Welcome address by Mr David Gerald, Founder, President & CEO, SIAS at SIAS Corporate Governance Digital Symposium 12 October 2020

Date: October 12, 2020

Mr Ong Chong Tee, Deputy Managing Director, Financial Supervision at MAS

Mr Carmine Di Noia, CONSOB Commissioner and Deputy Chair of the OECD Corporate Governance Committee

Mr Greg Medcraft, Director for Financial and Enterprise Affairs, OECD

Distinguished speakers and panelists,

Ladies and gentlemen,

Thank you for taking time to join us today at the SIAS Corporate Governance Digital Symposium 2020. I would like to extend a very special thanks to Mr Ong Chong Tee for taking his time to be with us. I also want to thank Mr Carmine Di Noia and Mr Greg Medcraft, both from OECD for your participation once again. We are also happy to have with us Mr J.Y. Pillay, an outstanding Singaporean, currently Rector, College of Alice & Peter Tan, National University of Singapore, and Dr Ang Hak Seng, Commissioner for Charities and Deputy Secretary of Ministry of Culture, Community and Youth. It is indeed good to see so many of you join us this year despite the challenges and disruptions that Covid-19 has brought us. It is with this same spirit that we decided to continue to hold this event digitally.

Covid-19 and Corporate Governance-Identifying right Risks

Covid-19 has thrown a curve ball to many industries and companies. We can expect the effects to linger for a few years to come. However, what’s the relevance of Covid-19 to corporate governance?

Many feel that corporate governance is just a set of rules that we must “reluctantly” follow, focussing only on the burden and cost. They fail to see the real value of having proper governance in place. I see corporate governance, specifically integrity, as the foundation for company purpose, strategy, opportunity and risk management. It enhances the quality of leadership and decision-making and confidence in all stakeholders.

We need to use the lessons that the COVID-19 pandemic has taught us and start looking at the right risks, meaning: climate, biodiversity loss, natural and human-made environmental disasters. Therefore, the theme for this year’s Symposium is Balancing Short & Long Term Business Pressures.

Some of us will find that, in the new normal, business models will have to be changed and reviewed. Competencies of companies and staff will have to be gained and adapted. However, there is a need to change our priorities and start by identifying the right risks. There is no point arguing over shareholder versus stakeholder value while we continue to destroy the conditions for life on earth.

CG Practices during Covid-19

Covid-19 also brought about particular challenges to companies and shareholders, especially in the context of shareholder engagement and the running of AGMs. For some time, SIAS had been calling for virtual AGMs. I am glad how swift the regulations were amended to help accommodate the need to conduct meetings virtually. However, many shareholders lament on having to only vote by proxy and submitting their questions to the company in advance. There was no “live” voting and Q&A.

While companies and vendors found themselves adjusting to a new normal, I am glad that new guidance by Ministry of Law on “live” voting and Q&A will be required for meetings henceforth.

One particular observation we are pleased to note, is how companies have responded to questions on their annual report posed by SIAS. From April to September, out of the 207 companies, 153 responded to the questions. That is a 74% response rate, up from 20% before! I am certain shareholders appreciate the efforts of companies keeping them informed, especially in the current uncertain environment.

Corporate Governance Research

This year, although we will not be holding our annual Investors’ Choice Awards, we continue to track listed companies on their transparency and corporate governance practices. In the interest of time, I will provide a quick overview, but the details will be published on our website

The average overall corporate governance scores continued its upward trend and reached 52.8% in 2020 over a four-year period from 2017, led by big cap companies at 68%. Whilst the mid and small caps also saw improvement, they trailed below the average.

Broadly, the main driving forces for the increase are as follows: (1) Shareholders’ rights and equitable treatment, (2) Responsibilities of the Board and (3) Stakeholders’ roles.

However, we are concerned of 3 critical areas:

  1. Only 4.6% of companies disclosed that their board set the risk tolerance and that there was a risk management policy describing the tolerance for various classes of risk;
  2. 23.9% of companies disclosed their key risks and how these risks were assessed and managed; and
  3. 30.2% of companies disclosed their non-financial performance indicators.

Given the current Covid-19 pandemic and the added stress and risks that companies are faced with, the lack of a risk management policy and guidance of risk by the board can result in mis-managing possible opportunities while under-playing potential threats.

In addition, more companies should disclose non-financial information. From our research, 85% of respondents use non-financial information for their investment decisions.

