Company directors are responsible for overseeing the management's performance in running the company in the best interests of shareholders, the community, and the government while complying with the law.
They set objectives and supervise management to ensure the realisation of the business plan's vision.
On the other hand, a company secretary plays a crucial role in ensuring the company's efficient administration, particularly in complying with statutory and regulatory requirements and implementing decisions made by the board of directors.
Despite the name, the role of a company secretary is not limited to clerical or secretarial tasks.
Both company directors and secretaries are expected to maintain high ethical standards in their professional conduct. Upholding good ethics is vital for directors and secretaries as it ensures legal compliance, safeguards the company's reputation, fosters stakeholder trust, and promotes long-term success.
The Companies Commission (SSM) has issued a Consultative Document on the Proposed Updates on the Company Director and Secretary Code of Ethics in Malaysia.
This document aims to gather feedback from stakeholders and interested parties regarding the proposed updates to the existing Code of Ethics.
The document includes an Exposure Draft of the updated Code, and comments and recommendations can be submitted until April 17, 2023.
The main updates to be made to the existing Company Director and Company Secretary Code of Ethics Booklet (‘Existing Code’) under the Updated Code are as follows:
a. Corporate Liability under Malaysian Anti-Corruption Commission Act 2009
Introduction of new ethical principles for company directors relating to corporate liability under section 17A of the Malaysian Anti-Corruption Commission Act 2009.
This can be found in section (d) of paragraph 13 of Part A of the Updated Code.
b. Environmental, Social, and Governance" (ESG) principles
Introduction of new ethical principles for company directors to encourage sustainable business practices and replace 'corporate social responsibility' with 'sustainability' principles to align with current "Environmental, Social, and Governance" (ESG) principles.
This can be found in section (c) of paragraph 13 of Part A of the Updated Code.
c. Continuous Professional Development Programs
Inclusion of new ethical principles for company directors and secretaries relating to attendance at continuous professional development programs.
These principles are outlined in paragraph (xiii) of section (a) of paragraph 13 of Part A and paragraph (iv) of section (b) of paragraph 18 of Part B of the Updated Code.
d. Through Training and Communication to promote Strong Corporate Governance
Incorporation of new ethical principles for company directors to ensure that employees understand and appreciate the value of good corporate governance, processes, and procedures through training, awareness programs, and robust communications.
These principles are mentioned in paragraph (ii) of section (b) of paragraph 13 of Part A of the Updated Code.
e. AML/CFT Obligations
Add new ethical principles for company directors and secretaries pertaining to anti-money laundering and counter-financing of terrorism (AML/CFT) obligations.
These principles can be found in section (e) of paragraph 13 of Part A and section (d) of paragraph 18 of Part B of the Updated Code.
f. Navigating Law, Regulations, Procedures, and Practising Certificate Requirements
Introducing new ethical practices for company secretaries relating to compliance with the law, regulations, procedures, and practising certificate requirements.
These practices are outlined in paragraphs (i) and (ii) of section (a) of paragraph 18 of Part B of the Updated Code.
Definition of Director
In the context of this Code, a company director means any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions and instructions the majority of directors of a corporation are accustomed to act and an alternate or substitute director.
A director also includes executive and non-executive directors, as some companies will not necessarily use the designation "director".
A company limited by guarantee may call their officers various names, including "governors", "trustees", "chief executive officer", and "managing director". These persons are directors of the company if they occupy a director position or carry out such functions, including primarily responsible for the company's management.
These updates aim to enhance the standard of corporate governance and promote ethical behaviour among company directors and company secretaries in Malaysia.
Please note that the Consultative Document and the Exposure Draft of the updated Code can be found on SSM's portal: https://www.ssm.com.my/Pages/Legal_Framework/Public-Consultation.aspx.
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