Listed firms manage 72% corporate governance score despite new criteria

“This is another year that the CGR project has made major progress in criteria development to meet the Asean standard,” said Bandid Nijathaworn, president and chief executive of the IOD.

The solid performance reflected the value of corporate governance development cherished by listed companies in order to bolster sustainable growth and boost the confidence of domestic and international investors. 

The average score of 72 per cent was fairly good under the strict criteria, but down from 78 per cent of 526 listed companies last year, he said. 

Criteria jumped sharply to 237 from 148 last year, and the category weighting and calculation method was adjusted.

Three categories breached 70 per cent – equitable treatment of shareholders (91 per cent), rights of shareholders (87 per cent) and disclosure and transparency (77 per cent). 

However, two categories fell short of 60 per cent – board responsibilities (63 per cent) and the role of stakeholders (62 per cent) – so further development is required in these areas.

According to the 2014 report, 308 listed companies scored over 70 per cent, of which 29 companies (5 per cent of the total) were scored excellent with 90 per cent and above, 108 companies (20 per cent) were scored very good with 80-89 per cent and 171 companies (31 per cent) were scored good with 70-79 per cent. 

The new criteria demanded more details in many aspects such as the requirement of individual performance evaluation for each board member, requirement to comply with business ethics and anti-corruption practices, requirement of at least two-thirds of board members present in order to vote, and the establishment of a nine-year ceiling for the term of independent directors. 

“Although companies needed to make adjustments to comply with these additional requirements, the overall score remains good,” he said.

The IOD will help listed companies, particularly small firms, to develop corporate governance standards, especially in putting policies into practice and reporting the results of implementation. 

It will work with the SET and the Securities and Exchange Commission to promote knowledge about corporate governance standard development and compliance with such standards to listed companies.

SET president Kesara Manchusree said listed companies had placed importance and priority on developing good corporate governance. 

The SET continues to promote good CG among firms so as to build sustainable growth with recognition at the international level. 

“We use integrated media and activities to enhance understanding and improve best practices such as professional manuals, prestigious awards to honour companies as role models and many others.”