More small- and mid-cap companies aim to have 30% of board comprising women directors — SC

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This story has been amended for clarity.

KUALA LUMPUR (Oct 8): Gender diversity on boards of listed companies shows slight improvement at 24.82% of the top 100 listed companies as at Aug 31, 2020, up from 23.68% in 2018, the Securities Commission of Malaysia (SC) said in a statement marking the release of its annual Corporate Governance Monitor 2020 (CG Monitor 2020) report today.

Across all listed companies, the ratio stood at 16.96% as at Aug 31 compared with 15.69% in 2018, the SC said, adding that there are five companies with all-male boards on the top 100 listed companies, namely Comfort Glove Bhd, Focus Dynamics Group Bhd, Frontken Corp Bhd, Guan Chong Bhd, and Pentamaster Corp Bhd. Overall, the number of companies with all-male boards stood at 248.

“The data shows that we continue to record progress in relation to gender diversity on the boards… However, it appears unlikely that we will achieve the 30% target [for the top 100 PLCs] by Dec 31, 2020. While the SC, together with other relevant stakeholders will continue to drive greater gender diversity on boards, other measures and interventions are also being considered to accelerate progress,” the CG Monitor 2020 read.

It is worth noting that the number of large companies that had adopted the target of having 30% or more women directors in 2019 remained at 42, the same as in 2018. Among mid-cap companies, however, the number of adopters increased to 28 in 2019 (25 in 2018) and among small-cap companies, the number of adopters rose to 342 in 2019 (302 in 2018), according to data appended in the CG Monitor 2020. Overall, a total of 412 companies adopted the target in 2019, up from 369 in 2018.

Infographic from the SC's CG Monitor 2020

There are 682 public-listed companies with at least one woman director on the board, up from 634 in 2018. A total of 165 listed companies here have complied with the target of having 30% women directors, up from 145 in 2018.

In 2019, women accounted for 21% of new board appointments. The trend of appointing younger women directors continued, with 41% of women directors below 50 years old and 11% below 40 years old.

A total of 121 companies are considered large-cap (FBM100 members and those with more than RM2 billion market cap at the start of the companies’ financial year), 51 mid-cap (RM1 billion to RM2 billion market cap) and 765 small-cap (below RM1 billion) in 2020 compared with 106 large-cap, 54 mid-cap and 770 small-cap in 2018.

In the statement, the SC also said more listed companies adopted best practices as outlined in the Malaysian Code on Corporate Governance (MCCG) in 2019, compared to the year before.

Areas which show an increase in adoption include the two-tier voting process and board practices to determine the remuneration of directors and senior management.

“While the adoption of the two-tier voting process for retention of long-serving independent directors has increased, there remain a high number of independent directors whose tenure spans between 20-40 years,” the SC said in the statement, without naming the five companies with independent directors who have served on the same board for at least 31 years.

The SC notes that the participation of non-large shareholders “remains low” in Tier 2 voting, a process meant to give minority shareholders a larger voice.

“On average only 40% of non-large shareholders cast their votes. While the two-tier voting process is not mandatory, the SC strongly encourages shareholders to seek the adoption of this practice to strengthen the reappointment of long-serving independent directors. Similarly, non-large shareholders should rise up and exercise their rights in determining the extension of the tenure of these directors,” the SC said.

However, the SC also said it is “encouraged” to note that smaller companies have adopted a more transparent approach with regards to disclosure of remuneration of senior management on a named basis.

“The adopters include Caely Bhd, Y&G Corp Bhd and Timberwell Bhd. Good quality disclosures and transparency will enable stakeholders to gain deeper insights on how corporate governance frameworks and practices support the company’s business resilience and growth, especially during this challenging period," it said.

The CG Monitor 2020, which is available on the SC’s website, also presents observations on three thematic reviews on the adoption of two-tier resolutions, board remuneration of listed companies on the FTSE Bursa Malaysia Top 100 Index and the conduct of fully virtual general meetings by listed companies since the Movement Control Order.

The review on board remuneration shows that the total board remuneration for 2019 decreased by 11.7% compared to 2018, in which the executive directors’ remuneration decreased by 14.5%, while non-executive directors’ remuneration increased by 6.2% in 2019.

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Lam Jian Wyn