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The Stock Exchange of Singapore (SES) recently introduced its Best Practices Guide to provide guiding principles on corporate governance for listed issuers.

Section I of the Guide replaces Chapter 9B of the SES Listing Manual, and sets out the principles and best practices in relation to the Audit Committee (a committee comprising a majority of independent directors, required by statute for public listed companies). Unlike Chapter 9B, which provided mandatory rules applicable to all listed issuers, the Guide has greater flexibility and recognizes that each listed issuer should be allowed to adopt a corporate governance system that best suits its business environment, corporate culture and management systems.

To foster transparency of corporate governance practice, SES requires each listed issuer to disclose in its annual report whether and how it has complied with the Guide, including disclosure of its corporate governance processes and activities.

Section II of the Guide sets out best practices relating to dealings in securities by directors and employees while in possession of unpublished material price-sensitive information. One provision of Section II which differs from the existing Model Code on Securities Transactions by Directors which it replaces, is the lengthening of the window period for permitted dealings in securities. It must be read in conjunction with existing insider trading laws which bind directors and employees.

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