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Mandatory Onboarding Programme On Sustainability Implemented By The Securities Commission And Bursa






The Securities Commission (SC) and Bursa Malaysia (Bursa) have recently introduced a new mandatory onboarding programme on sustainability for directors of public listed companies (PLCs) on Bursa. The Mandatory Accreditation Programme (MAP) Part II: Leading for Impact (LIP) is an initiative under the SC’s Corporate Governance Strategic Priorities 2021- 2023, which aims to provide directors with the foundation to address sustainability risks and opportunities effectively and have better oversight over their companies’ material sustainability matters.


The introduction of the LIP is seen as an ongoing effort to elevate sustainability practices in Malaysia. On 26 September 2022, Bursa announced the enhanced sustainability reporting requirements to its Main Market Listing Requirements and the ACE Market Listing Requirements, with the aim to elevate the sustainability practices and disclosures of listed issuers. Bursa enhanced the sustainability reporting requirements in the Listing Requirements to ensure their continued relevance and to propel listed issuers to adopt international best practices.


Expansion Of The Ambit Of The MAP


The LIP serves as an expansion of the existing ambit of MAP (now known as MAP Part I). The MAP Part I is a mandatory training programme for directors where its main focus is on corporate governance which include director’s roles, duties and responsibilities and other obligations under the Listing Requirements.


Mandatory Requirement For Directors Of PLCs To Attend The LIP


In addition to the amendments made to the Main Market and ACE Market Listing Requirements last year, further amendments were made to urge directors of PLCs to attend the LIP programme. Pursuant to Paragraph 1.3 of the Main Market Listing Requirements, Practice Note 5 (Training for Directors), a director who is appointed for the first time as a director of a listed issuer is required to attend MAP Part I in relation to a director’s roles, duties and liabilities and the LIP in relation to sustainability and the related roles of a Director. Similar requirements were also implemented for directors of companies intending to be listed on the ACE Market. These requirements were introduced as part of the amendments made to Paragraph 1.3 of the ACE Market Listing Requirements, Guidance Note 10 (Training for Directors).


These requirements have come into effect on 1 August 2023 (effective date). First-time directors and directors of listing and transfer applicants must complete the programme within 18 months from the date of appointment or admission, respectively. Existing directors of PLCs on the Main Market and ACE Market must complete the LIP within 24 months from the effective date, i.e. by 31 July 2025.


The SC Chairman said in a statement issued by the SC and Bursa on 6 June 2023 (Statement) that it was important for the boards of directors (Boards) to stay on top of sustainability-related developments so they can effectively manage sustainability considerations effectively. It was added that “this is especially important where stakeholders are becoming increasingly concerned about environmental, social and governance (ESG) issues.” The SC Chairman also emphasised how the LIP underpins the SC’s focus on supporting sustainability-conscious and effective leadership of PLCs.


Chief Executive Officer of Bursa said in the same Statement that the introduction of the LIP programme for PLC directors was timely, as it was a significant step towards strengthening the commitment towards ESG practices among Boards. It was stressed that “Bursa Securities will provide the necessary support and resources to assist our PLC directors in fostering sustainable growth within their organisations to ensure long-term value creation for their stakeholders.”


Details On The LIP


The Institute of Corporate Directors Malaysia (ICDM) has been appointed as the knowledge partner to conduct the LIP, in line with their mandate to enhance the overall effectiveness of Boards and to promote excellence in sustainability-driven governance.


The LIP has been carefully curated to focus on the baseline knowledge and key considerations surrounding sustainability, including questions which Boards should direct towards management in the effort to ensure a more robust and effective oversight of sustainability risks and opportunities of the company. The LIP will also provide directors with a platform to engage and learn from their peers.


Several focus areas including competence, engagement, performance, strategy & risk, communication and relevance to help directors navigate through existing and emerging sustainability issues will be covered under the LIP.


Conclusion


The implementation of the LIP is a joint effort by the SC and Bursa to elevate and strengthen sustainability practices of PLCs in Malaysia. This focused strategy will guarantee that sufficient attention is also devoted to sustainability concerns in order to assist directors in fulfilling their responsibilities.


Details on the LIP can be found at (https://lip.icdm.com.my/).


4 August 2023


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