As discussed in our prior post, the Monetary Authority of Singapore sought input from stakeholders on possible changes to Singaporean corporate governance, following the release of the Consultation Paper on Recommendations of the Corporate Governance Council.
The Corporate Governance Council (the “Council”) sought input on proposed changes to Singaporean corporate governance through the adoption of a new code of corporate governance, changes to the listing rules of the Singapore Exchange Limited (“SGX”) and the adoption of non-binding voluntary practice guidance. Some of the proposed changes include:
- Streamlining the proposed new code of corporate governance to make it shorter and more concise compared to the existing 2012 code of corporate governance (the “2012 Code”).
- Formalizing some 2012 Code practices as part of the SGX listing rules for companies both on the Mainboard and as members of the Catalist market.
- Move some practices from the 2012 Code to the practice guidance, which also incorporates some global practices, such as limits on directorships.
In our submission, Glass Lewis generally agreed with most of the Council’s recommendations. However, on some topics we expressed concern that the recommendations could have unintended consequences, and on some topics we were not convinced that the recommendation would go far enough in addressing the problem at hand. For instance, Glass Lewis has concerns about reducing the standards of remuneration disclosure, given that Singaporean companies have generally not performed well in disclosing remuneration practices to key management personnel. Additionally, we believe that certain tests, such as limitations on transactions amounts for determining the independence of a director, should remain in the new code instead of being relegated to the practice guidance.
We acknowledged the Council’s desire to find a solution to the issue of independent director board tenure. Yet, we believe that the Council should ultimately adopt a hard cap on years of service, with reference to regional practices, even if a two-tier voting system on a director’s independence is adopted.
Finally, Glass Lewis identified certain areas where implementation could improve corporate governance practices. For example, elevating limitations on public company directorships from the practice guidance to the new code itself would be in line with practices adopted by regional peers. Additionally, Glass Lewis supports improvements to shareholder engagement and efforts to avoid the “clustering of AGMs” in peak periods, including through caps on the maximum number of AGMs per day, as well as to lengthen the meeting notice period.
The full Glass Lewis submission is available to download below. For further information please contact us at info@glasslewis.com.