NO business can avoid the tide of internationalisation, what                                                                                          
with the continuing liberalisation of trade, globalisation of                                                                                         
the world economy and the acceleration of technological                                                                                               
advancements. Along with it are changes in the socio-economic                                                                                         
and political arena as well as the accompanying opportunities,                                                                                        
risks and underlying trends.                                                                                                                          
                                                                                                                                                      
A business must either participate in the flow or face                                                                                                
possible extinction or be a candidate for acquisition.                                                                                                
Whatever the response or choice made, corporations today face                                                                                         
greater organizational demands given such a new paradigm in                                                                                           
the business environment.                                                                                                                             
                                                                                                                                                      
This article discusses the changing demands in the role of                                                                                            
Malaysian company directors in response to the fundamental                                                                                            
shifts in the business environment. It explores the challenges                                                                                        
faced by directors in their critical roles as corporate                                                                                               
leaders, strategists and change agents, all of which assume                                                                                           
great importance in the organisation particularly in                                                                                                  
public-listed companies with international trade, how well                                                                                            
directors fulfil these roles is critical to the company's                                                                                             
success.                                                                                                                                              
                                                                                                                                                      
The growing complexities of the business and legal                                                                                                    
environments have resulted in a situation where directors                                                                                             
increasingly rely heavily on their advisers, namely company                                                                                           
secretaries, accountants and lawyers. This need is further                                                                                            
exacerbated by the impetus towards reformation in corporate                                                                                           
governance ala legislative amendments and regulations through                                                                                         
governmental agencies (such as the Registry of Companies and                                                                                          
the Securities Commission).                                                                                                                           
                                                                                                                                                      
Understandably, this great reliance on outside advice is due                                                                                          
in main to the ever-widening scope of duties and liabilities                                                                                          
of directors and to the higher standards of accountability,                                                                                           
transparency and integrity expected of them.                                                                                                          
                                                                                                                                                      
It is expected of directors and the organisations they lead to                                                                                        
enter the next millennium with a new dynamic world view one                                                                                           
that offers new challenges and opportunities alongside a real                                                                                         
threat to organizational survival in the light of intense and                                                                                         
continuing market competition and other risk factors                                                                                                  
associated with cross-border trading.                                                                                                                 
                                                                                                                                                      
Directors, therefore, will require more than administrative                                                                                           
prowess in carrying out their roles and duties in meeting the                                                                                         
requirements of the law, which are the "hard issues" of                                                                                     
management encompassing mainly the statutory and fiduciary                                                                                            
roles. They are now required as well to have an astute                                                                                                
understanding of the "soft issues" of management, vis-a-vis                                                                                 
the business and society.                                                                                                                             
                                                                                                                                                      
Herein lie the more complex areas of corporate management,                                                                                            
which include rethinking corporate strategies, embracing state                                                                                        
of the art technologies, reshaping the organizational                                                                                                 
structure, redefining organisational culture projecting                                                                                               
corporate beliefs and values, and measuring up to the social                                                                                          
and moral responsibility to society as a good corporate                                                                                               
citizen.                                                                                                                                              
                                                                                                                                                      
Who then is a company director?  The Malaysian Companies Act                                                                                          
1965 does not give a comprehensive definition, but the term                                                                                           
director describes any person occupying the position of                                                                                               
director by whatever name called, whether by right or not, and                                                                                        
includes an alternate or substitute director.                                                                                                         
                                                                                                                                                      
Given that the business of the company shall be managed by the                                                                                        
directors who may exercise all the powers of the company,                                                                                             
indeed the directors' role in the corporate world can be wide                                                                                         
and onerous.                                                                                                                                          
                                                                                                                                                      
It is not surprising, therefore, that corporate directorship                                                                                          
today demands a commitment to guide the company towards                                                                                               
excellence.  This demand exacts an enlightened view of the                                                                                            
role of the organisation in the context of a rapidly changing                                                                                         
environment.                                                                                                                                          
                                                                                                                                                      
In this respect, a director is encumbered with the                                                                                                    
responsibility to exercise his powers in the best interests of                                                                                        
the company and with a high level of professionalism, whether                                                                                         
in the capacity of an executive or non-executive director.                                                                                            
                                                                                                                                                      
In practice, there appears to be a distinction between                                                                                                
non-executive directors and executive directors.  The former                                                                                          
are involved in the collective decision of the board of                                                                                               
directors but have no other functions (except that which is                                                                                           
expressly delegated), while the latter are managing or                                                                                                
executive directors who in addition to their function of                                                                                              
attending board of directors meetings are also employed                                                                                               
full-time.                                                                                                                                            
                                                                                                                                                      
Regardless, under the Companies Act, both are considered                                                                                              
officers of the company and are held responsible for the                                                                                              
direction and management of its corporate affairs.                                                                                                    
                                                                                                                                                      
In general, there are three basic functional roles of                                                                                                 
directors: directing, auditing (of company performance) and                                                                                           
legitimising (approving matters beyond the powers of the                                                                                              
management).                                                                                                                                          
                                                                                                                                                      
A new professional standard                                                                                                                           
                                                                                                                                                      
Professionalism, according to Prof A.A. Patterson in his work                                                                                         
entitled Changing Perception of Professionalism, was                                                                                                  
traditionally understood in the earlier part of this century                                                                                          
to represent a particular balance between the competing                                                                                               
variables of public interest, client interest, firm interest,                                                                                         
and self- interest.                                                                                                                                   
                                                                                                                                                      
