| The Code of Corporate Governance (the “Code”), which is applicable to listed companies in Singapore on a “comply or explain” basis, first came into effect on 1 January 2003. The Code aims to promote high levels of corporate governance in Singapore by putting forth Principles of good corporate governance with which companies must comply, and Provisions with which companies are expected to comply and, if not, explain why. The Practice Guidance complements the Code by providing guidance on the application of the Principles and Provisions and setting out best practices for companies. Adoption of the Practice Guidance is voluntary. |
A. Explanation
This second paragraph in the Introduction explains how the Code is structured.
The Code is a set of good corporate governance Principles and practices. It is made mandatory to all listed companies in Singapore on a “comply or explain” basis through the SGX-ST Listing Rules (MR 710 and CR 710). While non-listed companies are not required to adhere to it, they are encouraged to follow its good governance practices.
The Code was first issued on 1 January 2003. Since then, there have been three revisions: 2005 (second edition), 2012 (third edition), and 2018 (fourth edition).
The Code is structured at two levels:
- Principles. There are currently 13 Principles. These are overarching, non-disputable statements that embody the fundamentals of good corporate governance that companies must comply with.
- Provisions. These are actionable steps that guide companies when they comply with the substance of the Principle. In the preceding Codes, Provisions were called Guidelines. Each Principle has two or more Provisions. There are currently 51 Provisions in total.
Companies must comply with the Principles. Variations to the Provisions are acceptable to the extent that companies explicitly state and explain how their practices are consistent with the intent of the relevant Principle. The enhanced “comply or explain” regime in the 2018 Code is covered further in Introduction paragraphs 6 to 9.
To complement the Code, a new non-binding Practice Guidance has been issued. These are best practices that can be applied on a voluntary basis by companies. Many of the details in the guidelines in the 2012 Code that were overly prescriptive and less essential have been moved into the Practice Guidance.
B. Related Rules and Regulations
C. CG Guides
- Board Guide 1.1: Introduction [Corporate Governance]
- Board Guide 1.5: Rules and Codes [Corporate Governance]
- Board Guide 1.6: The “Comply or Explain” Regime [Corporate Governance]
- Board Guide Appendix 1J: “Comply or Explain” – An Explanation of the Regime [Corporate Governance].
D. Related Articles
- “The Singapore Code of Corporate Governance – its evolution” by Adrian Chan. (69KB)
- “Developments in governance: revisions to the Singapore Code of Corporate Governance” by Annabelle Yip. (101KB)
- “Unboxing Corporate Governance: Three Fabled Tests for a Better Code” by Lawrence Loh. (135KB)
- “Comply or Explain 2.0: What’s the Difference?” by Ng Siew Quan. (145KB)