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An assessment of the quality of the Corporate

Governance within Malaysian International Shipping


Corporation Berhad and its impact on the
organisations key stakeholders

Being a Research and Analytical Project submitted in partial


fulfillment of the requirements for the degree of BSc (Hons) in
Applied Accounting from Oxford Brookes University

Name

: Rychard Hong Zhen Ter

ACCA Registration Number : 2513979


Date of submission

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Research and Analysis Project

Table of Contents
Part 1 Project Objectives and Research Approach...................................................................... 3
1.1 Reasons for choosing the project topic area and organisation ................................... 4-5
1.2 Project objectives and research questions ......................................................................... 6
1.3 Overall research approach ......................................................... Error! Bookmark not defined.
Choice of organization ................................................................... Error! Bookmark not defined.
Project objectives and research questions ........................................................................... 7
Information gathering and literature review .......................................................................... 7
Analysis ........................................................................................................................................ 7
Conclusion and recommendation ........................................................................................... 8
Part 2 Information Gathering, Accounting and Business Techniques .................................... 9
2.1 Sources of information.......................................................................................................... 10
2.2 Methods used to collect information .................................................................................. 11
2.3 Limitations of information gathering .................................................................................. 12
2.4 Ethical issues that arose and their resolutions ................................................................ 13
2.5 Accounting and/or business techniques used and their limitations ........................... 14
Part 3 Analysis of MISC Berhads extent of compliance with the Malaysian Code on
Corporate Governance .................................................................................................................... 17
3.1 GABs Extent of compliance with the MCCG .................................................................... 18
3.1.1 Establishing clear roles and responsibilities ........................................................... 18-19
3.1.2 Strengthening Composition of the Board ................................................................. 19-21
3.1.3 Reinforcing Independence ........................................................................................... 22-23
3.1.4 Fostering Commitment ................................................................................................. 23-24
3.1.5 Upholding Integrity in Financial Reporting ............................................................... 25-26
3.1.6 Recognising and Managing Risks .............................................................................. 26-27
3.1.7 Timely and High Quality Disclosure ................................................................................ 27
3.1.8 Strengthening Relationship between Company and Shareholders ..................... 28-29
3.2 Identification of MISC's key stakeholders .................................................................... 30-31
3.3 Activities undertaken by GAB for Key Stakeholders ...................................................... 32
Shareholders ........................................................................................................................ 32-34
Employees............................................................................................................................. 35-37
Community ............................................................................................................................ 38-39
4.0 Conclusion and Recommendations ....................................................................................... 40
Skills and Learning Statement ....................................................................................................... 41
Lessons learnt from meetings with project mentor .......................................................... 42-43
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The extent in which the research objectives have been achieved...................................... 44


Demonstration of interpersonal and communication skills ............................................ 45-47
The benefits of undertaking the RAP in my accountancy studies and future
employment role ........................................................................................................................... 48
Appendices ........................................................................................................................................ 49
Appendix 1 : Profile of the Board of Directors ................................................................... 49-55
Appendix 2 : Directors' Training ................................................................................................ 56
Appendix 3 : Sub-Board Committee Members........................................................................ 57
Appendix 4 : Diversity of Employee .......................................................................................... 58
Appendix 5 : Relationship with shareholders ......................................................................... 59

List of References .................................................................................. Error! Bookmark not defined.

Oxford Brookes University

Research and Analysis Project

Part 1
Project Objectives and
Research Approach

Oxford Brookes University

Research and Analysis Project

1.1 Reasons for choosing the project topic area and organization
The research and analysis project is based on topic 17, an assessment of the quality of the
corporate governance within an organization and the impact on an organizations key
stakeholder. The company that I have chosen for this project is Malaysian International
Shipping Corporation (MISC).
This particular topic has picked my interests as it allows me to apply the knowledge that I
have previously learnt from paper P1: Governance, Risks and Ethics in my Association of
Chartered Certified Accountant (ACCA) course to a practical organization. This is definitely
something different from my studies, which is more theoretical based in nature which
encouraged me to be more analytical and think more critically.
The second reason for choosing corporate governance is due to the Enron scandal that has
always been related to corporate governance. This scandal could have been avoided if
proper corporate governance were in place to prevent it. For instances, the cause of the
scandals were due to the use of accounting loopholes, special purpose entities and poor
financial reporting (Healy and Palepu, 2010). Besides, there are a lot of other cases as seen
in Lehman Brothers, Bear Stearns and Madoff that further justifies the importance of
corporate governance. On the other hand, there is also an emergence of human governance
which is said to be able to steer corporation with integrity from the inside out which is
different from the corporate governance (Accountants Today, 2009). This had led me to
choose this topic to further increase my understanding of corporate governance.
The company that I have chosen as the target is MISC Berhad (MISC) which is one of the
worlds leading international shipping and maritime conglomerates. The principal businesses
of MISC consist of ship owning, ship operating, other shipping related activities, owning and
operating of tank terminals and offshore floating facilities as well as marine repair, marine
conversion and engineering & construction works. MISC has grown from being purely a
shipping line in 1968 to become a fully integrated maritime, offshore floating solutions,
heavy engineering and logistics services provider. This was brought about when MISC
became a subsidiary of PETRONAS in 1998, a move that produced synergistic benefits
especially in the field of oil & gas (MISC Bhd Annual Report, 2012a).

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Research and Analysis Project

MISC was ranked among the top 100 in Malaysian Corporate Governance Index 2011
(MSWG, 2011). This clearly shows that MISC is one of the top in being compliant with
corporate governance best practices, quality of disclosure and corporate responsibility
effort. I am interested to find out the governance structure that has been put in place by the
board to earn the company this honour.
Lastly, there was an offer from PETRONAS to takeover MISC with a cash buyout of RM9.16
billion (Business Times , 2013a). This shows the attractiveness of MISC even in the eye of a
large corporation such as PETRONAS. PETRONAS is ranked as the 75th largest company in the
world in 2013 by FORTUNE (Money CNN, 2013). This has sparked my curiosity regarding
whether the governance structure of MISC has influenced on its attractiveness.

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1.1 Project objectives and research questions


The objectives of this research and analysis project are as follows:
a) To assess the quality of the corporate governance within MISC Bhd.
b) To assess the impact of MISC Bhds corporate governance on its key stakeholders.
In order to achieve the said objectives, the following research questions have been
formulated:
a) What is MISC Bhds extent of compliance with the Malaysian Code on Corporate
Governance (MCCG)?
b) Are MISC Bhds Corporate Governance practices comparable with its competitors
and companies known for good Corporate Governance practices?
c) Who are the key stakeholders of MISC Bhd?
d) What are the activities undertaken by MISC Bhd for its key stakeholders?

1.2 Overall research approach


Choice of organization
Consultation from seniors and lecturers has helped me in choosing this organization as they
advised me to look at Malaysian Corporate Governance Index 2011 to search for potential
companies that top in the CG list.
It was from there that MISC caught my attention as I have read some news from the local
newspaper and online portals regarding its takeover bid.
Therefore, I visited the companys website for availability of information. Since, great
amount of information can be found, this had led to me choosing MISC Bhd as the
organization for my project.

