SGX reviewing companies' compliance with corporate governance code

SGX Centre at Shenton Way.
SGX Centre at Shenton Way.PHOTO: ST FILE

SINGAPORE - The Singapore Exchange (SGX) is carrying out a review of how locally-listed companies are abiding by the "comply or explain" requirement in the Singapore Code of Corporate Governance (CG Code).

The review, which is expected to take four months to complete, is part of SGX's drive to raise governance standards of listed companies, the exchange operator and regulator said on Monday (Oct 12).

It will cover annual reports of over 550 mainboard companies released in the 12 months to June 30, 2015. Audit firm KPMG, has been appointed to review the annual reports.

SGX said it intends to make findings of the review public and engage with relevant companies to ensure shortcomings identified are addressed.

But it will be exploring how to publish its findings "on a statistical and no-name basis", said its chief regulatory officer Mr Tan Boon Gin in a speech on Monday.

Mr Tan said SGX will highlight the areas that need improvement so investors can get more information to make informed judgements on whether a company has given adequate disclosures and meaningful eplanations for any deviation from the code."

He was speaking at the launch of the Securities Investors Association (Singapore)'s 6th Singapore Corporate Governance Week.

Listed companies are required under SGX listing rules to comply with the CG Code, or explain deviations in their annual reports. Investors can then evaluate the adequacy of companies' disclosures and whether explanations for any deviations are meaningful.

The review follows the introduction of a disclosure guidance document in January 2015 to help companies comply with key aspects of governance, SGX added.

It will capture all aspects of the CG Code and focus on the areas specified in the SGX Disclosure Guidance document.

Examples of key CG Code principles covered in the review include board composition, risk management and internal controls and disclosure on remuneration.

Said Mr Tan in a statement on Monday, "A company's approach to the Code of Corporate Governance principles speaks volumes about its commitment to business transparency and accountability to stakeholders.

"Companies are under ever increasing scrutiny; those with good governance will build up reserves of shareholder trust and confidence which can be drawn upon should they become victims of negative research reports or short-selling."