By ALLINA ALBERT ARNOLD 108944 SITTI RAZMAH THOMAS 108946 NOOR AZLINA MOHD AINEE 109010

1. Corporate Governance By ALLINA ALBERT ARNOLD 108944 SITTI RAZMAH THOMAS 108946 NOOR AZLINA MOHD AINEE 109010

2. What is corporate governance? • Finance Committee on Corporate Governance in Malaysia in the Report on Corporate Governance (2002) stated that: “Corporate governance is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking account the interests of other stakeholders”.

3. What is corporate governance? (cont.) • Corporate governance is about the way in which boards oversee the running of a company by its manager, and how board members are in turn accountable to shareholders and the company. • A simple adherence to formal system of corporate governance, in term of structures, rules, procedures and code of practice.

4. Ethical aspects of CG found in 4 Core Values • Responsibility – management of the companies • Transparency – financial reporting • Accountability – BOD and management • Equitable treatment – interest of the management and shareholder of the companies

5. Development of CG in Malaysia • main sources – • Malaysian Code on CG by Finance Committee on CG • Capital Market Master Plan (CMP) by Securities Commission • Financial Sector Master Plan (FSMP) by Bank Negara Malaysia on the financial sector • provides guidelines on the principles and best practices in corporate governance and the direction for the implementation as well as charts the future prospects of corporate governance in Malaysia.

6. Malaysian Institute of CG (MICG) • established in March 1998 by the High Level Finance Committee on Corporate Governance • founding members:- • Federation of Public Listed Companies (FPLC) • Malaysian Institute of Accountants (MIA) • Malaysian Association of Certified Public Accountants (MICPA) • Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) • Malaysian Institute of Directors (MID) • Objectives – to raise the awareness and practice of good CG in Malaysia.

7. Issue 1: Balancing Self-interest and Altruism: corporate governance alone is not enough.

8. The underlying complaint • Some business leader have forgotten their social responsibility, morality and ethics on the basis that, if they “do the business thing”; they can leave others to do “the moral” or the “social thing”. Their decision are wrong. • Morality is a specialist concern which can be left to the priest or teachers or philosophers, the implicit norms and values which drive our behaviour will, come what may, be revealed by and integrated into our everyday activities.

9. Cont’d… • If they are by the standards of the time deemed morally bad, then attack on the immorality of business are inevitable. • Self interest should be moderate by moral sentiments so that purely selfish or exploitative behaviour would be exception not the rule.

10. What is the importance? • Nowadays, the special & important is our contemporary moral climate, individualism, & self interest are very strong & altruism is taken, or left, as if an optional extra. • One cannot subcontract or outsource one’s own individual morality to a specialist, specialist institutions are nonetheless important in creating a climate in which one develops a moral sense

11. Current crisis in confident in corporation. • It is engaged in “free enterprise” as an imbalances between selfishness & altruism. • All those involved in corporate life & especially those with senior positions need to appreciate their own responsibilities within which they will exercise their own position. • The most important is it require an identification of how to develop & enact moral duty & obligation for helping & caring for others, being honest, treating others with dignity, respect, fairness and on occasion putting the needs of others.

12. Issue 2: Corporate Governance & Accountability : What Role for Regulator, Director & Auditor?

13. Today’s Findings • CG structure should be examine periodically because we live in a time of rapid change • Company activity grow in range, diversity and magnitude. Therefore CG should be change to solve shortcoming in today’s system and proposing some basic change

14. Roles of Regulator, Director & Auditor • Regulator – Government should be held more responsible to shareholder & the public • Director – Should distance themselves from their company in order to serve shareholder better - Need to be well informed about company as a senior executive • Auditor – Perform proper core audit duties - Latter provide specialized expertise

15. Issue 3: Corporate Governance: A Development Challenge and difference Practices Among Companies

16. Why matters for development? • CG continues to be seen by some as relatively unimportant in developing countries, in large part because of the paucity there of firms with widely traded shares. • Yet the poor quality of local systems of CG lies at the heart of one of the greatest challenges most countries in the developing world currently face: how successfully a firm to transform local systems of economic and political governance – including those of CG – from systems that tend to be highly personalised, and thus strongly relationship-based, into systems that are more effectively rules-based?

17. Cont… • In many of today’s OECD countries the transformation from relationship - to predominantly rules - based systems of economic and political governance took place largely before the spectacular rise and rapid global spread late in the 19th century of the giant manufacturing corporation, and the displacement of proprietary capitalism (unincorporated individually owned business) by corporate capitalism on a global scale.

18. Good Corporate Governance Practices • While the principles of good governance may be fundamentally the same for all companies, there is great scope for creativity and innovation in applying such principles to the specific circumstances facing individual firms.

19. Elements to practice good corporate governance • The commitment of managers and controlling shareholders is an important factor to any sustained program of improvement in a company’s governance. • To be fully successful, a CG program must effectively communicate to stakeholders the unshakeable commitment of the firm, its management and controllers to the goals of corporate governance. • The rewards of initial, narrowly-focused efforts can generate sustainable momentum for more comprehensive efforts and a virtuous circle of adoption of best better practices.

20. The result • The experiences of companies that demonstrate the contribution good governance can make to operational performance and access to cost of capital. • All companies may experience different result as which way the CG practices they applied.

21. Conclusions • Poor CG • Increased cost of raising capital • Diminished value for mergers/strategic partnerships • Spill-over negative effect on consumers, creditors, business partners etc

22. A good CG is important to be practice by all profit and non-profit organization in order to maintain their good reputation in the market, to be more competitive in the industry, and to be able to participate in the global market.