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Research and Analysis Project

Project objective and research questions


The project objectives were determined by focussing on the project title, an assessment of
the quality of the corporate governance within an organization and the impact on an
organizations key stakeholder to identify the theme for the research. Research question
on the other hand are the boundaries to achieve the desired objectives.
Information gathering and literature review
In undertaking this project, only secondary information was used. This is due to the
abundance of information available in the public domain for both the chosen topic as well
as the organization that render the use of primary information unnecessary.
To be able to conduct this research effectively, further reading such as books and articles
that relevant to corporate governance are done. Besides, a review on Malaysian Code of
Corporate Governance was also carried out. It helps in having more knowledge regarding
corporate governance as it enables me to critically evaluate and assess the corporate
governance practice of MISC bhd.
Analysis
This analysis will comprise of three main parts. Benchmarking is used quite extensively in
this project. By benchmarking MISC Bhds corporate governance practices against the
Malaysian Code on Corporate Governance and companies that are known for good
corporate governance practices, it will point out the strength and weaknesses of MISC Bhds
corporate governance practices and therefore, the quality of its corporate governance
practices.
Mendelows matrix was also used to identify the significance of each stakeholder group.
This is done by assessing each of the stakeholders level of interests in and power over MISC
bhd. Lastly, reviews on MISC Bhds Corporate and Social Responsibility(CSR) Report was also
done to gain further understanding on activities that have been carried out by MISC for its
stakeholders.

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Conclusions and recommendation


Conclusion is a summary of research findings obtained from the thorough analysis carried
out with the guidance from the research questions formulated above.
Recommendations on the other hand are suggested the solutions to further improve MISCs
corporate governance practices so that they are in line with the Malaysian Code on
Corporate Governance or comparator companies.

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Research and Analysis Project

Part 2
Information
Gathering, Accounting
and Business
Techniques

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Research and Analysis Project

2.1 Sources of information


As highlighted above in section 1.3, only secondary sources will be used and they are as
follows:
a) Malaysian Code on Corporate Governance 2012
This source is relevant as MISC Bhd is listed in Bursa Malaysia, and so is required to
comply with the framework of Malaysian Code on Corporate Governance 2012. By
benchmarking MISC Bhds CG practices with the Code would facilitate the
assessment of the formers quality.
b) MISC Bhds Annual Report
Statement of Internal Control and Corporate Governance can be found in the annual
report which provides details of the companys CG practices that allows the
benchmarking with the Code mentioned earlier. Also the availability of the financial
statement facilitated the calculation of financial ratios which are used to assess the
companys CG on shareholders.
CSR report can also be found as part of annual report. This is relevant as it will
provide information on the activities carried out by MISC Bhd for its stakeholders.
Besides, news on CSR related awards won by MISC Bhd can also be obtained.
c) Companys Website
The companys profile and also the structure of the organization can be found here
which helps in developing an understanding of the company. Similarly, annual
reports of competitor companies known for good CG practices are obtained from the
respective website as well. Besides, there is also a section on investor relation which
shows the information which investors would be interested in such as the financial
information, financial reports, analyst coverage, industry resources, share
information and news and announcements which aids the assessment of the
companys commitment to transparency.

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2.2 Methods used to collect information

a) library
I am fortunate to be studying in Sunway University College which comes with an
extensive facilities being provided such as the Tun Hussein Onn Library(THOL). THOL
stores over thousands of books of a variety of categories. THOL has been the place
for me to source for books used in this research. However, taking into consideration
that THOL housed such a great number of books, it is inevitable that locating the
books will be a problem. To overcome this, I would approach the librarian for help
and use the advance search system in place in the library. The search facility
identifies the book and provides reference which reduces much of the time required
in locating the books that I was searching for.
No doubt, searching for information from the library would be more time consuming
as the required book may be missing from the shelves or they have been borrowed
by others. To overcome this problem, electronic research would be used.
b) Electronic research
The Internet is a global computer network providing a variety of information and
communication facilities, consisting of interconnected networks using standardized
communication protocols (Oxford Dictionaries, 2013a).
Web browser, a software application used to locate, retrieve and also display
content on the World Wide Web, including Web pages, images, video and other files.
The two most popular browsers are Microsoft Internet Explorer and Firefox. Other
major browsers include Google Chrome, Apple Safari and Opera (Webopedia, 2013).
As mentioned above, there are a number of search engines available. I personally
used search engines such as Google and Yahoo as I find them more user-friendly and
enable me to access to a vast and diverse amount of information easily and quickly.
It enables me to obtain the past and latest news and updates of MISC Bhd.
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However, there is always downside to everything. The internet is no exception. My


laptop was exposed to virus attack as downloading of materials is being made. I was
fortunate to have installed antivirus software and also be selective in downloading
materials.
Sometimes, I find it difficult to filter out the required information as there are too
many related information that will be displayed. I had to use the advance search
function in the search engine to filter out the unnecessary information by being
more specific with keywords used.

2.3 Limitation of information gathering


There is no doubt that there are shortcomings with using secondary sources of information.
The problems are as follows:
a) The reliability of information published in the internet may not be trusted completely as
it may be influenced by the writers biasness and prejudice. It is not possible to obtain
assurance on this matter.
b) Besides, the information published may be outdated as they would have been written
sometime ago.
c) Having said above that the internet provides a great amount of information also means
that it will lead to information overload. Since I am not able to look into every webpage
some relevant information may be overlooked.

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Research and Analysis Project

2.4 Ethical issues that arose and their resolutions


Ethical issues are inevitably present in the course of the research especially during data
collection. Integrity is demonstrated by making reference to the original sources whenever
information is extracted and used in the report to avoid plagiarism which is defined as the
practice of taking someone elses work or ideas and passing them off as ones own (Oxford
Dictionaries, 2013b).
Another ethical issue that arose during the course of work is that it is important to be
competent and diligent so that the analysis carried out is accurate and conclusion reached is
valid. To ensure that this is the case, I have carried out literature review as mentioned above
that will provide me with the necessary knowledge to complete this project. At the same
time, information obtained were cross checked to other sources to ensure that it is
consistency and therefore, reliable before using them.
Another common ethical issue that arose was that of objectivity. I did not allow my
judgement to be clouded by the fame of the company even though MISC is a household
name in Malaysia and ranked among the top 100 companies in Malaysian CG Index.

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2.5 Accounting and business technique used and their limitation


a) Benchmarking
MCCG provides a guideline of principles and best practices on structures and processes that
companies may use as a reference n their implementation of corporate governance
practices
This is a good benchmark for MISC Bhd as it would show the level of compliance and
therefore, the quality of the MISC Bhds practices.
Comparison with other companies
In addition, MISC Bhds corporate governance practices are also benchmarked with those
companies that are known for good corporate governance practices such as Public bank to
identify rooms for improvements.
Limitations
The Malaysian Code is a principle based code. This would mean that compliance with the
Codes principle is not compulsory and any non compliance only requires explanations to be
given. This poses a problem as the reasonableness of the explanations given cannot be
ascertained easily. Also taking into account the differences in culture, ownership structure
and size of different companies, the said comparison between them may not being
meaningful.

