KUALA LUMPUR: The Securities Commission (SC) has released the new Malaysian Code on Corporate Governance (MCCG) to strengthen corporate culture anchored on accountability and transparency.
The MCCG takes effect today, and the first batch of companies that are expected to report their application of the practices in the new code will be those with financial year ending Dec 31, 2017.
The new set of best practices places greater emphasis on the internalisation of corporate governance culture, not just among listed companies, but also among non-listed entities, including state-owned enterprises, small and medium enterprises and licensed intermediaries to embrace the code.
The new MCCG has 36 practices to support three principles namely board leadership and effectiveness; effective audit, risk management and internal controls; and corporate reporting and relationship with stakeholders.
“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, “ SC chairman Tan Sri Ranjit Ajit Singh said in his speech to officiate the release of MCCG.
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 listed companies to put more thought and consideration when adopting and reporting on their corporate governance practices.
The MCCG also adopts a differentiated and proportional approach in the application of the code taking into account the differing size and complexity of listed companies. The code now identifies certain practices and reporting expectations to only apply to companies in the FTSE Bursa Malaysia Top 100 Index and those with a market capitalisation of RM2bil or more.
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