A Guide to Singapore’s Code of Corporate Governance

Last updated on December 26, 2025

Corporate governance is a broad concept which refers to how companies are governed, directed and managed. It can be defined as the system of rules, practices and processes by which the business and affairs of a company are directed and controlled so as to maximise stakeholder value.

In Singapore, the regulatory framework governing corporate governance practices consists of legislation from the Companies Act 1671, the Securities and Futures Act 2001 (SFA), the Singapore Exchange Listing Rule or Manual (SGX Listing Manual) in respect of companies listed on the Singapore Exchange, and best practice recommendations set out in the Code of Corporate Governance with the accompanying Practice Guidance issued by the Monetary Authority of Singapore (MAS).

This article is intended to explain Singapore’s Code of Corporate Governance, including:

What is the Code of Corporate Governance?

First issued by the Corporate Governance Committee in Singapore on 1 January 2003, the Code of Corporate Governance (the Code) is a framework which lays out the standards and principles of good corporate governance, as well as the provisions which companies are expected to comply with.

The purpose of the Code is to promote high levels of corporate governance in Singapore through principles such as board independence, transparency, fair remuneration, and shareholder rights on a “comply or explain” basis, all of which will be further elaborated on in this article.

The Code has since been revised several times over the years, with the last revision in 2018 which introduced Practice Guidance issued by the MAS (Practice Guidance) to complement the Code.

How does the Code of Corporate Governance operate?

The Code is not legally binding but operates on what is known as a “comply or explain” basis. This means that companies must either comply with the Code’s principles or explain why they have failed or chosen not to do so.

This “comply or explain” arrangement gives companies some flexibility in terms of making decisions, but they must be prepared to justify their choices. Any variations from the provisions of the Code will only be acceptable to the extent that the company is able to state and explain how their decisions are consistent with the aim and philosophy of the relevant principle underlying such provision.

For example, if a company does not separate the roles of its chairman and Chief Executive Officer (which the Code recommends), it must explain clearly in its annual report the provision from which it has varied, the reason for the variation and how other practices it has adopted are in the best interests of its shareholders.

The accompanying Practice Guidance complements the Code by providing guidance and setting out best practices for the application of the principles and provisions of the Code. For instance, Provision 4.5 of the Code states that “where a director holds a significant number of such directorships and commitments, it provides the Nominating Committee’s and Board’s reasoned assessment of the ability of the director to diligently discharge his or her duties.” The Practice Guidance then provides further guidance on the steps that a nominating committee should take in reviewing the appointment of a director who sits on multiple boards.

Although the adoption of the Practice Guidance is voluntary, companies are highly encouraged to apply it as a matter of good practice.

Who does the Code of Corporate Governance Apply to?

The Code primarily applies to listed companies, i.e. companies whose shares are traded publicly on the Singapore Exchange (SGX). As listed companies are able to raise funds from public investors, they are held to higher standards of disclosure and accountability reflected in the Code.

Unlisted companies, such as private family businesses or start-ups that are not listed on the SGX, are not required to follow the Code. However, many of these companies still choose to adopt parts of the Code as best practice, especially if they plan to go public in the future or want to attract investors who value strong corporate governance.

Does Compliance with the Code of Corporate Governance Matter?

Maintaining high corporate governance standards is important for several reasons. It not only affects a company’s long-term success and reputation, but also sets the benchmark for the country’s viability as a financial hub for investors. In the long run, good governance practices can enhance Singapore’s reputation as an international financial centre, attract international investments, improve the liquidity of our stock markets and reduce the cost of capital for companies.

The Code plays a vital role in this aspect by promoting transparency, accountability and investor confidence – the three cornerstones of a healthy financial market. Companies that adhere to the Code are more likely to reap economic benefits such as:

Increased investor confidence – Investors are more willing to invest in companies that are transparent and well-managed.
Increased access to capital – Strong governance indicates that a company is less likely to suffer from mismanagement or unresolved issues. This boosts investor confidence and can lead to higher share prices, lower cost of capital, and easier access to funding.
Enhanced corporate resilience and long-term sustainability – Companies that follow governance best practices tend to have stronger internal controls and clearer risk management processes. This helps them anticipate and handle crises more effectively when they arise.
More globally competitive – When investors believe that a company has robust checks and balances, they view it as a safer long-term bet, which translates into stronger market valuation for the company.
Improved reputation and brand value – Reduced risks of regulatory sanctions, shareholder disputes and governance failures enhance a company’s reputation and position in the global market. In contrast, weak corporate governance can lead to mismanagement, fraud, or conflicts of interest – all of which can destroy the value of a company.