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Research and Analysis Project

b) Mendelows Framework
Mendelows framework is used to help understand the influence of each stakeholder, over
the organisations objectives or strategy. A stakeholder is defined by Freeman (1984) as any
group or individual who can affect or be affected by the achievement of an organizations
objectives. The aim of the framework is to estimate which stakeholder has the most
influence by (power x interest = influence) over the organisations objectives (Campbell,
2008).
Power is the individuals ability to influence the objectives.
Interest is the individual willingness (how much they bother about the organisation) (Wiki
Answer 2013a).

However, it must be noted that it is not easy to determine the level of interests and power
of each stakeholder. Any form of measurement is arbitrary. Besides, the stakeholders in
each quadrant may move from one quadrant to another. Lastly, even though the
stakeholders reside within the same quadrant it does not mean that the treatments for
them are the same as they may have different needs.

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c) Financial Analysis
Ratio analysis was used in this part of research. Ratio analysis is one of the most important
techniques for financial analysis as it converts quantifiable figures into ratios which ease the
comparison between information of the other firms (Business dictionary, 2013a).
For this project, the ratios such as earnings per share ratio (EPS) and dividend payouts were
used to evaluate the impact of the companys corporate governance practices on the
shareholders. Comparisons were made with previous years results to assess establish the
trend on the shareholders returns.

Limitations
Despite the usefulness of ratio analysis, there are limitations present as well. For instance:

Financial accounting information is affected by estimates and assumptions.


Accounting standards allow different accounting policies, which impairs
comparability and hence ratio analysis is less useful in such situations.

Ratio analysis explains relationships between past information while users are more
concerned about current and future information.
(Accounting Explained, 2013)

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Part 3
Analysis of MISC
Berhads extent of
compliance with the
Malaysian Code on
Corporate Governance

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3.1 Analysis of MISCs extent of compliance with the Malaysian code on


corporate governance (MCCG) (The Code)
The information used in this analysis was obtained from the statement of corporate
governance and internal control found in MISC annual report, 2012. They are benchmarked
against the 8 principles of MCCG 2012 as follows.
3.1.1 Establish clear roles and responsibilities
The Board reserves material matters to itself for decisions, which include the overall Group
strategies and directions, acquisitions and investment/divestment policies, approval of
major capital expenditures, projects, plans and budgets and significant financial matters, as
well as major human resource policies (MISC Annual Report, 2012b). This is in line with
MCCG (2012)s principle 1.1 that requires the board should establish clear functions
reserved for the board and those delegated to management.
The Board monitors the overall performance of the Group (MISC Annual Report, 2012c).
This is in line with MCCG (2012)s principle 1.2 which require the board to assume
overseeing the conduct of the companys business. Besides, the Board acknowledges its
overall responsibility for continuous maintenance of a sound system of risk management
and internal control to safeguard shareholders investment and the Groups assets (MISC
Annual Report, 2012d) which is also in line with MCCG (2012)s principle 1.2.
The average age of directors in MISC is 58. Even though the annual report mentioned that
deliberations took place on the Succession Planning Plan and Policy of the Company but no
further information is provided on it. Succession planning is certainly an important aspect. It
is so important that it is said to be one of the major yardsticks of a Chief Executive Officers
success (United Arab Emirates, 2005). This is also in line with principle 1.2 of MCCG (2012)
which require board to ensure that candidate appointed to senior management position are
of sufficient calibre. To make matters worse, the average age of directors of 58 is close to
private sector retirement age of 60 years (MISC Annual Report, 2012e). However, a
nomination and remuneration committee exists which is responsible for annual review on
the required mix of skills and experience of the directors. This is further discussed under in
Principle 2 of MCCG (2012) strengthen composition.
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MISC has also put in place MISCs Code of Conduct and Business Ethics (CoBE). The CoBE is
applicable to all Directors, employees and third parties performing works or services for or
on behalf of the Company. It governs the desired standard of behaviour and ethical
conducts expected of each individual to whom the CoBE applies (MISC Annual Report,
2012f). Having the Code of Conduct and Business Ethics will ensure that MISC staffs will
maintain an ethical and moral minimum in their daily conduct. This is also in line with MCCG
(2012) which requires the board to formalise ethical standards through a code of conduct
and ensure its compliance.
However, the board did not formalise, periodical review and make public its board charter.
This is not in accordance with MCCG (2012) principle 1.7.

3.1.2 Strengthen composition


It is generally agreed that in order to be competitive and effective, the board should
comprise of members that are from diverse backgrounds so that they can provide a more
effective strategy plans for the company ultimately achieving the maximization of
shareholders wealth (MCCG, 2012).
According to Dutra (2012), having a diversified board ensures that board members are able
to fully understand and are able to actively engage in all aspects of an enterprises
operations. The board of directors in MISC are made up of members with diversified
professional backgrounds, experience, competences and knowledge in the areas of business
management, oil and gas industries, marine and engineering, transportation, chemical
engineering, naval architecture and finance which eventually lead to the proper steering of
MISCs future (MISC Annual Report, 2012g). This can be seen in the directors profile shown
in Appendix 1.
Besides, MISC should be given credit as they have two women in their Board out of the
seven in total (See appendix 1). This represents 28.5% of women in the board of MISC.
However, MISC could consider introducing more women into the board as research
suggested that a Board with gender diversity would result in better decisions and thus

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financial performance. Moreover, there has been a recent announcement that the Board of
Malaysian corporations should consist of at least 30% women (Tee and Lee,2011).
According to MCCG (2012)s Principle 2.1, the board should establish a nominating
committee which should comprise exclusively of non executive directors, a majority of
whom must be independent. MISC has complied with it having 3 non-executive directors in
the NRC board.
Credits should be given to MISC for having such a committee. The functions of the NRC
include overseeing the recruitment and removal of directors. This is done through the
annual review of boards required mix of skills and experience and other qualities. Besides,
the board also recommends the remuneration and compensation of the non-executive
directors, the president/CEO, the management committee members and the bonus
quantum for the group (MISC Annual Report, 2012h).
MCCG (2012) also states that the levels of remuneration should be sufficient to attract,
retain and motivate directors to run the company successfully. Therefore, it is crucial for a
company to have a remuneration committee in place to formulate remuneration levels with
formal and transparent procedures.

(Source: MISC Berhad Annual Report, 2012)

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According to Dravis (2010), when there is an absence of oversight, management will be


tempted to use corporate resources in its own interest. However, from the table above, it
can be seen that the bonus is separated from the basic salary which would allow the
shareholders to determine the weightage of the performance and non-performance related
pay. It also shows the commitment to transparency by MISC.
However, the bonus represents only 10.5% of total remuneration paid to the ED. Such low
weightage implies that the ED will continue to enjoy high basic salary when the companys
performance is poor and return to shareholders are poor which is a clear violation of
accountability to shareholders. It would be better if half of the directors remuneration is
linked to his or her performance as suggested by Mcintosh (2011) as this will provide
incentives for the directors to perform well and manage the company better as their
remuneration are contingent on the companys performance.
The total remuneration paid to non executive directors increased by 24.3% which is pretty
high. However, when it is compared to the increase in Profit after tax of 113.8% , the
increment could be justified.

