This document discusses corporate governance and provides definitions, reasons for its importance, characteristics of good governance, current issues, and advantages and disadvantages. It defines corporate governance as an internal system that ensures the needs of shareholders and stakeholders are met through good business practices, accountability, and integrity. It lists eight key characteristics of good governance: participation, rule of law, transparency, responsiveness, consensus oriented, equity and inclusiveness, effectiveness and efficiency, and accountability. It also discusses the Port Klang Free Zone scandal as a current governance issue in Malaysia.
This document discusses corporate governance and provides definitions, reasons for its importance, characteristics of good governance, current issues, and advantages and disadvantages. It defines corporate governance as an internal system that ensures the needs of shareholders and stakeholders are met through good business practices, accountability, and integrity. It lists eight key characteristics of good governance: participation, rule of law, transparency, responsiveness, consensus oriented, equity and inclusiveness, effectiveness and efficiency, and accountability. It also discusses the Port Klang Free Zone scandal as a current governance issue in Malaysia.
This document discusses corporate governance and provides definitions, reasons for its importance, characteristics of good governance, current issues, and advantages and disadvantages. It defines corporate governance as an internal system that ensures the needs of shareholders and stakeholders are met through good business practices, accountability, and integrity. It lists eight key characteristics of good governance: participation, rule of law, transparency, responsiveness, consensus oriented, equity and inclusiveness, effectiveness and efficiency, and accountability. It also discusses the Port Klang Free Zone scandal as a current governance issue in Malaysia.
MANAGEMENT Corporate Governance LECTURER: PUAN RUHANA BT HAJI BUSU Prepared by: Wong Yoke Pui 147722 Seow Fun Yin 147836 Oh Shiek Ching 14783 !ee "nn #ui 14768 $gor Siew %n 1&'114 (e)ini*ion Corporate governance is an internal system that encompasses polices, processes, people, and makes sure the needs of shareholders and other stakeholders are met in full. This will e accomplished y directing and controlling managing activities using good usiness practices, o!ectivity, accountaility and integrity. Effective corporate governance relies on e"ternal marketplace commitment and legislation, plus a healthy oard culture which safeguards policies and processes. Why doe+ ,orpora*e go-ernan,e i.por*an* Corporate governance is a key element in enhancing investor confidence, promoting competitiveness, and ultimately improving economic growth. #ood corporate governance helps to prevent corporate scandals, fraud, and potential civil and criminal liaility of the organi$ation. % good corporate governance image will enhances the reputation of the organi$ation and makes it more attractive to customers, investors, suppliers and, contriutors of nonprofit organi$ations. &t is aims to protect shareholder rights, enhance disclosure and transparency. /ood Corpora*e /o-ernan,e #ood corporate governance will ensures the accountaility of certain individuals such as reduce or eliminate principal'agent prolem, achieve an a locative efficiency likes ensure investors receive ade(uate return and guideline on how company is managed or governed such as eliminate undesirale ehavior and reduce unethical ehavior. %igh* ,hara,*eri+*i, o) good go-ernan,e 10 Par*i,ipa*ion )articipation y oth men and women is a asis of good governance. )articipation could e either direct or indirectly. &ndirectly means participation through legal intermediate institutions or representatives that represent their interests. )articipation is a method wherey policy making, prioriti$ing issues, convenience to pulic goods and services and also allocating resources that unfair y stakeholders. &t varies from one conte"t to another and su!ect to different kind of pro!ects and visions. 20 1u2e o) 2aw #ood governance re(uire laws, regulations and codes of conduct should e fair and enforced impartially, particularly the laws on human rights. The helpful ways of tackling weak governance is to look at the disconnection etween institutions within the roader governance environment as well as the scope of operation of the pulic in common. The availaility of information is critical to good governance. %ccess to information and the promotion of practical rights provide an enaling framework where accountaility and improved delivery could enhance institutional changes. 30 3ran+paren,y Transparency means that decisions taken and their enforcement are done in a way that follows rules and regulations. &t also means that information is freely availale and directly open to those who will e affected y such decisions and their enforcement. &t also means that enough information is provided and that it is provided in easily understandale forms and media. &t promotes openness of government action, decision'making processes, and consultative processes among pulic sector and all stakeholders. 