2021

EFFECTIVE DATE OF MCCG 2021

Effective Date
Reporting
The MCCG is effective Two-tier Voting
The first batch of
from 28 April 2021 companies to begin
reporting on the adoption The resolution for the
of the revised MCCG will updated two-tier voting
be those with financial process should be tabled
year ending 31 December to shareholders at general
2021 meetings held after 1
January 2022
 Key Focus Areas
1 2 3

Performance Reviews
Independence of & Remuneration Integrity &
Boards Governance

4 5

Sustainability Stakeholders
 CARE – slight difference

Focus on substance and not form – Adoption of best practices by In particular, Large Companies are
to build stakeholder confidence subsidiaries of listed companies – to encouraged to adopt the Step Up
align the culture of the whole group practices

Large companies that have departed

from a practice have to adopt it within a Disclosures have to be informative Mid-cap and small-cap cos
reasonable timeframe and provide and useful to stakeholders
justification for that timeframe encouraged to adopt practices
i.e. 3 years or less including shareholders meant for Large Companies
Adoption of Best Practice Throughout Group
➢ Guidelines for the Conduct of Directors of Listed
Companies and their Subsidiaries

➢ Definition of subsidiaries

➢ Implications of non-compliance to the Guidelines

➢ Areas covered by the Governance Framework –

• Code of Conduct & Ethics
• Conflict of interest
• Whistleblowing
• Anti-corruption
• Sustainability
• Diversity including gender diversity
 Adoption of Best Practices
by Listed Companies and their Subsidiaries

Bursa Malaysia’s Listing Requirements 15.29 – Listed issuers must ensure that it has
the following for the listed issuer and its subsidiaries (group):

1 2 3

Policies and
procedures on anti- Must be reviewed
corruption that are Policies and periodically to assess
guided by GAP procedures on their effectiveness, and
pursuant to section whistleblowing at least once every 3
17(5) of the MACC Act. years.
MCCG 2021
The 2021 update of the MCCG introduces best practices and guidance
to–
• improve board policies and processes including those related to
director selection, nomination and appointment;
• strengthen board oversight and the integration of sustainability
considerations in the strategy and operations of companies; and
• encourage the adoption of the best practices, particularly those
found to have relatively lower levels of adoption, as highlighted in
the SC’s Corporate Governance Monitor 2019 and 2020 reports.
Major departure from MCCG 2017

Tenure
ESG

Objective & Independent

• New best • No appoint- • Independent
practices for ment of active Directors
companies to politicians to tenure above 9
manage Board years subject
Environmental, • All listed to 2-tier voting
Social and company to
Governance have 30%
(ESG) risks and women
opportunities directors
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P1.4
NIL The Chairman of the Board should not be a member of the
Audit Committee, Nomination Committee or Remuneration
Committee.

Action to take
➢ have to elect new members to Audit Committee, Remuneration Committee and
Nomination Committee by 31 Dec 2021, if the Chairman is currently on these
Committees.

➢ If there are 2 EDs and 3 INEDs including the Chairman – a new director may have
to be appointed as the AC and NC must have non-executive Directors – the majority
who have to be independent (LR15.08A and LR15.09).
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021- G1.2
Nil Where the CEO or executive directors form part of
the board, the non-executive
directors are encouraged to meet among
themselves at least annually to discuss
among others strategic, governance and
operational issues.
Action to take
Schedule the independent meeting into the meeting calendar
 Meeting of Non-Executive Directors
What to do
Make such meetings routine and not when there are major issues only.
NEDs may want to clarify certain things among themselves without
management’s presence.
Keep such meetings brief and focus only on the topics that need private
time. The meeting can be conducted in an informal setting ie – need not
be in the boardroom
The minutes if required, should be taken by one of the directors present
What not to do
If it is left to situations where there are major issues, then a
meeting of the NEDs will alarm management and may put them
on the defensive.
The meetings should not be a continuation of board meetings as
executive directors and management must be present.
The company secretary should not be present to take minutes