In addition, the increased global focus on environmental, social, and governance (ESG) standards makes compliance with the Code strategically important. This is because investors are now not only interested in how profitable a company is but how those profits are made, which includes assessing how the company treats its employees fairly, uses resources responsibly, and has in place robust and transparent governance systems.

One example is City Developments Limited (CDL), a local listed company which aligns its board management and reporting duties with the Code. Ranked second on the Singapore Governance and Transparency Index 2024, it is reported as one of Singapore’s largest issuers of green bonds and Singapore’s most sustainable company. This has helped CDL access billions in sustainability-linked financing, while boosting its reputation as an ESG leader globally.

How is Compliance with the Code of Corporate Governance Monitored, and are there Consequences for Non-Compliance?

Compliance with the Code is mainly overseen by the MAS and enforced through the SGX Listing Manual. The SGX Listing Manual is the primary document setting out the qualification and regulatory requirements in relation to the trading of securities. This includes the manner in which securities are to be offered, regulating transactions with interested persons and disclosure obligations of listed issuers.

Although the Code itself does not draw legal penalties for non-compliance, some of its provisions may be incorporated into legislation or directives which can be legally enforceable.

For example, all listed companies are subject to continuing obligations in the SGX Listing Manual. One such obligation is the disclosure of how the requirements of the Code have been complied with and/or any instances of non-compliance. In turn, the SFA enforces these disclosure requirements by making it an offence for a listed company to intentionally or recklessly fail to meet its disclosure obligations under the SGX Listing Manual. In the event of a failure, a listed company may be subject to a fine of up to $250,000 and/or 7 years’ imprisonment.

The SGX Listing Manual also empowers the SGX with enforcement powers to ensure listed companies comply with the provisions of the Code. Some of these powers may include:

Authority to issue fines of an amount up to $250,000 per contravention (subject to a maximum of $1 million per hearing for multiple charges)
Requiring a listed company to implement an effective education or compliance programme
Requiring a listed company’s directors or executive officers to undertake a mandatory education or training programme (on corporate governance duties)
Requiring the resignation of a director or executive officer
In serious cases, the SFA also empowers the SGX to apply to the courts for a court order to enforce compliance with the listing rules.

Apart from sanctions and penalties, a listed company can also face non-penal consequences if it does not comply or fails to explain its non-compliance with the Code sufficiently. Such consequences may include reduced market credibility, loss of investor confidence, negative media scrutiny or pressure from shareholders to improve governance – all of which can weaken its market position in the economy.

What are the Key Aspects of the Code of Corporate Governance?

The Code is built around five key areas that set out what good corporate governance looks like in practice:

1. Board matters

A company’s board of directors is principally responsible for the stewardship of the company. It is the integrity of the board which ensures that both the form and substance of the Code are complied with, leading to improved governance.

Board composition and independence

The Code and SGX Listing Manual requires that the majority of the board of directors be non-executive, independent directors who have no business, family or financial ties to the company. At least one-third of the board should be independent (i.e. not part of management or linked to major shareholders). If the chairman is not independent, the board should have an even higher proportion of independent directors to make up the majority of the board. It should be noted that an independent director must be non-executive, but not all non-executive directors are independent.

Separate chairman & CEO roles

The Code provides that the chairman and CEO of the company should not be the same person. The relationship between the chairman and the CEO must also be disclosed if they are immediate family members. This is in recognition of the fact that board responsibilities should be distinct from management responsibilities to ensure independent decision-making, and there should be a clear separation of powers to avoid concentration of authority.

Board diversity

This Code recognises that diversity is multi-dimensional in nature, encompassing various aspects, and certain aspects of diversity are viewed favourably by investors and other stakeholders globally. It therefore recommends that the board be composed of people from a mix of genders, ages, skills, and experiences. This ensures the appropriate level of independence and diversity of thought, which enables the board to make decisions in the best interests of the company.

Nomination committee

In relation to the appointment of directors, the Code recommends that independent nomination committees be formed to assess whether new directors are qualified and independent. The nomination committee should comprise at least 3 directors, a majority of whom (including the chairman) must be independent.

2. Remuneration

The primary objectives of the remuneration principles under the Code are to facilitate appropriateness, transparency and accountability on the issue of executive remuneration.

Remuneration committee

A remuneration committee, made up of independent directors, should be formed to decide on fair and transparent remuneration packages for directors and key management of the company. The committee should comprise a majority of non-executive and independent directors who have no business, family or financial ties to the company, so as to minimise the risk of any potential conflict of interest.

