Singapore reviews governance code and listing rules after international consultation

Monetary Authority of Singapore OK’s revision

The Monetary Authority of Singapore (MAS) has given the green light to a revised Code of Corporate Governance and subsequent amendments to the national stock exchange’s listing rules, after a consultation in which international institutional investors have provided feedback.

MAS, the city state’s central bank and financial regulatory authority, said the recommendations issued by the Corporate Governance Council, a body set up in 2017 to undertake the revision of the Code, focused on strengthening the following areas: board quality and independence, engagement between issuers and shareholders, and fostering long-term within the investment chain.

The Code has also looked at the “disclosure of the relationship between remuneration and value creation” as well as at the “consideration of the interests of groups other than shareholders” which is an approach taken by the UK’s Governance Code released in July.

Respondents included the likes of APG Asset Management, BlackRock, BMO Global Asset Management, British Columbia Investment Management Corporation, the California State Teachers’ Retirement System, Fidelity International, as well as the Council of Institutional Investors and the International Corporate Governance Network.

Others included Aviva Investors, EdenTree Investment Management, Legal & General Investment Management and the Association of Chartered Certified Accountants.The Corporate Governance Council has recommended the introduction of a new principle for companies to consider and balance the needs and interests of stakeholders.

“The board should determine the company’s relevant stakeholders and set policies and practices in relation to material stakeholders that are identified,” the Council recommended.

Regarding remuneration, a number of respondents suggested adopting a “say on pay” system. The Council however, stated that this approach “is not necessary in the Singapore context at this point.”

“Shareholders can express their views on the quality of the disclosure by engaging the company, including through Annual General Meetings. To provide companies with greater guidance on disclosures relating to remuneration, the Council recommends revising the Practice Guidance to set out the key areas to be covered in such disclosures,” the Council stated.

It added: “This will help to demonstrate how companies can provide meaningful disclosures, without revealing confidential information which could negatively impact their competitiveness.”

The Corporate Governance Council has now finished its mandate. An independent Corporate Governance Advisory Committee will monitor the implementation of the Code. MAS said members to this new body would be appointed in due course.

The new Code is effective from 1 January 2019, with a three-year transition period for changes in listing rules pertaining board composition.