Directors need to have the right principles and values in discharging their duties

1. You are a director when
there is no Code on
Corporate Governance
Nik Mohd Hasyudeen Yusoff
6 October 2017

2. Agenda
• What can we learn from traffic practices?
• Corporate governance in practice
• The journey of corporate governance in Malaysia
• Reality check - ACGA recent observations
• The way forward

3. Why traffic lights work?

4. What if there was no traffic light?

5. Which car is prone to accident?

6. Which car is prone to accident?

7. If we have traffic laws, why do we still have accidents?

8. Your
Business
Your
Customers
Your
Customers
Your
Customers
Your
Suppliers
Your
Network
Partners
Your
Competitors
Your
Competitors
The ever-changing marketplace and complex business relations
Key players in your market segment
Economy
Environment
Technology
Regulation
Society

9. Definition
• The process and structure used to direct and
manage the business and affairs of the company
towards business prosperity and corporate
accountability with the ultimate objective of realising
long-term shareholder value, while taking into
account the interest of other stakeholders
• Principle-based which allows the principles and best
practices to be applied based on the situations and
circumstances faced by companies
Corporate Governance in Practice

10. History of corporate governance in Malaysia:
From crisis to competitiveness
1997 2000 2007
2011
2012 2014 2017
Asian
Financial
Crisis
MCCG
2000
issued
MCCG
2007
issued
CG
Blueprint
2011 -
2020
issued
MCCG
2012
issued
MCII
2014
issued
MCCG
2016
issued
Asean
CG
scorecard
BNM Policy
Document on
CG of FIs

11. MCCG 2017
Step up practices are applicable to Large Companies which are the top 100 companies on Bursa
Malaysia or having market capitalisation of RM 2 billion and above.
The step are practices are: Limiting the tenure of independent directors to 9 years, disclosing detailed
remuneration of each member of senior management on named basis, audit committee should solely
comprised on independent directors and establishing risk management committee which comprise of a
majority of independent directors

12. RegulatorsShareholders Lenders
Stakeholders
Corporate governance Business governance
Internal control
Assurance
Strategy
People
Process
Finance
Sustainable
Enterprise
Role and structure
Risk management
Customers
Compliance
Stewardship
Board sets tone and
oversees management with division of
responsibilities based on the delegation
made by the board
Culture
Business development
A snapshot of the views from the boardroom
Fiduciary duties
ConscienceCompetence
Board and Management

13. Board
Corporate Governance in practice:
Setting up an effective board
Nomination and
remuneration
committee
Audit committee
Nomination
and
succession
Remuneration
Board and
key risk
takers
performance
Risk
management
Internal
control
Financial
reporting and
audit
Purpose,
values and
risk appetite
Strategy and
business
models
Disclosure
and
communication
Performance
targets and
assessments
Conduct and
compliance
Human
potential
development
Capital
structure and
dividend
policy
Delegation,
key policies
and
procedures
Performance is driven by having the right balance of competent
and conscientious members who lead and make decisions based
on quality information in compliance with robust process and
having adequate check and balance
Risk committee

14. We used to be in a situation where
corporate governance was alien

15. Despite having code on corporate governance,
corporate transgression did not disappear

16. Conducts of companies are determined by the
theme on tone set by directors
In making decisions, directors must remember their
fiduciary duties:
Duty of candour
Duty of care
Duty of loyalty

17. The Way Forward
• The board determine strategy, risk appetite and the tone of
governance
• The C-suite and other team members would behave based on
the tone at the top (tune in the middle and tap of the feet on the
ground)
• While rules set the parameters of conducts and practices, in
protecting the public from market failures, inside-out approach in
determining conducts and practices would be more sincere and
sustainable
• One needs to ask oneself whether decisions made are in whose
interests, the answer to this would influence the outcomes