Bursa Malaysia Seeks Feedback on Review of Listing Requirements: Companies Act 2016

In light of the Companies Act 2016 coming into force on 31 January 2017, Bursa Malaysia has announced on 20 March 2017 that it has issued a consultation paper to seek public feedback on the proposed review of the Listing Requirements. You can access the consultation paper here and feedback is to be given by 14 April 2017.

Reading the consultation paper, I set out below on an interesting proposed move towards greater transparency in the remuneration of directors. It is proposed that new requirements be put in place for tighter shareholder approval and for disclosure of remuneration on a named basis.

This consultation paper is to be read together with the earlier two directives / clarifications from Bursa Malaysia dated 2 February 2017 and 10 March 2017.

The four broad areas covered by the consultation paper are as follows. First, the no-par value regime and its impact on share capital, share premium and share buy-back. Secondly, allowing electronic communications with shareholders. Thirdly, with the move to a constitution to replace the articles of association, amendments to enhance the contents of the constitution. Fourthly, enhancing disclosure of directors’ fees and benefits. There are then other consequential changes to be made to the Listing Requirements.

I pick out one area of interest from the consultation paper. This is the move towards greater transparency on the remuneration of directors.

Firstly, the Companies Act 2016 now requires that for a listed company and its subsidiaries, the fees and benefits payable to directors must be approved at a general meeting. Bursa Malaysia proposes that this requirement for the fees and benefits payable must be subject to an annual shareholders’ approval. This is to remove the practice of some companies obtaining the shareholders’ mandate for a capped amount and then not obtaining successive shareholder approval at the AGMs. This proposed move is with the aim of better governance. Shareholders will have the opportunity at each AGM to approve or reject the fees and benefits payable to the directors.

Secondly, a proposed move towards more detailed disclosure of directors’ remuneration in the annual reports. It is proposed that the disclosure of the directors’ remuneration (in the form of directors’ fees, salaries, percentages, bonuses, commission, compensation for loss of office, benefits in kind based on an estimated money value) will now be on a named basis in the annual reports. The listed issuer will also be strongly encouraged to disclose its directors’ remuneration policy in the annual report to complement this detailed disclosure. Shareholders will then have more information to assess whether the remuneration of directors are commensurate with their individual performance.

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