Disclosure obligation

Companies are also encouraged to disclose the breakdown of how much their directors and key executives earn, and how pay is linked to company performance. This transparency helps shareholders judge if pay levels are reasonable – for example, whether a CEO’s bonus is tied to the company’s long-term success rather than short-term profits. This also ensures that the directors are not waylaid by pursuits motivated by self-interest, and that the company’s funds and assets are utilised for the benefit of the company as a whole.

3. Accountability and audit

The respective roles of the board and management tend to overlap in the area of accountability and audit, although the management remains accountable to the board. The Code and Practice Guidance recommend that the board should be responsible for establishing and maintaining a sound risk management framework to effectively monitor and control risks, including a system of internal controls to detect and address issues early.

Audit Committee

An audit committee, which must consist entirely of non-executive and mostly independent directors, should be formed to maintain the financial integrity and internal control of the company. It should be the responsibility of the board to ensure the members of the committee are appropriately qualified to discharge their responsibilities. The Code sets out the duties of the audit committee, which include reviewing financial reporting issues, the adequacy of internal controls and risk management systems, the company’s external audit processes and internal audit function.

4. Shareholder rights and engagement

The Code recognises that shareholders have the right to receive accurate information and to participate in key decisions concerning the company. In this respect, the Code emphasises that companies should provide shareholders with a balanced and understandable assessment of their performance, position and prospects, which in turn enables the shareholders to make informed decisions, particularly in connection with general meetings such as the annual general meeting (AGM). Companies must also disclose material information promptly to shareholders, such as changes in key management or major transactions to be entered into by the company.

In relation to voting by shareholders, the Code recommends a one-share-one-vote principle, i.e. every share carries one vote, ensuring fairness. The Code also provides that companies should extend voting methods to include telephonic, electronic and other modes of in absentia voting as well. Further, companies should encourage their shareholders to adopt the use of technology, such as participating in virtual AGMs, so as to accommodate shareholders who are based overseas or those unable to attend meetings in-person.

5. Stakeholder engagement and sustainability

Good governance is not just limited to engagement with shareholders but includes everyone affected by a company’s actions. The Code recognises the various stakeholder interests in a company and encourages companies to adopt an inclusive approach by considering employees, customers, suppliers and the wider community when making their decisions.

Stakeholders are parties who may be affected by the company’s activities, or whose actions can affect the ability of the company to conduct its activities. The Practice Guidance recommends that the board should determine the relevant stakeholders, and set policies in relation to material stakeholders identified.

It is a common and accepted practice for sustainability reports to be used to engage stakeholders, as these reports typically contain data that investors and shareholders rely on to assess how the company is growing and conducting its business. Some of the primary components of the report include:

Material environmental, social and governance (ESG) factors
Climate-related disclosures
Policies, practices and performance
Targets for each ESG factor
Sustainability reporting framework
Board statement and associated governance structure for sustainability practices

The sustainability report should also contain a statement from the board that it has considered sustainability issues in the company’s business and strategy, determined the material ESG factors and overseen the management and monitoring of the material ESG factors.

Listed companies must publish annual sustainability reports on a “comply-or-explain” basis, explaining how they manage ESG risks within defined timelines. Some of the common risks include:

Environmental – such as resource usage (i.e. high energy, fuel or water consumption). For example, data centres in Singapore consume large amounts of electricity for cooling, which is a key environmental risk they must manage and report on.
Social – such as labour conditions, workplace practices and data privacy. For example, construction companies must adhere to strict regulations to ensure workers’ health and safety.
Supply chain risks – such as child labour, unethical sourcing or supply chain disruptions.
Governance – such as poor board diversity, tax compliance, corruption and greenwashing.

What are Some of the Key Obligations for Companies Under the Code of Corporate Governance?

The five tenets of good governance discussed above form the basis of how the Code is structured. In terms of its practical applicability, the Code seeks to promote good governance by imposing several obligations on companies to promote these five aspects. Some of these obligations are summarised below.

“Comply or Explain” framework

As previously discussed, under the “Comply or Explain” mechanism, listed companies must state in annual reports how they have complied with each principle. If they fail to adhere to or deviate from the Code, this must be explained with reasons for failing to do so and the alternative practices adopted.

This system promotes flexibility and accountability in the way a company is managed. Smaller companies, for instance, may have fewer independent directors, but they must justify how they maintain accountability in other ways. For example, they should separate key roles as much as possible, such as between the chairman and the CEO, or appoint independent directors to lead each committee.

Disclosure requirements

In addition to reporting on compliance with the Code, companies must provide annual reporting of board composition, remuneration, risk management, sustainability efforts and shareholder engagement practices.

