The Singapore Stock Exchange (SGX) has called for more transparency from listed companies. But while market participants welcome the request for increased disclosure, some feel the regulator could do more to address its own reputation regarding enforcement.
On March 19, the exchange announced its high expectations for company risk management despite tough times, after cautioning Neptune Orient Lines (NOL) for poor disclosure on March 17. But a spate of corporate governance failings by Chinese listings has led to increased focus on the SGX’s dealing with mainland companies.
The exchange has been accused of leniency towards its Chinese listings in the past. “Selective enforcement has always been an issue, perceived or real, with the SGX. This is an area that it may need to improve,” said one market participant.
But lawyers say that it has increased the number of verbal and written queries regarding listed companies’ disclosures and asked some for updated contact details of directors and controlling shareholders.
The reminder raises the bar for all listed companies, said Marcus Chow, a director in Drew & Napier’s corporate department. “There’s a clear message for everyone that when disseminating potentially price sensitive information, it is important to be open and transparent.”
For listed firms, he believes this means enhancing and enforcing internal confidentiality compliance to secure price sensitive information, and being cautious regarding how much to disclose.
Chow expects to see fewer template and boilerplate announcements after the warning. “Enhanced vigilance in disclosure, governance and internal controls are the buzzwords of these times,” he says.
However, the exchange’s powers of enforcement are limited. It has been suggested that the SGX imposes punitive fines and surprise audits, but so far it has only used public reprimands to punish non-compliant listings.
One industry source complained: “Perhaps it is time to re-examine the SGX’s role as a regulator without any real bite,” he said.
Maxine Riley