Corporate Governance of Axiata Group Berhad and Nestle Malaysia Berhad
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This report analyzes the corporate governance of Axiata Group Berhad and Nestle Malaysia Berhad, including the components of corporate governance adopted by the companies for sustainability and attracting investors.
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AXIATA GROUP BERHAD and NESTLE (MALAYSIA) BERHAD
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Executive summary This report has included the corporate governance of the Axiata Berhad group and Nestle Malaysia Berhad. The analysis and research are done on the contemporary issues which are faced by the companies. Axiata Group is a telecommunication company and Nestle Malaysia Berhad is a food and beverage company that deals in products like Maggi, Nescafe, KitKat and always try to maintain integrity and excellence in products.their purpose is to enhance the quality of life and contribute to the healthier future of people. The report has includes the components of corporate governance which the companies have adopted and implemented for sustainability. It is concluded that the corporate governance mechanisms help in representing and attracting the investors for investment.
Introduction Corporate governance includes the system for directing and controlling with the help of rules, practices,andprocesses.Corporategovernanceoccursforbalancingtheinterestofthe stakeholdersofthecompany.Stakeholdersarethemanagement,customers,suppliers, shareholders,government,financiersandcommunity.Thisreportincludesthecorporate governance of Axiata Berhad group and Nestles Berhad group. It includes the process for the companies to be directed and controlled. It includes the laws and regulations of the company which includes the state and central regulations to be followed. This report includes the overall performance of the Nestle (Malaysia) Berhad which includes the macroeconomic factors and risksincorporategovernance.Itisanalyzedthatgoodcorporategovernancehelpsin contributing to sustainable economic development which helps in enhancing the performance of companies(Salleh, et al., 2013). Corporate governance Axiata group In Asia, the Axiata group is one of the famous and largest telecommunication companies. There are various subsidiaries located in Asia. Earlier it was known as TM International Berhad and it was part of Telecom Malaysia Berhad. Celcom is also the brand of Axiata group which operated in Malaysia. The board members of the company own the portion of shares which positively impacts the performance of the company (Axiata group, 2018). Axiata Group Berhad is considered as the fully committed towards the corporate governance and sets the objective of enhancing the value of shareholders as well as the competitive position of the company. regulatory and compliance in Axiata group include the group regulatory affair
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which is used for proactively shaping the external environment and enabling the effective and proper management of the issues related to regulatory which the OpCos are facing. The various regulatory issues are identified and monitored with the help of reviewing the matrix of group risks in managing the process of enterprise risk management (Axiata group, 2018). The regulatory strategy is involved in constantly managing and monitoring the developments in regulatory and identifying the regulatory issues which include the issues related to strategies, finance, and reputational impact. Stakeholder engagement includes the engagement plan for covering the political and government stakeholder in the market of OpCo. Axiata Group has adopted the strategy for effective corporate governance which includes the digital business, telco and innovative infrastructure for creating effectiveopportunitiestotheshareholdersandstakeholdersofthecompany.theyhad implemented the policies and practices by considering the transparency and accountability principles. In the framework of corporate governance, forms play the major role and the principles of group and states for approaching and implementing the regulatory compliance effectively. the main objectives are included in the framework of regulatory compliance is the setting of baseline expectation in relation of regulatory compliance. The objective is placing the OpCos and anxiety in the best position for complying effective regulatory obligations. It also includes managing the
exposure for unacceptable compliance risks. In Axiata group Berhad has created strong corporate governance in the company. The corporate governance framework requires effective practices and guidelines. They had adopted the companies act 1965. They had issued thecorporate governance guide for the board room excellence which is issued by the Bursa securities. The framework also includes the Main LR of bursa securities. The securities commission Malaysia In April 2017 has MCCG 2017 for identifying and closing the gap. Axiata has applied all the best practices in MCCG 2017 (Axiata group, 2018). For good corporate governance, it is required to maintain a good relationship with auditors. In Axiata, the relationship with auditors is maintained by the BAC. It includes the reappointment, remuneration and engaging with external auditors. In order to review the performance of the external auditors and maintain the work quality and delivering the services on time, all the other services which are provided for the engagement partners(Lu and Castka, 2009). The various recommendations are included for corporate governance is the level of knowledge, capability and maintain the work quality. The ability of external auditors to perform the work related to audit on time.It is analyzed that the shareholders have the authority for decision making. In various decisions shareholder approval are required which includes the financial statement adoption, distributing final dividends, directors election and re-election, fees payments to directors, and external auditors appointment(Lu and Castka, 2009). Relations with other stakeholders are required by disclosing the financial reports to shareholders and providing the
