Shareholders of publicly-listed companies in Singapore should press for full disclosures of the remuneration of corporate directors and key executives during annual general meetings.
They should also ask for details of the qualifications and experience of those sitting on audit committees looking through the finances and operations of such companies.
These were among the eight key recommendations made by Associate Professor of Accounting, Mak Yuen Teen, of the Business School at the National University of Singapore in a study on the state of corporate governance in Singapore commissioned jointly the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).
Both bodies are also to review how the current efforts in director training and professional development in Singapore can be significantly enhanced. This would be done jointly with the Singapore Institute of Directors.
The MAS and SGX also plan to give practical guidance to audit committees on how they can better perform the critical role they play in the performance and governance of listed companies.
These two immediate initiatives follow the release today of the findings of the first comprehensive review of the state of corporate governance practices of SGX-listed companies based on key areas in the Singapore Code of Corporate Governance since it was introduced in 2001, said the MAS and SGX in a joint statement today.
Prof Mak, who led the study, reviewed the annual reports of 659 mainboard and Sesdaq-listed companies to assess how well they disclosed and implemented the best practice guidelines set out in the Code.
A number of independent directors and other market participants were also consulted.
Among the recommendations, Prof Mak suggests that the board of directors of companies should ensure that there is a process in place to ensure proper application of the "comply or explain" requirement and that corporate governance disclosures in annual reports reflect corporate governance practices of the company.
Another suggestion is that shareholders should question companies at AGMs about their corporate governance practices.
He notes that remuneration disclosures and policies for directors and senior executives is a significant area of weakness among Singapore companies.
To address this, among the steps he suggests is that minority shareholders, including institutional shareholders, should apply more pressure on companies to provide full disclosure of remuneration of individual directors and key executives, especially those who are controlling shareholders or related to controlling shareholders.
As for audit committees, he recommends that as part of steps to improve their effectiveness, the board of directors should ensure that there is adequate accounting or financial expertise and experience on the audit committee.
Additionally, shareholders should query companies as to whether there is the necessary expertise or experience on the audit committee, says Prof Mak.
MAS and SGX say they would study the report and come up with practical steps to be taken together with industry stakeholders to enhance corporate governance of SGX-listed companies.
"MAS considers creating a wider pool of well-qualified indepedent-minded directors and enhancing the effectiveness of audit committees as key steps in strengthening corporate governance practices for SGX-listed companies," said Mr Shane Tregillis, Deputy Managing Director, Market Conduct.
Singapore's Minister for Education and Second Minister for Finance, Mr Tharman Shanmugaratnam, today also called for continued efforts to improve corporate governance practices across Asia as they contribute to the strength of the markets and companies.
Speaking at the OECD Asian Corporate Governance Roundtable meeting at Regent Hotel, he said that the Asian financial crisis that hit the region 10 years ago had highlighted the importance of corporate governance.
"It is a key component that contributes to the strength of our markets and to the performance of our companies. While corporate governance practices across Asia have improved significantly, we cannot lower our guard,'' Mr Tharman told the delegates.
When times are good, countries should press ahead and gain momentum in the efforts to improve corporate governance.
But good corporate governance goes beyond box-ticking, he said.
"It must be focused on both the spirit and substance behind corporate governance rules and guidelines. It is important that we convince companies in the inherent benefits of good corporate governance, as a tool for sustained corporate performance."
Mr Tharman said that platforms like OECD Asian Corporate Governance Roundtable were valuable as they helped in sharing experiences and learning from each other.
