ANNUAL REPORT 2002 / 2003


THE FINANCIAL SECTOR - KEY REGULATORY AND SUPERVISORY INITIATIVES

BUILDING STRONG PILLARS FOR GOOD CORPORATE GOVERNANCE

Higher standards of corporate governance are needed in the financial sector to foster a stronger risk management culture, better internal controls, and greater transparency.

Key initiatives taken last year to improve corporate governance included:

Established in August 2002, the CCDG comprises members from businesses, professional organisations, academic institutions and the government. Its primary role is to:

One of the Councilís recommendations was quarterly reporting, which is now required of listed companies with market capitalisation of S$75.0 million or more. Smaller companies have been exempted until 2005 when a review will be conducted.

The International Accounting Standards were reviewed to make sure they were applicable in Singapore. Most were adopted as the Financial Reporting Standards (Singapore), and Singapore-incorporated companies had to comply with these starting 1 January 2003.

The Code of Corporate Governance took effect on 1 January 2003. The Singapore Exchange (SGX) Listing Manual requires all listed companies to disclose in their annual reports, their corporate governance practices with reference to the Code.

The provisions of the Code are not mandatory. Deviations from the Code have to be disclosed by companies. The emphasis is on compliance with the spirit rather than the form of the Code.

The Company Legislation and Regulatory Framework Committee issued its final report in October 2002 with these key recommendations:

The Government has accepted all the Committee’s recommendations, and MAS is implementing those recommendations relevant to the Securities and Futures Act (SFA).

Risk-Based Regulatory Regime  Prudential Policies Enhancing MAS' Supervisory Role Greater Consistency in Standards Across Sectors
Building Strong Pillars for Good Corporate Governance  Additional Requirements Building Confidence with Sound Market and Business Conduct
Upholding Professional and Ethical Standards Laying Strong Foundation for Financial Innovation Managing Technology Risks
Improved Securities Trading and Clearing System Safer Settlement System for Foreign Exchange Payment Systems

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