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1.

0 Introduction
Padini Holding Berhad was established in 1975 in the retail industry with the
company's pioneer brand in Malaysia, which was begun as Hwayo Garments
Manufacturers Company in 1971. The company specializes in clothing and
accessories that include men's and ladies' shoes and accessories, children's garments,
maternity wear, which products are mainly sales venue for The Middle East and
Southeast Asian countries. The most outstanding brands are Padini and VINCCI in the
various subsidiaries. (Padini, N.D.)
The board of Padini is fully aware that its main role for the group management is
bound to require its due diligence to always be in the best interest of the group and its
shareholders. At the same time, the board of directors also recognized the need to
strengthen the value of shareholders, taking into account the appropriate balance of
the interests of other stakeholders. The Bursa Malaysia Securities Berhads Main
Market Listing Requirements have been revised in the new Malaysian Code on
Corporate Governance 2012 (MCCG 2012). The principles of group application and
the corresponding recommendations are set out in MCCG 2012. Where any one of the
principles of the proposal has not been followed, which have a clear description of the
position, if there are reasons not to observe, it is also given the reason in the annual
report. However, if alternative has been adopted, they are also reported.
In the following article, through the analysis of the annual report of Padini to
understand their corporate governance reporting practices, weaknesses, strengths and
the company has been improving its corporate governance in comparison with
compliance with MCCG 2007 to MCCG 2012.