New Business Integrity Research

To further extend our evaluation of corporate governance practice in Singapore and the region, I am pleased to announce that, in collaboration with CGIO of NUS Business School, SIAS is releasing the findings of the latest Business Integrity research. The study which uses the Transparency International framework provides insights to evaluate the corporate disclosure level on anti-corruption policy and strategy. This is the first year we are collaborating with NUS CGIO on this project, we look forward to learning more insights from the research findings tomorrow. Do join this session.


While we are indeed pleased to see that corporate governance practices, in general, are improving, there are some observations from our research into the Q&A on Annual Reports which companies should adopt:

  1. Be clear and direct

    Companies should be forth right and state the facts and provide clear explanations, especially when addressing difficult issues and losses. In one instance, the Chairman praised how well the management had done. This is in spite the company had made losses for several years. In fact, the loss was not even mentioned until you flip over 30 pages into the annual report! Companies should provide a fair and balanced report on their status and be clear and direct in their communication with shareholders.

  1. Timely disclosures of risks

    SIAS is particularly disturbed by the lack of disclosure of key risks and associated risk management strategies. In our review of companies, through the Q&A of their annual reports, we note that some companies lack making timely disclosures. For instance, SIAS questioned one listed company, that ran a foreign worker dorm which was designated an isolation area, for not disclosing this fact. Companies should make timely and meaningful disclosures, not just materially price-sensitive but trade-sensitive information as well. This means that companies have to disclose information that will influence an investor in deciding whether to buy, sell or hold securities.

  1. Engage shareholders and stakeholders

    This pandemic has also seen many companies conduct capital raising and other corporate actions to shore up their balance sheets. However, companies should continue to engage their shareholders and stakeholders to provide them with the rationale for their fund raising and to account for their use of funds. The social distancing measures in place should not be an excuse for not engaging with shareholders. In the SIA example, which was conducted during the Circuit Breaker period, SIAS sent questions to the company regarding their planned fund raising and rights issue. SIA responded to the SIAS questions in a timely manner and we even recorded a dialogue with the CEO. With technology today, having engagement and taking questions “live” from shareholders should be part of any listed company’s standard operating procedure.

SIAS will continue to monitor companies and review their annual reports. There are at least 12 companies which have given us serious concerns. The areas of concern which we are monitoring include:

  1. Relationship and qualification of IDs
  2. the level of non-audit fees
  3. receivables and impairment of joint venture/off balance sheet accounting
  4. long term performance of REIT manager
  5. impairment and valuation of assets
  6. going concern and independence of directors
  7. attendance of chairman at board meetings
  8. long term performance and separation of chairman/CEO
  9. attendance of directors
  10. clarifications of IPTs
  11. Buying of company’s shares during M&A and prior to announcement of contract wins
  12. Corporate governance report – one company even based their corporate governance report on 2012!

You can find all the Q&As on Annual Reports publish on the SIAS website.

Shareholder Activism on the rise

One observation is the number of activists is increasing, and their tactics and strategies are changing too. No longer can companies put on lavish meals in the hope that shareholders will flock to the buffet instead of focusing on the company’s affairs and resolutions at the meeting.

There are more institutional investors and hedge funds investing in Singapore listed companies, a testament to the growing attractiveness to the quality of companies in Singapore. However, are companies prepared for this new breed on investors? How do you engage them?

Companies should take a critical look at their businesses as an activist would, looking hard for underperforming components. They should understand which activists might be interested in or attracted to the company and why. And they can better understand their shareholder base and have a tailored engagement plan. Any gap in your communication or disclosures will be met with action from these activists!

If a company only thinks that shareholder activism is by hedge funds and institutional investors, they have to think twice. Today, individual shareholders are also actively seeking greater accountability from boards and senior management; testament to the growing number of EGMs called by individual shareholders, who are not afraid for a full-blown proxy contest that seeks to replace the entire board.

I hope I have set out the context of the challenges and opportunities for these challenging times, and for the week’s sessions.

Thank you, Mr Ong, for gracing today’s Conference. Also, a big thank you, to all our distinguished guests and speakers for their participation and all of you for your attendance.

I also want to extend my deepest appreciation to all our sponsors, donors, supports and endorsers for coming forward to support this event and SIAS.

I trust you will find this to be an enjoyable and enlightening week.

Thank you.