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10% shareholder

A person who has an interest or interests in one or more voting shares in the company; and the total votes attached to that share, or those shares, is not less than 10% of the total votes attached to all the voting shares in the company. “Voting shares” exclude treasury shares.


In general, “adequate” would mean that something is enough or satisfactory for a particular purpose.

When used to describe risk management and internal control systems, it means that the system is well-designed to achieve risk management and internal control objectives.

Risk management and internal control systems are considered adequate and effective if they provide reasonable assurance for the management of a company’s risks, the safeguarding of its assets, the reliability of financial information, and compliance with laws and regulations.

Alternate director

A person who is appointed to attend Board meetings on behalf of a director when the latter (usually referred to as the principal director) is unable to attend.

Audit and Risk Committee (ARC)

In certain circumstances, the Board may choose to expand the scope of the Audit Committee (AC) beyond financial reporting and other financial related matters, for instance, to cover broader aspects of risk management. This usually occurs when the Board chooses not to form a Board Risk Committee (BRC), and opts instead for an existing Board Committee to take on the oversight of risk management. Such a combined Committee is commonly called the Audit and Risk Committee.

Board Risk Committee (BRC)

A Board Risk Committee is a separate committee that supports the Board in fulfilling its oversight responsibilities of overseeing the risk management framework and policies.

Boilerplate disclosures

Boilerplate disclosures are those that repeat standard language usually borrowed from the disclosure requirement itself or formulated for one situation and then repeatedly used in other situations. In other words, they are made primarily for the sake of making the disclosure, rather than to meaningfully inform the stakeholders in a way that is substantive, complete and specific to the circumstances being disclosed.

“Comply or Explain”

The Code of Corporate Governance is based on the “comply or explain” regime. This means that listed companies must either seek to comply with the principles and guidelines contained in the Code, or adequately explain the non-compliance. Further information on “comply or explain” is found here.


This term “constructive” means being useful; and at the very least, intended to improve something in a positive way.

Directly Associated

A director will be considered “directly associated” with a 10% shareholder when the director is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the 10% shareholder in relation to the corporate affairs of the corporation. A director will not be considered “directly associated” with a 10% shareholder by reason only of his or her appointment having been proposed by that 10% shareholder.


In the context of corporations, diversity means recognising and leveraging on the demographic differences that exist in society and companies. Diversity is considered a key ingredient of an effective Board. There are several dimensions of Board diversity. These include skills, experiences, knowledge of the company, gender, age, ethnicity or culture, geography and tenures.


In general, “effective” means successfully achieving the intended or desired result.

It is used in several places in the Code and sometimes in conjunction with the term “adequate”. For example, the role of the Board is to ensure that risk management and internal control systems are adequate and effective. In this context, “adequate and effective” mean:

  • Adequate: The systems are well-designed to meet the risk management and internal control systems objectives.
  • Effective: The systems are operating as designed and intended.

Electronic Communication

Communication transmitted (whether from one person to another, from one device to another, from a person to a device or from a device to a person):
(a)    By means of a telecommunication system; or
(b)    By other means but while in an electronic form.

Such communication, where particular conditions are met, can be received in a legible form or be made legible following receipt in a non-legible form.

Executive Director (ED)

An ED is a working director who participates in the day-to-day running of the company and who has a decision-making role (as delegated by the Board), in its daily operations. He is paid as a full-time staff. A CEO or other member of the CxOs who is a member of the Board is an ED. An ED is, by definition, deemed to be non-independent.

First-time director

A first-time director is one who has no prior experience as a director of a listed company.

Familiarity threat

This term is often used in corporate governance in the context of the independence of directors, auditors, and other professionals who are required to be objective. It means that, due to a long or close relationship with a client (or another party), the professional could be too sympathetic to the client’s (or other party’s) interests and/or is too uncritically accepting of its work.

Immediate family member

The SGX-ST Listing Rules define an immediate family member as the person's spouse, child, adopted child, step-child, sibling and parent. Other regulations may have slightly different variations on the definition.

The Financial Reporting Standards use the term “close members of the family of a person” and defines the term as those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. The term “immediate family member” includes that person's children and spouse or domestic partner, children of that person's spouse or domestic partner, and dependants of that person or that person's spouse or domestic partner.

Independence in appearance

This term is often used in relation to director and auditor independence. For example, in the context of auditor independence, it refers to the avoidance of circumstances that would cause a reasonable and informed person, having knowledge of all relevant information, including safeguards applied, to reasonably conclude that the integrity, objectivity or professional scepticism of a firm, or a member of the assurance team, had been compromised.

Independence of mind

This term is often used in relation to director and auditor independence. It refers to the state of mind that (i) allows making an opinion or decision without being affected by influences that compromise professional judgement; and (ii) allows an individual to act with integrity and exercise objectivity and professional scepticism.

Independent Director (ID)

A director who does not have a material or pecuniary relationship with the company or related persons, except in respect of director fees. He must be a Non-Executive Director (NED).

The Code defines an ID as a director who is independent in character and judgement; and that there are no relationships or circumstances which are likely to affect, or could appear to affect, his judgement. It provides several tests for independence, the principal one being that the director has “no relationship with the company, its related corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgement in the best interests of the company” (Guideline 2.3).

