Singapore code changes seek focus on long term, sustainability

The Singapore Corporate Governance Council wants to modify its code of conduct for company to emphasise the long term future of the company and play up the board's responsibilities for environmental and social impact. The code also adds a prescription to the board's duties, saying that it should "identify the key stakeholder groups and recognise that their perceptions affect the company's reputation". It has issued a consultation paper suggesting stronger language on director independence, as well as new provisions on board composition, director training, multiple directorship, alternate directors, remuneration practices and disclosures, risk management and shareholder rights.

The proposed code, revised in the aftermath of the global financial crisis, generally tightens provisions. The current code, for example, proposed "appropriate training" for incoming directors. The modifications would make that read "comprehensive and tailored induction". First-time directors should be offered training in accounting, legal provisions, and industry-specific knowledge. But it continues to recognise the peculiarities of the island state's family-led business structures, including a new section defining the need for at least half the directors to be independent when the CEO and chairman are either the same person of members of the same family. Otherwise, independent non-executives would only need to make up a third of the board, as the current code provides.

Alan Chan, the CEO of Singapore Press Holding who chaired the panel, said, "the Council recognises the need for corporate governance practices to be adopted on a contextual basis, and has sought to adapt rather than replicate relevant practices of other jurisdictions. The proposed set of recommendations is a balanced package that not only serves to enhance Singapore’s corporate governance standards, but is also pragmatic and workable in practice."

Source documents: The consultation paper is an 18-page pdf file. The news release has links to the draft code and annexes.

http://www.mas.gov.sg/news_room/press_releases/2011/Consultation_on_the_Proposed_Revisions_to_the_Code_of_CG.html