SINGAPORE – Shareholders in Singapore can expect better communication and transparency from the companies they invest in as the government implements new rules.
For one, every listed firm must have a dedicated investor relations website or section on its company website with relevant information for shareholders and contact details, the Singapore Exchange Regulation (SGX RegCo) said on Sept 23.
In addition to a mandatory investor relations policy that must be published online, companies are also encouraged to publish their annual reports, minutes of annual general meetings, investor presentation decks and a calendar of upcoming events on the website.
Currently, only a handful of companies provide details of such shareholder engagement activities. This is despite over 90 per cent of listed firms already maintaining a website for investor engagement.
The investor relations policy must serve to facilitate regular, effective and fair communication with shareholders. Minimally, it must state set out the channels through which the issuer communicates with investors, including the mechanisms by which investors may contact the issuer.
Listed companies must also clearly explain the factors used to determine the amount paid to the company’s executive directors and executives, including the chief executive, in their annual reports.
Annual reports must also include a link to the company’s investor relations policy, a dividend policy, and a description of key shareholder engagement activities within the year. While companies are not required to issue dividends, they must explain their reasons if they choose not to.
The new rules, which take effect on Jan 1, 2027, “target specific communication gaps and are aimed at elevating disclosure quality”, the regulator said.
These improvements to company disclosures can help to boost company valuations and attract overseas investors, it added.
Under current listing rules, both mainboard and Catalist listcos must release material announcements on SGXNET, SGX’s official portal.
While SGXNET will remain the primary channel moving forward, the company’s investor relations website will provide shareholders with an additional touchpoint.
“Singapore’s equity market is benefiting from a resurgence of investor interest, but this interest will not last if boards and management do not increase investor engagement and demonstrate greater transparency – particularly transparency about how board or management decisions align with shareholder interests,” said the regulator’s chief executive Tan Boon Gin.
The rule changes strengthen disclosure standards while preserving flexibility for companies, he noted. Additional “meaningful and substantive” disclosures beyond the minimum requirements can help attract global capital and improve valuations.
David Gerald, chief executive of the Securities Investors Association Singapore, said smaller and mid-cap companies, in particular, can benefit from having a clear and accessible digital presence.
This can improve their visibility and help investors better understand their business, strategy, financial performance and corporate developments.
Prof Lawrence Loh from NUS Business School added that the costs that small companies may have to bear can be offset by the potential benefits of having a website, such as better liquidity and value.
Another new rule concerns disclosures on the financial and non-financial performance indicators used to decide executive pay. These disclosures, as well as how these factors are aligned with long-term value creation objectives, must be included in annual reports for the financial years commencing on or after Jan 1, 2027.
Gerald said: “Shareholders looking at the current disclosures still find it difficult to establish a clear link between performance and pay.
“It is not uncommon to see bonuses being paid even when companies have been loss-making, although there may be legitimate reasons for this, depending on the circumstances of the company.”
Describing the key performance indicators linked to management’s remuneration will help shareholders better understand what the board considers key business drivers and how management performance is assessed.
Companies will also be required to include their dividend policy in their annual reports.
Gerald said that formulating a clear, detailed dividend policy addresses the question of whether the company has the capacity to pay dividends to shareholders.
“Otherwise, it is common to see companies default to preserving cash. Having a formal dividend policy is something that all forward-looking, responsible boards should be doing anyway,” he noted.
He added that there may be a segment of investors who want dividends, but there are also others who invest for growth and expect that companies with growth opportunities may not be able to pay dividends during their growth phase.
“Ultimately, a clearly articulated dividend policy does not necessarily mean that companies should pay higher dividends. Rather, it gives shareholders greater transparency on how the board approaches capital allocation and the circumstances in which capital may be returned to shareholders,” he said.
The Singapore Institute of Directors (SID) said it welcomes SGX RegCo’s new requirements to strengthen disclosures on remuneration, dividend policies and investor relations.
It particularly welcomes the regulator’s emphasis that the “new requirements should raise the quality of disclosure, rather than being a box-ticking exercise,” it said, adding that it supports SGX RegCo’s position that issuers should go beyond minimum requirements and provide substantive and meaningful disclosures.
“This will be important in ensuring that the new requirements improve the quality and usefulness of information available to investors, rather than becoming a compliance exercise,” SID said.
SID chief executive Emily Poon said more disclosure also does not necessarily mean better disclosure.
“Good disclosure should help investors understand how boards are thinking and making decisions,” she said, adding that implementation should remain proportionate.
“Companies differ considerably in size, business model and resources. The new requirements are a good start towards raising the baseline for disclosure, while preserving the board’s ability to exercise judgement.”
Gerald added that The real test will therefore be whether boards embrace the spirit rather than merely the letter of the new rules.
If companies provide meaningful disclosure, explain their capital-allocation decisions and engage investors seriously, we believe these measures can help reduce information gaps and potentially narrow the valuation discount suffered by some listed companies.
Gerald added that the real test will be whether boards embody the spirit of the new rules, and not just the letter.
“If companies provide meaningful disclosure, explain their capital-allocation decisions and engage investors seriously, we believe these measures can help reduce information gaps and potentially narrow the valuation discount suffered by some listed companies,” he said.
The new requirements were formalised after SGX RegCo concluded its industry consultation in May. It received comments from 32 respondents, including asset managers, service providers, representative bodies, issuers and market professionals.
It noted that several respondents had suggested expanding disclosures to cover a wider range of capital management practices.
These include how companies choose participants in investor engagement activities and how they handle requests for meetings with management.
The regulator said it will share the feedback with the Monetary Authority of Singapore’s Corporate Governance Advisory Committee for its consideration, to see if these other disclosures should be part of the corporate governance code or the listing rules.
