Bursa Malaysia Securities Bhd (Bursa Malaysia) has prohibited executive directors from being members of the audit committee in an effort to enhance its independence. Under the new ruling, the internal audit function was also made compulsory to provide a more effective support to the audit committee in carrying out its functions. The amendments were one of the exchange’s many ways to enhance the quality of listed companies.

The amendments, which took immediate effect (28 January 2008), are aimed at raising the standards of corporate governance for companies listed on the main board, second board and Mesdaq Market and increasing investor confidence. However, it said the companies were given up till 31 January 2009 to comply with the requirements on the revised composition of the audit committee as well as mandatory internal audit function.

Other amendments included:

~ Bernama ~

According to Malaysian Institute of Corporate Governance (MICG) chief executive officer/executive director, Datuk Shahran Laili Abdul Munid, there is still room for further improvement for corporate governance in Malaysia although it has been strengthened in recent years. Despite talks on corporate governance and efforts made with the revised CG code, there are still financial irregularities, fraud, manipulation and corruption happening. Shahran said foreign investors would look for good corporate governance practices before investing in a country. He said factors such as corruption, fraud, money-laundering, dishonesty as well as criminal breach of trust were major factors that would lead to the downfall of the companies and organisations.

~ Bernama ~

The City watchdog might make overseas companies listed in the UK subject to the Combined Code on Corporate Governance, according to a new review. The Financial Services Authority (FSA) is seeking views on whether non-UK companies that hold a primary listing in the UK should be subject to the UK’s current ‘comply or explain’ regime, as part of its wider review of the structure of the Listing Rules.

Presently, overseas companies must disclose whether or not they comply with the corporate governance regime in their country of incorporation, and also disclose any significant ways in which their corporate governance practices differ from those set out in the Combined Code. The FSA wants to know the ‘merits and demerits’ of making all companies, regardless of country of incorporation, subject to the UK code - and whether doing this would lead to ‘substantive changes in behaviour’ by overseas issuers.

The review is also seeking views on whether the overall structure of the Listing Rules should be overhauled. It points out that the implementation of a number of directives under the European Financial Services Action Plan has blurred the historic role of listing. The FSA is also concerned that there is scope for confusion between primary, secondary and global depositary receipt listing - particularly that market participants might assume that all three have the same level of corporate governance.

It suggests, therefore, that the secondary listing and GDR regimes could be done away with altogether, and replaced by a ‘directive-minimum’ regime.

Alternatively, it suggests modernising the entire regime on a two-tier system. It does not, however, advocate doing away with any of the methods of listing altogether.

~ Bernama ~

The UK’s accounting watchdog reckons that existing guidelines on narrative reporting cover all the requirements of the new company law regime.

The Accounting Standards Board (ASB) is reminding quoted companies that they need to follow the enhanced business review requirements contained within the Companies Act 2006. It believes, however, that fresh guidance is not needed, as all the requirements of the enhanced business review are already covered by its January 2006 guidance on the now-defunct Operating and Financial Review.

The ASB has also issued a table relating the relevant sections of the Companies Act to its OFR guidance, to help companies in preparing their business reviews, which is available at this website: http://www.frc.org.uk/.

~ Newswire for Chartered Secretary ~

The first accounting standard ensuring that the approach is the same regardless of whether US or international systems are used has been published.

The International Accounting Standards Board (IASB) is issuing a revised version of IFRS 3: Business Combinations and IAS 27: Consolidated and Separate Financial Statements. The standards were jointly devised with the US Financial Accounting Standards Board (FASB) to create a single accounting standard that would ensure that the accounting for business combinations is the same regardless of whether International Financial Reporting Standards (IFRSs) or US generally accepted accounting principles (GAAP) are used.

The revised standards relate to how companies account for mergers and acquisitions. The FASB published its revised standards in December.

The move has been welcomed by the accounting industry, with Mary Tokar, Head of KPMG’s International Financial Reporting Group calling it ‘a further step towards greater consistency’. She cautions, though, that although the concepts and principles of the two standards are the same, they are no t 100 per cent identical.

The IASB’s revised standards are available at this website: http://www.iasb.org/Current+Projects/IASB+Projects/Business+Combinations/ Business+Combinations+
Overview.htm.

~ Newswire for Chartered Secretary ~

Bursa Malaysia announced its new highlevel organisation structure which took effect on 1 January 2008. The restructuring process is aimed at achieving greater efficiency and efficacy of its business through streamlining core functions and business activities.

Dato’ Yusli Mohamed Yusoff, Chief Executive Officer of Bursa Malaysia said, “The new organisation structure is to further strengthen the Exchange’s capabilities to sustain and grow business performance towards heightened success as well as meet and manage our stakeholders’ and customers’ needs.”

The new high-level organisation structure is streamed into five main components.

Group Human Resources, Corporate Secretarial, Communications and Investor Relations will report directly to the CEO.

~ Bursa Malaysia Berhad ~