Date: September 23, 2019
Minister Ong Ye Kung, Minister for Education,
Mr Daniel Teo, Chairman, SIAS
Mr Carmine Di Noia, Commissioner, CONSOB, Italy
Mr Greg Medcraft, Director, OECD Directorate for Financial and Enterprise Affairs, France
Distinguished speakers, guests from near and afar
Distinguished guests, Ladies and gentlemen,
It gives me great pleasure to welcome you all to our 10th Corporate Governance Week in this, the 20th year of the formation of the Securities and Investors Association of Singapore.
A developed capital market is one which allocates resources to their best uses and therefore benefits its economy, and one which observes high standards of corporate governance. With this in mind, over the past 20 years Singapore has introduced several initiatives to raise the level of corporate governance in the local market. This was done to promote awareness of the need for all companies and organisations that deal with the public to behave honestly, responsibly, and to treat all stakeholders fairly and with respect.
Our raison d’etre and focus on corporate governance, is that investors need to trust investee companies and ultimately, this hinges on the quality of disclosures and honest communication with stakeholders.
Corporate governance standards have been improving in Singapore with the measures introduced by the regulators and the market driven initiatives by SIAS and industry players. However, we are always mindful that together with the market, governance practices are constantly changing and evolving, and that regulators, practitioners and SIAS cannot sit still and rest on our laurels. We have to move with the times and keep ourselves constantly updated of the latest developments in governance in order to be able to properly discharge our duty to the public. Hence, this annual event, which is one of the initiatives we have established in this market
Improving corporate governance at the company level
Over the last three years, we have been dispatching our in-depth Q&A on Annual Reports to listed companies aimed at better disclosures and corporate governance practices at the company level. We pose the questions to companies on their corporate governance practices, business strategies and financial statements with the objective of helping shareholders to have better engagement with the company, to seek accountability from the boards at AGMs thereby raising the standards of meetings.
Since we commenced this initiative, we have covered nearly 600 listed companies and issued over 1000 sets of questions. The questions focus have been on directors’ responsibilities, remuneration, independence on the board, diversity, director training and questions on their business strategies. Accounting matters such as the adoption of SFRS(I), material variances and audit disclaimers; responses to changes in the listing rules and Code of Corporate Governance.
As companies embark on sustainability reporting, the Q&As also engage companies to ensure that their sustainability efforts are not merely “box-ticking” exercises, but translate into sustainable practices and business models to create long term value for all stakeholders. We will do more to help shareholders understand sustainability reports and to ask the right questions, especially in the areas of risk disclosures.
Our observations
From our research, companies can do better at providing shareholders with more clarity on their business models. They should clearly demonstrate how they generate value for shareholders.
Very often, the statement from the chairman/CEO is mostly just historical and little is mentioned about the future. Stakeholders want to know the opportunities and the challenges companies are facing. It is a missed opportunity for the company to engage with its stakeholders if they stick to the same old template for their annual reports (including boilerplate text for the chairman/CEO statements)
In the disclosure of remuneration, companies can improve by:
- RCs being more pro-active in encouraging greater transparency on their remuneration policies and the level and mix of remuneration;
- Establishing and clearly showing the link between pay and performance;
- RCs ensuring that a significant and appropriate proportion of executive directors’ and key management personnel’s remuneration, especially for companies that have reported losses for years, is linked to corporate and individual performance.
Fundamentally, trust between stakeholders and the company must be maintained. After all, it is enshrined in the Singapore Corporate Governance Code that companies give “the opportunity (to shareholders) to communicate their views on matters affecting the company. The company gives shareholders a balanced and understandable assessment of its performance, position and prospects.”
I urge all companies to bear this in mind as we head into the closing stages of 2019, facing a future where the only certainty is heightened volatility amid the slowing economy and where distress levels are slowly but surely rising. Companies must communicate clearly their position and not shy away, especially during bad times, but instead engage more with their stakeholders. We will be taking more proactive steps to seek better communication and engagement.
Technology – the new face of governance?
This brings me to the theme of this year’s Conference, “Technology – the new face of governance?’’ which aims to provide updates on the latest thinking and best practices in governance worldwide in the face of rapid technological change.
Digital technologies are now turning the world upside down. It is a fascinating, but challenging, time for business. Industry boundaries are disappearing. Platform companies, such as Grab, operate across multiple industries (transportation, finance, healthcare, food, etc.) and use networks to deliver new business models and disrupt incumbents. Social media empowers all the stakeholders and has transformed the meaning of transparency.
We cannot think in terms of traditional corporate structures anymore. Their boundaries have become more fluid and porous. Traditional corporate organizations with their departments, business divisions, and hierarchical relationships between the different groups of stakeholders are changing as companies adapt to this environment.
I am grateful and honoured to welcome experts from all around the globe, experts from United States, United Kingdom, Italy, France, Netherlands, Australia, Hong Kong and, of course, Singapore, who will share their insights on what is being done in their jurisdictions in the face of technological advances and how we can all raise the governance bar for the local market in order to maintain Singapore’s position as a leading Asian gateway for international capital.
Singapore Advancing to be Asia’s Hub for Restructuring
In this respect, I am also pleased that a segment of this year’s Conference will be devoted to discussing the latest developments in Singapore’s efforts to become a regional debt restructuring hub. The experience, gleaned from the several debt restructurings undertaken on behalf of the oil and gas sector over the past few years, should prove invaluable in this respect and I am confident that in time, Singapore will be the centre of choice for companies seeking help on the debt front.
Also included in the programme is a session on understanding retail investors and how companies can improve liquidity and create long-term relationships with their shareholders through better engagements. All of this makes for an exciting few days ahead.
Thank you, Minister, for gracing today’s Conference. Also, a big thank you, to all our distinguished speakers for your participation and all of you delegates for your attendance. I also want to extend my deepest appreciation to all our sponsors, donors, supporters of the Corporate Governance Pledge and endorsers for coming forward to support this event, not forgetting my staff who worked very hard to make this Conference a success.
I trust you will find this week to be an enjoyable and an enlightening one
Thank you.
