A COMPARISON OF THE DEVELOPMENT OF CORPORATE GOVERNANCE IN MALAYSIA VERSUS SINGAPORE AND HONG KONG.

The Malaysian Code on Corporate Governance covers three parts, which are 1.0 -The Principles of Corporate Governance and Best Practices in Corporate Governance and 2.0 - Principles and Best Practices for Other Corporate Participants.

1.0 PRINCIPLES OF CORPORATE GOVERNANCEThe principle of Corporate Governance consists of four parts, which are the first one is Directors, second is Directors Remuneration, third is Shareholders and last but not least, Accountability and Audit.1.1 DIRECTORS

Based on corporate governance of Malaysia, Directors consist of The Board, Board Balance, Supply of Information, Appointments to the Board and Re-election.

As for The Boards, every listed company should be headed by an effective board which should lead and control the company and establish clear functions. Meanwhile on Board Balance, the board include a balance of executive directors and non-executives directors, where in making decision, no individual or small group of individual can be, dominate. The board should be supplied in a timely fashion with information in a form and of a quality appropriate to enable it to discharge its duties, is the part in supplying of information. Besides that, there should be formal and transparent procedures for the appointment of new directors to the board. Last but not least, all directors should be required to submit themselves for re-election at regular intervals and at least every three years.Malaysia implied that to establish the clear roles and responsibilities, The Board together with the Chief Executive Officer (CEO) should develop the descriptions for their respective functions and should be clearly set out and understood. Every performance, long-term targets met by the CEO, the board should develop and agree. Besides, regular review on the division of responsibilities should be conducted to ensure that the needs are consistently met.Looking for the corporate governance of Singapore, the board roles are to highlight on four main points. The first role is to provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human resources are in place for the company to meet its objectives. Second role is to establish a framework of prudent and effective controls which enables risk to be assessed and managed. The board also need to review on management performance and last but not least, to set the companys values and standards, and ensure that obligations to shareholders and others are understood and met.

Furthermore, any decisions are to be made by all directors and The Board should meet regularly, as well as warranted by particular circumstances, as deemed appropriate by the board members. An article of Association is to be amended and to provide for telephonic and video conference meetings. The number of board and board committee meetings held in the year, as well as the attendance of every board member at these meetings, should be disclosed in the companys annual report.

Other than that, upon appointment of the director, companies should provide a formal letter to the director, setting out the directors duties and obligations. When the director had his first appointed to the board, he should receive appropriate training. This should include an orientation program to ensure that incoming directors are familiar with the companys business and governance practices. It is equally important that directors should receive further relevant training, particularly on relevant new laws, regulations and changing commercial risks, from time to time.

As for corporate governance in Hong Kong, The Board should meet regularly and board meetings should be held at least four times a year. All directors are given opportunity to include matters in the agenda for regular board meetings. The most important is, all directors have given an opportunity to attend the board meeting and notice of at least 14 days should be given. The minutes of board meetings should be kept by a duly appointed secretary, and can be open for inspection at any reasonable time on reasonable notice by any director also should record in sufficient details.

Other than that, if a substantial shareholder or a director has a conflict of interest in a matter to be considered by the board which the board has determines to be material; the matter should be dealt with by a physical board meeting rather than a written resolution. Last but not least, an issuer should arrange appropriate insurance cover in respect of legal action against its directors. 1.2 DIRECTORS REMUNERATION

Based on corporate governance of Malaysia, the remunerations consist of the level and make up of remuneration, the procedure of remuneration and also the disclosure of remuneration.

The level and make-up of remuneration should be sufficient to attract and retain the directors needed to run the company successfully. The component parts of remuneration should be structured so as to link rewards to corporate and individual performance, in the case of executive directors. Meanwhile in the case of non-executive directors, the level of remuneration should reflect the experience and level of responsibilities undertaken by the particular non-executive concerned. Procedure explains that the companies should establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration package of individual directors. Meanwhile the disclosure of remuneration explains the companys annual report should contain details of the remuneration of each director.

As for Corporate Governance in Singapore, in the remuneration matters, the procedure for developing remuneration policies, there should be a formal and transparent procedure. First, The Board should set up a Remuneration Committee (RC) comprising entirely of non-executive directors, the majority of whom, including the Chairman and must be independent. Secondly, the RC will recommend to the Board a framework of remuneration, and the specific remuneration packages for each directors and the CEO. It should be submitted for endorsement by the entire Board. Besides, the RC should cover all aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits in kind.The level and mix of remuneration explains that the performance-related elements of remuneration should be designed to align interest of executive directors with those of shareholders and link rewards to corporate and individual performance. Besides, there should be a fixed appointment period for all executive directors. It should not be excessively long or with onerous removal clauses. The RC should review what compensation commitments the directors contract of service. The most important is, the long-term incentives schemes are generally encouraged. The cost and benefits of long-term incentives schemes should be carefully evaluated. All directors are encouraged to hold their shares beyond the vesting period, subject to the need to finance any costs of acquisition and associated tax liability. Disclosure on remuneration explain that each company should provide clear disclosure of its remuneration policy, level and mix of remuneration and the procedure for setting remuneration in the companys annual report. Report should be done on the remuneration at least the top 5 key executives. This report should set out the names of directors and earning remuneration which falls within bands of $250,000. For transparency, the report should disclose the same details of remuneration of employees who are immediate family members of a director or the CEO, and whose remuneration exceeds $150,000 during the year.

