As part of Bursa Malaysia's regulatory approach, the Exchange constantly monitors listed issuers' corporate activities and developments to ensure compliance with the LR. This is in order to prevent incidences of corporate irregularities that could undermine shareholders' investments in Listed Issuers.
In undertaking surveillance, we look for breaches of the LR, corporate abuses, irregular transactions or malpractices by Listed Issuers, and take the appropriate preventive or remedial actions in a timely manner to maintain an orderly and fair market.
A "risk-based" approach is used in the monitoring of these activities and developments guided by the following corporate surveillance framework:
Detection of possible irregularities or corporate misconducts through:
Regular monitoring of non-financial and financial red flags;
Regular monitoring of corporate developments and tracking of 'questionable' individuals; and
Undertaking in-depth analysis of issues or matters detected from sources such as media reports and announcements to identify possible abusive or dubious transactions or breaches.
Engagements with the directors or auditors of the Listed Issuers and other intermediaries to address concerns not only relating to a direct breach of the LR but also poor CG practices or other undesirable practices with the aim of enhancing the standard of CG practices and good business conduct among the Listed Issuers. The engagement is also an important platform for us to share our expectations with the management, directors, advisors, auditors and company secretaries of the Listed Issuers.
Undertaking thematic studies to detect emerging trends and issues, and consider appropriate actions to address or mitigate these issues or trends, including issuance of directives or proposing changes to regulatory framework. The "themes" are derived from possible risk areas or current trends or issues which in our opinion can give rise to potential abuses or malpractices.
Undertaking preliminary investigation to establish a prima-facie case before referring the possible breaches to Investigation or other relevant authorities for enforcement actions.
The sources of information for purpose of our surveillance activities include but not limited to the following:
Some of the actions undertaken by Corporate Surveillance include, amongst others:
Where there is a breach of the LR:
Referral is made to Investigation division for further investigation and/or where appropriate, require the Listed Issuer(s) to take the necessary corrective actions and/or require restitution of the losses (if any) by the affected directors; and
Issuance of directives to address areas of concern in the Listed Issuers such as requiring the appointment of special auditors, immediate reinstatement of the dissolved Audit Committee in breach of LR, making additional disclosures necessary for the investing public etc.
Where there is no clear breach of the LR but concerns poor CG practices:
Advocate the Listed Issuers and/or its directors to abort or withdraw from the proposed undesirable transactions or actions;
Enhance CG practices and good business conducts through engagements with the respective Listed Issuers' directors, advisors and auditors to share key areas of concern on specific issue(s) concerning the Listed Issuers. For example:
Enhancing board composition and pre-empting the importance of investors' relations to enhance market confidence and perceptions.
Encouraging the board of directors to ensure that corrective actions are being taken in cases such as breakdown of internal control or breaches in procurement/tender procedures and authority limits, and to enhance internal controls and to prevent such failures from recurring.
Ensuring timely, adequate, fair and balance disclosures of the issues at hand to enhance transparency, particularly in cases involving board tussles, and to ensure that the Listed Issuer or the disputing parties comply with the provisions of the LR.
Engage external auditors of Listed Issuers to share key areas of concern and to encourage closer scrutiny of accounts during audit to avoid surprises.
Require additional disclosures on certain dubious or non-straightforward transactions to enhance transparency and ensure adequate, fair, balance, factual, clear and unambiguous disclosure of material information for informed decision-making by the investing public.
Probe and challenge advisors' assessments, valuation and rationale for certain transactions by Listed Issuers where the assessment, valuation or rationale lacked supporting evidence and substance, in particular in cases close to triggering PN17/GN3 criteria and probing the validity of statutory declaration of solvency.