Key changes to Singapore Code of Corporate Governance & Related Listing Rules from 1 January 2019

Six years after the last revision to the Code of Corporate Governance, the Monetary Authority of Singapore released another in August 2018, which aims to do ‘more with less’. ‘Less’ relates to the fact that the new Code is more succinct with 13 instead of 16 Principles. ‘More’ means that the updated Principles aim to elevate the level of corporate governance in Singapore.

The revised Principles provide clearer guidance on director independence, objectivity and value-driven effectiveness.  They also place more emphasis on improving assurance systems and stakeholder engagement through sustainability reporting. This plethora of changes is in line with the need for Singapore to progress in global governance practices, and to make impactful contributions to societal and environmental causes as the nation pursues economic progress with its first world status.

Businesses should note the following key changes to the Singapore Code of Corporate Governance & Related Listing Rules that affect annual reports for financial years starting on or after 1 January 2019.

Key Changes

Principle 1: The Board’s Conduct of Affairs Principle 2: Board Composition and Guidance

From Code to Listing Rule

  • A director without experience as a director of a SGX-listed company must undergo training in the rules and responsibilities of a director.

New Listing Rule

  • Attend the prescribed training within 1 year of appointment or listing

New Code Provision

  • Directors facing conflicts of interest recuse themselves from discussions and decisions involving the issues of conflict.

Note: The board plays an important role in the company. Directors should be equipped with the knowledge required for them to carry out their roles on specific board committees.

From Code to Listing Rule

  • Independent directors must comprise at least one-third of the issuer’s board (Effective 1 Jan 2022).
  • All directors, including their designations and roles must be identified in the annual report.

New Code Provision

  • The shareholding threshold for determination of a director’s independence is reduced to 5%.
  • Independent directors make up a majority of the board where the Chairman is not independent. Assessment of the Chairman’s independence extends beyond the immediate family.
  • Non-executive directors make up a majority of the board.
  • The board diversity policy and progress made towards implementing the board diversity policy are disclosed in the annual report.

Note: Independent directors are essential in furthering the overall interests of a company and provide checks and balances for effective corporate governance.

Principle 9: Risk Management and Internal Control Provision 2.1: Basis for the Determination of Independence of a Director

Merging Code Guidelines with Enhanced Listing Rules

  • The board must comment on the adequacy and effectiveness of internal controls (including financial, operational, compliance and information technology controls) and risk management systems.
  • Whether the Audit Committee concurs with the board’s comment
  • Audit Committee’s comment on whether the internal audit function is independent, effective and adequately resourced

Note: This update enhances disclosure on internal control and risk management to safeguard the interests of shareholders.

From Code to Listing Rule

A director is not independent if he/she:

  • Is an employee of the issuer or any related company in the current financial year or any of the past 3 financial years
  • Has an immediate family member who is employed or had been employed (whose pay is determined by the Remuneration Committee) by the issuer or any related company in the current financial year or any of the past 3 financial years

New Listing Rule

  • If a director has been on the board for an aggregate period of more than 9 years, his/her continued appointment as an independent director must be approved by a two-tier shareholder’s vote (Effective 1 Jan 2022).

From Code to Practice Guidance

  • The other Code guidelines are shifted to the Practice Guide.

Note: This update encourages more rigorous assessments of the independence of long-tenured directors and board renewal and rejuvenation.

New Principle 13: Engagement with Stakeholders

Listing Rules (issued in June 2016)

  • Sustainability reporting

Code Provisions

  • Identify and engage with material stakeholder groups and manage relationships with such groups
  • Annual Report to disclose strategy and key areas of focus on stakeholder relationships
  • Corporate website to communicate and engage with stakeholders

Note: The long-term success of a company is influenced by its ability to foster and maintain effective relationships with not only shareholders but also other stakeholders.


For assistance or enquiries, you may contact our risk advisory specialists below:

Dennis Lee, Partner
T +65 6594 7627  
[email protected]

Sovann Giang, Senior Director
T +65 6594 7892  
[email protected]