Corporate Governance in Malaysia

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Corporate Governance is a concept in which it has been existence for decades; although not in the exact form that it has come to be understood today (Anandarajah, 2001). The term corporate governance was introduced in Malaysia in 1997 during the Asian Financial Crisis. It also drew the public’s attention on the weaknesses of the Malaysian corporate governance practice (Nor Azizah Zainal Abidin, 2007). Besides that, the downfall of Sime Bank, the Bumiputera Malaysian Finance (BMF) scandal, the irregularities in Renong Berhad, the Perwaja fiasco and the internal management problem faced by Malaysian Airline System (MAS) forced government to enhance corporate governance regulations (Norwani, Mohamad, & Chek, 2011). The High Level Finance…show more content…
This Code has somehow reduced the number of financial scandal but definitely not completely clear it off. There are many scenarios that company collapsing due to financial scandal as what was initiated by the BMF (Bank Bumiputera Finance) scandal. The law governing director’s duty consist of various forms of law. These duties have been observed also contain a plurality of legal fields such as company law and employment law (Hee, 2003). Section 132(1) of the Companies Act 1965 requires a director to use reasonable diligence and to act honestly in the discharge of his duties. The duty to act in the best interest of the company as a whole also from common law covers the collective interest of both existing and prospective shareholders. It is suggested that the common law fiduciary duty to avoid conflicts of interest should be codified to allow directors to be clear about their obligations in conflict situations. KLSE listing Requirements stipulates that public listed companies must got at least two independent directors. Individuals who are expressly excluded from being eligible to act as independent directors include major shareholders, professional advisers or relatives of an executive director or major shareholder of the listed company (Hee, 2003). This provides a better equilibrium of powers between directors and independent directors. The auditor actually provides a check on the information aspect of the
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