Bursa Malaysia
KUALA LUMPUR: Listed companies’ corporate governance (CG) disclosures have shown improvements this year compared with their disclosures in 2014, according to Bursa Malaysia Bhd
.
The exchange said the findings, contained in its third Corporate Governance Analysis Report, revealed that the quality of disclosures among all listed issuers had increased on average from about 61% in 2014 to about 69% in 2016.
“The quality of disclosures for each of the six principles assessed under the Malaysian Code of Corporate Governance (MCCG) 2012 was satisfactory,” it said in a statement.
Large cap companies achieved average scores of 72% against 64% in 2014, mid-cap companies scored 67% compared to 60% previously while small-cap companies improved to 68% from 60% in 2014.
Furthermore, 30% of small cap listed issuers scored bonus points for meaningful disclosures that provided insights into the listed issuers’ corporate governance practices.
“About 30% of our large cap and 15% of our mid cap listed issuers also scored bonus points for their disclosures,” Bursa Malaysia said.
The findings and observations showed that overall, there was a high level of adherence to the listing requirements, and embracement of MCCG principles and recommendations.
The report also showed that listed issuers had uploaded comprehensive board charters on their website where they included details on the formal schedule of matters reserved for the board and the board’s oversight of management.
Moreover, there was an increase in the number of listed issuers which separated the position of chairman and CEO in line with best practice.
The exchange had undertaken a review of corporate governance disclosures in 280 listed companies’ annual reports in 2014 and provided them with their scores. The review in 2016 marked the second time that these listed issuers’ corporate governance disclosures were reviewed.
The review was undertaken to assess whether these listed issuers had improved their disclosures, further to our advocacy programmes and engagement activities carried out subsequent to the issuance of the first report in 2014.
Bursa Malaysia chief executive officer Datuk Seri Tajuddin Atan said the overall improvement in scores shown by listed companies was indeed commendable.
“As the exchange’s regulatory framework is benchmarked against the Organisation for Economic Co-operation Development (OECD) principles of corporate governance, the high scores achieved by our listed issuers is a testament to the high standard of corporate governance in our marketplace, as well as the emphasis placed by our listed issuers in continuously stepping up their efforts and ensuring meaningful CG practices and disclosures,” he said.
“It is especially heartening to note that our small-cap companies have improved their CG disclosures significantly which clearly shows that that the size of listed issuers’ market capitalisation is not a barrier to good quality CG practices.”
While disclosures have improved since 2014, the findings showed that there is still room for improvement, especially disclosures on the activities of the board, board committee and individual directors.
Bursa Malaysia said only 56% disclosed the criteria for evaluation of individual directors, 40% disclosed criteria for evaluation of board committee and 65% disclosed criteria for evaluation of the board.
Most listed issuers also continued to issue generic disclosures in their Statement of Risk Management and Internal Control, it added.
In addition to the Corporate Governance Analysis Report, each of the listed issuers reviewed will receive their individual disclosure scores and a detailed report which indicate areas where they have made adequate disclosures as well as areas for improvement.
“The consolidated reports are useful to both listed issuers and investors as these provide a comparative analysis of CG practices across a wide segment of companies,” Bursa Malaysia said.
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