MAS Announces New Rules for Singapore-Listed Companies

Singapore. The Code of Corporate Governance is set to be revised to include new rules for Singapore-listed companies. These rules are expected to improve investor confidence.

According to MAS, the revisions were suggestions from the Corporate Governance Advisory Committee’s recommendations in September 2022.

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Part of the new mandate includes a nine-year tenure limit on independent directors, as well as a mandatory remuneration disclosure for CEOs and directors.

The information companies need to disclose covers the base or fixed salary, and variable or performance-related income or bonuses. It should also include the benefits in kind, shared-based incentives and awards, stock options granted, and other long-term incentives.

“SGX RegCo believes that the increased transparency will enable investors to assess whether the directors and CEO are appropriately incentivised,” shared SGX RegCo, the exchange’s regulatory arm.

Although concerns about privacy, security, and competition were raised during the consultation, most participants supported the disclosure of information.

As for the nine-year limit tenure, it stemmed from recommendations by the Corporate Governance Advisory Committee (CGAC) and received broad market support during a public consultation process, said SGX RegCo.

This move will remove the two-tier vote mechanism that retains long-serving independent directors. Previously, long-serving independent directors may continue to be independent if their appointment was approved by shareholders, excluding the directors and the CEO of the company and their associates.

“This mechanism was widely used by issuers to retain hundreds of long-serving independent directors, inhibiting board renewal and progress on board diversity,” said SGX RegCo.

The new revisions will be effective starting on 1 January 2025, which coincides with the implementation of the SGX Listing Rules requirement.

According to the assistant managing director of capital markets at MAS, Lim Tuang Lee, the new revisions are crucial to improve director diversity, increase market transparency, and heighten board renewal.

“High standards of corporate governance, characterised by strong accountability and transparency, are critical in upholding investor confidence in our capital markets,” he shared.

According to SGX RegCo CEO Tan Boon Gin, “these changes provide an opportunity for companies to inject new skills, experience and knowledge into their boards, all of which will be invaluable in guiding the business for the long term.”

Minister for Social and Family Development Masagos Zulkifli added that companies should “use this opportunity to think actively about succession planning and refresh their boards with the right mix of board directors to best chart their path forward”.

“This is an important move that will promote good governance, as well as greater diversity that strengthens boards’ decision-making process,” he added.

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