Making their voices heard

Do minority shareholders have a voice? How can Asia, and Singapore in particular, build a culture of shareholder activism in enhancing corporate governance?

SINGAPORE’S Code of Corporate Governance was recently updated, and it is important to review and revise it periodically to keep in step with international best practices, especially if we want to position the country as a strong financial hub. While the Code provides a good foundation for corporate governance, it does, after all, represent the minimum that companies are expected to abide by.

To build a culture of shareholder activism against backdrop of enhanced corporate governance, both parties – companies and individual shareholders – need to do their part. Companies should strive to do more than just comply with the Code; they should actively work towards aligning their internal control measures with international standards. Certainly, this is easier said than done, particularly when it is a voluntary move and companies are not being threatened to do so with a stick.

Thus, for their part, shareholders need to demand good corporate governance, be it in the form of activism or by sending a signal to the market by choosing to invest in companies that exhibit good corporate governance. But this needs to be done en masse or there will be little impact. What is really needed is a collective paradigm shift and positive reinforcement aided by greater awareness and education via the media and other avenues such as the Singapore Corporate Awards, which recognise and celebrate excellence in corporate governance.

At the end of the day, shareholders – especially minority shareholders who cannot afford to incur major personal financial losses – should always remember the principle of caveat emptor. As the buyer, you must take responsibility for managing your own risks and you need to do your due diligence on the company before investing in it.

Ronald Lee
Managing Director
PrimeStaff Management Services Pte Ltd