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BT EXCLUSIVE: MARKET REGULATION

SGX RegCo seeks to hardcode whistleblowing policy into Listing Rules

This ensures confidentiality and no retaliation against complainants, says regulator

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"We are doing all these to give whistleblowers confidence; confidence to come forward and alert us," says Mr Tan.

Singapore

THE Singapore Exchange Regulation (SGX RegCo) intends to hardcode into its Listing Rules a whistleblowing policy for all companies that ensures confidentiality and no retaliation against complainants.

Having outlined its whistleblowing policy and officially set up a whistleblowing office in late 2019 to more effectively address tip-offs, feedback, complaints and short-seller reports on companies, the frontline stock market regulator now wants to make sure complainants are also protected at the company level.

"We will implement this through the Listing Rules," Tan Boon Gin, SGX RegCo's chief executive officer, said at a recent interview.

Mr Tan believes listed companies must play their part, and wants to make company audit committees responsible for ensuring the whistleblowing policy is adhered to.

Currently, whistleblowing on workplace issues is more commonly dealt with under an individual company's whistleblowing rules.

The Code of Corporate Governance (CG Code) requires companies to publicly disclose and communicate to its employees the existence of a whistleblowing policy.

The code does not, however, have the force of the law. This means that there is nothing to compel companies to enforce these whistleblowing policies.

By hardcoding the whistleblowing policy into the Listing Rules, Mr Tan said compliance will become mandatory. Moreover, the requirements will be more detailed.

While the CG Code focuses mainly on the safety of employees, the new requirement under the Listing Rules will cover "more general applicability", going beyond employees.

SGX RegCo aims to consult the market on this move in June, and if all goes well, to institutionalise a healthy whistleblowing culture across the market by year-end.

"We are doing all these to give whistleblowers confidence; confidence to come forward and alert us. The way we have gone about doing this is by signalling to them a clear and safe channel for them to utilise; and we are also assuring them that they have our full attention," Mr Tan said.

It is crucial that SGX RegCo does this given that it has adopted a risk-based approach, requiring only high-risk companies to report quarterly effective Feb 7, 2020.

"We need to provide a formal channel for the market to feedback to us which companies have lapses, which companies they are most concerned about and which companies they think are the higher-risk companies," Mr Tan explained.

"This whistleblowing policy must contain two elements. One, the preservation of confidentiality. And two, protection against reprisals. We are going to make the audit committee responsible for making sure that the company adheres to this policy," Mr Tan said.

Since the whistleblowing office was set up, SGX RegCo has received 13 tip-offs, some of which are actionable.

Reports received comprise allegations about financial irregularities, allegations about whether a company's disclosure has been timely or adequate, allegations about various aspects of corporate transactions as well as governance issues including interested person transactions (IPTs).

Mr Tan is of the view that many of the whistleblowing reports are more appropriately dealt with at the company level.

"So it is important that the market has confidence in the system, both in the company as well as at the regulator level," he noted.

"We want to spell out more clearly in detail what protecting the safety of a whistleblower means, and to us it means two things - confidential and non-reprisal," Mr Tan stressed.

On the receipt of a complaint, SGX RegCo's response will depend on the issue highlighted.

Typically, the regulator will undertake its own review. It may require the company involved to take remedial action. If the allegation is very serious and warrants referral to a statutory authority, SGX RegCo will do so. It can also bring the matter to the attention of the company's audit committee.

All these steps will be taken confidentially, even as the shares continue trading.

"We will handle it like any other potential misconduct. When there is a breach, there are all sorts of things we can do at the time of the breach, which includes issuing Notice of Compliance (NOC) to make sure that the company takes remedial actions or whatever actions we feel the company needs to take at that point in time in order to protect investors," Mr Tan said.

"If there is sufficient basis to issue a NOC, we will do so. NOC is a very important part of our toolkit."