SGX RegCo seeks more powers for faster disciplinary action
Issuers must have whistleblowing policy in place under the proposed changes
7 Aug 2020 | The Asset

Singapore Exchange Regulation (SGX RegCo) has started consultation on proposed changes to the listing rules governing enforcement actions in an effort to foster greater and swifter accountability, as well as clarity, in the securities market. The proposals include making it mandatory for issuers to have a whistleblowing policy.

“The investing public can only continue to have trust and confidence in the market if they are assured that swift and appropriate enforcement against any listing rule breaches or malfeasance will take place,” the exchange’s regulatory arm said in a statement.

SGX RegCo highlights the role that listed companies can play in raising market standards, particularly in detecting and dealing with misconduct or wrongdoing. “We are therefore proposing that companies put in place and disclose arrangements to receive and investigate whistleblowing allegations as well as proper provisions for protection of the whistleblower within the company,” it says.

At present, SGX RegCo notes, its range of direct enforcement powers is mainly confined to private actions. Such actions have been regularly meted out, but always away from the public eye. Public sanctions are available, but such powers can only be wielded by the independent Listings Disciplinary Committee (LDC). This has led to delays at times, such as when conflicts of interests arise as members try to form a hearing committee that satisfy quorum and independence requirements.

To remedy the situation, SGX RegCo proposes to have the powers to deal with cases that call for public sanctions that the LDC can hear, except the ones where fines may be imposed. “A fine is the severest of disciplinary actions and the committee will continue to be the sole party to wield this power,” it notes.

The regulator also wants additional powers where an issuer under investigation must seek its approval before directors can be appointed or re-appointed to its board. Directors under investigation would similarly be subject to SGX RegCo’s approval prior to their appointment or re-appointment to the board of an issuer.

Says the regulator’s chief executive officer Tan Boon Gin:  “SGX RegCo is acutely aware of the perception that few public enforcement actions have taken place in recent years. We are proposing to widen the scope of direct disciplinary actions available to us so as to speed up the disciplinary process. This will enhance its deterrent effect and together with the requirement for a whistleblowing policy, ensure greater accountability of issuers and their relevant persons. Market clarity and confidence will be enhanced in the long run.”

The public consultation will continue until September 7.

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