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Singapore – Key Issues For Your Business In 2015: Corporate Governance & Directors Duties.

10 March, 2015

 

Legal News & Analysis – Asia Pacific – Singapore  Regulatory & Compliance

 

Directors Must Be Alert To Every Change Highlighted In This Update And More

 
Directors, as the guardians of the corporation, exercise a critical function of oversight. With the spread of regulatory changes introduced in the last 18 to 24 months, some of which are outlined in this update, 2015 will see directors even busier trying to come up to speed with relevant laws, regulations and accounting changes. It is not for the directors to understand every change, but it is their role to ensure they are cognisant of the developments and that someone appropriately qualified has been tasked to look into the matter and to update the board. The board can then direct appropriate action to be taken. Failure to at least be aware and direct someone to look into the matter could result in a breach of fiduciary duties. It is likely that there will be more active enforcement.

 
Board Diversity

 
Board diversity will remain an issue of interest in 2015. Board diversity goes beyond gender diversity extending to diversity in skills, experience, age and nationality, as examples. Yet, the area of greatest scrutiny for 2015 will remain gender diversity, particularly given that Minister Grace Fu publicly named several corporations which had no females on the boards. The SGX has formed a Diversity Action Committee towards the end of last year, and various action plans is likely to be expected from the Committee. Nominating committees are expected to be particularly busy having to formulate detailed guidelines on diversity as a whole.

 
Extension Of Statutory Duty Of Disclosure To CEOs

 
At present, the only persons who are required to disclose their interests in transactions or shareholdings in the company and its related corporations are the directors. Pursuant to the amendments, CEOs of private companies (who are not also directors) will be required to disclose the interests that he and/or his family members hold in the shares of the company as well as any conflict of interests in transactions with the company arising due to the nature of his office or the properties owned by him. This change has been introduced due to the influence that CEOs have in the decision-making of a company, and is aimed at promoting better standards of corporate governance.

 
Review Of OECD Corporate Governance Principles

 
The OECD Corporate Governance Principles were first introduced 16 years ago and updated in 2004. The OECD is now conducting a review of the Principles. It notes that the “rationale for the review is to ensure the continuing high quality, relevance and usefulness of the Principles taking into account recent developments in the corporate sector and capital markets. The outcome should provide policy makers, regulators and other rulemaking bodies with a sound benchmark for establishing an effective corporate governance framework.” If it comes to pass, directors can expect there to be various changes to be introduced in Singapore as well.

 

Rajah & Tann

 

For further information, please contact:

 

Kala Anandarajah, Partner, Rajah & Tann 

kala.anandarajah@rajahtann.com


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