Date: October 3, 2012
Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance
Mrs Josephine Teo, Minister of State, Ministry of Finance and Ministry of Transport
Mr Hsieh Fu Hua, Chairman, SIAS
A warm welcome to Mr Brendan Wood, Founder & Chairman of Brendan Wood International
Ladies and gentlemen
Thank you Sir, for taking time to be with us tonight. There are about 1,100 of us here. A record number after our first year of celebration, obviously your popularity is showing.
Thank you Minister Teo for joining us tonight as well.
I am also pleased to welcome to our counterparts from the newly formed investor body, SharePHIL, Philippines.
A warm welcome to all of you especially our regulators, corporate friends, media, and of course investors to this 13th Investors’ Choice Awards Presentation Ceremony and Annual Dinner.
Tonight, as we have done over the last twelve years, we honor the companies that have excelled in Corporate Governance and Transparency standards, setting benchmarks for other listed companies to follow. These high standards achieved by these companies give confidence and comfort to the investors. As such, you deserve the recognition tonight by investors.
We just concluded the 4th Asian Investors’ Corporate Governance Conference, which we hold annually, as part of the Singapore Corporate Governance Week. This year, we were indeed privileged to have distinguished speakers, panelists and participants from across the globe like United Kingdom, United State, Australia, Japan, India, Hong Kong and ASEAN. The discussions focused on how corporate governance is helping in restructuring economies with particular relevance to Asian economies and the current phase of development of our companies.
The Conference highlighted that, in Asia, unlike in more developed western economies, the presence of a strong majority shareholder or family owned companies, creates a different set of considerations for investors. Thus, the advancement in corporate governance practices is timely as companies tap international investor funds.
I would like to specially thank supporting ORGANISATIONS, ACRA, SGX,OECD and our Strategic Partners, KPMG and CPA Australia and all our Supporting Partners, Sponsors and friends. I would also like to thank Mr Christopher Bennett, for providing advice, guidance and help to me to secure speakers from United Kingdom, Hong Kong and Australia.
I would like to give perspective on the Conference which leads me to ask: Why is corporate governance important or is it just the latest fashion? I believe it is important not just because it ensures better performance of the company but because it helps with improving social cohesiveness and is an indicator of successful civil society. Its major purpose is the protection of the vulnerable shareholders. This is how SIAS began, protecting the rights of investors from abuse. Our brand of responsible activism emphasises resolving issues in the Boardroom and not the Courtroom.
Regulations can be onerous, but you must remember that regulations are a result of genuine grievance. We still believe that our style of resolving issues is good for companies, shareholders and the capital markets. But our approach needs the cooperation of all parties. We hope that the current good cooperation can continue.
SIAS will continue to do its best to protect minority shareholder interest and should retail investors lose faith in the capital markets, that would be a grave situation for all. For example, in the case of China Sky disobeying regulatory requirements may lead to delisting and the consequent loss of value for shareholders. Hence our intervention.
The matter went to court on the need for the company to comply with the SGX requirement for a Special Audit surrounding related party transactions, questions surrounding land transactions and queries into maintenance costs. Our role is not just limited to protecting investors. When investments are interfered with, SIAS will proactively seek to mediate the situation with Boards and regulators so as to ensure that shareholders’ interests are protected.
As part of our efforts to improve retail investors knowledge and skills, SIAS will continue with investor education as its other major activity. Recently, we launched the Singapore Investment Week where 3,000 Singaporeans were able to learn from experts on the steps to invest and the risks to manage.
The Ever Changing Landscape
The last Financial Crisis saw the effect of counterparty risk affect the investments of local Singaporeans and institutions. The current European Debt Crisis continuing, the sluggish US economy and the slow down of the Chinese economy, will inevitably affect Singapore and our companies. All the more we should continue to improve our capital markets to make it attractive to investors.
The Changing Regulatory Framework
Integrity has been the hallmark of our present government setting the standard for our people and companies here since 1959 following the acclaimed example of our first Prime Minister and his successors. We are a city that follows the rule of law.
Although Singapore is seen as a model for good corporate governance, nevertheless, to err is only human and Singapore is hardly divine! We have had our fair share of corporate failures too. It is, therefore, not unexpected that our company laws and Corporate Governance Code will continue to be revised to suit the needs of the times. In this regard, the recent revisions to our Corporate Governance Code and the Companies Act are timely. As an investor body, we are indeed pleased that greater recognition is now being given to the shareholders rights.
