Analyzing Corporate Governance in AFFIN Bank: A Comprehensive Report

This report analyzes the corporate governance practices of AFFIN Bank, referencing the Malaysian Code on Corporate Governance (MCCG) 2017. It defines corporate governance and its importance for organizational control and sustainability. The report delves into the CARE principles (Comprehend, Apply, Report), key principles of good governance (board leadership, audit and risk management, stakeholder relations), and provides examples of these principles in practice within AFFIN Bank. It also examines how AFFIN Bank involves shareholders in decision-making, emphasizing communication and the conduct of general meetings. The report concludes by highlighting the necessity of corporate governance for maintaining organizational control and ensuring stakeholder participation.

THE MALAYSIAN CODE ON
CORPORATE
GOVERNANCE 2017

Table of Contents
INTRODUCTION...........................................................................................................................1
1. CARE and its applications..................................................................................................1
2. Key principles of good corporate governance....................................................................2
3. Examples for practising good corporate governance.........................................................3
4. Practice and guidance in order to involve shareholders in participation of voting decisions
at General Meetings................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Corporate governance can be defined as system in which various types of rules and
practices are included (Ibrahim, Arif and Paino, 2017). It is required to be implemented in every
organisation as through this whole organisation is kept under good control. The organisation
referred here is AFFIN Bank which is doing their operations in Malaysia since 1975. This report
will discuss about laws associated with shareholders rights, duties and responsibilities of
corporate participants etc.
1. CARE and its applications
Cooperate Governance define as an effective process and structure which used by
company for manage and direct entire affairs of the firm. Basically it provide better framework
which support company for attaining its goals and objectives. Along with this, effective
governance defines appropriate rights and responsibilities which may lead firm in their decision
making process. In addition of this, the MCCG (2017), determine a new approach which help in
promoting internalisation of corporate governance culture.
CARE: It is an appropriate term which support as well as encourage business organization for
determining thought process which include effective as well as good corporate governance in
order to provide fair and meaningful explanation for how an business organization apply this
practices within their business. Basically, CARE contribute in establishing positive and mutual
trust among firms and its stakeholders in which they provide valid as well as appropriate
disclosures. By which stakeholders effectively engage with company in appropriate way (Visser
and Tolhurst, 2017). Comprehend: Effective corporate governance practices defines company vision,
structure, process which helps firm to attain long term sustainability. Along with this, it
also provide better support to business organization to maintain ethical behaviour in
overall business strategies. In addition of this, elements like investors, stakeholders,
creditors are helping in recognize the environmental as well as social responsibilities
which may leads in attaining long term sustainability in most effective manner. By
applying MCCG, firm ensure that workers are effectively understand towards the
governance process by attaining better training and awareness programs in most effective
way.
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 Apply: It is also an effective principle of MCCG, which include culture change, mindset
for corporate governance in order to promote meaningful application to attain better
intend outcomes. Along with this, it also help in implementing the practices which may
leads business organization to attain positive outcomes which may lead strong corporate
governance culture.
 Report: It is also an effective principle of MCCG, which define fair and meaningful
results. With the help of this company enhance their profitability level and make strong
corporate governance practices (Tee and et. al., 2017). Along with this, it also provide an
effective explanation for the departure in which stakeholder and investors required
reliable and integrated information in order to assess the ownership of the structure. With
the help of this capital get attracted for long period of time which may leads in
maintaining better confidence in market.
2. Key principles of good corporate governance
Corporate governance report consist some rules, procedures and practices and with
assistance of this organisation will controlled and directed. This will comprise interest of clients,
stakeholders, suppliers, government and many more. There are three key principles which will
include into this, stated as beneath:
Board leadership and effectiveness: It consists: Board responsibilities: They are much responsible for growth and success of an
association. They are collectively accountable for attaining targets and goals of an
enterprise. It is essential for them to set some objectives for staff members which they
need to attain. Main responsibility of board chairman is to establish leadership and good
corporate governance practices. In board there must be competent and qualified company
secretary who is having significant knowledge about all rules and regulations. According
to the report of corporate governance of AFFIN Bank, their board committee promote
good business conduct so that they will be able to maintain integrity, fairness and
transparency at workplace (Krishnan and Amin, 2017). Board composition: It is required for them to acquire judgement as per the interest of
organisation. For this, they have to take into account diverse insights and perspectives. It
is essential for BOD to develop some thoughts regarding overall effectiveness of board
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and in addition individual director. This has been determined that, an individual director
will be appointed for almost nine years. Remuneration: It is required for company to set effective remuneration for directors as it
helps to attract them and in addition retain talent for maximum duration in affiliation. In
this manner, they will be able to attain coveted targets effectually. Policies regarding this
need to be developed by independent as well as transparent procedure.
Effective audit and risk management: As indicated by the Corporate governance report of
AFFIN bank, some outcomes will attained: Audit committee: This is entirely independent and it is must for board to review their
recommendations as well as findings properly. For this, they will utilize financial
