asean corporate governance scorecard...note: 2016 was a gap year for revision and no assessment was...
TRANSCRIPT
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ASEAN Corporate Governance ScorecardBriefing on Structure & Assessment Methodology, Past
Performance of Singapore Listed Companies and Opportunities for Areas for Improvement
Friday, 21 Jun 2019
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Opening Address
Ms Phua Wee LingExecutive Director & Head of Markets, Policy
& Infrastructure Dept,MAS
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ASEAN Corporate Governance Scorecard
Singapore Companies Briefing 2019
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Mr John LimPast Chairman
Singapore Institute of Directors
Prof Lawrence LohDirector
Centre for Governance, Institutions & OrganisationsNUS Business School
21 June 2019
Domestic Ranking Bodies:
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Contents
▷ Scorecard Initiative▷ Scorecard Structure▷ Singapore’s Progress in the Scorecard▷ Areas of Improvement▷ Enhancements in Company Recognition
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Scorecard Initiative
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Scorecard Initiative▷ Started in 2011; 6 participating countries include Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam
▷ Underlying rationale
o Reflect global principles and internationally recognised good practices
o Universal and capable of being applied to different markets in ASEAN
o Robust quality assurance processes to ensure independence
▷ ASEAN Capital Market Forum Working Group comprises representatives from six countries, currently coordinated by
Securities and Exchange Commission Philippines
▷ SID and CGIO appointed by Monetary Authority of Singapore as domestic ranking body (DRB)
▷ Scorecard enhancement
o Scorecard revised in 2016
o G20/OECD Principles of Corporate Governance used as main benchmark
Scorecard enhancement
▷ Scorecard assessment will be conducted every two years to allow companies to incorporate improvements to their
corporate governance practices based on their previous assessment results
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Scorecard Structure
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Scorecard Structure
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LEVEL ONE
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Covers 5 areas:❑Rights of Shareholders ❑Equitable Treatment of
Shareholders ❑Role of Stakeholders ❑Disclosure and Transparency ❑Responsibilities of the Board
LEVEL TWO
2
Bonus items reflecting other emerging good practices;
Penalty items reflecting issues indicative of poor governance
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Disclosure and transparency (25)
Responsibilities of the board (40)
Level 1 Score (Max = 100 points)
Rights of shareholders (10)
Equitable treatment of shareholders (10)
Role of stakeholders (15)
Total Score Attainable(Max = 130 points)
Level 2 Score(Max = 30 points)
Bonus
(+30)
Penalty
(-65)
Scorecard Structure
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Part Number of Items
A – Rights of Shareholders 20
B – Equitable Treatment of Shareholders 15
C – Role of Stakeholders 13
D – Disclosure and Transparency 32
E – Responsibilities of the Board 65
Level 1 Total 145
Bonus 13
Penalty 25
Total 183
Note: a. 31 questions (or 21%) out of the total 145 Level 1 questions are given more weight based on the key areas to sharpen the focus.
b. A complete copy of the ACGS template can be downloaded from the ASEAN Capital Markets Forum website at: http://www.theacmf.org/ACMF/upload/asean_cg_scorecard_12_may_2017.pdf
Scorecard Structure
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Assessment Process
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Shortlist:
100* largest companies by market capitalisation
Analyse**:
100 companies by DRBs using Scorecard
Peer review:
Top 35 companies for each country by governance performance by other DRBs
Publish:
Companies in Singapore by rank based on corporate governance scores, ASEAN Top 50 after peer review in alphabetical order
* Note: Vietnam only has 70 companies
** Data sources:
a. Annual reports for the financial years ending between April 2018 and March 2019
b. Company websitesc. SGX announcements and media articles between 1
August 2017 and 31 July 2019 d. REITs and Business Trusts were excluded
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Singapore’s Progress in the Scorecard
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Singapore Average Total Scores
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55.67
71.68 70.7278.14 78.45
0
10
20
30
40
50
60
70
80
90
100
Ave
rage
To
tal S
core
2012 2013 2014 2015 2017
Note: 2016 was a gap year for revision and no assessment was conducted.
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13
23
36
22
12
1 21
11
27
23
1012 11
5
0
5
10
15
20
25
30
35
40
40.01-50.00 50.01-60.00 60.01-70.00 70.01-80.00 80.01-90.00 90.01-100.00 100.01-110.00 110.01-120.00
Nu
mb
er
of
Co
mp
anie
s
Total Score
2015
2017
Note: 2016 was a gap year for revision and no assessment was conducted.
