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Corporate Governance: DR MAK YUEN TEEN LOOKS AT RECENT DEVELOPMENTS, MAJOR CHALLENGES AND SUGGESTIONS FOR SUSTAINABLE IMPROVEMENTS IN SINGAPOREAN CORPORATE GOVERNANCE
BETWEEN 2001 AND 2005, SINGAPORE was in a regulatory overdrive mode as far as corporate governance and financial reporting were concerned. A range of reforms were introduced.
The first Singapore Code of Corporate Governance in April 2001 was published and became effective in January 2003.
The securities and Futures Act (SFA) 2001 was introduced. Major market conduct provisions in the act, which became effective on 1 October 2002, cover issues related to corporate governance, including prohibited conduct, continuous disclosure, insider trading, and civil action by the Monetary Authority of Singapore (MAS) for breaches of SFA provisions.
The Council on Corporate Disclosure and Governance (CCDG) was established in August 2002. This is charged with prescribing accounting standards in Singapore; strengthening the existing framework of disclosure practices; and reviewing and promoting good corporate governance in Singapore.
Accounting standards (called Financial Reporting Standards) became mandatory for all companies for financial periods beginning from 1 January 2003. These standards are almost fully converged to the International Accounting Standards Board (IASB) standards.
Quarterly reporting became mandatory for financial periods beginning 1 January 2003 for listed companies that have market capitalisation of S$75 million and above.
The Accounting and Corporate Regulatory Authority (ACRA) was formed in May 2004 by combining the Registry of Companies and Businesses and the Public Accountants Board to enhance the regulatory framework for monitoring and enforcing companies' compliance with disclosure requirements and accounting standards.
The CCDG completed its review of the Singapore Code of Corporate Governance in May 2005 and the revised Code was published by the Ministry of Finance in July 2005, to apply to listed companies from January 2007.
In September 2005, the Monetary Authority of Singapore issued new Corporate Governance Regulations for banks, financial holding companies and large insurers, and corporate governance guidelines for banks, financial holding companies and direct insurers. The corporate governance guidelines were based on the revised code issued by the CCDG but enhanced in specific areas such as the internal audit. These new regulations and guidelines will apply from January 2007.
These regulatory developments occurred against the backdrop of a shift from a merit-based to a disclosure-based approach...