FACULTY

ADMINISTRATIVE SCIENCE & POLICY STUDIES

PROGRAMME
DIPLOMA IN CORPORATE ADMINISTRATION (AM120)

SUBJECT

CORPORATE COMPLIANCE AND PRACTICE II (ADM 321)

NO NAME MATRIC NUMBER

1. NAJWA ALEYA AZMIR 2022776741

2.
DANIA MARIA BINTI AMINUDDIN 2022303965

3.
NURHASLINDA AMISHA BINTI MUHAMAD FAUZI 2022993659

4.
ALIF HAIKAL BIN ZAIMI 2022939623

DATE OF SUBMISSION :
12 NOVEMBER 2023

PREPARED FOR:
DR. MUHAMMAD AIMAN BIN AWALLUDDIN
 PROBLEM BASED LEARNING ASSIGNMENT :

NO TOPICS PAGES

1.0 INTRODUCTION OF CORPORATE GOVERNANCE 2-3

2.0 Summary TEE INTERNATIONAL LIMITED CASE 4

3.0 ISSUE FROM TEE INTERNATIONAL LIMITED CASE:

ISSUE 1 and SOLUTION

● Tee International Limited's board leadership is so defective that it 5-8
facilitates the development of dishonest divisions within the
company.

ISSUE 2 and SOLUTION

● Unveiling Corporate Governance Deficiencies: Tee International 9-11
Limited's Lapses in Oversight and Board Composition Raise
Alarming Concerns

5.0 CONCLUSION 12

6.0 REFERENCES 13

1
1.0 INTRODUCTION OF CORPORATE GOVERNANCE

According to the report on Corporate Governance (1999) by the Finance Committee on

Corporate Governance and the Malaysia Code on Corporate Governance, "corporate
governance" is "the process and structure used to direct and manage the business and affairs of
the company towards enhancing business prosperity and corporate accountability with the
ultimate objectives of realizing long-term shareholders value while taking into account the
interest of the other stakeholders." The term "corporate governance" refers to the framework by
which a firm is managed and guided. The means and methods by which the company is
controlled and guided are covered here. The ties that bind the company's diverse constituencies
together are also covered. In addition, it's the set of norms, standards, and procedures by which
an organization is managed. Corporate governance is based on the following fundamental
principles: responsibility, fairness, accountability, openness, and risk management.

The strength and longevity of any business are underpinned by its corporate governance. It
includes a wide range of rules and procedures for steering a business's operations in the right
direction. Fundamentally, corporate governance is more than just a series of laws; it's a moral
compass that helps businesses treat their stakeholders fairly and hold themselves accountable.

The Board of Directors is a crucial part of any well-functioning corporation. Stakeholders can
rest assured that this committee will be keeping a close eye on the company's operations. The
board's tasks include strategic decision-making, hiring and managing top management, and
assuring adherence to ethical practices. Their watchfulness and strategic direction are
invaluable to the system of government as a whole.

Other than that, how a firm interacts with its shareholders is an important part of its overall
corporate governance structure. The role of shareholders in corporate governance is vital
because they are the owners of the company. Their rights include voting on key company
decisions, electing board members, and having access to clear and accurate company
information. Recognising the vital role that shareholders play in ensuring a company's long-term
viability and success, good corporate governance is dedicated to safeguarding the interests and
rights of those shareholders.

2
Next, Compliance with legal requirements and ethical standards is another cornerstone of
good business governance. Maintaining the confidence of stakeholders and the general public
requires adhering to the highest ethical standards. By maintaining legal and ethical standards of
conduct, companies can demonstrate their dedication to responsibility and accountability.

Transparency and disclosure are non-negotiable aspects of effective corporate governance.

The provision of timely and accurate information regarding a company's financial health,
decision-making processes, and risks empowers stakeholders to make informed decisions.
Transparency instills trust and confidence, facilitating better relationships between a company
and its stakeholders.

Corporate governance also stresses the value of effective risk management. An organization's
resilience and long-term success depend on its ability to recognise and effectively manage
potential threats. Risk management practises are often included into governance frameworks to
lessen the impact of prospective threats and challenges, protecting the business from instability.

In addition to shareholder concerns, corporate governance recognizes the significance of

considering broader stakeholder interests. This inclusive approach involves acknowledging the
impact a company has on employees, customers, suppliers, and the community. Balancing
these various interests promotes sustainable, responsible business practices that benefit the
broader society.

