KUALA LUMPUR: Companies’ board members must maintain their independence in terms of mind and position in order to exercise their roles and responsibilities effectively.
Securities Commission (SC) executive chairman Datuk Seri Dr Awang Adek Hussin said that some independent directors seem to be under-prepared and over-reliant on the management, which should not be the case, as it could lead to the management having to control the board.
"Independent directors' role is to provide a check and balance to the executives (directors), and they must take audit findings, particularly on risk assessment to better manage any possible disruptions to the business.
"I encourage independent directors to work and share views among themselves. This will allow them to be in a position to influence the board in the best interest of the company," he said.
Awang Adek said this in his opening remarks at the International Directors Summit, organised virtually by the Institute of Corporate Directors Malaysia (ICDM) from Sept 26-28, 2022.
Elaborating on the matter, Awang Adek said since 2019, the SC has taken 104 administrative actions against 39 individual directors, including non-executive directors for various breaches of securities law, including furnishing false and misleading information to the stock exchange.
He said board members are not decorative pieces, and should not view the position as a privilege or perk.
Instead, they should act responsibly, lest they become a liability to the company.
Meanwhile, Awang Adek said boards also need diversity in terms of age, experience, ethnicity and gender.
He noted that in terms of women's participation on the companies’ board of directors in the country, 80 per cent of listed companies now have at least one woman director compared with only 7.7 per cent in 2011.
However, companies should strive to achieve the target of 30 per cent women's participation on board.
As of Sept 1, 2022, there were 282 women directors appointed to the boards, accounting for 34 per cent of all new board appointments in 2022, compared with 17 per cent in 2021.
He said 79 per cent of the appointments were for the post of independent non-executive directors.
On a similar note, Awang Adek said boards must provide strategic direction and support innovation to stay sustainable in the long run and remain resilient and agile in the complex and volatile environment to meet the evolving stakeholders' expectations and demands. - Bernama