Institutional investors form lobby group

KUALA LUMPUR: Sovereign wealth, pension, pilgrimage and trusts funds such as Khazanah Nasional Bhd, the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (KWAP), Permodalan Nasional Bhd (PNB), Lembaga Tabung Angkatan Tentera (LTAT) and Lembaga Tabung Haji, have teamed up to champion corporate governance and shareholder activism.

These "big boys,” which are usually substantial shareholders in companies listed on Bursa Malaysia, established the Institutional Investor Council Malaysia (IICM), with RM100,000 start up administrative fund extended by the Securities Commission.

This is a follow up of the Malaysian Code for Institutional Investors (Code) requiring institutional investors to promote good governance in the companies they place their trust in.

The Code encourages the institutional investors to disclose their stewardship responsibilities, monitor their investee companies, regularly engage with decision makers of investee companies, adopt a robust policy on managing conflicts of interests, incorporate good governance and sustained investment considerations and publish their voting policy. 

KWAP chief executive officer Wan Kamaruzaman Wan Ahmad was appointed chairman of this newly set up IICM. 

Deputy Finance Minister Ahmad Maslan announced in Parliament yesterday Bank Negara Malaysia’s representative is no longer part of the Retirement Fund Incorporated’s (KWAP) investment panel as proposed in the amendment of the KWAP Act 2007.

In response to this good governance development, Wan Kamaruzaman confirmed Bank Negara Malaysia's representative is still part of KWAP’s board of directors, just not in the investment panel. 

"The management of the pension fund, investment and information of retirees being kept confidential has also been clearly stated in the recent law amendment," he said. KWAP manages a pension fund for 711,000 government retirees amounting to RM115 billion. 

Minority Shareholder Watchdog Group (MSWG)  chief executive officer Rita Benoy Bushon, who is also council member of IICM, is the secretariat head.

Wan Kamaruzaman noted IICM is made up of 15 committee members and decisions are voted by majority. "We are all equal in this council, there is no veto power entrusted to any committee member. The quorum is set at five committee members."

Apart from KWAP and MSWG, other council members include Employees Provident Fund deputy chief executive officer (Investment) Mohamad Nasir Ab Latif, Permodalan Nasional Bhd chief strategy officer Datin Paduka Kartini Abdul Manaf, Lembaga Tabung Angkatan Tentera deputy chief executive Datuk Zakaria Sharif, Federation of Investment Managers Malaysia chief executive officer Nazaruddin Othman, Lembaga Tabung Haji group deputy managing director Datuk Johan Abdullah, Life Insurance Association of Malaysia president Toi See Jong, Malaysian Takaful Association deputy chairman Muhammad Fikri Mohamad Rawi and Private Pension Administrator chief executive officer Datuk Steve Ong.

The private sector is represented by Gerald Ambrose, chief executive of Aberdeen Islamic Asset Management Sdn Bhd and Dr Hans-Christoph Hirt, director of Hermes Investment Management/ Hermes Equity Ownership Services.