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Securities Commission Malaysia releases new code on corporate governance

The Malaysian Securities Commission has released the new Malaysian Code on Corporate Governance (MCCG) to strengthen corporate culture by placing greater emphasis on the internalisation of corporate governance culture, not just among listed companies, but also encouraging non-listed entities including state-owned enterprises, small and medium enterprises (SMEs) and licensed intermediaries to embrace the code.

The code is effective immediately and applies for companies reporting at year end 31 December 2017.

A key feature of the new code is the introduction of the Comprehend, Apply and Report (CARE) approach, and the shift from “comply or explain” to “apply or explain an alternative”. This is meant to encourage companies to put more thought and consideration when adopting and reporting on their corporate governance practices. 

Unlike its predecessor the new code identifies different practices and reporting expectations applying either to companies in the FTSE Bursa Malaysia Top 100 Index, or those with a market capitalisation of RM 2bn or more.

Another requirement introduced by the code is for audit committees to be made of independent directors only and the establishment of a Risk Management Committee.

“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. It serves as a compass for boards to steer their companies forward and deepen understanding on the importance of corporate governance,” Tan Sri Ranjit Ajit Singh, Securities Commission Malaysia chairman, said.

 

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