Corporate Governance Blueprint 2011

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Corporate
Governance
Blueprint 2011
Towards Excellence in
Corporate Governance

Suruhanjaya Sekuriti Malaysia
3 Persiaran Bukit Kiara
Bukit Kiara
50490 Kuala Lumpur
Malaysia
Tel: 603-6204 8000 Fax: 603-6201 5078
www.sc.com.my

Copyright
© July 2011 Securities Commission Malaysia

All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (graphical, electronic, mechanical, photocopying, recording, taping or otherwise), without the prior written permission of the Securities Commission Malaysia.

Perpustakaan Negara Malaysia

Cataloguing-in-Publication Data

Corporate governance blueprint 2011 : towards excellence
in corporate governance
Bibliography : p. 77
ISBN 978–983–9386–67–7
1. Corporate governance--Malaysia. 2. Industrial management. 1. Suruhanjaya Sekuriti Malaysia.
658.4009595

This book is printed using eco-friendly
recyclable and bio-degradable paper

CONTENTS
FOREWORD BY MINISTER OF FINANCE II, MALAYSIA
MESSAGE FROM CHAIRMAN OF
THE SECURITIES COMMISSION MALAYSIA

v
vii

INTRODUCTION

1

CHAPTER 1

5

SHAREHOLDER RIGHTS
CHAPTER 2

13

ROLE OF INSTITUTIONAL INVESTORS
CHAPTER 3

21

THE BOARD’S ROLE IN GOVERNANCE





ROLES AND RESPONSIBILITIES
INDEPENDENCE OF THE BOARD
COMPOSITION OF THE BOARD
COMMITMENT OF BOARD MEMBERS

CHAPTER 4

43

DISCLOSURE AND TRANSPARENCY
CHAPTER 5

53

ROLE OF GATEKEEPERS AND INFLUENCERS
CHAPTER 6

61

PUBLIC AND PRIVATE ENFORCEMENT
IMPLEMENTATION

69

ACRONYMS AND ABBREVIATIONS

75

REFERENCES

77

ACKNOWLEDGEMENTS

79

FOREWORD
by YB DATO’ SERI AHMAD HUSNI HANADZLAH
Minister of Finance II, Malaysia

Malaysia is transforming itself into a high-income nation by 2020. The New Economic Model (NEM) and the Economic Transformation Programme (ETP) provide the economic framework to significantly increase productivity, innovation and creativity. The structural reforms will create a more conducive investment environment and increased business opportunities. The strengthening of corporate governance practices is key in attracting private sector investments. Corporate governance is also a priority in our drive to increase the competitiveness of Malaysian businesses to tap domestic and international capital. Internationally, governance practices now have a substantial influence on the investment decisions of long-term investors. As the competition for capital intensifies, it is important that Malaysia surpasses international benchmarks of good governance. Good governance is increasingly used to gauge the sustainability of performance and profitability of a business operation. Malaysian companies must therefore demonstrate track records of good governance in order to attract and retain long-term investors. For the capital market to continue to support the sustainable development of the economy, a sound and balance regulatory framework which promotes good ethical conduct is necessary. The necessary accountability and high levels of investor protection is a prerequisite. This envrionment must be accompanied by embedding practices into an organisation’s goals and business processes. I express my appreciation to the Securities Commission Malaysia for launching this Corporate Governance Blueprint. This Blueprint is a significant initiative that supports the efforts of the Government in promoting Malaysia as a leading business and investment destination. This Blueprint will, undoubtedly, contribute greatly to our efforts in transforming Malaysia into a high-income nation by 2020.

Thank you.

DATO’ SERI AHMAD HUSNI HANADZLAH
Putrajaya
28 June 2011

MESSAGE
from TAN SRI ZARINAH ANWAR
Chairman, Securities Commission Malaysia

The hallmark of the capital market that Malaysia aspires to build is one that will be distinguished by the quality of its governance. Good governance engenders trust...
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