MALAYSIA Law and Practice Contributed by: Dato’ Tan Yee Boon, Stephanie Chan Pik Jia and Joaana Keng Li Xin, David Lai & Tan
Board is not only more inclusive but also better positioned to navigate the complexities of mod - ern business environments. Digital Governance and Cybersecurity With Malaysia’s ongoing digital transforma - tion, digital governance and cybersecurity are becoming increasingly critical. The increase in digital transformations and the rising frequency of cyber threats mean that companies will need to establish robust cybersecurity frameworks and governance structures to protect sensitive data. Regulators are likely to introduce more stringent disclosure requirements on cyberse - curity readiness, especially for companies han - dling sensitive consumer or financial data. Direc - tors are also expected to develop digital literacy and be accountable for overseeing tech-related risks. Corporate Culture and Ethical Leadership In response to increasing public scrutiny and global calls for responsible business practices, companies will face increased pressure to dem - onstrate a values-driven culture. In 2025, further emphasis on creating strong ethical guidelines for companies to adhere to can be expected, with a focus on improving corporate account - ability and maintaining trust with stakeholders. This could include more comprehensive train - ing programmes for directors and executives, as well as improved mechanisms for reporting unethical behaviour. Shareholder Engagement and Activism Shareholder activism is likely to continue shap - ing corporate governance practices in 2025, especially as investors seek more influence over company strategies, including decisions related to corporate sustainability, executive compensa - tion and strategic direction. Publicly traded com - panies may need to enhance their engagement
with shareholders to address concerns proac - tively, fostering a more collaborative relationship between shareholders and management. 2.2 ESG Considerations As ESG considerations gain prominence in Malaysia’s corporate landscape, companies are now expected not only to integrate these fac - tors into their business practices and disclosures but also to disclose them transparently. This shift aligns with growing stakeholder demands and regulatory emphasis on sustainable, ethical business practices. Environmental Reporting Companies are required to disclose the impact of their operations on the environment, including areas such as carbon emissions, energy con - sumption, waste management and water usage. These ESG disclosures should be aligned with globally recognised standards, including the Global Reporting Initiative and the Task Force on Climate-related Financial Disclosures. In Malay - sia, Bursa Malaysia and the SC require public listed companies to clearly detail their strategies for managing environmental risks and reducing their environmental footprint. Social Reporting Social reporting focuses on a company’s respon - sibility towards internal and external stakehold - ers. Companies are expected to report on key aspects such as labour and employment prac - tices, diversity and inclusion, human rights and community engagement and impact. The List - ing Requirements and the MCCG encourage companies to demonstrate their commitment to social responsibility by showcasing efforts to enhance employee welfare, foster diversity and contribute to community development.
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