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regime, for example, replacing the annual licensing renewal requirement with greater monitoring and regular reporting. The SC also established a central electronic disclosure system for continuous reporting obligations to facilitate efficient information access.
Greater accountability was placed on boards and management of intermediaries to monitor the business conduct of employees and agents. This required boards to take an active role in driving compliance and risk management culture as well as manage potential conflicts of interest. The promotion of a strong compliance culture among directors of PLCs was enhanced through the Capital Market Director Programme delivered by the SIDC, and the Guidelines on Conduct of Directors of Listed Corporations and Their Subsidiaries.
In addition, investors were better empowered to make informed investment decisions through strengthened disclosures, greater focus on suitability assessments and post-issuance obligations by intermediaries. With the widespread usage of digital marketing channels in recent years, product issuers were allowed greater flexibility in using a wider range of advertising platforms, including social media, messaging applications and video streaming, to responsibly promote their products and services through the new Guidelines on Advertising for Capital Market Products and Related Services issued in 2020.
1.3.4 STRENGTHENED CORPORATE GOVERNANCE PRACTICES
In the CMP2, the SC set out to develop a capital market that is distinguished by the high quality of its governance. Good CG practices engender trust and confidence among investors, and provide a solid foundation to achieve sustainable growth. Recognising the importance of a culture of self and market discipline, the Corporate Governance Blueprint (CG Blueprint) issued in 2011 outlined the need for better governance across the market ecosystem, including directors, shareholders and gatekeepers, as well as through public and private enforcement.
Over the last decade, Malaysia continued to receive international plaudits for its CG standards. In the recent Corporate Governance Watch 2020 assessment by ACGA, Malaysia ranked fifth. There were marked improvements recorded in the areas of CG rules, standards and practices of auditors and audit regulators, investor stewardship as well as the CG culture of listed companies. Malaysia also ranked second in protecting minority investors, according to the World Bank’s Doing Business 2020 – a hallmark to the strength of its shareholder rights, governance safeguards and corporate transparency requirements.
The Malaysian Code on Corporate Governance (MCCG) has evolved to utilise the Comprehend, Apply and Report (CARE) approach to promote greater internalisation of CG. Coupled with the SC’s annual reporting of adoption rates via the Corporate Governance Monitor (CG Monitor), Malaysia has seen improvements across various indicators of board leadership and effectiveness, audit and risk management, integrity in corporate reporting and meaningful relationships with stakeholders. Gender diversity in PLCs have also seen marked improvements as a result of efforts by the SC and the industry to champion it. As at end of 2020, 73% of PLCs have at least one female on their board, compared to 44% in 2018.
In fostering high quality independent auditing in the capital market, the Audit Oversight Board (AOB), which was set up in 2010, continued to strengthen its focus on risk-based inspections and to take enforcement actions against auditors for non-compliance. Additionally, new registration criteria were introduced in 2018 to ensure that the auditors’ gatekeeping role remains relevant, and more importantly, to encourage audit firms to increase their capacity and improve audit quality.
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