Governance advisers post-IPO also part of SGX’s proposed regulatory changes
By JAMIE LEE 24 August 2009
Companies audited by an overseas accounting firm may need a joint sign-off by a local auditor, while new listings may need to hire governance advisers for two years after their initial public offering (IPOs).
These were part of the proposed regulatory changes indicated by Singapore Exchange CEO Hsieh Fu Hua in a speech at the annual Invest Fair on Saturday.
A joint sign-off is a good move since this means that there is a local auditor - who is more familiar with Singapore’s risk tolerance - looking at the accounts, said Ding Hock Chai, co-head of Kim Eng Capital’s corporate finance.
‘In most cases, most international audit firms already require the local partner to review but the requirement for a sign-off would make them more careful.’
Robson Lee, a lawyer at Shook Lin & Bok, suggested that reporting accountants for the IPO should also ‘expressly confirm’ in the prospectus that there are adequate group internal controls and risk management measures in place.
SGX is also looking to have new listings appoint governance advisers - likely to refer to issue managers and corporate lawyers - to advise the companies for two years after their listing.
‘This will help companies to institute a robust framework of reporting, accountability, internal controls and other components of good corporate governance very early on,’ said Mr. Hsieh.
But NRA Capital chairman Kevin Scully said that he was concerned whether this would raise listing costs for companies and deter companies from listing here.
This comes on the back of competition from Malaysia and South Korea, particularly for China firms, he told BT. ‘I don’t know what would be the liability of these governance advisers.’
He suggested that SGX relook whether the number of fraud incidents here beat the average number of cases seen in the region before deciding if such measures are needed.
But Lee Suet Fern, managing partner at Stamford Law Corporation, said that while this may raise the costs of a listing, Singapore’s listing costs are ‘very reasonable’ compared with those of other markets.
Mak Yuen Teen, co-director at the National University of Singapore’s Corporate Governance and Financial Reporting Centre, said that the increase in costs may be unavoidable to raise the quality of the market and offer better investor protection.
‘The quality and integrity of the advisers is important as we don’t want those who are only good in helping tick the boxes,’ he added. ‘They also need to be accountable for their advice.’
In another proposed move, chief financial officers and independent directors may need to be appointed at least six months before IPO submissions.
This is so that they have enough time to perform proper due diligence on an IPO candidate’s suitability, said Mr. Hsieh.
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Foreign audits may need local sign-off
Governance advisers post-IPO also part of SGX’s proposed regulatory changes
By JAMIE LEE
24 August 2009
Companies audited by an overseas accounting firm may need a joint sign-off by a local auditor, while new listings may need to hire governance advisers for two years after their initial public offering (IPOs).
These were part of the proposed regulatory changes indicated by Singapore Exchange CEO Hsieh Fu Hua in a speech at the annual Invest Fair on Saturday.
A joint sign-off is a good move since this means that there is a local auditor - who is more familiar with Singapore’s risk tolerance - looking at the accounts, said Ding Hock Chai, co-head of Kim Eng Capital’s corporate finance.
‘In most cases, most international audit firms already require the local partner to review but the requirement for a sign-off would make them more careful.’
Robson Lee, a lawyer at Shook Lin & Bok, suggested that reporting accountants for the IPO should also ‘expressly confirm’ in the prospectus that there are adequate group internal controls and risk management measures in place.
SGX is also looking to have new listings appoint governance advisers - likely to refer to issue managers and corporate lawyers - to advise the companies for two years after their listing.
‘This will help companies to institute a robust framework of reporting, accountability, internal controls and other components of good corporate governance very early on,’ said Mr. Hsieh.
But NRA Capital chairman Kevin Scully said that he was concerned whether this would raise listing costs for companies and deter companies from listing here.
This comes on the back of competition from Malaysia and South Korea, particularly for China firms, he told BT. ‘I don’t know what would be the liability of these governance advisers.’
He suggested that SGX relook whether the number of fraud incidents here beat the average number of cases seen in the region before deciding if such measures are needed.
But Lee Suet Fern, managing partner at Stamford Law Corporation, said that while this may raise the costs of a listing, Singapore’s listing costs are ‘very reasonable’ compared with those of other markets.
Mak Yuen Teen, co-director at the National University of Singapore’s Corporate Governance and Financial Reporting Centre, said that the increase in costs may be unavoidable to raise the quality of the market and offer better investor protection.
‘The quality and integrity of the advisers is important as we don’t want those who are only good in helping tick the boxes,’ he added. ‘They also need to be accountable for their advice.’
In another proposed move, chief financial officers and independent directors may need to be appointed at least six months before IPO submissions.
This is so that they have enough time to perform proper due diligence on an IPO candidate’s suitability, said Mr. Hsieh.
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