40 1e+pon+i-ene++ &nstitutions and processes try to serve all stakeholders (uickly or within a reasonale timeframe. &0 Con+en+u+ orien*ed There are many different point of views in a society or a community. % good governance should take into consideration each stakeholder memers* opinions and enefits to reach a road consensus on what is the est interest of the group, on policies and procedures. Reaching a consensus in any decisions could e done y practicing serious consideration of every stakeholder*s opinion. This does not only seek agreement of the ma!ority, ut also to resolve the o!ections of the minority with the ultimate goal to achieve the most agreeale decision. &n other words, grassroot democracy shall e achieved. % deep understanding of the historical, cultural, and social conte"ts of a given society or community could e the foundation towards a consensus oriented governance. 60 %4ui*y and in,2u+i-ene++ % society*s well eing depends on ensuring that all its memers feel that they have a stake in it and do not feel e"cluded from the mainstream of the society. This re(uires all groups to have opportunities to improve or maintain their well eing. &t includes designing mechanisms, policies, or processes that are fair for all stakeholder memers where each and every one of them is given e(ual chance to reach the state of good welfare. 70 %))e,*i-e and e))i,ien* #ood governance means that the processes and institutions produce desirale results that meet the needs of the society, while putting the resources at their est use. +eing effective which means providing what the community needs, in which would increase the community*s welfare. &n the conte"t of instilling efficiency in good governance, usage of natural resources should e sustainale and at the same time, to protect the environment. 80 5,,oun*abi2i*y %ccountaility is the key re(uirement of good governance. ,ot only governmental institutions ut also the private sector and civil society organi$ations must e accountale to the stakeholders and pulic. -ho is accountale to whom varies, depending on whether the decision.action is internal or e"ternal to an organi$ation. &t acts as a means towards the development of more efficient and effective organi$ations. /o how accountaility comes into the picture in ensuring the positive impact eing rought to the community0 %s an e"ample, politicians and pulic servants are given enormous power through the laws and regulations they implement, resources they control, and they organi$ations they manage1 and accountaility is a way to ensure that this power is used appropriately and in accordance with the pulic interest. &n general, an organi$ation is accountale to those who will e affected y its decisions or actions, and it*s important to practice transparency in order to enforce accountaility in organi$ations. 5d-an*age o) Corpora*e /o-ernan,e Corporate governance practices leads to a etter system of internal control, thus leading to greater accountaility and etter profit margins. #ood corporate governance practices can pave the way for possile future growth, diversification, or a sale, including the aility to attract e(uity investors either nationally or aroad. +etter corporate governance can also provide shareholders with greater security on their investment. +etter corporate governance also ensures that shareholders are sufficiently informed on decisions concerning fundamental issues. 2or e"ample, when a company amendments of statutes or articles of incorporation, it will inform the shareholders. &t was found out that more than 345 of the gloal institutional investors are willing to pay a premium for the shares of a well'governed company over one considered poorly governed ut with a comparale financial record. (i+ad-an*age o) Corpora*e /o-ernan,e Costs of 6onitoring ''' To effectively govern a pulicly traded corporation, shareholders must speak with one voice and have enough votes to allow that voice to have any real weight. This re(uires individuals that have a collective vision for the company to pour more money into that company to gain a controlling share. This process can e highly political, since controlling shareholders that sense a hostile takeover may attempt to uy up more shares to stay in power and keep the minority party silent. Corporate governance at this level could grind to a halt, driving stock prices lower and hindering a corporation7s aility to make smart usiness decisions. Family-Owned Companies --- Corporate governance works at its best when shareholders and board members are able to make objective decisions that are in the best interest of the company. For example, Ford and Wal Mart lose objectivity in business making decisions due to the familys financial investment in the business performance and the emotional ties associated with building a worldwide corporation from the ground up. Curren* i++ue+ Ca+e 1: Por* 62ang Free 7one 8P6F79 S,anda2 )ort 8lang 2ree 9one scandal had een e"posed since early of %ugust :;;<, ut the police and the 6alaysian %nti'Corruption Commission spent aout three years to charge several people including former Transport 6inister Tun =r Ling Liong /ik with cheating the 6alaysian government y misleading the Cainet on the land ac(uisition for the 6ega =istriution pro!ect in )ort 8lang. =r Ling is accused of dishonestly hiding the fact that the valuation y the >aluation and )roperty /ervice =epartment, 6inistry of 2inance. %ccording to the charge, the fraud was committed with the knowledge that he could cause a loss to the 6alaysian government, where he had an interest in the transaction pertaining to the fraud and he was ound under the law to protect it. )arliament is entitled to know what were the reasons which caused the )829 land (uestion, which has landed the country with a R6?:.