Gems - a new corporate governance rating guide to investing in small, mid-cap stocks

SINGAPORE - There is a new corporate governance rating guide to help small investors invest in listed small and medium enterprises (SMEs).

Launched earlier today, the Governance Evaluation for Mid-and-Small Cap or Gems, for short, is a collaboration between Securities Investors Association of Singapore (Sias) and the Singapore Association of the Institute of Chartered Secretaries and Administrators (Saicsa), and advised by associate professor Mak Yuen Teen.

Handshakes, an innovative data analytics platform to the capital markets, is a partner to this project.

Gems covers 428 companies, or 82 per cent, of companies listed on the Singapore Exchange. These companies have a market capitalisation of $500 million or less.

Professor Mak observed that existing corporate governance ratings and scorecards generally rely too much on just disclosures by companies. They do not sufficiently differentiate between what is important for SMEs compared to large companies.

However, Gems is the first rating to have assessed these companies on six broad categories relevant to small and medium capitalisations, with specified weightings.

Saicsa, Sias and Associate Professor Mak will be posting the names of companies ranked in the top 10 per cent, along with the Gems research methodology, on their respective sites.

Mr Lawrence Kwan, chairman of Saicsa's corporate governance advocacy and research taskforce, said: "The common aim (of Gems) is to see that SME companies strive to exceed their current corporate governance standards beyond mere compliance with the letter of the law."

Sias president and chief executive David Gerald added that Gems will allow investors to make more informed decisions and go on to invest in viable, well-governed companies: "Many are staying away from investing. $73 billion lies in the safe. The market is suffering from liquidity - we need to show how company officials are walking the talk."