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SGX RegCo working with SIAS and SID to issue best practices guide at AGMs

THE Singapore Exchange RegCo will work with the Securities Investors Association (Singapore) and the Singapore Institute of Directors (SID) to come up with a guide on how directors and investors should best conduct themselves during shareholder meetings here.

The best practices guide will present a holistic view of each party’s role and responsibilities at annual general meetings (AGMs) and other shareholder meetings, said Singapore Exchange Regco chairman Tan Cheng Han.

This latest effort by the SGX, the SIAS and the SID will be different from the guides or a code on the conduct at AGMs that were previously published and will not be “one sided”, he said.

“All directors and shareholders want the same thing from shareholder meetings and AGMs - constructive discussions and fruitful engagement conducted in robust yet courteous spirity. It does neither management nor shareholders any good when relationships break down and mutual trust and confidence is lost,” said Prof Tan in his keynote speech at the launch of The Singapore Directorship Report 2018 on Wednesday that was organised by the SID and attended by some 300 participants.

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The issue of shareholder and board conduct has turned into a hot topic since Stamford Land Corporation filed a defamation suit against shareholder Manohar Sabnani over statements he allegedly made during the group’s 2016 and 2018 AGMs as well as in publications post the latest AGM.

Earlier, Prof Tan also remarked on the growing trend of shareholder activism in Asia, citing data from research provider Activist Insight. In the first eight months of this year, a total of 90 activist campaigns have unfolded across Asia versus 60 over the same period in 2017.

“The increasing trend in this part of the world should make us sit up,” he said.

The 2018 Singapore Directorship report - the third edition of a biennial report that was first rolled out in 2014 - was produced by the SID with the support of the Accounting and Corporate Regulatory Authority (Acra) and the SGX, in partnership with Deloitte, Handshakes and Nanyang Technological University. It is a comprehensive analysis of directorship and board practices in Singapore on multiple aspects ranging from remuneration, diversity to board composition.

It also serves as a guide to companies on the impact of the recent changes to the Code of Corporate Governance and consequently, the Listing Rules that were announced in August and will come into effect on Jan 1, 2019 except for the rules on the nine-year tenor for independent directors and the requirement for independent directors to comprise one-third of the board which take effect in January 2022.

The report findings indicate that the average tenure of independent directors in Singapore is 7.3 years and that more than a third of independent directors (IDs) have held their appointments for over nine years.

Of the 523 companies which have been listed for nine years or more, over half or 55.3 per cent have at least one ID who has served for over nine years which could render them “non-independent” once the nine-year rule kicks in.

It is heartening to note that the proportion of IDs on boards has been on the rise since 2014. Then, only 54.5 per cent of the firms had IDs that comprised half or more of their boards versus 70.3 per cent currently - a significant leap.

One weak spot was the low disclosure of remuneration with only one in three companies reported on director salaries.