Other firms can 'learn from SingPost board reforms'

The board reforms initiated by Singapore Post following a special audit that found corporate governance lapses hold lessons for other companies, industry observers say.
The board reforms initiated by Singapore Post following a special audit that found corporate governance lapses hold lessons for other companies, industry observers say.PHOTO: ST FILE

The board reforms initiated by Singapore Post following a special audit that found corporate governance lapses hold lessons for other companies, industry observers say.

They point in particular to the finding that directors should conduct regular self-assessment to ensure that a board does not get complacent.

SingPost sought the special audit last December after admitting to an "administrative oversight" in failing to disclose former lead independent director Keith Tay's interest in its 2014 acquisition of freight forwarder F.S. Mackenzie.

Mr Tay is chairman and a 34.5 per cent shareholder of Stirling Coleman, which arranged the deal on behalf of the seller of F.S. Mackenzie.

The SingPost saga has shown that perception is as important, if not more important, than the reality, when corporate governance is called into question, said Ms Joyce Koh, executive director of Singapore Institute of Directors.

The SingPost reforms that relate to conflicts of interest, a director's code of conduct and board renewal are among the most comprehensive seen, Ms Koh noted.

Some go beyond leading practices and directors on other boards may find them stringent. For example, directors need to get clearance before taking on other board positions and commitments, and for buying or selling company shares.

Capping board tenures at nine years, with six years being the target, is another stringent rule, Ms Koh said.

The reforms came ahead of the findings of a full corporate governance review under way. More reforms are expected after this.

Corporate governance expert Mak Yuen Teen, who was first to flag worrying practices at the firm, highlighted reforms, including a very comprehensive code of conduct and ethics that directors have to sign off on every year and for which there are no waivers.

"It is good practice for directors to have to seek pre-clearance before accepting other key appointments and before dealing in the securities of the company," he said.

Other areas for improvement include the evaluation and approval of mergers and acquisitions, and the approval of regulatory announcements, which Associate Professor Mak believes will be addressed when the full review is completed.

The company may need to review its internal audit function to ensure that it has a broad-enough mandate to cover board compliance issues, and ensure that the new policies are implemented effectively, he said.

"SingPost could consider embedding some of the key aspects of its code and conflict of interest policy into its articles of association to give them more teeth," Prof Mak added.

Of greater significance is the process of self-evaluation, TSMP Law joint managing director Stefanie Yuen Thio said.

"Many of the guidelines are simply statements of existing directors' duties, and do not set new boundaries. For this reason, I don't think its new internal code should inspire any knee-jerk reactions from other corporates," she added. "The lesson I would take away from this is that a board should never get complacent, and the directors should conduct regular self-assessment."

A version of this article appeared in the print edition of The Straits Times on June 18, 2016, with the headline 'Other firms can 'learn from SingPost board reforms''. Print Edition | Subscribe