PETALING JAYA: Active politicians should not be appointed to the boards of listed companies, the Securities Commission Malaysia (SC) said.
Instead, it said, all board members should be nominated based on their qualifications and legal responsibilities.
This is to promote the exercise of objective and independent judgment in line with global best practices.
Today, the statutory body updated the Malaysian Code on Corporate Governance (MCCG), which sees the introduction of new best practices and guidelines to strengthen corporate governance culture of listed companies.
“The guidelines recommend that persons linked directly with the executive powers such as heads of state, heads of government and ministers should not serve on boards as this would cast serious doubt on the independence of their judgment,” it said.
SC said a company should disclose in its corporate governance report how candidates for board positions were sourced, including whether such candidates were recommended by the directors, members of senior management or major shareholders.
It also said that individuals standing for board elections should be transparent and make the necessary declarations to the board and shareholders on any existing or potential conflict of interest that could affect the execution of their role as directors.
SC said the appointment and re-appointment of directors was a critical aspect of corporate governance, which had an impact on the leadership of companies.
“Shareholders should have the information they need to make an informed decision on these appointments.
“The information should be included in the notes accompanying the notice of the general meeting,” it said.
It also said all boards should comprise at least 30% women and companies should review the participation of women in senior management to ensure there was a healthy talent pipeline.