KUALA LUMPUR: The Securities Commission has released the new Malaysian Code on Corporate Governance - a set of best practices to strengthen corporate accountability and transparency.
The new code - which takes effect today - is an important milestone in the corporate governance journey to ensure the resilience of the capital market, said its chairman Tan Sri Ranjit Ajit Singh at the release of the MCCG.
It also encourages non-listed entities including state-owned enterprises, small and and medium enterprises (SMEs) and licensed intermediaries.
The first batch of companies that are expected to report their application of the practices in the new code will be those with financial year ending December 31, 2017.
" We continue to detect instances of serious market misconduct by directors and less than honest and transparent disclosures by boards on their financial and non-financial information."
A key feature is the introduction of the Comprehend, Apply and Report (CARE) approach.
"Another new dimension is the Step Up practices to encourage companies to go further in achieving corporate excellence."
The code identifies certain practices and reporting expectations to only apply to companies in the FTSE Bursa Malaysia Top 100 Index and those with a market capitalisation of RM2 billion or more.
One of the key concerns is the practices on retention of independent directors.
"Boards that intend to retain an independent director beyond 12 years will now be expected to obtain annual shareholders' approval through a two-tier vote."
Ranjit also announced a three-year plan to advance key corporate governance priorities which include strengthening the ecosystem through a Corporate Governance Council.
The SC, he added, will also use big data and artificial intelligence capabilities to strengthen its corporate surveillance and enforcement capabilities.
The regulator will collaborate with industry group and stakeholders to increase women's participation in boards of the top 100 companies on Bursa Malaysia from 16.8 per cent to 30 per cent by 2020.