Singapore proposed changes to its corporate governance rules such as ensuring the independence of directors and board oversight of a company’s internal controls as the city seeks to protect its reputation as a financial hub.
“Good corporate governance plays an important role in ensuring the effective functioning of Singapore’s capital markets,” Alan Chan, chairman of the Corporate Governance Council, told reporters today. Chan is also the chief executive officer of Singapore Press Holdings Ltd., the city’s biggest publisher.
Regulators around the world have stepped up oversight of their capital markets after coming under scrutiny during the global financial crisis in 2008. The Monetary Authority of Singapore set up the 13-member council last year with a goal to boost corporate governance standards and investor confidence.
The council proposed 15 changes to the code, which was last reviewed in 2005. The public can comment on the proposals by July 31.
The proposals include ensuring independent directors make up at least half of the board, including when the chairman and CEO is the same person or immediate family members; that a director can’t be considered independent after serving on a board for more than nine years; and that the board must be responsible for risk management and internal controls.
They also include the introduction of guidelines on shareholder rights.
“This is music to my ears,” said David Gerald, president of the Securities Investors Association Singapore and one of the council members.
A former independent director at Airocean Group Ltd. was sentenced in March to four months jail for his part in making a misleading statement to the Singapore Exchange. The central bank won its first civil lawsuits for stock rigging and insider trading last year while the Attorney General’s office has set up a unit to prosecute complex financial crimes.
“This effort is critical to maintaining investor confidence and to enhance Singapore’s reputation as a leading and trusted international financial center,” the council said in a statement.
Investors and the Securities Investors Association Singapore have also called for tighter rules governing foreign companies listed on the nation’s bourse.
Several Chinese companies listed in Singapore, including China Milk Products Group Ltd. and Sino Environment Technology Group Ltd., have reported irregularities in their accounts, leading to their shares being suspended.