The executive directors and CEO should be informed about the gist of the Not sharing the gist of the discussions could lead to
discussions if there are questions about board papers. defensiveness on the part of the executive directors and CEO
Require the CEO to be present for part of the meetings where necessary
to provide clarification on some matters in order to enable the NEDs to
understand the papers better and to ask better questions at the board
meeting.
Request for meetings with the internal audit head or risk assurance head if
necessary. This is separate from the annual meeting between the AC and
the CIA. This sends the message that the board has a special interest in
the assurance functions
Make it clear that the NED meeting is part of good practice and merely to Discuss individual members of management or the executive
clarify matters and not a meeting to ‘assess’ the performance of the CEO directors.
or the executive directors as this is the role of the whole board
1
0
MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – G1.6
Nil Board committee meetings should be
conducted separately from the board
meeting to enable objective and
independent discussion during the meeting,
particularly the Audit Committee.
Action to take
Ensure no combined meetings.
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P4.1 to 4.5
NIL The board together with management takes responsibility for
the governance of sustainability in the company including
setting the company’s sustainability strategies, priorities and
targets.
Strategic management of material sustainability matters should
be driven by senior management.

Action to take
Board to set up Sustainability Committee to address the new best practice
 Impact of Climate Change on Companies

Increased
Stranded Increased Costs of
Assets Premiums Borrowing

Supply
Chain Loss of Loss of
Disruption Business Reputation

4
 Task Force on Climate-Related Financial
Disclosures (TCFD)
Climate related risks and opportunities
Risks
1. Transition risks to a lower carbon economy in the form of policy and technological changes that could affect the competitiveness
of companies, and shift in supply and demand for certain commodities and legal risks and reputational risks to companies that
fail to mitigate climate change impacts.
2. Physical risk due to direct and indirect damage to assets, indirect impact from supply chain disruption, changes to water
availability and quality and food security. Acute risks from extreme weather, cyclones and hurricanes and chronic risks from
rising sea levels and heat waves.

Opportunities
1. Cost savings from energy efficiency
2. Renewable energy such as wind, solar, tidal, hydro
3. Low emissions product and services to capture the market
4. Green bonds and other green products
5. Resilience to respond to climate change

Financial Impacts
Investors, lenders and insurance underwriters need to understand how climate-related
risks and opportunities are likely to impact an organization’s future financial position.

4
 TCFD

Board oversight, whether climate change issues are

considered in the business plans, management’s role

Strategy How climate-related issues impact business strategies (eg

products and services, supply chain etc) and whether the
organization is resilient in the face of increased temperatures

Risk
Management Identification, assessment & management of
climate-related risks

Metrics Metrics and targets used to manage material climate-

and related risks and how the achievement of the targets
Targets is incorporated into remuneration policies

4
3
 TCFD Recommendations & Guidance
➢ Governance – Disclose the organization’s governance on climate-related risks and opportunities
Disclose the board’s oversight of climate-related risks and opportunities and management’s role in assessing
and managing climate related risks and opportunities.

➢ Strategy – Disclose actual and material potential impacts of climate-related risks and opportunities on
the organization’s business strategies and financial planning where the information is material
Describe the organization’s climate-related risks and opportunities over the short, medium and long-term and the
resilience of the organization’s strategies in taking into consideration different climate-related scenarios, including
2°C or lower scenario.
➢ Risk Management – How the organization identifies, assesses and manages climate-related risks
Disclose the process to identify, assess and manage risk and how these are integrated into the organization’s
overall risk management.

➢ Metrics and targets - Disclose the metrics and targets used to assess and manage material climate-
related risks
- Disclose the metrics used to assess climate-related risks and opportunities in line with strategy and the risk
management process
- Disclose Scope 1,2 and 3 GHG emissions
- Describe targets used to manage climate-related risks and opportunities against the targets.

4
TCFD and Global Regulatory Developments on Climate Change
➢ASX, HKEx, LSE & SGX (in a recently issued CP) encourage or require listed issuers to report
in accordance with the TCFD’s Recommendations.

➢Governments (UK and NZ) are introducing legislation to mandate

disclosures on climate change based on the TCFD’s
Recommendations, to disclose the impact of economic activities across
various sectors.

➢The TCFD has identified non-financial industries most affected

by climate change, These comprise:
(a) agriculture, food and forest management;
(b) energy;
(c) materials and building; and
(d) transportation

The IFRS Foundation is developing investor oriented baseline sustainability

reporting. The climate-related standards are expected to be issued by June 2022.
4
 Directors’ Liability and Climate Change
➢ Companies Act 2016
Section 213 – Directors shall exercise their powers for a proper purpose and in good faith in the best interests of the
company and shall exercise due care, skill and diligence.

