More listed companies adopted best practices as outlined in the Malaysian Code on Corporate Governance (MCCG) in 2019, compared to the year before. When releasing its annual Corporate Governance Monitor (CG Monitor 2020) today, the Securities Commission Malaysia (SC) noted that the areas which show an increase in adoption are the Step Up practices, the two-tier voting process and board practices to determine remuneration of directors and senior management.
CG Monitor 2020 also presents observations on three thematic reviews on the adoption of two-tier resolutions, board remuneration of listed companies on the FTSE Bursa Malaysia Top 100 Index and the conduct of fully virtual general meetings by listed companies since the Movement Control Order.
The review on board remuneration shows that the total board remuneration for 2019 decreased by 11.7% compared to 2018, in which the executive directors’ remuneration decreased by 14.5%, while non-executive directors’ remuneration increased by 6.2% in 2019.
While the adoption of the two-tier voting process for retention of long serving independent directors has increased, there remains a high number of independent directors whose tenure spans between 20 – 40 years. The SC notes that the participation of non-large shareholders in Tier 2 voting remains low. On average only 40% of non-large shareholders cast their votes. While the two-tier voting process is not mandatory, the SC strongly encourages shareholders to seek the adoption of this practice to strengthen the reappointment of long serving independent directors. Similarly, non-large shareholders should rise up and exercise their rights in determining the extension of the tenure of these directors.
As at 31 August 2020, gender diversity on boards of listed companies shows slight improvement at 24.82% (2018: 23.68%) on the top 100 listed companies and 16.96% (2018: 15.69%) across all listed companies. Currently, there are also five companies with all-male boards on the top 100 listed companies, namely Comfort Glove Bhd, Focus Dynamics Group Bhd, Frontken Corporation Bhd, Guan Chong Bhd, and Pentamaster Corporation Bhd.
The SC is also encouraged to note that smaller companies have adopted a more transparent approach with regards to disclosure of remuneration of senior management on a named basis. The adopters include Caely Bhd, Y&G Corporation Bhd and Timberwell Bhd. Good quality disclosures and transparency will enable stakeholders to gain deeper insights on how corporate governance frameworks and practices support the company’s business resilience and growth, especially during this challenging period.