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How do we meet the International Integrated Reporting Council (“IIRC”)’s guiding principles such as connectivity of information, conciseness, and clear articulation of the strategy while adhering to Bursa Malaysia’s guidelines?

Let’s look at the Chairman’s Statement first.

The Chairman’s Statement has become optional under Bursa’s present guidelines while Management Discussion and Analysis (“MD&A”) write-ups have become mandatory, with a clear guideline on disclosures that is highly recommended for companies to follow.

Companies which have retained Chairman’s Statements are now challenged:


“How do they give credence to Chairman’s Statements while ensuring it is distinctive from the MD&A and significant to the overall annual report?”

The Customary Formula Applied

In justifying the inclusion of Chairman’s Statements, companies often use the following “recipe” (or variants of it) to keep the former and the MD&A distinct:

  1. Salutations and greetings;
  2. Economic / global / national overview;
  3. Macro perspective of the industry;
  4. Major factors / developments within the year;
  5. Quick mentions of financial performance;
  6. Corporate governance;
  7. Sustainability;
  8. Brief sharing on outlook and prospects;
  9. Acknowledgement and appreciation; and
  10. Perhaps anything else the Chairman would like to specifically touch on.

Certainly, from a superficial level, it looks decent albeit it tends to be a bit dry. After all, many of these elements are not mandated within the MD&A according to industry guidelines, so it would be apt to put these in the Chairman’s Statement. In any case, responsible public listed issuers should mention these important matters in their reporting where they best fit.

However, when we do that, are we truly doing the Chairman’s Statement justice? Or are we keeping the Chairman’s Statement in merely to fill pages?

Justification for its Inclusion

The Chairman’s duty is to the company and its shareholders. As the leader of the Board, among the Chairman’s job functions are to ensure effective communication with shareholders and to present the company’s aims and policies to the outside world.

With that in mind, it becomes clear that the Chairman’s Statement has an essential place in the company’s annual reporting publication to shareholders.

How, then, should the Chairman’s Statement be framed?

To find the answer for that, we believe we should revert to the original spirit and purpose of the Chairman’s Statement, which is to serve as a letter or message to shareholders, ensuring the company’s corporate reporting remains relevant to investors for their capital allocation decisions. It should be a true communication to the shareholders about the story of their company, justifying its existence and showcasing the value of the company.

Key Messages of Chairman’s Statement

In the true context of <IR>, there is so much more that can be done with the Chairman’s Statement, while staying precise and concise. Here are some ideas (especially if it’s going to be your first year of <IR> adoption):

  • Utilise the Chairman’s Statement to clearly define who you are and the business you are in. Yes, it may appear obvious i.e. property development, offshore vessel support, airport operator, airline, etc.; but so are your competition. What is it that differs you from the rest? How are you distinctive from your peers? Is it culture, business model, technology, people, the overall strategic approach?
  • How does the business justify its existence? What’s the company’s Mission Statement and is it well-defined? Why is this company important and why do we matter within the industry and the larger narratives of market positioning and nation-building?
  • What role does the company play beyond generating revenue and profits? How does the company serve stakeholders and society (this is not to be mistaken for altruism or CSR, but how its business purposes deliver unique value to the market).
  • Where are we going from here (you could possibly draw from the vision statement, but once again, many vision statements are opaque and draw more questions than answers).

The Chairman’s Statement is the ideal place to make a case for these key points.

With these serving as the central themes of your Chairman’s Statement, you’ll find that the messaging will be more straight to the point with a stronger emphasis on what’s really important. There should also be a more natural fit of the earlier mentioned formula items into the overall story.

Avoiding Repetition in Your Narrative

You may wonder, wouldn’t a lot of this be duplicating what’s given in the Corporate Profile or About Us sections of the annual report?

The answer is, yes, it would, if you were to just insert your standard writeup. Hence, the importance of recrafting to keep content precise and concise.

That’s where an <IR> driven writing team will be an asset. They’ll be able to understand the business and tap the info to develop a succinct narrative that speaks to the shareholders and clearly articulate what is the company all about, why does it do what it does, and how is it destined to be a winner both in the present and the future.

This article was first published here.

Photo by Kelly Sikkema on Unsplash.

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