Comparison Of Companies With Malaysian Code Corporate Governance Accounting Essay

Corporate administration is the procedure and construction used to direct and pull off the concern and personal businesss of the company towards heightening concern success and corporate answerability with making stockholder value, whilst taking history the involvements of stakeholders. The rules underlying the Malayan Code of Corporate Governance focal point on four countries including board of managers, managers ‘ wage, stockholders and answerability and audit.

Background of the Companies

The two companies that I have chosen are Fraser & A ; Neave Holdings Bhd and Nestle ( Malaysia ) Berhad. F & A ; N is a market leader and family good known trade name in Malaysia which engaged in the industry and sale of drinks and dairy merchandises. It was runing since 1883 and has employed about 3000 employees in operations. ( Fraser & A ; Neave Holdings BHD, 2009 ) Nestle is a universe ‘s taking nutrient company that engaged in fabrication, selling and sale of nutrient merchandises. The company has begun since 1912 in Malaysia and it has about 5000 employees. ( Nestle , 2010 )

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Comparison between both of the companies in conformity with Malayan Code of Corporate Governance

Both of the company are listed on Bursa Malaysia and committed to really high criterions of corporate administration through unity, transparence and answerability every bit good as remains responsible to their stockholder, stakeholders and the community.

The president and CEO of F & A ; N is separate individual. Y.A.M Teng Ku Syarif Bendahara Perlis Syed Badarudin Jamalullail is the F & A ; N ‘s president, while the CEO of the company is Mr Tan Ang Meng. The president and CEO of Nestle is different individual. Tan Sri Dato ‘ Seri Syed Zainol Anwar Jamalullail is the Chairman whereas Peter Robert Vogt is the CEO or Managing Director. This implies that both of the companies besides have a good corporate administration.

Independent non-executive managers of F & A ; N make up of at least one-third of the board rank. There are 4 independent non-executive managers of 11 board members. All managers are non-executive managers except the CEO. The same as F & A ; N, the Board of Nestle besides composed of more than tierce of independent non-executive managers. There are eight Board members while four members are independent non-executive managers. This shows that Nestle has the higher corporate administration because its ratio of independent non-executive managers is higher comparison to F & A ; N.

The non-executive managers of the both of the F & A ; N and Nestle are capable, skill and experience. The F & A ; N ‘s non-executive managers have a varied and relevant of experience and accomplishments which are nucleus for manage the company concern operation every bit good as approve and do strategic programs, concern enterprises, investing and support determinations. Likewise, the non-executive managers of Nestle besides have diverse experience including professional backgrounds, a high degree of concern, international and fiscal cognition, which is necessary and of import for puting of schemes, monitoring of scheme accomplishment, and efficaciously taking the company. Both of the companies besides have high criterion of corporate administration.

The Board of F & A ; N had appointed a senior independent non-executive manager for the company. Leslie Oswin Struys is the senior independent non-executive manager of F & A ; N and it had been stated in the one-year study. He was appointed to move as an extra communicating channel for corporate administration personal businesss in the company. In contrast, Nestle does non name a senior independent non-executive manager. This reflects that F & A ; N has higher criterion of corporate administration comparison to Nestle .

Size of the Boards of both of the companies was examined to find the impact of the figure upon its effectivity. The board of F & A ; N has eleven managers where six non-executive managers are campaigners of the two largest stockholders and four are independent non-executive managers and one executive manager, CEO. The Board is loosely balanced that reflect the involvements of important stockholders, direction and minority stockholders in the company. On the other manus, the Board of Nestle is good balanced where five independent non-executive managers, one non independent non executive manager, and two executive managers. The independent non-executive managers provide the independent indifferent positions and advice in its determination devising to move that the best involvement of the company, whereas the responsibility of executive is to guarantee the execution of the policies and schemes that set by the Board. The boards of these two companies are balanced but F & A ; N hold a greater corporate administration because it has higher Numberss of non-executive managers.

The Board of F & A ; N held 8 board meetings in the twelvemonth 2009, the inside informations of managers ‘ attending was recorded. Most of the board of managers attended 8/8 of board meetings where five meetings were held at its registered office and the other three meetings were held off-site in Kuala Lumpur. Four meetings of managers were held by the Board of Nestle in the twelvemonth. The record of attending is all the managers have full or 100 % attending except Tan Sri Dato ‘ Ernst Zulliger and Mohd. Rafi k Bin Shah Mohamad merely attended three of four general meetings. F & A ; N held the meetings more frequent comparison to Nestle , hence, F & A ; N has the higher criterion of corporate administration.

