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Singapore considers review of corporate governance code

Singapore should to update its corporate governance code to encourage better boardroom behaviour and improve diversity, a director of the Monetary Authority of Singapore (MAS) has said.27 Sep 2016

Corporate governance is changing, with greater expectations for accountability, transparency and responsibility from directors, Ong Chong Tee, MAS's deputy managing director for financial supervision said in a speech during Singapore's Corporate Governance Week.

It has been four years since Singapore's Corporate Governance Code was last reviewed and it may be time to do so again, Ong said.

"One area that will need to be considered is in the area of board diversity. A more diverse board is required not only out of political correctness but from good business sense. A board that has a good mix of experiences, background and technical competencies will result in more robust and thorough discussions and in decision-making by minimising blind spots or information gaps," Ong said.

Good corporate governance is also important to investors and other stakeholders, he said.

"Companies increasingly have to be more transparent and accountable to their stakeholders. In the past year, MAS has worked with market participants including industry associations to improve the level of corporate disclosures in Singapore" Ong said.

"But high quality corporate disclosures continue to be a recurring concern for investors as seen in some recent allegations of accounting irregularities against a few commodity-related or energy resources firms. The bugbear is that investors looking to analyse financial information put out by companies may feel hampered in doing so," he said.

Investors often find that the usefulness of a company’s financial statements is limited by "over-aggregation of information, insufficient disclosures and disclosures that are difficult to understand," Ong said.

 "These findings suggest that companies can do more in providing simple and succinct financial disclosures. In this regard, audit committees and directors also have a role in ensuring that financial disclosures of their companies are sufficient, timely and meaningful," he said.

"Any review will need to carefully weigh the differing perspectives of different stakeholders. What is needed is a balanced and progressive code that not only serves to enhance Singapore’s corporate governance standards, but is also pragmatic and workable in practice," he said.

The Singapore Institute of Directors has also issued a series of guidebooks in corporate governance since August last year and will release a board guide in the coming months, Ong said.

"This will be a very helpful document that highlights roles and responsibilities of the board, and provides practical tips for directors to internalise corporate governance best practices and discharge their fiduciary duties," he said.

Investors in Singapore are expected to have a stewardship code detailing how they should use their power as shareholders within the next three months.

The code follows similar developments in Japan, Malaysia, Hong Kong and Taiwan, and is due to be launched later this year, Hans Cristoph-Hirt, co-head of Hermes Equity Ownership Services told the Business Times.