The concept of corporate social responsibility (CSR) is increasingly recognised as an

important part of sound business practises. There is a growing expectation for businesses to do
the right thing by society. Policies and initiatives that prioritize social and environmental
responsibility are common features of governance frameworks that go above and beyond the
purely financial.

Overall, corporate governance serves as a compass pointing businesses in the direction of

ethical actions, responsible decisions, and long-term success. It's the assurance of trust,
openness, and responsibility, connecting a company's ambitions with the interests of all
stakeholders and the larger community. Corporate governance, when properly executed, is
more than a set of regulations; it's a way of life that helps firms grow in longevity, credibility, and
prosperity.

3
2.0 Summary TEE INTERNATIONAL LIMITED CASE

Tee International Limited, a Singapore-based company operating in engineering, real estate,

and construction, faced a significant issue involving questionable transactions and its former
Group Chief Executive (GCE) and Managing Director (MD), Phua Chian Kin (PCK).

An investigation was initiated by the company in response to unexplained fund remittances

involving PCK, two significant subsidiaries, and Oscar Investment Pte Ltd. The
investigation was carried out by PricewaterhouseCoopers (PwC), with a specific emphasis on
transactions that took place from July 19, 2018, to August 29, 2019.

The company's board at that time comprised independent and executive directors, including
PCK, and was chaired by Bertie Cheng Shao Shiong, an 81-year-old independent director with
over 17 years of service on the board. Shortly after the investigation announcement, the
chairman retired.

The investigation findings are being reviewed by regulatory bodies, including the Commercial
Affairs Department (CAD) and SGX RegCo, to determine if there were any breaches of listing
rules.

It's important to note that this is not the first instance of legal concerns involving Tee
International Limited. Both PCK and the former chairman had been previously investigated for
potential market rigging.

The situation underscores the importance of regulatory compliance and transparent financial
dealings within corporations, particularly regarding related-party transactions and governance
structures. The ongoing review by regulatory bodies will determine the implications and potential
consequences for Tee International Limited and its stakeholders.

4
3.0 ISSUE FROM TEE INTERNATIONAL LIMITED CASE:

ISSUES 1

● Tee International Limited's board leadership is so defective that it facilitates the

development of dishonest divisions within the company.

Tee International, a mainboard-listed engineering business, has appointed an external

third-party independent investigator to investigate the questionable transaction involving its
controlling shareholder and former Group Chief Executive (GCE) and Managing Director (MD),
Phuan Chian Kin (PCK). The investigation was undertaken by PricewaterhouseCoopers Risk
Advisory Services (PwC). The transactions, which occurred between July 2018 and May 2019,
were allegedly carried out on the orders of group chief executive and managing director Phua
Chian Kin, according to Tee International.

From the case given of the TIL, It is possible to assert that this organization and its board
committee do not adhere to the statutes and regulations governing sound corporate
governance.This phrase is uttered when a casual and suspicious transaction has occurred
within the organization and no other members appear to be aware of what is truly occurring. For
instance, the case detailed how the disclosure of the dubious transactions was not the initial
instance in which TIL came under scrutiny regarding potential unlawful activities. In April 2012, it
was reported that the CAD was investigating Mr. Cheng and PCK for alleged market
manipulation from July 2008 to March 2009; however, no further information was available
regarding this investigation.This demonstrates that they evaded the investigation despite the
fact that they continue to engage in unlawful transactions, as evidenced by the records.

The subsequent factor contributing to the leadership's lack can also be assessed in relation to
the independent director. It was stated in this TIL case that Mr. Cheng was the independent
director in command at the time. Independent director (ID) Bertie Cheng Shao Shiong (Cheng),
aged 81, presided over the board, which also comprised three other IDs and three executive
directors (EDs): PCK, his brother Phua Boon Kin (PBK), who served as Deputy MD, and Ms
Saw Chin Choo (Saw). Since Mr. Cheng was appointed as an ID to the board in March 2001, he
had been a member for over seventeen years at the time of the problematic activities. Based on

5
this statement, it appears that Mr. Cheng had been with TIL for an extended period of time,
during which time he should have noticed any suspicious activity within the organization,
particularly during the board members' annual meeting when they discussed the business. This
is due to the fact that independent directors are crucial to preserving the equilibrium between
ownership and management in a company. The presence of independent directors not only
contributes to the optimisation of profits but also ensures the well-being of shareholders.

