ONE of the key decisions the Corporate Governance Committee which developed the first Code of Corporate Governance in Singapore had to make was whether to base it on the shareholder or stakeholder model. It opted for the shareholder model, although it recognised that enhancing long-term shareholder value requires the interests of other stakeholders to be taken into account. The first paragraph of its report defined corporate governance as follows:

“Corporate governance refers to the processes and structure by which the business and affairs of the company are directed and managed, in order to enhance long term shareholder value through enhancing corporate performance and accountability, whilst taking into account the interests of other stakeholders. Good corporate governance embodies both enterprise (performance) and accountability (conformance).”

I believe it was the right decision to adopt the shareholder model at that time, to provide a clear focus for companies and boards.