[Last updated: 1 January 2024, unless otherwise noted]

The CMA has issued the Corporate Governance Regulations which set out general governance guidelines and requirements applicable to all listed companies. At present the requirements under the Corporate Governance Regulations are generally only mandatory for Main Market listed companies, with some provisions being categorized as guiding provisions.

Mandatory requirements

Over time, the CMA has gradually issued resolutions making certain requirements under the Corporate Governance Regulations mandatory. A listed company must comply with these requirements, some of which include:

• Appointment of a prescribed number of independent and non-executive directors to the board.
• Appointment of an audit committee and its composition.
• Appointment of a remuneration committee and its composition.
• Appointment of a nomination committee and its composition.
• Adoption of a corporate governance code for the company and board committee charters that do not contradict the provisions of the Corporate Governance Regulations.

Audit committee

Under the Corporate Governance Regulations, an issuer must have an audit committee that comprises at least three members and no more than five members, provided that at least one of its members is an independent director and that all members are non-executive (if all members are board members). Furthermore, at least one member of the committee must be a specialist in finance and accounting matters.

Some of the responsibilities of an audit committee include:

• Supervising the internal audit department of the company.
• Reviewing the internal audit reports.
• Supervising the external auditors of the company.
• Reviewing the interim and annual financial statements before they are presented to the board of directors.

Remuneration committee

Under the Corporate Governance Regulations, an issuer must have a remuneration committee, and its members cannot be executive directors and must include at least one independent director. The chairman must be an independent director.

Some of the responsibilities of the remuneration committee include:

• Laying down policies regarding the remuneration of board members and senior executives.
• Periodically reviewing the remuneration policy and assessing its effectiveness.
• Providing recommendation to the board in respect of the remuneration of its members.

Nomination committee

Under the Corporate Governance Regulations, an issuer must have a nomination committee. Members of the committee cannot be executive directors and must include at least one independent director. The chairman must be an independent director.

Some of the responsibilities of the nomination committee include:

• Reviewing the structure of the board of directors and recommending changes.
• Ensuring the independence of the independent board members.
• Annually reviewing the skills and expertise required of the board members and executive managers.

The Corporate Governance Regulations provides that an issuer may combine the remuneration and nomination committees into one committee, subject to certain conditions.

Form 8

As mentioned above, there are numerous documents that are submitted to the CMA when an issuer applies for listing on the Main Market. This includes "Form 8" which is a report on the corporate governance procedures followed by an issuer. In Form 8 the issuer, through a series of yes or no answers explains:

• How it has applied the principles of the Corporate Governance Regulations and its own internal corporate governance code.
• Whether it has deviated from the provisions of the Corporate Governance Regulations or its own internal corporate governance code, and, if so, the reasons for any such deviation.

For most issuers undertaking an IPO on the Main Market, it is not possible to comply with all the provisions of the Corporate Governance Regulations. Therefore, there is usually a post-listing undertaking given by the issuer in the prospectus to complete and provide the CMA with an updated Form 8.