Furthermore, the validity of Mr. Cheng's ID should be called into doubt. This is the case in
accordance with the Company Acts of 2013. In accordance with Section 149(10), an
independent director may be appointed for a consecutive term of up to five years. In its General
Circular 14/2014, the Ministry of Corporate Affairs affirmed that it is permissible to appoint an
independent director for a duration of five years or less. As one tenure, appointments lasting
less than five years will be regarded as such. Reappointment eligibility for the independent
director designated under this section is contingent upon the adoption of a special resolution;
such details are required to be included in the board report.

6
Solution 1

How can Tee International Limited (TIL) overcome the issues faced by them using the
methods you have learnt in Corporate Governance?.

Reorganizing the board of directors in a fundamental way is absolutely necessary if Tee

International Limited (TIL) is going to be successful in overcoming the challenges it is now
facing and in enhancing its corporate governance. Because of the shortcomings of the existing
board, which have been brought to light by the lawsuit, there is a pressing need for a leadership
structure that is more efficient. This involves the appointment of new independent directors who
have a wide range of experience and a dedication to the maintenance of ethical standards in
corporate governance practices. Establishing and firmly enforcing term limits for directors, even
those who serve in an independent capacity, is something that has to be done in order to
guarantee frequent turnover, which helps avoid complacency and unwarranted influence.

Besides that, It is essential that the credentials of independent board members be subjected to
a stringent evaluation in order to guarantee that these individuals are in possession of the
appropriate level of experience as well as autonomy to competently monitor the operations of
the firm. In addition, a comprehensive whistleblower process has to be developed in order to
encourage workers to expose unethical or illegal conduct without the danger of reprisal being
taken against them. This method should be linked with a clear framework for rapidly examining
and responding to concerns made by whistleblowers.

Moreover, It is important to increase the role that independent directors play in supervision,
especially in the process of analyzing and authorizing big transactions. In order to maintain
openness in the company's financial operations and ensure that all board members are kept
informed about such activities, improved reporting procedures are required. It is essential to
provide regular training and education programmes on the concepts of corporate governance,
legal requirements, and ethical behavior for all directors, but particularly for independent
directors.

7
Furthermore, It is recommended that the independence of the external auditor be reevaluated to
guarantee that there are no conflicts of interest and that the auditor is able to deliver objective
comments on the company's financial statements. It is absolutely necessary to comply in a more
stringent manner with the applicable Company Acts and any other regulatory requirements. This
must include a strict adherence to the processes for director appointment and reappointment.
Directors are expected to participate actively in board debates and decision-making processes,
creating an atmosphere in which divergent points of view are encouraged.

In addition, It is of the utmost importance to improve transparency in areas such as financial

declarations, transactions involving linked parties, and possible conflicts of interest. In order to
keep shareholders and regulatory agencies as well as other relevant parties fully informed, the
firm needs to comply with all disclosure obligations. A comprehensive approach should be used
when collaborating with regulatory agencies in order to guarantee compliance with
investigations and a speedy resolution of any complaints that are brought up. Tee International
Limited will be able to strengthen its corporate governance system, reestablish confidence with
its stakeholders, and reduce risks connected with dubious transactions and regulatory scrutiny if
it implements these initiatives. It will be vital to perform ongoing monitoring and modification of
these measures in order to sustain a culture inside the organization that is characterized by
integrity and compliance.

8
ISSUES 2

● Unveiling Corporate Governance Deficiencies: Tee International Limited's Lapses in

Oversight and Board Composition Raise Alarming Concerns

Tee International Limited's corporate governance appears to be marred by a lack of effective

oversight and regulatory adherence, as evident from the questionable transactions involving its
controlling shareholder, Phua Chian Kin (PCK). This suggests a failure in implementing robust
corporate governance practices, contributing to potential misconduct within the organization.

An additional face highlighting Tee International's corporate governance challenges is the

composition of its board of directors. The extended tenure of independent director Bertie Cheng
Shao Shiong (Cheng), spanning over 17 years, raises concerns about the board's
independence and effectiveness. Furthermore, the abrupt retirement of Mr. Cheng shortly after
the announcement of the questionable transactions suggests a reactive rather than proactive
approach to governance issues.

To address these corporate governance challenges, Tee International Limited could benefit from
implementing measures such as regular board refreshment to ensure a diverse and
independent composition. This would involve periodic rotation of long-serving directors to bring
in fresh perspectives and prevent stagnation within the board.

Additionally, enhancing transparency and accountability in financial reporting is crucial. The

company should establish rigorous controls and disclosures to monitor interested party
transactions, as demonstrated by the unauthorized transfers involving PCK and subsidiaries.
This could involve strengthening the role of the audit committee and ensuring that relevant
information is included in annual reports, aligning with corporate governance guidelines.