Section 210 – Directors includes CEO, CFO, COO or any other person primarily responsible for the management of
the company

Section 214 – the Business Judgement Rule

➢ Petra Perdana v Tengku Dato’Ibrahim Petra

➢ Pioneer Haven v Ho Hup Construction
Directors must exercise their powers for the purpose for which they were conferred and
in the interests of the company. The court balances whether the director exercised his
powers for what he considered the company’s best interests, and whether the director
had acted as an intelligent and honest man ie whether an intelligent and honest man in
the position of the director of the company, could in the whole of the existing circumstances,
have reasonably believed that the transactions were for the benefit of the company.

4
 Directors’ Liability and Climate Change
Environmental Quality Act 1974
The Act prohibits actions that result in pollution of the:
(a) air;
(b) soil;
(c) inland waters; and
(d) discharge of oil & waste into Malaysian waters.

Section 43(1)
Where an offence has been committed under the Act, any
person
who at the time the offence was committed was a director, CEO,
manager…shall be deemed guilty of that offence unless he
proves that the offence was committed without his consent or
connivance and that he had exercised all such diligence as
to
prevent the commission of the offence as he ought to
have exercised.
4
 Climate-related Litigation
Volkswagen – Investors have taken action against Volkswagen to seek compensation for reduced share prices due to the
diesel emissions scandal. Volkswagen AG the parent company has commenced legal action against the former CEO and
Chairman and board members.

Exxon Mobil – Minority shareholders have filed suits against directors for breaching their fiduciary duties of care, loyalty
and good faith because they were grossly negligent in not knowing that Exxon’s actual investment and asset valuation did
not incorporate greenhouse gas or carbon proxy costs which resulted in an impairment charge.

Royal Dutch Shell – investors and citizens won in their court action against Royal Dutch Shell on the grounds that its
emissions violated its duty of care under Dutch law and human rights obligations.

McVeigh v Retail Employees Superannuation Trust (REST)

An Australian pension fund member filed a suit against Fund the alleging that it had violated the Corporations Act 2001 by
failing to provide information related to climate change business risks and any plans to address those risks.

ClientEarth v Enea
A shareholder in Poland sued the company as the company planned to embark on a coalfired plant project that had been
criticized by environmentalists, investors and rating agencies. There was a high chance that the project would end up as a
stranded asset as financing was difficult to obtain and potential EU rules would make it difficult for the project to be
profitable.
4
Climate Change and Principles-based
Taxonomy (CCPT)
Aimed at FIs for:
• Standard classification and reporting of climate related exposures to
support risk assessment
• Strengthen accountability and market transparency
• Encourage financial flows to support climate objectives
• Designing and structuring green finance solutions and services

Guiding Principles • FIs should conduct due diligence

1. Climate change mitigation
2. Climate change adaptation
3. No significant harm to
the environment
4. Remedial measures in
transition
5. Prohibited activities
assessment of existing and
prospective customers and have
access to verifiable information
to support assessment against
the principles
• Economic activities classified
as climate supporting,
transitioning and watchlist

4
 Sustainability
1
Responsibility
for governance
& setting
strategies,
6 priorities & 2
targets
Designated
Person to Senior
integrate management
sustainability drives material
into company matters
(Step Up)

Practice 4
5 3
Performance
Disclose
evaluations
achievement of
against
targets to
progress in
stakeholders
achieving 4
targets
Training &
review board
composition

5
0
 Bursa Malaysia’s Listing Requirements
Paragraph 29, Part A of Appendix 9C
A narrative statement of the listed issuer ’s management of material
economic, environmental and social risks and opportunities
(“Sustainability Statement”).

Paragraph 6.2, Practice Note 9

A listed issuer must include disclosures on the following:
(a) the governance structure in place
(b) the scope
(c) material sustainability matters and
(i) how they are identified;
(ii) why they are important to the listed issuer; and
(iii) how they are managed including details on –
(aa) policies to manage these sustainability matters;
(bb) measures or actions taken to deal with these; and
(cc) indicators relevant to these sustainability matters
which demonstrate how the listed issuer has
performed in managing these sustainability
matters.

5
 Board Oversight The Board may need a Director with
ESG knowledge or to nominate a
director to undergo intensive ESG
training.