Companies must also observe the corporate disclosure policy set out in the SGX Listing Manual. This policy mandates every listed company to announce to the market any information that is likely to materially affect the price or value of its securities. The SGX Listing Rules also prohibit a listed company from selective disclosure to certain parties without a legitimate corporate objective. Selective disclosures occur when a company gives materially market-sensitive information to a specific group of people, such as business partners or fund managers, instead of to the market as a whole. Legitimate corporate objectives can include disclosing confidential information to professional advisors with the appropriate confidentiality safeguards, such as lawyers and accountants, to enable them to carry out their work or due diligence effectively. The corporate disclosure policy seeks to not only preserve the fairness and integrity of the securities market, but to also keep members and investors duly informed of any major developments affecting the company.

Board’s collective responsibility

The Code emphasises the corporate responsibility of companies by holding the board accountable for meeting its corporate governance obligations. In practice, this means directors must stay informed, act in the company’s best interests, and ensure proper oversight.

Practical Implications for Directors and Officers

Is there a duty to stay informed of Code requirements?

Directors and officers are required to stay up-to-date on the company’s business, as well as the regulatory or governance frameworks which affect it, such as the Code, SGX Listing Manual, and other applicable legislation. This allows them to exercise due care, skill and diligence when making informed decisions for the company, or when explaining any justification for deviations from the Code.

If a director or officer fails to stay informed of the Code, this may amount to a breach or non-compliance of the disclosure obligations under the SGX Listing Manual. Additionally, there is a statutory duty for companies to keep the stakeholders updated on developments that could materially affect the company. Section 203 of the SFA, read together with the disclosure requirements under the SGX Listing Manual, makes it an offence for a company to intentionally or recklessly fail to notify the exchange of matters that are required to be disclosed under the listing rules or other exchange requirements as soon as the information comes to the issuer’s knowledge and is required to be notified.

Contravention of provisions under the SFA may incur criminal or civil liability for the company and/or its officers. In a well-publicised case, the former CEO, CFO and independent directors of Hyflux Ltd were charged under section 203(2) of the SFA for intentionally failing to disclose key information about the Tuaspring project, which was required under SGX Listing Manual. A person found to have contravened section 203(2) of the SFA is liable on conviction to a fine of up to $250,000 and/or 7 years’ imprisonment.

Can directors or officers be held personally liable for misleading or inadequate disclosures?

If a director or officer provides misleading or incomplete disclosures, they may also be held personally liable or face disqualification under the SGX Listing Rules and/or other laws such as the Companies Act or SFA.

Common law duties such as fiduciary duty, as well as the duty of care, skill and diligence for directors also apply, meaning that directors may be held liable for negligence or breach of those duties if they fail to ensure that the company’s disclosures are adequate. For example, if the company suffers loss or damage as a result of the director’s failure, he or she may need to account for any gain or profit that he or she may have obtained consequent to the breach.

In certain cases, if a listed company fails to provide disclosure or provides misleading or incomplete disclosures in an intentional or reckless manner, the company can face criminal sanctions under the SFA. Additionally, its director or officer may be found to be personally guilty of a criminal offence, if such failure was attributable to any neglect on his part or was done with his consent or connivance. Penalties include a fine of up to $250,000 and/or imprisonment of up to 7 years.

On a practical level, directors must ensure that the company has systems to identify, assess and disclose material information to the market in a timely, accurate and complete way. They cannot simply rely on management without oversight, but must exercise independent judgment and seek legal or expert advice if in doubt.

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Corporate governance is intended as a means to ensure that laws, regulations and processes are complied with, that there is no misfeasance within the company and that the assets of the company are maximised in the interests of its stakeholders.

Singapore’s Code of Corporate Governance plays a crucial role in shaping how companies behave and how investors trust them. While it is not enforceable law, it carries strong influence through the “comply or explain” approach – encouraging transparency, responsibility, and sustainability.

Company directors should remember that the objective of the Code is not to prescribe corporate behaviour in detail but to encourage companies (in particular, listed companies) to adopt practices which aim to provide accountability while creating long-term shareholder value, as well as to encourage sufficient disclosure so that stakeholders can assess the company’s governance practices and respond in an informed manner. At the end of the day, reputation is a valuable asset, and a company that demonstrates the tenets of good governance strengthens its public image and engenders investor confidence.

If you are a director, shareholder, or aspiring investor, you may wish to consult a corporate lawyer on any matters relating to the Code. An experienced corporate lawyer can help you understand how the Code applies to your company, ensure proper disclosures, and advise on governance systems that meet both regulatory and investor expectations.