Governance and

Responsibility: Governance:
Reporting & Disclosure

Institutional investors
Institutional investors manage funds invested by
inviduals
4 types of institutional investors:
Pension funds
Insurance and takaful companies
Unit and investment trusts
Banks

Importance of institutional
investors
Increasing dominance of institutional investors in
monitoring management which potentially result to
positive contribution to governance by
concentrating power in a few hands
Fund managers and other professionals working for
the institutions have the skills and expertise to
contribute towards the direction and management
of a company

Potential problems of institutional

investors
Short-termism of fund managers
Lack of skills of trustees
Lack of influence of individual shareholders
Creates complex ownership and control issues

Insitutional shareholders
intervention
Strategy: in terms of products sold, market serviced,
expansion pursued or other aspects strategic positioning
Operational performance: divisions persistently
underperformed
Remuneration policy: relate to failure to curtail extreme
rewards
Internal control: relate to failure in quality and budgetary
control
Social responsibility: relate to failure to protect environment
Succession planning: relate to failure to balance board
composition
Failure to comply with relevant codes

General meetings
Annual General Meeting (AGM)

Extraordinary General Meeting

(EGM)

Must be held once every calendar

year
Legally required
Separate resolutions for each issue
Not less than 21 days notice required
First must be held no more than 18
months from the date of incorporation
and thereafter no more than 15
months between meetings
All shareholders must be notified and
entitled to attend
Annual accounts and appointment of
auditors (if appropriate) approved at
this meeting

Not set timetable held on an as

required basis
No legal obligation to have any
Separate resolutions for each issue
Not less than 14 days notice required
All shareholders must be notified and
entitled to attend
Agenda dictated by need for meeting

Proxy voting
Proxy voting system is implemented to ensure
that shareholders who are unable to attend general
meetings where resolutions will be proposed and voted
on
can still make their opinions heard

Corporate governance disclosure

Shareholders are the legal owners of a company
and thus entitles them to sufficient information for
decision making
The AGM is the only opportunity for the directors to
communicate with the shareholder
The annual reports and accounts are the only
legally-required disclosure to shareholders and the
only information received
General principles of disclosure relate to the need to
create and maintain communication with
shareholders and other stakeholders

General principles of corporate

governance disclosure
Directors understand interests and concerns of
shareholders
Shareholders understand what the company is
trying to achieve
Increased shareholders interest encouraging checks
on managers of the company
Potential benefits from closer interest by major
shareholders in company affairs

Best practice CG disclosure

requirements
Annual general meetings (AGM)
Audit Committee
Remuneration Committee
Nomination Committee
Directors

Mandatory vs. voluntary

disclosures

Examples of voluntary disclosures

Chairman and CEO statements regarding company position
Business review (formerly OFR): non-financial language
Governance: a section devoted to compliance with the Code
Any other business: shareholder information including
notification of AGM, dividend history, and shareholders
taxation position

Disclosure beyond the annual

report
Press releases
Management forecasts
Analysts presentations
The AGM
Information on the corporate websites such as
stand alone social and environment reporting

Motivations behind voluntary

disclosure
Strong disclosure regime can help to attract capital and
maintain confidence in company
May be to promote company in a positive light and act
as a marketing tool
Helps improve public understanding of the structure,
activities, corporate policies and performance
Shareholders and potential shareholders require access
to regular, reliable, comparable information for decision
making
Weak disclosure and non-transparent practices can
contribute to unethical behavior and loss of market
integrity