If I invest in a listed company, how can I be sure that the management will act in the best interest of shareholders?

The management of companies is legally bound to act in the best interest of shareholders. Officers of a company are required to exercise a reasonable degree of care and diligence at all times. Directors of companies have a duty to:

	avoid situations, which might conflict with their duties as directors;
	avoid the abuse of position or information gained through their position as company director;
	avoid trading in the company's securities while making use of privileged information;
	avoid entering into transactions with the company without the proper approval;
	act honestly in exercising their powers; and
	take reasonable care and diligence in exercising their powers

In addition to the above, as directors of listed companies, they must also comply with the KLSE Listing Requirements, which govern, among other things, continuing obligations on disclosures, related party and interested party transactions, reporting requirements and restrictions on number of directorships, which can be held by a director of a listed company.

What incentives are there to ensure sure good governance of the companies?
In March 2000, the Malaysian Code on Corporate Governance prepared by a high level finance committee was released to the public. This code was prompted by the lessons learnt during the East Asian financial crisis of 1997/98 when issues in relation to poor corporate governance surfaced.

The code sets out best practices in corporate governance. While compliance to the code by Malaysian companies is voluntary, the release of the code was coupled with amendments made to the listing requirements of the KLSE which mandates the disclosure by listed companies of the extent to which they have complied with the principles and best practices as outlined in the code.

For an update on corporate governance in Malaysia, click here

If I own shares of a public-listed company, and am unhappy with the way the management is running the company, who can I speak to? What can I do?
Regardless of the amount, if you own shares of a public-listed company, you are actually a part owner of the company. As a shareholder of a public-listed company, you are accorded certain rights and privileges under the Companies Act 1965 and the KLSE Listing Requirements.

You have the right to bring directors to task if you feel that the company is not being managed properly, through meetings of the company where all shareholders have the right to speak, ask questions, and raise issues or vote on resolutions affecting the company.

During a company's Annual General Meeting (AGM), which must be held within 18 months of a company's incorporation and at least once every calendar year, you are legally entitled to:

	inquire about any matter pertaining to the company, which has been reported in the annual report.
	raise issues relating to the strategic and financial management, future direction, goals and objectives of the company.
	engage the company's directors in frank discussions on the company's performance and concerns that you may have.
	exert pressure on directors to be more transparent and accountable.

If your concerns cannot wait till the next AGM, you can even request and convene a general meeting of the company provided that you own at least 10% of the paid-up voting share capital or am acting in concert with other shareholders who together with you hold at least 10% of the paid-up voting share capital.

Where related-party transactions are involved, KLSE Listing Requirements require that directors, majority shareholders and persons concerned abstain in a vote on such decisions. As such, you are able to affect the outcome of such transactions by exercising your right as a shareholder.

Finally, if you have reason to believe that directors of the company have acted in bad faith or failed in their fiduciary duties to you provided for under the Companies Act 1965, you can pursue legal recourse.