KUALA LUMPUR: The Securities Commission (SC) will press for greater diversity, including the gender composition of board of directors in public listed companies (PLC) when it launches the new corporate governance blueprint for Malaysia, its chairman Tan Sri Zarinah Anwar said yesterday.
She said women are under-represented on the board of directors of Malaysian PLCs, with only 7.5% of the total number of directors even though they constitute almost 50% of the workforce.
She said while the selection of board members should be made based on merit, due consideration should be given to the benefits of diversity.
“There is an urgent need to give serious attention to improving the participation of women on boards of Malaysian PLCs. Today women make up only 7.5% of the total number of directors on boards, while studies have proven that the presence of women on boards contributes to significant improvements in performance,” she said in her keynote address at the Conference of Corporate Directors yesterday, organised by the Malaysian Alliance of Corporate Directors (MACD).
She quoted recent studies such as the Eversheds Board Report 2010 and the McKinsey & Company set of reports on female participation, which found that better performing companies tended to have a higher percentage of female directors.
She later said the new blueprint on corporate governance, expected to be revealed in 1H of this year, will include provisions for greater diversity in the composition of board of directors, including gender diversity.
During the opening ceremony for the conference, Zarinah, Datuk Jaffar Indot, president of MACD, and Paul W Chan, deputy president of MACD, launched the Directors Registry which will contain pertinent information on the skills and knowledge base of PLC directors in Malaysia.
The registry is envisaged to have many uses, including to facilitate initiatives to enhance directors’ governance knowledge and boardroom skills in crucial areas of their duties and responsibilities.
“The registry is absolutely a new design, which we have seen applied elsewhere such as in Thailand and Hong Kong. It’s going to be quite a comprehensive registry,” Jaffar said.
He added that MACD is still studying the best way to implement the registry and it may impose a small fee on members of the registry for maintenance purposes.
Zarinah said the registry is important as to provide MACD and other relevant parties, such as the SC, information on the availability of candidates for directorial posts in the country.
The registry could also be utilised to increase the number of female representation on the board of directors of PLCs.
“There might be women who don’t know that their services are required to be on the board of directors of PLCs. Equally, there might be companies that want to add more diversities in the composition of their board of directors, but may not be aware of the availability of women candidates who could serve on the board,” she said, acknowledging the factors which contributed to the low number of women on the board of directors.
On the issue of corporate governance in Malaysia, where independent non-executive directors are allowed to serve up to five listed companies (from 10 previously), professor Mervyn King, chairman of MACD Advisory Board, from South Africa, said what is important is not the numbers, but knowledge and honour.
“The true test has got nothing to do with the number of boards. The true test is whether the person has the ability and capacity to honestly carry out duties as a non-executive director. If one is asked to serve on a board where the person knows there will be conflict, and he or she had to declare the conflict and has to be excluded from every board meeting, he or she might as well not become the non-executive director of the company,” said King
By The Edge Financial Daily