Singapore proposes stronger corporate governance rules

The Corporate Governance Council of Singapore has released a consultation paper on its recommendations to revise the country’s Code of Corporate Governance. The Monetary Authority of Singapore (MAS) said the recommendations aim to support sustained corporate performance and innovation, and strengthen investor confidence in its capital markets. The MAS announced the formation of the council last February under the chairmanship of Mr Chew Choon Seng, former chairman of the Singapore Exchange (SGX). The code was last reviewed in 2012, when changes were introduced to strengthen board independence and enhance remuneration practices and disclosures. “Corporate governance practices globally have continued to evolve since then. MAS has been monitoring these market developments and industry feedback on how the code can be improved. A review of the code and practices is thus timely to ensure that they continue to support sustained corporate performance and maintain investor confidence in our capital markets,” stated the regulator at the time. The council was asked to consider how the “comply-or-explain” regime under the code could be made more effective. This included improvements in the quality of companies’ disclosure of their corporate governance practices and explanations for deviations from the code. The council was also asked to propose mechanisms to monitor the progress made by listed companies in strengthening their corporate governance practices. MAS stated this month that the council believes that a “well-rounded” board, with the appropriate mix of skills, experience and independence, is critical to good corporate governance. “Hence, a key focus of the code revisions is to reinforce board competencies through encouraging board renewal, strengthening director independence and enhancing board diversity. Other proposed code revisions include greater emphasis on disclosures of the relationship between remuneration and value creation, and the need for companies to consider and balance the needs of all stakeholders,” it states. Beyond code revisions, the council also proposes to clarify the intent of the “comply-or-explain” regime and the expectations on listed companies’ corporate governance disclosures. “Given the importance of a conducive ecosystem to support companies in implementing good corporate governance practices, the council is recommending the establishment of an industry-led Corporate Governance Advisory Committee,” explains the MAS. Mr Chew Choon Seng said: “The package of recommendations takes into account the changing business environment and the diverse views of various stakeholder groups that the council has engaged. The streamlined code is shorter and concise. It seeks to encourage companies to move away from a compliance mindset and adopt thoughtful corporate governance practices that will best support their long-term business objectives.” The council has invited interested parties to submit their feedback on the recommendations by 15 March this year. The paper is available on the MAS website.

Singapore proposes stronger corporate governance rules

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