Code of Governance
The Corporate Governance Code in Singapore is a comprehensive set of principles and guidelines designed to promote high standards of corporate governance among listed companies. Originally introduced by the Corporate Governance Committee in March 2001, the Code came into effect on January 1, 2003. It operates on a “comply-or-explain” basis, meaning companies must either comply with the Code or explain why they do not. For further reading, please refer to www.sid.org.sg.
The following https://bbcincorp.com/sg/articles/code-of-corporate-governance-in-singapore summarise the essence of the CGC.
Key principles of the Code of Corporate Governance
The key principles of the Code serve as the foundation for ethical management and accountability, guiding your company toward transparency and responsible decision-making, which include the following:
Board independence
One of the primary principles of the Code is ensuring the independence of the Board of Directors. The Code specifies that at least one-third of the Board should be independent non-executive directors with this proportion increasing for larger companies.
An independent director is described as someone who is independent in conduct, character, and judgment. They should have no relationship with the company, its related corporations, substantial shareholders, or officers that could interfere, or be perceived to interfere, with their independent business judgment in the best interests of the company.
Remuneration matters
The Code emphasizes the importance of fair and transparent remuneration policies. These policies should attract, retain, and motivate directors and key management personnel. Companies are encouraged to establish a remuneration committee to oversee these matters, ensuring that compensation aligns with the company’s long-term interests.
Accountability and audit
Accountability and audit are cornerstones of good corporate governance. The Code requires companies to establish robust internal controls and risk management systems. Regular audits, both internal and external, help ensure these controls are effective. An independent Audit Committee plays a vital role in overseeing financial reporting and ensuring the integrity of financial statements.
Shareholder rights and responsibilities
Companies should facilitate the effective exercise of shareholders’ rights and ensure that all shareholders have the opportunity to participate effectively in and vote at annual general meetings.
The Code encourages companies to engage with shareholders regularly and to consider their interests in decision-making processes.
Disclosure and transparency
Transparency is essential for building trust with stakeholders. The Code mandates comprehensive and timely disclosure of financial and non-financial information. Companies should provide clear, accessible, and accurate information about their operations, financial statements, and governance practices. This transparency helps stakeholders understand the company’s activities and assess its performance more effectively.
The information provided above is a brief overview of key aspects of corporate governance as outlined in the Code. For a more comprehensive understanding and detailed provisions, please refer to the full version of the Code of Corporate Governance by the Monetary Authority of Singapore (MAS).