6 months ago
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Shareholders are often sidelined when it comes to their opinions and insights despite owning a bit of the company. Singapore is trying to change that
 "Why Singapore wants to make it easier for shareholders to call special meetings")
The Singapore Exchange building in Singapore. Image used for representational purposes/Reuters
In a bid to bolster corporate governance practices and foster greater shareholder empowerment, the Singapore Exchange (SGX) is advocating for a significant rule change. The proposed alteration, announced on Tuesday, seeks to streamline the process for shareholders to convene special general meetings, marking a pivotal development in the landscape of corporate governance within the city-state.
What is the current landscape?
Presently, Singapore-listed companies operate without a regulatory mandate to heed shareholder calls for special general meetings, a stance that has historically stifled shareholder initiatives.
What are the proposed amendments?
SGX is championing a transformative shift, mandating that listed firms take concrete action within a 21-day window upon receipt of a requisition from shareholders. Even a solitary shareholder wielding a minimum 10% stake can trigger this mechanism, ushering in a newfound era of shareholder influence.
Should a company contest the legitimacy of the notice, the proposal stipulates a swift recourse, necessitating a court intervention within the same timeframe. This stringent framework aims to expedite the process while ensuring procedural fairness.
Public consultation on the proposal is open till 23 May.
What have officials said?
Tan Boon Gin, CEO of SGX Regulation, articulated the rationale behind the proposed overhaul, emphasising the symbiotic relationship between shareholder engagement and corporate responsiveness.
“If investors have a stronger say, companies will be more motivated to consider their interests by improving both operational performance and shareholder returns,” stated Gin, underscoring the imperative for companies to align with market sentiments.
Market analysts, including Yeap Jun Rong from IG, offered nuanced perspectives on the proposed reform. While acknowledging its potential to fortify corporate governance, Rong cautioned against potential burdens on companies stemming from frequent special meetings.
The new rule could come as a positive step in trying to improve corporate governance “given the declining trend in the number of SGX listings, the relatively weaker valuation and the perception of a general lack of liquidity in some areas of the markets,” Reuters quoted Rong.
What led to this move?
Singapore’s proactive stance on corporate governance reform reflects a broader trend, fueled by escalating investor activism both domestically and internationally. Recent regulatory initiatives, such as enhanced CEO pay transparency and board strengthening efforts, underscore Singapore’s commitment to fostering a conducive environment for investors while fortifying market integrity.
Furthermore, SGX’s endeavors to revitalise local equities align with broader aspirations to bolster the competitiveness of Singapore’s capital markets. The proposed rule change signifies a pivotal milestone in this trajectory, poised to augment investor confidence and bolster market vibrancy.
What are the next steps?
As the consultation period for the proposed rule change extends until May 23, stakeholders are invited to contribute their perspectives, ensuring a robust and inclusive deliberative process.
In tandem, SGX Regulation is spearheading efforts to streamline logistical aspects, proposing mechanisms for seamless dissemination of relevant documents and ensuring requisite board participation at requisitioned meetings.
With inputs from agencies
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