25 November 2021

On 9 November 2021, the Monetary Authority of Singapore (“MAS”) issued revised Guidelines on Corporate Governance for Designated Financial Holding Companies, Banks, Direct Insurers, Reinsurers and Captive Insurers which are Incorporated in Singapore (“CG Guidelines”).

Key revisions to the CG Guidelines include:

  • Incorporation of the 2018 Code of Corporate Governance (“CG Code”). The CG Guidelines previously contained the 2012 version of the CG Code;
  • Revisions to the Additional Guidelines (“AGs”) within the CG Guidelines to align with international standards and industry good practices;
  • Refinements to the compliance approach for different categories of financial institutions that are subject to the CG Guidelines; and
  • Introduction of a new AG on the appointment of non-directors to the Board Risk Committee.

The CG Guidelines comprise the Principles and Provisions of the CG Code and AGs added by MAS. The issuance of the revised CG Guidelines follows MAS’ public consultation from 7 May 2021 to 18 June 2021 on proposed revisions to the CG Guidelines to align and strengthen corporate governance standards across locally-incorporated banks, insurers and designated financial holding companies (“FHCs”) (collectively, “FIs”).

MAS had proposed in the consultation paper to include selected Provisions and AGs from the CG Guidelines in the Banking (Corporate Governance) Regulations 2005 and the Insurance (Corporate Governance) Regulations 2013 (collectively, “CG Regulations”) for mandatory compliance as they are fundamental to good corporate governance. MAS is continuing to review this and will consult the industry in due course.

MAS issued its Response to feedback received from the public consultation on 9 November 2021. MAS has carefully considered the feedback and made revisions to the proposals where appropriate. Key points from the MAS Response are set out below.

1.  Implementation timeline

The revised CG Guidelines will take effect as follows:

  • 1 January 2022: Expectations in the CG Guidelines relating to disclosures are effective from 1 January 2022 and will apply to the FIs’ annual reports covering financial years commencing from 1 January 2022. FIs have to provide explanations if they do not make the relevant disclosures in accordance with the CG Guidelines.
  • 1 April 2022: All other expectations in the CG Guidelines, save for Provision 2.2, are effective from 1 April 2022. FIs are to provide explanations for variances observed from 1 April 2022 in their annual reports covering financial years commencing from 1 January 2022 or on their websites.
  • 31 December 2022: Provision 2.2 is effective from 31 December 2022. Provision 2.2 sets out MAS’ expectation for majority board independence where the Chairman is not independent. An FI with a financial year from 1 January 2022 to 31 December 2022 should disclose any variance from Provision 2.2 as at 31 December 2022 in its annual report or on its website in 2023. 

2.  Compliance approach

MAS takes the view that it is important for FIs to fully observe the Principles in the CG Guidelines as these represent key elements of good corporate governance, and would align with the approach adopted for listed companies. FIs listed on Singapore Exchange (“SGX”) are expected to fully comply with the Principles, which are already mandatory under the SGX Listing Rules.

For FIs that are not listed on SGX, MAS expects (a) banks, Tier 1 insurers, and certain designated FHCs to fully observe these Principles, and (b) Tier 2 insurers and other designated FHCs to observe the Principles or explain any variance in their annual reports or on their company websites.

In addition, MAS expects every FI to observe the Provisions and the AGs. Variances from the Provisions and AGs are acceptable to the extent that FIs explicitly state and explain how their practices are consistent with the policy intent of the relevant Principle. FIs listed on SGX should disclose their corporate governance practices and explain variances from the Provisions and AGs in their annual reports. FIs that are not listed on SGX should disclose the same in their annual reports or on their company websites.

