Also read: Worldwide Corporate Governance and Corporate Governance: Board Structure.

If you’re much in and out of the corporate world be it corporate Malaysia or corporate China, you’d get the idea of what “Corporate Governance” mean. In very general terms, corporate governance literally means “System or systems by which business corporations are directed and controlled“. This involves sets of company policies, laws, rules, regulations, corporate charters, relationships and processes within; whereby authority is exercised and controlled in corporations.

In Malaysia on the other hand, the High Level Finance Committee on Corporate Governance (HLFCCG) defines corporate governance (1999) as the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long term shareholder value, whilst taking into account the interests of other stakeholders.

What embodies corporate governance in companies are basically legal provisions which specifies as management affairs. But today, we’re going to take a look at the Basic Provisions of Corporate Governance.

Provisions of Corporate Governance

The Companies Commission of Malaysia or more famously known as Suruhanjaya Syarikat Malaysia (SSM), released an interesting table of corporate governance provisions. There are 249 types of offences under the Companies Act 1965 pertaining corporate governance. They are:

1. Provides for the requirement to issue share certificates – Section 107.
2. - keep copies of register of charges – Section 115(2).
3. - notify change in registered address – Section 120(1).
4. - print company name and number on official documents – Section 121(i)(b).
5. - display the company’s name in the place of business – Section 121(3).
6. - keep Register of Directors – Section 134.
7. Provides for the requirement for companies to appoint a company secretary – Section 139.
8. - the office of the company secretary not to be left vacant for more than 1 month – Section 139(1B).
9. - a company secretary to be appointed with the approval of directors – Section 139(3).
10. Provides for register of directors, managers and secretaries to be kept at the registered office of the company – Section 141.
11. Provides for the requirement to hold annual general meeting – Section 142(1).
12. Provides for the requirement to keep minutes in the minutes book – Section 156.
13. Provides for the requirement for companies to keep a register and update the register of members – Section 158 (1) (a).
14. - lodge annual return – Section 165(4).
15. - attach auditor’s statement – Section 165 A(1).
16. Provides for the requirement for entries to be made into the accounting record within 60 days of the completion of transaction – Section 167(1A).
17. Provides for the requirement for directors to table audited accounts during AGM – Section 169(1).
18. Provides for the company’s account to be audited prior to their tabling – Section 169(4).

References include:

• Companies Act 1965; Section 107, Duties of company with respect to issue of certificates, Part IV – Shares, Debentures and Charges.
• Companies Act 1965; Section 115, Company to keep copies of charging instruments and register of charges, Part IV – Shares, Debentures and Charges.
• Companies Act 1965; Section 120, Office hours, Part V – Management & Administration.
• Companies Act 1965; Section 121, Publication of name, Part V – Management & Administration.
• Companies Act 1965; Section 134, Register of directors’ shareholdings, etc., Part V – Management & Administration.
• Companies Act 1965; Section 139, Secretary, Part V – Management & Administration.
• Companies Act 1965; Section 141, Register of directors, managers and secretaries, Part V – Management & Administration.
• Companies Act 1965; Section 142, Statutory meeting and statutory report, Part V – Management & Administration.
• Companies Act 1965; Section 156, Minutes of proceedings, Part V – Management & Administration.
• Companies Act 1965; Section 158, Register and index of members, Part V – Management & Administration.
• Companies Act 1965; Section 165A, Auditor’s statements, Part V – Management & Administration.
• Companies Act 1965; Section 167, Accounts to be kept, Part VI – Accounts & Audits.
• Companies Act 1965; Section 169, Profit and loss account, balance-sheet and directors’ report, Part VI – Accounts & Audits.