On 17 April, The Edge Singapore published an article titled “The need for balance in strengthening governance” by Ms June Sim, a former Managing Director of SGX Regco. In the article, she commented on four of my suggestions for improving corporate governance in Singapore that were in an interview titled “Driving accountability in the boardroom and beyond”, published by the same paper on 26 March.

She ended her article by saying that “what we should all strive for is not simply to have more rules or louder voices, but to ensure that governance continues to strengthen in a way that is balanced, credible and fit for purpose.”

The problem I find with Ms Sim’s point of view is that she seems so convinced that our existing rules are adequate and that our governance has already been strengthening “in a way that is balanced, credible and fit for purpose”.

Let me address her comments on each of my suggestions.

Sponsor independence

Ms Sim said that my concerns around sponsors providing non-sponsorship services, including financial advisory or investor relations functions, are not new. She added that existing listing rules address such risks clearly and went on to spell out the rules in some detail.

Ms Sim is right to say that the concerns are not new. What she failed to mention is that despite the rules, SGX Regco issued a Notice of Compliance (NOC) on 22 January 2020 to one of the major sponsors for possible conflict of interest relating to share registrar or investor relations services provided by two affiliates of the sponsor at four Catalist companies sponsored by that sponsor. The NOC also noted that the group shared common directors and/or shareholders with another affiliated law firm “which provides certain legal and other services to certain sponsored issuers of [the sponsor]”. It is the first NOC to be issued to a sponsor.

She also failed to mention that prior to the issue of the NOC, I had written about other services provided by affiliates of this sponsor to the four companies, and relationships between some directors of these companies and the sponsor’s affiliate firms. In fact, the issues raised in the NOC were essentially identical to the issues I had raised about that sponsor.

The action by SGX Regco was a clear acknowledgment that there were serious conflicts, despite the presence of the rules. If I had not written about the conflicts, I wonder if SGX Regco would even be aware of the issues and taken any action.

On 12 August 2020, I issued a report with Chew Yi Hong titled “Who’s Sponsoring Who? Challenges of the Catalist Board” that went into detail on many issues relating to sponsors and the sponsor-based regime. It included nine case studies as examples where we believed there were questions as to whether the continuing sponsor in question has adequately discharged their responsibilities.

Ms Sim did not address fundamental issues with the sponsor-based regime for Catalist, which remains today, or which may even have become worse.

For example, Catalist companies can change the sponsor at any time after the first three years of listing, and we can observe that such changes are quite common. Some companies have made multiple changes over a relatively short period of time. The reason cited is often “commercial reasons”.

As the continuing sponsor’s role is to help ensure that the company complies with the listing rules, this is akin to being able to change your regulator if you are not happy with it. In our 2020 report, we found that 102 out of the 261 issuers included in our study, or 39%, have changed their sponsor at least once and 37 issuers have had at least three different sponsors since their listing on Catalist, with nine having four sponsors and two having five sponsors. The most extreme case is Sunrise Shares Holdings, which has now changed its sponsor five times between September 2018 and 1 January 2024, and on 13 April 2026, announced the appointment of yet another new continuing sponsor after the previous sponsor issued a notice of termination three months earlier.

I have not seen SGX Regco publicly question an issuer or sponsor about a change, appearing to simply accept “commercial reasons” as a valid reason, and the standard boilerplate disclosure that the outgoing sponsor had not raised any concerns. Did SGX Regco, when she was part of the team at the helm, seek to understand the real reasons for these changes?

If Catalist companies can change the continuing sponsor which is supposed to help ensure that they comply with listing rules, how can they be truly independent?

Ms Sim seems to have an unshakeable faith in the existing rules governing sponsors,  despite evidence pointing to issues with the sponsorship regime on Catalist.

Perhaps she can explain how SGX Regco ensures that sponsors effectively discharge their responsibilities notwithstanding the issues that have been identified, and why those issues that were raised are of no concern, rather than simply asserting that there are rules in place.

Directorship limits

Ms Sim claims that Singapore does not have an issue of overboarding. This is unfortunately a very common Singaporean attribute – that only other countries have an issue,  but not Singapore.

Singapore undoubtedly had an overboarding issue for a long period of time but the failure to admit and address it meant that it was left to advocates like myself to “shame” busy directors from time to time over the years. In fact, when I was on the SID council in the early 2000s, one council member had a full-time job, an MP position and served on more than 10 listed boards. Another had close to 10 directorships.

While the public spotlight on busy directors may have reduced the problem of overboarding, I would not be so quick to conclude that this is no longer an issue.

Ms Sim cited SID’s Singapore Directorship Report 2025 which shows that only 1% of directors hold more than four appointments and about nine in 10 listed entity directors hold a single board position. These statistics mix up all kinds of directors, including executive directors, who may face restrictions from their companies in serving on boards of companies outside the group.

It would be more useful if there is a detailed breakdown of the number of directors who serve on different numbers of boards – for example, how many serve on 6, 7, 8 boards etc. – since 5 boards or fewer is the limit imposed in several other markets.  Of particular interest is how many hold more than five independent director appointments.