2.0 Corporate governance practices


2.1 Establish clear roles and responsibilities
Padini lists a more complete and detailed the responsibilities of board, especially
the chairman and chief executive officer, which can supervise that management
does not go beyond the limits of the law. At the same time, in performing the
functions of the directors, the directors should take the interests of the company
as the main. Since the executive directors supervise the company's business and
development of the relevant information. In order to ensure the effective
management of the business and the objective method of evaluating the
effectiveness of the survey, which is the key performance indicators of all senior
management personnel through the board.
2.2 Ensure timely and high quality disclosure
The code of conduct contains the terms and conditions of employment of any
unauthorized disclosure or participation in any unauthorized publication, and the
group's business activities and transactions constitute a dereliction of duty. The
power to disclose the company comes from the board of directors, and there will
be a public announcement of the company or the company's secretary. Thus, to
ensure that the corporate disclosure of the company does not adversely affect the
Bursa Malaysias Main Market Listing Requirements. It has been the intention of
the board of directors and practices, to provide a disclosure, is accurate and
timely nature.
2.3 Foster Commitment
The Padini of Nominating Committee made a commitment to the time, which all
directors must perform their duties as directors of the company. This is
accompanied by a letter signed by all the directors and the directors approved as
an indication of their commitment. The agreement also through the guidance of
outside directors can be accepted or not. The application director must first ensure
that sufficient time is allocated to the company for personal responsibility to
perform their duties. Notice to the outside directors must be communicated to the
Secretary General of the board of directors of the board of directors. Any
potential conflict of interest arising from the external directors, and then submit it
to the nomination committee's decision.
2.4 Uphold Integrity in financial reporting
In order to further improve the quality of the audit committee and its ability to
maintain the integrity of the Padini Holding Berhad's financial reporting. There
are three independent non-executive directors composition audit committee, who
is all Certified Public Accountant and has extensive experience in auditing. That
ensure that the committee considered the financial statements in accordance with
the applicable financial reporting standards and also improves the reliability of
the financial report of the management system. In order to promote fairness and
ensure that the internal and external auditors can freedom of speech, the executive
members of the directors are not involved in the meetings of the audit committee,
in addition to the invitation by the audit committee.
3.0 Strength
3.1 Strengthen composition and independence
The nomination committee consists of 3 independent non-executive directors,
which established in 2013. In the constitution of the nomination committee, the
composition, duties and powers of the commission are disclosed. At present, the
chairman of the committee is a senior independent director of the group, who is
also in charge of the Leadership Committee in the annual assessment of the board
of directors, including the chairman of the board. The committee decided to assess
the board of directors and committees, which will pay attention to the overall
structure and the ability to do the work entrusted to them that in dealing with
issues related to corporate strategy and planning, risk management and internal
control.
As for the gender diversity of the board of directors, the board of directors
stipulates that at least two or 1/3 of the members must be female, and the board of
directors is currently in compliance with this point. The board of directors is
consisted of 11 people who are 6 males and 5 females. Chairman and chief
executive officer's position has been held by different people, the current board of
directors is composed of most of the non-independent executive director. At
present, none of the board of directors currently has a term of more than nine
years of independent directors.
3.2 Strengthen relationship between company and shareholders
The directors believe that the company's shareholders to participate actively in
order to promote the participation of shareholders. The executive members of the
board of directors give all the information that is needed by the shareholders to
make an appropriate evaluation of the group's prospects. In the chairman's
statement in the company's annual report and quarterly results, to provide
comprehensive information about the development of dynamic industry, held on a
regular basis, performed by the subsidiaries of the group, a fair and clear summary
of the prospects for this business group. The shareholders have enough time and
opportunity to raise questions, and the board has always responded to their own
ability and the satisfaction of the shareholders in the company's shareholders'
meeting.
3.4 Strengthen training
To ensure that the board of directors to conduct appropriate continuing education
programs, the nomination committee recommended that the board of directors
approved the approved guidelines. The basic principle is the case that all directors
should participate in the training of general subject means upgrading the skills as a
director, for example, the problem of corporate governance, and individual
directors should receive training related functions, each executive director. For
employees who want to improve their skills and abilities, Padini provides grants,
loans, paid leave, examination time, and a number of internal training programs.
4.0 Weakness
4.1 Unacceptable electronic voting
In the annual report (2015) shows it that the directors do not take into
consideration to take an electronic vote in recent years. These polls provide a
channel of communication between the management, the board, and the
shareholders. Kahan & Rock (2008) and Listokin (2008) offer great overviews
over this process, including the complexities and traps during voting procedures.
Nearly all shareholders sending in votes by mail or Internet, vote by proxy, rather
than attending meetings to vote in person. Kahan & Rock (2008) identify various
inconsistencies and weaknesses in administration election process, including
inaccurate shareholder lists, omissions and delays in ballot distribution, and
insufficient vote tabulation by the subcontractor companies that run voting on
behalf of public companies. If the vote is not accurate statistics, then voting totals
become noisier signals of shareholders preferences, undermining the value of
corporate elections as a form of communication.
4.2 Undisclosed directors remuneration
MCCG 2012 recommends that the company discloses the individual
remuneration of the directors. However, that only show the relevant
responsibilities of the Remuneration Committee, which did not disclose any about
the remuneration of the board of directors in 2015 annual report or official
website. To disclosure directors remuneration is an inseparable part between
shareholders and executive directors, especially in evaluating the performance of
executive directors. Chizema (2008) believed that introduction of corporate
governance code into a culture of high collectivism and uncertainty avoidance
would mean resistance. A high concentration of family ownership and prevalent
of nominee shareholders meant that potential rent extraction is higher by non-
independent executive directors. If it is not publicly disclosed, they may be given
themselves for higher remuneration and get away with it. Supplementary
disclosures would mean they would be in control of the company (Siti Seri
Delima Abdul Malak, PhD, 2015).
5.0 Compliance with MCCG 2012
The section, through compare with 2007 annual report (compliance with MCCG
2007) and 2015 annual report (compliance with MCCG 2012) to be aware of the
company keep the part of best practices with the MCCG 2007 and adopted and
improved from the MCCG 2012.
5.1 Perfect the handbook and charter
In the 2007 annual report of Padini that compliance with MCCG 2007, which
expound the directors' responsibility and system. In the 2015 annual report that
compliance with MCCG 2012, the company has perfect the group employee
handbook and the board charter, which have a formal specification of
management behavior of moral behavior. Proper behavior of employees can
promote honesty and integrity, and cover the participation of employees and third
party stakeholders. This clarify the structure and composition of the committee,
responsibilities, rights, and the relationship between the board of directors and
management in the board charter. The corporate rules are disclosed in the official
website and the annual report. Let the general public can through the network
information to understand the company's ethical behavior and standards. The
information will be placed in the public view, let the public together to supervise
the responsibility of the enterprise.
5.2 Establish the Remuneration Committee
The board of directors does not have to set up a remuneration committee in the
2007 annual report. Each director's salary, as a whole, is subject to approval by
the board of directors at the annual general meeting. In the 2015 annual report,
the Remuneration Committee was also established in 2013, which have 2
independent non-executive directors and 1 non-independent director. And the
remuneration committee Charter had disclosed on the official website. On the
remuneration of executive directors, the majority has set up a Remuneration
Committee based on such as prior to the signing of the contract, the contract
terms and conditions not Committee but according to the negotiations between
the board of directors of independent directors and executive.
6.0 Conclusion
The Investment and Financial Services Association of Australia guidance II states that
corporate governance means improving company performance for economic growth,
stakeholders and shareholders (IFSA, 1999). On the basis of Malaysia also
introduced its new corporate governance code Malaysian Code on Corporate
Governance (MCCG 2012) in March, 2012 to improve financial performance of the
public enterprises. Padini of directors will be guided by the recommendations of the
MCCG 2012 and actively strives to comply with the recommendations as far as
practicable. Many of the statutory provisions are already in place that seek to protect
the rights of these two parties. For the shareholders, a large part of their rights are
protected by the provisions of the Companies Act, 1965 and Bursa Malaysias Main
Market Listing Requirements.
(1900 words)

Chizema, A. (2008). Institutions and voluntary compliance: The disclosure of


individual executive pay in Germany. Corporate Governance: An International
Review, 16(4), 359-374.

Kahan M, Rock E. 2008. The hanging chads of corporate voting. Georgetown Law J.
96(4):122781

Listokin Y. 2008. Management always wins the close ones. Am. Law Econ. Rev.
10(2):15984

IFSA. (1999). Corporate Governance: A Guide for Investment Managers and


Corporations

Monsod, A. (2010) Corporate Governance Asia. Journal on corporate Governance in


Asia. 7(3) pp. 19-37.

MCCG. Malaysian Corporate Code on Governance (2012).

MCCG. Malaysian Corporate Code on Governance (2007).


Siti Seri Delima Abdul Malak, PhD. (2015). The Malaysian Disclosure Framework on
Executive Directors Remuneration: A Critical Review and Closing Its Loops [Online]
Available at: http://www.mcser.org/journal/index.php/mjss/article/viewFile/7960/7625
[Accessed: 3/10/2016]