17. crf 2012 azryain borhan

CORPORATE GOVERNANCE &
CORPORATE SOCIAL RESPONSIBILITY
Repositioning Corporate Governance and Corporate
Social Responsibility in the 21st Century Corporate
Environment: The SSM Approach

AZRYAIN BIN BORHAN
Director,
Companies Commission of Malaysia Training Academy

Companies Commission of Malaysia @ CRF 2012 1

PERSPECTIVE: THE GLOBAL DIMENSION OF CG
AND CR

Companies Commission of Malaysia @ CRF 2012

PERSPECTIVE: MALAYSIA - A NATION
UNDERGOING TRANSFORMATION

• 5 key global trends which
Malaysia must address

“…….99.2% of enterprises in Malaysia are SMEs”
Tenth Malaysia Plan


THE NATIONAL CHALLENGE: ATTAINING HIGH-
INCOME DEVELOPED NATION

8
VISION 2020 - INNOVATION DRIVEN
ECONOMY
Developed country, High income economy
[USD17,000 Per Capita Income]
WITHIN YEARS
NEM - CHARACTERISTICS OF
PRIVATE SECTOR-LED MALAYSIA’S ECONOMY IN 2020
ECONOMY
• Market-Led 
• Well-Governed 

EFFICIENCY DRIVEN • Regionally integrated 
ECONOMY
[USD7,000 Per Capita
• Entrepreneurial 
Income] • Innovative


1. POSITIONING CG AND CR INTO THE NATIONAL
ECONOMIC VALUE CHAIN
National
Knowledge Individual Companies
economy
EXISTING FUTURE
ENHANCED FOREIGN
INVESTMENT

ECONOMIC INFORMED SUSTAINABLE
ORIENTATION & RE-ORIENTATION OF

PARTICIPANTS FOREIGN DOMESTIC BUSINESS
THE PRIVATE SECTOR HUMAN

INVESTORS FRAMEWORK CHARACTERISTICS
OF MALAYSIA’S
PRIVATE
• Subscribes to ECONOMY IN 2020
SECTOR-LED
ENHANCED
CAPITAL

EDUCATION & corporate ECONOMY
PRIVATE SECTOR • Market-Led
AWARENESS governance
PARTICIPATION • Well-Governed
• Carries out business
operations COMPETE • Regionally
consistent with the GLOBALLY integrated
STRONG
Triple Bottom Line • Entrepreneurial
FOUNDATION ON
considerations • Innovative
BUSINESS
SUSTAINABILITY • Innovative
CAUSATION OUTCOME


2. INTRODUCING A PARADIGM SHIFT INTO
CORPORATE GOVERNANCE
• Cadbury
Report
(1992) Conventional Corporate
• Greenbury
Report Governance
(1995)
• TurnBull
Report
(1999)
CG 2.0
• Higgs Report • Shareholders primacy
(2003) • Profit-centric
• Smith Report
(2003) • Responsive to crisis
• ‘Safety net’ -
prevents/minimizes
economic/corporate
downfall
1997 ASIAN
FINANCIAL
CRISIS


2. INTRODUCING A PARADIGM SHIFT INTO CG -
INTEGRATING CR WITH CG

21st Century Corporate
Governance

CG 2.0
• Stakeholders primacy
• Sustainability-centric
• Tool for economic
advancement -
economic catalyst
• Holistic
• Dynamic
considerations/subject
matter


HIGH
 CG 1.0

     CG 2.0
  

LEVEL OF EMPHASIS

CG 3.0
MED
 
LOW

Revenue and Shareholders Duties and Society Environment
profit dividend responsibilities Auditors
of directors Workers National
Economy
CONVENTIONAL CORPORATE
CORPORATE RESPONSIBILITY
GOVERNANCE CONSIDERATION

Towards Corporate Sustainability



“The process and structure used • Long term shareholder
to direct and manage the value
business and affairs of the
company towards enhancing • Enhanced business
business prosperity and prosperity
corporate accountability with
the ultimate objective of PROCESS
realising long term shareholder & Direct & manage
value, whilst taking into STRUCTURE the business &
account the interests of other affairs of a
company
stakeholders.”
• Enhanced corporate
accountability
High Level Finance Committee
Report on Corporate Governance, • Other stakeholders’
February 1999 interests


“The process and structure used to direct and manage the business and
affairs of the company towards enhancing business prosperity and
corporate accountability with the ultimate objective of realising long term
shareholder value, whilst taking into account the interests of other
stakeholders.”

High Level Finance Committee Report on Corporate Governance,
February 1999

SSM functions = “….. To instill good corporate governance and promote
proper conduct amongst officers of corporations, business owners,
industry groups and professional bodies through continuous education”.

