ACC 30008 Report: Corporate Governance of Axiata and Nestle Malaysia

This report provides a comprehensive analysis of the corporate governance practices of Axiata Group Berhad and Nestle Malaysia Berhad, two Bursa Kuala Lumpur-listed companies. The report examines the companies' annual reports, assessing their corporate governance disclosures and identifying key components likely to mitigate corporate failure. It explores regulatory compliance, stakeholder engagement, and the roles of board members and committees, including nomination committees. The analysis highlights instances where best practice recommendations are followed or not followed and offers an opinion on the role of corporate governance mechanisms in attracting investment and recruitment. The report uses scholarly journal articles to support its arguments and provides a detailed comparison of the two companies' approaches to corporate governance, emphasizing the importance of transparency, accountability, and responsible business conduct.

AXIATA GROUP BERHAD and NESTLE (MALAYSIA) BERHAD

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.

Contents
Introduction.................................................................................................................................................2
Corporate governance..................................................................................................................................3
Axiata group............................................................................................................................................3
Nestle Malaysia Berhad...........................................................................................................................6
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

Introduction
Corporate governance includes the system for directing and controlling with the help of rules,
practices, and processes. Corporate governance occurs for balancing the interest of the
stakeholders of the company. Stakeholders are the management, customers, suppliers,
shareholders, government, financiers and community. This report includes the corporate
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
risks in corporate governance. It is analyzed that good corporate governance helps in
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

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
effective opportunities to the shareholders and stakeholders of the company. they had
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 the corporate
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, and responsibility. The board of directors placed the rick
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 in corporate
governance (Nestle Malaysia Berhad, 2018). It includes the board charter, terms of reference for

the audit committee, terms of reference for the nomination and compensation committee and
remuneration policy.
Corporate governance includes the three main components which are transparency,
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
standards of accounting. The risk management committee and Statutory audit committee
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 directly effects and impacts on 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. The board of the company delegates the responsibility of internal control to the
management team. It is necessary for the team management to regularly evaluate the
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

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.
Axiata group 2018, Annual report Axiata Berhad group. Available at
https://www.axiata.com/investors/2018/assets/pdf/axiata_iar-our_governance.pdf Accessed on
24th September 2019
Axiata group 2018, Annual report Axiata Berhad group. Available at
https://www.axiata.com/sites/default/files/docs/Axiata-Group-Berhad-Corporate-Governance-
Report-2018.pdf Accessed 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.