(Source: MISC Berhad Annual Report, 2012)


As seen from the figures above, MISC has provided the disclosure of remuneration of each
non-executive director. As for the executive director, it can be found on the previous table.
MISC should be given credit for disclosing the remuneration of director separately when the
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existing rules allow disclosure in wage band format. This allows the shareholders to assess
the reasonableness of the remuneration paid to each and every director. This will give them
an assurance that the directors are not paying themselves excessively.
3.1.3 Reinforce independence
The general rule of good corporate governance practices requires the split of the roles of
chairman and CEO.
With reference to Cadbury Report (1992), the role of chairman and CEO should be split and
chairman independence is necessary. This is to ensure that a clear division of responsibilities
exists at top of the company, eliminating the possibility of individual possessing unfettered
powers in decision making. This is also in accordance with MCCG (2012)s principle 3.4.
MISC has clearly complied with the requirement, having Datuk Manharlal Ratilai as
chairman and Datuk Nasarudin Md Idris as the CEO (MISC Bhd annual report, 2012i).
Datuk Manharlal Ratilai is a non-independent non-executive director (MISC Annual Report
2012j). This may not be good as he is not an independent non-executive director. This may
give rise to the threat of impairment of objectivity when making judgement and therefore
his ability to protect the minority shareholder interest will be affected.
MCCG (2012) requires the majority of the board to comprise of independent directors
where a chairman of the board is not an independent director. Therefore, MISC met the
requirement as majority of its board is independent directors.
Paragraph 15.02 of the Bursa Malaysia Listing Requirements states that, independent nonexecutive directors should make up of at least one-third of the board membership (Bursa
Malaysia, 2013a). However, there is no similar requirement mentioned in MCCG 2012.
The board of MISC has seven Directors comprising one Non-independent Non-executive
Chairman, four independent non-executive directors, one non-independent non-executive
director and an Executive Director who is also the President/Chief executive officer
(President/CEO)(MISC Bhd annual report, 2012k).

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As seen above, the independent non-executive directors make up majority composition of


the board. MISC has clearly complied with the requirement of one-third as required by the
listing requirement. This would ultimately lead to decision by the executive directors that
are fair and in line with shareholders interest as they know that they are being monitored
by these independent non-executive directors.
As mentioned above, there are four (4) independent non-executive directors in MISCs
board. It must be taken note that three out of four of the independent non-executive
directors have been with the companies for nine (9) years or more (See: Appendix 1).
This is not in accordance with MCCG (2012)s principle 3.2 which states that the tenure of an
independent director should not exceed a cumulative term of nine years. However, the
board had considered his position and had sought the shareholders approval to retain him
as independent Non-Executive Director which is permitted by MCCG (2012).

3.1.4 Foster commitment


The directors of MISC have attended the Mandatory Accreditation Programme (MAP), in
compliance with the Main Market Listing Requirements (MMLR). The directors of MISC are
encouraged to attend continuous education programme, talks, seminars, workshops and
conferences to enhance their skills and knowledge in order to ensure they keep abreast with
the new development in the business environment of the industry. Relevant training
programmes are arranged by the Company Secretary for the directors. In addition, a
dedicated in-house training programme is organized for the Directors within the group on
an annual basis (MISC annual report, 2012l). This is certainly in line with MCCG (2012)s
Principle 4.2 which states that the board should ensure its members have access to
appropriate continuing education programmes.
Despite having a list of training programmes conducted in the annual report (See appendix
2), MISC did not disclose training attended by respective directors. This will not allow the
shareholders to know whether all the directors have attended the necessary training. MISC
should provide information on the attendance of each director on each training programme
conducted.
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Currently, there are two (2) non-executive directors that are holding two memberships in
the sub-board committees (MISC Bhd Annual report, 2012m). This raises a doubt on the
ability of the non-executive directors to spend adequate time on those committees that
they represent and also such arrangement could possibly lead to the non-executive
directors having unfettered power in making recommendations. This is in line with MCCG
(2012)s principle 4.1 which requires directors to devote sufficient time to carry out their
responsibilities
Name of NED

Audit Committee

Nomination and
Remuneration Committee

Dato Halipah binti Esa

Dato Kalsom binti Abd.

Rahman
Table 1 : Membership in Sub-board Committee (See appendix 3)

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3.1.5 Uphold integrity in financial reporting


The board acknowledges its responsibilities to present clear, balanced and understandable
financial statements to shareholders that clearly reflect the Groups financial position,
performance and future prospects that are reasonable and appropriate. This is done
through the annual financial statements and quarterly announcements of results to the
shareholders as well as the Chairmans statement and President/CEOs report on the
business segment review in the annual report (MISC Annual Report, 2012n).
The Board is assisted by the Board Audit Committee (BAC) to oversee the Groups financial
reporting processes and the quality of its financial reporting prior to the approval by the
Board of Directors focussing particularly on the changes in or implementation of major
accounting policy, significant and unusual events and compliance with accounting standards
and other legal requirements (MISC Berhad Annual report, 2012o). For audit committee to
discharge their responsibilities, audit committee should have members with appropriate
skills to oversee internal controls and understand the company (Gomes, 2009) The fact that
MISCs annual report for 2012 was not qualified is a testimony of the companys
commitment to fair financial reporting.
The annual reporting year end for MISC is on the 31st December which in this case is on the
31st December 2012. The date of issuance of annual report for year ended 31st December
2012 is on the 28th May 2013. The company had therefore taken 148 days after the year end
to make disclosure to the shareholders (Bursa Malaysia, 2013b). The time taken by MISC
paled when compared to 52days taken by Public Bank Berhads (31st December 2012 21st
February 2013) (Bursa Malaysia, 2013c) was about one third of the time taken by MISC.
Investors make investment decisions based on financial reporting. Thus, investors want
more transparent information about the companys financial data (Gass, D, 2006).
Therefore, MISC should seek to improve on this as this might raise doubt about their
commitment to transparency to remove information asymmetry between shareholders and
management.

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The Board also ensures that there are formal and transparent arrangements for the
maintenance of an objective and professional relationship with the External Auditors (MISC
Annual Report, 2012p). This is in line with the MCCG (2012)s principle 5.2 which states that
the Audit Committee should have policies and procedures to assess the suitability and
independence of external auditors.
The auditor responsible for expressing opinion on the financial statement of MISC is Ernst &
Young. The firm has been the auditor of MISC for more than 5 years. However, there have
been rotations of engagement partner during the period under review with engagement
partners tenure not exceeding 5 years. As such, the audit firm is not likely to suffer from the
threat of independence due to familiarisation with the client.
Ernst & Young provides both audit and non-audit services to MISC. The total fees paid to the
audit firm for the financial year 2012 amounts to RM3,149,000. Out of which the non-audit
service fee is RM322,000 which accounts for 10.2% of the total fees (MISC Berhad Annual
report, 2012q). The relatively low weightage of non-audit fee is not seen as a threat to the
auditors objectivity as the risk of fee dependency on the client should not arise.

