KUALA LUMPUR (Nov 24): The Securities Commission (SC) Malaysia has remained steadfast in its position to discourage the appointment of active politicians to the board of public companies to ensure that they are more resilient, innovative, and in a stronger position to implement new strategies and methods in response to changing market conditions.
“We have addressed this issue and our recommendation is to discourage the appointment of active politicians. This is the SC’s position,” the commission said in its technical briefing.
The SC had previously stated in its updated Malaysian Code on Corporate Governance that the board must also be mindful of the recommended best practices in relation to board appointments, whereby, in the case of state-owned enterprises (SOE), the Organisation for Economic Co-operation and Development’s Guidelines on Corporate Governance of State-Owned Enterprises recommended that the SOE board composition should allow the exercise of objective and independent judgment.
The SC has emphasised that all board members, including public officials, should be nominated based on qualifications and have equivalent legal responsibilities.
“Further, the guidelines recommend that persons linked directly with executive powers such as heads of state, heads of government, and ministers should not serve on boards as this would cast serious doubt on the independence of their judgment.
“Additionally, a listed company is discouraged from appointing an active politician as a director on its board,” it said.
Meanwhile, the SC has released the Corporate Governance Strategic Priorities 2021- 2023 (CG Strategic Priorities), a critical component of the Capital Market Masterplan 3 (CMP3) that focuses on catalysing competitive growth, empowering investors for a better future, and shaping a stakeholder economy.
The commission said board composition is a critical determinant of board leadership as it allows listed companies to respond effectively to emerging imperatives and disruptive forces, which necessitates board diversity in terms of skills, gender, age and nationality, among other things.
“For companies to survive and thrive, boards must also learn to adapt. Boards that adopt a proactive and forward-thinking approach to board refreshment and continuous professional development.
“Thus, in the next three years, the SC will focus on encouraging boards to review and refresh their composition to ensure there is diversity and the right mix of expertise on the board, as well as enhance the continuous professional development framework for boards,” it added. – Bernama