The responsibility to ensure that Singapore continues to achieve high standards in corporate governance practices cannot rest with the regulators alone. Boards and senior managers must not just go by the letter of the law but must also strive to practice good corporate governance in the spirit of the law.
At SIAS, we see the need to encourage and recognise listed company boards and senior management that do good work in this area. Nevertheless, it is now also an established fact that investors pay a premium for companies with good corporate governance practices and companies could well leverage on improving corporate governance as a strategy for leapfrogging competitors in financial markets.
SIAS Initiatives to promote good corporate governance
At SIAS, we have embarked on various initiatives to help companies identify and improve their corporate governance practices.
Today I would like to highlight 3 major initiatives:
Firstly, the revisions to SIAS Corporate Governance Awards criteria to include international OECD principles and Shareholder Confidence Index to make it more relevant and attractive to all investors because it increases the confidence in the winning companies.
This year, SIAS, together with Sim Kee Boon Institute for Financial Economics (SKBI), at SMU, and Brendan Wood International, developed a new Scorecard based on international best practices (OECD) and Shareholder Confidence Index by Brendan Wood International and not just the Singapore Corporate Governance Code. Realising the importance and the value of the input from investors, their voice is now incorporated into the Scorecard. Since the Award is an Investors” Choice Award, SIAS is fortunate to work with Brendan Wood International to incorporate shareholder ratings on listed companies.
The awards will, therefore, showcase Singapore”s best performing companies in governance and Shareholder Confidence Index to investors globally by using international standards. It will, undoubtedly, raise the profile of the winning companies and consequently, the importance of the Award.
I am pleased to announce that from next year onwards, SIAS will also recognise best companies around the ASEAN region for their achievements in good corporate governance and shareholder confidence given the fact that the cross border trading within ASEAN is now becoming a reality.
SIAS is also pleased to present, this year, the Brendan Wood TopGun CEO Designation for Singapore CEOs. This is a new Award presented jointly with SIAS and Brendan Wood International, and it recognises the contributions of and excellence of our top chief executives. Brendan Wood”s TopGun CEO apply to CEOs who are best in class as rated by shareholders in the time period. In this case year ending Sept 12.
Secondly, I am pleased to announce that SIAS will be launching research into the corporate governance of listed companies. The Corporate Governance Page, which is being launched tonight, will give investors a snap shot of the corporate governance practices of the company in an easy to understand one page report following the OECD principles. But, it is not to be taken as a complete insurance against corporate failures, rather it is an encouragement to companies to practice good corporate governance.
This report, developed with research from Sim Kee Boon Institute for Financial Economics at SMU, is culled from publicly available data. It will also show each company’s scoring of their corporate governance practice and compare their scores relative to their industry, against all SGX listed companies and also their scoring among the Industry’s best rated companies.
I am also pleased to announce that SIAS will be developing a publication called the “Winners’ Circle”. This publication will contain all the Award winners’ Corporate Governance Page and will be circulated to institutional and fund managers globally. Using this report, investors can have a more informed view of the companies they invest in.
With strong empirical evidence today that companies with good corporate governance also have good performance, this initiative is, therefore, another step in the development of our capital markets and the report can provide companies with a feedback and benchmark to raise the standards of corporate governance practices here in Singapore.
Thirdly, SIAS recently made 5 proposals to SGX to improve the protection of investors in SGX listed foreign companies which are now in the public domain and do not require airing tonight. These initiatives, we believe, will further improve Singapore’s corporate governance practices and correspondingly seek to protect the interest of shareholders.
Over the years, SIAS has moved to ensure that investor interests are championed responsibly. From our inception in 1999 to fight for the rights in shareholders in CLOB to unlock their value in Malaysian companies; at Natsteel to fighting clauses in dividend payout, and also working with the Chinese government in the China Aviation Oil scandal subsequently seeing the company reorganized and the shares traded again. SIAS will continue to ensure that shareholders rights are upheld and we will continue to make a difference with our “in the boardroom and not in the courtroom” approach to championing the rights of minority shareholders.
We continue to work with regulators and listed companies to ensure that disputes are managed and companies comply with the regulations and Listing Rules. This climate of collaboration will ensure that the interests of shareholders are maintained and the value of the company preserved.
We need your continued cooperation and understanding so that onerous regulations do not have to be asked for. We hope to avoid confrontations. Self-regulation, in our view, therefore is a much better approach.
I congratulate all winners and enjoy the evening.