Malaysia Launches Principles on Good Governance for GLICs
Malaysia has launched the principles on good governance (PGG) for government-linked investment companies (GLICs), which puts greater focus on board diversity, transparency, and the adoption of ESG standards.
Last year, the SC (Securities Commission) issued its corporate governance strategic priorities for 2021 to 2023, which included plans to improve governance practices at GLICs, with a focus on promoting ESG fitness and leadership of boards.
The strategic priorities form a major component of the Capital Market Masterplan 3, a five-year plan charting the path ahead for Malaysia's capital market, launched in September 2021.
"To ensure that the GLICs have good stewardship, the PGG will focus on the roles and responsibilities of the board of directors," said Malaysia's finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
"All directors should lead by example based on principles as well as carry out their duties with diligence, transparency and fidelity."
Tengku Zafrul also emphasised the need for qualified individuals with broad experience and integrity to join the board of the GLICs, saying that a director's qualifications are essential under the PGG.
He also discussed the need for a diversity of views on the board regarding culture, age, background, experience and gender. Specifically, the PGG recommends that female directors comprise a minimum 30 percent of a GLIC's board.
The PGG also recommends that GLICs have a corporate governance structure that includes ESG monitoring within its investment strategy.
In a separate statement, the Ministry of Finance said the newly-launched PGG would be the primary reference for the baseline corporate governance standards and sustainability practices of all GLICs.
The PGG was developed with reference to local and international practices and standards, including the Malaysian Code on Corporate Governance, which the SC updated in April 2021.
"The PGG is supported by three key principles, which are leadership and effectiveness of the board of directors, strengthening the board of directors'composition, and encouraging accountability and transparency in investment management," the Ministry said.
The PGG forms part of a broader transformation programme for GLICs and other government-linked companies, launched 18 months.
There are six GLICs in Malaysia – including the Employees' Provident Fund (EPF) – which together have total assets of MYR 1.7 trillion (USD 395 billion).
Source: Regulation Asia
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