A very good morning, Professor Tan Wee Liang, CSIS Chairman; distinguished guests, ladies and gentleman.
I would like to kick off this morning by talking about influence.
I assume many of you in the audience are users of social media. I myself am active on LinkedIn; by which I mean that I post now and then, and I read a fair bit of what others post as well.
Some people are much more active than I am – they may post daily or even more than once a day. Others post once a week or once every two weeks. Some have hundreds of thousands or even millions of followers. Others have just a few thousand.
In this huge sea of voices, I find my attention drawn to a small number of individuals who are posting original content rather than just reposting the thoughts of others.
They may not have large followings, and they are not always the most frequent of posters. But these are the individuals I would consider as true influencers.
Having millions of followers doesn’t always mean someone is influential. Yes, large followings give individuals access to an audience. But someone who is passively posting information is just a broadcaster, not an influencer.
Why am I talking about this? What does this have to do with all of you here today?
Cosecs are like these potential LinkedIn influencers. You have unparalleled access to the halls of power in your organisation. You have a direct line to the board chair, the independent directors and management.
That access can be used passively, as a distributor of board papers, disclosures and minutes. If you only do that then you are, really, just a broadcaster.
The challenge, then, is to first recognise your potential; and then to actively pursue a course of transformation into a strategic influencer.
Singapore’s capital market is undergoing a makeover, and all of you have an opportunity to reinvent yourselves: from passive broadcaster, to strategic influencer; from chief compliance officer to chief governance officer.
The Value Unlock catalyst
One of the key changes taking place in the Singapore market is a change in the regulatory framework, to one more heavily focused on disclosures and value creation.
As a regulator myself, I am very much aware that regulation on its own cannot unlock value. But it can create the structure that promotes a value creation mindset and focus. Regulation can act as an enabler of growth.
Let me give you an example of how we see this happening. Last month, we announced a new set of Enhanced Disclosures. Starting next year, we want companies to disclose the key performance indicators, the KPIs, that are used to decide how they pay their top executives. They must also disclose how those KPIs contribute to value creation.
Some commentators have criticised this requirement because they think companies will just disclose something very generic. They say that companies will look to comply with merely the letter of the law, and not the spirit, and that investors will be left with even more boilerplate disclosures to read.
But it only takes a few companies to do a good job and provide a yardstick against which savvy investors will measure all their other portfolio companies. Over time, companies that do better on disclosures will enjoy better valuations; and those that do worse will suffer.
Retail investors, enabled by AI, are asking tougher questions. Global investors, drawn in by the Monetary Authority of Singapore’s Equity Market Development Programme, are effectively raising the bar for corporate governance.
Singapore already has a strong reputation for compliance. But investors are not just looking for compliant companies anymore. They are looking for companies that are actively unlocking value.
By pushing companies to disclose the connections between remuneration KPIs and value creation, we are ensuring the needs of these investors are met. We are pushing companies to think about how they are creating value.
This week, Singapore Exchange Regulation also announced a joint consultation with the Corporate Governance Advisory Committee on changes to the Code of Corporate Governance.
Some of the key changes relate to proactive engagement with the investment community and interactions with shareholders at general meetings.
These proposed changes recognise that value creation depends on not just sound strategy but also on how effectively companies communicate their performance, prospects and long-term value propositions to the market.
Strategic levers
These proposed changes to our corporate governance code and the newly announced Enhanced Disclosures are strategic levers that companies can pull to unlock value.
They are also strategic levers that you, cosecs, can pull to reinvent your roles.
In many companies, the board provides oversight while the management team drives operations. Who connects them? Who ensures that independent directors have the unfiltered insights they need to challenge assumptions? Who ensures that executive decisions are aligned with the long-term interests of shareholders?
The answer to those questions is: you, the cosec.
Some of you may feel hesitant about this. You might worry that stepping into an influencer role might mean overstepping your boundaries or interfering with executive management.
But strategic influence is not about dictating strategy. It is about quiet boardroom diplomacy – shaping the agenda, framing the narrative and asking the right questions.
When the board discusses capital allocation, we are not asking you to suggest that the board pays higher dividends. But you can prompt a discussion on how the dividend policy communicates the company’s long-term growth plan to the market.
When the remuneration committee meets, we are not asking you to suggest how much the key executives should be paid. But you can guide the discussion towards how to align executive KPIs with long-term value creation for the company rather than just short-term gains.
This is how you demonstrate your worth. You show that governance is not just a cost centre, but a value driver.
To close, I will return to my earlier analogy of the similarities between the cosec and the LinkedIn influencer.
On social media, influence is fleeting. Clicks and likes interact with shifting algorithms, so what is trending today quickly becomes lost within months, maybe even weeks.
But in our capital market, your influence will be measured in something far more permanent and enduring: long-term value creation.
We have built the regulatory infrastructure to enable your makeover.
For the in-house secretaries, this means using your unique access to bridge the gap between compliance and corporate strategy. For our corporate services providers, it means leveraging your cross-industry portfolio to raise governance standards and cross-pollinate best practices across multiple boards.
Do not be content to merely record the boardroom feed. Step up, activate your access and help guide the strategic narrative of your enterprise. You are your company’s influencer.
