For companies aspiring to list on the Singapore Exchange (SGX), strong financial performance and growth potential are just the starting points. What increasingly separates successful IPO candidates from those that fall short is something less tangible but far more fundamental: corporate governance.
Corporate governance defines the structures, systems, and values through which a company is directed and controlled. It ensures that leadership decisions serve not only the founders or executives, but also shareholders, employees, customers, and society at large. As global investors become more discerning and regulatory expectations continue to rise, good governance has become a non-negotiable foundation for accessing public capital, especially in Singapore’s highly transparent marketplace.
This article explores why corporate governance matters so much for an SGX listing, what the key expectations are, and how companies can bridge governance gaps before going public.
1. Why Corporate Governance Matters in the SGX Context
Singapore is recognized worldwide for its robust legal system, transparent capital markets, and investor protection frameworks. The SGX Listing Rules and the Singapore Code of Corporate Governance set a high bar not as a barrier, but as a benchmark that fosters long-term trust and resilience.
For investors, governance equals confidence
Investors in Singapore, from sovereign wealth funds like GIC and Temasek to institutional and retail investors, view governance as a signal of credibility and sustainability. A company with strong governance is seen as better equipped to handle risks, protect shareholder interests, and deliver consistent returns.
For issuers, governance reduces risk
Good governance practices also benefit companies directly. They:
Minimize legal and reputational risks.
Improve decision-making transparency.
Strengthen internal controls and accountability.
Attract quality institutional investors who value compliance and ethics.
In essence, governance is not just about ticking boxes, it’s about building a resilient, investable organization.
2. Understanding the “Governance Gap”
Many private or family-owned companies aiming for an IPO face what’s called a “governance gap.” This gap arises when internal structures, policies, or controls are not yet aligned with public market expectations.
Common governance gaps include:
Founder-dominant boards with limited independent oversight.
Lack of documented internal controls or risk management systems.
Inadequate disclosure practices around financial or ESG performance.
Unclear succession planning or leadership accountability structures.
Bridging this gap before listing isn’t optional; it’s essential. The SGX conducts rigorous due diligence, and investors scrutinize governance standards as part of their valuation and risk assessments.
3. Key Governance Requirements for an SGX Listing
The SGX Listing Manual and the Code of Corporate Governance (2018) outline the key expectations for listed companies. While not all rules apply equally to Mainboard and Catalist listings, the guiding principles remain the same.
a) Board Independence and Diversity
At least one-third of the board should be independent directors, ensuring objective oversight. Increasingly, SGX promotes board diversity in terms of gender, expertise, and experience to enhance decision-making.
b) Accountability and Transparency
Listed companies must maintain timely, accurate, and balanced disclosure of material information, including quarterly or semi-annual financial results, related party transactions, and risk exposures.
c) Internal Controls and Risk Management
Robust systems for financial reporting, internal audits, and risk assessment are mandatory. Boards must ensure that internal controls are effective and regularly reviewed.
d) Remuneration and Alignment
Executive and board remuneration should be transparent and aligned with the creation of long-term shareholder value. Excessive or poorly structured pay packages can raise red flags.
e) ESG and Sustainability Reporting
Since 2022, the SGX has required mandatory climate-related disclosures for certain sectors and encourages comprehensive ESG reporting. Sustainability governance is fast becoming a mainstream investor requirement.
4. How to Get Your House in Order
Preparing for an SGX listing involves transforming governance culture from informal to institutional. Here’s how companies can get started:
Step 1: Conduct a Governance Audit
Begin by assessing your current practices against SGX requirements. Identify gaps in board composition, internal policies, reporting structures, and compliance procedures. External consultants or legal advisors can assist with this review.
Step 2: Professionalize the Board
Appoint independent directors with relevant industry, legal, or financial expertise. Ensure board committees' audit, risk, and remuneration are appropriately structured and chaired by qualified members.
Step 3: Strengthen Internal Controls
Implement standardized processes for financial management, risk monitoring, and compliance. Adopt internal audit frameworks that ensure accountability at all levels.
Step 4: Enhance Disclosure and Communication
Invest in transparent investor relations (IR) systems. Train leadership to communicate with clarity and consistency both during the IPO process and post-listing.
Step 5: Embed ESG Governance
Integrate sustainability into strategy and operations. Establish an ESG committee to oversee metrics, goals, and reporting. This signals a forward-looking, responsible business model to investors.
5. Case Example: From Family Business to Public Company
Consider a mid-sized logistics company in Southeast Asia preparing for a listing on the SGX Catalist. Initially, decision-making was centralized around the founder, with limited documentation or external oversight.
Through a structured pre-IPO governance program, the company:
Reconstituted its board to include independent directors.
Adopted a whistleblower policy and internal audit framework.
Published its first ESG report highlighting carbon reduction goals.
Established a transparent performance-based remuneration structure.
The result? It not only secured SGX approval but also attracted strong investor interest during its IPO roadshow, thanks to improved credibility and professional governance standards.
6. The Payoff: Governance as a Value Driver
Strong corporate governance doesn’t just reduce risk, it actively enhances value. Research shows that well-governed companies enjoy:
Lower capital costs due to investor trust.
Higher valuation multiples are associated with greater transparency and accountability.
Better long-term performance through sustainable decision-making.
In Singapore’s market, where integrity and compliance are deeply valued, governance excellence can become a competitive advantage rather than a regulatory burden.
Final Thought: Building Trust Before You Go Public
An SGX listing is not merely a financial event; it’s a trust event. Companies that demonstrate strong governance send a powerful message: they are prepared to be held accountable, operate transparently, and create long-term value for all stakeholders.
Bridging the corporate governance gap is therefore more than a compliance exercise; it’s an investment in your company’s future reputation and resilience.
In a world where capital follows confidence, getting your house in order isn’t just preparation, it’s the key to unlocking sustainable success in Singapore’s trusted capital markets.