Interested Person

An interested person is one who could influence the company (known as “entity at risk”) to enter into a transaction with one or more interested persons (known as an “interested party transaction”) that may adversely affect the interests of the company and its shareholders.

In the context of a company, “interested person” means:

  • A director, CEO, or controlling shareholder of the issuer; or
  • An associate of any such director, CEO, or controlling shareholder.

For an individual director, CEO or controlling shareholder, an associate means:

  • His immediate family;
  • The trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and
  • Any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more.

For a company that is a substantial or controlling shareholder, an associate means any other company which is its subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more

For the definition of “interested person” for a REIT, business trust, or investment fund, refer to Chapter 9 of SGX Listing Manual.

Interested Person Transaction

This is a transaction between the company (the “entity at risk”) and an interested person. It includes:

  • The provision or receipt of financial assistance;
  • The acquisition, disposal or leasing of assets;
  • The provision or receipt of services;
  • The issuance or subscription of securities;
  • The granting of or being granted options; and
  • The establishment of joint ventures or joint investments.

Such a transaction can be in the ordinary course of business or not, and can be entered into directly or indirectly (for example, through one or more interposed entities).

However, SGX MR 915(2) provides an exception to the above for the grant of options, and the issue of securities pursuant to the exercise of options, under an employees' share option scheme approved by the Exchange.
Entity at Risk
An entity at risk is the company that could be adversely affected by an interested party transaction.

It could be:

  • The issuer;
  • A subsidiary of the issuer that is not listed on the Exchange or an approved exchange; or
  • An associated company of the issuer that is not listed on the Exchange or an approved exchange, provided that the listed group, or the listed group and its interested person(s), has control over the associated company.

Intimidation threat

This term is often used in the context of the independence of auditors. It refers to the threat that the auditor will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over him.

Key Management Personnel (KMP)

“Key Management Personnel” (KMP) refer to members of the top management team of the company. They would typically comprise the CxOs (CEO, COO, CFO, CHRO, CCO, CRO, CTO), and other titles such as President and Managing Director depending upon the size of the company. In the CG Guides series, the term is used interchangeably with “senior management”.

Lead Independent Director (Lead ID)

A Lead Independent Director (Lead ID) is first among equals. He is elected or appointed from the group of IDs of a Board, to chair its meetings and represent the group as well. Under certain circumstances such as when the Board Chairman is not independent, the Board should appoint a Lead ID (Guidelines 3.3 and 3.4).

Long-term Incentive Schemes (LTIs)

In the context of executive remuneration, LTIs refer to incentives which are paid usually with some form of company equity and/or cash payments linked to the longer term performance of the company (typically by linking it to the company’s share price performance, financial performance, or other strategic achievements).

LTIs may be awarded annually, but the resulting rewards will only emerge after a long period of time (typically in the range of three to ten years, depending upon the company’s strategy and plan features).

Non-Executive Director (NED)

A NED is a director who does not participate in the day-to-day running of the company and focuses only on its governance. He may either be independent or not independent.

Non-Independent Non-Executive Director (NI-NED)

A NI-NED is a NED who, whilst not participating in the day-to-day running of the company, is nevertheless deemed not to be independent due to a relationship (for example, he was an immediate former senior executive of the company or he has more than 10 per cent shareholding in the company).

Principal Commitments

This includes all commitments which involve significant time commitment such as full-time occupation, consultancy work, committee work, non-listed company Board representations and directorships and involvement in non-profit organisations. Where a director sits on the Boards of non-active related corporations, those appointments should not be normally be considered principal commitments.

Progressive refreshing

This refers to the regular and staged renewal of the Board. Refreshing usually requires one or two directors to step down each year and be replaced by new directors. In this way, the Board will continually have new blood to provide new and fresh insights while benefiting from the retention of older directors who provide continuity with their familiarity of the company. Progressive refreshing would require some degree of succession planning of directors.

Public interest entity

  1. All listed entities; and
  2. Any entity —
    1. Defined by regulation or legislation as a public interest entity; or  
    2. For which the audit is required by regulation or legislation to be conducted in compliance with the same independence requirements that apply to the audit of listed entities. Such regulation may be promulgated by any relevant regulator, including an audit regulator.

In general, listed companies and charities are public interest entities.

Rigorous Review

This means taking a level of care to look at, or consider every part and angle of something, to be certain it is correct or safe. The Code calls for rigorous review in some instances meaning that the review needs to be more than casual and it involves a greater level of care and scrutiny that the position taken and/or decision made by the Board can be fully justified and upheld when challenged by stakeholders.

Self-interest threat

This term is often used in corporate governance in the context of the independence of directors, auditors, and other professionals who are required to be objective. It refers to the threat that a financial or other interests will inappropriately influence the professional’s judgment or behaviour.

Self-review threat

This term is often used in corporate governance in the context of the independence of directors, auditors, and other professionals who are required to be objective. The threat that the professional will not appropriately evaluate the results of a previous judgment made, or service performed, by him.


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