Engagement guidance released alongside new Corporate Governance Code
Shareholders should not only exercise their right to attend company general meetings but also vote responsibly, according to new guidance on shareholder engagement drawn up by a top-level Singapore panel.
The proposed guidance was released by the Corporate Governance Council alongside final revisions to Singapore’s corporate governance code today. It’s the latest attempt to define shareholder responsibilities and follows other “stewardship codes” that have been published in the last few years.
Although it doesn’t form part of the code, the advice aims to enhance the quality of engagement between shareholders and companies – “to help drive higher standards of corporate governance and improve long-term returns to shareholders”.
It says that shareholders’ vote at annual meetings is a direct way of expressing views and expectations to the board, and that investors should tell companies why they disagree with proposals.
Shareholder groups are encouraged to adopt international best practices and develop their own guidelines on their roles as shareholders of listed companies.
“To ensure that these standards are achieved and sustained in practice, active and constructive shareholder relations is crucial,” the guidance states.
Alongside the engagement guidelines is a new principle on shareholder rights. The Council also recommends that firms put all resolutions to vote by poll and published detailed results.
“Active and constructive shareholder relations is crucial”
The 13-member Council was set up in February 2010 under the chairmanship of Alan Chan, chief executive of media group Singapore Press Holdings. A public consultation of its proposals in the summer received 75 responses.
Chan said the final code was “pragmatic and workable in practice” and covers director independence, board composition, director training, multiple directorships, alternate directors and remuneration.
The 33-page document, which will replace the previous code released in 2005, will come into effect for listed companies as of July 1 2012.
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