Audit committees from the legal perspectives: the case of Malaysia

Abstract

Good corporate governance practices are a trademark of developed capital markets. Stringent regulation of capital markets is not a consistent way to mitigate financial mishaps in developed market environment. Malaysian government has adopted a market deregulation approach, and delegated the responsibilities of ensuring a fair and proper functioning of financial institutions to the Securities Commission. The commission is required to issue listing requirements for public and listed companies to establish audit committees. This paper discusses the Malaysian audit committees' duties from the legal perspective. The discussion covers audit committee's fiduciary duties, duty to be diligent, duty of care and skill and statutory duties which are framed in order to make the functioning of Audit committees more effective.