Date: October 4, 2010
Mr David Gerald, President and Chief Executive Officer, SIAS,
Distinguished Guests,
Ladies and gentlemen,
Good Morning.
SIAS’ contribution to good corporate governance
1. I am honoured to be invited to kick start Singapore’s first week-long Corporate Governance initiative organised by SIAS. From their beginnings as a shareholder group formed in response to the CLOB saga, SIAS have now grown into an established institution that has rendered sterling services to the Singapore market by helping to instill a culture of accountability from management and boards. I would like to commend SIAS for its efforts to improve investor protection by raising the standards of corporate governance and transparency among companies and fostering a well-informed investing community in Singapore. They have “Dared to Challenge” corporates in championing issues affecting minority shareholders. So, please join me to applaud SIAS for their contribution.
Singapore top ranked in Asia
2. On the topic of corporate governance, we are proud to say Singapore is ranked top in Asia for 2010. The ranking, conducted by Asian Corporate Governance Association (ACGA) and CLSA Asia Pacific markets, has incorporated 11 markets in Asia, including Hong Kong and Japan.
3. Singapore scored highly because of its strong enforcement actions since the global financial crisis. At Singapore Exchange (SGX), we have strengthened our oversight of companies and publicly disclosed the outcome of our enforcement actions. In particular, SGX’s unprecedented step in publishing the names of directors of six listed companies who had breached the SGX Listing Rules was cited as a factor.
4. This recognition will no doubt serve as strong encouragement for my colleagues and me to build a market with globally recognised standards in corporate governance practices, policies as well as oversight. We will work with other regulators and enforcement agencies, such as the Monetary Authority of Singapore, Accounting and Corporate Regulatory Authority, and the Commercial Affairs Department to enhance our eco-system and improve investor confidence so that Singapore becomes the financial capital and hub of Asia, and SGX, the Asian Gateway.
SGX’s Corporate Governance Framework
5. Like its stable of over 700 listed companies in Singapore, Singapore Exchange is a listed entity. Therefore, we swallow our own medicine: what we say other listed companies should do, we also similarly do!
6. Given that SGX is the exchange, some of you may ask: what has SGX done in the area of corporate governance for its listed companies?
7. One recent initiative is the introduction of a proposed Guide on sustainability reporting for listed companies. As more companies become conscious of their role also as good corporate citizens, it will be natural to take the next step on guidelines and standards, leading to rules. We are advocating a voluntary approach to sustainability reporting for the present, as we want to move in line with, and not ahead of, business needs and market development. We have reasons to believe that in the years to come, sustainability reporting and actions will gain importance companies and investors.
8. Another initiative that we have introduced was corporate governance course. On an ongoing basis over the years, SGX has worked together with the Singapore Institute of Directors and other partners and conducted corporate governance courses aimed at directors and management of newly listed companies, both in Singapore and in China, to help imbue a strong culture of corporate governance among listed companies. These are efforts we will continue to invest in to create instill the importance of corporate governance among our newly listed companies.
9. We have also successfully implemented full poll voting at our AGM last year and publicly disclosed the full shareholder votes for every resolution to reinforce transparency in the voting process. This is a milestone in shareholder democracy, as poll voting upholds the principle of one share one vote, and fulfills the demands of the institutional investors to fully participate in the results of shareholder meetings.
Governance is a collective effort
10. That said, corporate governance cannot live alone. It requires the collective efforts of all constituents – companies, intermediaries and participants, the media, and above all, shareholders – for it to function effectively.
11. In this respect, I am heartened by the continuous efforts throughout the eco-system in supporting and raising standards. Last Friday, Singapore hosted the Asian Chief Audit Executives Leadership Forum, with chief internal auditors from different parts of the world congregating in Singapore to share and learn best practices on ways to promote effective governance and controls that support businesses. I had the personal fortune of being part of the event and I am pleased to note that over the past decade, the membership of the Institute of Internal Auditors, has increased from 11,000 to 31,000, a 3-fold increase. This is strong testament to the value that companies place on internal controls, which is an important element in good corporate governance.
12. Finally, shareholders need to invest efforts to check that companies are not merely box ticking but are embracing the spirit of corporate governance, transparency and accountability.
13. In the week ahead, I am sure you will get insights from distinguished speakers and industry experts. With more knowledge, I hope you will raise the awareness and spread the consciousness of the important value of transparency, accountability and good corporate governance around you.
14. I shall leave you with a quote from Warren Buffet: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you”ll do things differently”.
15. With that, I wish everyone a fruitful week ahead! Thank you.
