Introduction to Corporate Governance
Global Overview of Corporate Governance
Singapore Regulatory Framework
History of the Singapore Code
1. Board Matters
Principle 1 - The Board's conduct of affairs
Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and Management remains accountable to the Board.
Principle 2 - Board composition and guidance
There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and 10% shareholders2. No individual or small group of individuals should be allowed to dominate the Board's decision making.
Principle 3 - Chairman and Chief Executive Officer
There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company's business. No one individual should represent a considerable concentration of power.
Principle 4 - Board membership
There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.
Principle 5 - Board performance
There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.
Principle 6 - Access to information
In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.
2. Remuneration Matters
Principle 7 - Procedures for developing remuneration policies
There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.
Principle 8 - Level and mix of remuneration
The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.
Principle 9 - Disclosure on remuneration
Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company's Annual Report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.
3. Accountability and Audit
Principle 10 - Accountability
The Board should present a balanced and understandable assessment of the company's performance, position and prospects.
Principle 11 - Risk managment and internal controls
The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders' interests and the company's assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.
Principle 12 - Audit committee
The Board should establish an Audit Committee ("AC") with written terms of reference which clearly set out its authority and duties9.
4. Shareholder Rights and Responsibilities