The Companies Commission of Malaysia (“CCM
”) issued the Code of Ethics for Company Director and Company Secretary
”) on 11 September 2023.
The New Code supersedes the Code of Ethics – Company Director / Company Secretary
”) that was issued previously by the CCM.
As in the case of the Superseded Code, the New Code is divided into two parts, namely Part A which sets out the Code of Ethics for Company Director and Part B, the Code of Ethics for Company Secretary.
Objectives of the Code of Ethics for Company Director
The Code of Ethics for Company Director is formulated to enhance the standard of corporate governance and corporate behaviour with a view to achieving the following intended objectives:
Other noteworthy updates
Who is a ‘director’?
The definition of a ‘director’ in the “Definition” section of Part A of the New Code is substantially similar to the corresponding definition in Part D of the Superseded Code save that the description of a shadow director in the New Code refers to ‘a person in accordance with whose directions and instructions the majority
of directors of a corporation are accustomed to act’ instead of ‘a person in accordance with whose directions and instructions the directors of a corporation are accustomed to act’ under the Superseded Code. The definition under the Superseded Code follows the definition of a director in the repealed Companies Act 1965 while the definition in the New Code accords with the definition in the Companies Act 2016.
For greater clarity, the “Definition” section of Part A of the New Code states that some companies do not use the designation ‘director’. The section further states that a company limited by guarantee may describe their directors as ‘governors’ or ‘trustees’ and that such persons are directors of a company if they occupy the position of a director or carry out such functions including being primarily responsible for the management of the company.
Rearrangement of Requirements relating to Company Secretaries
The Superseded Code listed the 15 requirements relating to company secretaries in successive paragraphs. The New Code reorganises these requirements into four sections, namely Professionalism, Corporate Governance, Relationship with Directors and Shareholders, and Obligations of Reporting Institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.
The New Code is a timely update of the Superseded Code as it codifies concerns that have arisen in recent years, such as corporate liability, money laundering and terrorism financing and environmental, social and governance requirements.
Apart from the updates highlighted above, most of the provisions of the New Code have been carried over from the Superseded Code albeit with drafting amendments in several provisions.
Alert by Kok Chee Kheong (Partner) of the Corporate Practice of Skrine.