THE Institute of Corporate Directors (ICDM), a dedicated body set up to enhance the professionalism and effectiveness of corporate directors in the country, was officially launched last Monday.
Led by Tan Sri Zarinah Anwar as chairman and Michele Kythe Lim as president/CEO, ICDM will, among other things, provide learning and development via training programmes, board and director effectiveness evaluation, director-sourcing services and research and advocacy.
It is effectively a “one-stop centre” that caters for all board and director needs, according to Zarinah, former chairman of the Securities Commission Malaysia (SC).
In an interview with The Edge, Zarinah makes it clear that ICDM is not there to prescribe new rules for directors. Whilst it is the brainchild of the SC and is supported by Bursa Malaysia and Bank Negara Malaysia, ICDM — a membership-based organisation — does not fall under the SC and has no regulatory function.
“It’s independent. ICDM is not prescribing a new set of rules. We are not another regulator. Although we were set up with the full support of the regulator, we have no regulatory function. Rather, we are here to provide services to boards and individual directors to enable them to better comply with rules prescribed by the regulators so they can practise sound governance standards and contribute effectively to the pursuit of the company’s strategies,” Zarinah explains.
The SC initiated the establishment of ICDM as part of its corporate governance strategic priorities for 2017 to 2020. The body was incorporated on July 19 last year.
ICDM’s membership is not limited to directors of public-listed companies (PLCs). Directors of all companies, including unlisted government-linked firms, state-owned enterprises and sizeable small and medium enterprises, are encouraged to become members as well, Zarinah says.
A key part of ICDM’s services is providing training programmes for directors, boards and board committees.
Zarinah points out that companies need to place more focus on board committee training.
“A lot of focus goes towards the training of directors and boards, but board committees [less so]. Apart from audit, attention should also be paid to renumeration, nomination, risk and governance committees. These are all very important legs to support the board in the effective discharge of the board’s roles,” she says.
ICDM also offers director registry and placement services. “If boards are looking to fill a vacancy with a director who has certain kinds of experience and qualifications, or if they need a woman director with a specific background and skills, we can help them fill that vacancy,” Zarinah adds.
Lim, who was also at the interview, says ICDM has a registry of about 300 candidates at present to source from. “Candidates have got to be members of ICDM. When a company comes to us for placement purposes, the first place we look at is the registry. But we also work back to back with professional bodies, with other stakeholders in the market, to make sure we furnish as many candidates as possible who meet the requirements of the client. But to clarify, we only place non-executive directors for board positions ... so, we’re not an executive search, in that sense,” she says.
The other service that ICDM provides is board and director effectiveness evaluation.
“As you know, the Malaysian Code on Corporate Governance requires all PLCs to undertake annual evaluation of the effectiveness of the boards, directors and board committees. Large companies are also required to periodically undertake independent third-party evaluation, so that they have a much more objective assessment of their effectiveness. That’s where we come in. We provide that independent third-party assessment of a board’s effectiveness,” Zarinah says.
Apart from that, ICDM will also do research and advocacy.
“Being a membership organisation, ICDM will be the voice of its members. Our research and advocacy service will raise issues from feedback received from our members. The issues may vary according to concerns that may arise at particular points in time.
“At the same time, we will look into issues that we know are occupying the attention of boards, for example the perceived lack of qualified and willing directors, men or women, CEO’s pay, composition of boards, diversity, on-boarding of directors, risk management, compliance, and whether there is too much regulation,” Zarinah adds.
ICDM’s board of directors comprises notable figures who themselves sit on the boards of major companies. They are Datuk Seri Johan Raslan (former executive chairman of PwC Malaysia), Datuk Azmi Mohd Ali (co-founder and senior partner of legal firm Azmi & Associates), Datuk Abdul Aziz Abu Bakar (the first CEO of the Malaysian Directors Academy or MINDA), Sarena Cheah (managing director of the property development division of Sunway Group) and Salleh Hassan (director of professional standards and qualifications at the Securities Industry Development Corporation).
Zarinah notes that ICDM is a not-for-profit body that is “by directors for directors”.
“We hope that members working together towards a common objective will help promote the self-discipline required to ensure boards adopt sound governance practices at all times. We therefore encourage directors to become members and avail themselves of the products and services that we offer. Membership also confers additional value in terms of recognition as our by-laws require members to act professionally at all times and to conform to our code of conduct which is aligned to the general duties required of directors.”