Today, the pressure of market forces seem to have redefined it                                                                                        
as representing a balance in the tension between ethics and                                                                                           
economics, or between public interest and self-interest.                                                                                              
                                                                                                                                                      
For public-listed company directors, the call for the highest                                                                                         
professionalism is even more significant today in view of the                                                                                         
greater level of scrutiny and transparency stakeholders and                                                                                           
interest groups (such as investors, creditors, employees,                                                                                             
environmentalist, and the state) place on them.                                                                                                       
                                                                                                                                                      
The degree of confidence investors place in the Malaysian                                                                                             
securities market is of national concerns the Government as it                                                                                        
has economic, social and political consequences. Investors                                                                                            
want a healthy, secure and transparent market where there is                                                                                          
adequate disclosure of corporate information.                                                                                                         
                                                                                                                                                      
This is a market where they are assured of getting fair, equal                                                                                        
and timely access to all corporate information that will                                                                                              
enable them to make confident choices about companies and to                                                                                          
assess more accurately the soundness of their management.                                                                                             
                                                                                                                                                      
The day-to-day affairs of the company may be delegated to the                                                                                         
management of the company, but directors cannot afford to be                                                                                          
pasive observers of management. At no time can directors plead                                                                                        
ignorance over their statutory responsibilities, including the                                                                                        
attendant moral and ethical obligations.                                                                                                              
                                                                                                                                                      
Allowing companies to be Stun as though they are their own                                                                                            
private businesses should not be entertained. Guarding against                                                                                        
complacency, indifference and lack of vigilance will save the                                                                                         
director much trouble for non-compliance of the law.                                                                                                  
                                                                                                                                                      
In fact, directors must act independently of the management                                                                                           
and stand ready to intervene and "flex their muscles," if                                                                                   
needed, and exercise final judgment on matters material to the                                                                                        
company.                                                                                                                                              
                                                                                                                                                      
The investing public today is more informed and literate and                                                                                          
their expectations are certainly much higher. It is,                                                                                                  
therefore, not enough for directors just to know the law and                                                                                          
the rules and ensure that the minimum legal requirements are                                                                                          
complied with.                                                                                                                                        
                                                                                                                                                      
A higher degree of care, competence and diligence imbued with                                                                                         
a deep sense of honesty, integrity and accountability should                                                                                          
constitute the director's credo. This greater expectation for                                                                                         
transparency is recently reflected in the corporate scene with                                                                                        
the establishment of the Malaysian Institute of Corporate                                                                                             
Governance and the amendments to the Securities Industry Act                                                                                          
and the Companies Act.                                                                                                                                
                                                                                                                                                      
The role of Malaysian company directors is becoming more and                                                                                          
more onerous. This trend is not expected to abate and this is                                                                                         
as it should be in the light of the nation's stride towards                                                                                           
realising Vision, 2020. The responsibility for the realisation                                                                                        
of an industrialized economy cannot be that of the Government                                                                                         
alone. r                                                                                                                                              
                                                                                                                                                      
Legislations and regulatory frameworks, no matter how well                                                                                            
formulated, by themselves are o substitute for good corporate                                                                                         
governance, sound management and high ethical standards by                                                                                            
directors and the management alike. Experience also shows that                                                                                        
no system of supervision or control mechanisms, however                                                                                               
vigorous, can guarantee that there will not be abuses or                                                                                              
betrayals from the very people who have been empowered and                                                                                            
entrusted with the vital task of directing a company.                                                                                                 
                                                                                                                                                      
Surely the management philosophy that continuous learning,                                                                                            
which is seen as critical to the survival of a business, be                                                                                           
solely confined to all individuals in the organization to the                                                                                         
exclusion of directors, does not hold water.                                                                                                          
                                                                                                                                                      
The acquisition and the utility of knowledge can only enhance                                                                                         
the professional calibre of the Malaysian company director in                                                                                         
per- forming his statutory and fiduciary role and will no                                                                                             
doubt make him more efficient and effective in his conduct of                                                                                         
the business of the company that he directs. It should not be                                                                                         
surprising that this will in turn make him not only an                                                                                                
indispensable but a highly valued part of the management team.                                                                                        
                                                                                                                                                      
The process of professionalising Malaysian company directors                                                                                          
should take on a new and dynamic dimension - one that will                                                                                            
ensure an orderly development of the corporate sector with                                                                                            
effective and responsible management. Directors must live up                                                                                          
to the expectations of our times by portraying the highest                                                                                            
professionalism and ethics in the conduct of their businesses.                                                                                        
                                                                                                                                                      
This, besides instilling a sense of "spiritual wellness" in                                                                                 
the individual, will enhance the corporate image of the                                                                                               
company' and go a long way in strengthening the corporate                                                                                             
identity.                                                                                                                                             
                                                                                                                                                      
The natural spin-off of the professionalising process will be                                                                                         
greater and more wide-ranging participation of private sector                                                                                         
companies in nation building. As well as being the engine of                                                                                          
growth of the nation ultimately the corporate sector should be                                                                                        
ready to take lead in the socio economic change with the long                                                                                         
term objective achieving a higher standard and quality of life                                                                                        
for our society.                                                                                                                                      
                                                                                                                                                      
Then society will recognise the important role that Malaysian                                                                                         
company directors play in the corporate sector, spawning a                                                                                            
continuous flow of investment, both local and foreign, that                                                                                           
will provide the impetus for economic robustness.