3.1.6 Recognise and manage risks


The Board acknowledges its overall responsibility for continuous maintenance of a sound
system of risk management and internal control to safeguard shareholders investment and
the Groups assets (MISC Berhad Annual report, 2012r). This is in line with MCCG (2012)s
principle 6.1 which states that the board should establish a sound framework to manage
risks.
In term of risk management, MISC has in place an Enterprise Risk Management (ERM)
framework to identify, assess, report and monitor the risks face by the Group so that
appropriate measures can be taken to mitigate them. The said framework focuses on
striving a balance between risk and reward in making business decisions to protect key

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stakeholders interests and to comply with legal and statutory requirements (MISC Berhad
Annual report, 2012s).
MISC group Internal Audit (GIA), functionally reports to the BAC, performs independent
planned approved audits and initiatives within the Group to evaluate and assess the
effectiveness of risk management, internal control and governance processes. GIA also
conducts additional assurance assignments, control improvement engagements and special
reviews arising from potential irregularities in any areas upon request by the Management,
Management Audit Committee (MAC) or BAC. The BAC reviews, deliberates and endorses
the annual and long term audit plans and strategies including scope of work and resources.
Results of the audit engagements are presented and deliberated during quarterly BAC
meetings (MISC bhd Annual report, 2012t). This is in line with the MCCG (2012)s principle
6.2, which requires the board to establish an internal audit function which reports directly
to the Audit Committee.

3.1.7 Ensure timely and high quality disclosure


MISC has its own website that provides recent and upcoming activities of the company. This
will provide shareholders with timely information of the companys performance and its
latest news such as fleet acquisition or fleet sale. Therefore, shareholders will be able to
make a better and more thought out decisions on their investment decisions.
This is in line with the MCCG (2012), principle 7.2 which encourage the company to leverage
on information technology for effective dissemination of information.
Information provided on the webpage of MISC is compared with Public Bank which is well
known for its good corporate governance practices. MISCs disclosure is comparable with
the latter with one distinguishable difference which is that Public Bank publishes its credit
rating on their investor relation webpage while MISC do not. Nevertheless, MISC did have

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interactive chart of its share price as well as investment calculator which should be given
credit as Public Bank does not.

3.1.8 Strengthen relationship between company and shareholders


In line with MCCG (2012) principle 8.3 which requires the board to promote effective
communication and proactive engagements with shareholders, the board should maintain a
good relationship with shareholders as the former are the actual owners of the company. In
order to maintain such a relationship, the management will have to take on the
responsibility to communicate the companys performance and situation to make sure that
there is a mutual understanding between them.
The Board values its dialogue with both institutional shareholders and private investors and
recognize the importance of providing timely and equal dissemination of relevant
information to them (MISC Berhad Annual report, 2012u).
Several mediums as shown below are used to provide and communicate information to
shareholders are shown below:

Annual Report
An annual report is one of the most common and basic way in which a company may
communicate with their shareholders and other stakeholders. Its objective is to
disclose to shareholders information that are relevant in a transparent and
understandable presentation
MISC could be said to have demonstrated their commitment in maintaining a good
relationship with their shareholders by preparing a detailed annual report and
disclosing voluntary information such as the companys involvement in workplace,
market place, environment and community which help shareholders understand the
companys commitment to sustainability.

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AGM
With reference to the Code, companies should communicate with its private
investors through AGM and encourage their participation. MISCs AGM notice period
given to its shareholders was 22 days (28th May 2012 19th June 2012) which is one
day in addition to the mandatory 21-day requirement (Bursa Malaysia, 2013d).
Shareholders are given the opportunity to interact and receive updates on the
operations, financials, business strategies and future prospects of MISC from the
Board of Directors at the Annual General Meeting. Representatives and heads of
each department are also present to provide further clarity on the operations and
corporate developments of MISC. (MISC Berhad Annual report, 2012v).
The AGM is held at Ballroom 1&2, Level 2, Intercontinental Kuala Lumpur on
Wednesday, 19June 2013 at 11.00am (Bursa Malaysia, 2013e). The location is
accessible as it is the city where most people live in. However, the date and time is
not conducive in encouraging shareholders to attend as most people will be working
on a Wednesday as it is not a public holiday and the time is at 11.00am where there
is no break. MISC should pick a more accessible date to encourage more
shareholders to attend the AGM.

Other initiatives
Quarterly briefing sessions between the Companys senior management and
analysts/investors as seen in appendix 5 was also carried out by MISC to
communicate with its shareholders. This is definitely a good practice as up-to-date
information is being provided to the shareholders.

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3.2 Identification of MISCs key stakeholders


A stakeholder is defined as person, group or organization that has interest or concern in an
organization. Stakeholders can affect or be affected by the organization's actions, objectives
and policies. Some examples of key stakeholders are creditors, directors, employees,
government (and its agencies), owners (shareholders), suppliers, unions, and the
community from which the business draws its resources (Business Dictionary, 2013b).
To identify the stakeholders of MISC, Mendelows matrix was used. With guidance from the
Mendelows matrix, I have identified the following key stakeholders of MISC namely the
shareholders, employees and community. The fact that MISC did not focus solely on
shareholders shows that the company is adopting a broad view of corporate governance
(Allen, F, 2005).

Employees

Shareholders
Customers

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The presence of institutional investors in MISC such as the CIMB Group, CITI Group,
AmanahRaya Trustees Berhad and Lembaga Tabung Haji, with combined shareholding
exceeding 80% (MISC Berhad Annual report, 2012w) naturally makes this group powerful
which allows them to even remove the current board of directors if they are not found to be
effective. They would certainly have high interests in the profitability of MISC which in turn
would ensure high dividend payout for them as long term investors. As for short term
investors, they would be more concern with the share price.
Community would certainly be interested in the services MISC is providing as without
proper conduct of business by MISC, the environment specifically the sea would be polluted
and would certainly affect the well-being of the community. The power of each individual is
certainly very low. However, a community at large is of great influence and with the
existence of Non-Governmental organizations (NGOs) that will champion their rights and
interest, the power of community is definitely high. Moreover, in recent times, government
of each country has taken this matter seriously and imposes fines on companies that pollute
the environment. This can see be seen from a recent incident where United States fines two
European shipping firms, Columbia Ship management GmbH of Germany and Columbia Ship
management Ltd of Cyprus for pollution in New Jersey (Jones, D, 2013).
Employees can be said to have a direct interest in the company as the companys
performance and future affects their employment. For instance, if the company is facing a
liquidity problem, company may not be able to pay their salaries and may even make them
redundant. However, without a union, their power level is much lower compared to the
company management. Therefore, employee would have a high interest but a low power in
the company.