Over the years, I have debated this issue with SID. I have repeatedly said that one should not only look at the number or percentage of directors who are overboarded, but the number of companies with at least one overboarded director. This is because from my interactions with independent directors, they have shared with me the challenges they have faced in arranging meetings when there was just one overboarded director. They have also shared that overboarded directors are often unable to make contributions when the company needs to make urgent and important decisions. Given the increasing risks that companies face today, overboarding is arguably an even more important issue now.  Statistics on the number of issuers with at least one overboarded director would therefore also be useful.

In 2021, I wrote about one overboarded director who served on the boards of nine listed companies. He was executive chairman in one company, independent board chairman in two, deputy independent chairman in two, and lead independent director in three. He was also the AC chair for five of these companies, NC chair for three companies, RC chair for three companies, acting risk management committee chair for one company, and a member of 12 ACs, NCs or RCs.

What was also interesting was that the boards and committees of most of his companies were not particularly active. Of the nine companies, seven of their boards met only twice a year.  Six of the nine ACs met just twice. In this case, overboarding and limited oversight seemed to go hand-in-hand.

I would suggest a more in-depth study of the overboarding issue rather than simply asserting that it is not a problem in Singapore.

We should also recognise that Singapore is very much an outlier in Asia when it comes to the lack of any guideline or rule on number of directorships. An article by ISS Corporate last year said that Singapore and Hong Kong were the only Asian markets they have analysed that did not have a limit on the number of directorships held by independent directors. The Hong Kong Exchange has now introduced a limit, despite considerable resistance from issuers and directors. Starting with the first AGM after July 1, 2028, independent directors will no longer be able to serve on more than six boards of companies listed in Hong Kong.

If there are few directors who are overboarded now, as Ms Sim asserts, there should be minimal resistance to introducing a limit.

Ms Sim said that imposing a limit may “constrain market development, reduce the pool of experienced directors willing to serve and limit the flexibility companies need to build boards with the right mix of skills and experience.”

As an active observer of companies, I do not see evidence that so-called experienced directors who serve on many boards have necessarily improved performance or corporate governance of companies. What worries me more is that some of these “experienced directors” are entrenched, and this has hindered board renewal and building boards with the right mix of skills and experience – and limited board opportunities for other qualified directors, including first-time directors.

Watchlist removal

Ms Sim said that the removal of the watchlist mechanism has been the subject of discussion and that this was a decision that followed extensive deliberation and was informed by market experience. She said that my approach “seems to be informed by the idea that the watchlist’s main function is to weed out the bad companies from the good” and that I had missed the point.

I did not miss the point. Rather, SGX changed its mind. I would be interested to hear what Ms Sim thought was the purpose of having those watchlists when they were introduced. Weren’t they introduced such that persistently under-performing companies or penny stocks would be removed from listing unless they improve their performance or stock price?

When the Financial Entry Watchlist was introduced in March 2008, SGX said in its Practice Note that the watchlist “seeks to heighten transparency of an issuer’s financial and share price performance”. The two main purposes of the watch-list were to:

(i) instill discipline in issuers to administer their financial and share price performance for continued compliance with the listing rules; and

(ii) alert investors to the risk of being invested in companies that may face delisting.

In the case of the Minimum Trading Price Watchlist implemented in March 2015 with a 12-month transition period, and which was subsequently removed in June 2020, it was proposed by MAS and SGX because of concerns that low price securities may be susceptible to excessive speculation and potential market manipulation. The proposal had received support from a majority of respondents.

By removing both watchlists, there is now no mechanism for improving quality in the market by ridding it of poorer companies. I remain convinced that this is a mistake.

Lawyers (and accountants) as independent directors

It is Ms Sim’s defence of lawyers serving as independent directors on companies that receive services from that lawyer’s firm that I find most perplexing.

She said my suggestion should be treated with caution and that if applied consistently, such a position would extend to other professions, such as accountants, whose firms provide services to listed companies. Surely Ms Sim would know that partners or employees of accounting firms which provide external audit services to a company cannot serve on the latter’s board as a director, not just as an independent director. In addition, it is rare – and considered poor corporate governance – even if it was internal audit services.

Ms Sim takes the position that conflicts are acceptable as long as they are properly identified, disclosed and managed. This is a rather low bar. She also cited the $200,000 threshold in the Practice Guidance in the Code, which is intended as a guide for what constitutes significant payments. She omitted to mention the reference in the Practice Guidance to “material services (which may include auditing, banking, consulting and legal services)”. Importantly, in determining whether a service is material, the Guidance states that “the amount and nature of the service, and whether it is provided on a one-off or recurring basis” are relevant.   Services provided by law firms where their partners serve as independent directors of clients are often recurring in nature.

Again, Ms Sim seems to have great confidence that existing rules and safeguards are sufficient, and is prepared to accept the risks that come with such situations. She does not address why a company should use that specific law firm when there are plenty of other law firms out there offering the same services. As I have also pointed out in various commentaries, it is very rare in markets such as HK, Australia and US for such a situation to exist.

I wish Ms Sim well but I hope that we do not buy into her narrative that all is well and there is little need for change.

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The views in this article are my personal views.