseCoopers and Securities Industry Development Corporation as working partners, produced The StarBiz-ICR Malaysia Corporate Responsibility Award that recognize companies with outstanding CSR practices and went beyond community and philanthropic activities. The enactment of the Malaysian Code on Corporate Governance (MCCG) in 2001, and its amendment in 2007 and 2012, outlined the role, composition and structure of the board of directors, as it was the most important internal governance mechanism in companies. Compliance with the disclosure provisions of the MCCG then became part of the Listing Requirements for Bursa Malaysia. The Malaysian government also presented the Malaysian ‘Business Code of Ethics’ in 2002 and supplemented the code with a ‘National Integrity Plan’. The Integrity Institute of Malaysia was later established in 2004 with the objective of enhancing corporate governance and business ethics standards in Malaysia. These efforts were intended to promote corporate transparency and accountability, as well as to improve the quality of life and well-being of the citizens From the series of activities and plans undertaken by government, it is clear that the disclosure...
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...British American Tobacco Malaysia The Company’s corporate governance structure has been built and enhanced based on the following principles and best practices, Malaysian Code on Corporate Governance (Revised 2007) (Malaysian Code); Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Listing Requirements); Corporate Governance Guide: Toward Boardroom Excellence of Bursa Malaysia Securities Berhad (CG Guide); British American Tobacco Malaysia’s Code of Corporate Governance (BATM Code); Standards of Business Conduct (Standards); Statement of Business Principles (Business Principles); and Statement of Delegated Authorities. These principles are reflected in the Standards of Business Conduct, which have been in place for many years and have recently been updated in order to ensure that they remain at the forefront of best business practice. Every Group company and every employee worldwide is expected to live up to them. In addition, the principles set out within the Statement of Business Principles are designed to help meet the expectations placed on the company by various stakeholders. Both documents are available from the Company Secretary and on batm.com. PRINCIPLE 1 Establish clear roles and responsibilities: Role of chairman and CEO There should be a clear division of the responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No individual should have unfettered...
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...“Critically discussed if there are real reasons why institutional investors should be concerned about the independence and genuine effectiveness of the audit function? Search the findings of academic papers and other published sources to support your view.” Introduction An institutional investor is an organization that invests on behalf of the organization’s members. These investors are a part of corporate governance for companies and they have large amounts of money to invest. In Malaysia, there are five leading institutional investors; Employees Provident Fund of Malaysia (EPF), Pertubuhan Keselamatan Sosial (Social Security Organisation), Lembaga Tabung Haji (Pilgrimage Board), Khazanah Nasional, Permodalan Nasional Berhad (National Equity Corporation) and Lembaga Tabung Angkatan Tentera (Armed Forces Fund Board) have taken various measures over the years to put better governance practices in their investee companies. As they can afford to buy more shares and bonds, sometimes automatically put them as majority and proactive shareholders. They have power to influence over management decision making, conduct regular engagements with management of companies, placing new shares, demand meetings with the senior managements of companies regards to their performance, vote on key issues at general meetings and communicate on other matters affecting shareholders' interest. The institutional investor which is an external party that are independence from the management can be seen...
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...1.0 Introduction Flat Cargo Berhad (FCB) is an air freight services and ground handling company. Its company’s operations cover Asian Pacific region including China, Japan, Thailand, Singapore and many more. Their main customers are United Parcel Services (UPS), City Link and Nationwide Express. The main shareholder for FCB is Bangor Sdn Bhd which is part of Miri Group represented by 26.5% of the company interest. Kencana & Associates is the auditor company that audit FCB’s account. The leader of the auditors is Mr Chuah Mun Soong. The auditing team found some irregularities in accounting record of FCB. There are two parties which Mr Chuah has to report, they are his superior, Mr Keong Chee Wah and FCB Audit Committee. However, Mr Chuah concerns that FCB might have a fraud due to the past experience such as Media Com and Blue Vital. 2.0 The Root Cause of the Problems As per our discussion about this case study, we managed to find out several root cause of the problems. 2.1 Rising of Oil Price The first root cause is the rising in oil price in the year 2005. In the year 2005, there was an international crisis occurred with the exceptional increase in oil prices. The hike started in mid-2004 at US$40 per barrel but eventually, the increase continued to stages of US$50, US$60, US$65, US$70 and US$80 per barrel. The price hike in fuel surcharges drastically affected the freight forwarding industry significantly because of its reliance on fuel for operations. This...
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