Reply to Parliamentary Question on SGX RegCo's regulatory oversight of listed companies
QUESTION NO 2310
NOTICE PAPER 1377 OF 2018
FOR ORAL ANSWER
Date: For Parliament Sitting on 13 February 2019
Name and Constituency of Member of Parliament
Mr Leon Perera, NCMP
To ask the Prime Minister what measures are being taken to ensure that (i) the minimisation of the risk that SGX-listed companies experience a sudden deterioration in financial viability and (ii) SGX RegCo is sufficiently resourced to discharge its obligation.
Answer by Mr Ong Ye Kung, Minister for Education, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1. The financial performance of companies depends on many factors – such as the global business conditions, competition, performance of specific projects, and also its own business decisions.
2. That is why investing in listed companies entails risks. Investors in search of returns must understand that returns come with risks.
3. Our regulatory regime does not, and cannot, dictate how listed companies make their commercial decisions or seek to prevent business failures. What regulation can do is to promote transparency and good disclosure practices so that investors are able to make informed decisions.
4. Under SGX’s listing rules, listed companies are required to provide timely and accurate disclosure of all material information concerning their business, financial condition and prospects. This includes reporting financial results either quarterly or half-yearly, depending on their market capitalisation. Further, if the board sees clear evidence of significant improvement or deterioration in the company’s near-term financial performance, it is obliged to make an immediate announcement.
5. As the front-line regulator, SGX RegCo monitors listed companies’ compliance with disclosure requirements. If they are inadequate or lack clarity, SGX RegCo will, either by way of public queries or by directly engaging the listed company, elicit fuller disclosures. For example, in FY2018, it issued more than 400 public queries. For serious disclosure lapses or irregularities, SGX RegCo will investigate and take appropriate enforcement actions.
6. As to the question on whether SGX RegCo is sufficiently resourced, RegCo did not start from scratch. When it was constituted last year, it took over all the existing regulatory functions and resources of SGX. A separate board with a majority of independent directors was formed with the sole responsibility of overseeing SGX RegCo’s performance of its regulatory functions. This was aimed at ensuring the independence and dedicated focus of SGX’s regulatory functions. SGX RegCo also remains supervised by MAS.
7. SGX RegCo, like most reputable regulators, takes a risk-based approach in determining where to focus its efforts and resources. This is the right approach. Under its new Fast Track programme, companies which maintain a good history of compliance and corporate governance standards will enjoy faster processing times for company submissions, such as circulars, and share issuance applications; while those with poor compliance records will be subject to increased scrutiny. Its efforts to respond in a timelier manner to potential cases of corporate malfeasance have also been well-received by the market.
8. SGX RegCo will continue to build up its capabilities and strive to ensure that listed companies abide by high standards of corporate governance and disclosure practices.
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MAS launched a public consultation on a revised framework to strengthen surveillance and defence against money laundering risks in Singapore’s Single Family Office sector.
MAS and the China Securities Regulatory Commission held their annual supervisory roundtable, where both regulators exchanged views on supervisory approaches and discussed initiatives to deepen capital markets connectivity between Singapore and China.
The Monetary Authority of Singapore (MAS) introduced amendments to the Code of Corporate Governance, to reflect SGX RegCo’s Listing Rule changes to introduce a nine-year tenure limit for independent directors and mandatory remuneration disclosure for each individual director and CEO.