Singapore listed firms may miss key corporate governance deadlines: study

According to new analysis of data in this year's Governance and Transparency Index (GTI), Singapore listed firms will take until 2020 to comply fully with board independence guidelines. -- PHOTO: ST FILE
According to new analysis of data in this year's Governance and Transparency Index (GTI), Singapore listed firms will take until 2020 to comply fully with board independence guidelines. -- PHOTO: ST FILE

Singapore's listed companies may miss critical timelines in adhering to the country's code of corporate governance, particularly in the area of board independence, if the current rate of progress is anything to go by, a study has found.

According to new analysis of data in this year's Governance and Transparency Index (GTI), Singapore listed firms will take until 2020 to comply fully with board independence guidelines, even though companies are required to be aligned to the code by the end of their 2017 financial year.

The annual GTI is jointly published by NUS Business School's Centre for Governance, Institutions and Organisations (CGIO) and CPA Australia, in partnership with the Business Times.

Only 268 firms or 41.6 per cent have complied with the recommendations under the code, which was last revised in 2012. Under the revised code, listed firms are required to appoint an independent chairman or have independent directors make up at least half the board in instances where the chairman is not an independent director. More than half of the companies examined in GTI 2014 (376 firms) have yet to meet this requirement.

Listed firms have also been slow in disclosing their executive directors' exact remuneration, especially that of the chief executive officers. While the number of firms disclosing the exact pay package of their CEOs increased to 19.3 per cent from 7.8 per cent a year ago, there remains a large majority which have not done so, citing confidentiality, talent-poaching and competition as reasons behind disclosing such information.

Said Associate Professor Lawrence Loh, project leader of the GTI project at NUS Business School's CGI: "The GTI 2014 results demonstrate that while Singapore's listed companies have made good progress, we are actually still quite far from compliance to the Code.

"Notably, our projections based on GTI 2014 suggest that a quantum leap is needed in several critical areas, particularly in board independence."

Associate Professor Themin Suwardy, Singapore divisional president of CPA Australia, said: "The road ahead needs the collective efforts of all stakeholders - boards, management, investors, regulators and accountants."

The 2014 GTI examined a total of 644 Singapore-listed companies which released their 2013 annual reports before 31 May 2014.

The latest analysis also found much room for improvement in other areas highlighted in the corporate code of gievrnance. Only 14.8 per cent of companies voted by poll and subsequently disclosed the voting results.

In addition, the study found that the number of independent directors (IDs) who have served for more than nine years increased from 37.2 per cent last year to 37.8 per cent in GTI 2014, even though the code recommends that the independence of any director who has served beyond nine years be subject to rigorous review. A total of 243 companies are now required to re-assess the independence of their 469 long-serving IDs.