MSWG: No political appointees for PLC boards, please

KUALA LUMPUR: The Minority Shareholders Watch Group (MSWG), which today launched Malaysia-Asean Corporate Governance Report 2017, believes there is no place for political appointees on the board of public listed companies (PLCs), among other governance issues.
Its other recommendations was for directorship tenures for independent board members to be limited, performance based bonus should be used to reward upper management, and increased gender diversity in the board of directors.
Of the 880 public listed companies studied for the report, 17 scored a corporate governance (CG) score of more than 100 while 113 companies scored below 50. The higher the score the better.
The finance sector, which is heavily regulated, emerged as the sector with the highest CG score of 78.94 points.
Speaking to reporters, CEO of the shareholders activism group Devanesan Evanson said, the group strongly discourages the appointment of political appointees onto boards of public listed companies, stating that board member appointments should be the prerogative of shareholders.
He said independent directors’ tenure should be in line with the Malaysian Code on Corporate Governance (MCCG), which recommends that the tenure be limited to nine years. After that, an independent director may continue to serve on the board as a non-independent director.
The Malaysia-Asean Corporate Governance Report highlighted that the longest instance an independent non-executive director has served the role was for 46 years while the shortest was less than a year.
Nevertheless , Devanesan noted that companies may also need time in adapting to the MCCG and that the Companies Act 2016 is still relatively new.
He encouraged performance-based bonuses rather than salary remunerations as the latter may not motivate corporate leaders to perform well.
While Malaysian corporates have improved in terms of having more female participation in senior roles, the gap is still there to bridge, and short of the 30% target.
Devanesan encouraged more female corporate leaders participation on both the board and management levels.
On a separate matter, MSWG will expand its assessment coverage to include all Practice Note 17 (PN17) companies and China-based listed companies from 2019.
Devanesan said the decision to monitor all PN17 companies and China-based listed companies are in view of the risk and issues surrounding such companies.
“Once you become PN17, you are already a risky company. Shareholders have a greater risk of losing. China listed companies have a history of accounting frauds and problems,” he said.
Currently, MSWG actively monitors some 300 listed companies – of which six are China based. The new addition could expand its coverage by another 20 more companies.