News and developments
Securities Commission Issues New Guidelines on Corporate Governance
To further strengthen board governance and oversight in listed issuers and their subsidiaries, the Securities Commission Malaysia (SC) has, on 30 July 2020, issued new Guidelines on Conduct of Directors of Listed Issuers and Their Subsidiaries (“Guidelines”).
The Guidelines comprises 5 chapters i.e. Introduction (Chapter 1), Definitions (Chapter 2), Conduct Requirements for Directors (Chapter 3), Maintaining Proper Records and Accounts (Chapter 4) and Group Governance (Chapter 5). The Guidelines comes into effect on 30 July 2020, with the exception of Chapter 5 on Group Governance which will come into effect on 1 January 2021.
The summary of the key points in the Guidelines are as follows:
(i) Conduct of directors (Chapter 3)
- A director of listed corporation and their subsidiaries must:
- A listed corporation and its directors must establish policies and procedures to manage potential conflict of interest situations including potential conflict of interest between any director and the corporation; and the listed corporation and its subsidiaries.
- Listed corporation and their subsidiaries and their directors must cause to be kept the accounting and other records for not less than 7 years from the completion of the transactions or operations to which the entries or records relate, to: (a) sufficiently explain its business, transactions and financial position; (b) enable the preparation of true and fair financial statements; and (c) enable the accounting and other records to be conveniently and properly audited.
- Where the financial statements of a subsidiary are required to be consolidated into the financial statements of a listed corporation, the subsidiary and its directors must provide the listed corporation with all information and record necessary to enable the preparation of the consolidated financial statements in accordance with the approved accounting standards.
- A listed corporation and its directors must:
- A subsidiary of a listed corporation and its directors must provide the listed corporation with any information requested by the listed corporation to enable the board of the listed corporation to oversee the performance of its subsidiaries effectively, including assessing non-financial performance of the group.