Identify,
Identify prioritize and Develop
material manage risks strategies to
Management or address the
sustainability and strategize Set targets
ESG Committee matters for risks and
opportunities opportunities

An ESG Board Committee should review Management’s identification of material sustainability matters,
prioritization of such matters and how those risks will be managed, as well as the metrics and targets. This should
be discussed at the Board Risk Committee meeting and subsequently at the Board meeting.

5
Board Oversight
Sample Disclosure
The Board sets our strategic direction, including having responsibility
for our climate strategy. We realize that our climate and sustainable Climate opportunities Climate risks
finance ambitions will only be successful if they are integrated into our
governance structure. As a result, our Group Chief Executive is the Board governance
main sponsor of our climate ambition and we provide regular updates
HSBC Holdings Board
on our climate and sustainable finance initiatives to the Board and the
Group Executive Committee. Group Risk Committee

The Group Chief Risk Officer and the chief risk officers of our
Management governance
Prudential Regulation Authority-regulated businesses are the senior
managers responsible for climate financial risks under the UK Senior Group Executive Group Risk Management
Committee Committee
Managers Regime. The chief risk officers attend Board meetings and
where appropriate provide regular verbal and written updates to the
Board and Group Executive Committee (‘GEC’). Supporting governance
Climate Business Climate Risk Oversight
The Group Risk Committee (‘GRC’) provides oversight of climate risks Council Forum
and opportunities through a wide range of high level enterprise risk
reports, deep dives and updates. For example in 2020, the GRC and
Regional, global business and global
the HSBC UK Risk Committee received an update on the thematic functions supporting forums
review of climate risk management and reviewed the Group’s climate
risk appetite statement and risk management approach.
HSBC TCFD Report 2020, p5

5
 Sustainability and Risk Disclosures
Part of
Risk
Report
Modelling financial
impact of 2°C to 4°C &
analysis on
commodities
Strategy and Risk
Managing climate
change (extreme
weather, water stress,
consumer preferences,
Climate Change Governance policy change)

Metrics & targets

(reduction in GHG
emissions)
Financial Impact

Unilever Annual Report 2020 p44-

60
 Integrating Sustainability into Risk Management - HSBC
➢ We formalized our overall approach to climate risk management and developed plans to integrate climate risk into the Group-
wide risk management framework through existing policies, processes and controls for our key climate risks. This includes
aligning climate risk with our three lines of defence model to ensure robust oversight of climate risk.

➢ We have also reviewed our risk appetite to reflect the risks from climate change, setting out the measures we intend to take to
support our climate ambition and our commitments to regulators, investors and stakeholders.

➢ Our approach to climate risk management is aligned with HSBC’s Group-wide risk management framework, which follows
five simple steps: define and enable, identify and assess, manage, aggregate and report.

➢ This will ensure the Board and senior management have visibility and oversight of the climate risks that could have the
greatest impact on HSBC. For example, we have established a transition risk framework to improve how we identify, assess and
manage our exposure to high transition risk sectors, and we continue to engage with our customers to better understand and
support their low-carbon strategies.

➢ In 2020, we began reviewing our policies on sustainability risk, resilience risk and regulatory compliance to identify any gaps
and help improve our understanding of how climate change is likely to impact these risks.

➢ A dedicated climate risk program has been established to accelerate the integration of climate risk into risk management. The
program was approved in December 2020, and is one of the key risk investments for 2021. We will continue to embed our
climate risk appetite and risk management framework across our businesses throughout 2021. An important strand of this
work will involve exploring how to increase the availability and quality of data so that new metrics can be developed to strengthen
how we assess and manage climate risks and opportunities.
HSBC TCFD Report 2020,
p22
 Performance
5 Aspects for the
Evaluation Practice 4.4
Assessment:
1 2 3 4 5
Purpose & Oversight & Risk Management
Strategy Accountability Board External
Has the board
Composition & Disclosure
Does the board ensured that
Has the board Oversight
demonstrated sustainability risks
established a Has the board
commitment to and opportunities Is the board
governance provided
sustainability and are integrated into equipped
structure to enable oversight of
has it ensured that the enterprise risk to provide
it to oversee how timely
sustainability risks management oversight on
sustainability risks disclosure
and opportunities framework and has material
and opportunities about company’s
are addressed by it considered how sustainability
are managed and sustainability
the company’s sustainability issues?
integrated performance?
purpose and impacts the
throughout?
strategies? company’s financial
performance?
https://corostrandberg.com/wp-content/uploads/2017/06/esg-governance-assessment-for-boards-and-corporate-secretaries-sept-
2017.pdf

