KUALA LUMPUR: The Securities Commission has issued new guidelines on the conduct of directors of listed companies and their subsidiaries to strengthen board governance and oversight in listed issuers and their subsidiaries.
SC chairman Datuk Syed Zaid Albar said in a statement on Thursday the new guidelines take into account the evolving Malaysian corporate governance landscape, lessons learnt from the SC’s regulatory work in enforcing corporate governance breaches and the need to ensure the country's framework remains relevant and effective.
“In discharging his fiduciary duties, a director owes the company duties of disclosure, honesty, candour and the duty to favour the company’s interest over his own, ” he said.
These guidelines were in line with its Corporate Governance Strategic Priorities (2017-2020) which seeks to, among others, promote the proper discharge of directors’ fiduciary duties among corporate Malaysia.
The guidelines set out guidance on duties and responsibilities of boards in company group structures and requirements for the establishment of a group-wide framework to enable, among others, oversight of group performance and the implementation of corporate governance policies.
The introduction of these guidelines is one of the measures approved by the Special Cabinet Committee on Anti-Corruption (JKKMAR) in 2019.
The guidelines come into effect on Thursday, with the exception of chapter five on group governance, which will come into effect on Jan 1, 2021.
Under the guidelines a director must exercise his powers for a proper purpose and in good faith in the best interest of the corporation in which he sits as a board member.
A director who is appointed by virtue of his position as a representative of a shareholder, must act in the best interest of the corporation in which he sits as a board member.
“In the event of any conflict between his duty to act in the best interest of the corporation and his duty to his nominator, he must not subordinate his duty to act in the best interest of the corporation to his nominator, ” it said.
The SC said in directing or managing the business and affairs of the corporation, a director must exercise reasonable care, skill and diligence.
The director must maintain a sound understanding of the business, and keep abreast of relevant developments to ensure he is able to discharge his duties and responsibilities effectively.
The director must ensure key transactions or critical decisions are deliberated and decided on by the board in a meeting.
The gudelines stated a listed corporation and its directors must establish policies and procedures to manage potential conflict of interest situations including potential conflict of interest between any director and the corporation; and the listed corporation and its subsidiaries.
Click here for the details: https://www.sc.com.my/regulation/guidelines/conduct-of-directors
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