position of the organization in market. Axiata Group Berhad includes the various practice which is required for fulfilling the requirements of Bursa Malaysia listing. It is necessary for corporate governance for setting the strategic aim of the company and ensuring to provide the necessary resources for meeting the objectives and reviewing the performance of management. Nestle Malaysia Berhad Nestle (Malaysia) Berhad is a company that is base on wellness, nutrition, and health. It is considered as the investment holding company. they deal in various segments including the food and beverages. Nestle Berhad adopts the best practices of corporate governance for continuing the nourishing and enhancing the lives of people in Malaysia. They consider that compliance helps in building trust. Good corporate governance helps in remaining the board of directors and Nestle Berhad committed towards success. The principle of good corporate governance includes integrity, accountability,transparency,andresponsibility.Theboardofdirectorsplacedtherick management guidelines, measures for controlling, and processing (Nestle Malaysia Berhad, 2018). The board of directors of Nestle Malaysia Berhad ensures to provide the business and affairs for the effective doctrine and principles for effective corporate governance which includes integrity, transparency, accountability and responsible business conduct. Nestle Berhad had adopted the practices which includes the Malaysian code on corporate governance issues in 2017. The adoption of corporate governance principles includes the adoption of best practices incorporate governance (Nestle Malaysia Berhad, 2018). It includes the board charter, terms of reference for
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the audit committee, terms of reference for the nomination and compensation committee and remuneration policy. Corporategovernanceincludesthethreemaincomponentswhicharetransparency, accountability, and security. Transparency in Nestle is the main corporate governance as they have nothing to hide from the stakeholder’s aim of good corporate governance is to provide the transparency to stakeholders with the full disclosure of financial and non-financial data. It is analyzed that the relationship between corporate governance and performance of the company as it includes corporate governance, structure, ownership structure, and capital structure(Griseri and Seppala, 2010). In Nestle, the variables of corporate governance help in affecting the linkage between the environmental factors of the organization and improving the performance of the organization. They had established clear roles and responsibilities and ensure that all the members are aware of the roles and responsibilities to follow for good corporate governance. Board ensures to provide the leadership for achieving the objectives of business which are included for internal controls and risk management. The business principles include the code of conduct for business which also addresses the issues for compliance, sustainability, and corporate social responsibilities. They had included the practices and ethics at workplace to maintain employee relations and human rights(Hamid and Aziz, 2012). The principles included in corporate governance are delighting the consumers, proper care for people, developing responsible partnership and promoting sustainability. In Nestle, the management and leadership principles are also involved For the communication with stakeholders, Nestle took the initiative to run the annual business forum which includes the program which helps in providing the opportunities to stakeholders to
discuss the issues with management related with the corporate activities, financials and making the long term strategy of the organization(Haniffa, 2002). Financial report transparency and internal controls which includes the companies and allied matters act. The documents include all the information related to the audited financial statement, which is relevant to the regulations and standardsofaccounting.Therisk managementcommitteeandStatutoryauditcommittee overviews the risk profiles, and manage the framework of risk management and adopt the risk- reward strategies(Nastiti, 2017). It is analyzed that corporate governance directlyeffectsand impactson the profits and reputations of the company. when the policies are poor of corporate governance it impacts the reputation spoilage, fines, loses and lawsuits. The various pitfalls must be avoided as it includes the conflicts of interest and it is essential for the company to avoid it. it is necessary for the management