MALAYSIA Law and Practice Contributed by: Dato’ Tan Yee Boon, Stephanie Chan Pik Jia and Joaana Keng Li Xin, David Lai & Tan
2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance As Malaysia looks towards 2025, corporate gov - ernance continues to evolve in response to glob - al trends, regulatory developments and height - ened stakeholder expectations. The following key issues are poised to take centre stage in the governance landscape. Environment, Social and Governance (ESG) Compliance ESG factors are becoming increasingly impor - tant in corporate governance. The Malaysian government and regulators, particularly the SC and Bursa Malaysia, are expected to implement more structured frameworks for ESG disclosures and practices among public listed companies. Companies will be expected to provide clear and measurable outcomes related to environmental impact, social responsibility and governance practices. This growing focus on ESG is aligned with global trends and reflects an increasing demand from investors for transparency in these areas. This focus on ESG aligns with global investor demands and Malaysia’s commitment to sus - tainable development. Increasingly, investors are prioritising companies with credible ESG credentials, making ESG integration not only a compliance matter but also a competitive dif - ferentiator. Board Diversity and Inclusion Diversity in the boardroom is another hot top - ic that will continue to gain traction in 2025. Improving gender diversity and inclusion at the leadership level is becoming more of a priority for regulators and investors alike. Bursa Malay - sia and the SC are likely to enhance regulations aimed at increasing diversity, ensuring that the
businesses, providing them with opportunities for fundraising and greater market exposure. All companies in these markets are required to adhere to specific corporate governance stand - ards. Regulatory Framework for Corporate Governance These companies must comply with several key regulations that govern corporate govern - ance. CA 2016 provides the legal foundation, detailing the roles of directors and the rights of shareholders. The Listing Requirements impose mandatory governance obligations on listed companies, such as the composition of the Board, financial disclosures and the establish - ment of essential committees like audit and risk management. These requirements ensure that companies maintain a high level of transparency and accountability. Moreover, these regulatory requirements support Malaysia’s broader goals of enhancing investor protection, promoting ethical corporate behav - iour and attracting foreign investment through strong governance practices. In addition, the MCCG offers guidelines for best practices in corporate governance. While adherence to the MCCG is not compulsory, list - ed companies are expected to either follow its principles or explain any deviations. This flexible approach allows companies to maintain govern - ance standards while providing transparency regarding their corporate practices. The MCCG’s emphasis on board diversity, stake - holder engagement and sustainability aligns with global trends and reinforces Malaysia’s commit - ment to responsible business conduct.
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