Singapore Total Score Distribution Curve
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111.5
92.1
72.360.0
0
20
40
60
80
100
120
Top 10 #11 to 40 #41 to 70 #71 to 100
Average Score *
* Based on 2017 ACGS Data
Singapore Companies’ Average Score by Band
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4060
Number of Companies*
Above Average (≥ 78.45)
Below Average (< 78.45)
* Based on 2017 ACGS Data
Singapore Total Score Distribution
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73.5
65.5
85.5
8.54.9
14.0
3.6 4.3 2.60.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
All 100 Companies Below Average 60 Companies Above Average 40 Companies
Level 1 (Max. 100 Points) Bonus (Max. 30 Points) Penalty (Max. 65 Points)
Singapore Level 1, Bonus & Penalty Scores
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12
4
16
20
11
3
1
6
1112
8
2
0
5
10
15
20
25
45.01-50.00 50.01-55.00 55.01-60.00 60.01-65.00 65.01-70.00 70.01-75.00 75.01-80.00 80.01-85.00 85.01-90.00 90.01-95.00 95.01-100.00
Nu
mb
er o
f C
om
pan
ies
Below Average Companies (60 Cos) Above Average Companies (40 Cos)
Singapore Level 1 Score Distribution
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55.67
43.29
62.29
48.9
67.66
28.42
71.68
54.55
71.69
57.99
75.39
33.87
70.72
57.27
75.21
67.02
84.53
35.14
78.14
62.68
76.84
73.09
87.53
36.75
78.45
70.59
82.41
67.61
85.73
41.3
0
10
20
30
40
50
60
70
80
90
100
2012 2013 2014 2015 2017
Year-over-year Average Scores by Country
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55.67
71.68 70.72
78.14 78.45
43.29
54.5557.27
62.68
70.59
62.29
71.69
75.2176.84
82.41
48.9
57.99
67.02
73.09
67.6167.66
75.39
84.5387.53
85.73
28.42
33.87 35.1436.75
41.3
0
10
20
30
40
50
60
70
80
90
100
2012 2013 2014 2015 2017
Singapore Indonesia Malaysia Philippines Thailand Vietnam
Singapore ranked 3rdamong ASEAN countries in 2012, 2013, 2014 and 2017; 2nd in 2015.
Country Average Scores Comparison by Year
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ACGS Ranking 2017Number of Singapore
CompaniesPercentage by Singapore
Companies
TOP 10 5 50%
TOP 20 6 30%
TOP 50 12 24%
TOP 70 16 23%
Singapore’s Share in ASEAN Top-Performers
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Areas of Improvement
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Areas of Improvement
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Part A: Rights of Shareholders All (100 Companies)
Does the company disclose the voting procedures used before the start of meeting?38%
Do the minutes of the most recent AGM record that the shareholders were given the opportunity to ask questions and the questions raised by shareholders and answers given recorded?
48%
Does the company disclose the list of board members who attended the most recent AGM?20%
Does the company disclose that all board members and the CEO (if he is not a board member) attended the most recent AGM? 18%
Does the company provide at least 21 days notice for all AGMs and EGMs?45%
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Part B: Equitable Treatment of Shareholders All (100 Companies)
Are the profiles of directors/commissioners ( at least age, academic qualification, date of appointment, experience, and directorships in other listed companies) in seeking election/re-election included in the notice of AGM/circulars? 49%
In case of related party transactions requiring shareholders' approval, is the decision made by disinterested shareholders?
13%
Areas of Improvement
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Part C: Engagement with Stakeholders All (100 Companies)
Disclosure of policy and practices on the existence and scope of the company's efforts to address customers' welfare? 48%
Disclosure of policy and practices on supplier/contractor selection procedures?24%
Disclosure of policy and practices on the company's anti-corruption programmes and procedures? 27%
Does the company explicitly disclose the policies and practices on training and development programmes for its employees? 50%
Areas of Improvement
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Part D: Disclosure and Transparency All (100 Companies)
Disclosure of non-financial performance indicators in annual report 39%
Disclosure of biographical details (at least age, academic qualifications, date of first appointment, relevant experience, and any other directorships of listed companies) of all directors/commissioners in annual report
47%
Disclosure of minutes of AGM and/or EGM on the company’s website12%
Areas of Improvement
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Part E: Responsibilities of the Board All (100 Companies)
Are the details of the code of ethics or conduct disclosed? 30%
Are all directors/commissioners, senior management and employees required to comply with the code/s?
23%
Does the company have a process to implement and monitor compliance with the code/s of ethics or conduct?
19%
Does the company have a term limit of nine years or less or 2 terms of five years each for its independent directors/ commissioners? 13%
Are the board of directors meeting scheduled before the start of financial year?40%
Does the board of directors/commissioners meet at least six times during the year? 24%
Areas of Improvement
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Part E: Responsibilities of the Board All (100 Companies)
Are board papers for board of directors/commissioners meetings provided to the board at least five business days in advance of the board meeting?
30%
Does the company have measurable standards to align the performance-based remuneration of the executive directors and senior executives with long-term interests of the company, such as claw back provision and deferred bonuses?
30%
Is the chairman an independent director/commissioner? 29%
Does the company disclose the process on how the board of directors/commissioners plans for the succession of the CEO/Managing Director/President and key management? 23%
Does the board of directors/commissioners conduct an annual performance assessment of the CEO/Managing Director/President?
36%
Areas of Improvement
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Bonus Questions All (100 Companies)
Does the company release its notice of AGM (with detailed agendas and explanatory circulars), as announced to the Exchange, at least 28 days before the date of the meeting?
19%
Are the audited annual financial report /statement released within 60 days from the financial year end? 20%
Does the company use professional search firms or other external sources of candidates (such as director databases set up by director or shareholder bodies) when searching for candidates to the board of directors/commissioners?
19%
Does the board describe its governance process around IT issues including disruption, cyber security, and disaster recovery, to ensure that all key risks are identified, managed and reported to the board?
21%
Areas of Improvement
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Enhancements in Company Recognition
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Key Changes
▷ All ASEAN companies scoring 97.5 points and above* or 75% of the maximum attainable score (currently is 130) will be recognised
▷ Top 20 ASEAN companies will be recognised in ranking ordercompared to previously companies were recognised in alphabetical order within bands
* Note: In 2017 assessment, 19 Singapore companies scored 97.5 points and above.
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Thank You!
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