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Corporate Regulation and Governance Policy Committee
The work of the Corporate Regulation and Governance Policy Committee is progressing well.One of the three review committees under its wing, the Corporate Governance Committee (CGC), has completed its work. After conducting a month-long public consultation, the CGC, a private sector-led committee established by the Ministry of Finance, MAS and the Attorney-General’s Chambers, issued in March 2001 its Final Report and a Code of Corporate Governance, which sets out recommended corporate governance principles and practices. The second review committee, the Disclosure and Accounting Standards Committee, has reviewed the processes by which accounting standards are set, maintained and regulated in Singapore. It recently posted its draft report on the Internet for further public comment. The third committee, on Company Legislation and Regulatory Framework, will hold a public consultation soon.
Strengthening Corporate Governance and Disclosure for Local Banks
Local banks have in recent years implemented significant improvements in corporate governance and disclosure practices. These include the implementation of the recommendations of the Committee on Banking Disclosure in 1998, the establishment of Nominating Committees,
and the appointment of directors and chief executives under MAS Notice 622 in 1999. In addition, the proposed Code of Corporate Governance released in March 2001 will serve as minimum standards to be observed by local banks. Banks, as custodians of public funds, are expected to observe higher standards of corporate governance.
As part of the continuing effort to strengthen banks’ corporate governance and disclosure standards, a working group comprising representatives from MAS and the local banks was set up in February 2001. This working group is reviewing guidelines on the determination of directors’ independence, as well as on the composition, roles, and responsibilities of banks’ Compensation and Audit Committees.
MAS also recognises that higher disclosure standards enhance corporate governance as they allow stakeholders to better assess the effectiveness of the board and senior management. Disclosure standards of our banks have been significantly raised. Local banks have taken a phased approach in disclosing pertinent information related to the areas of corporate governance practices, financial performance review, and risk exposure and management practices. For financial year 2000, local banks have improved disclosure of directors’ remuneration, related party transactions and risk management practices. They will be disclosing further details next year on all these areas. This will put local banks on par with their international counterparts.
Prospectus Disclosure Regime
New provisions were introduced in the Companies (Amendment) Act 2001 to increase accountability for prospectus disclosures:
a) Underwriters (in addition to issuers and their directors previously) are now held liable for misleading or inadequate prospectus information.
b) The issuer may be required to issue a supplementary or replacement prospectus if a prospectus was found to contain false or misleading information or to have omitted material information after it had been registered.
The Singapore Code on Take-Overs and Mergers
On 21 November 2000, the Securities Industry Council issued a new Practice Note No.14 on Partial Offers. The new practice note provides more take-over
options, in that offers may now be made for part (either less than 25% or at least 50%) of a company’s voting shares instead
of 100% previously.
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