MAS Speech on Corporate Governance

On 19 November 2009 Mr. Heng Swee Keat, Managing Director, Monetary Authority of Singapore delivered the key note address at the 2009 Asian Investors' Corporate Governance Conference in Singapore. His speech focused on corporate governance as an ongoing concern; corporate governance and the financial crisis and the Code of Corporate Governance (‘the Code’).

Mr Heng gave a timeline of the development of the Code in Singapore with MAS and the SGX now having responsibility for listed companies under the Code. He also highlighted that during a review in 2007 there were significant gaps found in audit committees, their training and effectiveness in particular, resulting in the release of audit committee guidelines in 2008. To complete this section of his speech, Mr Heng proudly remarked that Singapore is ranked first in corporate governance standards in Asia according to The World Economic Forum's Global Competitiveness Report 2009.

Mr Heng then commented on risk management, in particular risk appetite, and remuneration, noting that they have been the most significant aspects of corporate governance that have contributed to the current financial crisis.  He said that remuneration had been so closely tied to short term gains and under such circumstance it is inevitable that there would be high risk taking. He highlights that some jurisdictions considering the empowerment of shareholders in the remuneration of executives to aid in reducing the high risk levels. Mr Heng reports that MAS is undertaking its own review of Corporate Governance frameworks for locally incorporated banks and insurers with focus on risk management and remuneration alignment.

However Mr Heng believes there is no time for Singaporean companies to become complacent even though there are generally good corporate governance practices. He announced that there will be a Corporate Governance Council (‘the Council’) formed, made up of public and private sector members, which will be charged with promoting “a high standard of corporate governance in companies listed in Singapore so as to maintain and enhance investors' confidence”. The Council’s responsibilities will include, but not be limited to, professional development and guidance for Board members and review of the Code. Further details would be released in early 2010.

Mr Heng concluded his speech by encouraging advocacy bodies, such as the Securities Investors Association of Singapore, to continue to demand good corporate governance and emphasize ethical and responsible corporate cultures. 

For the full text of Mr Heng’s speech please refer to MAS Corporate Governance Speech