Fostering a Sound and Reputable Financial Centre

Enhancing Corporate Governance Standards

The financial crisis has highlighted the importance of risk management oversight at the Board level and sparked increased global discussions on the need for better corporate governance practices. MAS has been closely monitoring developments on this front and has proposed enhancements to the existing corporate governance framework for locallyincorporated banks, financial holding companies and direct insurers. A consultation paper on MAS’ proposed enhancements was issued on 18 March 2010. The proposals emphasise the important role played by the Board in overseeing the soundness of their financial institutions. The proposals also focus on the need for directors to be equipped with the appropriate skills and to be able to commit enough time to discharge their responsibilities more effectively. In addition, independent directors play an important role on the Board by providing a check and balance on management and majority shareholders, protecting the interests of financial institutions as a whole. As such, the proposed enhancements also touch on the criteria for director independence, as well as changes to the minimum proportion of independent directors on Board and Board Committees.

MAS has also introduced a requirement for real estate investment trusts (REITs) to hold Annual General Meetings (AGMs) with effect from 1 January 2010. Mandatory AGMs will enhance corporate governance for REITs by providing an important channel for communication between REIT managers and unitholders, thereby increasing REIT managers’ accountability to unitholders.

In February 2010, MAS established the Corporate Governance Council to promote a high standard of corporate governance for companies listed in Singapore, so as to maintain investors’ confidence and enhance Singapore’s reputation as a leading and trusted international financial centre. The Council is chaired by Mr Alan Chan, Chief Executive Officer, Singapore Press Holdings Limited, and comprises members drawn from the business community and stakeholder groups. Representatives from MAS, Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Limited (SGX) are appointed to the Council on an ex officio basis. As an immediate task, the Corporate Governance Council has commenced a review of the Singapore Code of Corporate Governance. The Council will also identify opportunities for continuing professional development of directors and the development of practical guidance for Board committees of listed companies.