The Nominating Committee of F & A ; N composed of four non-executive managers, three of whom are independent with the duty in measuring recommendations for the Board. All the members attended the lone meeting scheduled during the twelvemonth. In the meeting, proposed alterations in the composing of the chief Board, subordinate boards and commissions were reviewed and submitted recommendations to the Board. They besides reviewed and kept along, and assessed the developments and effectivity of board public presentation. Nestle does non see it necessary to puting up a separate Nomination Committee as the turnover of managers is really low with merely eight individuals and that all proposals for assignment and surrender of managers are to the full deliberated by the board of managers. Two nominations of new managers were to the full deliberated by the Board in 2009 which is the nomination of Datuk Rafi ah Binti Salim as an independent non-executive manager and Peter Robert Vogt was appointed as the pull offing manager. This indicates that Nestle has lower criterion of corporate administration comparison to F & A ; N because it does non designated Nominating Committee.

The Remuneration Committee of F & A ; N was formed in May 2001, dwelling four non-executive managers which its duty to measuring sequence planning, wage policies and patterns of the company. All the Remuneration Committee members attended the two meetings that held during the twelvemonth. Unlike F & A ; N, Nestle does non set up a Remuneration Committee due to the pull offing manager, and the finance & A ; control executive, Marc Philippe Seiler and the non independent non-executive Director, Dato ‘ Frits Wout Marie new wave Dijk are proposed and employed straight by Nestle S.A. Each of these managers is employees which based on expatriation employment contracts and their wage bundle in harmonizing to the wage patterns of the world-wide Nestle group. The wage paid to the president and other independent non-executive managers are proposed by the company to the Board. Hence, F & A ; N act in higher criterion of corporate administration because of the non-establishment of Remuneration Committee by Nestle .

The re-election and re-appointed processs of F & A ; N ‘s managers are conformity in the Company ‘s Articles of Association. Elections of new managers are held at the Annual General Meeting as following the first assignment. One-third of the managers rotationally submit themselves for re-election by stockholders at every AGM of the company. The re-election and re-appointed of Nestle ‘s managers are contained in Articles 90.1 and 90.2 of the Company ‘s Articles of Association, tierce of the managers shall be nominated themselves for re-election by stockholders at the Annual General Meeting, and all managers will retire from office one time at least in each three old ages. Both of the companies besides have a proper re-election in conformity Company ‘s Articles of Association and act in good corporate administration.

During the twelvemonth 2009, the F & A ; N ‘ managers attended assorted external and internal preparation programme and seminars such as Directors ‘ Continuing Education Programme, Mandatory Accreditation Programme, The Global Economy in the Aftermath of the Financial Crisis, and Risk Management Programme. From clip to clip, the managers attend developing to maintain abreast with current developments every bit good as the new statutory and regulative duties. Besides, as the uninterrupted preparation for Nestle ‘s managers, the direction updated them on a timely footing with reading stuff based on latest development on managers ‘ functions and duties. For illustration, the pull offing manager had attended preparation on “ Crisis Management ” and the finance and control executive attended the Mandatory Accreditation Programme. The other managers have attended relevant preparations in countries to their capacity as managers from clip to clip. The both companies are continuing good corporate administration which supplying vast of preparation to managers.

The Audit Committee of F & A ; N comprises five managers, the bulk of whom are bulk of independent Board members, including the Chairman and a member who is an comptroller. The Audit Committee ‘s president was Tan Sri Dato ‘ Dr Lin See Yan. Mr Anthony Cheong Fook Seng is a member with an accounting making. A sum of four meetings were held and all the members attended all the meetings during the twelvemonth. The Audit Committee of Nestle consists of five members who are all independent non-executive managers. The station and current Chairman of the Audit Committee are both qualified chartered comptrollers, being members of the Malaysian Institute of Accountants. During the twelvemonth, the Audit Committee held five meetings and a quorum established by the presence of the Chairman and two members in the Audit Committee meetings. The members had planned and conducted internal audits and to guarantee that the Company ‘s fiscal statements are prepared in conformity with GAAP. This proved that Nestle has better corporate administration because the president of Audit Committee is a qualified chartered comptroller and the figure of its meetings is higher comparison to F & A ; N.


In decision, overall F & A ; N has a higher criterions of corporate administration compared to Nestle , hence Nestle have to do betterment. But both of the companies were seeking to prosecute the best pattern and continuing the highest of corporate administration in conformity the Malayan Code on Corporate Governance [ Revised 2007 ] in order to protect the companies ‘ repute, stockholders and stakeholders.

( 1659 words )


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