A brief notes on ethical and corporate governance in Malaysia. There are theories on ethics, code of ethics by CIMA, the concept, purposes and aims of corporate governance together with a short discussion on different criminal activities that related with company.

1. ETHICAL & CORPORATE
GOVERNANCE
NUR HIDAYAHTUL NABIHAH BINTI MANAS
OCT 2018-FEB 2019
TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE
PAHANG BRANCH CAMPUS

2. Ethic
Moral principles or values
that governs a person’s
behaviours
2
1

3. Ethical Theories
TELEOLOGICAL
+ Result oriented
+ Whether something is right or wrong depends
on the outcome of the decision
+ The goal is important, not the means of getting
there
+ Two perspectives:
1) Utilitarianism
action is moral if it produces the
greatest good for greatest number
of people
2) Egosim
morality of the action is
determined by the impact on
yourself
DEONTOLOGICAL
+ Action oriented
+ Whether that action is right or wrong depends on
the rules
+ Emphasis on the relationship between duty and
morality of human action
+ Kant’s 3 Categories Imperatives:
1) Consistency
All follow the same rules
2)Humandignity
Inner values (Eg.: Self-respect etc.)
3)Universality
Other viewed the action is moral or
suitable
3

4. “Lina gave money to Abu, a homeless man.
4
Teleological:
Not moral if Abu use
the money for drugs
Deontological:
An act of charity is a
moral action even Abu
use the money for
drugs

5. Ethical Principles
5
CIMA Code of
Ethics
Integrity Objectivity
Professional
Competency &
Due Care
Confidentiality
Professional
Behaviour

6. Corporate Governance
System by which company is
directed and controlled. Concerned
with practices, procedures, process
and structure to manage the
company business and affairs.
6
2

7. Purposes of Corporate Governance
7
Assist the
director in
managing the
company
Encourage healthy
group decision
making
Control
mechanism in
an
organization

8. Objectivity of Corporate Governance
8
Long term
prosperity
Enhance
shareholders’
values
Enhance
stakeholders’
interests

9. Development of Corporate Governance
9
Cadbury Report 1992
• Comply with Code of best practices
• Audit committee to oversee the company’s finance
• CEO and Chairman should be different person
Greenbury Report
• The director's remuneration should not be excessive
Hampel Report 1998
• Review and enhance previous recommendations
• Eg.: director should not be involved in deciding his own remuneration
Combined Code
• Combined all previous recommendations into 1 code
• Adopted in UK Listing Rules and London SE

10. Development of Corporate Governance
10
Turnbull Report 1999
• By ICA in England and Wales
• As guidance to listed company on how to implement the Combined Code
Cromme Code
• By German
Sarbanes-Oxley Act 2002
• By USA
• To improve quality of transparency of financial report, independent audit and
accounting
Malaysian Code of Corporate Governance
• By Malaysia
• In 2000

11. Concept of Corporate Governance
11
Openness Honesty Independence
Transparency Accountability Responsibility
Fairness Reputation

12. Malaysian Code of Corporate Governance 2017
+ To all public listed company
+ 36 practices
+ 3 core principles:
1) Effectiveness and leadership of BOD
2) Effective audit and risk management
3) Integrity in corporate reporting and meaningful relationship with the
stakeholders
+ Concept “Apply or Explain an Alternative”;
CARE principles (Comprehend, Apply, Report)
+ BOD structure:
1) Unitary BOD
2) Two-tier BOD (Supervisory & Management)
12

13. Stakeholders &
Their Claims
13
3
The stakeholders are persons who have
interests in the company.
E.g. : Shareholders, creditors etc.

14. Claims by the Stakeholders
14
• Company to pay more dividends and increase the shares
priceShareholders
• Company to pay back the loan with interestsCreditors
• Company to pay better salary, bonus, promotion and better
working environmentEmployees
• Company to produce better quality of products with
reasonable pricesCustomers
• Company to take care the environment & generate
employmentCommunity
• Company to ensure fair and competitive tradingGovernment

15. Criminal Activities
Related to the
Company
15
4

16. Criminal Activities
16
Money Laundering
• Section 4(1)
AMLATFA 2014:-
Proceeds of unlawful
activity
• Engage directly or
indirectly in the
transaction
• Use, convert, receives,
or hold
• Transfer from Malaysia
to overseas or
otherwise
• Conceals, disguise,
delay the nature, origin,
location etc.
Fraudulent Trading
• Section 540(1) CA
2016
• Intention to defraud
the creditor
• Carry business for
fraudulent purpose
• Liquidator apply to the
court if discover any
fraudulent trading
• Remedy:- any person
who have knowledge of
it will be personally
liable
Wrongful Trading
• Section 539(3) CA
2016
• Borrow money when
knowing that the
company is unable to
pay the debt
• Punishment:- Max 5
years imprisonment, or
fine max RM500K, or
both.
• Re Produce
Marketing
Consortium Ltd
1989:- Not based on
fraud, still an offence

17. Thank You!
Keep Calm & Good Luck in Your Final Exam!