Malaysian Code on Corporate Governance (MCCG) by Nabaz Shwany

1. MALAYSIAN CODE ON CORPORATE
GOVERNANCE (MCCG)
BY: NABAZ SHWANY(NABAZ
NAWZAD)
UNIVERSITI UTARA
MALAYSIA

2. MALAYSIAN CODE ON CORPORATE GOVERNANCE
REASONS FOR MCCG UPDATES
MCCG 2012 PRINCIPLES
CONCLUSION

3.  Malaysia listed as number one in Asia for having so many rules and
implications for corporate governance practice
 MCCG was introduced on March 2000 based on British experience
to avoid corporate malefaction
 MCCG brought systematical change in the structure of public and
Private Corporation.
 MCCG revised several times in 2007, 2011 and 2012
 The MCCG targeted those companies that are listed on Bursa
Malaysia
 companies are requiring preparing their annual report and proving
that they conducted the principles and recommendations

4.  Shifts are inevitable and necessary requirement to deal
with market dynamic and effectively manage corporate
governance as part of global sustainable development
 To improve the role and the responsibility of directors,
 Fostering their commitment,
 Promoting board structure effectiveness,
 Internal and external auditing

5. Establishing Clear Role and Responsibilities
 The 2012 Codes sets out eight principles and each principle followed by
several recommendations.
 The board should establish clear functions reserved for the board and
those delegated to management
 The board should discharging its fiduciary and leadership functions
 The board should ensure business plan well managed and performed
properly
 formalize ethical standards
 Auditing the company sustainability and development
 the board should have a formula to give a chance to its members for
accessing information & advices through consultation
 Assigning qualified secretary

6. Strengthen Composition
 Establishing independent nominating committee to compromise
with non-executive directors to oversee the selection and
assessment of the directors based on the company needs,
training for the success of the directors and assessing directors at
the end of every year
 The head of the committee must be senior independent director
and gender diversity should be considered
 Committee selection is based on competency, commitment,
performance and contribution with board members
 The board should establish formal and transparent
remuneration policies and procedures to attract and retain directors

7. Reinforce Independence
 Ensure effectiveness of independent directors
 The independent board should concentrate on the director economic
background and daily relationships and predict whether the
independent director could really keep his neutrality or not
 The period of the serving directors which should not exceed of nine
years, if not should be known as non-independent director
 The position of chairman and the chief executive officer separated and
must be run by two different individuals
 The chairman responsibility is to lead the board and oversight the
management
 CEO focuses on business and the companies’ day to day management

8. Foster Commitment
 Highly committed individual is the one who:
i. “(1) Strong belief in and acceptance of the organization’s goals and
values;
ii. (2) Willingness to exert considerable effort on behalf of the
organization; and
iii. (3) Strong desire to maintain membership in the organization”
(Samad 2011).
 Director must spend sufficient time in carrying out the duties
and update any changes and knowledge to enhance their skills
 directors and management must have access to appropriate
educational programs to challenge any difficulties in complex
business environment

9. Uphold Integrity in Financial Reporting
 Committee must ensure to provide reliable financial
information in accordance to standards of financial
reporting.
 Auditing committee should have a policy to oblige
external auditors to confirm their independent in
auditing process and abide by all the relevant rules and
requirements.

10. Recognize and Manager Risks
 Internal auditing to manage and control risks
 Maintain control and surveillance over shareholders’
investment and companies assets
 The chief of the internal audit must be well educated
and have experience in risk management and control
process.

11. Ensure Timely and High Quality Disclosure
 Companies are required to have high quality of
corporate disclosure policies and procedures
 Stake holder rights and utilizing information
technology to foster good governance and better
relationship and transparency between companies and
stakeholders.

12. Strengthen Relationship between Company and
Shareholders
 Encourage shareholders to attend in general meetings.
 The board must provide a clear guideline to the
shareholders on how they could exercise their rights.
 Fostering the Use of Technology
 Voting right
 The board is encouraged to make announcement regarding
election with details
 Participate in achieving companies’ goals, undermine risks
and facilitate management process;

13.  MCCG was strong move to encourage more investment
and better business.
 The companies controlling and the auditing system
was developed.
 Through the eight principles of MCCG we can expect
more efficiency, accountability, attainability,
transparency and accuracy in the future of Malaysian
corporate governance