Corporate Governance in Hong Kong explains that the issuer should disclose its directors remuneration policy and other remuneration related matters. The procedure for setting policy should be formal and transparent. The RC should consult the chairman about their remuneration proposals for other executives directors. Other than that, the remuneration committees terms of reference should include as minimum, to make recommendations to the board on the issuers policy and structure for all directors and on the establishment of a formal and transparent procedure for developing remuneration policy.

Besides, the RC should consider salaries paid by comparable companies, time commitment and responsibilities and employment conditions. The RC also has to review and approve compensation payable to executive directors and senior management for ay loss or termination of office or appointment to ensure it is consistent with contractual terms.

The RC also should review and approve compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that they are consistent with contractual term, as well as to ensure that there is no director or any of his associates is involved in deciding his own remuneration.

1.3 SHAREHOLDERS

Based on corporate governance of Malaysia, the shareholders consist of the dialogue between companies and investors ad also The Annual General Meeting.

The Corporate Governance in Malaysia explain the dialogue between companies and investors is companies and institutional shareholders should each be ready, where practicable to enter into a dialogue based on the mutual understanding of objectives.

In Malaysia, The Board should facilitate the exercise of ownership rights by shareholders. Apart from that, The Board should promote effective communication and proactive engagements with shareholders because direct engagements with shareholders provides a better appreciation of the companys objectives, quality of its management and challenges, while also making the company aware of the expectations and concerns of its shareholders. Besides, The Boards should encourage poll voting in order to put substantive resolutions to vote by poll and make an announcement of the detailed results showing the number of votes cast for and against each resolution.

Meanwhile in The Annual General Meeting, it explains the companies should use the AGM to communicate with private investors and encourage their participation. Thus, The Board should take reasonable steps to encourage shareholder participation at general meetings. General meetings are an important avenue through which shareholders can exercise their rights. The Board also should take active steps to encourage shareholder participation at general meetings such as serving notices for meetings earlier than the minimum notice period.

Besides, the board should direct the company to disclose all relevant information to shareholders to enable them to exercise their rights. The Board also can demonstrate their commitment to shareholders by ensuring that the company publishes these measures on its corporate websites.

The Corporate Governance of Singapore highlight the points that companies should engage in regular, effective and fair communication with shareholders. The companies should regularly convey pertinent information, gather views or inputs and address shareholders concerns. In disclosing information, companies should be as descriptive, detailed and forthcoming possible and avoid boilerplate disclosures. Besides, companies should disclose information on a timely basis, where there is inadvertent disclosure made to a selected group, companies should make the same disclosure publicly to all others as soon as practicable.The other point is companies should encourage greater shareholder participation at AGMs and allow shareholders the opportunity to communicate their views on various matters affecting the company. The shareholders have the opportunity to participate effectively and to vote in AGMs. There should be allowed to vote in person or in absentia as Articles of Association allow for absentia voting methods such as by mail, email, fax, etc. Besides, there should be separate resolutions at general meetings on each substantially separate issue. The chairpersons of the Audit, Nomination and Remuneration committees should be present and available to address questions at general meetings.As for the Corporate Governance of Hong Kong, The Board should be responsible for maintaining on-going dialogue with shareholders and in particular, use annual general meetings or other general meetings to communicate with them and encourage their participation.

Apart from that, for each substantially separate issue at a general meeting, a separate resolution should be proposed by the chairman of that meeting. Besides, the issuer should arrange for the notice to shareholders to be sent for annual general meetings at least 20 clear business days before the meeting and to be sent at least 10 clear business days for all other general meetings. The board also should establish a shareholders communication policy and review it on a regular basis to ensure its effectiveness.

Other than that, the chairman of the board should attend the annual general meeting. He should also invite the chairmen of the audit, remuneration, nomination and any other committees to attend. In their absence, he should invite another member of the committee or failing this his duly appointed delegate, to attend. These persons should be available to answer questions at the annual general meeting. The chairman of the independent board committee should also be available to answer questions to approve a connected transaction or any other transaction that requires independent shareholders approval

1.4 ACCOUNTABILITY AND AUDIT

The Corporate Governance of Malaysia highlights three main points under the accountability and audit. First, Financial Reporting where, the board should present a balanced and understandable assessment on the companys position and prospects. Second, Internal Control where, the board should maintain a sound system of internal control to safeguards shareholders investments and the companys assets. Third point is Relationship with Auditors where, the board should establish formal and transparent arrangements for maintaining an appropriate relationship with the companys auditors.