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3.3 Analysis of Activities Undertaken by MISC for its key stakeholders


Shareholders
Companies are slowly realising that Corporate Governance plays an important role in
safeguarding shareholders interest. According to Wallace and Zinkin (2006), good
Corporate Governance contributes to good results. The analysis of impact on shareholders
will be based on:

Impact on shareholders
Investor Return

Profitability

Profitability
Table 3: MISCs Financial Performance

Profit Before Taxation


EPS

2012

2011

2010

1599.3

845.1

2,466.9

17.3

(40.1)

48.8

Source: MISCs Annual Report

The loss reported in 2011 was due the sluggish performance in shipping industry. It was
projected to have a rather difficult year in 2011 as full year forecasts for oil demand are
revised downwards and more tankers are delivered in an already crowded market, driving
some companies to place vessels in lay-up (PWC, 2011).
Despite the negative outlook, the board of MISC Bhd manage to increase in profit in
continued and discontinued operations. It is largely due to the major decisions made by the

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management of MISC to divest and cease operations. The effective management has also
resulted in a significant impact on EPS. The EPS of MISC has rose to 17.3 cents in the year
ended 2012 compared to a 40.1cents loss per share in the year ended 2011. Thus, it can be
said that the board of MISC is committed to safeguard the shareholders interest and the
returns to them.
Investor Return
The primary objective of a company is to maximise shareholders wealth. This can be
achieved through capital gain in share price as well as dividend payments. The objective of
wealth maximisation states that management should seek to maximise the present value of
future expected returns to shareholders (Charles Moyer, 2008).
MISC did not make any dividend payments in the year 2011 and 2012. This is due to the
consideration of immediate funding requirement to adequately support its capital and
operational expenditures. However, this poor performance may not be favourable to the
long term investors who depend on the dividend payout to meet their financial
commitment.
As stated above, shareholders wealth maximisation is also closely related to the companys
share price. As the stock price rises, the value of the firm increases and the net worth of the
shareholder increase as said by Peavler.R (2013).

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Source: Yahoo Finance


The share price of MISC is consistently below that of KLSE. The poor performance of share
price was more on an industry issue due to loss of confidence is this sector (Gcaptain, 2011).
The trend that the share price is consistently below that of KLSE was not influenced by
MISCs corporate governance practices as MISC is one of the top 100 ranking company in
Malaysian Corporate Governance Index 2011 (MSWG, 2011). This shows that many factors
other than corporate governance affect the share price.

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Employees

Diversity and
Equality

Training and
Development

Benefits and
Rights

Safe Working
Environment

Employees generally have high interest in the companys affairs as their employment
continuity depends on the company. However, they only possess low power in the case of
MISC as there is no labour union. Therefore, they should be kept informed.
According to Gregory (2011), employees satisfaction is vital to the success of a company.
MISC recognized the importance of its workforce and even regards them as impetus for the
Groups growth. (MISC Annual Report, 2012x).
Diversity and Equality
100%
80%

431

369

60%

Female

40%
20%

647

530

2011

2012

Male

0%

(Source: MISC Annual Report, 2012)(See appendix 4)

From the chart above, it shows that 41% of the total employees in the year 2012 are female
which had increased slightly from the previous year of 40%. This shows that MISC promotes
work equality and hires based on skill sets and the ability to display optimum capability and
overall performance (MISC Annual Report, 2012y).

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Training and Development


a) Lifelong learning
MISC recognises that providing learning and development opportunities are essential for.
During the financial year 2012, a provision of approximately RM 5.44million has been
allocated to support learning and development. Around 60% of MISCs employees benefited
from the training programmes conducted throughout the year. A total of 2,486 days of
training were conducted in FY2012. This is equivalent to an average of 22 training hours or
2.7 days of training per employee.

Leadership Development

This leadership development is an ongoing initiative for all employees of MISC. Employee
leadership competencies are assessed and if there are existing gaps, specific leadership
programmes are implemented to close these gaps. On top of the existing leadership
programmes conducted, MISC have provided customised leadership programmes
throughout the year, such as the People Development Workshops for General Managers
and the Impact & Influence Programmes for Managers. For Executive level employees,
programmes such as Business Awareness, Spirit of Champions, Emotional Intelligence and
Upholding Shared Values have been introduced during this financial year.
(MISC bhd Annual Report, 2012z)

Benefits and Rights


The Group also continuously recognises and rewards long service employees via its Annual
Long Service Awards programme. For the financial year 2012, a total of 235 employees were
honoured. The Group also provides monetary rewards to children of employees who have
done well in numerous public examinations, such as the UPSR, PMR, SPM and STPM. For the
financial year 2012, a total of 65 young bright students (UPSR 26 recipients, PMR 24
recipients and SPM 15 recipients) were awarded (MISC bhd Annual Report, 2012aa).

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Safe Working Environment


MISC showed efforts to inculcate a work culture that emphasises health and safety by
organizing and implementing several health and safety programmes in the period under
review.
a) Health and Safety Initiatives for the year Implementation of Automated External
Defibrillators (AED) within MISC
In Malaysia, the awareness towards the importance of AED in assisting during the
occurrence of heart attack or cardiac arrest in the office environment is on the rise. There
are few workplaces and public area whereby AED is provided. As a responsible organisation,
MISC has taken steps to provide AED machines at its office in Menara Dayabumi. Following
an assessment by MISCs Corporate HSE unit, a total of 19 units of AED have been purchased
and is made available at all floors in Menara Dayabumi. An implementation programme for
AED was also drawn up, focusing on educating staff and specialised training for Floor
Wardens throughout 2013.
b) Capability Development of Emergency Response team
As part of its effort to ensure the safety of staff working in MISC, MISC continues to develop
the capability of its Emergency Response Team (ERT). In the year under review, Corporate
HSE organised the ERT Teambuilding Program 2012 to enhance the capability of the MISC
Floor Wardens.
(MISC bhd Annual Report, 2012bb)
When compared to Maxis, one of the top 10 best employer in Malaysia in 2012 (Top 10 of
Malaysia,2012), one of the distinguishable gap is that Maxis provides comprehensive
guidelines for ensuring the health, safety and wellbeing of their employees under their
Occupational Safety and Health Management System (Maxis, 2012). MISC could consider
implementing it.

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Community
Recognizing the nature of its business which is prone to polluting the environment as
discussed in section 3.2 earlier, MISC has always been committed to conserve and preserve
the environment. MISC sees sustainability and being environmentally conscious as being
important and have taken the initiative to reduce its carbon footprint looking in order to
create a greener MISC.
One of the initiate involves using the Energy Efficiency Operational Indicator (EEOI) to
monitor the efficiency of their fleet and benchmarking them to the worlds best practices.
EEOI and EEDI are mechanisms developed by the International Maritime Organisation (IMO)
and the Marine Environment Protection Committee (MEPC) in an effort to reduce
greenhouse gas (GHG) emissions within the international shipping industry. The EEOI is for
ship owners and ship operators to evaluate the performance of their fleet with regards to
CO2 emissions, and enable the effects of emission reduction measures to be monitored.
EEOI enables the ratio recording of mass CO2 generated per unit of transport work.
Results proved that EEOIs of MISC ships in operation are generally lower when compared
against similar studies by IMO and other worldwide fleets. A lower EEOI value indicates a
more efficient ship, where the average CO2 emissions per tonne of cargo carried per
nautical mile is lower.
Besides, MISC is also dedicated to achieving high safety and environmental standard. Four
of MISC LNG tankers and two of MISC Chemical tankers have been accredited with Green
Awards, while its Petroleum fleet has been accredited since 2005. This Green Awards are
accredited by the Green Award Foundation, a neutral and independent foundation
established in 1994 by the Rotterdam Municipal Port Management and the Dutch Ministry
of Transport. The certificate is awarded to vessels that implement high safety and
environmental standards in shipping. With the certification, the vessels are entitled to
various benefits from ports, government institutions as well as private companies.

