MALAYSIAN CODE ON CORPORATE GOVERNANCE 2012

The Securities Commission (SC) has released the Malaysian Code on Corporate Governance 2012 (MCCG 2012) as a key deliverable of the Corporate Governance Blueprint (Blueprint) and supersedes the Malaysian Code on Corporate Governance 2007 (2007 Code). It sets out broad principles and specific recommendations on structures and processes which companies should adopt in making good corporate governance an integral part of their business dealings and culture. It also elaborates on the need for boards to recognize and manage risks as well as to encourage shareholder participation.

This new code on corporate governance focuses on clarifying the role of the board in providing leadership, enhancing board effectiveness through strengthening its composition and reinforcing its independence. It also encourages companies to put in place corporate disclosure policies that embody principles of good disclosure. Companies are advised to make public their commitment to respecting shareholder rights.

The MCCG 2012 adopts a new structure and encompasses recommendations from the Blueprint and parts of the 2007 Code. It sets out eight (8) broad principles as follows:
1) Establish clear roles and responsibilities
2) Strengthen composition
3) Reinforce independence
4) Foster commitment
5) Uphold integrity in financial reporting
6) Recognise and manage risks
7) Ensure timely and high quality disclosure
8) Strengthen relationship between company and shareholders

The MCCG 2012 will be effective on 31 December 2012. In other words, listed companies with financial year ending 31 December 2012 onwards will be required to report on MCCG 2012 and disclosure should be made in the annual report published in 2013.

Members can view the copy of the MCCG 2012 and a set of Frequently Asked Questions (FAQs) attached or download them from the SC website at www.sc.com.my.