The board should ensure that financial statements are a reliable source of information. Apart of that, the Audit Committee should ensure financial statements comply with applicable financial reporting standards. It must be a reliable source of financial information.

Besides that, the Audit Committee should have policies and procedures to assess the suitability and independence of external auditors. The audit committee should review and monitor the suitability and independence of external auditors. The independence of external auditors can be impaired by the provision of non-audit services to the company. The Audit Committee should therefore establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into procedures that must be followed by the external auditors.The Singapore codes of Corporate Governance explain that The Board should present a balanced and understandable assessment of the companys performance, position and prospects. Apart from that, The Boards responsibility to provide a balanced and understandable assessment of the companys performance, position and prospects extends to interim and other price sensitive public reports, and reports to regulators Furthermore, The Management should provide all members of the Board with management accounts which present a balanced and understandable assessment of the companys performance, position and prospects on a monthly basis.Meanwhile for the Audit Committee highlight that The Board should establish an Audit Committee (AC) with written terms of reference which clearly set out its authority and duties.Thus, The Audit Committee should comprise at least three directors, all non-executive, the majority of whom, including the Chairman, should be independent. Moreover, The Board should ensure that the members of the Audit Committee are appropriately qualified to discharge their responsibilities. At least two members should have accounting or related financial management expertise or experience, as the Board interprets such qualification in its business judgement. Besides, The Audit Committee should have explicit authority to investigate any matter within its terms of reference, full access to and co-operation by Management and full discretion to invite any director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.The Audit Committee should meet with the external auditors, and with the internal Auditors, without the presence of the company are Management, and should review the independent of the external auditors annually. The Audit Committee should review arrangements by which staff of the company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The Audit Committees objective should be to ensure that arrangements are in place for the independent investigation of such matters and for appropriate follow up action. The Board should disclose the names of the members of the Audit Committee and details of the Committees activities in the companys annual report.As for the Corporate Governance of Hong Kong, The board should present a balanced, clear and comprehensible assessment of the companys performance, position and prospects. Apart from that, the Management should provide sufficient explanation and information to the board to enable it to make an informed assessment of financial and other information put before it for approval.

Besides, The directors should include in the separate statement containing a discussion and analysis of the groups performance in the annual report, an explanation of the basis on which the issuer generates or preserves value over the longer term and the strategy for delivering the issuers objectives.

Moreover, the board should present a balanced, clear and understandable assessment in annual and interim reports and other financial disclosures required by the Listing Rules. It should also do so for reports to regulators and information disclosed under statutory requirements.

Meanwhile in Audit Committee, the Principle state that the board should establish formal and transparent arrangements to consider how it will apply financial reporting and internal control principles and maintain an appropriate relationship with the issuers auditors. The audit committee established under the Listing Rules should have clear terms of reference.Thus, Full minutes of audit committee meetings should be kept by a duly appointed secretary of the meeting draft and final versions of minutes of the meetings should be sent to all committee members for their comment and records, within a reasonable time after the meeting. Besides, the audit committee should make available its terms of reference, explaining its role and the authority delegated to it by the board by including them on the Exchanges website and the issuers website.2.0 PRINCIPLES AND BEST PRACTICES FOR OTHER CORPORATE PARTICIPANTSThe Corporate Governance of Malaysia highlights four main points. There are shareholder voting, dialogue between companies and investors, evaluation of governance disclosures and last but not least, external auditors. 2.1 Shareholder VotingInstitutional shareholders have a responsibility to make considered use of their votes. Apart from that, the board should encourage poll voting. The board is encouraged to put substantive resolutions to vote by poll and make an announcement of the detailed results showing the number of votes cast for and against each resolution. Companies are encouraged to employ electronic means for poll voting. Thus, the chairman should inform shareholders of their right to demand a poll vote at the commencement of general meeting.2.2 Dialogue between Companies and Investors

Institutional investors should encourage direct contact with companies, including constructive communication with both senior management and board members about performance, corporate governance, and other matters affecting shareholders interest. Apart from that, the board should promote effective communication and practice engagements with shareholders. Direct engagements with shareholders provides a better appreciation of the companys objectives, quality of its management and challenges, while also making the company aware of the expectations and concerns of its shareholders. This will assists shareholders in evaluating the company and facilitate the considered use of their votes.