statement of firm properly as it is much reliable in nature. Risk management and internal control framework: Organisation needs to obtain an
appropriate judgement to reduce level of risk. Therefore, they will easily attain coveted
targets effectively and efficiently. AFFIN bank is having significant structure for internal
control, risk management and governance as well. It is fundamental for bondholder to
examine appropriateness of this sort of framework (Esa and Zahari, 2017).
Integrity in corporate reporting & meaningful relationship with stakeholders: It comprise:
 Communication with stakeholders: It is required to maintain an effective communication
amongst stakeholders and firm. Therefore, they will develop mutual understanding with
each other's expectations and goals. Along with, it is needed for bondholder to obtain
judgement regarding CSR, environment and governance policies.
3. Examples for practising good corporate governance
Board Responsibilities:
According to the statements of which has been given in corporate governance report of
AFFIN Bank, board of directors plays an important role in order to create favourable conditions
for it or to sustain at marketplace of Malaysia. For an example: AFFIN BANK is looking
forward to other areas of Malaysia where it is not doing business. Here, BOD can do meetings in
which they can discuss about major aspects so that favourable conditions can be created.
Another example can be taken under which is integrity, transparency and fairness is being
brought up BOD of AFFIN Bank so that to shareholders can show their interest in future aspects
(Hassan, Hijazi and Naser, 2017).
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Board composition:
As per given under report of AFFIN Bank, Managing Directors have understood the
perceptiveness of its clients and taken initiatives so that to reduce all the risks and gain
competitive advantages as well so that to sustain at financial market for a longer period of time.
For an example: BOD of AFFIN Bank, reduces diversity and risks through building up the
interests of company people.
One more example under this that can be taken under this as, BOD of AFFIN Bank
considers their stakeholders as main point while conducting a meeting as they are the one who
brought up funds whenever it is needed to attain desired goals and objectives.
Remuneration:
This part which is being given under corporate governance report of AFFIN Bank has
mentioned that, Formal and transparent policies should be made for BOD so that every single
senior gets equal opportunity. For en example: Government of Malaysia has formulated rules and
regulations where votes can be given by employees in order to select an individual in Board of
Directors (Farhan, Obaid and Azlan, 2017).
4. Practice and guidance in order to involve shareholders in participation of voting decisions at
General Meetings
It is very necessary for Affin Bank to involve their stakeholders in their meetings as they
are also an integral part of management and it is their right to participate in all the meetings. By
attending these, the shareholders will be able to understand the objectives of the organisation in a
better manner and quality of its management as well.
 Communication with Stakeholders – It is very necessary for Affin Bank to have a good
communication with their stakeholders as it will help them in understanding their
concerns which they are having regarding company and then try to solve it. There are
many ways through which company can develop communication with its stakeholders
like:
◦ By implementing engagement meetings
◦ By making use of social media and other websites
◦ By organising investor relation functions etc.
Along with this, Affin Bank is required to form an intrinsic report in which all the details
about company will be included like its financial statements, governance reports etc. This report
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will be given to investor so that they can get all the minute details about the company and know
about what is happening inside the company in a proper manner as well (Rahman, Ibrahim and
Ahmad, 2017).
 Conduct of general meetings – This is also an effective way through which Affin Bank
can include their shareholders in their meetings. Through these meetings, a shareholder
will be able to understand the business, its performance and its position in the market in
an effective manner. The board of company is required to make sure that stakeholders are
given notice of meeting at least 28 days before the meeting so that they can take their
decision to come in meeting effectively. The notice should be having all the details about
what matters will be discussed in the meeting and along with this details of resolutions
will also be included. Also, the board of directors should also make sure that shareholders
are participating in the meeting. If they want that large no. of shareholders should
participate then they should make sure that they are having electronic voting and remote
shareholder participation.
CONCLUSION
From the above report, it can be concluded that it is necessary for every organisation to
implement corporate governance as then only they will be able to keep the whole organisation
under control. Shareholders are an integral part of management so they are also required to be
taken care of properly and it is to be made sure that they participate in the meetings as then only
they will be able to understand the organisation in a better manner.
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REFERENCES
Books and Journals
Esa, E. and Zahari, A. R., 2017. Corporate Social Responsibility Disclosure in Malaysian
Government-Linked Companies. Terengganu International Finance and Economics
Journal (TIFEJ). 2(2). pp.83-93.
Farhan, A., Obaid, S. N. and Azlan, H., 2017. Corporate governance effect on firms’
performance–evidence from the UAE. Journal of Economic and Administrative
Sciences. 33(1). pp.66-80.
Hassan, Y., Hijazi, R. and Naser, K., 2017. Does audit committee substitute or complement other
corporate governance mechanisms: Evidence from an emerging economy. Managerial
Auditing Journal. 32(7). pp.658-681.
Ibrahim, S. N. S., Arif, H. M. and Paino, H., 2017. The Relationship between Corporate
Governance Disclosures and Balance Sheet Ratios. Gading Journal for the Social
Sciences. 11(02). pp.33-40.
Krishnan, S. and Amin, A. M. M., 2017. Empirical Study of Corporate Governance on Public
Listed Companies in Malaysia. Human Resource Management Research. 7(1). pp.17-
27.
Rahman, H. U., Ibrahim, M. Y. and Ahmad, A. C., 2017. Corporate governance reforms and
shareholders’ confidence in emerging markets: A case of Malaysia. World Journal of
Science, Technology and Sustainable Development. 14(1). pp.60-74.
Tee, C. M. and et. al., 2017. Institutional Monitoring, Political Connections and Audit Fees:
Evidence from Malaysian Firms. International Journal of Auditing. 21(2). pp.164-176.
Visser, W. and Tolhurst, N., 2017. The world guide to CSR: A country-by-country analysis of
corporate sustainability and responsibility. Routledge.
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