@ illion )829 scandal. &t noted that three months after the formation of the /uper Task 2orce, several people were charged for their alleged role in the )829 scandal. The 6inistry of Transport also said that they will make sure the )829 scandal will e clearly and hoping that corruption is eing checked and !ustice is eing restored. The )ort 8lang 2ree Trade 9one A)829B fraud not only will ring ad effect to the country7s economic growth, pulic trust, the market economy and national control systems also constitute a threat. &n our opinion, )829 scandal is a serious misappropriation issue. has een involving more and more people. +ut as 6alaysian, we are more concerned aout the responsiility as its leaders are involved in the scandal, particularly when the scandal has caused the country to lose so much money. %lthough the task force7s investigation report has identified the government officials who has seriously violated the rules, ut we were disappointed that the ministry was not represented y any official who could shed light on the many unanswered (uestions regarding the issue. The R6?:.@ illion )ort 8lang 2ree 9one A)829B scandal as it represented a ma!or step ackwards in pulic accountaility and good governance. )829*s management should have known that the risk of misappropriation. )829 scandal caused 6alaysia*s has suffered the ignominy of the worst ranking and score in ?@ years in Transparency &nternational AT&B Corruption )erception &nde" AC)&B .Therefore, good corporate governance is very important helps to prevent corporate scandals, fraud, and potential civil and criminal liaility of the organi$ation. Ca+e 2: Si.e (arby +ui* again+* e: C%O and *wo o*her+ o-er ;akun pro<e,* % recent news report states that there ma!or pro!ects in the sector of /ime =ary, due to improper management of these pro!ects led to repeated e"tension and cost overruns, prompting the company to withstand up to R6 ?.C illion total loss last year. 2or the coming si" months, government is estimated need to allocate D;; million provisions for the losses. 6ost of the losses are down to ill'advised investments in the energy and utilities sector in Eatar as well as tardy usiness practices in the development of the +akun dam in /arawak. The +akun =am pro!ect at /ungai +alui, /ungai Re!ang, /arawak, is the largest hydropower pro!ect in 6alaysia. /ime =ary is in the midst of preparing for a civil suit against those responsile for the company losses. Thus, /ime =ary +hd and its three susidiaries have filed another civil suit against its former group chief e"ecutive =atuk /eri %hmad 9uir 6urshid and two others for restitution of R6D;.@mil relating to the +akun =am pro!ect. The other two defendants are former head of the group*s energy and utilities AEFUB division, =atuk 6ohamad /hukri +aharom, and former EFU division chief financial officer %dul Rahim &smail. This case reflects very adly on the management and corporate governance of /ime =ary that lead to the losses. &n our opinion toward this case, /ime dary failed to comply the principles of corporate governance that caused to the losses. /ime =ary management tried to hide the losses incurred in Eatar and +akun. The amount for cost over'runs of the pro!ects was much higher. -e think that /ime =ary not only against the principles of good governance ut also reached the various laws. -e are also (uestioned how plantation'ased /ime =ary could post such huge losses when it en!oyed financial and political support from the government. &t also need to highlight that faulty corporate governance and risky investments as factors ehind /ime =ary*s historic losses. The first rule of Corporate #overnance is to have capale people who are also competent and with integrity to manage a company. 6alaysia need to take serious in the selection of candidates to take the responsile. +esides that, awareness towards importance of corporate governance will improve economy performance in 6alaysia. 1e)eren,e+ http://en.wikipedia.org/wiki/Corporate_governance#Principles http://www.corporategovernancedefinition.net/ Topics/Corporate_governance/An_overview_of_corporate_governance http://www.gdrc.org/u-gov/doc-oecd_ggov.html#Accountailit! http://siteresources.worldank.org/P"#$%C&'CT()A*+,(-')*A*C'/)esources/Ac countailit!,overnance.pdf http://www.unescap.org/pdd/prs/Pro.ectActivities/(ngoing/gg/governance.asp http://www.metagora.org/training/enc!clopedia/governance.html http://www.reform.gov./page/,((+_,(-')*A*C'.pdf http://www.swview.org/log/seven-characteristics-corporate-governance http:..www.malaysia'today.net.mtcolumns.letterssurat.GGC@4'who'is'at'the'root'of'the' pkf$'scandal'tun'dr'ling'liong'sik'or'tun'dr'mahathir'mohamed http://www.unescap.org/pdd/prs/Pro.ectActivities/(ngoing/gg/governance.asp http://www.reform.gov./page/,((+_,(-')*A*C'.pdf http://ma./ainooks.com/terms/hrm/eight-ma.or-characteristics-of-good- governance.shtml http://www.metagora.org/training/enc!clopedia/governance.html http://www.gdrc.org/heritage/tugi-culturalheritage.pdf reference: http:..www.ehow.com.listHC@:G;D:Hdisadvantages'corporate'governance.html http:..www.ehow.com.listHC;@3?3CHenefits'corporate'governanceH.html http:..www.sse.sk.Content.E,.&ssuers.CorporateH#overnance.lst.mervynHa!.htm0 L%,#IE, http:..www.mysinchew.com.node.4D?<4 http:..pkf$'scandal.org.:;;D.?:.??.pkf$'details'of'charges. http:..www.mysinchew.com.node.G<D:@ http:..www.mysinchew.com.ta"onomy.term.3<0pageI: http:..www.sinchew'i.com.sci---.ta"onomy.term.4:C0pageI?? http:..www.csrdigest.com.:;?;.;@.sime'dary'proes'akun'dam'losses. http:..www.themalaysianinsider.com.malaysia.article.pakatan'(uestions'sime'darys' corporate'governance.