SGX clarifies transitional arrangements for Listing Rules mandating baseline corporate governance practices
On 28 November 2018, Singapore Exchange Limited (“SGX”) issued transitional practice notes on “Transitional Arrangements Regarding Code of Corporate Governance 2018” (“Practice Note”). The Practice Note sets out the transitional arrangements for certain baseline corporate governance practices stipulated in the Code of Corporate Governance issued in May 2012 (“2012 CG Code”) that have been migrated to the Singapore Exchange Securities Trading Limited Listing Rules (Mainboard) and Listing Rules (Catalist) (collectively, “SGX-ST Listing Rules”).
By way of background, on 6 August 2018, the Monetary Authority of Singapore (“MAS”) issued the revised Code of Corporate Governance (“2018 CG Code”). The 2018 CG Code replaces the 2012 CG Code and applies to annual reports of an issuer listed on the SGX-ST for financial years commencing on or after 1 January 2019. Important requirements or baseline corporate governance practices stipulated in the 2012 CG Code have been shifted to the SGX-ST Listing Rules, rendering compliance with these requirements mandatory. Amendments to the SGX-ST Listing Rules to implement these requirements took effect on 1 January 2019, with the exception of those relating to board composition that will take effect on 1 January 2022.
This article discusses the following SGX-ST Listing Rules requirements addressed in the Practice Note:
Changes effective from 1 January 2019
- Directors to be re-nominated and re-appointed at least once every three years
- Description of corporate governance practices with reference to 2018 CG Code
- Enhanced disclosures in annual reports on adequacy and effectiveness of issuers’ internal controls and risk management systems
- Directors are not independent if they or their immediate family members are employed by issuer or its related corporations
Changes effective from 1 January 2022
- Independent directors to make up one-third of the board of directors of an issuer
- Two-tier vote on independence of directors serving more than nine years
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