Disclosure and corporate governance of insider trading: The Malaysian perspectives.


Edward Sek Khin Wong *, Choong Kwai Fatt and Priscillia Yap Poi Yok

This study examined the issues of disclosure of and corporate governance of insider trading in Malaysia. Insider trading has evolved itself in various jurisdictions from the agency theory to the misappropriation theory. In Malaysia, the mere fact of the receipt of information itself resulted in a triggering of a breach of insider laws regardless of unrealized gain or loss. In this paper, documents from several articles, section 183 - 188, Capital Market and Services Act 2007 (CMSA), including the inclusion of “Chinese walls” were used as a defence for a corporation with regard to conduct of its officers under section 194 of the CMSA. Moreover, the Malaysian disclosure best practises guidelines of 2004 were scrutinized in studying and establishing an evolution of insider provisions leaning towards the philosophy of disclosure theory. The findings indicated that should the insider misappropriated the “property information” of a Company by non-disclosure, by not disclosing it in a timely manner, by being inaccurate, by being ambiguous, or by disclosing to another person who have proprietary information before it officially reached the market warrant the prospect of violating insider-trading rules? As a result, the removal of intentional misappropriation and the inclusion of the recipient of such information being liable depict the emphasis of disclosure. This study can assist law enforcement bodies to provide legitimacy to the transparency rules and insider trading provisions to reduce the gap between the legal norms and the social norms of the day.


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