2012年-世界发展银行全球_Corporate_Governance_Country_Assessment___Malaysia_59页_2mb

Summary of the 2012 Corporate Governance ROSC for Malaysia

Core Content

The Report on the Observance of Standards and Codes (ROSC) on corporate governance in Malaysia, published in July 2012, evaluates the country's legal and regulatory framework, corporate practices, and enforcement mechanisms against the OECD Principles of Corporate Governance. It is an update of the 2005 Corporate Governance ROSC and highlights both achievements and remaining challenges in corporate governance reform.

The assessment is based on the Detailed Country Assessment (DCA), which analyzes legal requirements and actual practices. It is prepared by the World Bank and includes input from various stakeholders, including the Securities Commission (SC), Bank Negara Malaysia (BNM), Bursa Malaysia, and Minority Shareholder Watchdog Group (MSWG).

Main Findings

Achievements

• Legal and Regulatory Framework: Malaysia has a well-developed legal and regulatory system for corporate governance, with strong institutions like the SC, BNM, CCM, and Bursa Malaysia.
• Capital Market Development: Malaysia has a large and active capital market with over 950 listed companies and two dozen IPOs annually. The market capitalization reached 176% of GDP in 2010, higher than most high-income countries and other Asian economies.
• Corporate Governance Code: The Malaysian Code on Corporate Governance (2012) has been implemented with high compliance in several key areas, including the prohibition of insider trading and the adoption of International Financial Reporting Standards (IFRS).
• Shareholder Rights: Basic shareholder rights are well established, including the ability to trade shares, participate in meetings, and receive information. Shareholders have the right to approve major transactions and board member appointments.
• Board Practices: Most boards include a majority of non-executive directors, with at least one-third considered independent. Audit and nomination committees are common, and directors are trained and self-evaluate their performance.
• Disclosure and Transparency: Companies produce complete and audited annual reports, including information on directors, risk management, related-party transactions, and corporate social responsibility (CSR).

Key Obstacles

• Company Law Gaps: The Companies Act 1965 (CA), though amended, still lacks clarity and completeness in areas such as shareholder rights and equitable treatment.
• Conflicts of Interest: Government-linked investment companies (GLICs) and government-linked companies (GLCs) have significant influence in the market and may face conflicts of interest due to their role in managing substantial assets.
• Limited Shareholder Influence: Minority shareholders have limited influence on board selection and major decisions, and the law does not mandate equitable treatment or fair treatment of all shareholders.
• Proxy and Voting Issues: Proxy rules are interpreted to prevent minority shareholder participation in show of hands voting. Postal and electronic voting are not allowed, and custodians do not accurately reflect client views.
• Auditor Independence: While auditors are required to provide non-audit services, there are no explicit limits on such services. Until recently, there was limited oversight of audit quality and independence.
• Board Power: The board does not have clear authority to choose or remove the CEO, and controlling shareholders may still override board decisions.

Key Recommendations

To address the challenges and maintain investor confidence, the report recommends:

• Reform of Company Law: To enhance shareholder protection and legal clarity, including explicit equitable treatment of shareholders and more mechanisms for shareholders to safeguard their interests.
• Enhance Disclosure: Improve transparency on beneficial ownership and other non-financial information.
• Strengthen Auditor Independence: Implement explicit limits on non-audit services for audit clients and ensure independent oversight of audit quality.
• Revise the CG Code and Listing Requirements: To reinforce board independence and support ongoing reform.
• Review the Role of GLICs and GLCs: Improve management and disclosure of conflicts of interest and ensure governance considerations are integrated into investment decisions.
• Ensure SC Independence: Maintain the credibility and independence of the Securities Commission (SC) to protect its reputation and enforce regulations effectively.

Institutional Landscape

• Regulatory Bodies: The Securities Commission (SC), Companies Commission of Malaysia (CCM), Bank Negara Malaysia (BNM), and Bursa Malaysia are active in enforcing corporate governance standards.
• Government Involvement: The Putrajaya Committee on GLC High Performance (PCG), chaired by the Prime Minister, promotes corporate governance in government-linked companies (GLCs).
• Market Participants: GLICs (such as the Employee Provident Fund (EPF)) are major investors in the market, with significant influence over company governance and operations.

Capital Market Performance

• Market Size: Malaysia has a large and active capital market, with 956 listed companies on Bursa Malaysia.
• Market Capitalization: Reached 176% of GDP in 2010, showing strong market development.
• Equity Raising: From 2007 to 2011, over 12 billion USD was raised through IPOs and secondary offerings.
• Market Turnover: The turnover ratio is 27.1% of GDP in 2010, lower than some comparable markets.
• Sector Diversity: Listed companies span various sectors including construction, consumer products, finance, manufacturing, and technology.
• Top Ten Companies: Account for 37% of market capitalization, indicating a relatively deep market compared to other emerging economies.

Conclusion

Malaysia is a regional leader in corporate governance and has made significant progress since the 2005 assessment. However, reforms are still needed to fully protect minority shareholders and retirement savings, ensure greater transparency, and strengthen auditor independence. The report emphasizes the importance of continued reform and institutional capacity building to maintain and improve corporate governance standards.