Press Statement - Announcement of MSWG Business Plan for 2005 to 2009 and launching of MSWG website
Good Morning
Ladies and Gentlemen
Distinguished Members of the Press and News Media.
I would like to welcome you as our distinguished guests to the Press Conference of Badan Pengawas Pemegang Saham Minoriti Berhad (BPPSM) or popularly known as Minority Shareholder Watchdog Group (MSWG).
Today’s press conference is most timely and apt.
The year 2005 has been an exciting year for BPPSM and particularly for me as this is the first Press Conference since I started my appointment as the Chief Executive Officer.
BACKGROUND
BPPSM began operations more than three years ago, campaigning nationwide for protection of minority shareholder’s rights and minority interests.
At this juncture, I would like to record my acknowledgement for the hard work and good efforts put in by the Board of Directors and the former management. They left in my hands a legacy and a robust organisation for shareholder activism and protection of minority interests in the Malaysian capital market.
RELATIONSHIPS WITH CMDF
I am most grateful to the Capital Market Development Fund (CMDF) and the founding members who have been most supportive of me and BPPSM.
I am much delighted to announce that the CMDF has just approved the Business Plan of BPPSM for the next five (5) years, 2005 to 2009.
The CMDF would provide funding not exceeding RM 5.0 million for BPPSM for its operations in the next three (3) years, 2005 to 2007.
Critical Role of BPPSM
The critical role of BPPSM is clearly expressed by the former Prime Minister and Minister of Finance, Tun Dr. Mahathir Mohamad in a book entitled “ Corporate Governance: An Asia Pacific Critique,” in which he remarked,
“ The year 2001 ushered in two further milestones namely, the incorporation of the Malaysian Code on Corporate Governance into the revamped Listing Rules of the Kuala Lumpur Stock Exchange and the establishment of Badan Pengawas Pemegang Saham Minoriti Berhad or the Minority Shareholder Watchdog Group Ltd. The latter will promote better and more effective corporate governance practices which could set a benchmark for others in the region.”
The Honorable Prime Minister and Minister of Finance, Datuk Seri Abdullah Ahmad Badawi reiterated the critical role of BPPSM at the Invest Malaysia 2005 Conference held recently,
“ …… the protection of minority interests will, at times, remain a critical priority of the Malaysian Government to ensure confidence in the Malaysian Capital Market.”
OBJECTIVES OF PRESS CONFERENCE
At today’s press conference, we are glad to present to you, the Business Plan of BPPSM roadmap for the next five (5) years, 2005 to 2009 and the launch of our website.
The challenges of BPPSM are to navigate the twin needs of establishing itself into:
1) A credible and trusted institution of choice for shareholder activism and for the protection of minority interests; and
2) A financially healthy and sustainable public institution.
BPPSM is an independent and a non-profit organization founded by:
• Kumpulan Wang Simpanan Pekerja (KWSP)
• Permodalan Nasional Berhad (PNB)
• Lembaga Tabung Angkatan Tentera (LTAT)
• Lembaga Tabung Haji (LTH)
• Pertubuhan Keselamatan Social (SOCSO)
Currently, the Board Members of BPPSM are:
Tan Sri Abdul Halim Ali – Chairman, KWSP
Tan Sri Dato’ Lodin Wok Kamaruddin – Director, LTAT
Datuk Ng Teck – Director, SOCSO
Wan Roshdi Wan Musa – Director, PNB
Rita Benoy Bushon – Director, KWSP
Syed Saleh Syed Abdul Rahman – Director, LTH
Abdul Aziz Ismail – Alternate Director, LTAT
Ismail Hamid – Alternate Director, SOCSO
The Board is being restructured to enhance its image of being independent.
VISION OF BPPSM
To be the premier service entity in enhancing shareholder activism and protecting minority interests.
MISSION OF BPPSM
To lead in the development of knowledgeable as well as vibrant minority shareholders and delivering its services effectively, efficiently and economically, thereby contributing to the development of the capital market.
GOAL OF BPPSM
To achieve credibility and sustainability through the provision of its products and services by 2009.
OBJECTIVES OF BPPSM
• To provide a forum on minority shareholders’ experiences;
• To act as the think-tank and resource centre for minority interests and corporate governance matters;
• To develop and disseminate the educational aspects of corporate governance;
• To provide a platform to initiate collective shareholder activism on unethical or questionable practices;
• To influence the decision making process in public listed companies;
• To monitor for breaches and non-compliance in corporate governance practices; and
• To initiate where appropriate, reports to regulatory authorities
VALUE STATEMENT OF BPPSM
• BPPSM pledges to comply with the principles stated in the Malaysian Code on Corporate Governance
• BPPSM members are bound to comply with the principles stated in the Malaysian Code on Corporate Governance
• Organisations and institutions wishing to join BPPSM as members must agree to adhere to Sections 4.80 to 4.85 of the Malaysian Code on Corporate Governance.
