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Regulator Proposes Changes to Singapore Governance RegimeSubmitted by: David Smith, Asia-Pacific Research (Singapore)

The Singapore Exchange Ltd. (SGX) on Dec. 9 proposed 36 changes to the market?s corporate governance regime in Singapore in a wide-ranging review of its Listing Rules.

Among the changes proposed, the SGX proposes:

* to require the audit committee?s assessments of company?s internal controls and risk management policies and systems to be disclosed in the annual report (currently, guideline 12.2 of the Code of Corporate Governance requires that the ?board should comment on the adequacy of the internal controls, including financial, operational and compliance controls, and risk management systems in the company?s annual report?);

* that newly listed companies appoint a governance adviser to assist in ensuring that they have the ?framework and practices of good corporate governance as befits a listed company.? The SGX proposes that areas of governance that the advisor weigh in on include internal controls, risk management processes, board practices, and accounting and reporting;

* that the SGX be permitted in certain circumstances to review and approve the appointments of directors, CEOs and CFOs (for example, where the company is the subject of a regulatory enquiry);

* that there at least one independent director serve on the board of a company at all times; and

* that where both the company and its auditor are based in a foreign jurisdiction, a joint sign-off of the company?s audited accounts with a Singapore-based accounting firm be required.

Noting that ??there may be instances where controlling shareholders dispose of their interests when trading in the shares is suspended, particularly when the trading halt or suspension is due to investigations of irregularities or corporate failures,? the SGX has also proposed that controlling shareholders be required to custodise their shares with either the Central Depository (CDP), or an agency with an agreement with SGX preventing trading of shares during a trading suspension.

The SGX also proposes that shareholders notify the listed company when pledging shares or entering into a derivative agreement where the delivery of shares in the company to the counterparty might ??result in a possible change in control in the issuer or may cause the issuer to breach its loan covenant.? The listed company in turn would be required to inform the market.

The closing date for comments on the proposed changes is Jan. 15.

Full post as published by Institutional Shareholder Services -- Corporate Governance Blog on December 18, 2009 (boomark / email).