Initiatives include stipulation that CFOs, directors be appointed early
By Gabriel Chen 23 August 2009
Chief financial officers (CFOs) and independent directors may have to be appointed at least six months prior to the submission of documents for a company’s listing on the stock exchange.
The proposal was one of several new initiatives highlighted yesterday by Singapore Exchange (SGX) chief executive Hsieh Fu Hua in a bid to strengthen corporate governance standards.
Speaking at the annual Invest Fair organised by online trading platform ShareInvestor, he said the proposal would give CFOs and independent directors adequate time to perform proper due diligence on the suitability of an initial public offering (IPO).
Other initiatives he mentioned included having all newly listed companies appoint ‘governance advisers’ - likely to include corporate law firms - for an initial period of two years following an IPO.
The SGX also aims to call for controlling shareholders of listed companies to ‘custodise’ their shares in Singapore, Mr. Hsieh said.
Currently, some large shareholders of foreign companies listed in Singapore could be holding shares with other custodians overseas, and not with the Central Depository (CDP) here.
Under the proposed change, their shares would have to reside with the CDP.
Market watchers believe that if shares are held by the CDP, it is likely that there will be better surveillance in the case of unusual share activities.
These regulatory moves come at a time when there have been reports of several high-profile accounting irregularities pertaining to China companies listed here.
Take the case of China Sun Bio-chem Technology.
In February, its auditors, PricewaterhouseCoopers, told the board that they had discovered about 592 million yuan (S$125 million) missing from the company’s bank accounts.
The auditors said they were unable to find evidence to support the explanation provided by the company’s management that the money had been used to buy raw materials.
Other China companies listed here - known as ‘S-chips’ - facing financial woes or accounting irregularities and scandals include China EnerSave, Sino-Environment Technology Group and Ocean International.
The SGX’s proposals will be put up for public consultation at a later time, and any change will be subject to the approval of the relevant authorities.
Asked for comments, sources at brokerages said they hoped to get more details, but their initial reaction was that the proposals would give a boost and shore up the image of the S-chip sector.
‘A lot of what the SGX is saying has merit and is worth further consideration. I think it’ll bring back investor confidence in S-chips, some of which have been dogged by governance issues,’ said Ms Carol Fong, chief executive of CIMB-GK Securities.
Mr. David Gerald, president of the Securities Investors Association of Singapore, welcomed the proposals.
They will give greater protection to minority shareholders who have put their faith in companies operating overseas, he said.
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SGX lines up plans to tighten governance
Initiatives include stipulation that CFOs, directors be appointed early
By Gabriel Chen
23 August 2009
Chief financial officers (CFOs) and independent directors may have to be appointed at least six months prior to the submission of documents for a company’s listing on the stock exchange.
The proposal was one of several new initiatives highlighted yesterday by Singapore Exchange (SGX) chief executive Hsieh Fu Hua in a bid to strengthen corporate governance standards.
Speaking at the annual Invest Fair organised by online trading platform ShareInvestor, he said the proposal would give CFOs and independent directors adequate time to perform proper due diligence on the suitability of an initial public offering (IPO).
Other initiatives he mentioned included having all newly listed companies appoint ‘governance advisers’ - likely to include corporate law firms - for an initial period of two years following an IPO.
The SGX also aims to call for controlling shareholders of listed companies to ‘custodise’ their shares in Singapore, Mr. Hsieh said.
Currently, some large shareholders of foreign companies listed in Singapore could be holding shares with other custodians overseas, and not with the Central Depository (CDP) here.
Under the proposed change, their shares would have to reside with the CDP.
Market watchers believe that if shares are held by the CDP, it is likely that there will be better surveillance in the case of unusual share activities.
These regulatory moves come at a time when there have been reports of several high-profile accounting irregularities pertaining to China companies listed here.
Take the case of China Sun Bio-chem Technology.
In February, its auditors, PricewaterhouseCoopers, told the board that they had discovered about 592 million yuan (S$125 million) missing from the company’s bank accounts.
The auditors said they were unable to find evidence to support the explanation provided by the company’s management that the money had been used to buy raw materials.
Other China companies listed here - known as ‘S-chips’ - facing financial woes or accounting irregularities and scandals include China EnerSave, Sino-Environment Technology Group and Ocean International.
The SGX’s proposals will be put up for public consultation at a later time, and any change will be subject to the approval of the relevant authorities.
Asked for comments, sources at brokerages said they hoped to get more details, but their initial reaction was that the proposals would give a boost and shore up the image of the S-chip sector.
‘A lot of what the SGX is saying has merit and is worth further consideration. I think it’ll bring back investor confidence in S-chips, some of which have been dogged by governance issues,’ said Ms Carol Fong, chief executive of CIMB-GK Securities.
Mr. David Gerald, president of the Securities Investors Association of Singapore, welcomed the proposals.
They will give greater protection to minority shareholders who have put their faith in companies operating overseas, he said.
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