The ASEAN CG Scorecard uses two levels of scoring to capture the implementation of the substance of good corporate governance.
Level 1 scoring is based on the OECD Principles of Corporate Governance which covers the five areas below:
• Rights of shareholders
• Equitable treatment of shareholders
• Role of stakeholders
• Disclosure and transparency
• Responsibilities of the Board
While Level 2 scoring consists of:
• Bonus items reflecting other emerging good practices
• Penalty items reflecting actions and events that are indicative of poor governance
The assessment is based on publicly available and accessible information in annual reports, CG reports and sustainability reports. Other sources of information include corporate websites, announcements on Bursa Malaysia, as well as media and analysts’ reports.
For the 2020 assessment, it covered annual reports, CG reports and sustainability reports issued for financial year ended 30 April 2019 to 31 March 2020. Meanwhile, the cut-off date for other relevant information and developments is the date of the Adjudication Committee meeting.
For 2020, 52 trophies are awarded to 38 PLCs (please refer to the Appendix).
The categories of awards are:
1. Excellence Award for CG Disclosure
2. Excellence Award for CG Disclosure – Market Cap Below RM1 billion
3. Industry Excellence Award
4. Merit Award for Most Improved CG Disclosure
5. Merit Award for Newly Listed Company
The winners are determined by the Adjudication Committee which comprise representatives from professional bodies, CG experts, academicians, investment professionals and those familiar with the Malaysian equity market.
Due to the current COVID-19 pandemic, there will be no physical award presentation ceremony. Instead, the trophies will be delivered to the winners.
Notwithstanding the global COVID-19 pandemic that had impacted many local companies, MSWG is glad to see continuous improvement in the overall scores of Malaysian PLCs.
The average score for all PLCs has improved from 74.84 points in 2019 to 79.28 points in 2020.
At the same time, the average score for the top 100 PLCs and bottom 100 PLCs (based on ranking) have also improved from 98.40 points in 2019 to 101.73 points in 2020, and from 58.75 points in 2019 to 63.17 points in 2020, respectively.
Key Findings
Some key findings from the 2020 CG assessment are:
- The number of PLCs paying dividend has declined to 445, from 460 in 2019 assessment. As a comparison, there was 499 dividend-paying PLCs in 2018 assessment. Considering the prolonged COVID-19 pandemic, this figure is expected to drop further in 2021 as PLCs are either badly impacted by the pandemic or are more prudent in profit distribution to shareholders.
- The number of PLCs adopting Integrated Reporting has increased from 22 in 2019 assessment to 33 in 2020 assessment.
Integrated Reporting is an approach that enhances the way businesses think, plan and report to their stakeholders on how value is created within their organisation. MSWG hopes to see more PLCs adopt Integrated Reporting in our future assessment.
- In the 2020 assessment, there were 274 PLCs conducted their annual general meeting virtually due to the COVID-19 pandemic.
- The number of PLCs that have established a tenure limit policy for their independent directors has increased to 80 in 2020 assessment from 52 in 2019 assessment.
- On gender diversity: -
• 220 of the PLCs assessed have no female board representation
• 370 of the PLCs assessed have at least one woman director
• 142 of the PLCs assessed have at least 30% women on their boards
• On average, PLCs have 17% women directors on their board. The percentage has increased from 15% recorded in 2019 assessment.
The full list of Award Winners, Top 100 Companies for CG Disclosure (by rank) are enclosed in the Appendix.
The detailed findings for the 2020 CG assessment will be published in MSWG’s Malaysia-ASEAN Corporate Governance Report 2020, which will be released in September 2021.
The Minority Shareholders Watch Group (MSWG) was established as a government initiative in the year 2000 as part of a broader capital market framework to protect the interests of minority shareholders through shareholder activism. It is one avenue of market discipline to encourage good governance amongst public listed companies with the objective of raising shareholder value over time.
Over the years, MSWG has evolved into an independent research organization on corporate governance matters. MSWG provides a platform and a collective voice to both retail and institutional minority shareholders, and it advises on voting at general meetings of public listed companies.