5
 Joint Committee on Climate Change (JC3)
➢ Members: BNM and SC co-chair. Members comprise Bursa and 19 other industry players.
➢ Climate Change objectives
• Build capacity through sharing of knowledge, expertise and best practices
• Identify issues and challenges faced by the financial sector in managing the transition to a low
carbon economy
• Facilitate collaboration towards finding solutions to climate change solutions
➢ 2021 priorities
• Develop guidance documents on risk management and scenario analyses
• Support voluntary disclosures by the industry
• Conduct stakeholder engagement to strengthen enabling conditions for green financial products
and solutions
• Develop technical capacity building focusing on strengthening practical knowledge and tools
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P5.1
NIL The Nomination Committee should ensure that the
composition of the board is refreshed periodically. The
tenure of each director should be reviewed by the
Nomination Committee and annual re-election of a
director should be contingent on satisfactory evaluation
of the director’s performance and contribution to the
board.
Action to take
In the annual assessment of the Director’s performance, the NC to address above
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P5.3
If the board intends to retain an independent If the board intends to
director beyond 9 years, it should justify and retain an independent
seek annual shareholders’ approval. If the director beyond 9 years, it
board continues to retain the independent should provide justification
director after the 12th year, the board should and seek annual
seek annual. shareholders’ approval through a shareholders’ approval
2-tier voting process. through a 2-tier voting
process.

Action to take
Board to decide on application of 2-tier voting for IDs above 9 years.
Proposed Amendments to Definition of Independent Directors

MCCG Amendments Bursa Malaysia’s

 Independent Directors Consultation Paper
- tenure up to 9 years  has not served as an
 After 9 years – subject independent director of Step
to justification and seek the said Corporation for Up 9
annual shareholders’ a cumulative period of Year
2
approval through a two- more than 2 12 years from Tenure
tier voting process the date of his first Policy
appointment as an
independent director.
 3 year cooling off period 9 year
tenure is
after 12 cumulative years standard
policy
for FIs
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness

MCCG 2017 New MCCG 2021 – P5.5

A listed company is discouraged from appointing an active
NIL politician as a director on its board.
A person is considered politically active if he is a Member
of Parliament, State Assemblyman or holds a position at
the Supreme Council, or division level in a political party.

Action to take

No Head of State, Head of Government or Politicians & Public Sector Appointees is

to be appointed.
34
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P5.6
NIL If the selection of candidates was based on
recommendations made by existing directors,
management or major shareholders, the
Nominating Committee should explain why these
source(s) suffice and other sources were not
used.
Action to take
PLC encouraged to use external search firms to source for new Directors. To state
the source for selection of candidates in the CG statement and explain is internal
source used.
Bursa Malaysia’s Consultation Paper: Fit and Proper Policy

Fit & Proper Policy

for Appointment &
The Policy Must The Policy Must Be
Re- appointment of
Address Board Made Available on the
Directors in the
Quality and Integrity Listed Issuer ’s
Listed Issuer & Its
Website
Subsidiaries

Report the Application of the Fit and Proper Policy

in the NC Statement
Bursa Malaysia’s Consultation Paper: Fit and Proper Policy
Character Experience Time and
and and Commitmen
Integrity Competence t

Qualifications, Training Ability to Discharge Role

Probity
and Skills in Light of Time
Commitments

Personal Integrity Relevant Experience and Participation and

Expertise Contribution in the Board
or Track Record
Financial Integrity Relevant Past Performance
& Track Record

Reputation
 BNM’s Fit and Proper Policy
➢Applies to directors and senior officers
➢FI has to develop internal board-approved policies
which need to address the following matters:

