Diversity, Independence In Company Boards Contribute To Better Financial Performance

President and CEO of the Institute of Corporate Directors Malaysia (ICDM), Michele Kythe Lim.

KUALA LUMPUR, June 13 – A well-constituted board is better placed to achieve sustainable financial performance across key financial metrics, says Michele Kythe Lim, President and Chief Executive Officer of the Institute of Corporate Directors Malaysia (ICDM).

At a recent media briefing following ICDM’s annual general meeting, Michele spoke of the Malaysia Board Diversity Study launched by the institute in 2021 to establish correlations between board diversity and company performance.

She said the study found that boards with 30 to 50 percent independent directors showed higher return of equity (ROE) and stronger revenue growth, compared to boards with fewer independent

This signals a strong case for more independence on boards, and the key role it has in
ensuring sustainable business performance.

Towards this, ICDM will continue to support the mission of encouraging greater diversity of boards, through its independent board evaluations, director sourcing services, and capacity-building initiatives, she said.

To a question on whether company boards that have independent directors reported less instances of corruption, she said: “We currently do not have any definite data to support that company boards that have independent directors report less instances of corruption.”

She said the boards, in particular independent directors and the audit committee, have the
responsibilities and must exercise their roles to ensure transparency and impartiality
throughout the entire governance process.

“Independent directors provide the checks and balances for the board, and they have the
role and responsibilities to ask the right questions, to ensure accountability and

Outlining the progress made by ICDM over the years in the support and development of board directors, Michele said ICDM has seen a rising trend in the demand for directors from an independent source such as ICDM.

She said the institute was also ready to fulfill the calls for independent directors as well as women and young directors from its repository of 788 directors with a third of them being women and 22 percent of them aged less than 50.

ICDM will be also undertaking its role this year as the approved organiser and knowledge partner for Bursa Malaysia’s Mandatory Accreditation Programme (MAP) for board directors. The stock exchange appointed ICDM in 2021 for the role.

She said ICDM expected to play a more significant role in supporting the professional development of the director community. “As the national Institute of Directors (IoD), we aim to be the centre of excellence in enhancing directors’ competencies, skills and knowledge to develop an agile and future-focussed leadership for Corporate Malaysia.”

As of April 30 this year, ICDM has conducted four (4) MAP sessions for 244 first time directors
for companies listed Bursa Malaysia as well as directors of companies seeking listing on
the Exchange.

Under the Bursa Malaysia Listing Requirements, directors appointed to the boards of
public-listed companies (PLC) for the first time must complete the MAP within four (4)
months of their appointment. Meanwhile, directors of newly listed companies are required
to complete the MAP before the date of listing.