MAS has provided the following table in the Annex to the CG Guidelines summarising the compliance approach for listed and non-listed FIs:

Financial institutions



Additional Guidelines

Listed FIs

Full compliance



Non-listed FIs

·       Banks

·       Tier-1 insurers

·       Designated FHCs
(as set out in footnote 6 of the CG Guidelines)

Full compliance (except Principles 11 and 12, which are on a comply-or-explain basis)



·       Tier-2 insurers

·       Designated FHCs
(as set out in footnote 8 of the CG Guidelines)




·       Captive insurers

·       Special purpose reinsurance vehicles

·       Marine mutual insurers

·       Run-off insurers

No expectation to disclose variances, although CG Guidelines continue to apply

No expectation to disclose variances, although CG Guidelines continue to apply

No expectation to disclose variances, although CG Guidelines continue to apply

(Source: MAS CG Guidelines issued on 9 November 2021)

For captive insurers and special purpose reinsurance vehicles (“SPRVs”), considering the feedback received and taking into account the nature and scale of captive insurers and SPRVs, the Principles, Provisions and AGs in the CG Guidelines will continue to apply to captive insurers and SPRVs as good practices. However, they will be exempted from the comply-or-explain regime. A similar approach will be adopted for marine mutual insurers (“MMIs”), which are owned by their members, who are also the policyholders. MAS will also exempt run-off insurers from the comply-or-explain regime in relation to the Principles, Provisions and AGs, considering the lower level of public interest in these insurers as they have ceased writing new or renewal business.

However, where captive insurers, SPRVs, MMIs and run-off insurers are listed on SGX, they are expected to comply with the Principles and observe the comply-or-explain requirement for the Provisions as provided for under the SGX Listing Rules.

MAS also stated in its Response that it is reviewing the Tier 1 threshold for insurers.

3.  New AG on appointment of non-directors to Board Risk Committee

MAS has introduced a new AG 9.9 on the appointment of non-directors to the Board Risk Committee (“BRC”). The appointment of non-directors to the BRC is only to be notified to MAS 30 days prior to the appointment. MAS approval is not required for the appointment. When notifying MAS, FIs are to provide the Nominating Committee’s (“NC”) assessment of the non-director’s fitness and propriety, and independence.

In its Response, MAS clarified that AG 9.9 is intended to give FIs the flexibility to appoint a subject-matter expert as a non-director member to the BRC, provided the FI’s constitution permits such appointment. Any non-director who is appointed to the BRC should be fit and proper in accordance with the MAS Guidelines on Fit and Proper Criteria and each appointment should be subject to a maximum term of three years. The FI should disclose the appointment on its website or via corporate announcements (AG 9.9 has been revised to include MAS’ expectation for FIs to make this disclosure).

The FI has the discretion to determine the scope of the non-director member’s responsibilities and should bind him to appropriate undertakings for proper accountability and to discharge his responsibilities with due diligence and in the interests of the FI. The non-director should not be accorded voting rights on decisions that are put up for the BRC’s approval, given that he is not bound by the same statutory and fiduciary duties as a director and is not elected by shareholders.

The Remuneration Committee (“RC”) should determine the appropriate remuneration for a non-director on a proportionate basis, taking into consideration his scope of responsibilities, vis-à-vis directors. FIs are encouraged to disclose the non-director’s remuneration for transparency and accountability.

For the purposes of the BRC composition requirements under the CG Regulations, only directors are considered and the non-director cannot be relied on to meet the minimum numbers required.

4.  Expectation for majority board independence when chairman is non-independent

MAS had proposed a Provision 2.2 for the Board to have a majority of independent directors where the Chairman is non-independent. Provision 2.2 is part of the 2018 CG Code that MAS has fully incorporated into the revised CG Guidelines.

Recognising that it may be disproportionately burdensome for smaller and less systemically important FIs to constitute a majority independent board, given the challenges in identifying suitable independent directors, MAS has revised Provision 2.2 such that only locally-incorporated Tier 1 insurers, local banks, qualifying full banks, full banks and their designated FHCs are subject to the expectation for a majority independent board where the Chairman is non-independent. The revised Provision 2.2 will be effective from 31 December 2022, giving FIs sufficient time to consider changes to their Board composition. For all other FIs, at least half of the board is expected to be independent where the Chairman is not independent.

MAS stated that it is also reviewing the requirements on independent directors on the Board in the CG Regulations and will consult the industry in due course.

