Marginal pass on governance for many firms


A MARGINAL pass in corporate governance disclosures was the best a majority of the largest 95 Bursa Malaysia-listed firms could muster, findings from a new corporate reporting survey revealed yesterday. 

Like earlier surveys that showed local companies still lacking in certain aspects of corporate governance disclosures, the study conducted jointly by Universiti Teknologi Mara, the Malaysian Institute of Corporate Governance, Rating Agency Malaysia Bhd (RAM) and BizAid Technologies Sdn Bhd said “there is much room for improvement” in the reporting of corporate governance in public documents like annual reports.  

In this, the first phase of a two-step corporate governance rating process, the study that looked at eight key attributes found the average corporate governance reporting score was 53.9%, while the best performing firm, PLUS Expressways Bhd, attained 62.9%.  

The other firms in the top 10 were IOI Corp Bhd, Petronas Dagangan Bhd, Highlands and Lowlands Bhd, PPB Group Bhd, Public Bank Bhd, Kumpulan Guthrie Bhd, Telekom Malaysia Bhd, Maxis Communications Bhd and Puncak Niaga Holdings Bhd

Among the eight attributes, most companies did reasonably well in the disclosure of ownership structures and board, committee and management composition, areas required by the Malaysian Code on Corporate Governance to be disclosed, although other areas not mandated by the Code but still considered global best practice were largely ignored. 

Information on business code of ethics and corporate responsibility, arguably one of the most crucial aspects of corporate governance, was virtually non-existent. Every company bar one failed to attain even half of the 30 marks allocated for this attribute. 

Another attribute found wanting was in the disclosure of intellectual capital that comprises human capital, among others. A failure to adequately report training policies, staff welfare, promotion policies or knowledge management measures resulted in every sampled company scoring less than 50% of the required 30 marks. 

In accountability and transparency, an attribute that carries 85 marks, almost a third (31.5%) of the 95 companies scored less than 41. 

Based on a total attainable raw score of 375 for the eight corporate governance attributes, the best performing company attained 238 while the minimum score was 149. The mean score was 197.05 and the median 194. 

RAM and BizAid chairman Tan Sri Dr Abdul Khalid Sahan told a press conference after announcing the findings that the second phase of the assessment would lead to a rating on corporate governance in these companies.  

The voluntary exercise would take between six and eight weeks per company and involve site visits, interviews and a review of corporate documentation, he said.  

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