Singapore Proposes Corporate Governance Overhaul

The Singapore Exchange Regulation (SGX RegCo) and the Corporate Governance Advisory Committee (CGAC) have proposed wide-ranging changes to Singapore’s Code of Corporate Governance and SGX Listing Rules, with a particular focus on board effectiveness, corporate culture, long-term value creation, and emerging nonfinancial risks including AI.

“Maintaining trust in our capital markets relies on continuous improvements to our corporate governance,” said Bob Tan, Chairman of the CGAC. “The CGAC’s proposals aim to elevate standards and build greater trust between listed issuers and investors. By strengthening these foundations, we enable companies to pursue sustainable value creation.”

A key component of the proposed overhaul is a heightened focus on corporate culture and ethical conduct. The CGAC, an industry-led body established by the Monetary Authority of Singapore (MAS), recommends introducing a dedicated Code Provision (Provision 1.2) that builds on existing expectations for boards to set the “tone from the top,” placing greater emphasis on corporate culture, integrity, accountability, and shared values. Accompanying enhancements to the Practice Guidance emphasize the board's responsibility in shaping culture and promoting ethical conduct through formal codes of conduct and robust whistleblowing arrangements.

The proposals would also strengthen board independence and capacity. Directors would be limited to five listed-company directorships, while the Audit, Nominating, and Remuneration Committees would need to be chaired by independent directors and comprise a majority of independent directors. Where the board chair is not independent, companies would be required to appoint a lead independent director to support independent oversight and constructive challenge.

The reforms also address incentives and risk governance. Non-executive directors would be expected not to participate in performance-related share plans or other performance-related remuneration schemes, while a new Code Provision would require companies to disclose the board’s assessment of principal and emerging risks and how those risks are managed or mitigated.

The accompanying Practice Guidance specifically directs boards to consider AI and sustainability risks. For AI, boards would be expected to consider strategy and adoption, governance and risk-management processes, impacts on stakeholders, and implications for the workforce and organizational culture.

“Strong corporate governance is fundamental to strengthening Singapore’s equities market,” said Ho Hern Shin, Deputy Managing Director for Financial Supervision at MAS. The proposals, which are open for consultation until January 27, 2027, mark the first comprehensive review of the Code since 2018. The Code applies to Singapore-listed companies on a comply-or-explain basis, while the SGX Listing Rules are mandatory.