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THE Code of Corporate Governance (CG Code) will come under review by a council, amid calls for companies to go beyond boiler-plate explanations.
The Monetary Authority of Singapore (MAS) said on Monday that a review of the CG Code and practices is "timely" to ensure that they continue to support sustained corporate performance and maintain investor confidence in Singapore's capital markets.
"The council will consider how the 'comply-or-explain' regime under the CG Code can be made more effective," MAS said.
"This includes improving the quality of companies' disclosure of their CG practices and explanations for deviations from the CG Code. The council will also propose mechanisms to monitor the progress made by our listed companies in strengthening their corporate governance practices."
The council will be chaired by Chew Choon Seng, former chairman of the Singapore Exchange (SGX).
Mr Chew said: "We need to ensure that our CG Code remains relevant and progressive, and supports sustained business growth and innovation. The review of the CG Code will therefore take into account changes in our corporate landscape as well as international developments.
"With market participants paying greater attention to the corporate governance practices of listed companies, companies are now under increasing pressure to become more transparent and accountable to their stakeholders. It is important for our listed companies to go beyond mere box-ticking and boiler-plate explanations. They must be able to engage meaningfully with their stakeholders and implement CG practices that lead to long-term sustainable business performance."
The last review of the CG Code was done in 2012 - then, changes were introduced to strengthen board independence and enhance remuneration practices and disclosures.
The council members are drawn from various stakeholder groups to provide a broad and diverse perspective on CG issues. Representatives from MAS, the Accounting and Corporate Regulatory Authority and SGX will also be appointed to the council.
Stefanie Yuen Thio, one of the council members, said that if the SGX allows companies with dual class shares to list here, it will be important that the proportion of independent directors on the board, and the quality of their independence, both be ensured.
"Issues such as what qualifies as independence, what is the maximum tenure for each director, and a review of the 'comply or disclose' regime, would warrant reconsideration," said the joint managing director of TSMP Law Corporation.
The council will consult the public on its recommendations, including changes to the CG Code, before finalising them.