to recognize and manage the various risks which are associated with the business. it is important to recognize the risk management and internal controls. The board has included the procedures and internal control policies. The responsibility of board is to maintain the internal controls and risk management which help sin reviewing the integrity, adequacy, and effectively safeguarding the investments of shareholders and the asset of group. The team of board is responsible for establishing internal controls for the group(Anum Mohd Ghazali, 2010). It is considered as the on-going process which includes identify, evaluate, and manage the vital risks.Theboardofthecompanydelegatestheresponsibilityofinternalcontroltothe managementteam.Itisnecessaryfortheteammanagementtoregularlyevaluatethe effectiveness and adequacy and update the process on time and must include the measures which are required to address the risks which are identified(Menon and Mg, 2013). In the system of risk management and internal control, the process not only includes the controls of financials but
also include the risk, operational and compliance control. It does not eliminate or ignore but helps in managing the risk failures arises in achieving the goals, objectives, and policies of the company. In Nestle, the audit committee is responsible for reviewing the policy and process of the company. they provide opinions, risk exposures, and various systems for sustainability and development(Rosli, et al., 2015). Corporate governance mechanisms help in improving the position of the company in market and attract the investors for more investment. Good corporate governance and facilities affect the performance of the stakeholders and shareholders. Involvement is required for making effective decisions(Klapper, 2002). Conclusion It is concluded that the Axiata Company has favorable corporate governance performance. The impact of asset utilization and cash conversions has an inverse impact on the profitability of the organization. It is analyzed that the company must focus to handle the liquidity and counterparty risk effectively for the management. It is required to pay attention to determining good corporate governance as it helps the company in sustaining in market for long run. In order to enhance the performance of the company, the focus of management must be on liquidity management as it helps the company in converting assets into the cash more effectively and efficiently as it will help the company in making more investments. For the sustainability of the company, good corporate governance practices must be implemented but it is analyzed that corporate governance does not impact on the profitability but will help in sustaining in long run. Nestle Berhad in Malaysia includes the Financial report transparency and internal controls which includes the companies and allied matters act. The board responsibility includes the maintaining of internal
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controls and risk management which helps in reviewing the integrity, adequacy, and effectively safeguarding the investments of shareholders and the asset of group.
References Anum Mohd Ghazali, N., 2010. Ownership structure, corporate governance and corporate performance in Malaysia.International Journal of Commerce and Management,20(2), pp.109- 119. Axiatagroup2018,AnnualreportAxiataBerhadgroup.Availableat https://www.axiata.com/investors/2018/assets/pdf/axiata_iar-our_governance.pdfAccessedon 24th September 2019 Axiatagroup2018,AnnualreportAxiataBerhadgroup.Availableat https://www.axiata.com/sites/default/files/docs/Axiata-Group-Berhad-Corporate-Governance- Report-2018.pdfAccessed on 24th September 2019 Griseri, P. and Seppala, N., 2010.Business ethics and corporate social responsibility. Cengage Learning. Hamid, A. and Aziz, R., 2012. Impact of the amendments of Malaysian code of corporate governance (2007) on governance of GLCs and performance.World Academy of Science, Engineering and Technology,6(11), pp.612-617. Haniffa, R.M. and Cooke, T.E., 2002. Culture, corporate governance and disclosure in Malaysian corporations.Abacus,38(3), pp.317-349. Klapper, L.F., 2002.Corporate governance, investor protection, and performance in emerging markets. The World Bank.
Lu, J.Y. and Castka, P., 2009. Corporate social responsibility in Malaysia–experts' views and perspectives.Corporate Social Responsibility and Environmental Management,16(3), pp.146- 154. Menon, J. and Ng, T.H., 2013. Are government-linked corporations crowding out private investment in Malaysia?.Asian Development Bank Economics Working Paper Series, (345). Nastiti, M., 2017. Liquidity and operational risks relationship with the performance of Nestle Berhad. NestleMalaysiaBerhad2018,AnnualreportNestleMalaysiaBerhad.Availableat https://www.nestle.com.my/sites/g/files/pydnoa251/files/201909/Nestle_Corporate_Governance _Financial_Report_2018.pdfAccessed on 24th September 2019 Rosli, M.H.B., Said, J.B. and Fauzi, N.A.B., 2015. Corporate social responsibility disclosure (CSRD)inMalaysiantelecommunicationcompanies.InProceeding.KualaLumpur International Business, Economics and Law Conference(Vol. 6, No. 1, pp. 45-52). Salleh, W.A., Wan Mahmood, W.M., Sufian, F., Mohd Jamarudi, E.M., Sekharan Nair, G.K. and Ahmad,S.,2013.TheefficiencyofmergersandacquisitionsinMalaysiabased telecommunication companies.Asian Social Science,9(2), pp.12-23.