MICG: PLCs should improve in corporate governance disclosures

By DASHVEENJIT KAUR / Pic by ISMAIL CHE RUS

Corporate governance practices at Bursa Malaysia’s top 100 public-listed companies (PLCs) still fall short of expected standards, according to the Malaysian Institute of Corporate Governance (MICG).

Minister in the Prime Minister’s Department Datuk Paul Low Seng Kuan noted that transparency remains an issue within PLCs.

“Despite some positive results, MICG found that the disclosure practices and levels of transparency of the top PLCs fall short of expected standards,” he said after the launch of MICG’s report entitled, “Transparency in Corporate Reporting — Assessing Malaysia’s Top 100 Public- Listed Companies”.

The companies covered in the assessment were Bursa’s top 100 PLCs by market capitalisation as of Dec 30, 2016.

The companies are assessed based on the publicly available data between the period of 2015 and April 2017.

Based on the report, Petronas Gas Bhd (PetGas), Petronas Dagangan Bhd (PetDag), Petronas Chemicals Group Bhd (PetChem), Malayan Banking Bhd (Maybank) and Sime Darby Bhd are leading examples of Malaysian PLCs with high disclosure and transparency levels.

The report assesses the companies based on three dimensions; the anti-corruption programme (40%), organisational transparency (30%), and sustainability (30%).

Among the 15 companies that had scored 50% or more in all three dimensions were PetGas, PetDag, PetChem, Axiata Group Bhd, British American Tobacco (M) Bhd, Lafarge Malaysia Bhd, Maybank, MISC Bhd, Nestlé Malaysia Bhd, RHB Bank Bhd, Sime Darby, Sunway Construction Group Bhd, Telekom Malaysia Bhd, Top Glove Corp Bhd and Westports Holdings Bhd.

Another 11 companies scored full points in at least one of the three dimensions.

“This leaves with the balance 64 companies that had scored less than 50% overall. The average company score is 4.6 out of the maximum 10 points in the overall index,” Low added.

He said PLCs should engage with relevant stakeholders to improve the quality and extent of anti-corruption measures, organisational transparency and sustainability practices.

“These improvements should then be reflected in higher quality public reporting,” he said.

Meanwhile, MICG president Datuk Yusli Mohameed Yusof said corporate governance standards play a pivotal role in promoting greater trust and accountability in the capital markets.

“The objective of the report is to raise the bar of the corporate governance in Malaysia. On an overall basis, government-linked companies scored better relatively to multinational companies and family-run PLCs, with an average score of 5.8, 5.5 and 4.1 respectively,” he said.

“This is the inaugural report and as such, no comparison with prior period can be made. As this assessment is repeated in future years, it will allow companies involved and their boards to evaluate how they have improved the transparency of their corporate reporting,” he added.

In terms of organisational transparency, Maybank, Nestlé, Kuala Lumpur Kepong Bhd, UMW Holdings Bhd, Astro Malaysia Holdings Bhd and Bermaz Auto Bhd achieved perfect scores.

As for reporting on anti-corruption programmes, MICG stated that 13 companies had scored zero in the category.

“This signals that anti-corruption efforts among some of the largest businesses in Malaysia need to be comprehensively rebooted,” Yusli said.