In a move towards strengthening corporate governance and promoting high standards of integrity and accountability, the Companies Commission Malaysia (CCM) has recently issued a new Code of Ethics for Company Director and Company Secretary (Code of Ethics). This Code of Ethics serves as general guidelines on the ethical expectations of directors and company secretaries when carrying out their duties. This Code of Ethics supersedes the previous Code of Ethics – Company Director / Company Secretary (Preceding Code).
For purposes of the Code of Ethics, a “director” means any person occupying the position of director of a corporation by whatever name called. This includes a person in accordance with whose directions and instructions the majority of directors of a corporation are accustomed to act and an alternate or substitute director. A director also includes both executive and non-executive directors as some companies will not necessarily use the designation “director”.
The Need For The Code Of Ethics
Corporate governance forms the bedrock of any robust economy. It ensures that businesses are operated transparently, ethically and in the best interests of their stakeholders. With the global business environment evolving rapidly, it is essential for regulatory bodies to keep pace with these changes. As such, the Code of Ethics aims to provide clear guidelines and principles for directors and secretaries to create an ethical corporate culture.
Key Highlights
Whilst most of the provisions from the Preceding Code have been retained in the Code of Ethics, below are some of the key changes made:
(a)Section (a) of Part A:
A director and company secretary are required to stay abreast with the affairs of the company and be kept informed of the company’s compliance with relevant legislations and contractual requirements.
(b)Section (a) of Part A and section (b) of Part B:
A director is required to ensure full and immediate disclosure of all contractual interests whether directly or indirectly with the company.
(c)Section (b) of Part A:
A director is required to ensure employees fully understand and appreciate the value of good corporate governance practices and procedures through ongoing training, awareness programmes and robust communication.
(d)Section (c) of Part A:
A director is required to ensure the company’s commitment to Environmental, Social, and Governance (ESG) standards by among others, implementing suitable policies and initiatives to enhance the company’s social, economic, and environmental sustainability.
(e)Section (d) of Part A:
A director is required to ensure that the company has implemented effective procedures to reasonably safeguard both the company and its top management from liabilities arising under Section 17A of the Malaysian Anti-Corruption Commission Act 2009.
(f)Section (e) of Part A and section (d) of Part B:
A director and company secretary are responsible for safeguarding the company from the risks associated with exposure to Anti-Money Laundering (AML) / Counter Financing of Terrorism (CFT) activities.
Commentary
The enhancement of the Code of Ethics marks a significant step toward fostering a culture of transparency, integrity, accountability and sustainability within the corporate sector. By outlining clear guidelines and principles, the Code of Ethics ensures that company leaders uphold the highest standards of ethical conduct. This development not only strengthens corporate governance but also enhances investor confidence, promotes sustainable business practices, and ultimately contributes to the overall growth and stability of Malaysia's business landscape.
The Code of Ethics can be accessed via the link below:
12 October 2023