Opening Remarks By J Y Pillay, Chairman, Singapore Exchange Limited At The SIAs Investors' Corporate Governance Conference At Raffles City Convention Centre On 8 October 2008

I am happy to be here to say a few words at the opening of the SIAS Corporate Governance Conference.

SIAS’s contributions to good governance

2 First, may I acknowledge and thank the President and members of SIAS for your keen interest in the theory and application of corporate governance, and your vigorous efforts in support of it. As a result of your labours, together with the strivings of many others, the good word of corporate governance is gradually spreading through the business community and society, and progressively taking root in the nooks and crannies of board rooms.

Why the frequent revisiting of governance matters?

3 More than a decade after the seeds of corporate governance were planted, some observers may well ask what more can be said about it? Have those seeds not sprouted reasonably well? Why do we frequently revert to governance as though it were some magical totem pole?

4 Well, first, the refinement of the principles of good governance has not reached its culmination, and never will. As in all endeavours, there is no end point, for the simple reason that human beings are not perfect.

5 Second, despite all the efforts of the past, not everyone accepts that the adoption of the principles and guidelines of the corporate governance code, in full, is a worthy labour that will improve company performance in its wake.

6 Third, corporate governance does not stand loftily alone. It is part of the fabric of society. It can only advance, and be progressively applied, in line with the sensitivity of society to its relevance and value. Governance requires a collective effort by all the constituencies -- corporations, intermediaries and participants, the media, and above all, shareholders -- for it to function effectively. So progress has to be paced. It cannot run too far ahead of the capacity of society and business to accept it.

7 And fourth, since man is fallible, lapses in governance, of greater or lesser degree, will take place, intentionally or otherwise.

8 So, a conference such as this helps in addressing those and other issues, raising the consciousness of businesses and society, and reminding shareholders of their own role in promoting the practice of good governance in their companies.

SGX’s role

9 You may be interested in what SGX does in the area of corporate governance. Until the middle of last year, the Ministry of Finance was responsible for corporate governance and the promulgation of the corporate governance code; while the Exchange was charged with activating it through its Listing Rules. Since then, responsibility for governance has been transferred to MAS, in association with SGX.

10 One key initiative that SGX, MAS and ACRA have jointly embarked on is the establishment of the industry-led Audit Committee Guidance Committee (ACGC) in January this year. The ACGC is about to finalise its Guidebook for Audit Committees in Singapore, providing practical guidance to enhance their effectiveness.

11 Other measures introduced by the SGX to raise the standards of corporate governance practices include: (a) publishing on the SGX website, the companies listed on a secondary basis in Singapore as they comply with their respective home exchange rules and standards; and (b) the introduction of accession and cessation templates requiring companies to provide the basis for new board appointments as well as requiring directors of companies to declare the reasons for their departure from the board. In cases where such disclosure is wanting, shareholders should take advantage of the enhanced disclosure standards to closely question their boards at general meetings.

Role of Shareholders

12 More widely, shareholders have an obligation and interest to press their boards on compliance with the principles and guidelines of the CGC. It is for diligent shareholders to check that their companies are not merely ticking boxes in their efforts to comply with the Code, but are making diligent efforts to abide by its spirit. And if compliance is not complete, and a satisfactory clarification not provided, shareholders should press directors for a proper explanation.

Specialised governance monitoring agencies

13 Shareholder activism is served by specialised monitoring agencies that have spotted a perceived need to assess corporate compliance with the fundamental principles and precepts of governance through a rigorous review of company practices. Their reports do influence decisions by institutional investors and others on resolutions at general meetings.

A busy Conference schedule

14 With those brief remarks on governance and the status of the Code, may I leave you in the good hands of the many distinguished speakers your Association has assembled. Those experts will keep you busy the rest of the day delving into the intricacies of governance, outlining case studies, making proposals for improving the practice of good governance, and so forth.

15 May I wish all of you a very successful conference. Thank you.