THE corporate governance (CG) score of Malaysian public listed companies (PLCs) based on the ASEAN CG Scorecard (ACGS) has continued to rise despite PLCs having encountered numerous business challenges presented by the COVID-19 pandemic.
Based on the assessment of 864 companies in 2021 by the Malaysian Shareholder Watch Group (MSWG), the overall CG Score was 83.58 points (out of a maximum attainable score of 130 points) which is a commendable 5.4% increase from 79.28 points in 2020.
Over the past five years, Malaysian PLCs have shown consistent and steady improvements in the CG Score from 62.20 points in 2017 to 83.58 points in 2021 as reflected in the chart below.
The upward trend is also observed in the Top 100 PLCs and ACE Market PLCs. This steady improvement is indeed encouraging, and is a testament that the ACGS is an effective tool for corporate governance reform.
“We are very much encouraged by the 2021 assessment results which showed an improvement in overall CG score compared to 2020 – no small feat considering the tumultuous times faced by PLCs amid COVID-19 pandemic,” commented MSWG’s CEO Devanesan Evanson.
“The consistent improvement in the average CG scores over the last five years suggested that more and more companies are aligning their CG best practices with international and regional best practices, beyond the requirements of national legislation as measured by the scorecard.”
He added: “Further analysis of the individual components of the scorecard also demonstrated improvements across all parts, with the role of stakeholders’ parameter improving significantly since 2017.”
Commendable improvements in 2021 include:
- A rise in the number of PLCs which disclosed voting procedures before the start of annual general meeting (AGM) to 769 companies in 2021 from 551 companies in 2020;
- A big increase in the implementation of electronic voting in absentia mechanism to 775 companies from 274 companies during 2020;
- More companies have disclosed that related party transactions (RPTs) were conducted in such a way to ensure that they were fair and at arm’s length (from 111 companies in 2020 to 235 companies in 2021);
- An increase in the number of companies which disclosed anti-corruption procedures to 806 companies from 676 companies in 2020;
- A rise in the number of PLCs which adopted a term limit of nine years for its independent directors to 148 companies in 2021 from 80 companies in 2020;
- An increase in the number of PLCs which disclosed that their Nomination Committee undertook the process of identifying the quality of directors aligned with the companies’ strategic directions to 171 companies in 2021 from 47 companies in 2020;
- A rise in the number of PLCs which set up a separate board level risk committee to 427 companies in 2021 from 262 companies in 2020; and
- A rise in the percentage of women directors to 27% in 2021 from 26% in 2020 for Top 100 PLCs.
All-in-all, 2021 marks the 10th year that the MSWG has undertaken the CG assessment project to assess all Malaysian PLCs, excluding companies listed on the LEAP Market, Practice Note 17 (PN17) and Guidance Note 3 (GN3) companies by leveraging the ASEAN CG Scorecard (ACGS). – Nov 5, 2022
