Corporate governance intact despite rise in boardroom tussles

PETALING JAYA: While there has been an increase in the number of boardroom tussles in the corporate scene in the last couple of years, Bursa Malaysia and the Minority Shareholder Watchdog Group (MSWG) opined that the corporate governance level in the country remains intact.
MSWG CEO Rita Benoy Bushon believes that the rules and regulations are quite robust in Malaysia.
"In Malaysia, we're very good at related party transactions, some of the corporate governance regimes are quite robust. As a regulator, you have your own view on how you want to put regulations because you don't want to be over-regulated (as) it curbs activities and growth,"she told SunBiz.
Bushon is of the view that boardroom tussles are not something "exceptional" and are "allowable".
"From the shareholder's side, it's a normal process. Sometimes the tussle can be healthy because of issues of governance internally. You want to have new directors because the company has not performed (well) or governance was a concern.
"I have my capital in the company and if I am not happy with the company's management and board, I can call for an EGM for the people to vote for me. That is something acceptable," Bushon said.
Meanwhile, Bursa Malaysia in a reply email said it is important to recognise that some boardroom tussles involve the exercise of one of the most fundamental shareholder rights which is the ability to remove and replace directors.
It noted that the exercise of such a right is an indication of rising sophistication of shareholders, including minority shareholders, with regard to the directorship of a company.
In instances where there are boardroom tussles, Bursa said it will seek to ensure that accurate and comprehensive disclosures are made by the affected listed companies in accordance with the listing requirements.
"We will engage with the affected listed companies and their directors, and where there are breaches of the listing requirements, enforcement actions will be taken," it said.
Asked about the confusion that occurred in Wintoni Group Bhd's boardroom tussle, Bushon declined to comment, citing ongoing lawsuits.
"Court cases are on-going, I don't want to simply give my views. We're watching it, we want to see the developments.
"We don't have investigative powers. If we are unhappy with certain discrepancies, or so on, we'll bring them up to the regulators," she said.
Bushon agreed that when it comes to a boardroom tussle, shareholders might not be able to see the "full picture" and it will lead to difficulty in figuring out which party will work well for the company.
To recap, last September, a group of 10 minority shareholders of Wintoni called for an EGM to remove all board members of the company. Interestingly, all board members resigned ahead of the EGM.
The company immediately appointed new six directors, whereby the minority shareholders claimed it had breached the rules. Of course, the minority shareholders nominated three new directors of their own.
Wintoni said the EGM was no longer valid because all board members resigned before the EGM, but minority shareholders insisted on proceeding with the EGM, whereby the resolutions to appoint the three new directors were passed. So now, Wintoni has "two boards", which do not recognise each other.
Bursa said it monitored developments closely and engaged directly with the company to see that timely disclosures were made.
"While the action taken by the board went against the wishes of shareholders, Wintoni was found not to have violated the Companies Act 1965 and the listing requirements," it stressed.
The Securities Commission, however, did not respond to queries on the corporate governance issue.