Raising Corporate Governance Standards for Singapore-listed Companies

Mr Chua Kheng Wee Louis asked the Prime Minister (a) what are the plans under consideration to raise corporate governance standards for listed companies in Singapore; and (b) whether the Government is considering imposing regulatory requirements for companies to meet minimum governance standards, such as attaining minimum Singapore Governance and Transparency Index scores.

The Monetary Authority of Singapore (MAS) works closely with the industry to uplift listed companies’ corporate governance standards. Key stakeholders include Singapore Exchange (SGX) and the Corporate Governance Advisory Committee (CGAC), an industry-led body set up to advocate good corporate governance practices.

The SGX Listing Rules and the accompanying Code of Corporate Governance (CG Code) set out the baseline corporate governance standards that all listed companies should adhere to. These include requirements on board composition, director independence and remuneration.

These minimum requirements are reviewed regularly by MAS and SGX in consultation with CGAC to take into account latest developments and best practices. For instance, in January this year, SGX announced amendments to its Listing Rules to limit the tenure of independent directors serving on boards of listed companies to nine years, and to require listed companies to disclose the exact amount and breakdown of remuneration paid to the CEO and directors.

Mr Louis Chua mentioned the use of the Singapore Governance and Transparency Index (SGTI). In fact the key requirements that go into the SGTI scores are already reflected in the SGX Listing Rules and the CG Code.

While scorecards are useful for benchmarking practices across entities, they may not fully reflect the quality of disclosures or governance practices. Take for example, the issue of board diversity disclosures. This requires listed companies to describe how the combination of skills, talents, experience and diversity of its directors serves the needs and plans of the listed company. These are important qualitative assessments that need to be made in the context of the operating environment of the company. They are not easily reduced to a simple score.