Governance and operational arrangements for

conducting fit and proper assessments, ensuring that
new appointees understand the Policy, ensuring that
there are avenues for people to disclose information
that has a bearing on a person’s fit and proper criteria,
and ensuring that there are procedures to deal with
persons who no longer meet the criteria.
 BNM’s Fit and Proper Policy
Probity, Personal Integrity and Reputation
➢Persons who will not be considered as fit and proper to be a director or senior officer of a FI are
those who:
▪were subject to disciplinary or criminal proceedings relating to dishonesty, incompetence or
malpractice;
▪contravened standards of a regulatory, professional or government body including a refusal of
registration, license or membership;
▪engaged in deceitful or improper business practices or had to resign due to dishonesty or questions
about integrity;
▪ were in management of a business/entity that became insolvent or had been wound up
▪ refused to cooperate with regulators or had strong objections to establishing sound internal controls and risk management
Competency and Capability
➢ Whether the person has the appropriate qualification, training, skills, practical experience and commitment to effectively
fulfil the role and responsibilities of the position and in the case of directors, having regard to their other commitments;
and whether the person has satisfactory past performance or expertise in the nature of the business being conducted.
Financial Integrity
➢ Whether the person manages his own financial affairs prudently and has been able to fulfil his financial obligations, and
is not subject to a judgement debt in Malaysia or overseas
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P5.7
The board should ensure shareholders have the information they
NIL require to make an informed decision on the appointment and
reappointment of a director. This includes details of any interest, position
or relationship that might influence, or reasonably be perceived to
influence, in a material respect their capacity to bring an independent
judgement to bear on issues before the board and to act in the best
interests of the listed company as a whole.
The board should also provide a statement as to whether it supports the
appointment or reappointment of the candidate and the reasons why.

Action to take
Statement on assessment to be included in CG statement and the notes to AGM notice
 Process for Re-appointment
Contingent upon satisfactory performance
evaluation

Provide outcome of
Evaluate director –
evaluation and
Director offers self independence &
supporting
for re-election contribution to
statement to
board discussions
shareholders

Disclose any interest, position or relationship

that may influence his capacity to exercise independent judgement
and to act in the best interests of the company

2
 Sample Disclosure
For the purpose of determining the eligibility of the
Directors to stand for re-election…the Board through its
NRC, had assessed each of the retiring Directors, and
considered the following:

1) The Directors’ performance and contribution

based on Self and Peer Assessment results of the
BEE conducted for the financial year under review;

2) The Directors’ level of contribution to the Board

deliberations through his/her skills, experience and
strength in qualities; and

3) The level of independence demonstrated by the

independent Director, and his/her ability to act in the
best interests of the Company in decision-making.
Sime Darby Property Annual Report 2020, p163
2
MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P5.9
NIL The board comprises at least 30% women
directors.

Action to take
Budget 2022 – all PLCs to have at least one female board member
by September 2022. Board to start selection process if there are
no woman director on board yet.
MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P5.10
The board discloses in its The board discloses in its
annual report the company’s annual report the
policies on gender diversity, its company’s policy on gender
targets and measures to meet diversity for the board and
those targets. senior management.

Action to take
Gender policy to be reviewed to cover senior management
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P6.1
The board should undertake a formal The board should undertake a formal and
and objective annual evaluation to objective annual evaluation to determine
determine the effectiveness of the the effectiveness of the board, its
board, its committees and each committees and each individual director.
individual director. The board should The board should disclose how the
disclose how the assessment was assessment was carried out and its
carried out and its outcome. outcome, actions taken and how it has or
will influence board composition.

Action to take
To include the actions taken and how it has or will influence board composition
in the CG statement.
 Board Evaluations - Practice 6.1
➢ Disclose assessment of the board, board committees and
directors and criteria used
LR 15.08A

➢ Determine the effectiveness of the board, board committees and

each individual director and disclose how the assessment was
carried out and the outcome
MCCG 2017

➢ Determine the effectiveness of the board, board committees and

each individual director and disclose how the assessment was
Updated
carried out and the outcome, action taken and how it has or will
MCCG 2021 influence board composition.

3
 Sample Disclosure of Outcome, Actions
and Impact
Disclosure by a construction company

The board has assessed among other things, its mix and composition
in light of the board’s strategic direction and increased reporting
requirements on climate-related risks.

The board was of the view that it required a director with expertise in
climate-related risks. As one of the independent directors would
have reached nine years service by the next AGM, the board
decided to appoint a director with expertise in climate-related risks in
his place.

