SGX Strengthens Corporate Governance Structure

Changes have been made to the Securities and Futures (Corporate Governance of Approved Exchanges, Designated Clearing Houses and Approved Holding Companies) Regulations 2005 (“SFR 2005”) and the Singapore Code of Corporate Governance 2005 (“the Code”), which deal largely with the independence requirements of the Board of Directors.

To comply with the changes to the Code, SGX has made changes to its corporate governance structure.

Further refinements to the independence of SGX’s Board and its committees will be made in order to comply with SFR 2005 after SGX’s AGM in September 2006. The changes are two pronged, including:-

an improvement of our corporate governance as a listed company with appointment of a Lead Independent Director and changes to our Remuneration Committee; and
an enhancement of our SRO (self regulatory organisation) governance with the reconstitution of our Appeals Committee.

The detailed changes are as follows:-

1. Appointment of Lead Independent Director

The Board is pleased to appoint Mr Low Check Kian as Lead Independent Director of SGX.

The Code recommends that where the Chairman and CEO are both part of the executive management team, a Lead Independent Director be appointed. As the Board has an executive Chairman, SGX will appoint a Lead Independent Director to enhance the effectiveness of our non-executive directors.

The Board has always had a separate Chairman and CEO, to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making as recommended by the Code. The appointment of the Lead Independent Director will further underscore this principle.

The Lead Independent Director will lead and coordinate the activities of the non-executive directors. He will also serve as Chairman of the Nominating Committee and will chair Board meetings in the absence of the Chairman.

2. Changes to the Remuneration Committee:-

Miss Olivia Lum, an independent and non-executive director, has been appointed as a member of the Remuneration Committee, to take the place of the retiring executive directors, Mr J Y Pillay and Mr Hsieh Fu Hua.

With this appointment, all members of the Remuneration Committee will be non-executive directors.

3. Setting up of an independent Appeals Committee

As an SRO, SGX has to regulate the activities of its members in its marketplace. The Appeals Committee hears appeals from decisions of SGX’s Disciplinary Committees on breaches by SGX members of SGX’s rules, regulations or directives.

An independent non-board Appeals Committee has been set up to replace the previous board Appeals Committee.

While this change is not required under the new regulations, the reconstituted Appeals Committee has been initiated by SGX to strengthen its SRO function, as it sits at the apex of SGX’s rule enforcement and adjudications structure.

The reconstituted Appeals Committee will inject greater vigour and objectivity into the appeals process and ensure its independence, as its members are not directors or executives of SGX.