Three suggestions for the new SGListCos association

LAST week, 20 companies announced the formation of an association called SGListCos. Set up to support Singapore Exchange (SGX)-listed companies, the association has identified 3 areas of focus:

• Thought leadership and advocacy

• The environmental, social and corporate governance (ESG) ecosystem

• Corporate access and investor relations

The 20 founding member companies include Straits Times Index component stocks and other large-caps, such as property group CapitaLand Investment and commodities supplier Olam Group ; as well as mid- and small-caps, such as fintech platform iFast Corp and recruiter HRnetGroup .

Also in the list of founding members are law firm Allen & Overy, Catalist sponsor PrimePartners Corporate Finance, accounting firm PwC, and Swiss bank UBS.

The association's pro-tem chairman is Chew Sutat, who retired as SGX's head of global sales and origination last year after more than 14 years at the exchange.

Little else is known about the association's goals, and individuals involved say there is still much to be decided.

But associations for listed companies can be found in several other markets, giving some idea of what the association could aim to do.

Thailand, for instance, has the Thai Listed Companies Association. It aims to provide a platform for member networking, organise consultations and discussions on regulations and ESG practices, and organise professional development and executive education.

In New Zealand, the Listed Companies Association provides "leadership for a collective voice for business". It represents the interests of its members in discussions with regulators to ensure a "fair, adequate and efficient regulatory system", and requirements that are "appropriate and reasonable".

The mission of the Chamber of Hong Kong Listed Companies is to ensure a "sound and balanced regulatory environment" that is also conducive for fundraising.

Other markets with such associations include Bangladesh, South Korea, Cyprus.

While each association is slightly different from the next, all have in common an aim of advocacy.

Much as shareholder associations – such as the Securities Investors Association (Singapore) – champion the interests of minority shareholders and represent their voice in conversation with regulators and boards, these listed company associations aim to put their collective weight behind arguments for practices and policies that work to their favour.

Will SGListCos help uplift the valuations of SGX-listed companies? Will it raise the profile of SGX as a premier listing destination? Or will it push regulators to take conservative positions that favour businesses and protect the status quo?

Here are 3 suggestions for each of the 3 panels to consider.

Raise the bar, blaze a trail

In the area of thought leadership and advocacy, SGListCos could push for higher standards of behaviour.

Companies are loath to be the first to deviate from established patterns. This is so even if an action is preferred by shareholders or is best practice elsewhere.

When proxy advisers criticised processes leading up to the proposed merger of ESR-Reit and Ara Logos Logistics Trust (ALog Trust), the chief executive of ALog Trust had objected to the "grossly unfair" comments and noted "precedent cases" in the market.

But as a thought leader, SGListCos could help listed companies see the collective benefits of setting a higher bar.

More than that, they could help ensure that SGX is looked up to as a standards-setter in the region and even globally.

Open doors, break down barriers

In the area of ESG, SGListCos could expand the existing network of directors in Singapore.

Female participation on boards across SGX-listed companies remains low: 13.6 per cent as of Jan 1, 2022, according to statistics from the Council for Board Diversity. And 45 per cent of companies only have males on their boards.

Directors tend to come from informal circles of business associates, friends and extended family.

SGListCos could help companies improve their board diversity by encouraging the adoption of professional recruitment on corporate boards.

Directors with the right knowledge and experience could better challenge management or majority shareholders, and improve a company's return to its shareholders.

Engage in meaningful ways

In the area of corporate access and investor relations, SGListCos could experiment with new ways to communicate with investors.

After Covid-19 restrictions prevented companies from hosting physical annual general meetings (AGMs), companies began first to broadcast a message from the chairman and a reading of proxy vote counts. They responded to questions with written responses, and a few later tried to incorporate live Q&A sessions.

But shareholders want conversations with management, with the ability to ask follow-up questions or to press their case. They also want responses that are more candid, and less canned.

Online platforms actually allow companies to engage with investors more regularly and in a less formal setting, and this is something SGListCos could help companies with.

The best advocacy will create an environment that reassures investors the Singapore market is one with the highest of standards, the best of practices and the strongest returns.