3
Sample Disclosure - HSBC Annual Report 2020
Summary of Board Effectiveness, Recommendations and Actions
Recommendations from the
2019 and 2020 evaluations
2019
 Continue to provide strong leadership through a
culture of collaboration, transparency, open
communication and cooperation
2020
 Continue to focus on Board succession planning,
building on the progress made during 2020 to
Leadership facilitate and manage succession for Board and
committee positions, cognisant of diversity in all
aspects and making full use of external advisers
and skills matrix analysis
 Embed executive succession so that it translates
into a stronger, more diversified talent pool for
future senior leadership
2019
 Build on the shared perspective by ensuring that
the Board agenda allows sufficient time and
visibility of longer-term strategic perspectives
aligned to its appetite for business risk.
Shared
2020
Perspective  Optimise use of Board information to enhance
testing of the effectiveness of the strategic and
business plans with reference to the evolving
external factors and competitive landscape across
its key markets
Progress against
2019
recommendations
The Group Chairman enhanced his
communication activities with the
Board and executive management
during 2020. Following the
appointment of the new Group Chief
Executive, the Group Chairman
established a Board Oversight Sub-
Group to engage further with
management and provide a sounding
board
The Board adapted the Group
operating rhythm and increased the
frequency of meetings throughout
the Covid-19 outbreak to provide the
opportunity to reflect and act in real-
time on the evolving external factors.
Agreed actions for
2020 recommendations
The Nomination & Corporate
Governance Committee will allocate
additional time for discussion and
debate of external candidates for
non-executive Director succession
and the internal and external talent
pool for senior management roles
including executive Directors.
The Board will continue to enhance
the use of governance practices, such
as the Board Oversight Sub-Group
and the Group operating rhythm. It
will also continue to use Board
committees to underpin and deliver
effective decision making.
HSBC Annual Report 2020, p211
3
 MCCG 2017 versus new MCCG 2021
PRINCIPLE A – Board Leadership & Effectiveness
MCCG 2017 New MCCG 2021 – P7.1
The remuneration policies and practices should
NIL
appropriately reflect the different roles and
responsibilities of non-executive directors, executive
directors and senior management. The policies and
procedures are periodically reviewed and made
available on the Company’s website.
Action to take
Adopt remuneration policies to incorporate above and upload to website
 What Should Be In the Policy & Procedures?
Executive Directors and Senior Management Non-Executive Directors
Appropriate balance of fixed remuneration and performance-based Remuneration by way of fees and non-cash
remuneration benefits

Fixed remuneration should be relative to scale of the entity’s business Fees and other benefits should reflect time
commitment and responsibility of the role
Performance based remuneration should be linked clearly to specific No performance based remuneration
targets which should be aligned with the company’s short-term and long-
term objectives. It must be consistent with the company’s objectives,
goals, values etc and there should be malus or clawback provisions

Care should be taken in equity-based remuneration schemes to ensure

that it is not linked to short-termism and excessive risk taking

Termination payouts should be on a very clear basis and should never

be provided for termination based on misconduct
Source: ASX CG Principles and Recommendations

3
 Remuneration – Guidance 7.2
➢ Executive Directors should not be involved
in discussions about their own remuneration

➢ Controlling shareholders with a nominee

or connected director on the board should
also abstain from voting on the resolution to
approve that director ’s fees at the general
meeting

➢ Listed companies are encouraged to table

separate resolutions on the approval of the
fees of each non-executive director

3
MCCG 2017 versus new MCCG 2021
PRINCIPLE B – Effective Audit & Risk Management
MCCG 2017 New MCCG 2021 – P9.2
The Audit Committee has a The Audit Committee has a policy
policy that requires a former that requires a former partner of
partner of the external audit the external audit firm of the listed
firm of the listed company to company to observe a cooling-off
observe a cooling-off period period of at least three years
of at least two years before before being appointed as a
being appointed as a member member of the Audit Committee.
of the Audit Committee.

Action to take
Include in TOR of AC

MCCG 2017: Cooling off period for former key audit partner before joining the client’s
audit committee was 2 years.
Cooling off period for former
partner (all partners including
those in the affiliate firm e.g.
advisory and tax consulting)
before joining the client’s
audit committee is 3 years.
Audit Committee
Information in the audit firm’s
Annual Transparency Report
should be considered when
+ assessing the suitability,
objectivity and independence
of the external auditor.
5
 Annual Transparency Report
➢ Legal and ownership structure including affiliates
➢ Governance and leadership structure
➢ Partners’ equity if above 10% (substantial equity)
Governance ➢ Family relationships between partners
structure undertaking a leadership role or with substantial
equity
of firms & affiliates

