Corporate Governance Committee03 Apr 2001
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee (CGC) was established in Dec 1999 to review the development and promotion of best practices in corporate governance, especially among public-listed companies in Singapore.
The CGC conducted a month-long public consultation in December 2000 to seek feedback to its recommendations. Numerous feedback were received from various quarters, many of which were positive. The CGC would like to thank those who had contributed to the process. Several pertinent points raised had been incorporated into the Report and the accompanying Code of Corporate Governance.
The CGC had focused on four main areas, which are key tenets that underlie good corporate governance. They are:
Accountability and Audit; and
Communication with Shareholders.
Some of the recommendations are highlighted below.
For a company's Board to effectively fulfil its duties, it should have some degree of independence from Management. Therefore, at least a third of the Board should be independent. In addition, a Nominating Committee should be established to ensure a formal and transparent process for the appointment and re-election of directors. It should also propose objective performance criteria that measure how the Board has enhanced long-term shareholders' value.
Every listed company should also establish a Remuneration Committee to provide a greater degree of objectivity in remuneration-setting. Companies should disclose the remuneration of directors and at least the top 5 key executives (who are not also directors) by names in bands of S$250,000, for greater transparency and accountability.
Audit Committee should be made up entirely of non-executive directors. In addition, at least two members of the Audit Committee should have accounting or financial management expertise or experience, in order that it can effectively discharge its responsibilities.
Companies should provide timely disclosure of information to all shareholders in a fair and equitable manner.
Listed companies would be required to disclose their corporate governance practices and give explanations for deviations from the Code in their annual reports for Annual General Meetings held from 1 January 2003 onwards. However, listed companies are encouraged with the Code before that, if they are able to do so. The disclosure requirement would be included in SGX's Listing Manual. For more information on SGX's Listing Manual, you may wish to contact:
Corporate Communications, SGX
Tel: 236 8888
The CGC submitted the Report and accompanying Code to the Government on 21 March 2001. The Minister for Finance will formally announce that the Government has accepted the CGC's recommendations at the opening address at the OECD 3rd Asian Roundtable on Corporate Governance on 4 April 2001.
A copy of the final Report and Code is available here. The website is hosted on the Ministry of Finance homepage with links from the Registry of Companies and Businesses and the Monetary Authority of Singapore homepages. The final report and code is available on SGX's website.
MINISTRY OF FINANCE