Regulation of Corporate Governance in Singapore

Registering a company in Singapore requires having indepth knowledge of the local corporate governance laws. The corporate governance regime in Singapore focuses mainly on companies listed on the SGX-ST & consists of laws, regulations & good practices. So, let’s take a closer look at it.

Corporate Law

Registering companies in Singapore is governed by the CA, which is also the primary law regulating corporate governance in Singapore. It explicitly provides for the responsibility of the BOD for the general management of the company and the powers that must be exercised by the company at general meetings as per its AOA or the said law.

The Law establishes the following requirements for directors:

• act honestly & conscientiously;
• fulfill all their duties;
• avoid abusing their position & unlawfully using corporate information;
• disclose all transaction-related information;
• disclose all information necessary for maintaining shareholder & director registers;
• disclose the date of attaining the age of seventy.

Listing Provisions

The SFA & SGX-ST play an important role in regulating management of Singapore-listed companies. If you’re interested in opening & listing a company in Singapore, you should keep in mind that the SFA, the primary law regulating the securities & futures sector in Singapore, also helps prevent financial fraud.

Authorized officers of listed companies are prohibited from engaging in transactions involving their company's securities during the period leading up to the announcement of their companies’ financial status. Failure to do so can entail civil & criminal liability.

To make it to the official SGX-ST list & have their securities listed, companies must comply with the relevant requirements. Those contemplating opening a company in Singapore should keep in mind that under these requirements, already listed companies must disclose their corporate governance practices, as well as explain any deviations in their annual reports.

Amendments to the CGC (Corporate Governance Code) 

The main changes are as follows:

• independent directors must make up at least ⅓ of their companies' BODs;
• independent directors’ term of office mustn’t be more than nine years (may be more if approved by the majority of shareholders);
• directors may not be considered independent if they or their family members more than five percent of their companies’ shares;
• directors must undergo training on the powers & responsibilities of directors.

CGC 2012

To register a business in Singapore, one must keep in mind recommendations contained in a consultation document issued by the CG Council:

• independent directors should make up the majority of the company’s BOD if the chairman is independent;
• independent directors must be independent and impartial in the performance of their duties;
• directors holding controversial points of view should refrain from participating in GSMs & taking decisions related to controversial issues;
• all salaries and employee benefits must be disclosed;
• the company should have an official website, with constantly updated corporate information.

M&A deals in Singapore are regulated by the SFA. Issued by the MAS under the direction of SFAT, the M&A Code governs takeovers & mergers of companies listed on the SGX-ST.

Responsible Entities

Setting up a company in Singapore requires compliance with the rules established by the country’s main financial regulators. They include:

• ACRA - responsible for overseeing compliance with the CA. 
• MAS - responsible for overseeing the securities and futures market in Singapore; can issue SGX-ST guidelines as per the FSA.

If a listed company doesn’t comply with their rules, MAS or SGX-ST may go to court to enforce them. The SGX-ST can also suspend trading in the company's securities or remove it from its listing.

One more body potential investors should remember about is the CGAC. Having no formal regulatory powers, it acts as an advisory body, issuing practical recommendations on the disclosure of information relating to corporate governance of listed companies in Singapore.