BUSINESS MODEL OF BPPSM
Initially for three (3) years, 2005 to 2007, the funding of BPPSM is from CMDF for a sum not exceeding RM 5.0 million
Concurrently and progressively, BPPSM will work towards progressive and self-funding model over the next five years, 2005 to 2009 as follows:
• Initially – continued support in the form of user charges (instead of grants) from founding members
• Thereafter – from financial institutions
• Finally, individual shareholders and investors
Membership will entail a payment of fees that includes entrance fees, subscription fees and user-charge fees.
Sponsorships will be encouraged for certain activities, products and services.
TWO MANDATES OF BPPSM
• The Public Mandate
To inform the investing public and be a voice as well as act for minority shareholders
• The Private Members/Subscribers Mandate
To deliver corporate governance services and products to members/subscribers in return for a payment of fees that includes entrance fees, subscription fees and user-charge fees.
Both the public mandate and private members/subscribers mandate are mainly focused on corporate governance issues such as:
• Board responsibilities and oversight
• Board composition
• Management accountability and transparency
• Public accountability
• Corporate independence
• Financial reporting
WORK PROGRAMME OF BPPSM
The work programme will be carried out in three phases:
• Phase 1 from Jan to Dec 2005
• Phase 2 from Jan to Dec 2006
• Phase 3 from Jan 2007 onwards
The products and services of BPPSM consist of:
• Core Products
- Proxy Advisory Services
- Proxy Voting Services - comprising three stages: pre-meeting reports/briefings; agency voting and post-meeting reports/briefing.
- Articles and Commentaries
- Public Enquiries.
• Supporting Products
- Corporate Governance Screencard
- Corporate Governance Rating – once a year
- Corporate Governance Analysis – subject to appointment
- Corporate Governance Due Diligence Report – subject to appointment
- Dividend Survey – once a year
- Directors Compensation Survey – once a year
- Independent Director Turnover Survey – once a year
- Audit Committee Survey – once a year
• Ancillary Products/Activities
- Conferences, seminars and other events
- Training courses and investor education
- Referral services
- Public representation
- Strategic Tied-up/Outsourcing
Resource Centre
To strengthen and enhance product development, BPPSM has set up a Product Development Advisory Committee (PDAC) comprising key representatives from institutional investors and fund managers.
In 2005, BPPSM has aimed to act as proxies for minority shareholders in up to minimum 25 public listed companies (plcs), in 2006, up to 30 plcs, in 2007 up to 35 plcs, in 2008, up to 40 plcs and in 2009 up to 45 plcs.
The articles and commentaries including advisory services, will be provided accordingly.
The more plcs BPPSM represents as proxies the more effective will be for shareholder activism and vigorous participation of shareholders in general meetings of public listed companies.
STAFF STRENGTH OF BPPSM
• Chief Executive Officer’s office
• Client Services Division
• Corporate Services Division
CHALLENGES FACING BPPSM
1) Being a small organization, to recruit, retain and develop technical, competent and skilled staff with career prospect highly limited.
2) Staff are employed on a contractual basis, thereby resulting in perceived lack of secured employment.
3) BPPSM is unable to offer a highly competitive remuneration package to attract top class technical personnel.
4) Technical staff are expected to acquire investment representative’s license in additional to their tertiary professional qualifications
To overcome these challenges, BPPSM is creating a pool of knowledgeable skilled, experienced and committed associates as well as consultants to deliver the required products and services.
FINANCIAL RESPONSIBILITY AND ACCOUNTABILITY
BPPSM has ensured that its funding is managed prudently with full disclosure and transparency through:-
• Budgetary control with approved annual budgets and expenditure
• Regular board meetings for the board members to be fully informed about the state of its affairs
• Monthly financial reporting and accounts to be prepared for the Board of Directors tabled at the board meetings
• Annual report and accounts to be audited by a leading accounting firm
THE WAY FORWARD – DEADLINES
1) Approval of the Business Plan at the CMDF Board meeting on 20 April 2005
2) Delivery of products and services already started
3) Today’s Press conference
4) Completion of Board restructuring by 31 May 2005
5) Attending to the legal and financial formalities by 31 May 2005
- Amendment of Memorandum and Articles of Association
- Preparation and completion of the Funding Agreement
- Application to the Inland Revenue for Income Tax Exemption
6) Recruitment of technical staff
7) Opening of membership to organizations, institutions and individuals
CONCLUSION
To overcome the challenges and arriving at the destination successfully to be the premier entity in enhancing shareholder activism and protecting minority interests by 2009, BPPSM need to have the right vision, mission, goal, objectives, business model, activities, products and services as well as continuous motivation, determination, perseverance, hard work and appropriate funding. In this endeavour, the confidence, guidance, co-operation and assistance of the press and news media are of utmost importance. BPPSM has every reason to believe that these will continue to be forthcoming.
END OF PRESENTATION
Now, please feel free to raise any comments/questions that you may have.
Thank you.
Yours Sincerely,
Abdul Wahab bin Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group
Date: 11 May 2005
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