Singapore introduces guidance on shareholder engagement

Monetary Authority consultation calls for “constructive relationship” with companies

The Monetary Authority of Singapore, the central bank and market regulator, has proposed guidelines on shareholder engagement with companies for the first time.

The non-binding statement comes as part of a wider review of its corporate governance code.

“The objective of creating sustainable and financially sound enterprises that offer long-term value to shareholders is best served through a constructive relationship between shareholders and the boards of companies,” the statement prepared by the new Corporate Governance Council says.

“By constructively engaging with the company’s board and management, shareholders can help to set the tone and expectation for governance of the company.”

The guidance – issued in an annexe (final page) to the proposals today – says voting at companies’ annual general meetings is a direct way of expressing views and expectations to the board. “Hence shareholders should exercise their right to attend general meetings and vote responsibly.” And investors should explain to companies their reasons for disagreeing with any proposals.The Council, set up in February 2010 and headed up by Alan Chan, CEO of Singapore Press Holdings, also called on shareholder groups and associations to consider adopting international best practices.

The statement is not formally part of the new draft Code of Corporate Governance but seeks to “help drive higher standards of corporate governance and improve long-term returns to shareholders”.

The new draft puts forward 15 new proposals on director independence, board composition, director training, multiple directorships, alternate directors, remuneration practices and disclosures and risk management. The MAS is inviting public comments on the new proposals by July 31. The code applies to listed companies on a ‘comply or explain’ basis.
“Since the last review of the Code in 2005, global events such as the 2008 financial crisis have prompted closer study of corporate governance issues around the world,” the MAS said in a statement.