Article by : Mr. Sharul Azman Ramli.

 

WHAT IS GOOD CORPORATE GOVERNANCE?

Corporate governance is defined as the processes and structures used to direct and manage the business and affairs of a company to increase business profitability and corporate accountability with the primary aim of achieving long -term shareholder value without compromising the interests of other stakeholders.

 

Corporate governance provides a framework of control mechanisms to support a company in achieving its goals and preventing unwanted conflicts. Among the important elements that must be present in good corporate governance are:-

i) Ethical behavior;

ii) Accountability;

iii) Transparency; and

iv) Sustainability in administration.

 

The Malaysian Code on Corporate Governance (MCGG) prepared by the Securities Commission Malaysia is one of the important references that can be used as a guide in the implementation of good governance not only by companies listed on Bursa Malaysia but also can be used by unlisted companies, owned companies government and other small and medium enterprises (SMEs).

MCGG provides a comprehensive framework that can be used as a guide to good corporate governance practices. The structure of MCGG is as follows:-

1. Principles of Corporate Governance

 

MCGG is prepared based on 3 principles of good corporate governance, namely:-

i) Leadership and effectiveness of the Board

ii) Effective audit and risk management

iii) Integrity in corporate reporting and good relationships with stakeholders

 

2. Targeted Results

Targeted outcomes provide an idea of ​​what a company will achieve through its governance practices.

 

3. Practice

A practice is an action, procedure, or process that a company must adopt to achieve a targeted outcome taking into account existing legal requirements.

4. Guide

Guidelines that can be used to adhere to practices to help companies achieve targeted results.

 

The complete Malaysian Code on Corporate Governance (MCGG) can be obtained through the website www.sc.com.my

 

 

References:

Malaysian Code on Corporate Governance (2017) published by the Securities Commission Malaysia.

Date of Input: 23/03/2021 | Updated: 23/03/2021 | nurmiera