Mr David Gerald,
President and CEO of Securities Investors Association of Singapore (SIAS),
Mr Tan Chok Kian,
Chairman of SIAS,
Excellencies, Distinguished guests, Ladies and Gentlemen,
1. A very good morning to all. I am indeed pleased to join all of you here today for the inaugural Asian Investment Conference and Exhibition 2009.
2. Given the current economic backdrop, this Conference comes at a most opportune time, as it serves not only to expose investors to investment opportunities in Singapore and in the region, but also to update their investment knowledge and skills. It is also laudable that the organisers have chosen to expand the participation in this event to companies beyond the shores of Singapore, to include companies from China, Malaysia and Thailand. It is beneficial to have a wider participation as it allows investors from this region to meet and interact with a wider group of issuers and distributors of financial products and services. And, Singapore is well-placed to host such an event, given our location of confluence.
Corporate Governance Eco-system
3. Notwithstanding the uncertain global economic outlook, one may still find attractive investment opportunities that the market has under-valued. So, to discern the value of a business, it is helpful for the investor to have a good knowledge of the company concerned, especially the underlying business and the strength of the management team. In this regard, it is important to have a robust corporate governance eco-system. And, what do I mean by that? The corporate governance eco-system refers to the way business decisions are considered and taken, the way risks are assessed and mitigated, and the way accountability and authority are matched.
4. Firstly, at the company level, good corporate governance provides some assurance that the companies are well run and that disclosure, including through the annual reports, is made in a timely and accurate fashion. Good corporate governance mitigates the occurrence of adverse events like corporate fraud; and should they occur, increases the likelihood that they would be detected early and remedial action taken in a timely manner.
5. Secondly, for capital markets as a whole, good corporate governance will facilitate their effective and efficient functioning. Reliable disclosure and reporting helps investors to interpret data and facilitates comparison of investment opportunities as well as the efficient allocation ofcapital. A robust corporate regulatory framework also helps to protect the rights of investors and shareholders.
6. In Singapore, we are making a concerted effort to create a more conducive corporate governance environment. For example, the Monetary Authority of Singapore (MAS) regularly monitors global developments in corporate governance and reviews ways to further enhance our corporate governance system. However, we should be mindful that rules developed must be workable, and that there must always be a sensible balance between the benefits of a dynamic capital market and the costs of regulation. The right regulatory balance should marry high standards of integrity and accountability with a strong foundation for innovation, growth, and competitiveness.
7. As part of the Government's continuing efforts, in 2007, a Steering Committee to Review the Companies Act was formed, and tasked with undertaking a fundamental review of the Companies Act. This is a significant effort as I am sure all of you will appreciate as, the Companies Act represents the basic building block in the corporate governance eco-system - it sets out the regulatory framework for all companies.
Targeted Consultation with Focus Groups
8. Since its formation, the Committee, which is chaired by Attorney-General Professor Walter Woon, has studied and deliberated on key areas of the Companies Act. Various stakeholder groups have also provided feedback on the range of issues that the review should cover. I am glad to announce that the work of Committee has reached a significant stage - the Committee is now in the process of distilling the feedback and deliberations into a series of consultation documents. These documents will form the basis of more focused consultations on specific issues, allowing the process to benefit from the in-depth professional views and expertise of key stakeholders like you. These inputs will be used in refining the draft Bill which will be made available for public consultations by next year.
Selected Issues for Targeted Consultation
9. I would like to take this opportunity to share with you three issues relating to the Companies Act that the Steering Committee has looked at, and which will also be discussed in the consultation papers. These are issues regarding shareholder rights which I understand stakeholder groups such as SIAS and the institutional investors had previously surfaced to the Steering Committee for its attention.
Appointment of Multiple Proxies
10. Now, the first is an issue close to the hearts of institutional investors in Singapore - the appointment of multiple proxies. Currently, where shares in a company are held through a nominee company or a custodian bank, the nominee company or custodian bank is the registered member, and is entitled to attend and vote at a general meeting of the company.
11. The existing Companies Act provides that a member is entitled to appoint a maximum of two proxies to attend and vote at a general meeting, unless the articles of association for that company provide otherwise. This is because in most other normal circumstances, having two proxies would already be sufficient and fair for individual shareholders who are also the registered members. Companies have the option to allow a greater number of proxies, and some do. However, this is not a prevalent practice in Singapore. As a result, fund managers and institutional investors who hold shares through a nominee company or custodian bank may not be able to attend shareholders' meetings due to the limit to the number of proxies. The Steering Committee is thus surfacing for discussion whether the Companies Act should be amended to allow a nominee company or custodian bank to appoint more than two proxies to attend the general meeting of a company.
Investor Rights for CPF Fund Investors
12. Besides looking at the issue of multiple proxies, the Steering Committee will also be seeking comments and feedback on how to enhance the investor rights for Central Provident Fund (or CPF) members who purchase company shares using their CPF funds through the CPF Investment Schemes. Currently, such shares are held in the names of the CPF Agent Banks. As the CPF share investors are not the registered members, they have no rights other than to instruct the CPF Agent Bank in advance on how they wish to vote on resolutions. They may not attend the company AGMs. The Steering Committee will be seeking feedback on the possible legislative mechanisms that can be put in place to allow CPF share investors to enjoy their membership rights, such as attending general meetings. All these are part of the initiative to enfranchise shareholders so as to allow them to have a greater say in the overall well-being of the company.
Minority Shareholders Protection
13. Thirdly, besides empowering shareholders, the Steering Committee is also studying how minority shareholders rights can be enhanced. Currently, the Companies Act already allows the Court to grant relief to minority shareholders to control potential abuse of the majority's voting power. While there is an existing remedy for minority shareholders, some have commented that this necessitates costly litigation, which makes it unattractive to minority shareholders.
14. The Steering Committee is thus exploring if there are other remedies that can be made available to minority shareholders. Looking at developments in other jurisdictions such as Canada, New Zealand and the United States, an alternative that has developed is a minority buy-out right or appraisal right regime. The objective of such a regime is to allow a minority shareholder who dissented from certain fundamental changes to the enterprise or certain alteration of shareholder rights, to require the company to buy out his shares at a fair value. The Steering Committee will be seeking feedback from the focus groups as to whether such a regime is desirable and practical in Singapore's context.
15. Finally, let me strongly encourage all of you to participate in this consultation exercise - whether as part of the focus group consultations to be held soon, or the public consultation next year on the draft Companies (Amendment) Bill. This is a unique opportunity for all of you to help shape the new Companies Act and contribute to a more conducive corporate governance framework.
16. In conclusion, I would also like to take this opportunity to commend the efforts of SIAS at being an active participant and advocate in the area of corporate governance, and investor education. And, with that, I wish everyone a fruitful and lively discussion ahead. Thank you.