Besides, the board members and senior management are encouraged to have constructive engagements with shareholders about performance, corporate governance and other matters affecting shareholders interest. 2.3 Evaluation of Governance Disclosures

When evaluating companies governance arrangements, particularly those relating to board structure and composition, institutional investors and their advisers should give due weight to all relevant factors drawn to their attention. Thus, in Malaysia apply that every company should establish corporate disclosure policies and procedures to ensure comprehensive, accurate and timely disclosures.

What to highlight is the board should ensure the company has appropriate corporate disclosure policies and procedures, which the board should have internal corporate disclosure policies and procedures which are practical and include feedback from management. These policies and procedures should ensure compliance with the disclosure requirements as set out in the Bursa Malaysia Listing Requirements. Thus, board practice should be apply and guided.

2.4 External Auditors

The external auditors should independently report to shareholders in accordance with statutory and professional requirements and independently assure the board on the discharge of its responsibilities under principles DI and DII of Part I in accordance with professional guidance.

Apart of that, the Audit Committee should have policies and procedures to assess the suitability and independence of external auditors. Thus, the Audit Committee should review and monitor the suitability and independence of external auditors. The independence of non-audit services to the company and should establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into procedures that must be followed by the external auditors. This principle apply under uphold integrity in financial reporting.As for The Corporate Governance of Singapore and the best practice for other corporate participates, The Singapore Exchange Listing Rules require listed companies to describe in the annual reports their corporate governance practices with specific reference to the principles of the Code, as well as disclose and explain any deviation from any guideline of the Code. Companies are also encouraged to make a positive confirmation at the start of the corporate governance section of the annual report that they have adhered to the principles and guidelines of the Code, or specify each area of non-compliance. Many of these guidelines are recommendations for companies to disclose their corporate governance arrangements.Apart from that, the specific principles and guidelines in the Code for disclosure are set out for ease of reference and there are seventeen points need to be highlights.First, Delegation of authority, by the Board to any Board Committee, to make decisions on certain board matters. Second, The number of board and board committee meetings held in the year, as well as the attendance of every board member at these meetings. The type of material transactions that require board approval under the internal guidelines is the third point. Fourth, where the company considers a director to be independent in spite of the existence of a relationship as stated in the Code that would otherwise deem him as non-independent, the nature of the directors relationship and the reason for considering him as independent should be disclosed.The fifth and sixth point is the relationship between the Chairman and CEO where they are related to each other and Composition of nominating committee. Process for the selection and appointment of new directors to the board is the seventh point. Eight, any key information regarding directors, which directors are executive, non-executive or considered by the nominating committee to be independent and nine point is, process for assessing the effectiveness of the Board as a whole and the contribution of each individual director to the effectiveness of the Board. Tenth, Clear disclosure of its remuneration policy, level and mix of remuneration, procedure for setting remuneration and link between remuneration paid to directors and key executives and performance.

Meanwhile eleven points highlight the composition of remuneration committee. Twelve points is about the names and remuneration of each director. The disclosure of remuneration should be in bands of S$250,000. There will be a breakdown (in percentage terms) of each directors remuneration earned through base/fixed salary, variable or performance-related income/bonuses, benefits in kind, and stock options granted and other long-term incentives.

Besides that, the names and remuneration of at least the top 5 key executives (who are not also directors) listed in thirteen points. The disclosure should be in bands of S$250,000 and include a breakdown of remuneration. Fourteen point is where the remuneration of employees who are immediate family members of a director or the CEO, and whose remuneration exceed S$150,000 during the year. The disclosure should be made in bands of $250,000 and include a breakdown of remuneration and fifteen point is about details of employee share schemes Guideline.

Sixteen points explains that the composition of audit committee and details of the committees activities and last point, the seventeen point is the adequacy of internal controls, including financial, operational and compliance controls, and risk management systems.The Corporate Governance of Hong Kong and the best practice for other corporate participates explains on three main points where, the first point is about a narrative statement explaining how the issuer has applied the principles in the Code, enabling its shareholders to evaluate how the principles have been applied. Second point is about a statement as to whether the issuer meets the code provisions. If an issuer has adopted its own code that exceeds the code provisions, it may draw attention to this

fact in its annual report and last point is for any deviation from the code provisions, details of the deviation during the financial year.

Under the accountability and audit parts, the principle explain the best practice that an issuer should announce and publish quarterly financial results within 45 days after the end of the relevant quarter. These should disclose sufficient information to enable shareholders to assess the issuers performance, financial position and prospects. Besides, an issuers quarterly financial results should be prepared using the accounting policies of its half-year and annual accounts.Other than that, once an issuer announces quarterly financial results, it should continue to do so for each of the first 3 and 9 months periods of subsequent financial years, where it decides not to continuously announce and publish its financial results for a particular quarter, it should announce the reasons for this decision.