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During the Financial Year 2012, three Green Technology (GT) initiatives were set in motion
to help improve onboard environmental and energy efficiencies. The effects of the three GT
initiatives during the year under review were.
1. The incorporation of Propeller Boss Cap Fins (PBCF)
The PBCF has been installed on five of MISCs ships. Accumulative returns up till March
2013: Fuel saving of 4,742.16 MT which is equivalent to USD 2,998,832.16 (+4.38%) against
invested cost of USD 897,701.93.
2. The incorporation of low Friction Anti-fouling Coating (lFC)
LFC has been applied to four of our ships. Accumulative returns up till Mar 2013: Fuel saving
8,992.25 MT being equivalent to USD 5,962,370 (+4.88%) against invested cost of USD
821,576.
3. Trim Optimisation Programme
The installation of Trim Optimisation Programme has been done on two of MISCs ships.
However, the progress and performance are still under monitoring.
The success of three of the five initiatives is indicative of MISCs ongoing commitment to
environmental care and energy saving initiatives.
(MISC Bhd Annual Report, 2012cc)
When compared to MISCs competitor, Bumi Armada, MISCs initiatives should be given
credit. However, there is one initiative taken by Bumi Armada that is applausable which
MISC did not implement is that Bumi Armada has collaborated with Forest Research
Institute of Malaysia (FRIM) that resulted in the launch of Malaysias first carbon offset
conservation programme. This is said to be able to store 3938.6 tonnes of CO2 annually
(Bumi Armada, Annual Report 2012). MISC should certainly consider taking on this initiative.

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3.4 Conclusion and Recommendations


The extent of MISCs compliance with the MCCG
Through the research undertaken, it is clear that MISC has complied with most of the
requirements under the MCCG 2012. MISC has not only complied with the MCCG 2012
principle 5 that the Audit Committee should ensure financial statements comply with
applicable financial reporting standards, all five (5) members of the audit committee are
NEDs. This further enhances the credibility of the work done by the audit committee of
MISC. However, a number of shortfalls have been identified as follows.
The average age of the board is 58 which may indicate possible weakness in MISCs
succession planning. This may lead to disruption in boards decision making. MISC should
put in place plans to prepare successor for the directors. However, the long tenure could be
due to the decisions made by shareholders due to confidence in their past performance.
The bonus of board members represents a small percentage of total remuneration. MISC
should increase the weightage of bonus of the directors. However, this may not be in the
interest of the directors as there are external factors that affect the performance of the
company and thus, their remuneration.
It would be better for MISC to ensure that no board members hold membership in the other
two sub board committee unless it can be shown that they are able to contribute effectively
to the sound decision. However, MISC could face difficulty in finding suitable directors who
have sufficient knowledge, experience and time to sit on each board.
Lastly, the number of days taken by MISC to issue the annual report did not ensure that
shareholders are kept informed of the companys development and performance at the
soonest possible time. MISC could improve on this aspect by emulating the time taken by
Public Bank to issue the said report.

The impact of CG on the key stakeholders

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Having done the research on the activities undertaken by MISC for its stakeholders, it is
clear that MISC has taken care of its key stakeholders, namely shareholders, customers as
well as the community at large.
For the shareholders, MISC did not declare any dividend as the company was having a rough
time. Despite that, MISC had managed to turn around the company by reporting profit of
Rm992.4 million (USD324.6 million) compared to loss of Rm1489 (USD487million) (4 traders,
2012). This clearly reflects the effort of the management in trying to turn around the
company in order to increase shareholder value.
As for employees, fairness and equality is being practiced. Besides, employees are able to
develop themselves through the trainings provided. Employees also enjoy benefits provided
by MISC as well as a working environment that is safe.
The community enjoys the clean environment as MISC does not neglect the environment
and play their role in helping to conserve and protect the environment. This can be seen
from the initiatives taken by MISC to reduce its environmental footprint. This commitment
can also be seen from the Green Certificate Award won by MISC.

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Skills and learning


statement

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Skills and learning statement


1.0 Lessons learnt from the meetings with project mentor
There were a total of three meetings held with my project mentor during the course of
undertaking this research and analysis project.

First meeting

My first meeting with my mentor, Mr Goh was definitely an eye opener. I basically had a
very limited and general view on what should be done or included in a project. This was
partly due to the exam focussed ACCA examination style and partly because of my
laziness as the meeting was scheduled shortly after the ACCA exam in June. I did not
know which organization to choose as there are plenty of companies in Malaysia. I
merely did some reading on the OBU information pack collected from the college.
As a result, I was not able to answer most of the question posed by my mentor regarding
my project objectives and research question as well as the type of information to be
used. He was kind enough to give me a brief rundown of the projects requirement. The
information gotten from my mentor was definitely of great help. However, I felt that it
could have been more beneficial if I would have been more prepared and asks some
relevant question. This meeting was cut short as I could not give my viewpoint on the
project that I am about to do.
This meeting clearly taught me to always be prepared and to plan ahead. It is good to be
positive and hope for the best, but I should always prepare for the worst as well. There
is also a quote by Benjamin Franklin that goes by if you fail to plan, you are planning to
fail.

Second meeting

By the second meeting, I have already completed part 3 of the project. This meeting was
much more fruitful as I have already done a lot of reading and research on the project. I
basically gave brief overview of what I have done to my mentor and printed out a draft
copy of my report for his comments. There were of course problems that I have
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encountered throughout the research period and my mentor clarified most of the issues
faced and pointed out certain issues that I have overlooked.
I have learnt that font type, size as well as the creation of subtitles matter. It makes the
presentation of the project looked more professional in a way. Besides, there is also a
need to include graphs and tables when it is appropriate, which will eventually make the
project look more interesting.
My mentor also stressed on putting references whenever I include information from
other sources. I learnt that the lack of referencing is a serious offence in academic
research can make the project being accused of plagiarising. This is where I learn a
referencing method called Harvard Referencing System which provided me with a
guideline on referencing.

Third meeting

The third meeting is my presentation day. I was quite nervous as I hardly exposed to
such activity. Thankfully, there were power point and public speaking class arranged by
my college. It helped me in managing my fear of stage fright and I did learn some tips
from the classes. Besides, I took the initiative to go to the venue to familiarize myself
with the environment and equipment there.
There was a question and answer session at the end of my presentation where
questions were thrown from panel and answers would have to be given spontaneously.
This has helped in my impromptu skills which would be of great help in my future
dealing with clients.
Despite the preparation done in advance, I got nervous during the presentation. This
was pointed out by my mentor. It could clearly be seen that I was nervous and I was
losing my eye contact with the audience. I was advised to speak more clearly and slower
so that the audience could understand.

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From this meeting, I learnt that having enough exposure is the key to successful
presentation and to overcome nervousness, I have thus enrolled myself in the colleges
Toastmaster Club to create ample chance of speaking in public.

