A sufficient score is about 60%, in the current tempo (1% improvement each two years) it would take Malaysia four decennia to reach this level. That is not in line with their ambition to be a developed nation in 2020.
The Securities Commission issued a rather positive press statement, without any criticism whatsoever. This while the CG Watch 2012 report showed:
· That the SC and BM have only a “marginal” reputation for enforcement
· They “marginally” treat companies and individuals equally
· They have “no” track record regarding insider trading or market manipulation
Despite:
· Having “largely” sufficient resources (funding and manpower)
· Having “somewhat” efficient powers to investigate and sanction
The Malaysian financial regulators have been overpromising and underperforming for much too long time on the issue of enforcement. A reversal is very much needed and long overdue.
They might want to ask their tiny Southern neighbour for advice. Singapore scored 11.50 out of 18, or 64%, it scored better in every single category or at least the same as Malaysia.
Not all the news was bad for Malaysia, the good news was mostly linked to improvements in "CG Culture" and the activities by the MSWG. These subjects will be covered in a future posting.Further not so good news regarding institutional investors, questions 11 to 13.
And MACC? Read the last question and compare the scores for Malaysia and Singapore. Hopefully nobody is surprised about that....
Explanation of the scores:
Y = Yes (+ 1 point);
L = Largely (+ 0.75 point);
S = Somewhat (+ 0.5 point);
M = Marginally (+ 0.25 point);
N = No (0 point)
1. Do financial regulators in your country have a reputation for vigorously and consistently enforcing their own CG rules and regulations?
Malaysia “marginally” (0.25)Singapore “yes” (1.00)
2. Have their efforts improved tangibly in recent years?
Malaysia “marginally” (0.25)Singapore “largely” (0.75)
3. Are securities regulators seen to treat all companies and individuals equally?
Malaysia “marginally” (0.25)Singapore “somewhat (0.50)
4. Are the regulatory authorities sufficiently resourced - in terms of funding and skilled staff—to do their job properly?
Malaysia “largely” (0.75)Singapore “largely (0.75)
5. Does the main statutory regulator (ie, the securities commission) have effective powers of investigation and sanction?
Malaysia “somewhat” (0.50)Singapore “yes” (1.00)
6. Has it been investing significantly more financial and human resources in investigation and enforcement in recent years? (eg, against cases of market misconduct such as insider trading, share-price manipulation, self-dealing)
Malaysia “somewhat” (0.50)Singapore “somewhat” (0.50)
7. Has it had a successful track record prosecuting cases of insider trading and other market manipulation in recent years?
Malaysia “no” (0.00)Singapore “largely” (0.75)
8. Does the stock exchange have effective powers to sanction breaches of its listing rules?
Malaysia “somewhat” (0.50)Singapore “somewhat” (0.50)
9. Has it been investing significantly more financial and human resources in investigation and enforcement in recent years?
Malaysia “somewhat” (0.50)Singapore “somewhat” (0.50)
10. Do the regulators (ie, the securities commission and the stock exchange) disclose detailed and credible data on their enforcement track records?
Malaysia “largely” (0.75)Singapore “largely” (0.75)
11. Do institutional investors (domestic and foreign) exercise their voting rights?
Malaysia “somewhat” (0.50)Singapore “largely” (0.75)
12. Are institutional investors actively voting against resolutions with which they disagree?
Malaysia “marginally” (0.25)Singapore “somewhat (0.50)
13. Do institutional investors (domestic and foreign) often attend annual general meetings?
Malaysia “marginally” (0.25)
Singapore “marginally” (0.25)
14. Do minority shareholders (institutional or retail) often nominate independent directors? Malaysia “no” (0.00)
Singapore “marginally” (0.25)
15. Do retail shareholders see the annual general meeting as an opportunity to engage with companies and ask substantive questions?Malaysia “yes” (1.00)
Singapore “yes” (1.00)
16. Are minority shareholder activists willing to launch lawsuits against companies and/or their directors?
Malaysia “no” (0.00)Singapore “no” (0.00)
17. Are minority shareholders adequately protected during takeovers, privatisations, and voluntary delistings?
Malaysia “largely” (0.75)Singapore “largely” (0.75)
18. Is there an independent commission against corruption (or its equivalent) that is seen to be effective in tackling public- and private-sector corruption?
Malaysia “no” (0.00)Singapore “yes” (1.00)
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