Corporate Governance in Malaysia

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Corporate Governance is a concept in which it has been existence for decades; although not in the exact form that it has come to be understood today (Anandarajah, 2001). The term corporate governance was introduced in Malaysia in 1997 during the Asian Financial Crisis. It also drew the public’s attention on the weaknesses of the Malaysian corporate governance practice (Nor Azizah Zainal Abidin, 2007). Besides that, the downfall of Sime Bank, the Bumiputera Malaysian Finance (BMF) scandal, the irregularities in Renong Berhad, the Perwaja fiasco and the internal management problem faced by Malaysian Airline System (MAS) forced government to enhance corporate governance regulations (Norwani, Mohamad, & Chek, 2011).
The High Level Finance Committee Report 1999 on Corporate Governance in Malaysia defined corporate governance as the “process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking into account the interest of other stakeholders.” (Malaysian Code on Corporate Governance, 2012).
The code that governs the corporate governance in Malaysia is called the Malaysia Code of Corporate Governance (MCCG). This code was recently revised in March 2012 and it is known as the MCCG2012. Besides providing relevant information to investors, this code also aims to encourage transparency management of companies, to enable investors to guide the direction of the company (Nor Azizah Zainal Abidin, 2007).
The MCCG 2007 was revised with the aim to enhance the directors’ duty to the companies. With the revised MCCG 2012, there are still many issues arising from corporate governance. However, to some extent there are improvements in some area of the corporate governance. The revised MCCG 2012 contained a few improvements in the recommendation. This Code now establishes clear roles and responsibilities

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