Good Corporate Governance 1

Good Corporate Governance

OUTLINE What is meant by corporate governance? What regulation says about it? How to achieve good corporate governance?  Based on the real case  What happen if we not comply the corporate governance?  Conclusion   

What?

Unlimited Definitions

“… process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity an corporate accountability with the ultimate objective of realizing long term shareholder’ value, whilst taking into account the interest of stakeholders” Extract from the Report on Corporate Governanace ,February 1999.

“ Corporate Governance deals with the ways in which suppliers of finance to corporations assure themselves of getting return on their investment.” TheJournal of finance ,Shleifer and Vishny

“ Corporate governance is about promoting corporate fairness, transparency and accountability” J.Wolfenson, President of World Bank

All parties perform their job accordingly especially the management, they must apply stewardship principles to safeguard the shareholder’s interest. Directors Audit Committee Senior management

What regulation says?

Overview of the Malaysian Code for Corporate Governance PART 1 PRINCIPLES

A.Directors

BOD, BOD bal, supp.info, appmt, reelection.

B.Dir.remuntn

Lvl rem.,procdr,disc

C.S/holder D.Acc/aud CODE

PART 2 BEST PRACTICES

AA.Directors BB.Acc/aud CC.S/holder

Dialog.bet com n inv,AGM Fin.reptg, int.contrl, r/shp w audtrs 6 prin.responsibility Aud commtee n intrl aud r/shp bet s/hdr n BOD

PART 3 OTHER PARTICIPANT PART 4 EXPLANATORY NOTES

As presented by Haron, Abd Razak 2003.

WELL BALANCE AND EXPERIENCE BOARD EFFECTIVE COMMUNICATON WITH SHAREHOLDER

GOOD INVESTOR RELATION

ACCOUNTABILITY & AUDIT

GOOD CORPORATE GOVERNANCE The criteria

SELF MONITORING

LOYALTY, GOOD FAITH, CARE & DILLIGENCE

TRASPARENCY IN DECISION MAKING AVAILABILITY OF TIMELY & ACCURATE REPORTING

www.orac.com.my

How to achieved good Corporate Governance?

Effective audit committee •Financial statement •Risk management •Internal control •Compliance audit •Oversight the management •Relationship with external auditor •Resources and special investigation •Committee composition •Training •Meetings •Charter evaluation

•Company operation •Technology Procedures to deal •Safety on people with disaster •Accounting challenges •Compliance requirements •Impact to audit requirements •Impact to reporting requirement section404

Balance director

•In term of their remuneration •Roles within the company•Fiduciary and advisory roles. •Act for the best interest of the company •Observance with law, rules and regulation and code of conduct

Follow the rules

•Companies Act Section 132A,132B,132C,132D,132E,132G, 133,133A-Focus on Directors •Securities Commission •Listing requirement •etc

REAL CASE IN MALAYSIA

Public Bank Berhad Malaysian Business Corporate Governance Award Survey Report since 2002-2004

Overview of the Malaysian Code for Corporate Governance PART 1 PRINCIPLES

A.Directors

BOD, BOD bal, supp.info, appmt, reelection.

B.Dir.remuntn

Lvl rem.,procdr,disc

C.S/holder D.Acc/aud CODE

PART 2 BEST PRACTICES

AA.Directors BB.Acc/aud CC.S/holder

Dia.bet com n inv,AGM Fin.reptg, int.contrl, r/shp w audtrs 6 prin.responsibility Aud commtee n intrl aud r/shp bet s/hdr n BOD

PART 3 OTHER PARTICIPANT PART 4 EXPLANATORY NOTES

As presented by Haron, Abd Razak 2003.

What happen if we dIDn’t comply with the corporate governance?

MAXWELL PERWAJA

ENRON WORLD COM

DAIWA BANK

COLLAPSE BCCI BANK

BARINGS EMPIRE

CONCLUSION  The system of companies is direct and control.  All people have their own roles within the company Directors-Responsible the governance Shareholder-Appoint appoint director and auditor and satisfy the appropriate governance. Auditors-Provide the external check of Financial statement. Audit committee -Provide independent evaluation on Finacial reporting and business ethic.

Cont’d  The critical part are decision making and the compliance together with the reliability of Financial statement.  Whatever rules provided by Company and must bring to practical, if not, it isl just a waste.

The end Thank you