One possible way to increase the pool of directors would be for more Singapore companies to be open to having their senior staff sit on the Boards of other companies, as a way to further develop their promising executives. 20. There are some promising initiatives underway. The Singapore Institute of Directors (SID) and the Stewardship and Corporate Governance Centre (SCGC) have been working to help increase the pool of directors through a variety of training programmes. For example: •  The SID-SMU Directorship Programme provides basic, broad-based knowledge essential for performing as Board directors. •  SCGC, set up by Temasek, is developing a training programme designed specifically for potential and newly appointed directors. 21. But more work needs to be done in the area of competency building. Let me offer one possibility. There may be scope to build a cadre of full-time professional directors in Singapore. The concept of a professional director – as a person “who spends all his time in  BIS central bankers’ speeches  3  the discharge of his responsibilities as a director of various publicly held corporations”1 – is not new. In some jurisdictions, professional associations have introduced accreditation frameworks for directors, such as the “chartered director” in UK and the “accredited director” in New Zealand. This could be worth considering. Instilling the right values 22. Finally, corporate governance must be about instilling a culture that places values above profits. Publicly listed companies are increasingly at risk of becoming slaves to the pressures of quarterly earnings.

But corporate governance rose to prominence only in the last two decades, starting with the UK’s Cadbury Report in 1992. Since then, there has been a continuous stream of reforms in the UK to strengthen corporate governance, culminating in the UK Corporate Governance Code, which operates on a “comply or explain” principle. Corporate governance reforms in the US took a slightly different trajectory, leading to the Sarbanes-Oxley Act. Unlike the UK Code, Sarbanes-Oxley is enshrined in legislation and compliance is mandatory. 5. In Singapore, our corporate governance journey began in 2001, with the introduction of the Code of Corporate Governance. Since then, the Code has undergone two reviews to take into account changes in our corporate landscape as well as international developments. The most recent review was conducted by the private sector led Corporate Governance Council in 2010. MAS accepted all of the recommendations of the Council, with minor modifications, and issued a revised Code of Corporate Governance earlier this year. Key changes to the Code focused on strengthening Board independence, enhancing remuneration practices and disclosures, clarifying the Board’s responsibility in risk governance, and providing further guidance on companies’ engagement with shareholders. Going beyond the rules 6. Rules on corporate governance – mandatory or otherwise – have been considerably enhanced in most major jurisdictions. Yet, rules alone cannot assure us of high standards of practice. The recent financial crisis has exposed significant shortcomings in the governance of companies. We have seen monumental failures in risk management, a spate of accounting scandals and outright fraud.