Women empowerment was one of the key initiatives mentioned during Budget 2022 last year. Towards this end, the government, via the Securities Commission (SC), will make it mandatory for all PLCs to have at least one female member on the board.
PETALING JAYA: All around the world, there is a focus on gender diversity and increasing women participation on corporate boards.
Experts say an inclusive and gender balanced board is able to bring diverse perspectives to the table to facilitate robust discussions of issues, thus benefiting the firm.
Locally, women participation on boards of public-listed companies (PLCs) has shown decent improvement over the past decade, rising from 7.7% to 17.7% by 2021, according to Hong Leong Investment Bank (HLIB) Research.
Women empowerment was one of the key initiatives mentioned during Budget 2022 last year.
Towards this end, the government, via the Securities Commission (SC), will make it mandatory for all PLCs to have at least one female member on the board.
This initiative will take effect from Sept 1, 2022, for large cap companies with a market capitalisation of over RM2bil and from June 1, 2023 for the rest.
Following Budget 2022, the SC had issued its Corporate Governance Strategic Priorities 2021-2023 report, where under strategic initiative 1.3, the regulator will pursue the establishment of a public-private partnership to support this initiative, and accelerate progress in achieving the 30% target.
HLIB Research said within its coverage, 96% of PLCs have met this requirement.
Nevertheless, the rate of increase has diminished over the past three years, plateauing at 16.6% to 17.7% between 2019 and 2021, it noted in a strategy report on board gender diversity in corporate Malaysia.
“While female representation on boards of the top-100 PLCs is higher when stacked against overall PLCs on Bursa Malaysia, its pace of increase has also flattened in recent years.
In addition, only 162 PLCs (or 18%) have achieved the 30% target for female board representation and there are still 252 PLCs (27%) that have all-male boards,” it added.
Elaborating on the merits of gender diversity, HLIB Research said a 2021 study by the Institute of Corporate Directors Malaysia and WillisTowersWatson covering 312 PLCs on Bursa Malaysia showed that boards with at least one-third women representation correlates with 38% higher median return on equity than boards with no women.
According to HLIB Research, sectors that had more than half of the PLCs meeting the 30% target were banking, consumer, gloves, media, property, telco and utilities.
On a less progressive note, the research firm said the position of chairman and CEO or managing director (or its equivalent) remains very much male-dominated.
“Only 5.1% of PLCs within our coverage had women for the chairman role.
“For the CEO and managing director position, there were only three females holding the top executive position.” it noted.