➢ Description of compliance with ISQC 1 and

accounting and auditing standards
Measures to uphold ➢ Risk management process and mitigation
audit quality &
manage risks

6
0
 Annual Transparency Report
Audit Quality

➢ Ratio of average number of public interest entities, their entities and non-public
interest entities per partner
➢ Proportion of fee income from statutory audit and other services (tax, consulting
etc.)
➢ Headcount of audit personnel, qualifications, turnover and experience
➢ Staff to manager/partner ratio
➢ Hours of training
➢ Results of monitoring reviews by the firm and results of AOB inspections

6
 Sample Information in Annual Transparency Report
➢ Adherence to ethical requirements such as the fundamental principles in the International
Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants
➢ Independence under IESBA and how the firm maintains independence such as through internal policies,
training and disciplinary procedures for failure to comply with independence policies
➢ Partner rotation every 5 years
➢ Human Resources matters such as upskilling, training hours, professional development, talent
retention and learning and development
➢ Acceptance and continuance involving processes to accept new clients and retain current ones such
as the clients integrity and reputation or any conflict of interest that could impair independence and
objectivity and whether the timing and resources are sufficient to meet the needs of the engagement.
➢ Engagement Performance such as the approach, technology used, resource management, and the
use of quality review partners who review the audit plan and evaluate significant risk of misstatements in
the financial statements
➢ Monitoring of assurance quality such as the review of audit work on certain audits before the
audit report is issued, internal inspections to assess compliance with policies and procedures and
external inspection by the PCAOB
➢ Details of the audit firms governance structure
Source: PWC US Annual Transparency Report
2020
6
MCCG 2017 versus new MCCG 2021
PRINCIPLE C – Integrity in Corporate Reporting and
meaningful relationship with stakeholders
MCCG 2017 New MCCG 2021 – G12.1
The board should undertake active
NIL engagements with the relevant
stakeholders for example employees,
shareholders, potential investors, and
consumers to gain a better understanding
of the expectations and concerns (if any) of
these stakeholders and the company’s
impact on them.
Action to take
Arrange stakeholder engagement
MCCG 2017 versus new MCCG 2021
PRINCIPLE C – Integrity in Corporate Reporting and
meaningful relationship with stakeholders
MCCG 2017 New MCCG 2021 – P13.3
Listed companies should also take the
NIL necessary steps to ensure good cyber
hygiene practices are in place including data
privacy and security to prevent
cyber threats.

Action to take
Internal audit review of cyber security
 MCCG 2017 versus new MCCG 2021
PRINCIPLE C – Integrity in Corporate Reporting and meaningful
relationship with stakeholders
MCCG 2017 New MCCG 2021 - P13.4
The Chairman of the board should ensure that general
NIL meetings support meaningful engagement between the
board, senior management and shareholders. The
engagement should be interactive and include robust
discussion on among others the company’s financial and non-
financial performance as well as the company’s long-term
strategies. Shareholders should also be provided with
sufficient opportunity to pose questions during the general
meeting and all the questions should receive a meaningful
response.

Action to take
Board meeting agenda to include financial and non-financial matters
 MCCG 2017 versus new MCCG 2021
PRINCIPLE C – Integrity in Corporate Reporting and meaningful
relationship with stakeholders
MCCG 2017 New MCCG 2021 – P13.5
The board must ensure that the conduct of a virtual general
NIL meeting (fully virtual or hybrid) support meaningful engagement
between the board,
senior management and shareholders. This includes having in
place the required infrastructure and tools to support among
others, a smooth broadcast of
the general meeting and interactive participation by shareholders.
Questions posed by shareholders should be made visible to all
meeting participants
during the meeting itself.

Action to take
Ensure shareholders’ questions are displayed
MCCG 2017 versus new MCCG 2021
PRINCIPLE C – Integrity in Corporate Reporting and
meaningful relationship with stakeholders
MCCG 2017 New MCCG 2021 – P13.6
Minutes of the general meeting should be
NIL circulated to shareholders no later than 30
business days after the general meeting.

Action to take
Minutes may be uploaded to website
IMPORTANT – Long Serving ID
 Bursa Malaysia will introduce a 12-year tenure limit without
further extension for independent directors in the Listing
Requirements with targeted issuance in Q4, 2021.
 Bursa will solicit feedback from listed issuers and industry
before finalising the implementation timeline.