Subsection 17(c) Companies Commission of Malaysia Act 2001

Corporate responsibility means “commitment by corporations and
businesses towards achieving sustainability in the social, economic and
environmental conditions in furtherance to the pursuit of profitability“

SSM Corporate Responsibility Agenda, 2009


3. EMPHASIZING ON EDUCATION OF CORPORATE
ROLE- PLAYERS
The Deduction
1. Assigning a definition to the
• Under difficult economic ‘corporate governance’
1997
circumstances, corners were ‘cut’ and
ASIAN rules were ‘bent’
2. Introducing the Malaysian
FINANCIAL Code on Corporate
• Key issues: related party transactions,
Governance
CRISIS decisions making by corporate
- hybrid approach
leaders, asset shifting, conflict of - focuses on directors,
interest and lack of disclosure in directors’ remuneration,
transactions, by directors poor shareholders,
High Level Finance financial management by directors accountability and audit
Committee Report • Ineffective enforcement and influence
on Corporate of substantial shareholders. 3. Law reform
Governance - 5 • ‘Where were the directors’ and ‘where
February 1999 were the regulators?’ 4. Training and education
• Weakness in the relationship between • Focus on directors,
the company and members, company secretaries,
shareholders rights, controlling audit committees,
shareholders, duties and shareholders & investors
responsibilities of directors.


3. EMPHASIZING ON EDUCATION OF CORPORATE
ROLE- PLAYERS (Cont)
FOCUS:  Strengthening the foundation for sustainable business practises; and
HIGH  Supporting the creation of entrepreneurial culture


 

TRAINING FOCUS AND PRIORITY

Domestic
Foreign investors Universities & higher
companies &
businesses learning institutions Schools
- Trade missions,
- Board of directors
- Company
- International
economic/ business
meetings
- Graduating
students.
- Lecturers
- Secondary and

Members of the
public
secretaries primary school
- Embassies
- Management students
- Shareholders Approach: Future
Approach: Awareness integration into the Approach: General
- Employees Approach: Awareness
on setting up, NEM awareness to be in
- Auditors through fun but
managing and alignment with the
- Professionals educational activities
winding-up aspirations of the
- to prepare for
companies NEM
Approach: Re- future integration
alignment for into the NEM
integration into the
New Economic
LOW Model (NEM)

IMPACT TO THE ECONOMY
HIGH LOW


4. ENTRENCHING THE BASICS OF CG - IDENTIFY
THE STRATEGIC AREA(S)

• “Consider a building with a few broken
windows. If the windows are not repaired,
the tendency is for vandals to break a few
more windows. Eventually, they may even
break into the building, and if it's
unoccupied, perhaps become squatters or
light fires inside.”

• “Or consider a sidewalk. Some litter
accumulates. Soon, more litter
accumulates. Eventually, people even start
leaving bags of trash from take-out
restaurants there or breaking into cars.”

Broken Windows Theory
James Q. Wilson and
George L. Kelling


4. ENTRENCHING THE BASICS OF CG - KEEP IT
SIMPLE

1Keep proper
2 3 Tabling of
4Lodgement of
Auditing of account during
accounting audited account
the annual
records account general meeting and annual
(AGM) return with SSM

Section 167 CA 1965
• Company to keep Section 169 (4) CA Section 143 CA 1965
accounting records 1965 • A general meeting Section 165 (1) CA
which sufficiently • The profit and loss of every company is 1965
explain the accounts and held annually • Every company
transactions and balance sheet of having a share
financial positions the company shall Section 169 (1) CA capital shall lodge
of the company. be duly audited 1965 the Annual Return
• Records to be kept before they are laid • Directors table the together with
in a manner to during the company’s audited audited account
enable them to be company’s AGM account of during with SSM
audited AGM


5. COMMUNICATING CG TO THE STAKEHOLDER - IN
THEIR LANGUAGE
Economic benefits of corporate governance
• Contributes to economic prosperity and
competitiveness
• Attracts investment
• Facilitates access to credit facilities
• Enhance profit performance
• Structured management and clarity
• Enhance operations and efficiency
• Ensures long term business sustainability
Project
• Creates premium in the value/shares of a Risk management management &
company monitoring
• Positive branding and reputation
Strategic planning SOPs &
• Minimize (if not prevent) corporate fraud,
procedures
wastage, risk and mismanagement


5. COMMUNICATING CG TO THE STAKEHOLDERS -
INSPIRE THEM
RED BOOK - Reviewing & GREEN BOOK -
Revamping Procurement Enhancing Board
Practices Effectiveness

YELLOW BOOK - ORANGE BOOK -
Enhancing Operational Strengthening Talent
Efficiency & Effectiveness Management Practices

PURPLE BOOK - SILVER BOOK - Achieving
Optimizing Capital Value Through Social
Management Practices Responsibility

BLUE BOOK - KPI &
Performance Mgt

• Khazanah Nasional’s Prudent Aggression approach:
- Realisable asset value rose from RM50.9 billion in
May 2004 to RM112.6 billion as at Dec 2010
- Net worth adjusted rose from RM33.3 billion in
May 2004 to RM75 billion as at Dec 2010


Corporate governance is not about laws and regulations per se
but more on understanding of concept and changing the
attitude of economic role players - THE ULTIMATE
CHALLENGE FOR CORPORATE REGULATORS GLOBALLY


THANK YOU
azryain@ssm.com.my

18

17. crf 2012 azryain borhan

Recomendados

Recomendados

Mais conteúdo relacionado

Destaque

Destaque (11)

Semelhante a 17. crf 2012 azryain borhan

Semelhante a 17. crf 2012 azryain borhan (20)

Mais de Corporate Registers Forum

Mais de Corporate Registers Forum (20)

Último

Último (20)

17. crf 2012 azryain borhan