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The Singapore Exchange (SGX), in its Regulator’s Column, has provided updates on its efforts to strengthen vigilance and corporate governance practice among listed companies. SGX wishes to state that just as attracting foreign companies is a key pillar of our long-term strategy, so is maintaining stringent listings requirements and upholding corporate governance standards of our listed companies. SGX believes both elements are equally crucial if the Exchange and Singapore are to prosper as a trusted financial center for capital raising.
The Exchange recognises that the current business environment poses challenges to both the Exchange and our listed companies. In particular, SGX is acutely aware of the risks presented by companies operating in foreign countries, including Singapore-listed Chinese companies (S-Chips). The market needs to distinguish companies that are adversely affected by the current crisis as against those who resort to fraud. This differentiation applies to companies listed on SGX, regardless of their country of origin. Currently, about 142 listed companies on SGX have issued profit guidance since 2008.
Some of these risks can be, and are, addressed at the IPO due diligence stage where professionals play a major role in preparing companies for listing. Over the years, on-going improvements have been made to strengthen accountability and transparency during the IPO process, as well as post-IPO (Please refer to the Regulator’s Column Article, published on 3 April 2009, for more details).
Recently in March 2009, we convened meetings with 14 Audit Firms and held separate sessions with Issue Managers, Boards and Independent Directors (ID), to discuss current concerns arising from the financial crisis. As companies undertake their year-end audits, the Exchange has urged the audit professionals, Audit Committees (AC) and ID to scrutinize areas such as cash balances, account receivables and assessment of off-balance sheet items.
Inevitably, these additional checks, greater disclosure requirements and emphatic reminders to heighten vigilance will surface undesirable detritus. This is not unexpected given the current hostile economic environment. The Exchange is prepared to face this squarely.
All market participants have their respective roles to play in our financial ecosystem. The Exchange will do our utmost to fulfill our responsibility. Other stakeholders – audit and legal professionals, issue managers, and directors, must equally stand to complement the efforts of the Exchange. The overall market will benefit from these concerted efforts.
