Egyptian Institute of Directors “Getting Started” Case Study from the Malaysian Experience

2. Egyptian Institute of Directors “Getting Started” Case Study from the Malaysian Experience Grand Hyatt, Cairo, Egypt. 19-20 April 2004

3. Case Study from the Malaysian Experience MALAYSIA HISTORICAL PERSPECTIVE

4. Case Study from the Malaysian Experience Establishment of MICG in 1998: • Urgency due to economic crisis – directive by Ministry of Domestic Trade and Ministry of Finance. • Inactive Malaysian Institute of Directors • Established by Industry Players – Federation of Public Listed Companies, Malaysian Institute of Accountants, Malaysian Association of Certified Public Accountants, Institute of Chartered Secretaries & Administrators and Malaysian Institute of Directors. • No formal Business Plan • No formal Funding – Inadequate & Ill-equipped Staffing, Lack of Proper Office & Facilities and Shaky Long-Term Viability. • Organized as Public Corporation Limited By Guarantee

5. Case Study from the Malaysian Experience • Funding Issues Faced By MICG: • Public Agenda v Private Funding • Organizational Independence – Organizational Effectiveness & Credibility • Restrictions on International Funding • Governmental Support – Launching Grant to support building of initial infrastructure? • Viable Business Plan for Long-Term Sustainability – Can Training Income support operations in the long-term?

6. Case Study from the Malaysian Experience • Malaysia’s Corporate Environment: • Nearly 900 public listed companies • Nearly 100,000 private companies & sole-proprietorships • Government-link institutions are the largest shareholders in the stock exchange • Substantial shareholdings by families in the stock exchange

7. Case Study from the Malaysian Experience The Directors Training Environment in Malaysia: • ALL Directors of Public Listed Companies must undergo MANDATORY TRAINING EVERY YEAR (CEP) • MSEB has nearly 900 companies listed • MSEB has adopted certain portions of the Malaysian Code on Corporate Governance as mandatory for ALL Public Listed Companies • All director training providers MUST be accredited by the MSEB

8. Case Study form the Malaysian Experience Directors’ Attitudes: • High Apathy Towards Training • Courses Offered are Theoretical-Based and Boring • Time Constraints • Low Priority

9. Case Study from the Malaysian Experience MALAYSIAN INSTITUTE OF CORPORATE GOVERNANCE Vision To be the recognized leader in the education and promotion of the best corporate governance practices in Malaysia Mission To provide programs that will increase the awareness and adoption of good corporate governance practices

10. Case Study from the Malaysian Experience Enhancing MICG’s role as a training organization: • MSEB’s accreditation of MICG’s programs • Joint-Ventures with Strategic Partners • Focus on Niche Training Product – Case Study Method • Using other products as complimentary tools – CG Rating and CG Research • Media Engagement to enhance Corporate Profile and Reputation • Guest Presenters at relevant functions & conferences

11. Case Study from the Malaysian Experience CRITICAL SUCCESS FACTORS IN A VIABLE BUSINESS PLAN • STARTUP FINANCING - ENOUGH TO BUILD CRITICAL-MASS INFRASTRUCTURE • JOINT-VENTURE WITH STRATEGIC PARTNERS FOR LEAPING THE GROWTH CURVE – ACQUIRING COMPETENCY THE FASTEST WAY • MAKE DIRECTORS TRAINING MANDATORY • START WITH NICHE PRODUCTS

12. Case Study from the Malaysian Experience Membership Strategies • Linking Membership Fees to Membership Values – Periodicals, Discounts on Programmes, etc. • Preferential Privileges With Associates – Preferential Membership, Discounts on Programmes, etc. • Membership Drive in the Media • Membership Drive in Third-Party Programmes

13. Case Study from the Malaysian Experience Caveat on Memberships • Membership Fees cannot sustain the funding requirements of the Training Organization • Membership Numbers can be poorly low • Preference should be for Corporate Memberships – but Individuals should also be considered

14. Case Study from the Malaysian Experience Training Programmes Accreditation: • All training programmes must be accredited by the Malaysian Securities Exchange • Relevant Contents and Qualified Trainer • Tasks made easier by mandatory directors training • Competitive Strategy (against other training providers) of Niche Product Focus – Case Study Method

15. Case Study from the Malaysian Experience What is Corporate Governance? Corporate Governance involves all structures, systems and processes that will lead to the optimum performance of the corporation

16. Case Study from the Malaysian Experience • PROCESSES: • Mandates to BOD Committees • BOD Decision-Making • Stakeholders Communication • Remuneration Policy • Nomination Policy • Succession Planning • Strategic Business Planning • STRUCTURES: • Board of Directors • Board of Directors Committees • Corporate Structure • Organizational Structure • Board of Subsidiaries • SYSTEMS: • Accounting • Financial Control & Reporting • Auditing • Risk Management • Internal Control • Management Information

17. Case Study from the Malaysian ExperienceThe Building Blocks of Corporate Governance SHAREHOLDER VALUE PROFITABILITY GOODWILL STRUCTURES SYSTEMS PROCESSES WORK DELIVERY or PERFORMANCE (AUTHORITY, JOB RESPONSIBILITY, ETC.) WORK CULTURE (HARDWORK, HONESTY, BEST EFFORTS, TRANSPARENCY, ETC.) VALUE SYSTEM (INTEGRITY, RESPONSIBILITY, ACCOUNTABILITY, ETC.) ETHICS (RELIGION, CULTURE, SOCIAL VALUES, ETC.)

18. Case Study from the Malaysian Experience The Corporate Governance Value Chain for Shareholders EDUCATION & TRAINING AWARENESS & MOTIVATING CHANGE WORK PERFORMANCE • IMPROVEMENTS: • STRUCTURES • SYSTEMS • PROCESSES PEER PRESSURE & MARKET PRESSURE  TRUST:  CONFIDENCE  RISK PERCEPTION  PROFITABILITY:  PRODUCTIVITY  EFFICIENCY  COST GOODWILL COMPETITIVE ADVANTAGE SHAREHOLDER VALUE CAPITAL MARKET ADVANTAGE

19. CORPORATE GOVERNANCE – CHANGING ATTITUDES Need: Compliance Issue Business Strategy Issue • To shift mindset : • To shift approach: • To shift implementation: Cost-Based Application Competitive Advantage Tool Vague Theoretical Concept • Practical Tools: • Structures • Systems • Processes

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