2.0 The extent in which the research objectives have been achieved
The achievement of research objectives is highly dependent on the extent in which the
research questions have been answered. There are four research questions in my project
which had helped in providing the necessary direction for the project. However, not all of
the research questions have been well answered.
Research Questions
e) What is MISC Bhds extent of compliance with the Malaysian Code on Corporate
Governance (MCCG)?
f) Are MISC Bhds corporate governance practices comparable with its competitors and
companies known for good corporate governance practices?
g) Who are the key stakeholders of MISC Bhd?
h) What are the activities undertaken by MISC Bhd for its key stakeholders?
The first research question on the extent of compliance with Malaysian Code of Corporate
Governance was well answered because MISC being public listed company is required by
the listing rules to publish statement of corporate governance and internal control that
detailed its corporate governance practices. Besides, the existence of MCCG allows a
relatively easy comparison with that of MISC.
The second research question could be answered well due to the availability of competitors
in the same industry that is listed in the Kuala Lumpur Stock Exchange. This has helped
greatly as comparison can be done with ease as information regarding corporate
governance can be compared with MISCs CG practices with ease. Besides, comparison was
also made with companies known for good corporate governance. However, due to the
difference in size, industry and ownership structure that may exist, the comparison made is
less meaningful.
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The identification of MISC stakeholder was not very well answered. Even with the aid of
Mendelows Matrix, the identification of stakeholder was not an easy task. This is due to the
assessment of level of interests and power possessed by the individual stakeholder group
requires judgement. This would mean that the assessment of the levels of interest and
power will vary as different viewpoints exist between people and therefore, there is
likelihood of inaccuracy.
The last research question is much more related to corporate social responsibility as it
relates to the activities undertaken by MISC on its key stakeholders. Even though the
publication of CSR report is mandatory in Malaysia there is no framework over how it should
be reported and this had affected the reliability of the report as it is not well governed. The
biggest concern here is MISC Bhd only report the positive footprints that reflects well on its
reputation and avoid disclosing information that are negative. This is a form of self-praising.

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3. Demonstration of interpersonal and communication skills


Interpersonal skills are the life skills we use every day to communicate and interact with
other people, both individually and in groups. People who have worked on developing
strong interpersonal skills are usually more successful in both their professional and
personal lives (Skill You Need, 2013a). Communication on the other hand is simply the act of
transferring information from one place to another, whether this be vocally (using voice)
written (using printed or digital media such as books, magazines, websites or emails) visually
(using logos, maps, charts or graphs) or non-verbally (using body language, gestures and the
tone and pitch of voice)(Skill You Need, 2013b).

(Source : Sydney, 2013)


Interpersonal skill is greatly demonstrated when interacting with my mentor. Being
respectful has to be the key in communicating with my mentor. I have always been punctual
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for meeting as this shows the respect for my mentors time. Besides, I made sure that my
phone is in silence mode to avoid interruptions, in order to pay full attention during the
meeting. Doing all that helped me in concentrating and enabled me to identify valuable tips
from my mentor. This is further enhanced as I will sleep early a day before the meeting to
ensure that I am not tired. Besides, I made sure that calls made to my mentor is within the
office hour in order to refrain myself from intruding his private life.

(Source: Sydney, 2013)


The diagram above shows how communication works. There are two types of
communication which is verbal and non verbal. It is of utmost importance for us to convey
information to others in an appropriate way to ensure that it is not misinterpreted.
Communication is not just about conveying message. It is about listening and asking the
right questions as well.

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Various means of communication exists. The most common example are face-to-face, text
messages, phone calls, and emails. I personally prefer face-to-face communication as it
allows me to observe body movement which often conveys a lot of message as well.
However, this may not be the best way as it is only possible if both of us are available.
Questioning skills mentioned above refers to the ability to formulate questions which will
result in the right answer being obtained. Two types of questions exist, open ended and
closed ended. Open ended questions are unstructured question in which (unlike in a
multiple choice question) possible answers are not suggested, and the respondent answers
it in his or her own words (Business Dictionary, 2013a).
Close ended questions on the other hand provides a set of answers from which
the respondent must choose (Business Dictionary, 2013b). This has been the style of most of
my questions. This resulted n very limited and confined response from my mentor. Realizing
this, I have changed my way of questioning to a more open ended style. This has helped in
getting much more information that has helped in completing this project.

Open Ended Question

Close Ended Question

Me:

Me:

Mentor:

Mentor:

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4. The benefits of undertaking the RAP in my accountancy studies and future employment
role
Accounting studies
Being an ACCA student, there is lack of exposure on such projects. This experience has
greatly compensated for such lack of exposure. Besides, it has also made me realize the
practicality of my studies. This project has further enhanced my knowledge on the
importance of corporate governance and limitation involved in using the Mendelow
stakeholder matrix.
Understanding this RAP has also taught me to be more analytical. Much analytical skill have
been utilised in analysing the corporate governance of MISC and comparing it with its
competitor. This skill will definitely be of use in my professional level papers which require
extensive analytical skills. The large amount of information on the internet has also enabled
me to be much more selective and only extract information which is relevant. This is also
another skill that will be crucial for my professional papers examination.
Lastly, this project has also helped me in keeping up to date on the current issues faced in
the real world. This has further enhanced my knowledge which may help me in answering
the current issue questions that frequently appear in my professional level papers.
Future Employment Role
From the research done throughout the project, my research skills have been greatly
enhanced. This is of great importance as my future employment role may require me to
carry out research. I believe that it will not be of a problem as I have learnt to do research
from this project. Most importantly, I have cultivated the habit of referencing as and when
information are extracted and use in the report which will enhance the professionalism of
any work.
Besides, this project required me to sharpen my IT skills. This is one of the skills that I greatly
lack and have no confidence of. This project has pushed me to learn more about the
function of Microsoft power point which is tough but good at the same time as I know that

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this will help tremendously in my future employment which may require me to present or
generate graphs and tables.
Presentation is one of my weakest areas and this project has provided me with an
opportunity to practice my presentation skills. Besides, I have gained much valuable tips
from my mentor on presentation. This will be invaluable as presentation skills are one of the
most important skills one can possess.
Lastly, the amount of time required to complete this RAP is substantial and has taught me to
manage my time and stress more effectively. These types of pressure will highly likely be
more prevalent in the working world and this is good experience to prepare me for the
working world.
Overall, this project has taught me on the importance of corporate governance. Aside from
that, I have gained much interpersonal skills which could not have been obtained from
elsewhere. The knowledge and experience gained throughout the whole project are
invaluable and will certainly be a stepping stone for my future endeavour.

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Appendices-Research and Analysis Report


Appendix 1: Profile of the Board of Directors
(MISC Bhd Annual Report, 2012)

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Appendix 2: Directors Training


(MISC Bhd Annual Report, 2012)

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Appendix 3: Sub-board committee members


(MISC Bhd Annual Report, 2012)

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Appendix 4: Diversity of Employees


(MISC Bhd Annual Report, 2012)

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Appendix 5: Relationship with shareholders (Other initiatives)


(MISC Bhd Website, 2013)

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