SGX RegCo Mandates Tenure Limit On Independent Directors And Disclosure Of Remuneration Details Of Directors & CEOs

• Law Firm: Rajah & Tann
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Directors and Officers, Corporate Governance, Shareholders
• Author: Mr Chia Kim Huat, Abdul Jabbar Bin Karam Din, Evelyn Wee, Tan Mui Hui, Raymond Tong, Cynthia Goh, Danny Lim, Howard Cheam and Cynthia Wu
• Published date: 17 January 2023

Executive Summary

On 11 January 2023, Singapore Exchange Regulation ("SGX RegCo") announced that the following new requirements will apply to issuers ("Listed Issuers") listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") to institute better corporate governance practices relating to board renewal and disclosure of remuneration of directors and chief executive officers ("CEOs"):

1. Mandatory nine-year tenure limit on independent directors ("IDs"); and
2. Mandatory disclosure of remuneration details of each individual director and the CEO

The SGX-ST Listing Manual ("SGX-ST Mainboard Rules") and the Listing Manual Section B: Rules of Catalist ("SGX-ST Catalist Rules") were amended on 11 January 2023 to give effect to these changes. Transitional arrangements are in place to provide the Listed Issuers sufficient time to comply with these new requirements.

This Update provides a summary of these two new requirements.

Background Information

These changes stemmed from recommendations issued by the Corporate Governance Advisory Committee ("CGAC"), which was set up by the Monetary Authority of Singapore ("MAS") in 2019 to identify risks to the quality of corporate governance in Singapore, and take a leading role in advocating good corporate governance practices. CGAC's recommendations were made in response to the findings of a review published by KPMG in Singapore ("KPMG Review") of listed companies' disclosure on their compliance with the Code of Corporate Governance ("Code"). The findings of the KPMG Review suggest a concerning trend that long-serving IDs may become entrenched in listed companies in Singapore and that companies' disclosures on remuneration details of their directors and CEOs have been lacking.

SGX RegCo conducted a public consultation exercise from 27 October 2022 to 17 November 2022 to seek feedback on proposals to implement these changes. The respondents to the earlier consultation paper largely supported the proposals.

Mandatory Nine-Year Tenure Limit on IDs

Before 11 January 2023

Previously, Listing Rule 210(5)(d)(iii) of the SGX-ST Mainboard Rules and Listing Rule 406(3)(d)(iii) of the SGX-ST Catalist Rules provided that a director of a Listed Issuer was no longer independent if he/she had been a director of a Listed Issuer for an aggregate period of more than nine years (whether before or after listing) unless his/her continued appointment as an ID had been sought and approved in separate resolutions ("Two-Tier Vote") by:

• all...