5.  Transactions with related parties

Following feedback that AGs 14.1 to 14.5 on related party transactions in the CG Guidelines may be inconsistent with the requirements on related party transactions that apply to banks under MAS Notice 643 on Transactions with Related Parties (“MAS Notice 643”), MAS has aligned the definition of “related party transaction” in the revised CG Guidelines with the definition in MAS Notice 643 so as to reduce reporting burden for banks, which may arise from differences in the definitions. MAS has also amended AG 14.5, which sets out the expectation for the Audit Committee to review all material related party transactions, to state that the Board (or delegated Board Committee) should review all material related party transactions. This aligns more closely with MAS Notice 643 for banks, while continuing to set similar expectations for the boards of insurers and designated FHCs.

6.  Additional Guidelines on remuneration practices

MAS provided the following clarifications and comments relating to the AGs on remuneration practices:

  • Involvement of control functions in performance evaluation and remuneration matters: AG 6.6 provides that relevant control job functions should be involved in the design of remuneration policies, and provide inputs on performance evaluation and remuneration outcomes. This is to ensure remuneration polices do not create incentives for excessive risk-taking behaviour. MAS acknowledges that control functions may not have the necessary expertise or experience in advising on specific aspects of remuneration policies. However, such functions will be able to provide inputs to the design of performance evaluation and remuneration frameworks to foster prudent risk-taking and mitigate misconduct risk. Control functions that would typically be involved in performance evaluation and remuneration matters include risk management, compliance and internal audit.
  • Independent annual review of compensation practices: AG 6.9 sets out the expectations for the FI to conduct an independent annual review of compensation practices. MAS recognises that remuneration policies, regulations and guidelines may not change materially every year. Hence, where the RC is satisfied that there are no material changes, it may waive the conduct of the review for a particular year, or determine the scope of the annual reviews to cover other aspects. Where a foreign-owned FI performs the annual review against regulations and guidelines issued by its home supervisor, the FI must be able to demonstrate that the requirements and expectations of the home supervisor are consistent with the principles set out in MAS’ regulations and guidelines.
  • Remuneration structure for key management personnel and other MRTs: AG 7.4 requires FIs to subject to deferral arrangements over a period of at least three years at least 40% of the variable remuneration for key management personnel and other material risk takers (“MRTs”). MAS explained that the intent of AG 7.4 is to ensure that remuneration for key management personnel and other MRTs are aligned with the time horizon of risk and the long-term objectives of the FI, as their actions and decisions have a material impact on the risk profile of FIs. To address the possible punitive impact on lower-ranked employees with low variable remuneration, FIs may establish a minimum deferral threshold, where only variable remuneration above a certain quantum would be subject to deferral arrangements. MAS advises, however, that FIs should not increase the fixed pay to reduce the impact of deferral mechanisms and that a substantial proportion of remuneration for key management personnel and other MRTs should be in variable pay.
  • Communicating indicative criteria and scenarios that could result in ex-ante or ex-post adjustments to performance and remuneration: AG 7.10 requires FIs to set out clearly in the remuneration policies and communicate to employees the indicative criteria and scenarios that could trigger ex-ante or ex-post adjustments to performance and remuneration. MAS explained that while it does not prescribe the level of detail when communicating the criteria and scenarios to employees, such scenarios should minimally include cases in which: (i) the individual was accountable for misconduct that led to significant losses for the FI or significant adverse outcomes for its customers or counterparties; or (ii) there was fraud, gross negligence or material failure of risk management controls, including serious breach of internal rules or regulations, regardless of the scale of the damage.
  • Reliance on group level review and oversight: The local Board and RC remains ultimately responsible for overseeing remuneration matters, even if they leverage on independent reviews and oversight discharged by a Group RC or carried out at a Group level.
  • Definitions of key terms: MAS provided clarification on the definitions of “material risk takers”, “sustained attention”, “guaranteed bonus” and “ex-ante adjustment mechanisms”.