By proactively addressing these issues through board rejuvenation, increased transparency, and
strengthened controls, Tee International Limited can foster a culture of ethical conduct and
compliance, thereby mitigating corporate governance challenges and rebuilding stakeholder
trust.

9
SOLUTION 2

How can Tee International Limited (TIL) overcome these issues faced by them using the
methods we have learnt in Corporate Governance?.

Addressing Tee International Limited's Corporate Governance Challenges: They need A

Strategic Framework for Reform

Tee International Limited (TIL) finds itself at a critical juncture where corporate governance
deficiencies have cast a shadow on its oversight mechanisms and adherence to regulatory
standards. The revelation of questionable transactions involving the controlling shareholder,
Phua Chian Kin (PCK), indicates a systemic failure in implementing robust governance
practices, potentially paving the way for misconduct within the organization. Furthermore, the
extended tenure of independent director Bertie Cheng Shao Shiong (Cheng), spanning over 17
years, raises substantial concerns about the independence and effectiveness of Tee
International's board. The abrupt retirement of Mr. Cheng in response to the questionable
transactions underscores a reactive governance approach, emphasizing the need for a
proactive overhaul.

To navigate these intricate governance challenges, Tee International Limited can embark on a
strategic reform initiative. One pivotal solution lies in the implementation of a systematic board
refreshment strategy. This involves the periodic rotation of long-serving directors, including
individuals such as Bertie Cheng, to infuse the board with fresh perspectives and ensure a more
diverse, dynamic, and independent composition. This approach is designed to break away from
the stagnation that extended tenures may induce and enhance the board's effectiveness in
providing oversight.

Simultaneously, Tee International should place a significant emphasis on bolstering

transparency and accountability in its financial reporting processes. Establishing rigorous
controls and disclosures is paramount, especially in monitoring interested party transactions like
the unauthorized transfers involving PCK and subsidiaries. To achieve this, the role of the audit
committee should be reinforced, ensuring it becomes a cornerstone in a robust monitoring
system aligned with corporate governance guidelines. By adhering to these measures, Tee
International can instill a sense of trust and confidence in stakeholders by demonstrating its

10
commitment to transparency and ethical financial practices.

Additionally, Tee International Limited must prioritize a comprehensive review and restructuring
of its corporate governance framework. This involves a thorough examination of policies and
procedures to align them with best practices and regulatory requirements. Educational
programs for directors should be instituted to equip them with an in-depth understanding of
corporate governance principles, ensuring that the board is not only aware of its fiduciary
responsibilities but is also adept at navigating complex governance challenges effectively.

In conclusion, Tee International Limited's path to overcoming its current corporate governance
challenges lies in a strategic and comprehensive approach. By implementing a systematic
board refreshment strategy, fortifying transparency and accountability, and restructuring its
governance framework, Tee International can embark on a journey towards rebuilding
stakeholder trust. This proactive stance, coupled with educational initiatives for directors, will not
only address the current lapses but also establish a foundation for a resilient, ethically-driven,
and transparent corporate governance culture within the organization.

11
4.0 CONCLUSION

The Malaysian Code of Corporate Governance (MCCG) is a framework that was built in
harmony with the corporations Act. Its goal is to set out principles and rules that corporations
should adhere to for successful governance. This framework was created in Malaysia. The
MCCG functions within the legal confines outlined in the Companies Act, which places an
emphasis on values such as accountability, openness, and ethical conduct. It establishes
specific standards and practices that are meant to supplement the Companies Act, particularly
in regard to the functions and responsibilities of the board of directors. This helps to ensure that
businesses are run honestly and in the manner that is in the best interest of all stakeholders.
The Companies Act is supplemented by the Malaysian Corporate Governance Guide (MCCG),
which offers more in-depth advice on how to put its provisions into practice in order to promote
good corporate governance and build trust among various stakeholders operating within the
Malaysian business environment.

12
5.0 REFERENCE

TEE International Ltd TEEI.SI

https://www.reuters.com/markets/companies/TEEI.SI/#:~:text=TEE%20International%20Limited
%20is%20an,Infrastructure%2C%20and%20Corporate%20%26%20Others.

Independent directors under the Companies Act,

https://blog.ipleaders.in/need-know-independent-directors-companies-act-2013/

Malaysian Code on Corporate Governance

https://www.sc.com.my/api/documentms/download.ashx?id=239e5ea1-a258-4db8-a9e2-41c215
bdb776

Corporate Governance
https://www.sc.com.my/regulation/corporate-governance

13