LISTED companies must take cognisant that while it will be mandatory for boards to comprise at least one woman director, boards should put in efforts to achieve the target of having 30% women directors in order to further harness the benefits of having a diverse board.
Recognising the need for boards to be agile and effective as they navigate challenging and uncertain times, the Security Commission’s (SC) Corporate Governance (CG) Strategic Priorities 2021-2023 report has recognised the need to improve board diversity, including accelerating the participation of women on boards and in senior management.
As of Oct 1, women hold 17.7% of board positions which is an increase compared to 10 years ago when the level of women participation on boards was only 7.7%, according to the report which was rolled out today.
“However, progress has been marginal over the past three years, hovering around 25% for the top 100 listed companies and 17% overall (all listed companies),” observed the report.
“Furthermore, only 162 listed companies (18%) have achieved the 30% target. There also appears to be inertia that keeps gender diversity in the ‘nice to have category’ for 252 listed companies which still have all-male boards.”
The CG Strategic Priorities 2021-2023 builds on the SC’s previous plan for 2017 to 2020 where a 90% implementation score was achieved.
It focuses on five thrusts and 11 strategic initiatives to among others, strengthen board capacity in addressing sustainability; scale up investor stewardship; enhance availability of CG data through the use of digital tools, and further developing the collaboration with universities to deepen engagement with youth on CG.
Alongside the CG Strategic Priorities 2021-2023, the SC also released the Corporate Governance Monitor 2021 report to highlight progress made in the adoption of the 2017 edition of the Malaysian Code on Corporate Governance (MCCG).
Adoption levels across majority of the practices remained positive, with 24 out of the 36 best practices recording adoption levels of at least 90% (2019: 23 practices).
The lowest adoption level was for practices relating to the disclosure of senior management remuneration where only 5% of listed companies disclose the detailed remuneration of their senior management.
“Transparency on pay is critical to promote alignment between pay and performance and for shareholders to evaluate if the incentive structure is driving the right behaviour,” commented SC chairman Datuk Syed Zaid Albar.
The CG Monitor 2021 features three thematic essays, including SC’s Audit Oversight Board (AOB) report on the demographics of audit committees in terms of independence, diversity and competence.
Additionally, the AOB highlights that the selection criteria for external auditors should include considerations such as independence, competence, level of audit quality and resource capacity. – Nov 24, 2021
Photo credit: Business Today
