Date: October 24, 2011
|Mr Chew Choon Seng, Chairman, Singapore Exchange
Dr Piman Limpaphayom, Portland State University representing OECD
Mr John Colvin, CEO and Managing Director, Australian Institute of Company Directors
Ms Kathleen Cuneo, Special Counsel, Chief Legal Office, Australian Securities Investments Commission
Dr Nik Mahmood, Managing Director, Securities Commission, Malaysia
Ms Maria Juanita Cueto, Commissioner, Securities and Exchange Commission, Philippines
Mr John Lim, President, Singapore Institute of Directors
Distinguished Guests, Speakers, and Panelists
Ladies and gentlemen
A very good morning and welcome to the 3rd Asian Investors’ Corporate Governance Conference and the 2nd Singapore Corporate Governance Week.
It is indeed a privilege to have about 300 delegates comprising of corporate governance professionals, regulators from Asia and Australia and directors and senior management of listed companies from all over Asia. Experts from USA, UK, Australia and of course from various parts of Asia will try to guide you through the swamp of all the latest changes in corporate governance.
Just as we seem to have sailed through a mammoth global economic crisis that stemmed from a corporate failure in the US, we approach the European debt crisis that yet again threatens our already fragile financial and economic system.
Whilst the global macroeconomic climate continues to be challenging, Singapore and Asia have also not been spared. With growth forecasts slashed, companies must do more to attract investors. But many may question the allocation of resources for improving corporate governance during this time of uncertainty for businesses. However, we see high standards of corporate governance as an issue of national competitive advantage especially when countries are competing for investments.
Research has shown, empirically, that companies with higher corporate governance standards have a greater ability to attract investment capital, and in doing so, are also better placed to protect investors’ interests.
While Singapore has been ranked No. 1 by the Asian Corporate Governance Association survey in the 2010 CG Watch, but it is still lagging behind the best by world standards.
The latest KPMG Singapore fraud report highlighted that fraud hit nearly one in four companies in Singapore and the incidence of fraud had increased significantly, from 3.8 in 2008 to 9.0 in 2011, the average number of fraud incidents, costing an estimated total of $6.5 million in 2011. The report cited inadequate attention to and understanding of fraud, as key challenges that organizations need to address with 50% of the respondents felt that weak management and board oversight being a significant factor.
Since 2003 SIAS, together with NUS Business School, has been tracking companies on their compliance with the corporate governance Code. The best companies are awarded the Singapore Corporate Governance Award. It is interesting that our findings reveal that companies still tend to fulfill the minimum in the requirements for corporate governance. Companies are still following the letter of the law rather than preferring to follow the spirit of the law.
In the study conducted by Centre for Governance, Institutions and Organisations, on behalf of SIAS, the average score obtained by companies this year was 68.7 out of a possible maximum of 127. This score is somewhat stationary in comparison with last year’s score of 67.9. A broad implication is that we may be reaching a plateau in the state of corporate governance practices in Singapore. Thus a revised Code may be timely in bringing corporate governance practices and standards to a higher level but attitudinal change will be needed if we are to become best in the world.
Notwithstanding, this study also revealed that there are some improvements. For instance, there has been an increase by 21% in the number of companies where independent directors constituted more than half of the board; 40% of companies provided on going training on issues beyond director duties and liabilities, an increase by 9%; more than half of the companies, 56%, have an induction programme for all new directors and 91% of companies’ directors have separate and independent access to the company’s senior management.
There was also a 19% increase, up from 39% to 58%, in the number of companies that disclosed the process for the search, nomination, selection and appointment of new directors, but only 27%, a 11% fall from 38%, in the number of companies disclosing the criteria used for individual director performance this year.
There is a 12% increase in the number of companies having at least 2 members on the audit committee who have accounting experience or related financial management expertise or experience, 67% this year as compared to 55% last year.
One of the main concerns of investors is companies not having a whistle blowing policy in place. However, 77% of companies in fact have one in place; this is an increase by 6%.
However, only 46% of companies had the chairmen of all existing board committees present at the AGM to answer shareholders’ questions, compared to 58% last year.
As you can see, we still have a long way to go.
At SIAS, corporate governance is one of the key pillars in our vision for building an empowered and enlightened investing community. It is with the investors in mind that SIAS continues to promote good corporate governance practices and standards through various activities like these. Together with the boards, senior managers, professional institutions and regulators, we have established a good working relationship to achieve this objective. All those involved in the running of listed companies need to be involved in these initiatives.
I am, therefore, pleased to announce that so far 105 listed companies and professional organisations out of a total 400 approached have come forward to join the Statement of Support on Good Corporate Governance. We will continue to update on companies signing up on our website. It would appear that companies do want to be seen to be promoting good corporate governance. For investors, the proof of the pudding is in the eating.
Companies, regulators and markets cannot continue to operate the same way they have thus far. Directors, senior management and corporate governance professionals must continue to be updated on the changing landscape and take ownership in upholding good corporate governance practices.
In 2009, SIAS launched the inaugural Asian Investors’ Corporate Governance Conference. The intention was to bring together corporate governance professionals, listed companies and investors to discuss corporate governance issues and best practices from across the region.
Last year, SIAS expanded the event to a week and dedicated the week to promoting good corporate governance, hence, the Singapore Corporate Governance Week. This year the Corporate Governance Week will feature this Conference, four Executive Workshops, and uniquely, a Master Class by Professor Mervyn E King, Professor Extraordinaire, University of South Africa, a world renowned guru on corporate governance, a crisis management workshop and an investors’ forum on the importance of governance for retail investors.
Over the next two days you can expect the OECD findings on Corporate Governance in Asia, Progress and Challenges. You would also be hearing the views from regulators in Australia and Asia, Stock Exchanges and industry leaders on the changing corporate governance landscape. The two-day conference will highlight to you what the current issues are. I am certain that you will find these discussions insightful in shaping the future of corporate governance in the region.
This initiative, the Singapore Corporate Governance Week, is developed with the needs of the markets and the changing global regulatory environment, so that companies and also investors, in Singapore and throughout Asia can benefit from the changes to the new order for greater disclosure and transparency for a shared responsibility. By doing this, we are re-enforcing Singapore’s goal of being a leading financial hub and a centre for corporate governance excellence.
I wish to thank, first of all, OECD for being our Supporting Organisation, Singapore Exchange for being the Supporting Exchange and a Sponsor, Boardroom for its sponsorship and support in marketing efforts, the Big Four, KPMG, PricewaterhouseCoopers, Deloitte, Ernst & Young, ACCA and CPA Australia, Rodyk & Davidson, WongPartnership, Baker & McKenzie, Wong & Leow, and not forgetting our legal friends from New York, Kirby McInerney, Chubb, RSM; our university partners, CGIO NUS Business School and SMU Sim Kee Boon Institute and all endorsers, we thank you sincerely for your support and for making this Corporate Governance Week a success.
SIAS will continue to work with industry partners in Singapore and Asia to further the cause of good corporate governance in the interest of all investors. I would like to see the next year’s conference develop into a Global Conference.
I wish you all an enjoyable conference and I’m sure you will take with you much from the experts.