7.  Other new Provisions and AGs

  • Training for directors with no prior experience as a director of a listed company or FI: MAS agrees with feedback that the training programme for such directors could be developed by the FIs themselves and tailored to their specific needs. MAS has amended AG 1.15 to make it clearer that FIs have the flexibility in determining the training programme for new directors. MAS does not prescribe the specific training for directors as conveyed in the consultation paper. While examples of training areas are included (i.e. accounting, legal, relevant regulatory and industry-specific knowledge), these are intended as references.
  • Information to be disclosed when names of directors are submitted for appointment or re-appointment: MAS has changed the reference to “10% shareholder” in AG 4.7 to “substantial shareholder” for better alignment with Provision 2.1 of the 2018 CG Code, which replaced the concept of 10% shareholder with the concept of the substantial shareholder, as the appropriate threshold to trigger considerations on the independence of directors.
  • FIs’ management of financial and non-financial risks: In view of its increasing importance, MAS has included environmental risk as one of the risks to FIs mentioned in new AGs 9.4(d), 9.6 and 10.13(a). This also reiterates MAS’ expectations that FIs pay sufficient attention to environmental risk management.

8.  Proposed amendments to CG Regulations

MAS had conducted a review to identify the provisions shifted from the CG Code to the SGX Listing Rules for mandatory compliance in 2018, as well as other AGs within the CG Guidelines, which constitute expectations that are fundamental to good corporate governance and should therefore be included in the CG Regulations for mandatory compliance by the relevant FIs.

  • Independence from management relationships: MAS had proposed to revise the CG Regulations’ definition of independence from management relationships, to align with the CG Guidelines and capture employment with “related corporations” instead of “subsidiaries”. Feedback was received that an FI in a large global group might find it challenging to appoint independent directors within its group if employees of related corporations are caught as well. MAS will further review this proposed amendment to the CG Regulations and will seek more feedback.

MAS had also proposed to widen the scope of employment of the “immediate family member” to cover employment by the FI or its related corporations in any capacity, instead of only those employed as an executive officer. In response to feedback that the scope of the expanded rule may be too onerous, MAS has set out in AG 2.6 that a director is deemed non-independent if his or her immediate family member is employed (i) as an executive officer or other MRT by the FI, or (ii) has his compensation decided by the RC or the Board.

MAS may consider a new regulation that allows the Nominating Committee to rebut the presumption of non-independence where the director is prima facie deemed non-independent from management relationships by virtue of the expanded relationships described above. MAS will review the definition of independence from management relationships further and seek feedback on any additional change or refinement.

  • Directors’ responsibility for annual review of business objectives, strategies, corporate governance and culture and conduct frameworks: MAS proposed to set out the Board’s key responsibilities in the CG Regulations as the CG Regulations are currently silent on the responsibilities of the Board even though they set out the key responsibilities of the various Board Committees. One such responsibility was for the Board to “review, at least annually, the bank’s/insurer’s business objectives, strategies, and its corporate governance as well as culture and conduct frameworks”. MAS had informed FIs that these Board responsibilities will be included within the revised CG Guidelines, and subsequently within the CG Regulations when regulatory amendments are effected.

MAS agrees with feedback received that flexibility should be accorded to the FIs to determine the frequency of reviews as business objectives and strategies could be of a long-term nature and not change every year. As such, MAS will allow the reviews to be conducted on a periodic basis and where there are material developments, rather than “at least annually”. This could mean a review cycle of less than a year should there be material developments warranting this.

MAS will further review the roles and responsibilities of the Board proposed to be included in the CG Regulations, and will consult the industry in due course.

  • Extension in scope of RC’s responsibilities: Responding to feedback on the practical challenges for the RC to seek inputs from the relevant Board Committees overseeing control functions on the individual performance and remuneration of MRTs, MAS has clarified that the intent is for the RC to evaluate remuneration outcomes for MRTs in aggregate to ensure that these are aligned with prudent risk taking and consistent with sound risk management principles. The RC is not expected to evaluate the remuneration package of each MRT, and the proposed requirement to seek inputs from committees overseeing control functions will be limited to executive officers.

Reference materials

The following materials are available from the MAS website www.mas.gov.sg via this webpage:


Knowledge Highlights 13 June 2024

MAS expands application of fair dealing guidelines to all financial institutions and all products and services

Read more