PETALING JAYA: The Securities Commission (SC) has been urged to take steps to improve governance quickly to inject “much-needed” confidence in the Malaysian markets.
Subang MP Wong Chen said otherwise the country would see greater outflow of foreign investments.
“This will further dampen the value of the ringgit. As the currency weakens, prices of imported goods, including food, will rise,” he told FMT.
Wong was commenting on an FMT Business editorial today calling on the SC to publicly disclose the basis upon which it approved the acquisition of a majority stake in ratings agency RAM Holdings Bhd by CTOS Digital Bhd.
Wong pointed out that the default position on equity ownership of a ratings agency should be diverse.
“Nobody should have a controlling interest or be in a position to wield undue influence. That means nobody should hold a stake of more than 20%,” he said.
He said the policy had been designed to ensure that there are no major conflicts of interest.
He pointed out that a ratings agency not only has to be absolutely independent but also be seen to be independent.
In a letter dated April 28, the SC stated that it had given CTOS Digital the green light to raise its shareholding in RAM Holdings to more than 51% subject to the outcome of a vote on a special resolution to amend Clause 12.1 of the RAM Holdings constitution at its AGM today.
It also waived the requirement for the company to secure further approval for any subsequent cumulative increase of 10% or more.
Wong said the issue is not who owns the ratings agency but whether or not the board is competent and independent and that the regulator has a good, transparent and accountable governance structure.
He noted that the SC has, of late, been forced to deal with several controversial issues, such as the Malaysian Anti-Corruption Commission chief Azam Baki’s shares trading account and the furnishing of false statements to Bursa Malaysia Bhd by top executives of Seba Dinamik Bhd.
“We now have a new chairman at the SC. I am assuming that the approval (for CTOS Digital’s acquisition of a majority stake in RAM Holdings) was given during the tenure of the previous chairman,” Wong said. “The new chairman should review this approval critically and urgently.”
Former deputy finance minister Awang Adek assumed the role of SC chairman on June 1.