KUALA LUMPUR (Oct 11): The government will consider the establishment of a regulatory subsidiary of Bursa Malaysia (RegSub) to improve the existing corporate governance structure of the exchange and mitigate risks pertaining to conflicts of interest, according to Deputy Finance Minister I Datuk Seri Ahmad Maslan.
“Establishment of the RegSub aligns with the revised G20/OECD (Organisation for Economic Co-operation and Development) principles, which stresses the need for a clear division of responsibilities among various authorities and for safeguards to manage potential conflicts of interest,” he said during his keynote address at the launching of the revised G20/OECD Principles of Corporate Governance, hosted by the Securities Commission Malaysia (SC) on Wednesday.
It was announced in 2020 that Bursa Malaysia will establish a wholly owned unit called Bursa RegSub to assume the regulatory functions currently undertaken by the stock exchange regulator. This will bring Malaysia’s stock market regulator’s framework to be in line with jurisdictions such as Singapore, Japan and Brazil.
In a joint statement, SC and Bursa Malaysia said they have been working closely to further enhance the governance structure of the exchange by segregating its regulatory functions from its commercial objectives, in order to address perception of potential conflicts of interest between these two roles.
The Bursa RegSub will be governed by a board of directors, a majority of whom will be independent of Bursa Malaysia, and the chairman of Bursa RegSub will be appointed from among the independent board members, the statement read.
Revised G20/OECD principles focuses on sustainability
The revised G20/OECD principles are a global benchmark for legal, regulatory and institutional framework for corporate governance. It was endorsed at the G20 Leaders’ Summit in New Delhi, India, last month.
It includes a focus on sustainability and resilience, marking a significant shift for the companies to manage climate-related and other sustainability risks and opportunities.
“The issuance of the revised G20/OECD principles is indeed a key milestone, as it encapsulates a renewed global consensus on governance expectations, including the role of governance in supporting sustainability and resilience. Good corporate governance remains at the core of the SC’s regulatory priorities,” said SC chairman Datuk Seri Dr Awang Adek Hussain.
“The principles remain an important instrument, guiding the shape of regulatory and institutional framework, including Malaysia,” he added.
The principles were first issued in 1999 and the revised principles were endorsed by G20 leaders this year — including US, European Union and India — to reflect recent evolutions in capital markets, and corporate governance policies and practices.