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Agendas related to human capital issues, including equal opportunity, workplace health and safety as well as diversity, are also gaining momentum in shareholder meetings.
The landscape of shareholder activism has gradually matured in the last decade, contributed in large part by the launch of the MCII as well as the establishment of the IIC in 2014 and 2015 respectively. Institutional investors and the Minority Shareholders Watch Group (MSWG) have also stepped up on stewardship across a wide range of issues, from CG to compensation to workplace health and safety. Moving forward, the IIC will be expected to enhance the MCII to strengthen the stewardship of institutional investors, particularly in relation to sustainability.
Malaysia has also seen a change in how individual retail investors participate in shareholder meetings and exercise their rights. With the movement control orders, Malaysia has seen a shift into virtual and hybrid general meetings. A survey conducted by the SC revealed that virtual and hybrid general meetings resonated with investors across different age groups and the level of engagement during these meetings remained positive. Moving forward, the SC will continue to encourage the adoption of digital tools to promote meaningful engagements between the board, senior management and shareholders at general meetings. Stakeholder communications could also be strengthened through digital platforms and tools, setting up better collaborations to promote effective shareholder participation and by engaging youth on CG topics and issues.
The growth of investor activism and advocacy, in particular among retail investors, is underpinned by the promotion of transparency through disclosures and investor education. The SC continues to promote accurate and effective disclosures by market participants to enable investors to make informed decisions.
Similarly, investor education will remain a key priority for the SC. Over the next few years, the SC will continue to execute initiatives under the Malaysia National Strategy for Financial Literacy, together with BNM and the other members of the FEN, to elevate financial literacy among Malaysians and promote responsible financial behaviour5.
4.1.4 MOVING FURTHER TOWARDS PRINCIPLES-BASED REGULATIONS
In 2015, the SC, in its regulatory philosophy, outlined the policy to adopt a principles-based approach for regulations – one which emphasises broad-based standards over prescriptive and detailed rules, with greater focus on outcomes rather than dictating processes. This approach acknowledges that there may be more than one way to achieve a regulatory outcome, and by clearly articulating the desired outcomes, firms are given greater flexibility to achieve their own business goals without compromising those regulatory outcomes6.
Since then, elements of principles-based regulations were introduced in the Guidelines on Sales Practices of Unlisted Capital Market Products and Guidelines on Recognized Markets. In more recent guidelines, such as Guidelines on Advertising for Capital Market Products and Related Services, the SC has adopted principles-based regulations to a larger extent. These early initiatives and the challenges that surfaced during the implementation of this approach have provided valuable learning experiences for the SC and capital market participants to fine-tune the adoption of principles-based regulations.
Malaysia National Strategy for Financial Literacy 2019-2023, FEN, 2019. Regulatory Philosophy, SC, 2015.
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