International Business & Economics Research Journal – February 2010 Volume 9, Number 2 135 The Enforcement Role Of The Companies’ Commission Of Malaysia Mohd-Haswadi Hassan, Suruhanjaya Syarikat, Malaysia Glen D. Moyes, University of Texas – Pan American, USA Zuraidah Mohd-Sanusi, Universiti Teknologi MARA, Malaysia Takiah Mohd Iskandar, Universiti Kebangsaan, Malaysia ABSTRACT This paper explores the role of the enforcement efforts undertaken by the Companies Commission of Malaysia (CCM) as a regulator of the Companies Act of 1965, which is entrusted to uphold and ensure good practices of corporate governance among Malaysian companies. The paper attempts to provide an understanding on various enforcement actions in terms of the effectiveness and adequacy of the measures adopted by the CCM in promoting and improving the level of corporate governance practices in Malaysia. CCM has adopted the Balanced Enforcement Approach to promote effective corporate governance practices among the Malaysian companies. An increasing compliance rate and greater corporate governance awareness at a level similar to other countries indicates at least a minimum success of the Balanced Enforcement Approach. Indicated is the need for CCM to establish a benchmarking or ranking procedure in order to determine the level of corporate governance practices among companies in Malaysia. Keywords: Corporate Governance, Enforcement, Compliance, and Surveillance INTRODUCTION he 1997 economic crisis has resulted in a considerable effort implemented by the Malaysian government to develop a comprehensive framework for establishing good practices of corporate governance. After the establishment of the framework of good practices of corporate governance, there remained some concerns over the effectiveness of corporate governance rules arising from the increasing number of corporate misconduct cases in Malaysia (Sarji, 2007). A corporate misconduct represents noncompliance of written rules or the lack of actions taken on fraudulent activities committed within the internal control system. A weak enforcement environment of the government regulators has aggravated difficult for firms to comply with the requirements for achieving good practices of corporate governance. The lack of enforcement of regulations and laws is the key problem that needs to be corrected with a strict enforcement measure of each noncompliant corporate case (Johnson, 2003). The Companies Commission of Malaysia (CCM) is a government agency that actively advocates the practice of good corporate governance and integrity among companies in Malaysia. Under the Companies Act 1965, the role of CCM is to regulate corporations in this country. The CCM is also empowered by the Companies Act 1965 to provide services in administering, collecting and enforcing payments of prescribed fees or any other charges under the prescribed act and the jurisdiction of CCM. This paper seeks to understand the enforcement actions taken by CCM in enhancing corporate governance and the integrity of Malaysian companies. The paper further explores extent by which the CCM administers the enforcement of corporate governance and integrity upon corporations in Malaysia. This paper provides an insight into the role of CCM that has become very important as a result of the financial scandals among companies, such as Perwaja and Malaysian Airlines, which occurred during the 1997 financial crises in Malaysia. The increasing trend of corporate misconduct and fraudulent actions committed by directors and senior management personnel of the companies and non-compliance with the rules of corporate T