Government's Response to the Corporate Finance Committee Recommendations
9 Nov 1998..The Corporate Finance Committee submitted its final report on 21 Oct 98. It has made 38 recommendations, concerning the philosophy and framework of regulation, standards of disclosure, and measures to liberalise and develop Singapore as an international corporate fund-raising centre.
2 The main thrust of the Committee's recommendations is that Singapore should shift from merit-based regulation to a predominantly disclosure-based regime to promote innovation, entrepreneurship, efficiency and business flexibility, while protecting the integrity of the securities market. A disclosure-based system will allow investors to judge the commercial merits of transactions. It will also give companies and market intermediaries more flexibility in conducting their businesses and fund-raising activities, leading to greater financial innovation and investment choice.
3 The proposed disclosure-based regime will also provide greater protection to investors by increasing the legal obligation to disclose, raising the standard of disclosure, and empowering the regulator to pursue civil actions in the public interest.
4 The specific changes in rules and guidelines recommended by the Committee to SES rules are in consonance with these broad principles of a disclosure-based system. They include improvements to rules governing IPO distribution, price stabilisation and documentation; employee share options; secondary offerings and warrant issues; corporate governance; and interested-person transactions.
5 The Government agrees with the principles and framework of regulation proposed by the Committee, and has accepted all the Committee's specific recommendations. The Government's item-by-item response to the recommendations is in the attached table. MOF, MAS, RCB and SES will study and revise the relevant laws or rules to implement the recommendations.
6 The Government thanks Mr Lim Yong Wah, Chairman of the Committee, and his Committee members for the extensive effort that they have put into producing a valuable report, which marks an important shift in the approach to regulation of capital markets in Singapore. When implemented, their recommendations will help achieve the broader objective of making Singapore a world-class financial centre.